Document:

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Exhibit 10.35

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                            STOCK PURCHASE AGREEMENT

                                 BY AND BETWEEN

                           COLUMBIA LABORATORIES, INC.

                                       AND

                           PHARMABIO DEVELOPMENT INC.

                                   Dated as of

                                  July 31, 2002

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                  STOCK PURCHASE AGREEMENT, dated as of July 31, 2002 (this
"Agreement"), by and between COLUMBIA LABORATORIES, INC., a Delaware
corporation, whose address is 220 South Orange Avenue, Livingston, NJ 07039 (the
"Company"), and PHARMABIO DEVELOPMENT INC., a North Carolina corporation, whose
address is 4709 Creekstone Drive, Suite 200 Riverbirch Building, Durham, NC
27703 (the "Investor").

                  WHEREAS, the Investor desires to purchase from the Company,
and the Company desires to issue and sell to the Investor, 1,121,610 shares (the
"Shares") of common stock, par value $.01 per share, of the Company ("Common
Stock"), on the terms set forth in this Agreement (the "Stock Purchase").

                  NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows.

                                   ARTICLE I

                                  Definitions
                                  -----------

                  SECTION 1.01     As used in this Agreement, the following
terms shall have the following meanings:

                  "Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.

                  "Aggregate Purchase Price" shall have the meaning specified in
Section 2.01 herein.

                  "Alternate Market" shall mean the Nasdaq National Market, the
Nasdaq Small Cap Market, or the New York Stock Exchange, whichever is at the
time the principal trading exchange or market for the Common Stock.

                  "AMEX" means the American Stock Exchange.

                  "BDS Agreement" means the Asset Purchase, License and Option
Agreement between the Company and Bio-Mimetics, Inc. dated as of November 22,
1989, as amended.

                  "Board of Directors" means the board of directors of the
Company.

                  "Business Day" shall mean any day other than a Saturday,
Sunday or legal holiday on which banks in North Carolina and New York are open
for the conduct of their banking business.

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                  "Closing" shall have the meaning specified in Section 2.02
herein.

                  "Closing Date" shall have the meaning specified in Section
2.02 herein.

                  "Commission" means the United States Securities and Exchange
Commission.

                  "Company SEC Reports" shall have the meaning specified in
Section 3.05 herein.

                  "Debt" shall mean (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar instruments,
(iii) obligations to pay the deferred purchase price of property or services,
(iv) obligations as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, and (v) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (iv)
above. For the avoidance of doubt, Debt shall not include day-to-day obligations
and payables incurred by the Company in the ordinary course of business.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
from time to time amended, and the rules and regulations of the Commission
promulgated thereunder.

                  "Governmental Authority" means any foreign, Federal, state or
local court or governmental or regulatory agency or authority.

                  "Law" means any United States Federal, state, local or foreign
law, statute, rule, regulation, order, writ, injunction, judgment or decree of
any Governmental Authority.

                  "Master Services Agreement" means the agreement and initial
work order, dated as of the date hereof, between the Company and Innovex LP, a
New Jersey limited partnership, whose address is 10 Waterview Boulevard,
Parsippany, NJ 07054 ("Innovex"), which is an Affiliate of the Investor,
pursuant to which Innovex agrees to provide contract sales services to the
Company.

                  "Material Adverse Effect" means a material adverse effect on
the business, operations, properties or financial condition of the Company or
the Investor, as the case may be, and its subsidiaries, taken as a whole;
provided, however, that the following shall be excluded from any determination
as to whether a Material Adverse Effect has occurred: (i) any effect resulting
from or arising in connection with the Transaction Documents or the Transactions
(or the disclosure, announcement or arrangement thereof), (ii) the effects of
changes or conditions generally affecting the industry in which the Company or
the Investor operates and (iii) changes in general economic, financial market,
regulatory or political conditions.

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                  "Person" means any individual, partnership, corporation,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or agency or political
subdivision thereof, or other entity.

                  "Prospectus" shall mean the prospectus in the form included in
the Registration Statement, as supplemented by any Prospectus Supplement.

                  "Prospectus Supplement" shall mean any prospectus supplement
to the Registration Statement filed with the Commission pursuant to Rule 424(b).

                  "Registration Statement" shall mean the registration statement
on Form S-3, Commission File Number 333-38230 under the Securities Act, as such
Registration Statement may be amended from time to time.

                  "Royalty Agreement" means the Investment and Royalty Agreement
by and between the Company and the Investor, dated as of the date hereof,
pursuant to which the Investor agrees to purchase the right to receive royalties
on certain products of the Company.

                  "Securities Act" means the Securities Act of 1933, as from
time to time amended, and the rules and regulations of the Commission
promulgated thereunder.

                  "Serono Agreements" means the Marketing License Agreement by
and among the Company, Columbia Laboratories (Bermuda) Limited, Ares Trading
S.A. and Serono, Inc. and the Amended and Restated License and Supply Agreement
by and between Columbia Laboratories (Bermuda) Limited and Ares Trading S.A.,
each dated as of June 4, 2002.

                  "Subsidiary" and "Subsidiaries" shall have the respective
meanings specified in Section 3.07 herein.

                  "Transaction Documents" means, collectively, this Agreement,
the Master Services Agreement, and the Royalty Agreement.

                  "Transactions" means, collectively, the Stock Purchase and the
other transactions contemplated by the Transaction Documents.

                                   ARTICLE II

                                Purchase and Sale
                                -----------------

                  SECTION 2.01     Purchase and Sale. Upon the terms set forth
in this Agreement, at the Closing, the Company shall sell to the Investor, and
the Investor shall purchase from the Company, the Shares at a purchase price of
$4.903667 per Share, for an aggregate purchase price of five million five
hundred thousand dollars ($5,500,000) (the "Aggregate Purchase Price"). The
Aggregate Purchase Price shall be paid as provided below in this Article II.

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                  SECTION 2.02     Closing. The Stock Purchase shall occur
concurrently with the execution and delivery of the Master Services Agreement
and the Royalty Agreement by the parties thereto at 10:00 a.m. Eastern Time on
the date of this Agreement (consummation of the Stock Purchase is referred to as
the "Closing" and the date on which the closing occurs is referred to as the
"Closing Date"), at such place as may be mutually agreed upon by the parties.

                  SECTION 2.03     Payment of Purchase Price; Delivery of the
Shares. At the Closing:

                  (a) The Investor shall deliver to the Company the Aggregate
Purchase Price via wire transfer of immediately available funds to such bank
account as the Company shall designate in writing prior to the Closing.

                  (b) The Company shall deliver to the Investor a certificate or
certificates for the Shares purchased by the Investor, which shall be in
definitive form and registered in the name of the Investor and shall be
imprinted with the legends described in Section 6.01 hereof.

                                  ARTICLE III

                  Representations and Warranties of the Company
                  ---------------------------------------------

                  The Company hereby represents and warrants to the Investor as
of the date hereof as follows:

                  SECTION 3.01     Organization and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and the Company is qualified to do business as a
foreign corporation in each jurisdiction in which such qualification is
required, except where failure to so qualify would not have a Material Adverse
Effect. The Company has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its businesses as now conducted
and as proposed to be conducted.

                  SECTION 3.02     Authority and Consents. The Company has all
necessary corporate power and authority to execute and deliver the Transaction
Documents and to consummate the Transactions. The execution and delivery of the
Transaction Documents and consummation of the Transactions have been duly
authorized by all necessary corporate action on the part of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize the Transaction Documents or to consummate the Transactions. No
further approval or authority of the stockholders of the Company will be
required for the issuance and sale of the Shares to be sold by the Company as
contemplated herein. Each of the Transaction Documents has been duly and validly
executed and delivered by the Company and constitutes a valid, legal and binding
agreement of the Company, enforceable against the Company in accordance with its
terms. Except for (a) applicable filings, if any, with the Commission pursuant
to the Exchange Act and the Securities Act, (b) filings with the

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AMEX in connection with the listing of the Shares, and (c) filings, if any,
under state securities or "blue sky" laws, no consent, authorization or order
of, or filing or registration with, any Governmental Authority is required to be
obtained or made by the Company for the execution, delivery and performance of
the Transaction Documents or the consummation of the Transactions. Neither the
execution, delivery and performance of the Transaction Documents by the Company
nor the consummation by the Company of the Transactions will (i) conflict with
or result in any breach of any provision of the certificate of incorporation or
bylaws of the Company; (ii) subject to the filings and other matters set forth
in the preceding sentence, violate any Law applicable to the Company or any of
its Subsidiaries or the Transactions; or (iii) result in the creation of any
lien, charge, security interest or encumbrance upon any assets of the Company
pursuant to the terms or provisions of, or will not conflict with, result in the
breach or violation of, or constitute, either by itself or upon notice or the
passage of time or both, a default under any agreement, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which the
Company is a party or by which the Company or its properties may be bound,
except in the case of clauses (ii) and (iii) for such violation, lien, charge,
security interest, default or encumbrance which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

                  SECTION 3.03     Capitalization.
                                   --------------

                  (a) The authorized capital stock of the Company consists of
100,000,000 shares of Common Stock, of which 34,332,112 shares were issued and
outstanding as of the close of business on the date hereof, and 1,000,000 shares
of preferred stock, of which 1,130 shares of Series B preferred stock were
issued and outstanding, and 3,750 shares of Series C preferred stock were issued
and outstanding, as of the close of business on the date hereof (the "Preferred
Stock"). As of the date hereof, 7,547,618 shares of Common Stock were reserved
for issuance and issuable upon or otherwise deliverable in connection with the
exercise of outstanding stock options or warrants.

                  (b) Except as set forth on Schedule 3.03(b), there are no
outstanding subscriptions, options, warrants, rights, calls, contracts, demands,
commitments, conversion rights or other agreements or arrangements of any
character or nature whatever under which the Company is or may be obligated (x)
to issue or sell shares of its Common Stock or Preferred Stock, or (y) to
register shares of its Common Stock or Preferred Stock. No holder of any
security of the Company is entitled to any preemptive, subscription or similar
rights to purchase any securities (including the Shares) of the Company, except
as set forth on Schedule 3.03(b).

                  SECTION 3.04     The Shares. The Shares have been duly and
validly authorized, and, when issued and delivered in accordance with the terms
of this Agreement, will have been validly issued and will be fully paid and
nonassessable and free and clear of all pledges, liens, encumbrances and
restrictions (other than restrictions arising under this Agreement or federal or
state securities or "blue sky" laws).

