SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant þ
Filed by a party other than the registrant o
Check the appropriate box:
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Preliminary proxy statement |
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Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2)) |
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Definitive proxy statement |
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Definitive additional materials |
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Soliciting material pursuant to section 240.14a-12 |
THE FEMALE HEALTH COMPANY
(Name of Registrant as Specified in Its Charter)
Registrant
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
o Fee paid previously with preliminary materials:
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
THE
FEMALE HEALTH COMPANY
515 North State Street
Suite 2225
Chicago, Illinois 60610
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 29,
2007
To the Shareholders of The Female Health Company:
Notice is hereby given that the Annual Meeting of the
Shareholders (the “Annual Meeting”) of The Female
Health Company (the “Company”) will be held at The
Hilton Garden Inn, the Garden Room, 10 East Grand Avenue,
Chicago, Illinois 60610, on March 29, 2007 at
2:00 p.m., local time, for the following purposes:
1. To elect nine members to the Board of Directors, the
names of whom are set forth in the accompanying proxy statement,
to serve until the 2008 Annual Meeting.
2. To consider and act upon a proposal to ratify the
appointment of McGladrey & Pullen, LLP, independent
registered public accounting firm, as the Company’s
auditors for the fiscal year ending September 30, 2007.
3. To transact such other business as may properly come
before the Annual Meeting and any adjournments thereof.
Shareholders of record at the close of business on
February 12, 2007 are entitled to vote at the Annual
Meeting. All shareholders are cordially invited to attend the
Annual Meeting in person. Shareholders who are unable to be
present in person are requested to execute and return promptly
the enclosed proxy, which is solicited by the Board of Directors
of the Company.
By Order of the Board of Directors,
William R.
Gargiulo, Jr.
Secretary
Chicago, Illinois
February 20, 2007
TABLE OF CONTENTS
THE
FEMALE HEALTH COMPANY
515 North State Street
Suite 2225
Chicago, Illinois 60610
PROXY STATEMENT
FOR THE 2007 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of The Female
Health Company (the “Company”) to be voted at the
Annual Meeting of Shareholders (the “Annual Meeting”)
to be held at The Hilton Garden Inn, the Garden Room, 10 East
Grand Avenue, Chicago, Illinois 60610, 2:00 p.m., local
time, on March 29, 2007, and at any adjournments thereof,
for the purposes set forth in the accompanying Notice of
Meeting. The mailing to shareholders of this Proxy Statement and
accompanying form of proxy will take place on or about
February 20, 2007.
GENERAL
INFORMATION
The Board of Directors knows of no business which will be
presented to the Annual Meeting other than the matters referred
to in the accompanying Notice of Annual Meeting. However, if any
other matters are properly presented to the Annual Meeting, it
is intended that the persons named in the proxy will vote on
such matters in accordance with their judgment. If the enclosed
form of proxy is executed and returned, it nevertheless may be
revoked at any time before it has been voted by a later dated
proxy or a vote in person at the Annual Meeting. Shares
represented by properly executed proxies received on behalf of
the Company will be voted at the Annual Meeting (unless revoked
prior to their vote) in the manner specified therein. If no
instructions are specified in a signed proxy returned to the
Company, the shares represented thereby will be voted
FOR: (1) the election of the directors listed in the
enclosed proxy; and (2) ratification of
McGladrey & Pullen, LLP as the Company’s
independent registered public accounting firm for the fiscal
year ending September 30, 2007.
Only holders of the Company’s Common Stock (the
“Common Stock”), holders of the Company’s
Class A Convertible Preferred Stock-Series 1 (the
“Series 1 Preferred Stock”) and holders of the
Company’s Class A Convertible Preferred
Stock-Series 3 (the “Series 3 Preferred
Stock”), whose names appear of record on the books of the
Company at the close of business on February 12, 2007 are
entitled to vote at the Annual Meeting. On that date, there were
24,513,149 shares of Common Stock, 56,000 shares of
Series 1 Preferred Stock and 473,377 shares of
Series 3 Preferred Stock outstanding. Each share of Common
Stock, each share of Series 1 Preferred Stock and each
share of Series 3 Preferred Stock is entitled to one vote
on each matter to be presented at the Annual Meeting. A majority
of the votes entitled to be cast with respect to each matter
submitted to the shareholders, represented either in person or
by proxy, shall constitute a quorum with respect to such matter.
Under Wisconsin law, directors are elected by plurality, meaning
that the nine individuals receiving the largest number of votes
are elected as directors, and the ratification of the
appointment of the independent registered public accounting firm
requires the number of votes cast in favor of this proposal to
exceed the number of votes cast against this proposal, assuming
a quorum is present. Abstentions and broker nonvotes
(i.e., shares held by brokers in street name, voting on
certain matters due to discretionary authority or instruction
from the beneficial owners but not voting on other matters due
to lack of authority to vote on such matters without
instructions from the beneficial owners) will count toward the
quorum requirement but will not count toward the determination
of whether directors are elected or the appointment of the
independent registered public accounting firm is ratified.
ELECTION
OF DIRECTORS
(Item 1)
Pursuant to the authority contained in the Amended and Restated
By-Laws of the Company, the Board of Directors has established
the number of directors at nine. The Board of Directors has
nominated O.B. Parrish, Mary Ann Leeper, Ph.D., William R.
Gargiulo, Jr., David R. Bethune, Stephen M. Dearholt,
Michael R. Walton, James R. Kerber, Richard E. Wenninger and
Mary Margaret Frank, Ph.D. for election as directors, all
to serve until the 2008 Annual Meeting of Shareholders.
As indicated below, all persons nominated by the Board of
Directors are incumbent directors. The Company anticipates that
all of the nominees listed in this Proxy Statement will be
candidates when the election is held. However, if for any reason
any nominee is not a candidate at that time, proxies will be
voted for any substitute nominee designated by the Company
(except where a proxy withholds authority with respect to the
election of directors).
NOMINEES
FOR ELECTION AS DIRECTORS
O.B.
Parrish
Age: 73; Elected Director: 1987; Present Term Ends: 2007 Annual
Meeting
O.B. Parrish has served as Chief Executive Officer of the
Company since 1994, as acting President since May 2006, as
acting Chief Financial and Accounting Officer from February 1996
to March 1999 and as the Chairman of the Board and a Director of
the Company since 1987. Mr. Parrish is a shareholder and
has served as the President and as a Director of Phoenix Health
Care of Illinois, Inc. (“Phoenix of Illinois”) since
1987. Phoenix of Illinois owns approximately 233,501 shares
of the Company’s Common Stock. Mr. Parrish also is
Chairman and a Director of ViatiCare, L.L.C., a financial
services company, and Chairman and a Director of Abiant, Inc., a
neuroimaging company. Mr. Parrish is also a trustee of
Lawrence University. From 1977 until 1986, Mr. Parrish was
the President of the Global Pharmaceutical Group of G.D.
Searle & Co. (“Searle”), a
pharmaceutical/consumer products company. From 1974 until 1977,
Mr. Parrish was the President of Searle International, the
foreign sales operation of Searle. Prior to that,
Mr. Parrish was Executive Vice President of Pfizer’s
International Division.
Mary Ann
Leeper, Ph.D.
Age: 66; Elected Director: 1987; Present Term Ends: 2007 Annual
Meeting
Dr. Leeper has served as Senior Strategic Adviser to the
Company since May 2006. Dr. Leeper served as the President
and Chief Operating Officer of the Company from 1996 to April
2006. Dr. Leeper served as President and Chief Executive
Officer of The Female Health Company Division from May 1994
until January 1996, as Senior Vice President —
Development of the Company from 1989 until January 1996 and as a
Director of the Company since 1987. Dr. Leeper is a
shareholder and has served as a Vice President and Director of
Phoenix of Illinois since 1987. From 1981 until 1986,
Dr. Leeper served as Vice President — Market
Development for Searle’s Pharmaceutical Group and in
various Searle research and development management positions. As
Vice President — Market Development, Dr. Leeper
was responsible for worldwide licensing and acquisition,
marketing and market research. In earlier positions, she was
responsible for preparation of new drug applications and was a
liaison with the FDA. Dr. Leeper serves on the Board of
Neenah Paper, Inc. and is chair of its nominating and governance
committee. She is also an adjunct professor at the University of
Virginia Darden School of Business.
William
R. Gargiulo, Jr.
Age: 78; Elected Director: 1987; Present Terms Ends: 2007 Annual
Meeting
William R. Gargiulo, Jr. has served as Secretary of the
Company from 1996 to present, as Vice President from 1996 to
September 30, 1998, as Assistant Secretary of the Company
from 1989 to 1996, as Vice President — International
of The Female Health Company Division from 1994 until 1996, as
Chief Operating Officer of the Company from 1989 to 1994, and as
General Manager of the Company from 1988 to 1994.
