Exhibit
      10.61

    EMPLOYMENT
      AGREEMENT

    


    THIS
      EMPLOYMENT AGREEMENT dated as of January 5, 2006 (as the same may be amended,
      restated, supplemented or otherwise modified from time to time hereafter, this
      “Agreement”), is entered into by and between Columbia
      Laboratories, Inc.,
      a
      Delaware corporation having its corporate offices at 354 Eisenhower Parkway,
      Livingston, New Jersey 07039 (the “Company”), and Michael McGrane
      (“Executive”).

    


    WITNESSETH:

    


    WHEREAS,
      Executive was elected Senior Vice President, General Counsel, and Secretary
      of
      the Company on January 5, 2006; and

     

    WHEREAS,
      the Company wishes to continue the employment of Executive on the terms and
      conditions set forth in this Agreement; and

    


    WHEREAS,
      the Company and Executive desire to enter into this Agreement so the rights,
      duties, benefits, and obligations of each regarding Executive’s employment for
      and by the Company will be fully set forth under the terms and conditions stated
      within this Agreement;

    


    NOW
      THEREFORE, in consideration of the mutual promises and undertakings hereunder,
      and for other good and valuable consideration, the receipt and sufficiency
      of
      which are hereby acknowledged, the parties hereby agree as follows:

    


    1.  Term.
      The
      term of this Agreement shall commence on the date first written above and
      continue through March 31, 2008, unless this Agreement is earlier terminated
      in
      accordance with Section 6 or 8 hereof. The term shall be automatically extended
      without further action of either party for additional one-year periods, unless
      written notice of either party’s intention not to extend has been given to the
      other party hereto at least sixty (60) days prior to the expiration of the
      then
      effective term. 

    


    2.  Title;
      Duties.

    


    (a) Executive
      shall be the Senior Vice President, General Counsel, and Secretary of the
      Company. Executive will perform duties
      customarily associated with such position,
      including, but not limited to, duties relating to the management of the legal
      affairs of the Company and its affiliates,
      and such
      other duties commensurate with the job description as
      may be
      assigned to him from time to time by the President of the Company (the “Company
      President”) or his designee. Executive
      shall be
      employed at the Company’s offices located in Livingston, New Jersey.
Executive
      will report to the Company President.

    


    (b) Executive
      agrees to devote his
      entire business time and attention to the performance of his duties under this
      Agreement.
      He
      shall perform his duties to the best of his ability and shall use his best
      efforts to further the interests of the Company. Executive shall perform his
      duties and will be required to travel as reasonably necessary to perform the
      services required of him under this Agreement. Executive represents and warrants
      to the Company that he is able to enter into this Agreement and that his ability
      to enter into this Agreement and to fully
      perform his duties hereunder are not limited to or restricted by any agreements
      or understandings between Executive and any other person. For the purposes
      of
      this Agreement, the term “person” means any natural person, corporation,
      partnership, limited liability partnership, limited liability company, or any
      other entity of any nature.

    


    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (c) Executive
      will observe the reasonable rules, regulations, policies and/or procedures
      which
      the Company may now or hereafter establish governing the conduct of its
      business, except to the extent that any such rules, regulations, policies and/or
      procedures may be inconsistent with the terms of this Agreement, in which case
      the terms of this Agreement shall control.

    


    3.  Employment
      Contract.
      The
      Company and Executive acknowledge that the terms of his employment are set
      forth
      in this Agreement. If Executive’s employment terminates for any reason,
      Executive shall not be entitled to any payments, benefits, damages, award or
      compensation other than as provided in this Agreement, or as may otherwise
      be
      available in accordance with the Company’s established written plans and written
      policies at the time of termination.

