September 29, 1997



Vector Securities International, Inc.
1751 Lake Cook Road, Suite 350
Deerfield, Illinois 60015

Gentlemen:

In connection with your engagement by us as set forth in the engagement letter
dated the date hereof (the "Engagement Letter"), we hereby agree to indemnify
and hold harmless you and your affiliates, the respective directors, officers,
stockholders, agents and employees of you and your affiliates and each other
person, if any, controlling you or any of your affiliates (collectively
referred to as "you" and "your"), to the full extent lawful, from and against
all losses, claims, damages, liabilities and expenses (collectively, "Losses")
incurred by you (including fees and disbursements of counsel) which (i) are
related to or arise out of actions taken or omitted to be taken (including any
untrue statements made or any statements omitted to be made) by us or by you
with our consent or in conformity with our actions or omissions or (ii) are
otherwise related to or arise out of your activities on our behalf in
connection with your engagement by us, and we will reimburse you for all
expenses (including fees and disbursements of counsel) as they are incurred by
you in connection with investigating, preparing or defending any such action or
claim, whether or not in connection with pending or threatened litigation in
which you are a party. We will not be responsible, however, for any Losses
pursuant to clause (ii) of the preceding sentence which are finally judicially
determined to have resulted primarily from your willful misfeasance or gross
negligence. We also agree that you shall not have any liability to us for or in
connection with such engagement except for Losses incurred by us which are
finally judicially determined to have resulted primarily from your willful
misfeasance or gross negligence.  We further agree that we will not, without
the prior written consent of Vector Securities International, Inc. ("Vector"),
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not you are an actual or
potential party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional release of you from
all liability arising out of such claim, action, suit or proceedings.  Payments
pursuant to this paragraph shall be paid by us promptly upon our receipt of a
statement(s) from Vector setting forth the amounts with respect to which
indemnification and/or reimbursement is sought pursuant to this paragraph.

We agree if any indemnification sought by you pursuant to this letter agreement
is unavailable or insufficient to hold you harmless, then (whether or not
Vector is the indemnified person), we and Vector will contribute to the Losses
for which such indemnification is unavailable or insufficient in such
proportion as is appropriate to reflect the relative benefits to us, on the one
hand, and Vector, on the other hand, in connection with Vector's engagement
referred to above, subject to the limitation tat in any event Vector's
aggregate contribution to all Losses with respect to which contribution is
available hereunder will not exceed the amount of fees actually received by






Our indemnity, reimbursement and contribution obligations under this letter
agreement shall be in addition to any rights that you may have at common law or
otherwise.  We hereby consent to personal jurisdiction and service and venue in
any court in which any claim which is subject to this letter agreement is
brought against you.  This letter agreement shall be governed by and construed
in accordance with the laws of the State of Illinois without regard to
principles of conflicts of laws.  Any right to trial by jury with respect to
any claim or proceeding related to or arising out of Vector's engagement by us
or this agreement is waived.

It is understood that, in connection with Vector's above-mentioned engagement,
Vector may also be engaged to act in one or more additional capacities, and
that the terms of the original engagement or any such additional engagements
may be embodied in one or more separate written agreements.  The provisions of
this letter agreement shall apply to the original engagement, any such
additional engagement(s)) and any modification of the original engagement or
such additional engagement(s) and shall remain in full force and effect
following the completion or termination of Vector's engagement(s).

                              Very truly yours,

                              THE FEMALE HEALTH COMPANY

                              By:  /s/ O.B. Parrish
                              -----------------------------
                              O.B. Parrish
                              Chairman and Chief Executive Officer

Accepted:

VECTOR SECURITIES INTERNATIONAL, INC.

By:  /s/ Barry M. Deutsch
- ----------------------------
Barry M. Deutsch
Vice President

Date:  September 29, 1997