Mr. Gargiulo has also served as a Director of the Company
since 1987. Mr. Gargiulo is a trustee of a trust which is a
shareholder of
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Phoenix of Illinois. From 1984 until 1986, Mr. Gargiulo was
the Executive Vice-President of the Pharmaceutical Group of
Searle, in charge of Searle’s European operations. From
1976 until 1984, Mr. Gargiulo was the Vice President of
Searle’s Latin American operations.
David R.
Bethune
Age: 66; Elected Director: 1996; Present Term Ends: 2007 Annual
Meeting
Mr. Bethune has served as a Director of the Company since
January 1996. He is currently a member of the Board of Directors
of the CAMBREX Corporation, a life sciences company dedicated to
providing products and services that accelerate and improve the
discovery and commercialization of human therapeutics.
Mr. Bethune served as Chairman and Chief Executive Officer
of Atrix Laboratories, Inc. from 1999 until his retirement in
2004. From 1997 to 1998, Mr. Bethune held the positions of
President and Chief Operating Officer of the IVAX Corporation.
From 1996 to 1997, Mr. Bethune was a consultant to the
pharmaceutical industry. From 1995 to 1996, Mr. Bethune was
President and Chief Executive Officer of Aesgen, Inc., a generic
pharmaceutical company. From 1992 to 1995, Mr. Bethune was
Group Vice President of American Cyanamid Company and a member
of its Executive Committee until the sale of the company to
American Home Products. While at American Cyanamid Company, he
had global executive authority for human biologicals, consumer
health products, pharmaceuticals and opthalmics, as well as
medical research. Mr. Bethune is a founding trustee of the
American Cancer Society Foundation. He is the founding chairman
of the Corporate Council of the Children’s Health Fund in
New York City and served on the Arthritis Foundation Corporate
Advisory Council.
Stephen
M. Dearholt
Age: 60; Elected Director: 1996; Present Term Ends: 2007 Annual
Meeting
Mr. Dearholt has served as a Director of the Company since
April 1996. Mr. Dearholt is a co-founder of, and partner
in, Insurance Processing Center, Inc., one of the largest
privately owned life insurance marketing organizations in the
United States, since 1972. He has over 33 years of
experience in direct response advertising and data based
marketing of niche products. Since 1985, he has been a 50% owner
of R.T. of Milwaukee, a private investment holding company which
operates a stock brokerage business in Milwaukee, Wisconsin. In
late 1995, Mr. Dearholt arranged, on very short notice, a
$1 million bridge loan which assisted the Company in its
purchase of Chartex. Mr. Dearholt is also very active in
the non-profit sector. He is currently on the Board of Directors
of Children’s Hospital Foundation of Wisconsin, an honorary
board member of the Zoological Society of Milwaukee, and the
national Advisory Council of the Hazelden Foundation. He is a
past board member of Planned Parenthood Association of
Wisconsin, and past Chairman of the Board of the New Day Club,
Inc.
Michael
R. Walton
Age: 69; Elected Director: 1999; Present Term Ends: 2007 Annual
Meeting
Mr. Walton has served as a Director of the Company since
April 1999. Mr. Walton is President and owner of Sheboygan
County Broadcasting Co., Inc., a company he founded in 1972. The
company has focused on
start-up
situations, and growing value in under-performing, and
undervalued radio stations and newspapers. Sheboygan County
Broadcasting Co. has owned and operated businesses in Wisconsin,
Illinois, Michigan and New York. It has specialized in creating,
building and managing news media properties and has acquired
existing companies, as well. Prior to 1972, Mr. Walton was
owner and President of Walton Co., an advertising representative
firm he founded in New York City. He has held sales and
management positions with Forbes Magazine, The Chicago Sun Times
and Gorman Publishing Co. Mr. Walton has served on the
Board of the American Red Cross, the Salvation Army, the
Sheboygan County Chamber of Commerce and the Rogers Memorial
Hospital Foundation.
James R.
Kerber
Age: 74; Director: 1999; Present Term Ends: 2007 Annual Meeting
Mr. Kerber has served as a Director of the Company since
April 1999. Mr. Kerber has been a business consultant to
the insurance industry since January 1996. He has over
40 years of experience in operating insurance companies,
predominately those associated with life and health. From 1994
to 1996, he was Chairman, President, Chief Executive Officer and
director of the 22 life and health insurance companies which
comprise the ICH Group.
3
In 1990, Mr. Kerber was a founding partner in the Life
Partners Group where he was Senior Executive Vice President and
a director. Prior to that, he was involved with operating and
consolidating over 200 life and health insurance companies for
ICH Corporation, HCA Corporation and US Life Corporation.
Richard
E. Wenninger
Age: 59; Director: 2001; Present Term Ends: 2007 Annual Meeting
Mr. Wenninger has served as a Director of the Company since
July 2001. Mr. Wenninger currently serves as Chairman of
Wenninger Company, Inc., a mechanical contracting and
engineering company. From 1976 to 2001, Mr. Wenninger
served as President and Chief Executive Officer of Wenninger
Company, Inc. He is also Secretary of Wenn Soft, Inc., a
software development, sales and service company he founded in
1997. From 1992 to 1999, Mr. Wenninger served as Secretary
of Liftco, Inc. Mr. Wenninger is a current board member of
the Boys & Girls Club of Milwaukee, a former President
and board member of the Milwaukee Athletic Club, a former board
member of the Wisconsin Psychoanalytic Foundation, a former
board member of University Lake School, the former President and
a current board member of the Plumbing and Mechanical
Contractors Association of Milwaukee, the former President and a
former board member of the Sheet Metal Contractors Association
of Milwaukee and a former board member of the Mechanical
Contractors Association of America.
Mary
Margaret Frank, Ph.D.
Age: 37; Director: 2004; Present Term Ends: 2007 Annual Meeting
Dr. Frank has served as a Director of the Company since
October 2004. Dr. Frank has served as an Assistant
Professor of Accounting at the Darden Graduate School of
Business at the University of Virginia where she has taught
financial and tax accounting since 2002. From 1999 to 2002,
Dr. Frank was an Assistant Professor at the Graduate School
of Business at the University of Chicago. During 1997,
Dr. Frank was an accounting instructor at the Kenan-Flagler
Business School at the University of North Carolina at Chapel
Hill. From 1992 to 1994, Dr. Frank served as a Senior Tax
Consultant at Arthur Andersen.
The Board of Directors recommends that shareholders vote FOR
all nominees.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
(Item 2)
The Audit Committee of the Board of Directors has appointed
McGladrey & Pullen, LLP, independent registered public
accounting firm, as auditors to audit the financial statements
of the Company for the fiscal year ending September 30,
2007. The Board of Directors proposes that the shareholders
ratify this appointment. McGladrey & Pullen, LLP
audited the Company’s financial statements for the fiscal
year ended September 30, 2006. The Company expects that
representatives of McGladrey & Pullen, LLP will be
present at the Annual Meeting, with the opportunity to make a
statement if they so desire, and will be available to respond to
appropriate questions.
In the event that ratification of the appointment of
McGladrey & Pullen, LLP as the independent registered
public accounting firm for the Company is not obtained at the
Annual Meeting, the Audit Committee of the Board of Directors
will reconsider its appointment.
Under Wisconsin law, the ratification of the appointment of the
independent registered public accounting firm requires the
number of votes cast in favor of this proposal, whether in
person or by proxy, to exceed the number of votes cast against
this proposal, assuming a quorum is present.
The Board of Directors recommends that shareholders vote FOR
the ratification of McGladrey & Pullen, LLP as the
independent registered public accounting firm for the Company
for the fiscal year ending September 30, 2007.
4
DIRECTORS
MEETINGS AND COMMITTEES
Directors
The Board of Directors currently consists of nine members: O.B.
Parrish, William R. Gargiulo, Jr., Mary Ann
Leeper, Ph.D., Stephen M. Dearholt, David R. Bethune,
Michael R. Walton, James R. Kerber, Richard E. Wenninger and
Mary Margaret Frank, Ph.D. At each annual meeting of
shareholders, directors are elected for a term of one year to
succeed those directors whose terms are expiring.
Committees
of the Board of Directors and Meeting Attendance
The Company has an Audit Committee, a Compensation Committee and
a Nominating and Corporate Governance Committee. The
Board’s Audit Committee is comprised of Dr. Frank
(Chairperson), Mr. Bethune and Mr. Kerber. The
responsibilities of the Audit Committee, in addition to such
other duties as may be specified by the Board of Directors,
include the following: (1) responsibility for hiring,
overseeing and terminating the independent registered public
accounting firm for the Company; (2) review of the timing,
scope and results of the independent registered public
accounting firm’s audit examination; (3) review of
periodic comments and recommendations by the independent
registered public accounting firm and of the Company’s
response thereto; (4) review of the Company’s balance
sheet, statement of operations and statement of cash flows; and
(5) review of the scope and adequacy of internal accounting
controls. The Board’s Audit Committee is an audit committee
for purposes of section 3(a)(58)(A) of the Securities
Exchange Act of 1934. The Audit Committee met four times during
the fiscal year ended September 30, 2006.