    


    4.  Compensation.

    


    (a) Subject
      to tax withholdings and deductions to cover Executive contributions to, and
      payments under, applicable Executive benefit and welfare plans and programs,
      the
      Company will pay Executive an annual base compensation of $279,500 per year
      to
      be paid in accordance with the Company’s normal payroll practices during the
      term of this Agreement (“Base Salary”). The Company’s Board of Directors (the
“Board”) or Compensation Committee of the Board (or any committee of the Board
      that shall replace such committee) shall review annually Executive’s
      compensation for increases during the term of this Agreement in
      conjunction with the Company’s regular review of the salaries of other executive
      level employees and in consultation with the Company President.
      At such
      time, the Company will consider (without any obligation to implement) upward
      adjustments to Executive’s compensation under this Agreement in a manner
      consistent with the Company’s practices in effect from time to time.


    


    (b) In
      addition to Base Salary, Executive also will be eligible to receive an annual
      performance bonus as the Board or Compensation Committee of the Board (or any
      committee of the Board that shall replace such committee) shall, in its sole
      discretion, deem appropriate
      based
      upon the parameters and criteria contained in the Company’s bonus plan and in
      consultation with the Company President.
      He shall
      be eligible for a Target Annual Bonus of 40% of his Base Salary as then in
      effect. This bonus, if any, shall be paid to the Executive within seventy-five
      (75) days of the end of each calendar year.

    


    (d) Executive
      also shall be eligible in the sole discretion of the Board or the Compensation
      Committee of the Board (or any committee of the Board that shall replace such
      committee) to participate in the Company’s stock option plan as is from time to
      time in effect, subject to the terms and conditions of such plan. The
      Executive shall receive a grant of 30,000 restricted shares of the Company’s
      stock which shares are to vest on the first business day of the calendar month
      following the Company’s announcement of the results of the Phase III
      multi-center, randomized, double-blind, placebo-controlled, clinical trial
      designed to assess the efficacy, safety and tolerability of Prochieve® 8%
      (progesterone gel) in preventing preterm delivery in pregnant women who are
      at
      increased risk for preterm birth. Stock options granted to Executive prior
      to
      the date hereof shall not be affected by this Agreement in any
      manner.

    


    
      
         

      

      
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    5.  Benefits.
      

    


    (a)
       Executive
      and
      Executive’s eligible dependents shall
      be
      eligible for all employee benefit programs (including any
      pension, 401K, group life insurance, group medical and dental, vision, and
      short-term and long-term disability policies, plans, and programs)
      generally available to other executive level employees of the Company during
      the
      term of this Agreement,
      in
      accordance with the terms of those benefit plans.

    


    (b) Executive
      shall be entitled to accrue paid time off (“PTO”) during the term of this
      Agreement in accordance with the Company’s standard policy and in an amount
      commensurate with other executive
      level employees of the Company.

    


    (c) In
      accordance with the policies of the Company in effect from time to time,
      Executive will be entitled to reimburse-ment for approved ordinary and necessary
      business expenses incurred by him during the term of this Agreement commensurate
      with other executive level employees of the Company.

     

    6.  Termination.
      

    


    (a) Death.
      Executive’s employment shall terminate immediately upon his death.

    


    (b) Disability.
      Executive’s employment shall terminate upon Executive having a “Disability.” For
      purposes of this Agreement, “Disability” means a determination by Company in
      accordance with applicable law that, as a result of a physical or mental
      illness, Executive is unable to perform the essential functions of his job
      with
      or without reasonable accommodation for a period of six (6) months.

    


    (c) Termination
      by Company for Cause.
      Upon
      delivery of written notice of termination for “Cause” from Company to Executive,
      Executive’s employment shall terminate. Termination for “Cause” shall mean
      termination based on (i) Executive’s failure or refusal to perform, in any
      material respect, his duties faithfully and diligently in accordance with this
      Agreement; (ii) gross negligence, recklessness or malfeasance in the
      performance of Executive’s duties; (iii) Executive committing any criminal
      act; (iv) Executive committing any act of fraud or other material misconduct
      resulting or intending to result directly or indirectly in gain or personal
      enrichment at the expense of Company; (v) Executive willfully engaging in
      any conduct relating to the business of Company that could reasonably be
      expected to have a materially detrimental effect on the business or financial
      condition of the Company; (vi) misconduct which materially discredits or
      damages Company, or violates Company’s policies or procedures, after Company has
      notified Executive of the actions Company deems to constitute non-compliance;
      (vii) Executive materially breaches his obligations under Sections 9 and 10
      below, relating to confidential information, non-solicitation and
      non-competition. 

