SUPPLY AGREEMENT

I.

DEFINITIONS

1.10

“Commencement Date” shall mean January 1, 2004 or such earlier date as ANDRX receives FDA approval for a product described in either its ANDA No. 76-159 or its ANDA No. 76-621; provided, however, that in no event shall the Commencement Date be earlier than November 25, 2003.

1.11

“Commercially Reasonable Efforts” shall mean that degree of effort, expertise and resources that a person of ordinary skill, ability and experience in the matters addressed herein would utilize and otherwise apply with respect to fulfilling the obligations assumed hereunder.

1.12

“Confidential Information” shall have the meaning set forth in Section 9.1 hereof.

1.13

“FDA” shall mean the Food and Drug Administration of the United States.

1.14

“FFDCA” shall mean the Federal Food, Drug and Cosmetic Act, as amended, 21 U.S.C. §301 et seq., and any related federal and/or state law or regulation pertaining to the safety, effectiveness, adulteration, misbranding, mishandling, packaging, labeling or storage of pharmaceutical ingredients, finished pharmaceutical products, and/or medical devices that may be applicable to the Product during the term of this Agreement.

1.15

“Firm Order” shall mean a firm, binding, written order for Product to be manufactured by PFIZER, specifying quantities and delivery schedules for each Product. Firm Orders must be in full lot size quantities as described in Exhibit A.

1.16

“GAAP” means generally accepted accounting principles in the United States of America, consistently applied.

1.17

“Indemnified Party” shall have the meaning set forth in Section 8.3 hereof.

1.18

“Indemnifying Party” shall have the meaning set forth in Section 8.3 hereof.

1.19

“Initial Term” shall have the meaning set forth in Section 7.1 hereof.

1.20

“Intellectual Property” shall mean all intellectual property owned by, or licensed to a Party including, without limitation, patents, patent applications, continuations-in-part, divisionals, trade secrets, know-how, copyrights, trade names, trademarks, and trade dress.

1.21

“Law” shall mean any local, state or federal rule, regulation, statute or law relevant to the manufacture, distribution and/or sale of the Product, and to any other matters set forth herein.

1.22

“Losses” shall mean any liabilities, damages, costs or expenses, including reasonable attorneys’ fees, incurred by any Party that arise from any claim, lawsuit or other action by a Third Party.

1.23

“Marketing Allowance” shall mean [***] percent of gross sales, except that for sales made by Anda, Inc., an Affiliate of ANDRX LLC, Anda Pharmaceuticals Inc., an Affiliate of ANDRX LLC, and Valmed Pharmaceutical, Inc., an affiliate of ANDRX, doing business under the names Value in Pharmaceuticals or V.I.P. (collectively, “ANDRX Distribution Affiliate”), the Marketing Allowance shall be [***] percent of gross sales. Notwithstanding the foregoing, the [***]% Marketing Allowance on sales through an ANDRX Distribution Affiliate shall not be applicable to any sales to large warehousing chains, managed care organizations, wholesalers and distributors and shall apply only to sales to independent pharmacies, buying

groups, nonwarehousing chains and physicians. Exhibit B to this Agreement provides a specific (but not exclusive) list of accounts that shall not receive the [***]% Marketing Allowance.

1.24

“MSDS” shall have the meaning set forth in Section 5.1 hereof.

1.25

“NDA” shall mean the PFIZER New Drug Application, and any supplements thereto, relating to Glucotrol XL ^® in 10 mg dosage strength, 5 mg dosage strength or 2.5 mg dosage strength, as applicable.

1.26

Net Sales” shall mean the gross amount invoiced to Third Parties for the Product for product received by Third Parties in the Territory, less provisions for:

1.27

“Party” or “Parties” shall mean ANDRX or PFIZER, or both of them, depending upon the context in which such word may appear.

1.28

“Person” means a natural person, a corporation, a partnership, a trust, a joint venture, a limited liability company, any governmental authority or any other entity or organization.

1.29

“Pfizer” shall have the meaning set forth in the first sentence hereof.

1.30

“PFIZER Activities” shall have the meaning set forth in Section 8.2 hereof.

1.31

“Product” or “Products” shall mean PFIZER’S NDA extended-release glipizide pharmaceutical product, in 2.5 mg, 5mg and 10 mg dosage strengths. Products shall not mean any product sold by PFIZER under the trademark Glucotrol ^® or Glucotrol XL ^® or any ANDRX ANDA products.

1.32

“Reporting Period” shall mean a three-month period corresponding to a Calendar Quarter.

1.33

“Settlement Agreement” shall mean the Agreement dated as of September 4, 2003 by and among PFIZER, ALZA CORPORATION, ANDRX CORPORATION, ANDRX PHARMACEUTICALS, INC. and ANDRX PHARMACEUTICALS, LLC, which provides that the Parties shall enter into this Agreement.