The Compensation Committee is comprised of Mr. Kerber
(Chairman), Mr. Walton, Mr. Dearholt, Mr. Bethune
and Mr. Wenninger. The Compensation Committee, in addition
to such other duties as may be specified by the Board of
Directors, evaluates and determines the compensation for the
Company’s directors, executive officers and key employees.
The Compensation Committee also administers the Company’s
stock incentive and other employee benefit plans. The
Compensation Committee held two meetings during the fiscal year
ended September 30, 2006.
The Nominating and Corporate Governance Committee is comprised
of Mr. Bethune (Chairman) and Mr. Walton. The
Nominating and Corporate Governance Committee, in addition to
such other duties as may be specified by the Board of Directors,
identifies and recommends to the Board of Directors nominees for
election to the Board of Directors, reviews and makes
recommendations to the Board of Directors regarding the size and
composition of the Board of Directors and the committees of the
Board of Directors and reviews and recommends to the Board of
Directors corporate governance policies and practices for the
Company. The Nominating and Corporate Governance Committee held
three meetings during the fiscal year ended September 30,
2006.
The Board of Directors held eight meetings during the
Company’s fiscal year ended September 30, 2006. All of
the incumbent directors attended at least 75% of the aggregate
of (1) the total number of meetings of the Board of
Directors and (2) the total number of meetings held by all
committees of the Board of Directors on which he or she served,
if any.
CORPORATE
GOVERNANCE MATTERS
The Company is committed to establishing and maintaining high
standards of corporate governance, which are intended to serve
the long-term interests of the Company and its shareholders. The
Board of Directors has adopted Corporate Governance Guidelines
which can be found on the Company’s website at
www.femalehealth.com.
Director
Nominations
The Company has a standing Nominating and Corporate Governance
Committee. The Company has placed a current copy of the charter
of the Nominating and Corporate Governance Committee on its
website located at www.femalehealth.com. Because the Common
Stock is traded on the Over the Counter Bulletin Board, the
Company is not subject to the listing requirements of any
securities exchange or the Nasdaq Stock Market regarding the
independence of the members of the Nominating and Corporate
Governance Committee. However, each
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member of the Nominating and Corporate Governance Committee is
independent as defined in the listing standards of the Nasdaq
Stock Market.
The Nominating and Corporate Governance Committee will consider
director nominees recommended by shareholders. A shareholder who
wishes to recommend a person or persons for consideration as a
nominee for election to the Board of Directors must send a
written notice by mail, c/o Secretary, The Female Health
Company, 515 North State Street, Suite 2225, Chicago,
Illinois 60610, that sets forth: (1) the name, address
(business and residence), date of birth and principal occupation
or employment (present and for the past five years) of each
person whom the shareholder proposes to be considered as a
nominee; (2) the number of shares of the Common Stock
beneficially owned (as defined by section 13(d) of the
Securities Exchange Act of 1934) by each such proposed
nominee; (3) any other information regarding such proposed
nominee that would be required to be disclosed in a definitive
proxy statement to shareholders prepared in connection with an
election of directors pursuant to section 14(a) of the
Securities Exchange Act of 1934; and (4) the name and
address (business and residential) of the shareholder making the
recommendation and the number of shares of the Common Stock
beneficially owned (as defined by section 13(d) of the
Securities Exchange Act of 1934) by the shareholder making
the recommendation. The Company may require any proposed nominee
to furnish additional information as may be reasonably required
to determine the qualifications of such proposed nominee to
serve as a director of the Company. Shareholder recommendations
will be considered only if received no less than 120 days
nor more than 150 days before the date of the proxy
statement sent to shareholders in connection with the previous
year’s annual meeting of shareholders.
The Nominating and Corporate Governance Committee will consider
any nominee recommended by a shareholder in accordance with the
preceding paragraph under the same criteria as any other
potential nominee. The Nominating and Corporate Governance
Committee believes that a nominee recommended for a position on
the Company’s Board of Directors must have an appropriate
mix of director characteristics, experience, diverse
perspectives and skills. For new potential board members, the
Nominating and Corporate Governance Committee will in the first
instance consider the independence of the potential member and
the appropriate size of the board and then the qualifications of
the proposed member. Qualifications of a prospective nominee
that may be considered by the Nominating and Corporate
Governance Committee include:
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personal integrity and high ethical character;
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professional excellence;
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accountability and responsiveness;
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absence of conflicts of interest;
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fresh intellectual perspectives and ideas; and
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relevant expertise and experience and the ability to offer
advice and guidance to management based on that expertise and
experience.
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Communications
between Shareholders and the Board of Directors
The Company has placed on its website located at
www.femalehealth.com a description of the procedures for
shareholders to communicate with the Board of Directors, a
description of the Company’s policy for its directors and
nominee directors to attend the Annual Meeting and the number of
directors who attended last year’s Annual Meeting.
Code of
Ethics
The Company has adopted a Code of Business Ethics that applies
to all of the Company’s employees, including the
Company’s principal executive officer, principal financial
officer and principal accounting officer. A copy of the Code of
Business Ethics is available on the Company’s corporate
website which is located at www.femalehealth.com. The Company
also intends to disclose any amendments to, or waivers from, the
Code of Business Ethics on its corporate website.
6
AUDIT
COMMITTEE MATTERS
Report of
the Audit Committee
The Audit Committee is comprised of three members of the
Company’s Board of Directors. As stated above, because the
Common Stock is traded on the Over the Counter
Bulletin Board, the Company is not subject to the listing
requirements of any securities exchange or the Nasdaq Stock
Market regarding the independence of the members of the
Company’s Audit Committee. However, each member of the
Audit Committee is independent as defined in the listing
standards of the Nasdaq Stock Market.
The duties and responsibilities of the Audit Committee are set
forth in the Audit Committee Charter, which was amended by the
Board of Directors in February 2004 and which is attached as
Annex A to this Proxy Statement. The Company has placed a
current copy of the charter of the Audit Committee on its
website located at www.femalehealth.com.
The Audit Committee has:
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reviewed and discussed the Company’s audited financial
statements for the fiscal year ended September 30, 2006,
with the Company’s management and with the Company’s
independent registered public accounting firm;
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discussed with the Company’s independent registered public
accounting firm the matters required to be discussed by SAS 61
(Codification for Statements on Auditing Standards); and
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received and discussed with the Company’s independent
registered public accounting firm the written disclosures and
the letter from the Company’s independent registered public
accounting firm required by Independence Standards Board
Statement No. 1 (Independence discussions with Audit
Committees) and the independent registered public accounting
firm’s independence.
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Based on such review and discussions with management and the
independent registered public accounting firm, the Audit
Committee recommended to the Board of Directors that the audited
financial statements be included in the Company’s Annual
Report on
Form 10-KSB
for the fiscal year ended September 30, 2006, for filing
with the Securities and Exchange Commission (the
“SEC”).
AUDIT COMMITTEE:
Mary Margaret Frank (Chairperson)
David R. Bethune
James R. Kerber
Fees of
Independent Registered Public Accounting Firm
The following table summarizes the fees the Company paid for
audit and nonaudit services rendered by the Company’s
independent registered public accounting firm,
McGladrey & Pullen, LLP, during fiscal years 2006 and
2005:
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Service Type
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Fiscal 2006
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Fiscal 2005
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Audit Fees(1)
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$
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226,311
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$
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189,101
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Audit-Related Fees(2)
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17,365
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205,094
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Tax Fees(3)
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26,066
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20,723
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All Other Fees
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—
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—
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Total Fees Billed
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$
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269,742
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$
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414,918
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7
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(1) |
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Consists of fees for professional services rendered in
connection with the audit of the Company’s financial
statements for the fiscal years ended September 30, 2006
and September 30, 2005; the reviews of the financial
statements included in each of the Company’s quarterly
reports on Form
10-QSB
during those fiscal years; and consents and assistance with
documents filed by the Company with the SEC. |
| |
|
(2) |
|
Consists of activities in support of the Company’s
Sarbanes-Oxley Section 404 implementation project and costs
incurred for consultation on various accounting matters in
support of the Company’s financial statements. |
| |
|
(3) |
|
For the fiscal years ended September 30, 2006 and
September 30, 2005, consists of fees for professional
services rendered in connection with preparation of federal and
state income tax returns, including foreign tax filings, and
assistance with foreign tax structuring. |
The Audit Committee of the Board of Directors of the Company
considered that the provision of the services and the payment of
the fees described above are compatible with maintaining the
independence of McGladrey & Pullen, LLP.
The Audit Committee is responsible for reviewing and
pre-approving any non-audit services to be performed by the
Company’s independent registered public accounting firm.