    


    
      
         

      

      
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    Termination
      for Cause pursuant to subsections (i), (ii), (iv), or (v) of this Paragraph
      (c)
      of Section 6 shall not take effect unless and until the Company complies with
      the provisions of this paragraph. Executive shall be given written notice by
      the
      Company of its intention to terminate him for Cause, stating in detail the
      particular act(s) or failure(s) to act that constitute the grounds on which
      the
      proposed termination for Cause is based. That written notice shall be given
      to
      Executive within ninety (90) days of the Company’s learning of such act(s) or
      failure(s) to act. Executive shall then have thirty (30) days after receipt
      of
      such written notice to cure such conduct, to the extent such cure is possible.
      If Executive fails to cure such conduct on or before the end of the thirty
      (30)
      day period, Executive shall be terminated for Cause. If Executive’s conduct is
      not curable, no notice need be given by the Company before terminating Executive
      for Cause.

    


    (d) Resignation
      for Good Reason.
      Executive may terminate his employment with “Good Reason” (as defined below)
      upon no fewer than thirty (30) days prior written notice to the Company
      specifying the reason(s) for the termination. Upon receipt of Executive’s notice
      of intent to terminate his employment for Good Reason, Company shall have a
      right to cure the alleged breach or other conduct alleged by Executive to
      constitute Good Reason within the thirty (30) day period. For purposes of this
      Agreement, “Good Reason” means (i) Company materially breaches this
      Agreement; (ii) Company assigns duties to Executive which are materially
      inconsistent with his duties as set forth in Section 2 or which materially
      impair his ability to perform the services contemplated hereunder; or
      (iii) Company has, without Executive’s consent, relocated Executive’s
      office more than 100 miles from its location at the commencement of this
      Agreement
      or (iv)
      Company substantially reduces the Executive’s job title, responsibilities, or
      level of authority from that customary for the Senior Vice President, General
      Counsel, and Secretary of a specialty pharmaceutical company.
      

    


    (e) Resignation
      Without Good Reason.
      Executive may terminate his employment without Good Reason upon no fewer than
      thirty (30) days prior written notice to the Company. Without Good Reason as
      used in this Agreement refers to any reason not included as a Good Reason in
      section 6(d).

    


    (f) Termination
      by Company Without Cause.
      Executive’s employment shall terminate thirty (30) days after written notice
      delivered to Executive of Company’s termination of Executive’s employment for
      reason other than Death, Disability or Cause.

    


    7.  Compensation
      Upon Termination

    


    (a) If
      Executive’s employment is terminated by Company for Cause, by Death or
      Disability, or if Executive resigns Without Good Reason, Executive shall be
      entitled to receive:

    


    (i) the
      Base
      Salary through the date of termination;

    


    (ii) reimbursement
      for any previously unreimbursed business expenses properly incurred and
      documented by Executive in accordance with Company policy prior to the date
      of
      Executive’s termination; and

    


    
      
         

      

      
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    (iii) such
      Employee Benefits, if any, as to which Executive may be entitled under the
      employee benefit plans of the Company.

    


    (b) If
      Executive’s Employment is terminated by Company without Cause or by Executive
      with Good Reason, Executive shall be entitled to:

    


    (i) the
      Base
      Salary through the date of termination;

    


    (ii) reimbursement
      for any previously unreimbursed business expenses properly incurred and
      documented by Executive in accordance with Company policy prior to the date
      of
      Executive’s termination;

    


    (iii)  receive
      a
      lump sum payment equal to (1) one times Executive’s Annual Base Salary at the
      rate immediately in effect before Executive’s Termination Date; and (2) the
      greater of (A) the cash bonus paid to Executive in the preceding year pursuant
      to the
      Company’s bonus plan or
      (B)
      the Executive’s target bonus in effect at the time of the
      termination.