                  SECTION 3.05     The Company SEC Reports; Financial
Statements. The Company has made available to the Investor (i) the Company's
Annual Reports on

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Form 10-K for each of the fiscal years ended December 31, 2000 and December 31,
2001; (ii) all definitive proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since January 1, 2001; and (iii)
all other reports or registration statements filed by the Company with the
Commission since January 1, 2001 (all such filings at (i) through (iii),
collectively, the "Company SEC Reports"). As of their respective filing dates,
the Company SEC Reports were prepared in all material respects in accordance
with the requirements of the Securities Act or the Exchange Act, as the case may
be, applicable to the Company SEC Reports. None of such forms, reports or
registration statements contained, when filed, any untrue statement of a
material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company included in the
Company SEC Reports complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission with respect thereto when the same were filed and fairly presented,
in conformity with United States generally accepted accounting principles
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments). The Company has filed with the Commission on a timely
basis, or received a valid extension of such time of filing, all forms, reports
and documents required to be filed by it under the Exchange Act since January 2,
2001.

                  SECTION 3.06     Absence of Undisclosed Liabilities. Except as
and to the extent specifically reflected or reserved against on the consolidated
balance sheets of the Company as of December 31, 2001, included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2001, or
otherwise disclosed in the Company SEC Reports, neither the Company nor any of
its Subsidiaries have any material debts, liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise, and whether due or
to become due, arising out of transactions entered into, or any state of facts
existing on or prior to the date of this Agreement that would be required under
GAAP to be reported on the balance sheet of the Company, other than liabilities
and obligations (1) arising in the ordinary course of business after December
31, 2001, which do not have a Material Adverse Effect, or (2) arising in
connection with the Transactions, which do not have a Material Adverse Effect.

                  SECTION 3.07     Subsidiaries. Schedule 3.07 attached hereto
sets forth each subsidiary of the Company as of the date hereof (each a
"Subsidiary" and together its "Subsidiaries"), showing the jurisdiction of its
incorporation or organization and showing the percentage of each person's
ownership of the outstanding stock or other interests of such Subsidiary. Each
Subsidiary is duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and is qualified to do business as a
foreign corporation in each jurisdiction in which qualification is required,
except where failure to so qualify would not have a Material Adverse Effect.
Each

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Subsidiary has all requisite corporate power and authority to carry on its
business as now conducted.

                  SECTION 3.08     Absence of Changes. Except as disclosed by
the Company in the Company SEC Reports, since December 31, 2001, (a) the Company
and its Subsidiaries have not incurred any liabilities or obligations (indirect
or contingent) or entered into any written or oral agreements or other
transactions which are outside of the ordinary course of business which have had
or which would reasonably be expected to have, and there have been no changes in
the business or operations of the Company or any of the Subsidiaries which have
had or which would reasonably be expected to have, a Material Adverse Effect;
(b) the Company and its Subsidiaries have not sustained any material loss or
interference with their respective businesses or properties from fire, flood,
windstorm, accident or other calamity not covered by insurance; and (c) the
Company has not paid or declared any dividends or other distributions with
respect to its common stock and the Company is not in default in the payment of
principal or interest on any outstanding debt obligations.

                  SECTION 3.09     No Defaults. Except as to defaults,
violations and breaches which individually or in the aggregate would not have a
Material Adverse Effect on the Company, the Company is not in violation or
default of any provision of its certificate of incorporation or bylaws, or other
organizational documents, or in breach of or default with respect to any
provision of any agreement, judgment, decree, order, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which it is
a party or by which it or any of its properties are bound; and there does not
exist any state of fact which, with notice or lapse of time or both, would
constitute an event of default or default on the part of the Company as defined
in such documents or instruments, except such defaults which individually or in
the aggregate would not have a Material Adverse Effect on the Company.

                  SECTION 3.10     Material Agreements.
                                   -------------------

                  (a) Except as included or incorporated by reference in, or
otherwise referred to in, the Company SEC Reports, or listed on Schedule
3.10(a), the Company is not a party to any written or oral contract, instrument,
agreement, commitment, obligation, plan or arrangement, a copy of which would be
required to be filed with the Commission as an exhibit to a registration
statement on Form S-1 (collectively, "Material Agreements") if the Company was
registering securities under the Securities Act. The Material Agreements are in
full force and effect and the Company has in all material respects performed all
the obligations required to be performed by it to date under such agreements,
has received no notice of default and, to the best of the Company's knowledge,
neither the Company nor any party obligated to the Company is in default under
any Material Agreement now in effect, the result of which could reasonably be
expected to cause a Material Adverse Effect. All Material Agreements constitute
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.

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                  (b) Without limiting the foregoing, the BDS Agreement and the
Serono Agreements are in full force and effect and the Company and its
Affiliates have in all material respects performed all their respective
obligations required to be performed by them to date under such agreements, have
received no notice of default and, to the best of the Company's knowledge,
neither the Company nor its Affiliates nor any party obligated to the Company is
in default under such agreements, the result of which could reasonably be
expected to cause a Material Adverse Effect on the Company.

                  SECTION 3.11     No Litigation or Other Actions. There are no
legal or governmental actions, suits, proceedings or investigations pending or,
to the Company's knowledge, threatened to which the Company or any of its
Subsidiaries is or may be a party or of which property owned, licensed or leased
by the Company or any of its Subsidiaries is or may be the subject, which
actions, suits, proceedings or investigations, individually or in the aggregate,
might prevent or might reasonably be expected to have a material adverse affect
on the transactions contemplated by the Transaction Documents or result in a
Material Adverse Effect; and no labor disturbance by the employees of the
Company exists or, to the Company's knowledge, is imminent which might
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries is a party to or subject to the provisions of any
material injunction, judgment, decree or order of any court, regulatory body
administrative agency or other governmental body.

                  SECTION 3.12     Properties (Other than Intellectual
Property). The Company and each of the Subsidiaries have valid title to all the
properties and assets reflected as owned by such entities in the Company SEC
Reports, subject to no lien, mortgage, pledge, charge or encumbrance of any kind
except (i) those, if any, reflected in the Company SEC Reports, or (ii) those
which are not material in amount and do not adversely affect the use made and
proposed to be made of such property by the Company or Subsidiaries. The Company
and each Subsidiary holds its leased properties under valid and binding leases.
The Company and each Subsidiary owns, leases or licenses all such properties
necessary for the conduct of its respective business (as described in the
Company SEC Reports).

                  SECTION 3.13     Intellectual Property. The Company owns or
has valid and enforceable rights to use all Intellectual Property (as defined
below) necessary to conduct the Company's business as described in the Company
SEC Reports including without limitation to develop, commercialize, market, make
and distribute the Products (as defined in the Royalty Agreement) as described
in the Company SEC Reports (collectively, the "Company Intellectual Property").
To the knowledge of the Company, none of the Company Intellectual Property
infringes, misappropriates or makes any unauthorized use of any Intellectual
Property of any other person, except as provided on Schedule 3.13. The Company
has received no notice or other communication of any actual, alleged, or
potential infringement, misappropriation or unauthorized use of Intellectual
Property owned or used by any other person, except as provided on Schedule 3.13.
To the knowledge of the Company, no person is infringing, misappropriating or
making any unauthorized use of any the Company Intellectual Property, except as
would not reasonably be expected to have a Material Adverse Effect. Except as
included or

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incorporated by reference in, or otherwise referred to in the Company SEC
Reports, the Company has not entered into any agreement or arrangement, and the
Company is not subject to any judgment, order or decree of any court or
governmental or regulatory body limiting the Company' ability to exploit freely
the Company Intellectual Property or to transact business in any market with any
person, except as provided on Schedule 3.13. There is no pending or, to the
knowledge of the Company, threatened action, claim, suit, proceeding or
investigation before any court or any governmental or regulatory body
challenging the validity, scope, ownership, or right to use the Company
Intellectual Property, except as provided on Schedule 3.13. There are no
actions, claims, suits or proceedings by the Company against any other person
regarding the Company Intellectual Property or the Intellectual Property of such
person. The Company is not aware of any Intellectual Property owned or
controlled by any other person, or of any facts, circumstances or events, that
would materially impair or prevent the Company from developing, commercializing,
marketing, making and distributing the Products as contemplated by the Company
SEC Reports. "Intellectual Property" shall mean all: trade, business and product
names; trademarks; service marks; copyrights; patents; inventions; discoveries;
trade secrets; business and technical information; proprietary compilations of
data or information; know-how; formulas and techniques; methods; regulatory
filings and approvals; computer software; all intellectual property rights,
registrations, licenses and applications pertaining to any of the foregoing; and
all related documentation and goodwill.

                  SECTION 3.14     Compliance. The Company has been and is in
compliance in all material respects with all applicable Laws in respect of the
conduct of its business and the ownership of its properties, except where
failure to so comply would not reasonably be expected to have a Material Adverse
Effect. Each of the Company and its Subsidiaries has all franchises, permits,
licenses, consents and other governmental or regulatory authorizations and
approvals necessary for the conduct of its respective business as now being
conducted unless the failure to possess such franchises, permits, licenses,
consents and other governmental or regulatory authorizations and approvals,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.

                  SECTION 3.15     Taxes. The Company has filed all federal,
state, local and foreign income and other tax returns required to be filed by it
and has paid or accrued all taxes shown as due thereon, except where failure to
do so would not reasonably be expected have a Material Adverse Effect, and the
Company has no knowledge of a tax deficiency which has been or might be asserted
or threatened against it that would reasonably be expected to have a Material
Adverse Effect.

                  SECTION 3.16     Transfer Taxes. On the Closing Date, all
stock transfer or other taxes which are required to be paid in connection with
the initial issuance of the Shares to be sold to the Investor hereunder will be,
or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been fully complied with.

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                  SECTION 3.17     Registration and Listing of Stock.
The Company's Common Stock is registered pursuant to Section 12(g) of the
Exchange Act and is listed on the AMEX, and the Company has taken no action
designed to, or likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act or de-listing the Common Stock from the
AMEX, nor has the Company received any notification that the SEC or the AMEX is
contemplating terminating such registration or listing, except as presented on
Schedule 3.16.

                  SECTION 3.18     No Manipulation of Stock. The Company has not
taken any action designed to or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Common Stock in
contravention of Regulation M under the Securities Act to facilitate or in
connection with the Transactions.