The Audit Committee has delegated its pre-approval authority to
the Chairperson of the Audit Committee to act between meetings
of the Audit Committee. Any pre-approval given by the
Chairperson of the Audit Committee pursuant to this delegation
is presented to the full Audit Committee at its next regularly
scheduled meeting. The Audit Committee or Chairperson of the
Audit Committee reviews and, if appropriate, approves non-audit
service engagements, taking into account the proposed scope of
the nonaudit services, the proposed fees for the nonaudit
services, whether the nonaudit services are permissible under
applicable law or regulation and the likely impact of the
nonaudit services on the independence of the independent
registered public accounting firm.
Each new engagement of the Company’s independent registered
public accounting firm to perform nonaudit services set forth in
the table above has been approved in advance by the Audit
Committee or the Chairperson of the Audit Committee pursuant to
the foregoing procedures.
DIRECTOR
COMPENSATION AND BENEFITS
Directors who are officers of the Company do not receive
compensation for serving in such capacity. Individual directors
who are not officers of the Company receive $1,000 for
attendance in person at each meeting of the Board of Directors
or meeting of a committee of which he or she is a member. In
addition, each director who is not an employee of the Company
receives an automatic grant of options to purchase
30,000 shares of Common Stock under the Company’s
Outside Director Stock Option Plan. Stephen M. Dearholt, Richard
E. Wenninger, Mary Margaret Frank, Ph.D., James R.
Kerber, David R. Bethune and Michael R. Walton were awarded a
post-election grant of 30,000 options each on October 12,
2006. All of the options awarded on October 12, 2006 have
an exercise price of $1.27 per share, vest pro rata over a
36-month
period commencing November 12, 2006 and ending on
October 12, 2009 and expire on October 12, 2016.
EXECUTIVE
OFFICERS
The names of, and certain information regarding, executive
officers and certain key employees of the Company who are not
directors of the Company, are set forth below.
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|
|
Name
|
|
Age
|
|
Position
|
|
|
|
Donna Felch
|
|
|
59
|
|
|
Vice President and Chief Financial
Officer
|
|
Michael Pope
|
|
|
49
|
|
|
Vice President and General Manager
of The Female Health Company (UK) Plc.
|
|
Robert R. Zic
|
|
|
43
|
|
|
Vice President — Finance
|
|
Jack Weissman
|
|
|
59
|
|
|
Vice President — Sales
|
Donna
Felch
Age: 59; Vice President and Chief Financial Officer
8
Ms. Felch has served as Vice President and Chief Financial
Officer of the Company since February 2006. Prior to joining the
Company, Ms. Felch was Vice President and Treasurer of
American Pharmaceutical Partners Inc., a pharmaceutical company
that develops, manufactures and markets injectable
pharmaceutical products, from November 2002 until June 2005. In
these positions, she directed the treasury, tax, financial
planning and analysis, credit and collections and risk
management functions. Ms. Felch joined American
Pharmaceutical Partners Inc. in 1998 and during such time held
the positions of Senior Director of Corporate Accounting and
Director in General Accounting and Tax. In these roles, her
responsibilities included internal and external financial
reporting, tax, treasury, financing planning, credit and risk
management. Previously, Ms. Felch served as Director of
Corporate Tax with Fijisawa USA, a subsidiary of a major
Japanese pharaceutical company. Ms. Felch had formerly
worked as a Tax Manager for LyphoMed, Inc., a generic
pharmaceutical manufacturer.
Michael
Pope
Age: 49; Vice President, General Manager — The Female
Health Company (UK) Plc.
Mr. Pope has served as Vice President of the Company since
1996 and as General Manager of The Female Health Company (UK)
Plc. (formerly Chartex International, Plc.) since the
Company’s 1996 acquisition of Chartex. Mr. Pope has
also served as a Director of The Female Health Company, Ltd.
(formerly Chartex Resources Limited) and The Female Health
Company (UK) Plc. since 1995. From 1990 until 1996,
Mr. Pope was Director of Technical Operations for Chartex
with responsibility for manufacturing, engineering, process
development and quality assurance. Mr. Pope was responsible
for the development of the high speed proprietary manufacturing
technology for the female condom and securing the necessary
approvals of the manufacturing process by regulatory
organizations, including the FDA. Mr. Pope was also
instrumental in developing and securing Chartex’s
relationship with its Japanese marketing partner. Prior to
joining Chartex, from 1986 to 1990, Mr. Pope was Production
Manager and Technical Manager for Franklin Medical, a
manufacturer of disposable medical devices. From 1982 to 1986,
Mr. Pope was Site Manager, Engineering and Production
Manager, Development Manager and Silicon Manager for Warne
Surgical Products.
Robert R.
Zic
Age: 43; Vice President — Finance.
Mr. Zic has served as Vice President — Finance of
the Company since February 2006. Mr. Zic served as
Principal Accounting Officer from March 1999 until February
2006. From 1998 to 1999, Mr. Zic held the dual positions of
Acting Controller and Acting Chief Financial Officer at
Ladbroke’s Pacific Racing Association division. From 1995
to 1998, Mr. Zic served as the Chief Accounting Manager and
Assistant Controller at Argonaut Insurance Company. In this
capacity, he was responsible for the financial and accounting
operations of Argonaut and its four subsidiaries. From 1990 to
1994, he was the Assistant Controller of CalFarm Insurance
Company, where he was responsible for external reporting duties.
From 1988 to 1990, Mr. Zic was a Senior Accountant
responsible for the statutory-based financials of Allstate
Insurance Company. Mr. Zic began his career in 1986 as an
auditor with Arthur Andersen & Co.
Jack
Weissman
Age: 59; Vice President — Sales
Mr. Weissman has served as Vice President — Sales
since June 1995. From 1992 to 1994, Mr. Weissman was Vice
President-Sales for Capitol Spouts, Inc., a manufacturer of
pouring spouts for gable paper cartons. From 1989 to 1992, he
acted as General Manager-HTV Group, an investment group involved
in the development of retail stores. From 1985 to 1989,
Mr. Weissman was Director — Retail Business
Development for The NutraSweet Company, a Searle subsidiary.
Mr. Weissman joined Searle’s Consumer Products Group
in 1979 and held positions of increasing responsibility,
including National Account and Military Sales Manager. Prior to
Searle, Mr. Weissman worked in the consumer products field
as account manager and territory manager for Norcliff Thayer and
Whitehall Laboratories.
9
EXECUTIVE
COMPENSATION
The table below provides information for each of the
Company’s last three fiscal years regarding all annual,
long-term and other compensation paid by the Company to its
Chief Executive Officer, the other two executive officers of the
Company whose total annual salary and bonus exceeded $100,000
for services rendered during the fiscal year ended
September 30, 2006 and the other former executive officer
whose total annual salary and bonus exceeded such amount during
fiscal 2006. The individuals listed in this table are referred
to elsewhere in this proxy statement as the “named
executive officers.”