    


    (iv) for
      a
      period of twelve (12) months following his Termination Date, continue to receive
      the medical and dental coverage in effect on his Termination Date (or generally
      comparable coverage) for himself and, where applicable, his spouse and
      dependents, as the same may be changed from time to time for employees
      generally, as if Executive had continued in employment during such period;
      or,
      as an alternative, the Company may elect to pay Executive cash in lieu of such
      coverage in an amount equal to Executive’s after-tax cost of continuing such
      coverage, where such coverage may not be continued (or where such continuation
      would adversely affect the tax status of the plan pursuant to which the coverage
      is provided). The COBRA health care continuation coverage period under Section
      4980B of the Code, shall run concurrently with the foregoing twelve (12) month
      benefit period. 

    


    (c) If
      Executive’s Employment is terminated as a result of Company providing written
      notice to Executive pursuant to Section 1 of this Agreement of Company’s
      intention not to extend the term of the Agreement, Executive shall be entitled
      to:

    


    (i) the
      Base
      Salary through the end of the term;

    


    (ii)  reimbursement
      for any previously unreimbursed business expenses properly incurred and
      documented by Executive in accordance with Company policy prior to the end
      of
      the term;

    


    (iii)  receive
      a
      lump sum payment equal to (1) one times Executive’s Annual Base Salary at the
      rate immediately in effect before the end of the term.

    


    
      
         

      

      
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    8.  Change
      in Control.

    


    (a) In
      the
      event of “Change in Control” of Company, as defined in the Executive Change in
      Control Severance Agreement dated as of April 8, 2004 (the “Change in Control
      Agreement”) between the Company and Executive attached hereto as Exhibit A and
incorporated
      by reference as if fully set forth herein,
      Executive shall be entitled to the benefits, if any, available to him pursuant
      to the Change in Control Agreement. 

    


    9.  Restrictive
      Covenants.
      

    


    (a) During
      Executive’s employment and for a period of one (1) year following the
      termination of Executive’s employment for any reason, Executive will not compete
      directly with the Company anywhere in the world by rendering services or
      providing assistance for himself or on behalf of any other person or entity,
      in
      any line of business in which the Company is engaged or has made preparations
      to
      engage, as of the termination date of Executive’s employment with the Company.
      The term “compete” as used herein means that Executive engages in research,
      development, design, consulting, manufacturing, marketing, promotion or sales
      with respect to the Company’s business for a third party or for its or his own
      interest. 

    


    (b) Executive
      agrees that during the period stated in subsection (a) above, he will not
      (i) directly solicit or encourage in any manner the resignation of any
      employee of the Company or any of its subsidiaries; or (ii) directly or
      indirectly solicit or divert customers, vendors, or business of the Company
      or
      any of its subsidiaries (provided
      that
      Executive may deal with any such customers or vendors in any manner which does
      not violate the provisions of subsection (a) above); or (iii) attempt to
      influence, directly or indirectly, any person or entity to cease, reduce, alter,
      or rearrange any business relationship with the Company or any of its
      subsidiaries.