                  SECTION 3.19     Investment Company. The Company is not an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for an investment company, within the meaning of the Investment
Company Act of 1940, as amended.

                  SECTION 3.20     Insurance. The Company maintains insurance
with sound and reputable insurance companies of the types and in the amounts
that the Company reasonably believes is adequate for its business, including,
but not limited to, insurance covering all real and personal property owned,
licensed or leased by the Company and its Subsidiaries against all risks
customarily insured against by similarly situated companies, all of which
insurance is in full force and effect.

                  SECTION 3.21     Securities Matters.
                                   ------------------

                  (a) The Company has complied in all material respects with all
applicable Laws, including securities laws, in connection with the offer,
issuance and sale of the Shares hereunder.

                  (b) The Registration Statement has been declared effective by
the Commission and there is no stop order suspending the effectiveness of the
Registration Statement. The Company meets the requirements for the use of Form
S-3 under the Securities Act. The Registration Statement in the form in which it
became effective and also in such form as it may be when any post-effective
amendment thereto became effective and the Prospectus and any supplement or
amendment thereto, including any Prospectus Supplement relating to the Shares,
when filed with the Commission under Rule 424(b) under the Securities Act,
complied as to form with the provisions of the Securities Act and did not at any
such times contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Commission has not issued any order preventing or suspending the
use of any Prospectus.

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                  (c) As of the Closing Date, the Registration Statement as
supplemented by prospectus supplements does not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

                  (d) As of the Closing Date, the Company has taken (or soon as
practical thereafter will take) all such action as is necessary, appropriate or
customary to designate the Shares as shares being registered pursuant to the
Registration Statement, including without limitation filing with the Commission
an applicable Prospectus Supplement. The Company will deliver to Investor,
without charge, and in such quantities reasonably requested by the Investor,
copies of each form of Prospectus and Prospectus Supplement.

                  SECTION 3.22     Employees. As of the date hereof, the Company
has no collective bargaining arrangements or agreements covering any of its
employees. As of the date hereof, since January 1, 2001, no officer, consultant
or key employee of the Company whose termination, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, has
terminated or, to the knowledge of the Company, has any present intention of
terminating his or her employment or engagement with the Company.

                  SECTION 3.23     Debt. No Debt is outstanding or owed by the
Company except the Debt listed on Schedule 3.23. Set forth on Schedule 3.23 is a
list of all amounts of outstanding Debt of the Company for borrowed money and
the maturity dates thereof.

                  SECTION 3.24     Liens. No lien, mortgage, pledge or security
interest exists upon or with respect to any of Company's properties or assets.

                                  ARTICLE IV

                 Representations and Warranties of the Investor
                 ----------------------------------------------

                  The Investor hereby represents and warrants to the Company as
of the date hereof as follows:

                  SECTION 4.01     Organization; Authority; Consents;
Enforceability. The Investor is a corporation duly organized, validly existing
and in good standing under the laws of the State of North Carolina and has all
requisite power and authority to own its properties and assets and to carry on
its business as it is now being conducted and as currently proposed to be
conducted. The Investor has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the Stock Purchase. The
execution and delivery of this Agreement and consummation of the Stock Purchase
have been duly authorized by all necessary corporate action on the part of the
Investor and no other corporate proceedings on the part of the Investor are
necessary to authorize this Agreement or to consummate the Stock Purchase. This
Agreement has been duly and validly executed and delivered by the Investor and
constitutes a valid, legal and binding agreement of the Investor, enforceable
against the Investor in accordance with its

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<PAGE>

terms. Except for applicable filings, if any, with the Commission pursuant to
the Exchange Act and the Securities Act, no consent, authorization or order of,
or filing or registration with, any Governmental Authority is required to be
obtained or made by the Investor for the execution, delivery and performance of
this Agreement or the consummation of the Stock Purchase. Neither the execution,
delivery and performance of this Agreement by the Investor nor the consummation
by the Investor of the Stock Purchase will (i) conflict with or result in any
breach of any provision of the certificate of incorporation or bylaws of the
Investor or (ii) subject to the filings and other matters set forth in the
preceding sentence, violate any Law applicable to the Investor, except in the
case of clause (ii) for such violations which would not reasonably be expected
to have a material adverse effect on the ability of the Investor to timely
perform its obligations under this Agreement. The Investor is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for an investment company within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission promulgated
thereunder.

                  SECTION 4.02     Investment. The Investor (a) is an
"accredited investor", as such term is defined in Rule 501(a) of Regulation D
under the Securities Act; (b) is acquiring the Shares for its own account, for
investment and not with a view to the resale or distribution thereof in
violation of any applicable securities Law; (c) understands that the Shares are
subject to additional transfer and other restrictions set forth in this
Agreement; (d) understands that an investment in the Shares involves a high
degree of risk and the Investor may have to hold the Shares indefinitely and the
Investor may lose its entire investment; (e) has conducted and completed to its
satisfaction such "due diligence" and other investigations and evaluations in
connection with this investment as it has deemed appropriate or advisable; and
(f) has such knowledge and experience in business and financial matters so as to
enable it to understand and evaluate the risks of, form an investment decision
with respect to, and protect its interest in connection with, its investment in
the Shares.

                  SECTION 4.03     Compliance. The Investor has been and is in
compliance in all material respects with all applicable Laws in respect of the
conduct of its business and the ownership of its properties, except where
failure to so comply would not reasonably be expected have a Material Adverse
Effect.

                  SECTION 4.04     Securities Matters. The Investor has complied
in all material respects with all applicable Laws, including securities laws, in
connection with its purchase of the Shares hereunder.

                                   ARTICLE V

                                   Covenants
                                   ---------

                  SECTION 5.01     Covenants of the Company. The Company
covenants with the Investor as follows, which covenants are for the benefit of
the Investor and its permitted assignees, that:

                                       12

<PAGE>

                  (a) Securities Compliance. The Company shall notify the
Commission and the AMEX in accordance with their rules and regulations, of the
transactions contemplated by this Agreement, and shall take all other necessary
action and proceedings as may be required by applicable Law for the legal and
valid issuance of the Shares to the Investor.

                  (b) Registration and Listing of the Shares. The Company will
take all action necessary to cause its Common Stock to continue to be registered
under Sections 12(b) or 12(g) of the Exchange Act, will comply in all respects
with its reporting and filing obligations under the Exchange Act, and will not
take any action or file any document (whether or not permitted by the Securities
Act) to terminate or suspend such registration or to terminate or suspend its
reporting and filing obligations under the Exchange Act or Securities Act,
except as permitted herein or in a transaction approved by the Company's
shareholders. The Company will take all action necessary to continue the listing
or trading of its Common Stock and the listing of the Shares purchased by
Investor hereunder on the AMEX or an Alternate Market and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the AMEX or an Alternate Market, except pursuant to a
transaction approved by the Company's shareholders.

                  (c) Compliance with Certain Material Agreements. The Company
shall perform and fulfill all of its obligations, and shall cause its Affiliates
to perform and fulfill all of their respective obligations, under the BDS
Agreement and the Serono Agreements as necessary to maintain the Company's and
its Affiliates' respective rights in such agreements in full force and effect in
all material respects. The Company shall provide written notice to Investor
within five (5) Business Days of the Company's or any of its Affiliate's receipt
of any notice from any other parties to the BDS Agreement or the Serono
Agreements proposing or threatening to terminate any such agreement.

                  (d) Columbia Laboratories (Bermuda) Limited Crinone License.
Promptly following the Closing, the Company shall grant, and shall cause
Columbia Laboratories (Bermuda) Limited to accept, a license to use certain
patents, trademarks and technology related to its Crinone product as necessary
and appropriate in connection with Columbia Laboratories (Bermuda) Limited's
grant of a license of such Crinone patents, trademarks and technology to Ares
Trading S.A. pursuant to the Amended and Restated License and Supply Agreement
by and between Columbia Laboratories (Bermuda) Limited and Ares Trading S.A.
dated as of June 4, 2002.

                  SECTION 5.02     Covenants of the Investor. The Investor
covenants with the Company as follows, which covenants are for the benefit of
the Company and its successors and permitted assigns, that:

                  (a) Lock-Up. The Investor hereby agrees that, the Investor
shall not, directly or indirectly, sell, assign, convey, transfer, pledge, grant
an option with respect to or otherwise dispose of or encumber any of the Shares
(or any interest therein), without the prior written consent of the Company;
provided that the foregoing restrictions shall terminate with respect to 12 1/2
% of the Shares on January 31, 2003, and with respect to

                                       13

<PAGE>

an additional 12 1/2 % of the Shares on each of April 30, 2003, July 31, 2003,
October 31, 2003, January 31, 2004, April 30, 2004, July 31, 2004, and October
31, 2004, and provided further that the foregoing restrictions in this Section
5.02(a) shall terminate as to 100% of the Shares upon the occurrence of an Event
of Default under the Royalty Agreement. Notwithstanding the foregoing, the
Investor shall be entitled to transfer the Shares to any Affiliate of the
Investor provided that such Investor Affiliate shall have agreed in writing with
the Company to be bound by the terms of this Agreement to the same extent, and
in the same manner, as the Investor prior to such transfer. The Investor shall
comply with all applicable Laws in connection with every offer, sale, or other
transfer of the Shares. Any purported transfer in violation of this Section will
not be registered on the books of the Company and shall be null and void.