Summary
Compensation Table
| |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation Awards
|
|
|
|
|
Annual Compensation
|
|
|
Restricted
|
|
|
Securities
|
|
|
|
|
Fiscal
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Underlying
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary($)
|
|
|
Bonus($)
|
|
|
Awards($)
|
|
|
Options(#)
|
|
|
|
|
O.B. Parrish,
|
|
|
2006
|
|
|
|
110,833
|
|
|
|
—
|
|
|
|
538,000
|
(1)(2)
|
|
|
—
|
|
|
Chairman, Chief Executive Officer
and
|
|
|
2005
|
|
|
|
90,000
|
|
|
|
—
|
|
|
|
75,000
|
(3)
|
|
|
—
|
|
|
Acting President
|
|
|
2004
|
|
|
|
90,000
|
|
|
|
—
|
|
|
|
117,500
|
(4)
|
|
|
464,000
|
(5)
|
|
Mary Ann Leeper, Ph. D.,
|
|
|
2006
|
|
|
|
204,167
|
|
|
|
—
|
|
|
|
51,000
|
(1)
|
|
|
—
|
|
|
Senior Strategic Adviser(6)
|
|
|
2005
|
|
|
|
250,000
|
|
|
|
—
|
|
|
|
37,500
|
(3)
|
|
|
—
|
|
|
|
|
|
2004
|
|
|
|
250,000
|
|
|
|
—
|
|
|
|
47,000
|
(4)
|
|
|
790,000
|
(5)
|
|
Michael Pope,
|
|
|
2006
|
|
|
|
168,811
|
|
|
|
—
|
|
|
|
106,500
|
(1)(7)
|
|
|
—
|
|
|
Vice President and General Manager
of the
|
|
|
2005
|
|
|
|
160,343
|
|
|
|
—
|
|
|
|
7,500
|
(3)
|
|
|
—
|
|
|
Female Health Company (UK) Plc.(8)
|
|
|
2004
|
|
|
|
155,059
|
|
|
|
—
|
|
|
|
11,750
|
(4)
|
|
|
370,000
|
(5)
|
|
Donna Felch,
|
|
|
2006
|
|
|
|
108,202
|
|
|
|
25,050
|
(10)
|
|
|
81,000
|
(7)
|
|
|
—
|
|
|
Chief Financial Officer and Vice
President(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
On October 3, 2005, Mr. Parrish, Dr. Leeper and
Mr. Pope were issued 50,000, 30,000 and 15,000 shares,
respectively, of restricted Common Stock by the Company’s
Board of Directors. The shares had a one year restriction and
became vested on October 1, 2006. The closing price of the
Company’s Common Stock on October 3, 2005 was
$1.70 per share. As of September 30, 2006, the value
of Mr. Parrish’s restricted stock was $66,500, the
value of Dr. Leeper’s restricted stock was $39,900 and
the value of Mr. Pope’s restricted stock was $19,950
based on a value of $1.33 per share, the closing price of
the Company’s Common Stock on that date. The shares of
restricted stock have all the rights of the Company’s
Common Stock, including voting and dividend rights. |
| |
|
(2) |
|
On May 1, 2006, Mr. Parrish was issued
300,000 shares of restricted Common Stock by the
Company’s Board of Directors. The shares vest pro rata over
a two-year period such that 150,000 shares vest on each of
May 1, 2007 and May 1, 2008. None of the shares were
vested on October 1, 2006. The closing price of the
Company’s Common Stock on May 1, 2006 was $1.51 per
share. As of September 30, 2006, the value of
Mr. Parrish’s restricted stock was $399,000 based on a
value of $1.33 per share, the closing price of the
Company’s Common Stock on that date. The shares of
restricted stock have all the rights of the Company’s
Common Stock, including voting and dividend rights. |
| |
|
(3) |
|
On October 1, 2004, Mr. Parrish, Dr. Leeper and
Mr. Pope were issued 50,000, 25,000 and 5,000 shares,
respectively, of restricted Common Stock by the Company’s
Board of Directors. The shares had a one year restriction and
became vested on October 1, 2005. The closing price of the
Company’s Common Stock on October 1, 2004 was
$1.50 per share. As of September 30, 2006, the value
of Mr. Parrish’s restricted stock was $66,500, the
value of Dr. Leeper’s restricted stock was $33,250 and
the value of Mr. Pope’s restricted stock was $6,650
based on a value of $1.33 per share, the closing price of
the Company’s Common Stock on that date. The shares of
restricted stock have all the rights of the Company’s
Common Stock, including voting and dividend rights. |
| |
|
(4) |
|
On October 1, 2003, Mr. Parrish, Dr. Leeper, and
Mr. Pope were issued 50,000, 20,000 and 5,000 shares,
respectively, of restricted Common Stock by the Company’s
Board of Directors. The shares had a one year restriction and
became vested on October 1, 2004. The closing price of the
Company’s Common Stock on |
10
|
|
|
|
|
|
October 1, 2003 was $2.35 per share. As of
September 30, 2006, the value of Mr. Parrish’s
restricted stock was $66,500, the value of
Dr. Leeper’s restricted stock was $26,600, and the
value of Mr. Pope’s restricted stock was $6,650 based
on a value of $1.33 per share, the closing price of the
Company’s Common Stock on that date. The shares of
restricted stock have all the rights of the Company’s
Common Stock, including voting and dividend rights. |
|
|
|
|
(5) |
|
On April 22, 2003, Mr. Parrish, Dr. Leeper and
Mr. Pope were issued options to purchase shares of the
Company’s Common Stock as part of an exchange for the
cancellation of previously issued Common Stock options, which
cancellation occurred on September 26, 2002. The Common
Stock options have an exercise price of $1.40 per share,
which was the closing stock price of the Company’s Common
Stock on April 22, 2003. The options vested pro rata (one
thirty-sixth) on the first of each month for 36 months
following the date of the grant, commencing on May 1, 2003
and ending on April 1, 2006. |
| |
|
(6) |
|
Dr. Leeper ceased to be an executive officer of the Company
on May 1, 2006. |
| |
|
(7) |
|
On June 30, 2006, Mr. Pope and Ms. Felch were
each issued 60,000 shares of restricted Common Stock by the
Company’s Board of Directors. The shares vest pro rata over
a two-year period such that 30,000 shares vest on each of
June 30, 2007 and June 30, 2008. None of the shares
were vested on October 1, 2006. The closing price of the
Company’s Common Stock on June 30, 2006 was
$1.35 per share. As of September 30, 2006, the value
of both Mr. Pope and Ms. Felch’s restricted stock
was $79,800 based on a value of $1.33 per share, the
closing price of the Company’s Common Stock on that date.
The shares of restricted stock have all the rights of the
Company’s Common Stock, including voting and dividend
rights. |
| |
|
(8) |
|
Mr. Pope’s salary is paid in U.K. pounds. Amounts
shown for Mr. Pope’s salary are based on the 12- month
average exchange rate for each year, which was 1.80
U.S. dollars per U.K. pound in fiscal 2006, was
1.85 U.S. dollars per U.K. pound in fiscal 2005 and
1.79 U.S. dollars per U.K. pound in fiscal 2004. |
| |
|
(9) |
|
Ms. Felch became an executive officer of the Company with
her appointment as Chief Financial Officer and Vice President in
February 2006. |
| |
|
(10) |
|
On February 6, 2006, Ms. Felch was issued
15,000 shares of Common Stock by the Company. The closing
price of the Company’s Common Stock on February 6,
2006 was $1.67 per share. |
Stock
Options
No stock options were granted to the named executive officers of
the Company during the fiscal year ended September 30, 2006.
The following table provides information regarding the value of
unexercised options held by the named executive officers at
September 30, 2006. No named executive officer exercised
any option during the fiscal year ended September 30, 2006.
AGGREGATED
FISCAL YEAR-END OPTION VALUES
| |
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
Value of Unexercised
|
|
|
|
|
Underlying Unexercised
|
|
|
In-the-Money
Options at
|
|
|
|
|
Options at Fiscal Year End(#)
|
|
|
Fiscal Year End($)
|
|
|
Name
|
|
Exercisable/Unexercisable
|
|
|
Exercisable/Unexercisable(1)
|
|
|
|
|
O.B. Parrish
|
|
|
464,000 / 0
|
|
|
|
0 / 0
|
|
|
Mary Ann Leeper
|
|
|
790,000 / 0
|
|
|
|
0 / 0
|
|
|
Michael Pope
|
|
|
370,000 / 0
|
|
|
|
0 / 0
|
|
|
Donna Felch
|
|
|
0 / 0
|
|
|
|
0 / 0
|
|
|
|
|
|
(1) |
|
Calculated based upon a closing sale price of $1.33 on
September 30, 2006. |
Employment
and Change of Control Agreements
On January 20, 2006, the Company entered into an employment
agreement with Dr. Leeper, the Company’s Senior
Strategic Adviser and former President and Chief Operating
Officer of the Company, and a member of the Company’s Board
of Directors. The employment agreement was effective as of
May 1, 2006. The employment
11
agreement terminated all previous agreements between the parties
relating to Dr. Leeper’s employment, including the
employment agreement between the Company and Dr. Leeper
effective as of May 1, 1994. Pursuant to the terms of the
employment agreement, Dr. Leeper will serve as a strategic
adviser to the Company. The employment agreement originally
expired on September 30, 2006, but was extended for a
period of 90 days. Pursuant to the employment agreement,
Dr. Leeper originally received an annual base salary of
$150,000. As part of the extension of the employment agreement,
Dr. Leeper temporarily assumed some additional duties and
her base salary was increased to $200,000. On February 8,
2007, the Company’s Board of Directors further extended
Dr. Leeper’s employment for a period of ninety days
commencing on February 8, 2007 in accordance with the same
terms as previously extended. The employment agreement may be
further extended upon the mutual agreement of the Company and
Dr. Leeper. Under the employment agreement, Dr. Leeper
is entitled to participate in the Company’s bonus plans,
stock incentive plan and other employee benefit plans.
Additionally, under the employment agreement, Dr. Leeper is
eligible to participate in any medical, health, dental,
disability and life insurance policy that is in effect for the
Company’s other senior management. Pursuant to the
employment agreement, Dr. Leeper has agreed not to compete
with the Company during employment and for a period of two years
following termination of employment (six months if employment is
terminated by the Company after a “change of control”)
and has agreed to maintain the confidentiality of the
Company’s proprietary information and trade secrets during
the term of employment and for three years thereafter. The
employment agreement provides that if Dr. Leeper’s
employment is terminated by the Company without
“cause” or by Dr. Leeper for “good
reason,” Dr. Leeper will be entitled to a severance
payment of $125,000 and a payment of $50,000 in consideration of
the noncompetition and confidentiality covenants, except that if
such termination occurs at any time after or in anticipation of
a “change of control” with respect to the Company,
Dr. Leeper will be entitled solely to those amounts to
which she is entitled under the Amended and Restated Change of
Control Agreement dated October 1, 2005 by and between the
Company and Dr. Leeper. If the termination of
Dr. Leeper’s employment occurs as a result of the
death or disability of Dr. Leeper, then she shall be
entitled to receive the greater of (a) her base salary or
(b) the remaining amounts due her under the terms of the
employment agreement.