    


    (c) Executive
      acknowledges and agrees that he considers the restrictions set forth in this
      Section 9 to be reasonable both individually and in the aggregate and that
      the
      duration, geographic scope, extent and application of these restrictions are
      no
      greater than is necessary for the protection of the Company’s legitimate
      interests. It is the desire and intent of Executive and the Company that the
      provisions of this Section 9 shall be enforced to the fullest extent possible
      under the laws and public policies of the State of New Jersey. The Company
      and
      Executive further agree that if any particular provision or portion of this
      Section 9 shall be adjudicated to be invalid or unenforceable, such adjudication
      shall apply only with respect to the operation of such provision in the
      particular jurisdiction in which such adjudication is made. The Company and
      Executive further agree that in the event that any restriction herein shall
      be
      found to be void or unenforceable but would be valid or enforceable if some
      part
      or parts thereof were deleted or the period or area of application reduced,
      such
      restriction shall apply with modification as may be necessary to make it valid
      and Executive and the Company empower a court of competent jurisdiction to
      modify, reduce or otherwise reform such provision(s) in such fashion as to
      carry
      out the parties’ intent to grant the Company the maximum allowable protection
      consistent with the applicable law and facts and the express exceptions
      contained herein.

    


    
      
         

      

      
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    (d) Without
      limiting the foregoing, Executive will not be deemed to be in competition with
      the Company by reason of his employment by an enterprise (“Subsequent Employer”)
      whose businesses include both (i) activities that involve the Company
      Technology (“Covered Business”); and (ii) activities that do not involve
      the Company Technology (“Excluded Business”) upon satisfaction of the following
      conditions: (A) Executive delivers to the Subsequent Employer a copy of
      this Agreement or an extract thereof setting forth fully and completely the
      restrictions set forth in this Section 9; (B) the Subsequent Employer
      executes and delivers to the Company a written agreement in which, as a
      condition to Executive’s employment, the Subsequent Employer
      (1) acknowledges receipt of such restriction, (2) agrees to employ
      Executive only in the Excluded Business, (3) agrees to cause the executive
      in charge of the Covered Business to acknowledge such restrictions in writing
      and agree that Executive will not be permitted to participate in the Covered
      Business, (4) agrees to establish reasonable internal policies and
      procedures to prevent violation of such restrictions or disclosure by Executive
      to personnel engaged in the Covered Business, and (5) agrees that the
      Company shall be entitled to enforce such agreement directly against the
      Subsequent employer; and (C) Executive and the Subsequent Employer perform
      their obligations pursuant to this Agreement and such agreement.

    


    10.  Confidentiality.
      The
      Employee Proprietary Information and Inventions Agreement dated March 14, 2003,
      between
      the Company and Executive is attached hereto as Exhibit B and incorporated
      by
      reference as if fully set forth herein.

    


    11.  Cooperation:
      Executive agrees to cooperate on a reasonable basis in the truthful and honest
      prosecution and/or defense of any claim in which the Company, its affiliates,
      and/or its subsidiaries may have an interest (subject to reasonable limitations
      concerning time and place), which may include without limitation making himself
      available on a mutually agreed, reasonable basis to participate in any
      proceeding involving the Company, its affiliates, and/or its subsidiaries,
      allowing himself to be interviewed by representatives of the Company, its
      affiliates, and/or its subsidiaries without asserting or claiming any privilege
      against the Company, its affiliates, and/or its subsidiaries, appearing for
      depositions and testimony without requiring a subpoena and without asserting
      or
      claiming any privilege against the Company, its affiliates, and/or its
      subsidiaries, and producing and/or providing any documents or names of other
      persons with relevant information without asserting or claiming any privilege
      against the Company, its affiliates, and/or its subsidiaries; provided that,
      if
      such services are required after the end of any period during which he is
      eligible for severance benefits, if any, the Company, its affiliates, and/or
      its
      subsidiaries shall provide Executive with reasonable compensation for the time
      actually expended in such endeavors and shall pay his reasonable expenses
      incurred at the prior and specific request of the Company, its affiliates,
      and/or its subsidiaries.