                  (b) Stand-Still. In addition, the Investor agrees that for a
period of two (2) years from the date of this Agreement, neither it nor any of
its Affiliates will, unless (and then only to the extent) specifically approved
in writing by the Company's Board of Directors, directly or indirectly, in any
manner: (a) acquire, offer or propose to acquire, solicit an offer to sell or
agree to acquire, directly or indirectly, alone or in concert with others, by
purchase or otherwise, any direct or indirect beneficial interest in any voting
securities of the Company or securities convertible into, or exchangeable for,
such voting securities, or rights, warrants or options to acquire any voting
securities of the Company; (b) make, or in any way participate in, directly or
indirectly, alone or in concert with others, any "solicitation" of "proxies" to
vote (as such terms are used in the proxy rules of the Commission promulgated
pursuant to Section 14 of the Exchange Act) or seek to advise or influence in
any manner whatsoever any Person with respect to the voting of any voting
securities of the Company; (c) form, join or any way participate in a "group"
within the meaning of Section 13(d)(3) of the Exchange Act with respect to any
voting securities of the Company; (d) acquire, offer to acquire or agree to
acquire, directly or indirectly, alone or in concert with others, by purchase,
exchange or otherwise, other than pursuant to the Royalty Agreement, (i) any of
the assets, tangible and intangible, of the Company or any of its Affiliates or
(ii) direct or indirect rights, warrants or options to acquire any assets of the
Company or any of its Affiliates, in each case except for transactions in the
ordinary course of business of the Company; (e) arrange, or in any way
participate, directly or indirectly, in any financing for a purchase of
securities prohibited by clause (a) above or assets prohibited by clause (d)
above; (f) otherwise act, alone or in concert with others, to seek to propose to
the Company or any of its stockholders any merger, business combination,
restructuring, recapitalization or other transaction involving the Company or
any of its Affiliates or otherwise seek, alone or in concert with others, to
control, change or influence the management, board of directors or policies of
the Company or any of its Affiliates or nominate any person as a director who is
not nominated by the then incumbent directors, or propose any matter to be voted
upon by the stockholders of the Company or any of its Affiliates; (g) make any
request or proposal to amend, waive or terminate any provision of this Section;
or (h) announce an intention to do, or enter into any arrangement or
understanding with others to do, any of the actions restricted or prohibited
under clauses (a) through (g) of this Section; provided however that the
foregoing restrictions in this Section 5.02(b) shall terminate upon the
occurrence of an Event of Default under the Royalty Agreement.

                                       14

<PAGE>

                                   ARTICLE VI

                                  Miscellaneous
                                  -------------

                  SECTION 6.01     Legend.
                                   ------

                  (a) Each certificate representing Shares shall be stamped with
legends substantially in the following form:

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
         RESTRICTIONS ON TRANSFER AND OTHER MATTERS SET FORTH IN A STOCK
         PURCHASE AGREEMENT BETWEEN THE ISSUER OF THIS SECURITY AND THE INITIAL
         HOLDER HEREOF, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF
         THE ISSUER. NO REGISTRATION OF TRANSFER OF THIS SECURITY WILL BE MADE
         ON THE BOOKS OF THE ISSUER UNLESS AND UNTIL SUCH RESTRICTIONS HAVE BEEN
         COMPLIED WITH. ANY PURPORTED TRANSFER NOT IN COMPLIANCE SHALL BE NULL
         AND VOID.

                  (b) Upon written request of PharmaBio Development, Inc.
tendering a stock certificate bearing the legend in Section 6.01(a), the legend
in Section 6.01(a) shall be removed with respect to the portion of the Shares
represented by the tendered stock certificate as to which the lock-up
restriction in Section 5.02(a) has lapsed and the Company shall promptly issue a
stock certificate without such legend with respect to all such unrestricted
Shares as of the date of certificate issuance and a second stock certificate
bearing the legend in Section 6.01(a) for the balance of the Shares represented
by the tendered stock certificate that remain subject to the lock-up restriction
in Section 5.02(a) as of the date of certificate issuance.

                  SECTION 6.02     Notices. All notices, demands, requests,
consents or other communications (collectively, "Notices") required or permitted
to be given hereunder, or that are given with respect to this Agreement, shall
be in writing and shall be personally served, delivered by reputable "next
business day" air courier service with charges prepaid, or transmitted by hand
delivery or facsimile, addressed as set forth below, or to such other address as
such party shall have specified most recently by written notice:

if to the Company, to:     Columbia Laboratories, Inc.
                           220 South Orange Avenue
                           Livingston, New Jersey 07039
                           Attention: General Counsel
                           Facsimile:  (973) 994-3001

if to Purchaser:           PharmaBio Development Inc.
                           4709 Creekstone Drive
                           Suite 200 Riverbirch Bldg.
                           Durham, NC 27703
                           Attn:  President
                           Facsimile:  (919) 998-2090

                                       15

<PAGE>

         with a copy to:   Smith, Anderson, Blount, Dorsett
                           Mitchell & Jernigan, L.L.P.
                           2500 First Union Capitol Center
                           Raleigh, NC 27601
                           Attn: Christopher B. Capel
                           Facsimile: (919) 821-6800

Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by facsimile. Notice otherwise sent as provided
herein shall be deemed given on the next business day following delivery of such
notice to a reputable "next business day" air courier service.

                  SECTION 6.03     Governing Law. This Agreement shall be
governed by, interpreted under, and construed in accordance with the laws of the
State of Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law thereof.

                  SECTION 6.04     Dispute Resolution Procedures. The parties
agree that any dispute, difference, claim, action, demand, request,
investigation, controversy, threat, request for testimony or information or
other question arising with respect to this Agreement or any of the transactions
contemplated hereby shall be deemed a "Dispute" within the meaning of the
Royalty Agreement and shall be resolved using the Dispute Resolution Procedures
contained in the Royalty Agreement.

                  SECTION 6.05     Attorneys' Fees. A party in breach of this
Agreement shall, on demand, indemnify and hold harmless the other party for and
against all reasonable out-of-pocket expenses, including legal fees, incurred by
such other party by reason of the enforcement and protection of its rights under
this Agreement. The payment of such expenses is in addition to any other relief
to which such other party may be entitled.

                  SECTION 6.06     Further Actions. Each party shall, without
further consideration, take such further action and execute and deliver such
further documents as may be reasonably requested by the other party in order to
carry out the provisions and purposes of this Agreement.

                  SECTION 6.07     Survival. The representations, warranties,
covenants and agreements made herein by the Company and the Investor shall
survive the Closing for a period of one year.

                  SECTION 6.08     Entire Agreement. This Agreement constitutes
the entire agreement of the parties with respect to the subject matter hereof
and supersedes all prior agreements, understandings, negotiations and
discussions between the parties, whether oral or written, with respect to the
subject matter hereof.

                                       16

<PAGE>

                  SECTION 6.09     Modifications and Amendments. No amendment,
modification or termination of this Agreement shall be binding upon any other
party unless executed in writing by the parties intended to be bound thereby.

                  SECTION 6.10     Waivers and Extensions. Any party to this
Agreement may waive any right, breach or default that such party has the right
to waive, provided that such waiver will not be effective against the waiving
party unless it is in writing, is signed by such party, and specifically refers
to this Agreement. Waivers may be made in advance or after the right waived has
arisen or the breach or default waived has occurred. Any waiver may be
conditional. No waiver of any breach of any agreement or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach thereof
nor of any other agreement or provision herein contained.

                  SECTION 6.11     Titles and Headings; Rules of Construction.
Titles and headings of sections of this Agreement are for convenience only and
shall not affect the construction of any provision of this Agreement. Unless the
context otherwise requires: (a) a term has the meaning assigned to it; (b) "or"
is not exclusive; (c) "including" means including without limitation; and (d)
words in the singular include the plural and words in the plural include the
singular. The parties hereto have participated jointly in the negotiation and
drafting of this Agreement and, in the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as jointly drafted
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provision of this
Agreement.

                  SECTION 6.12     Expenses; Brokers. Except as otherwise
expressly provided in this Agreement, the Company and the Investor shall each
bear all of their own costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby. Each of the parties hereto
represents to the other party that neither it nor any of its Affiliates has used
a broker or other intermediary in connection with the Transactions for whose
fees or expenses any other party will be liable; and each party agrees to
indemnify and hold the other party to this Agreement harmless from and against
any and all claims, liabilities or obligations with respect to any such fees or
expenses asserted by any Person on the basis of any act or statement alleged to
have been made by such party or any of its Affiliates.

                  SECTION 6.13     Press Releases and Public Announcements.
Except as otherwise required by applicable Law or by obligations pursuant to any
listing agreement with or rules of any securities exchange or automated
quotation system, each party shall, and shall cause its respective Affiliates
to, not issue any press release or make any other public statement or disclosure
relating to, connected with or arising out of the Transaction Documents or the
Transactions without the other parties' prior written approval of the contents
and the manner of presentation and publication thereof (which approval shall not
be unreasonably withheld or delayed).

                  SECTION 6.14     Assignment; No Third Party Beneficiaries.
This Agreement and the rights, duties and obligations hereunder may not be
assigned or delegated by any party hereto without the prior written consent of
the other party hereto

                                       17

<PAGE>

and any purported assignment without such consent shall be void and of no
effect, provided that this Agreement and the rights, duties and obligations
hereunder may be assigned or delegated by the Investor to any of its Affiliates
at any time without the consent of the Company provided that such Investor
Affiliate shall have agreed in writing with the Company to be bound by the terms
of this Agreement to the same extent, and in the same manner, as the Investor
prior to such transfer. This Agreement and the provisions hereof shall be
binding upon and shall inure to the benefit of each of the parties and their
respective successors and permitted assigns. This Agreement is not intended to
confer any rights or benefits on any Person other than the parties and their
respective successors and permitted assigns.

                  SECTION 6.15     Severability. This Agreement shall be deemed
severable, and the invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of this Agreement or of
any other term or provision hereof. Furthermore, in lieu of any such invalid or
unenforceable term or provision, the parties hereto intend that there shall be
added as a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and
enforceable.

                  SECTION 6.16     Counterparts. This Agreement and any
amendment hereto may be executed in any number of counterparts and any party
hereto may execute any such counterpart, each of which when executed and
delivered shall be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument. The execution of this
Agreement and any such amendment by any party hereto will not become effective
until counterparts hereof have been executed by both parties hereto. This
Agreement may be executed by either party by delivery of such party's facsimile
signature thereon.

                            [signature page follows]

                                       18

<PAGE>

                                  [Signature Page to Stock Purchase Agreement]

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

                                                     COLUMBIA LABORATORIES, INC.

                                                     By: /S/ Fred Wilkinson
                                                         ------------------
                                                     Name: Fred Wilkinson
                                                     Title: President & CEO
                                                             7/31/02

                                                     PHARMABIO DEVELOPMENT INC.

                                                     By: /S/ Ronald J. Wooten
                                                         --------------------
                                                     Name: Ronald J. Wooten
                                                     Title: President
                                                             7/31/02

                                       19<PAGE>

                        INVESTMENT AND ROYALTY AGREEMENT

This Investment and Royalty Agreement (this "Agreement") is made as of July 31,
2002, by and between Columbia Laboratories, Inc., a Delaware corporation
("Columbia"), and PharmaBio Development Inc., a North Carolina corporation
("PharmaBio").