Effective February 2, 2006, the Company entered into a
letter agreement with Donna Felch, the Company’s Chief
Financial Officer and Vice President regarding the terms of her
employment with the Company. Pursuant to the terms of the letter
agreement, Ms. Felch will serve as the Company’s Vice
President and Chief Financial Officer and will be responsible
for the Company’s financial reporting, financial analysis
and related filings with the Securities and Exchange Commission.
Ms. Felch will receive an annual base salary of $165,000.
Additionally, Ms. Felch is entitled to participate in the
Company’s bonus plans, stock incentive plan and other
employee benefit plans. As a hiring bonus, Ms. Felch
received a grant of 15,000 shares of common stock.
Additionally, the Company agreed to grant Ms. Felch an
additional 15,000 shares of common stock on the one year
anniversary date of her hire date if she remained employed by
the Company on such date. Ms. Felch is eligible to
participate in any medical, health, dental, disability and life
insurance policy that is in effect for the Company’s other
employees who are located in the United States.
Effective October 1, 2005, the Company entered into Amended
and Restated Change of Control Agreements with each of O.B.
Parrish, its Chairman and Chief Executive Officer, Mary Ann
Leeper, its Senior Strategic Adviser and a director, and Michael
Pope, its Vice President, and effective February 8, 2006,
the Company entered into a change of control agreement with
Donna Felch, its Chief Financial Officer and Vice President.
These agreements essentially act as springing employment
agreements which provide that, upon a change of control, as
defined in the agreement, the Company will continue to employ
the executive for a period of three years in the same capacities
and with the same compensation and benefits as the executive was
receiving prior to the change of control, in each case as
specified in the agreements. If the executive is terminated
without cause or if he or she quits for good reason, in each
case as defined in the agreements, after the change of control,
the executive is generally entitled to receive a severance
payment from the Company equal to the amount of compensation
remaining to be paid to the executive under the agreement for
the balance of the three-year term.
SECURITY
OWNERSHIP
The following table sets forth information regarding beneficial
ownership of the Company’s Common Stock as of
February 12, 2007 with respect to (1) each person
known to the Company to own beneficially more than 5% of the
12
Company’s Common Stock, (2) each named executive
officer and each director of the Company and (3) all
directors and executive officers as a group.
The Company has determined beneficial ownership in accordance
with the rules of the SEC. Unless otherwise indicated, the
persons and entities included in the table have sole voting and
investment power with respect to all shares beneficially owned,
except to the extent authority is shared by spouses under
applicable law. Shares of the Company’s Common Stock
subject to options or warrants that are either currently
exercisable or exercisable within 60 days of
February 12, 2007 are treated as outstanding and
beneficially owned by the holder for the purpose of computing
the percentage ownership of the holder. However, these shares
are not treated as outstanding for the purpose of computing the
percentage ownership of any other person. As of
February 12, 2007, the Company had outstanding
24,513,149 shares of Common Stock.
| |
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially Owned
|
|
|
Name and Address of Beneficial Owner(1)
|
|
Number
|
|
|
Percent
|
|
|
|
|
O.B. Parrish(2)
|
|
|
1,421,901
|
|
|
|
5.7
|
%
|
|
William R. Gargiulo, Jr.(3)
|
|
|
137,500
|
|
|
|
*
|
|
|
Mary Ann Leeper, Ph.D.(4)
|
|
|
949,500
|
|
|
|
3.8
|
%
|
|
Stephen M. Dearholt(5)
|
|
|
3,964,700
|
|
|
|
15.1
|
%
|
|
David R. Bethune(6)
|
|
|
171,667
|
|
|
|
*
|
|
|
James R. Kerber(7)
|
|
|
575,377
|
|
|
|
2.3
|
%
|
|
Michael R. Walton(8)
|
|
|
827,223
|
|
|
|
3.4
|
%
|
|
Richard E. Wenninger(9)
|
|
|
3,057,918
|
|
|
|
12.4
|
%
|
|
Mary Margaret Frank, Ph.D.(10)
|
|
|
29,167
|
|
|
|
*
|
|
|
Michael Pope(11)
|
|
|
454,245
|
|
|
|
1.8
|
%
|
|
Donna Felch(12)
|
|
|
90,000
|
|
|
|
*
|
|
|
Gary Benson(13)
|
|
|
1,963,503
|
|
|
|
7.5
|
%
|
|
All directors, nominees and
executive officers, as a group
(12 persons)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(14)
|
|
|
11,777,948
|
|
|
|
41.0
|
%
|
|
|
|
|
* |
|
Less than 1 percent. |
| |
|
(1) |
|
Unless otherwise indicated, the address of each beneficial owner
is 515 North State Street, Suite 2225, Chicago, IL 60610;
the address of Mr. Dearholt is 36365 Trail Ridge Road,
Steamboat Springs, CO 80488; the address of Mr. Kerber is
8547 East Arapahoe Road, #J217, Englewood, CO 80112; the address
of Mr. Walton is 1626 North Prospect Avenue, No. 2310,
Milwaukee, WI 53202; the address of Mr. Wenninger is 14000
Gypsum Creek Road, Gypsum, CO 81637; the address of
Dr. Frank is P.O. Box 6550, Charlottesville,
VA 22906 and the address of Mr. Benson is Regency
Athletic Club, 1300 Nicollet Mall, Suite 600, Minneapolis,
MN 55403. |
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|
(2) |
|
Includes 233,501 shares owned by Phoenix of Illinois. Under
the rules of the SEC, Mr. Parrish may be deemed to have
voting and dispositive power as to such shares since
Mr. Parrish is an officer, director and the majority
shareholder of Phoenix of Illinois. Also includes
462,900 shares of Common Stock owned directly by
Mr. Parrish, 225,000 shares of Common Stock owned by
the Geneva O. Parrish 1996 Living Trust of which
Mr. Parrish is beneficiary and for which Mr. Parrish
may be deemed to share voting and investment power,
464,000 shares of Common Stock subject to stock options
held by Mr. Parrish and 36,500 shares under Common
Stock purchase warrants issued to Mr. Parrish. |
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|
(3) |
|
Consists of 37,500 shares of Common Stock owned directly by
Mr. Gargiulo and 100,000 shares of Common Stock
subject to stock options held by Mr. Gargiulo. |
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(4) |
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Consists of 159,500 shares of Common Stock owned directly
by Dr. Leeper and 790,000 shares of Common Stock
subject to stock options held by Dr. Leeper. |
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(5) |
|
Includes 1,403,113 shares owned directly by
Mr. Dearholt. Also includes 69,500 shares held by the
Dearholt, Inc. Profit Sharing Plan, 26,500 shares held in a
self-directed IRA, 275,820 shares held by the Mary C.
Dearholt Trust of which Mr. Dearholt, a sibling and his
mother are trustees, and 418,100 shares held by the |
13
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|
|
|
|
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John W. Dearholt Trust of which Mr. Dearholt is a
co-trustee with a sibling. Mr. Dearholt shares the power to
vote and dispose of 693,920 shares of Common Stock held by
the Mary C. Dearholt Trust and the John W. Dearholt Trust.