    


    12.  Remedies.
      Executive acknowledges and agrees that the Company’s remedy at law for a breach
      or threatened breach of the provisions of this Agreement would be inadequate
      and, in recognition of this fact, in the event of a breach or threatened breach
      by Executive of any provision of this Agreement, it is agreed that, in addition
      to any available remedy at law, the Company shall be entitled to, without
      posting any bond, specific performance, temporary restraining order, temporary
      or permanent injunction, or any other equitable relief or remedy which may
      then
      be available; provided, however, nothing herein shall be deemed to relieve
      the
      Company of its burden to prove grounds warranting such relief nor preclude
      Executive from contesting such grounds or facts in support thereof. Nothing
      herein contained shall be construed as prohibiting the Company from pursuing
      any
      other remedies available to it for such breach or threatened breach
      hereof.

    


    
      
         

      

      
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    13.  Applicable
      Laws and Consent to Jurisdiction.
      The
      validity, construction, interpretation, and enforceability of this Agreement
      shall be determined and governed by the laws of the State of New Jersey without
      giving effect to the principles of conflicts of law. For the purpose of
      litigating any dispute that arises under this Agreement, the parties hereby
      consent to exclusive jurisdiction of, and agree that such litigation shall
      be
      conducted in, any state or federal court located in the State of New
      Jersey.

    


    14.  Severability.
      The
      provisions of this Agreement are severable and if any one or more provisions
      are
      determined to be illegal or otherwise unenforceable, in whole or in part, the
      remaining provisions shall nevertheless be binding and enforceable. The Parties
      agree that the covenants set forth herein are reasonable. Without
      limiting the foregoing, it is the intent of the parties that the covenants
      set
      forth herein be enforced to the maximum degree permitted by applicable law.
      As
      such, the
      parties ask that if any court of competent jurisdiction were to consider any
      provision of this Agreement to be overly broad based on the circumstances at
      the
      time enforcement is requested, that such court “blue pencil” the provision and
      enforce the provision to the full extent that such court deems it to be
      reasonable in scope.  

    


    15.  Indemnification. The
      Indemnification Agreement dated April 8, 2004, between
      the Company and Executive is attached hereto as Exhibit C and incorporated
      by
      reference as if fully set forth herein.

    


    16.  Miscellaneous;
      Waiver.
      Executive further agrees that this Agreement, together with the Exhibits
      incorporated by reference as if fully set forth herein, sets forth the entire
      employment agreement between the Company and Executive, supersedes any and
      all
      prior agree-ments between the Company and Executive, and shall not be amended
      or
      added to except in writing signed by the Company and Executive. Executive
      understands that he may not assign his duties and obligations under this
      Agreement to any other party and that the Company may, at any time and without
      further action by or the consent of Executive, assign this Agreement to any
      of
      its affiliated companies. 

    


    17.  Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed an original and all of which taken together shall constitute one and
      the
      same agreement.

    


    18.  Successors
      and Assigns.
      This
      Agreement shall be binding on the successors and heirs of Executive and shall
      inure to the benefit of the successors and assigns of the Company.

    


    19.  Notices.
      Any
      notice required or permitted hereunder shall be in writing and shall be
      sufficiently given if personally delivered or if sent by registered or certified
      mail, postage prepaid, with return receipt requested, addressed: (a) in the
      case
      of the Company, to Columbia Laboratories, Inc., 354 Eisenhower Parkway,
      Livingston, New Jersey 07039, attn.: General Counsel, and (b) in the case of
      Executive, to Executive's last known address as reflected in the Company's
      records, or to such other address as Executive shall designate by written notice
      to the Company. Any notice given hereunder shall be deemed given at the time
      of
      receipt thereof by the person to whom such notice is given.

    


    
      
         

      

      
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    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the dates set
      forth below.

     

    


    
      	EXECUTIVE	 	 	COLUMBIA LABORATORIES, INC. 
	 	 	 	 
	 	 	 	 
	/s/ Michael
              McGrane	 	 	/s/ Stephen
              G. Kasnet
	
              
Michael
              McGrane	 	 	
              
 Stephen
              G. Kasnet, Chairman
	Date: March
              30, 2006 	 	 	Date: March
              30, 2006 




     

    
      
         

      

      
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