Background and Overview

A.     Contemporaneously with this Agreement, the parties are entering into a
       Stock Purchase Agreement, whereby PharmaBio is purchasing shares of stock
       of Columbia (the "Stock Purchase Agreement").

B.     PharmaBio is willing to provide certain additional funds to Columbia,
       subject to and upon the terms and conditions below.

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

1.0    Definitions.

1.1    "Advantage-S" shall mean the over-the-counter vaginal contraceptive gel
       product containing nonoxynol-9 currently marketed in the Territory as
       Advantage-S(R), and any other over-the-counter vaginal contraceptive
       product marketed by Columbia or its Affiliates, licensees or sublicensees
       as a replacement or substitute for or in lieu of Advantage-S.

1.2    "Adverse Marketing Event" shall mean the occurrence of any of the
       following: (i) Columbia or its licensees shall withdraw, or be required
       by the FDA or other governmental authority to withdraw, Crinone or
       Prochieve from the market for any reason for a period that is, or is
       reasonably expected to be, greater than [***]days; or (ii) Columbia or
       its licensees shall fail to have a supply of Crinone or Prochieve, or any
       ingredients or components thereof, consistent with past quantities and
       practices, for a period of time that is, or is reasonably expected to be,
       greater than [***] days.

1.3    "Affiliate" shall mean, as to any person or entity, any corporation or
       business entity controlled by, controlling, or under common control with
       such person or entity. For this purpose, "control" shall mean direct or
       indirect beneficial ownership of at least fifty percent (50%) of the
       voting stock or income interest in such corporation or other business
       entity, or such other relationship as, in fact, constitutes actual
       control.

1.4    "Annual Period" shall mean a twelve-month period beginning on January 1,
       2003 and each anniversary thereof.

1.5    "Crinone" shall mean the vaginal progesterone gel product containing
       progesterone in a

     [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

       concentration of four percent (4%) or eight percent (8%) currently
       marketed in the Territory by Serono, Inc. for secondary amenorrhea and
       assisted reproductive technology and any other vaginal progesterone
       product marketed by Columbia or its Affiliates, licensees or sublicensees
       as a replacement or substitute for or in lieu of Crinone.

1.6    "Debt" shall mean (i) indebtedness for borrowed money, (ii) obligations
       evidenced by bonds, debentures, notes or other similar instruments, (iii)
       obligations to pay the deferred purchase price of property or services,
       (iv) obligations as lessee under leases which shall have been or should
       be, in accordance with generally accepted accounting principles, recorded
       as capital leases, and (v) obligations under direct or indirect
       guaranties in respect of, and obligations (contingent or otherwise) to
       purchase or otherwise acquire, or otherwise to assure a creditor against
       loss in respect of, indebtedness or obligations of others of the kinds
       referred to in clauses (i) through (iv) above. For the avoidance of
       doubt, Debt shall not include day-to-day obligations and payables
       incurred by Columbia in the ordinary course of business.

1.7    "FDA" shall mean the United States Food and Drug Administration.

1.8    "GAAP" shall mean generally accepted accounting principles.

1.9    "Liens" shall mean any lien, security interest, mortgage, pledge,
       encumbrance, charge or claim.

1.10   "Master Services Agreement" shall mean the agreement and initial work
       order, dated as of the date hereof, between Columbia and Innovex LP, a
       New Jersey limited partnership, whose address is 10 Waterview Boulevard,
       Parsippany, NJ 07054 ("Innovex"), which is an Affiliate of PharmaBio,
       pursuant to which Innovex agrees to provide contract sales services to
       Columbia.

1.11   "Minimum Sales Force Level" shall mean a Columbia sales force size of not
       less than forty (40) Columbia sales representatives promoting Prochieve
       in the first or second detailing positions, provided that any open sales
       territory for which Columbia or Innovex is actively recruiting a sales
       representative shall be counted as a Columbia sales representative for
       purposes of this definition.

1.12   "Net Sales" shall mean the gross amount billed or invoiced by Columbia or
       an Affiliate or any licensee or sublicensee (or other transferee), or on
       behalf of or for the benefit of Columbia or an Affiliate or any licensee
       or sublicensee (or other transferee), for sales of the Products, to a
       third party in the Territory, less the following items, but only to the
       extent such items are included in such gross amount and without
       duplication:

                (i)       discounts, including cash and quantity discounts,
                          charge-back payments, refunds and rebates granted to
                          managed health care organizations or similar
                          organizations or to federal, state and local
                          governments (including, without limitation, Medicaid
                          rebates), their agencies, and purchasers and
                          reimbursers or to trade customers, including but not
                          limited to,

     [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                                       2

<PAGE>

                          wholesalers and chain and pharmacy buying groups;

                (ii)      actual credits or allowances resulting from customer
                          claims, damaged goods, rejections or returns of the
                          Products, including recalls, regardless of the party
                          requesting such;

                (iii)     freight, postage, shipping and insurance charges
                          actually allowed or paid for delivery of Products, to
                          the extent billed;

                (iv)      taxes, duties or other governmental charges levied on,
                          absorbed or otherwise imposed on sale of such
                          Products, including without limitation value-added
                          taxes, or other governmental charges otherwise
                          measured by the billing, when included in billing, as
                          adjusted for rebates, charge-backs and refunds, but
                          not including income or similar taxes; and

                (v)       actual write-offs of uncollectible customer accounts
                          for recorded sales, provided that (x) any subsequent
                          collection of such uncollectible accounts shall be
                          restored as Net Sales at the time of collection and
                          (y) Columbia shall follow commercially reasonable
                          practices of collecting and otherwise administering
                          such accounts.

         Notwithstanding the foregoing, for so long as the Amended and Restated
         License and Supply Agreement dated as of June 4, 2002 (the "License and
         Supply Agreement") between Columbia Laboratories (Bermuda) Limited and
         Ares Trading S.A. ("Ares") is in effect, then with respect to Crinone,
         "Net Sales" shall mean the gross amount billed or invoiced by Columbia
         or an Affiliate or any licensee or sublicensee (or other transferee),
         or on behalf of or for the benefit of Columbia or an Affiliate or any
         licensee or sublicensee (or other transferee), for sales of Crinone to
         Ares or an Affiliate or any licensee or sublicensee (or other
         transferee) (and shall not mean sales of Crinone by Ares or an
         Affiliate or any licensee or sublicensee (or other transferree)), which
         amount shall include any additional amounts paid by Ares or an
         Affiliate or any licensee or sublicensee (or other transferee) with
         respect to sales made in the "Non-Fertility Specialist Market"
         including without limitation pursuant to Section 5(a) of the License
         and Supply Agreement.

1.13     "Prochieve" shall mean the vaginal progesterone gel product containing
         progesterone in a concentration of four percent (4%) or eight percent
         (8%) to be marketed in the Territory under the trademark Prochieve(TM),
         or any other trademark, for secondary amenorrhea and assisted
         reproductive technology or any other vaginal progesterone product
         marketed by Columbia or its Affiliates, licensees or sublicensees as a
         replacement or substitute for or in lieu of Prochieve .

1.14     "Product" shall mean each of Advantage-S, Crinone, Prochieve, and
         RepHresh and "Products" shall mean all of such products together, in
         each case for any and all formulations, delivery mechanisms and
         indications, including "off-label" uses.

     [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                                        3

<PAGE>

1.15   "Royalty Term" shall mean the five (5) consecutive Annual Periods
       beginning on January 1, 2003.

1.16   "RepHresh" shall mean the vaginal get product to be marketed in the
       Territory under the trademark RepHresh(TM), or any other trademark, for
       the elimination of vaginal odor and maintaining physiologic vaginal pH or
       any other vaginal gel product marketed by Columbia or its Affiliates,
       licensees or sublicensees as a replacement or substitute for or in lieu
       of RepHresh.

1.17   "Territory" shall mean the United States of America and all states
       thereof, the District of Columbia, and Puerto Rico.

2.0    Investment and Royalties; Related Agreements.

2.1    PharmaBio will make the following payments to Columbia:

       Payment Date                         Amount

       September 30, 2002                        $1,125,000

       December 31, 2002                         $1,125,000

       March 31, 2003                            $1,125,000

       June 30, 2003                             $1,125,000

       Notwithstanding the foregoing, upon the occurrence of an Event of Default
       (as defined below), PharmaBio may at any time, if an Event of Default
       shall then be continuing, by written notice to Columbia terminate this
       Agreement (including PharmaBio's obligations to pay the amounts set forth
       above), so long as Innovex is not in default in any material respect of
       its performance of its material obligations under the Master Services
       Agreement and the work orders thereunder relating to the Products. "Event
       of Default" shall mean and include each of the following:

       (a)    Columbia shall fail to pay any royalties to PharmaBio when the
              same become due and payable to PharmaBio and [***]business days
              have elapsed following receipt of written notice of such
              non-payment from PharmaBio to Columbia;

       (b)    Any material representation or warranty made by Columbia under
              this Agreement shall prove to have been untrue or incorrect in any
              material respect when made;

       (c)    Columbia shall fail to perform or comply with any material
              agreement or covenant made by Columbia under this Agreement in any
              material respect;

       (d)    Columbia shall sell, assign, license, lease or otherwise transfer
              all or substantially all of its assets or properties owned (or
              otherwise held by it) relating to one or more of the Products, in
              one or a series of related transactions, without the prior

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                                        4

<PAGE>

          written consent of PharmaBio;

     (e)  An Adverse Marketing Event shall occur;

     (f)  Columbia shall (i) commence a voluntary case under the federal
          bankruptcy laws (as now or hereafter in effect), (ii) file a petition
          seeking to take advantage of any other laws relating to bankruptcy,
          insolvency, reorganization, winding up or composition for adjustment
          of debts, (iii) consent to or fail to contest in a timely and
          appropriate manner any petition filed against it in an involuntary
          case under such bankruptcy laws or other laws, (iv) apply for or
          consent to, or fail to contest in a timely and appropriate manner, the
          appointment of, or the taking of possession by, a receiver, custodian,
          trustee, or liquidator of itself or of a substantial part of its
          property, (v) admit in writing its inability to pay its debts as they
          become due, (vi) make a general assignment for the benefit of
          creditors, or (vii) take any corporate action for the purpose of
          authorizing any of the foregoing;

     (g)  A case or other proceeding shall be commenced against Columbia in any
          court of competent jurisdiction seeking (i) relief under the federal
          bankruptcy laws (as now or hereafter in effect) or under any other
          laws relating to bankruptcy, insolvency, reorganization, winding up or
          adjustment of debts, or (ii) the appointment of a trustee, receiver,
          custodian, liquidator or the like for Columbia or any of its
          subsidiaries or for all or any substantial part of their respective
          assets, and such case or proceeding shall continue without dismissal
          or stay for a period of sixty (60) consecutive days, or an order
          granting the relief requested in such case or proceeding (including,
          but not limited to, an order for relief under such federal bankruptcy
          laws) shall be entered; or

     (h)  Any indebtedness of Columbia or any of its subsidiaries in excess of
          $[***] shall be declared to be due and payable, or required to be
          prepaid, prior to the stated maturity thereof, and Columbia shall fail
          to pay the same within [***]days of such declaration.