Mr. Dearholt has sole power to vote and dispose of the
remaining shares of Common Stock. Also includes
139,167 shares of Common Stock subject to stock options and
Common Stock purchase warrants for 1,632,500 shares of
Common Stock. |
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(6) |
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Consists of 32,500 shares of Common Stock owned directly by
Mr. Bethune and 139,167 shares of Common Stock subject
to stock options held by Mr. Bethune. |
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(7) |
|
Includes 366,210 shares of Common Stock owned directly by
Mr. Kerber and 109,167 shares of Common Stock subject
to stock options held by Mr. Kerber. Also includes
100,000 shares subject to exercise of Common Stock purchase
warrants. |
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(8) |
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Consists of (a) 440,992 shares of Common Stock owned
directly by Mr. Walton, (b) 79,167 shares of
Common Stock subject to stock options held by Mr. Walton,
(c) 72,106 shares of Common Stock held by a trust of
which Mr. Walton is trustee and
(d) 234,958 shares of Common Stock held by Sheboygan
County Broadcasting Co., Inc. (“Sheboygan”). Under the
rules of the SEC, Mr. Walton may be deemed to have voting
and dispositive power as to the shares held by Sheboygan since
Mr. Walton is an officer, director and shareholder of
Sheboygan. |
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(9) |
|
Consists of (a) 2,653,751 shares of Common Stock owned
directly by Mr. Wenninger, (b) 5,000 shares of
Common Stock held by Mr. Wenninger’s spouse
(Mr. Wenninger disclaims beneficial ownership of the shares
held by his spouse), (c) 250,000 shares of Common
Stock held by a trust of which Mr. Wenninger is trustee,
(d) 29,167 shares of Common Stock subject to stock
options held by Mr. Wenninger and (e) Common Stock
purchase warrants for 120,000 shares of Common Stock held
by Mr. Wenninger. |
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|
(10) |
|
Consists of 29,167 shares of Common Stock subject to stock
options held by Dr. Frank. |
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|
(11) |
|
Consists of 84,245 shares of Common Stock owned directly by
Mr. Pope and 370,000 shares of Common Stock subject to
stock options held by Mr. Pope. |
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(12) |
|
Consists of 90,000 shares of Common Stock owned directly by
Ms. Felch. |
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|
(13) |
|
Consists of 431,957 shares of Common Stock and warrants to
purchase 1,500,000 shares of Common Stock owned by Goben
Enterprises, LP, a limited partnership of which Mr. Benson
is a general partner. Also includes 31,546 shares of
preferred stock owned by Goben Enterprises, LP. |
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(14) |
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Also includes 29,750 shares of Common Stock owned directly
by Mr. Zic and 69,000 shares of Common Stock subject
to stock options held by Mr. Zic. |
The above beneficial ownership information is based on
information furnished by the specified person and is determined
in accordance with
Rule 13d-3
under the Securities Exchange Act of 1934, as amended, as
required for purposes of this Proxy Statement. This information
should not be construed as an admission of beneficial ownership
for other purposes.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Company’s officers and directors, and persons
who own more than 10% of a registered class of the
Company’s equity securities, to file reports of ownership
and changes in ownership with the SEC on Forms 3, 4 and 5.
Officers, directors and greater than 10% stockholders are
required by SEC regulation to furnish the Company with copies of
all Forms 3, 4 and 5 they file.
Based solely on a review of the copies of such forms furnished
to the Company, or written representations that no Forms 5
were required, the Company believes that during fiscal 2006 all
section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were
complied with, except that Mr. Pope filed a Form 4 on
December 13, 2006 reporting a transaction occurring on
October 1, 2006 and a Form 4 on October 6, 2006
reporting transactions occurring September 28, 2006 and
September 29, 2006; Mr. Zic filed a Form 4 on
December 13, 2006 reporting a transaction occurring on
October 1, 2006 and a Form 4 on July 5, 2006
reporting a transaction occurring on June 3, 2006;
Mr. Parrish filed a Form 4 on May 8, 2006
reporting a transaction occurring on May 1, 2006;
Mr. Kerber filed a Form 4 on April 19, 2006
reporting a transaction occurring on June 19, 2000; and
Ms. Felch filed a Form 4 on February 14, 2007
reporting a transaction occurring on February 6, 2007.
14
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Between September 2004 and January 2005, the Company conducted a
program to induce the holders of the Company’s outstanding
Common Stock purchase warrants to exercise their warrants.
Pursuant to this program, the Company offered an incentive to
such holders providing for issuance of (1) shares of the
Company’s Common Stock equal to 10% of the aggregate number
of Common Stock purchase warrants exercised or (2) new
Common Stock purchase warrants equal to 20% of the aggregate
number of outstanding warrants exercised containing an exercise
price per share equal to the closing price of the Company’s
Common Stock as reported on the OTC Bulletin Board on the
date the holder committed to exercise the outstanding warrants.
Under this incentive program, one investor exercised 500,000
warrants as of September 30, 2004 and received
550,000 shares of Common Stock which includes 50,000
incentive shares. Between October 2004 and January 2005 four
investors opted to exercise 1,000,000 warrants and receive
1,100,000 shares of Common Stock which includes 100,000
incentive shares and two investors opted to exercise 1,200,000
warrants and received 1,200,000 shares of Common Stock and
240,000 incentive warrants with an exercise price in each case
of $1.50 per share and an expiration date of
November 23, 2007. Among the seven persons participating in
this program were three of the Company’s directors
(Stephen M. Dearholt, Richard E. Wenninger and O.B.
Parrish). The Company received aggregate proceeds of
$2.5 million from the exercise of the outstanding warrants.
It has been and currently is the policy of the Company that
transactions between the Company and its officers, directors,
principal shareholders or affiliates are to be on terms no less
favorable to the Company than could be obtained from
unaffiliated parties. The Company intends that any future
transactions between the Company and its officers, directors,
principal shareholders or affiliates will be approved by a
majority of the directors who are not financially interested in
the transaction.
PROPOSALS FOR
2007 ANNUAL MEETING
Any shareholder who desires to submit a proposal for inclusion
in the Company’s 2008 Proxy Statement in accordance with
Rule 14a-8
must submit the proposal in writing to O.B. Parrish, Chief
Executive Officer, The Female Health Company, 515 North State
Street, Suite 2225, Chicago, Illinois 60610. The Company
must receive a proposal by October 23, 2007 (120 days
prior to the anniversary of the mailing date of this Proxy
Statement) in order to consider it for inclusion in the
Company’s 2008 Proxy Statement.
Proposals submitted other than pursuant to
Rule 14a-8
that are not intended for inclusion in the Company’s 2008
Proxy Statement will be considered untimely if received after
January 6, 2008. If a shareholder gives notice of such a
proposal after this deadline, SEC rules allow the Company’s
proxy holders discretionary voting authority to vote against the
shareholder proposal to the extent it is properly presented for
consideration at the 2008 Annual Meeting of Shareholders.
ANNUAL
REPORT
The Company is required to file an Annual Report, called a
Form 10-KSB,
with the SEC. A copy of the Annual Report on
Form 10-KSB
for the year ended September 30, 2006 will be provided
without charge on written request of any shareholder whose proxy
is being solicited by the Board of Directors. The written
request should be directed to: Corporate Secretary, The Female
Health Company, 515 North State Street, Suite 2225,
Chicago, Illinois 60610.
EXPENSES
OF SOLICITATION
The cost of this solicitation of proxies will be paid by the
Company. It is anticipated that the proxies will be solicited
only by mail, except that solicitation personally or by
telephone may also be made by the Company’s regular
employees who will receive no additional compensation for their
services in connection with the solicitation. Arrangements will
be made with brokerage houses and other custodians, nominees and
fiduciaries
15
for the forwarding of solicitation material and annual reports
to beneficial owners of stock held by such persons. The Company
will reimburse such parties for their expenses in so doing.
By Order of the Board of Directors,
William R. Gargiulo, Jr.,
Secretary
Chicago, Illinois
February 20, 2007
16
ANNEX A
CHARTER FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF THE FEMALE HEALTH COMPANY
(as amended as of February 27, 2004)
Purpose:
The Audit Committee is appointed by the Board of Directors to
monitor the corporate financial reporting and the internal and
external audits of The Female Health Company (the
“Company”). The Audit Committee is directly
responsible for the appointment, compensation and oversight of
the work of the Company’s independent auditors, including
the resolution of disagreements between management and the
auditor regarding financial reporting. The Audit Committee shall
assist the Board of Directors with oversight of (i) the
integrity of the Company’s financial statements, the
accounting and financial reporting process of the Company and
the audits of the financial statements of the Company;
(ii) the Company’s compliance with legal and
regulatory requirements; (iii) the independent
auditor’s qualifications and independence and (iv) the
performance of the Company’s internal audit function and
independent auditors.
In addition, the Audit Committee will undertake those specific
duties and responsibilities listed below and such other duties
as the Board of Directors from time to time prescribe.
The function of the Audit Committee is oversight. The management
of the Company is responsible for the preparation, presentation
and integrity of the Company’s financial statements.
Management is responsible for maintaining appropriate accounting
and financial reporting principles and policies and internal
controls and procedures designed to assure compliance with
accounting standards and applicable laws and regulations. The
independent auditors are responsible for planning and carrying
out a proper audit and reviews, including reviews of the
Company’s quarterly financial statements prior to the
filing of each quarterly report on
Form 10-Q,
and other procedures. In fulfilling their responsibilities under
this charter, it is recognized that members of the Audit
Committee are not full-time employees of the Company and are
not, and do not represent themselves to be, accountants or
auditors by profession. As such, it is not the duty or
responsibility of the Audit Committee or its members to conduct
auditing or accounting reviews or procedures, and each member of
the Audit Committee shall be entitled to rely on (a) the
integrity of those persons and organizations within and outside
the Company from whom it receives information and (b) the
accuracy of the financial and other information provided to the
Audit Committee by such persons or organizations.
The independent auditors for the Company are ultimately
accountable to the Audit Committee and the Board of Directors.
The Audit Committee has the direct authority and responsibility
to select, evaluate and, where appropriate, replace the
independent auditors (or to nominate the independent auditors to
be proposed for shareholder approval in the proxy statement).