1.34

“Specifications” shall mean all product, regulatory, manufacturing, quality control, and quality assurance procedures, processes, practices, standards, instructions and specifications comprising PFIZER’s FFDCA approval applicable to the manufacture and packaging of Products as set forth in the NDA, and such other FDA and/or other regulatory requirements as may be applicable.

1.35

“Territory” shall mean the United States of America, together with its territories and possessions.

1.36

“Third Party” shall mean any Person that is neither a party to this Agreement nor an Affiliate of a party to this Agreement.

1.37

“Transfer Price” shall mean for each Product the price set forth in Exhibit A, as may be modified by agreement of the Parties pursuant to Paragraph 4.1 hereof.

2.1

Pursuant to the terms and conditions of this Agreement, ANDRX shall purchase from PFIZER all of its requirements of Products. PFIZER shall sell such Products to ANDRX on a non-exclusive basis; provided, however, that PFIZER shall sell and ANDRX shall be entitled to market, sell, promote and/or distribute Products on an exclusive basis (except as to PFIZER’s branded Glucotrol XL ^® product) for a period beginning on the Commencement Date and ending 180 days thereafter (“Exclusivity Period”), which date shall be extended if for any reason, including Force Majeure, PFIZER is unable to supply quantities of the Products to ANDRX pursuant to a Firm Order by the number of days that PFIZER is unable to supply pursuant to such Firm Order. After the expiration of the Exclusivity Period, the Agreement will continue on a non-exclusive basis for the remainder of its term. Notwithstanding the foregoing, if ANDRX markets any ANDRX ANDA Product prior to the end of the Exclusivity Period, the Exclusivity Period shall immediately terminate with respect to such ANDRX ANDA

Product upon the first commercial sale of such ANDRX ANDA Product to a Third Party (as evidenced by invoices, transfer documents, shipping documents or the like to such Third Party). It is the understanding of the Parties that after the expiration of the Exclusivity Period, PFIZER shall have the right to sell Products to Third Parties provided in any such case, it does not adversely affect PFIZER’s ability to manufacture or supply the Products to ANDRX as provided in this Agreement.

2.2

ANDRX shall not promote or distribute the Products outside the Territory or to any purchaser, distributor or distributee that ANDRX knows or reasonably should know, intends to utilize, resell or redistribute the Products outside the Territory. ANDRX shall use Commercially Reasonable Efforts to promote the Products, exercising substantially the same diligence and adhering to substantially the same standards it employs with respect to its other products, provided however, that ANDRX shall not be deemed to have failed to abide by or have failed to perform in accordance with the foregoing standard or promotional effort if (1) ANDRX is prevented from performing or hindered in its performance of such standard by any act or omission of PFIZER; or (2) by virtue of ANDRX’s sale or marketing of the ANDRX ANDA Products. The exercise of a right specifically conferred by this Agreement shall not, by itself, constitute either a failure by ANDRX to satisfy its obligation, pursuant to this section, to use Commercially Reasonable Efforts to promote the Products, or an act or omission by PFIZER that prevents or hinders ANDRX from satisfying that obligation.

2.3

ANDRX will have the right in its sole discretion to establish the price at which the Products will be sold to Third Parties.

3.1 

(a)

ANDRX shall provide PFIZER with a Firm Order for the period from the date hereof up to and including March 31, 2004, which Firm Order shall be attached as Schedule A. PFIZER shall supply the quantities set forth on Schedule A for each Product in accordance with the delivery schedule set forth therein, provided that the initial delivery date is no less than [***] days following receipt by PFIZER of approved label copy and tablet imprinting directions from ANDRX. PFIZER shall use Commercially Reasonable Efforts to supply Products to ANDRX as set forth in Schedule A no later than the Commencement Date. To the extent such Firm Order is not sufficient to meet ANDRX’s actual requirements for any Product for such period, PFIZER shall use its Commercially Reasonable Efforts to supply ANDRX with its requirements beyond the amounts set forth on Schedule A. For periods after March 31, 2004, Firm Orders shall be filled by PFIZER in accordance with the provisions of Section 3.1(b) and (c).

(b)

Except as provided in Section 3.1(a), within [***] after the beginning of each Calendar Quarter (commencing with the first Calendar Quarter of 2004), ANDRX shall give to PFIZER a forecast of ANDRX’s estimated quarterly requirements of the Products for the following [***]. [***] forecast delivered to PFIZER pursuant to the preceding sentence shall represent ANDRX’s reasonable estimates of the quantity of the Products

that ANDRX will require during [***] to which such forecast applies, and the forecast of its requirements of the Products during the first quarter of such [***] period shall be reflected in a Firm Order accompanying such forecast.