     In the event that PharmaBio terminates this Agreement upon an Event of
     Default, then Columbia shall pay to PharmaBio the aggregate amount (the
     "Repayment Amount") by which the aggregate amount of payments by PharmaBio
     under this Agreement (the "Aggregate Payments") exceeds the aggregate
     amount of royalties paid by Columbia to PharmaBio under this Agreement, in
     full satisfaction of Columbia's obligations under this Agreement. For
     purposes of this calculation interest shall accrue on the Aggregate
     Payments at a rate equal to the Prime Rate as announced from time to time
     by Wachovia Bank, N.A. (or its successor) plus [***]percent ([***]%),
     beginning with the payment of funds by PharmaBio to Columbia until the
     Repayment Amount is paid by Columbia. The Repayment Amount shall be payable
     over two (2) years in eight (8) equal quarterly installments beginning
     thirty (30) days after such termination. PharmaBio shall have no obligation
     to exercise its remedies under this Section 2.1 and in lieu of this Section
     2.1 may exercise its remedies under the other provisions of this Agreement.

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2.2  In consideration for the performance by PharmaBio of its funding
     commitments set forth in Section 2.1, Columbia shall pay PharmaBio
     royalties on Net Sales during the Royalty Term. The royalty payments
     payable by Columbia to PharmaBio with respect to each Annual Period are as
     follows:

               -------------------------------------------------------
               Annual Period during the        Royalty on Net Sales
               Royalty Term
               -------------------------------------------------------
               1                               5%
               -------------------------------------------------------
               2                               5%
               -------------------------------------------------------
               3                               5%
               -------------------------------------------------------
               4                               5%
               -------------------------------------------------------
               5                               5%
               -------------------------------------------------------

     Notwithstanding anything to the contrary contained in this Agreement, the
     total royalties payable to PharmaBio under this Section 2.2 shall not (i)
     exceed in the aggregate for all Annual Periods the amount of $[***] (the
     "Maximum Royalty Amount"), or (ii) provided PharmaBio is not in default of
     its payment obligations hereunder (and ten (10) business days shall have
     elapsed following receipt of written notice of such default from Columbia
     to PharmaBio), be less than $[***]in the aggregate for all Annual Periods.
     With respect to such minimum royalty commitment: if by February 28, 2005,
     PharmaBio has not received at least $[***]in aggregate royalties under this
     Section 2.2 (with respect to Net Sales during the Royalty Term through
     December 31, 2004), then Columbia will pay PharmaBio the difference between
     the amount of royalties actually received and $[***]; and at the end of the
     fifth (5th) Annual Period, if PharmaBio has not received at least $[***]in
     aggregate royalties under this Section 2.2, then Columbia will pay
     PharmaBio the difference between the amount of royalties actually received
     and $[***], provided that the time for payments under this sentence shall
     be extended by the period of any extension of the Royalty Term under
     Section 2.4, provided further that in no event shall such extension for
     payments under this sentence be extended more than six (6) months beyond
     the original due date. Such $[***]in minimum payments shall be payable by
     Columbia to PharmaBio notwithstanding the actual sales of the Products or
     other Product-related events, including without limitation any Adverse
     Marketing Event.

     The royalty payments under this Section 2.2 shall be paid by Columbia as
     soon as reasonably practicable following the end of each calendar quarter
     (but not later than forty five (45) days following the end of each calendar
     quarter, except following the fourth quarter, in which case Columbia shall
     have up to 60 days) during the five (5) Annual Periods in the Royalty Term.
     Accompanying each of Columbia's payments to PharmaBio under this Section,
     Columbia will provide to PharmaBio a report showing the applicable Net
     Sales and the calculation of the resulting royalty payment. Columbia also
     shall provide PharmaBio with all sales data for the Products that are
     available to Columbia.

2.3  As further consideration for PharmaBio's funding commitments set forth in
     Section 2.1,

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                                        6

<PAGE>

     on the date of this Agreement, Columbia shall pay to PharmaBio a fee in the
     amount of [***].

2.4  Columbia shall use its commercially reasonable efforts to commercialize the
     Products in the Territory. In this regard, Columbia will provide a sales
     force of an average size, calculated on a quarterly basis, not less than
     the Minimum Sales Force Level during the Royalty Term. If, at any time
     during such period, (a) Columbia reduces the Products' average sales force
     below the Minimum Sales Force Level for a period of more than sixty (60)
     days and Innovex is not in default in any material respect of its
     performance of its material obligations under the Master Services Agreement
     and the work orders thereunder relating to the Products or (b) an Adverse
     Marketing Event shall occur, then Columbia and PharmaBio will negotiate in
     good faith to restructure PharmaBio's commitments under Section 2.1 and the
     corresponding royalty amounts under Section 2.2, which negotiations will
     take into account the implications of the reduced sales force size or
     Adverse Marketing Event, as the case may be, on future sales of the
     Products. If the parties are unable to agree to such restructuring within
     thirty (30) days after PharmaBio gives written notice to Columbia of its
     intent to pursue a remedy under this Section 2.3, then, provided Innovex is
     not in default in any material respect of its performance of its material
     obligations under the Master Services Agreement and the work orders
     thereunder relating to the Products, PharmaBio may, at its sole discretion
     by written notice to Columbia, elect to (i) suspend all future funding
     obligations under Section 2.1; and (ii) extend the Royalty Term (including,
     without limitation, the then-current Annual Period). During the suspension
     and extension period, PharmaBio shall continue to receive royalties at the
     rate equal to the royalty amount applicable immediately prior to the
     effective date of the suspension and extension period. If PharmaBio elects
     this remedy, the then operating Annual Period for royalty payments under
     Section 2.2, and the funding commitments under Section 2.1, shall be
     extended until the Minimum Sales Force Level is satisfied or the Adverse
     Marketing Event no longer exists, as the case may be. The funding
     commitments under Section 2.1 shall resume as soon as Columbia achieves the
     Minimum Sales Force Level or the Adverse Marketing Event no longer exists,
     as the case may be, and the end of the then current Annual Period shall be
     extended for the amount of the suspension and extension period, such that
     PharmaBio enjoys the full length of the five (5) Annual Periods described
     in Section 2.2 with the benefit of the Minimum Sales Force Level or absence
     of the Adverse Marketing Event, as the case may be, for five (5) full
     twelve-month periods, and the term "Royalty Term" shall, for all purposes
     under this Agreement, be extended accordingly.

2.5  Each party hereto shall keep or cause to be kept such records as are
     required to determine, in a manner consistent with GAAP, the sums or
     credits due under this Agreement. Each party shall have the right, at such
     party's expense, through a certified public accountant or like person
     reasonably acceptable to the other party, upon execution of a customary
     confidentiality agreement, to examine such records during regular business
     hours upon reasonable notice during the term of this Agreement and for
     twelve (12) months after its termination; provided however, that (i) such
     examination shall not take place more than once a year and shall not cover
     such records for more than the preceding Annual Period, and (ii) such
     accountant shall report to both parties only as to

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                                       7

<PAGE>

     the accuracy of the reports or payments provided or made by the other party
     under this Agreement. Any adjustments required as a result of overpayments
     or underpayments identified through a party's exercise of examination
     rights, and any other adjustments that may be required from time to time in
     order to correct overpayments or underpayments under this Agreement, shall
     be made by subtracting or adding, as appropriate, amounts from or to the
     next royalty payment in accordance with Section 2.2. The party requesting
     the examination shall bear the full cost of the examination unless such
     examination correctly discloses that the discrepancy for the Annual Period
     differs by more than five (5) percent from the amount the accountant
     determines is correct, in such case the owing party shall pay the
     reasonable fees and expenses charged by the accountant. In the event that a
     party disputes an invoice or other payment obligation under this Agreement,
     such party shall timely pay the amount of the invoice or other payment
     obligation, and the parties shall resolve such dispute in accordance with
     Section 11.

2.6  Without the prior written approval of PharmaBio, Columbia shall not, nor
     shall it allow any Affiliate or third party acting on behalf of or for the
     benefit of Columbia or any Affiliate to, commercialize or promote a product
     that could reasonably be expected to compete with a Product in the
     Territory during the Royalty Term.

2.7  The Chief Financial Officers ("CFOs") of Columbia and PharmaBio shall
     coordinate the activities of the parties under this Agreement. The CFOs
     shall meet or communicate (in person or by telephone conference) on a
     regular basis as may be reasonably requested by either of them, but no less
     frequently than semi-annually about the performance of the parties under
     this Agreement. The parties acknowledge that a Steering Committee will be
     established as described in the Master Services Agreement. The parties
     agree that, in addition to the activities described in the Master Services
     Agreement, the Steering Committee will coordinate and facilitate the
     overall commercialization relationship among PharmaBio and its Affiliates
     and Columbia and its Affiliates, including with respect to this Agreement.

2.8  As further consideration for PharmaBio's funding obligations under this
     Agreement, Columbia hereby makes the representations and warranties set
     forth in Article III of the Stock Purchase Agreement.

2.9  Columbia agrees not to sell, assign, license, lease or otherwise transfer
     all or any substantial portion of its assets or properties owned (or
     otherwise held) relating to Crinone or Prochieve in one or a series of
     related transactions, without the prior written consent of PharmaBio, which
     consent shall not be unreasonably withheld or delayed.

2.10 Without the prior written consent of PharmaBio, which consent shall not be
     unreasonably withheld or delayed, Columbia shall not create or incur or
     allow to be created, incurred or exist any Debt, except Debt which is
     junior and subordinate in right of payment to Columbia's minimum payment
     obligations under Section 2.2 ("Junior Debt"), so long as prior to the
     creation of such Junior Debt the holder thereof has agreed to subordination
     terms and conditions in form and substance reasonably satisfactory to
     PharmaBio providing for the subordination of the Junior Debt to such
     minimum payment obligations.