The Company shall provide the Audit Committee with appropriate
funding for payment of compensation, fees and expenses to the
independent auditors and to counsel or other advisors that the
Audit Committee may deem appropriate to engage.
Membership:
The Audit Committee will consist of at least three members of
the Board, each of whom shall be “independent
director” within the rules of the Nasdaq Stock Market,
shall not be an officer or employee of the Company or its
subsidiaries and shall not have any relationship which, in the
opinion of the Board of Directors, would interfere with the
exercise of independent judgment in carrying out the
responsibilities of a director. One member of the Audit
Committee shall be an “audit committee financial
expert” as may be defined by the rules of the Securities
and Exchange Commission.
A-1
Responsibilities:
The responsibilities of the Audit Committee shall include:
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1.
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Reviewing on a continuing basis the adequacy of the
Company’s system of internal control over financial
reporting and the Company’s disclosure controls and
procedures;
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2.
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Reviewing on a continuing basis the activities, organizational
structure and qualifications of the Company’s internal
audit function;
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3.
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Reviewing the independent auditors’ proposed audit scope
and approach, including, when applicable, audit procedures with
respect to the Company’s internal control over financial
reporting;
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4.
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Reviewing with management and the independent auditors the
audited financial statements and audit findings, including any
significant suggestions for improvements provided to management
by the independent auditors and any serious difficulties or
disputes with management encountered during the course of the
audit, and reviewing the other financial disclosures in the
Company’s
Form 10-K
report, including Management’s Discussion and Analysis of
Financial Condition and Results of Operations;
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5.
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Having a predetermined arrangement with the independent auditors
that they will advise the Audit Committee through its Chair and
management of the Company of any significant or material issues
identified through procedures followed for interim quarterly
financial statements, and that such notification as required
under standards for communication with Audit Committees is to be
made prior to the related press release, or, if not practicable,
prior to filing the Company’s
Form 10-QSB
for that quarter, and receiving either an oral or written
communication provided by the independent auditors at the end of
each of the first three quarters of the year that they have
nothing to report or enumerate as to the required reporting
issues to the Audit Committee Chair;
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6.
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Approving the appointment of the independent auditors, subject,
if applicable, to stockholder ratification;
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7.
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Approving fee arrangements with the independent auditors;
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8.
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Reviewing the performance and qualifications of the independent
auditors and reviewing the experience and qualifications of the
senior members of the independent auditor team, compliance by
the independent auditors with audit partner rotation
requirements and the quality control procedures of the
independent auditors;
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9.
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Approving in advance the retention of the independent auditor
firm for any non-audit service that such firm is not prohibited
from performing for the Company and approving the fees for any
such service;
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10.
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Ensuring that the independent auditors prepare and deliver
annually a Statement as to Independence (it being understood
that the independent auditors are responsible for the accuracy
and completeness of this Statement), and discussing with the
independent auditors any relationships or services disclosed in
this Statement that may impact the objectivity and independence
of the Company’s independent auditors and to recommend that
the Board of Directors take appropriate action in response to
this Statement to satisfy itself of the independent
auditors’ independence;
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11.
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Reviewing reports from the independent auditors regarding
(a) critical accounting policies used by the Company in its
financial statements, (b) all alternative treatments of
financial information within generally accepted accounting
principles that the independent auditors have discussed with
management, ramifications of the use of such alternative
treatments and the treatment preferred by the independent
auditors, and (c) other material written communications
between the independent auditors and management;
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12.
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Recommending to the Board of Directors guidelines for hiring of
employees of the independent auditor who have been engaged on
the Company’s account;
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13.
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Advising the Board of Directors with respect to the
Company’s policies and procedures regarding compliance with
applicable laws and regulations;
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A-2
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14.
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Reviewing with management and the independent auditors the
effect of any significant regulatory and accounting initiatives;
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15.
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Obtaining from the independent auditors assurance that
Section 10A of the Securities Exchange Act of 1934 has not
been implicated;
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16.
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Meeting at least quarterly with management and the independent
auditors in separate executive sessions;
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17.
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Reviewing, in conjunction with counsel, any legal matters that
could have a significant impact on the Company’s financial
statements;
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18.
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Providing oversight and review of the Company’s asset
management policies, including an annual review of the
Company’s investment policies and performance for cash and
short-term investments, and the Company’s risk assessment
and risk management policies;
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19.
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If necessary, instituting special investigations and, if
appropriate, hiring special counsel or experts to assist;
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20.
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Reviewing related party transactions for potential conflicts of
interest and approving related party transactions;
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21.
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Establishing procedures for the receipt, retention and treatment
of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters and for the
confidential, anonymous submission by employees of the Company
or its subsidiaries of concerns regarding questionable
accounting or auditing matters;
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22.
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Performing other oversight functions as requested by the full
Board of Directors;
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23.
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Reviewing and updating the Audit Committee’s charter
annually and recommending any proposed changes to the Board of
Directors for approval;
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24.
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Instructing the independent accountants that the independent
accountants are ultimately responsible to the Board of Directors
and the Audit Committee; and
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25.
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Preparing any report, including any report of the Audit
Committee required by the rules of the Securities and Exchange
Commission to be included in the proxy statement for the
Company’s annual meeting.
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In addition to the above responsibilities, the Audit Committee
will undertake such other duties as the Board of Directors
delegates to it, and will report regularly to the Board
regarding the Committee’s examinations and recommendations.
Meetings:
The Audit Committee will meet at least two times each year. The
Audit Committee may establish its own schedule which it will
provide to the Board of Directors in advance.
The Audit Committee will meet separately with the Chief
Executive Officer and separately with the Chief Financial
Officer of the Company at least annually to review the financial
affairs of the Company. The Audit Committee will meet with the
independent auditors of the Company, at such times as it deems
appropriate, to review the independent auditor’s
examination and management report.
Reports:
The Audit Committee will record its summaries of recommendations
to the Board in written form which will be incorporated as a
part of the minutes of the Board of Directors at which those
recommendations are presented.
Minutes:
The Audit Committee will maintain written minutes of its
meetings, which minutes will be filed with the minutes of the
meetings of the Board of Directors.
A-3
PROXY
THE FEMALE HEALTH COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints O.B. Parrish and William R. Gargiulo, Jr., or either one
of them, each with full power of substitution and resubstitution, as proxy or proxies of the
undersigned to attend the Annual Meeting of Shareholders of The Female Health Company to be held at
the Hilton Garden Inn, the Grand Room, 10 East Grand Avenue, Chicago, Illinois 60610 on March 29,
2007 at 2:00 p.m., local time, and at any adjournment thereof, there to vote all shares of Common
Stock, Class A Convertible Preferred Stock — Series 1 and Class A Convertible Preferred Stock –
Series 3, which the undersigned would be entitled to vote if personally present as specified upon
the following matters and in their discretion upon such other matters as may properly come before
the meeting.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders
and accompanying Proxy Statement, ratifies all that said proxies or their substitutes may lawfully
do by virtue hereof, and revokes all former proxies.
Please sign exactly as your name appears hereon, date and return this Proxy. UNLESS OTHERWISE
SPECIFIED, THIS PROXY WILL BE VOTED TO GRANT AUTHORITY TO ELECT THE NOMINATED DIRECTORS AND TO
RATIFY THE APPOINTMENT OF MCGLADREY & PULLEN, LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM. IF OTHER MATTERS COME BEFORE THE MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE BEST JUDGMENT OF THE PROXIES APPOINTED.
detach below and return using the envelope provided
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THE FEMALE HEALTH COMPANY ANNUAL MEETING OF SHAREHOLDERS
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1.
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ELECTION OF DIRECTORS:
(terms
expiring at the 2008
Annual Meeting)
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1-David R. Bethune 2-Stephen M. Dearholt
3-Mary Margaret Frank, Ph.D. 4-William R. Gargiulo, Jr.
5-James R. Kerber 6-Mary Ann Leeper, Ph.D.
7-O.B. Parrish 8-Michael R. Walton
9-Richard E. Wenninger
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o FOR all nominees
listed to the left
(except as specified
below).
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o WITHHOLD
AUTHORITY to vote for all
nominees listed to the
left. |
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(Instructions: To withhold authority to vote for any indicated
nominee, write the number(s) of the nominee(s) in the box provided to
the right.) |
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2.
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To ratify the appointment of McGladrey & Pullen, LLP as the
Company’s independent registered public accounting firm for the
fiscal year ending September 30, 2007.
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o FOR o AGAINST o ABSTAIN |
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3.
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In their discretion, the Proxies are authorized to vote upon such
other matters as may properly come before the meeting. |
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Date |
NO. OF SHARES |
Check appropriate box
Indicate changes below: |
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Address Change? o
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Name Change? o |
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Signature(s) in Box
If signing as attorney, executor, administrator, trustee or guardian, please add your
full title as such. If shares are held by two or more persons, all holders must sign
the Proxy. |