(c)

Notwithstanding the foregoing, except as provided for below, any Firm Order (except for the first Firm Order), for any Product placed for a Calendar Quarter in accordance with Section 3.1(b) shall be between [***] of the most recent forecast estimated quantity for such Product for such Calendar Quarter provided by ANDRX to PFIZER in accordance with this Section 3.1, except that Firm Orders shall not be required to be between [***] of the most recent forecast in any Calendar Quarter in which a new generic glipizide extended release product enters the market. If requested by ANDRX, PFIZER shall use its Commercially Reasonable Efforts to supply an amount exceeding [***] of the most recent forecast estimated quantity for a Product.

(d)

PFIZER shall promptly notify ANDRX in writing if at any time PFIZER has reason to believe that PFIZER will not be able to fill at [***] of a Firm Order for any Product in accordance with the delivery schedule specified therein by ANDRX and pursuant to the terms and conditions of this Agreement. PFIZER shall deliver Product to ANDRX pursuant to each Firm Order no more than [***] after ANDRX’s requested delivery date, provided that such Firm Orders are delivered to PFIZER at [***] to ANDRX’s requested delivery date.

(e)

During any period in which PFIZER does not or cannot for any reason supply all of ANDRX’s requirements of the Products pursuant to a Firm Order, then PFIZER will supply ANDRX on a [***] before producing Products for any Third Party or for its own branded Glucotrol XL ^® product or generic Product. [***]

(f)

In the event ANDRX intends to manufacture and/or market any of the ANDRX ANDA Products, it shall have the right to do so without terminating this Agreement. In such event, ANDRX shall give PFIZER [***] prior written notice of its intention to do so. Upon the effective date of such written notice, PFIZER shall be relieved of its obligations to manufacture and supply Products for ANDRX, other than the fulfillment of Firm Orders. ANDRX will remain obligated to purchase previously provided Firm Orders. If ANDRX ceases providing Firm Orders to PFIZER and then later wishes to resume purchase of any of the Products pursuant to this Agreement, PFIZER and ANDRX will discuss in good faith the feasibility of such request. If PFIZER determines, in its sole discretion, that it has the resources and capacity to accommodate ANDRX’s request, then ANDRX shall provide PFIZER with a new Firm Order for such Products with a delivery date [***] from receipt by PFIZER of the Firm Order.

(g)

All forecasts to be provided or delivered by ANDRX to PFIZER pursuant to this Section 3.1 shall be in writing.

3.2

PFIZER agrees to accept all Firm Orders submitted in accordance with and on the terms set forth in this Agreement. No terms and conditions contained in any Firm Order, acknowledgment, invoice, bill of lading, acceptance or other preprinted form issued by either Party shall be effective to the extent they are inconsistent with or modify the terms and conditions contained herein.

3.3

All Products sold pursuant to this Agreement shall be delivered FCA (INCOTERMS 2000) [***]. ANDRX shall bear the cost of shipping and insurance.

3.4

PFIZER will manufacture, package, label, store, and ship the Products in accordance with Specifications set forth in the NDA for such Product as such NDA may be amended from time to time, and, as to tablet printing designation and label copy, in accordance with ANDRX’s reasonable instructions to PFIZER. ANDRX shall be promptly and fully advised of any new instructions or specifications required by the FDA or the FFDCA. In the event that PFIZER cannot reasonably manufacture Products in accordance with ANDRX’s instructions and Specifications, PFIZER shall promptly so advise ANDRX.

4.1 

(a) 

ANDRX shall remit payment for shipments of Products sent by PFIZER to ANDRX in U.S. dollars [***]. The invoice shall reflect the Transfer Price on date of shipment by PFIZER for each Product. The Transfer Price for the first twelve (12) month period for each Product is set forth on Exhibit A attached hereto. [***] prior to the end of the initial twelve (12)

month period and each twelve (12) month period thereafter, ANDRX and PFIZER agree to discuss in good faith the establishment of a new Transfer Price. Additionally, either party may request a new Transfer Price from time to time for good cause or, in any case, if the Reconciliation Statement (defined in 4.2(a) below) reflects a discrepancy of [***] or greater, then the Parties shall adjust the Transfer Price in an amount which the Parties determine in good faith reflects an appropriate Transfer Price based upon then existing market conditions.

(b) 

If, in any Reporting Period, the Net Sales price per bottle, multiplied by [***], is less than the amounts set forth below, the parties will discuss in good faith any amendments to the Agreement necessary to make the Agreement economically viable for both parties

4.2 

(a)

Within [***] of the end of each Reporting Period, ANDRX will determine the quantity of each Product sold by ANDRX during the Reporting Period, and the corresponding Net Sales and aggregate Transfer Price associated with the units of Products sold by ANDRX during the Reporting Period and provide such information to PFIZER (“Reconciliation Statement”). Additionally