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                                        8

<PAGE>

     Columbia and PharmaBio agree that Columbia's payment obligations under this
     Agreement, including such minimum payment obligations in Section 2.2, shall
     be and constitute "Senior Indebtedness" as such term is used in the 7?%
     Convertible Subordinated Note (No. R-1 $10,000,000) issued by Columbia to
     SBC Warburg Dillon Read Inc. dated March 16, 1998 (including any
     refinancing, replacement, substitution or restatement of such Note).

2.11 Without the prior written consent of PharmaBio, which consent shall not be
     unreasonably withheld or delayed, Columbia shall not create or incur or
     allow to be created, incurred or exist any Lien upon or with respect to any
     of Columbia's assets or properties, except Liens securing Debt or other
     obligations which are junior and subordinate in right of payment to
     Columbia's minimum payment obligations under Section 2.2 ("Junior Liens"),
     so long as prior to the creation of such Junior Liens the holder thereof
     has agreed to subordination terms and conditions in form and substance
     reasonably satisfactory to PharmaBio providing for the subordination of the
     Junior Liens to such minimum payment obligations.

3.0  Confidentiality and Ownership of Information.

3.1  Columbia on the one part and PharmaBio on the other part each acknowledges
     that, in the course of performing its obligations hereunder, it may receive
     information from the other party which is proprietary to the disclosing
     party and which the disclosing party wishes to protect from public
     disclosure ("Confidential Information"). Each receiving party agrees to
     retain in confidence, during the Royalty Term, and thereafter for a period
     of five (5) years, all Confidential Information disclosed to it by or on
     behalf of the other party, and that it will not, without the written
     consent of such other party, use Confidential Information for any purpose
     other than the purposes indicated herein or disclose such information to a
     third party. These restrictions shall not apply to Confidential Information
     which: (i) is or becomes public knowledge (through no fault of the
     receiving party); (ii) is made lawfully available to the receiving party by
     an independent third party that, to the knowledge of the receiving party,
     is under no duty of confidentiality to the disclosing party; (iii) is
     already in the receiving party's possession at the time of receipt from the
     disclosing party (and such prior possession can be demonstrated by
     competent evidence by the receiving party); (iv) is independently developed
     by the receiving party and/or Affiliates (and such independent development
     can be demonstrated by competent evidence by the receiving party); or (v)
     is required by law, regulation, rule, act or order of any governmental
     authority or agency to be disclosed by the receiving party, provided,
     however, if reasonably possible, such receiving party gives the disclosing
     party sufficient advance written notice to permit it to seek a protective
     order or other similar order with respect to such Confidential Information
     and, thereafter, the receiving party may disclose only the minimum
     Confidential Information required to be disclosed in order to comply with
     such and only to the government authority or agency or in the proceeding
     which is the subject of such order.

3.2  PharmaBio on the one hand and Columbia on the other hand shall limit
     disclosure of the other party's Confidential Information to only those of
     their respective officers,

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                                       9

<PAGE>

     representatives, agents and employees who are directly concerned with the
     performance of this Agreement and have a legitimate need to know such
     Confidential Information in the performance of their duties and shall
     ensure that their respective officers, representatives, agents and
     employees to whom Confidential Information is disclosed do not further
     disclose such Confidential Information to any third party except as
     otherwise permitted hereunder.

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<PAGE>

3.3  All Columbia inventions, processes, know-how, patents, trade secrets,
     copyrights, trade names, trademarks, service marks, marketing materials,
     proprietary materials or other intellectual property of any kind, and all
     improvements to any of the foregoing (collectively, "Columbia Property"),
     disclosed, used, improved, modified or developed in connection with the
     relationship contemplated by this Agreement shall remain the sole and
     exclusive property of Columbia.

3.4  Columbia acknowledges that PharmaBio (and its Affiliates) possess certain
     inventions, processes, know-how, trade secrets, improvements, other
     intellectual properties and other assets, including but not limited to
     analytical methods, procedures and techniques, computer technical expertise
     and software, and business practices, which have been independently
     developed by PharmaBio and/or its Affiliates (collectively "PharmaBio
     Property"). Any PharmaBio Property or improvements thereto which are
     disclosed, used, improved, modified or developed under or during the term
     of this Agreement shall remain the sole and exclusive property of PharmaBio
     or the respective Affiliate.

3.5  Neither PharmaBio nor Columbia or any of their Affiliates shall make any
     public announcements regarding this Agreement or the terms and conditions
     thereof without the prior written approval of the other party, which
     approval shall not be unreasonably withheld or delayed, except to the
     extent such disclosure is required by law.

4.0  Grant of Certain Preferred Rights by Columbia to PharmaBio

4.1  Columbia hereby grants to PharmaBio (which for purposes of this Section
     shall mean and include its Affiliates), for a period of [***]years from the
     date hereof, a preferred provider relationship whereby PharmaBio shall have
     a first and preferred opportunity to negotiate for a period of [***]days
     with Columbia (which for purposes of this Section shall mean and include
     its Affiliates) to provide to Columbia any services which PharmaBio
     provides to customers and which Columbia has decided to outsource or
     otherwise engage a service provider to perform during the Royalty Term,
     including without limitation clinical and pre-clinical development,
     coordination and execution services, sales and marketing services,
     commercialization services, and similar services. Columbia shall allow and
     grant PharmaBio the right to provide such services if PharmaBio agrees to
     provide such services on competitive terms and conditions.

4.2  If at any time during the Royalty Term, Columbia elects to outsource or
     otherwise engage a service provider to perform sales and marketing
     services, commercialization services, or similar services for its product
     known as testosterone progressive hydration buccal, Columbia will not grant
     a third party the right to provide such services without first offering and
     giving PharmaBio and its Affiliates the opportunity to obtain such right
     and attempting in good faith for a period of at least thirty (30) days to
     reach an agreement between the parties for PharmaBio or an Affiliate to
     obtain such right.

5.0  Independent Contractor Relationship.

     For the purposes of this Agreement, Columbia and PharmaBio are independent

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<PAGE>

       contractors and nothing contained in this Agreement shall be construed to
       place them in the relationship of partners, principal and agent, employer
       and employee or joint venturers. Neither Columbia nor PharmaBio shall
       have the power or right to bind or obligate the other party, nor shall
       either party hold itself out as having such authority.

6.0    Termination.

6.1    Columbia may terminate this Agreement for material breach upon sixty (60)
       days written notice specifying the nature of the breach, if such breach
       (i) has not been substantially cured within the sixty (60) day period or
       (ii) is not curable within such 60-day period and the breaching party has
       not commenced and diligently continued during such 60-day period
       reasonable actions to cure such breach. During the 60-day cure period for
       termination due to breach, each party will continue to perform its
       obligations under this Agreement. Any termination under this Section 5
       shall be without prejudice to any claims for damages or other relief by
       Columbia.

6.2    This Agreement shall terminate upon the payment by Columbia to PharmaBio
       of the Maximum Royalty Commitment.

7.0    Indemnification and Liability Limits.

7.1    PharmaBio shall indemnify, defend and hold harmless Columbia, its
       Affiliates and its and their respective directors, officers, employees
       and agents from and against any and all losses, claims, actions, damages,
       liabilities, penalties, costs and expenses (including reasonable
       attorneys' fees and court costs) (collectively, "Losses"), resulting from
       any: (i) breach by PharmaBio (or its employees) of its obligations
       hereunder; (ii) willful misconduct or grossly negligent acts or omissions
       of PharmaBio or its employees; and (iii) violation by PharmaBio or its
       employees of any municipal, county, state or federal laws, rules or
       regulations applicable to the performance of PharmaBio's obligations
       under this Agreement; except, in each case, to the extent such Losses are
       determined to have resulted from the gross negligence or willful
       misconduct of Columbia or its employees.

7.2    Columbia shall indemnify, defend and hold harmless PharmaBio, its
       Affiliates and its and their respective directors, officers, employees
       and agents from and against any and all Losses resulting from any: (i)
       third party claim arising from the manufacture, storage, handling,
       packaging, labeling, production, transportation, distribution, marketing,
       testing, use, sale or other disposition of the Products; (ii) breach by
       Columbia (or its employees) of its obligations hereunder; (iii) willful
       misconduct or grossly negligent acts or omissions of Columbia or its
       employees; and (iv) violation by Columbia or its employees of any
       municipal, county, state or federal laws, rules or regulations applicable
       to the performance of Columbia' obligations under this Agreement, except,
       in each case, to the extent such Losses are determined to have resulted
       from the gross negligence or willful misconduct of PharmaBio or its
       employees.

7.3    In the event of a third party claim or lawsuit, the party seeking
       indemnification hereunder (the "Indemnified Party") shall give the party
       obligated to indemnify (the "Indemnifying

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<PAGE>

       Party") prompt written notice of any claim or lawsuit (including a copy
       thereof), provided that the failure of an Indemnified Party to notify the
       Indemnifying Party on a timely basis will not relieve the Indemnifying
       Party of any liability that it may have to the Indemnified Party unless
       the Indemnifying Party demonstrates that the defense of such action is
       materially prejudiced by the Indemnified Party's failure to give such
       notice. The Indemnified Party and its employees shall fully cooperate
       with Indemnifying Party and its legal representatives in the
       investigation and defense of any matter the subject of indemnification,
       which defense shall be managed by the Indemnifying Party in a manner,
       including the selection of legal counsel, reasonably acceptable to the
       Indemnified Party. The Indemnified Party shall not unreasonably withhold
       its approval of the settlement of any such claim, liability, or action by
       Indemnifying Party covered by this indemnification provision; provided
       that such settlement does not include an admission or acknowledgement of
       liability or fault of the Indemnified Party.

7.4    Neither PharmaBio nor Columbia, nor any of such party's Affiliates,
       directors, officers, employees, subcontractors or agents shall have,
       under any legal theory (including, but not limited to, contract,
       negligence and tort liability), any liability to any other party hereto
       for any loss of profits, opportunity or goodwill, or any type of special,
       incidental, indirect or consequential damage or loss, in connection with
       or arising out of this Agreement. For the avoidance of doubt, a claim by
       PharmaBio for royalties on Net Sales payable by Columbia hereunder or a
       claim by Columbia for payments pursuant to Section 2.1 shall not be
       limited in any way pursuant to the provisions set forth in the preceding
       sentence.

8.0    Notices.

       Any notice required to be given by either party shall be in writing. All
       notices shall be to the parties and addresses listed below, and shall be
       deemed sufficiently given (i) when received, if delivered personally or
       sent by facsimile transmission with confirmed receipt, or (ii) one
       business day after the date mailed by first class mail or sent by an
       internationally recognized overnight delivery service with charges
       prepaid.

       If to PharmaBio:           PharmaBio Development Inc.
                                  4709 Creekstone Drive
                                  Suite 200, Riverbirch Building
                                  Durham, NC 27703
                                  Attention: President
                                  Fax: 919-998-2090

       With a copy to:            PharmaBio Development Inc.
                                  4709 Creekstone Drive
                                  Suite 200, Riverbirch Building
                                  Durham, NC 27703
                                  Attention: General Counsel
                                  Fax: 919-998-2090

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         If to Columbia:            Columbia Laboratories, Inc.
                                    220 South Orange Avenue
                                    Livingston, NJ 07039
                                    Attention: President
                                    Fax 973-994-3001

         With a copy to:            Columbia Laboratories, Inc.
                                    220 South Orange Avenue
                                    Livingston, NJ 07039
                                    Attention: General Counsel
                                    Fax 973-994-3001

9.0      Assignment.

         No party may assign any of its rights or obligations under this
         Agreement to any third party other than an Affiliate without the
         written consent of the other party, except that Columbia may assign its
         rights or obligations under this Agreement with respect to Advantage-S
         or RepHresh to a bona fide third party that acquires all of Columbia's
         business with respect to Advantage-S or RepHresh provided that such
         party assumes all of Columbia's applicable rights and obligations under
         this Agreement in form and substance reasonably satisfactory to
         PharmaBio; provided, however, that Columbia may not in any event assign
         its minimum payment obligations under Section 2.2 hereof. PharmaBio may
         at any time assign or transfer any of its rights or obligations under
         this Agreement to an Affiliate. Nothing in this Section 8.0 shall
         preclude the transfer of a party's rights and obligations under this
         Agreement in conjunction with a merger in which such party is not the
         surviving entity. Any attempted assignment in violation of this Section
         shall be null and void.

10.0     General Provisions.

10.1     Sections 2.1, 2.2, 2.5, 3.0, 7.0, 9.0, 10.0 and 11.0 shall survive the
         termination of this Agreement for any reason.

10.2     This Agreement contains the entire understanding of the parties with
         respect to the subject matter herein and cancels all previous
         agreements (oral and written), negotiations and discussions dealing
         with the same subject matter. The parties, from time to time during the
         term of this Agreement, may modify any of the provisions hereof only by
         an instrument in writing duly executed by the parties.

10.3     No failure or delay on the part of a party in either exercising or
         enforcing any right under this Agreement will operate as a waiver of,
         or impair, any such right. No single or partial exercise or enforcement
         of any such right will preclude any other or further exercise or
         enforcement thereof or the exercise or enforcement of any other right.
         No waiver of any such right will have effect unless given in a signed
         writing. No waiver of any such right will be deemed a waiver of any
         other right. The rights and remedies set forth in this Agreement are
         cumulative and not exclusive of any rights or remedies provided by law
         or

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         otherwise. Termination of this Agreement by a party shall not affect
         any other rights or remedies which may be available to such party
         against a defaulting party.

10.4     If any part or parts of this Agreement are held to be illegal, void or
         ineffective, the remaining portions of this Agreement shall remain in
         full force and effect. If any of the terms or provisions are in
         conflict with any applicable statute or rule of law, then such term(s)
         or provision(s) shall be deemed inoperative to the extent that they may
         conflict therewith, and shall be deemed to be modified or conformed
         with such statute or rule of law. In the event of any ambiguity
         respecting any term or terms hereof, the parties agree to construe and
         interpret such ambiguity in good faith in such a way as is appropriate
         to ensure its enforceability and viability.

10.5     The headings contained in this Agreement are used only as a matter of
         convenience, and in no way define, limit, construe or describe the
         scope or intent of any section of this Agreement.

10.6     Each party represents and warrants to the other that the individual
         signing below for such party is authorized and empowered to bind such
         party to the terms of this Agreement.

10.7     Neither party shall be liable to the other for delay or failure in the
         performance of the obligations on its part contained in this Agreement
         (other than payment obligations) if and to the extent that such failure
         or deal is due to circumstances beyond its control ("Force Majeure")
         which it could not have avoided by the exercise of reasonable diligence
         including but no limited to: act of God; war or insurrection; civil
         commotion; destruction of essential facilities or materials by
         earthquake, fire, flood or storm; labor disturbance (whether or not any
         such labor disturbance is within the power of the affected party to
         settle); epidemic; or other similar event; provided, however, that the
         party so affected shall notify the other party promptly should such
         circumstances arise, giving an indication of the likely extent and
         duration thereof, and shall use all commercially reasonable efforts to
         avoid, remove or alleviate such causes of non-performance and shall
         resume performance of its obligations hereunder with the utmost
         dispatch whenever such causes are removed. In the event of force
         majeure lasting more than three (3) months, the parties agree to meet
         and discuss how this Agreement can be justly and fairly implemented
         under the circumstances.

11.0     Dispute Resolution:

11.1     Governing Law. This Agreement, including, without limitation, the
         interpretation, performance, enforcement, breach or termination thereof
         and any remedies relating thereto, shall be governed by and construed
         in accordance with the laws of the State of Delaware, United States of
         America, as applied to agreements executed and performed entirely in
         the State of Delaware, without regard to conflicts of law rules.

11.2     Internal Review. In the event that a dispute, difference, claim,
         action, demand, request, investigation, controversy, threat, or request
         for testimony or information or other question arises pertaining to any
         matters which arise under, out of, in connection with, or

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                                       15

<PAGE>

         in relation to this Agreement (a "Dispute") and either party so
         requests in writing, prior to the initiation of any formal legal
         action, the Dispute will be submitted to the Chief Executive Officers
         of Columbia and PharmaBio. For all Disputes referred to the Chief
         Executive Officers, the Chief Executive Officers shall use their good
         faith efforts to meet at least two times in person and to resolve the
         Dispute within ten (10) days after such referral.

11.3     Arbitration.

         (a)      If the parties are unable to resolve any Dispute under Section
                  10.2, then either party may by election within ten (10) days
                  after the end of the period set forth in Section 10.2, require
                  the matter to be settled by final and binding arbitration by
                  sending written notice of such election to the other party
                  clearly marked "Arbitration Demand". Thereupon such Dispute
                  shall be arbitrated in accordance with the terms and
                  conditions of this Section 10.3. Notwithstanding the
                  foregoing, either party may apply to a court of competent
                  jurisdiction for a temporary restraining order, a preliminary
                  injunction, or other equitable relief to preserve the status
                  quo or prevent irreparable harm.

         (b)      The arbitration panel will be composed of three arbitrators,
                  one of whom will be chosen by Columbia, one by PharmaBio, and
                  the third by the two so chosen. If both or either of Columbia
                  or PharmaBio fails to choose an arbitrator or arbitrators
                  within fourteen (14) days after receiving notice of
                  commencement of arbitration, or if the two arbitrators fail to
                  choose a third arbitrator within fourteen (14) days after
                  their appointment, the American Arbitration Association shall,
                  upon the request of both or either of the parties to the
                  arbitration, appoint the arbitrator or arbitrators required to
                  complete the panel. The arbitrators shall have reasonable
                  experience in the matter under dispute. The decision of the
                  arbitrators shall be final and binding on the parties, and
                  specific performance giving effect to the decision of the
                  arbitrators may be ordered by any court of competent
                  jurisdiction.

         (c)      Nothing contained herein shall operate to prevent either party
                  from asserting counterclaim(s) in any arbitration commenced in
                  accordance with this agreement, and any such party need not
                  comply with the procedural provisions of this Section 10.3 in
                  order to assert such counterclaim(s).

         (d)      The arbitration shall be filed with the office of the American
                  Arbitration Association ("AAA") located in Delaware or such
                  other AAA office as the parties may agree upon (without any
                  obligation to so agree). The arbitration shall be conducted
                  pursuant to the Commercial Arbitration Rules of AAA as in
                  effect at the time of the arbitration hearing, such
                  arbitration to be completed in a sixty (60) day period. In
                  addition, the following rules and procedures shall apply to
                  the arbitration:

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<PAGE>

                  (i)      The arbitrators shall have the sole authority to
                           decide whether or not any Dispute between the parties
                           is arbitrable and whether the party presenting the
                           issues to be arbitrated has satisfied the conditions
                           precedent to such party's right to commence
                           arbitration as required by this Section 10.3.

                  (ii)     The decision of the arbitrators, which shall be in
                           writing and state the findings the facts and
                           conclusions of law upon which the decision is based,
                           shall be final and binding upon the parties, who
                           shall forthwith comply after receipt thereof.
                           Judgment upon the award rendered by the arbitrator
                           may be entered by any competent court. Each party
                           submits itself to the jurisdiction of any such court,
                           but only for the entry and enforcement to judgment
                           with respect to the decision of the arbitrators
                           hereunder.

                  (iii)    The arbitrators shall have the power to grant all
                           legal and equitable remedies (including, without
                           limitation, specific performance) and award
                           compensatory damages provided by applicable law, but
                           shall not have the power or authority to award
                           punitive damages. No party shall seek punitive
                           damages in relation to any matter under, arising out
                           of, or in connection with or relating to this
                           Agreement in any other forum.

                  (iv)     The parties shall bear their own costs in preparing
                           for and participating in the resolution of any
                           Dispute pursuant to this Section 10.3, and the costs
                           of the arbitrator(s) shall be equally divided between
                           the parties; provided, however, that each party shall
                           bear the costs incurred in connection with any
                           Dispute brought by such party that the arbitrators
                           determine to have been brought in bad faith.

         IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto through their duly authorized officers as of the date first set forth
above.

PHARMABIO DEVELOPMENT INC.               COLUMBIA LABORATORIES, INC.

By:    /S/ Ronald J. Wooten              By:    /S/ Fred Wilkinson
       ----------------------------             ------------------------

Name:  Ronald J. Wooten                  Name:  Fred Wilkinson
       ----------------------------             ------------------------

Title: President                         Title: President & CEO
       ----------------------------             ------------------------

       7/31/02                                  7/31/02

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