EXHIBIT 10.4
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CITIZENS BANK OF MASSACHUSETTS                                SECURITY AGREEMENT
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         Able Laboratories, Inc., a corporation duly organized under the laws of
the State of Delaware with a chief executive office at 200 Highland Avenue,
Suite 301, Needham, Massachusetts, and principal place of business and mailing
address at 6 Hollywood Court, South Plainfield, New Jersey 07080 (hereinafter
referred to as "Debtor"), hereby grants to Citizens Bank of Massachusetts, a
Massachusetts banking corporation, with a principal place of business at 28
State Street, Boston, Massachusetts 02109 (hereinafter referred to as "Secured
Party") a security interest in the property set forth on EXHIBIT "A" annexed
hereto (hereinafter referred to as the "Collateral"), to secure the payment and
performance of all obligations of Debtor to Secured Party (hereinafter referred
to as the "Obligations"). The term "Obligations" shall mean any and all loans,
advances and other credit made by Secured Party prior to, on or after the date
of this Agreement to or for the account of Debtor, and any and all interest,
commissions, obligations, liabilities, indebtedness, charges and expenses now or
hereafter chargeable against Debtor by Secured Party or owing by Debtor to
Secured Party, whether any of the foregoing are direct or indirect, joint or
several, absolute or contingent, due or to become due, now existing or hereafter
arising, no matter how or when arising and whether under any present or future
agreement or instrument between Debtor and Secured Party or otherwise, and the
performance and fulfillment by Debtor of all of the terms, conditions, promises,
covenants and provisions contained in this Agreement or in any note or notes
secured hereby or in any present or future agreement or instrument between
Debtor and Secured Party. Without limiting the foregoing, the Obligations of the
Debtor to the Secured Party shall include, without limitation, all indebtedness
owed by the Debtor to the Secured Party under the a certain non-restoring
equipment credit facility described in that certain Credit Agreement dated
October 24, 2002 by and between the Secured Party and the Debtor (hereinafter
collectively referred to as the "Credit Agreement").

REPRESENTATIONS AND WARRANTIES:

         Debtor hereby represents and warrants to the Secured Party that: (a)
Debtor is solvent, is able to pay its debts as they mature, has not within the
last four months prior to the date hereof committed any act of bankruptcy, and
intends to pay, keep and perform its obligations hereunder; (b) Debtor's exact
legal name is as set forth in the first paragraph of this Agreement, except as
set forth on EXHIBIT "D" annexed hereto, Debtor has not, during the preceding
five (5) years, changed its name, been a party to a merger, or used any other
corporate, fictitious or trade name, and Debtor is organized in the state
identified in the first paragraph of this Agreement; (c) Debtor has the power to
execute, deliver and carry out this Agreement and to incur the Obligations, and
has taken all necessary action to authorize the execution, delivery and
performance by Debtor of this Agreement and the incurring of the Obligations;
(d) The execution and delivery of this Agreement and compliance by Debtor with
any of the terms and provisions of this Agreement or of any of the other
agreements or instruments referred to herein, will not, on the date hereof,
violate any provision of any applicable existing law or regulation or any writ
or decree of any court or governmental instrumentality or of the charter or
by-laws of Debtor or any agreement or instrument to which Debtor is a party
(except for any such violation as would not be likely to have a material adverse
effect on the Debtor's business), and will not result in the creation or
imposition of any lien, security interest, charge or encumbrance of any nature
whatsoever upon or in any of its assets except as contemplated by this
Agreement, and no consent of any other party that has not already been obtained
(including stockholders or other equity interest holders of Debtor) and no
consent, license, approval or authorization of, or registration or declaration
with, any governmental bureau or agency is required in connection with the
execution, delivery, performance, validity, and enforceability of this
Agreement; (e) Debtor has good and marketable title to the Collateral, and none
of the Collateral is subject to any mortgage, pledge, lease, trust, bailment,
lien, security interest, encumbrance, charge or title retention or other


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security agreement or arrangement of any character whatsoever other than those
listed on EXHIBIT "B" annexed hereto ("Permitted Encumbrances"), and, to the
extent that this Agreement states that the Collateral is to be acquired after
the date hereof, will be the owner of the Collateral free from any adverse
liens, security interest or encumbrance except as set forth on EXHIBIT "B"; and
Debtor will defend the Collateral against all claims and demands of all persons
at any time claiming the same or any interest therein; (f) Debtor will make
punctual payment of all monies and will faithfully and fully keep and perform
all of the terms, conditions, covenants, and agreement contained on Debtor's
part to be paid, kept, or performed hereunder, and will be bound in all respects
as debtor under this Agreement; and will make punctual payment of all monies and
will faithfully and fully keep and perform all of the terms, conditions,
covenants and agreements on its part to be paid, kept or performed under the
terms of any lease or mortgage of the premises where the Collateral is located
or is to be located wherein Debtor is lessee or mortgagor, and will promptly
notify Secured Party in the event of any default on the part of Debtor or
receipt by Debtor of any notice of alleged default under any such lease or
mortgage.

COVENANTS:

         Debtor hereby covenants to Secured Party and agrees that:

         1. Except as set forth on EXHIBIT "C": (a) the Collateral will be kept
at 6 Hollywood Court, South Plainfield, New Jersey, and Debtor will not remove
the Collateral from said location(s) without prior written consent of Secured
Party; and (b) Debtor's corporate headquarters is at the address set forth in
the first paragraph of this Agreement, and Debtor will immediately notify
Secured Party in writing of any change in or discontinuance of Debtor's place or
places of business.

         2. If Debtor is a legal entity, Debtor will preserve its legal
existence and not, in one transaction or a series of related transactions, merge
into or consolidate with any other entity other than a Subsidiary with the
Debtor being the surviving entity , or sell all or substantially all of its
assets, without the prior written consent of Secured Party. Debtor will not
change the state of its organization, nor change its legal name, without
providing Secured Party with thirty (30) days prior written notice.

         3. If any or all of the Collateral is attached to or may be attached to
real estate, prior to the perfection of the security interest granted hereby,
Debtor will, on demand of Secured Party, use commercially reasonable efforts
furnish the latter with a disclaimer signed by all persons having an interest in
the real estate, of any interest in the Collateral which is or may be prior to
Secured Party's interest.

         4. Except for Permitted Encumbrances, no financing statement covering
any Collateral or any additions, accessions, proceeds or products thereof or
thereto is on file in any public office. At the request of Secured Party, Debtor
will join with Secured Party in executing one or more financing statements
pursuant to the Uniform Commercial Code in form satisfactory to Secured Party
and will pay the cost of filing and recording the same in all public offices
wherever filing and/or recording is deemed by Secured Party to be necessary or
desirable. To the extent allowed by the Uniform Commercial Code, as the same may
be amended, Debtor authorizes Secured Party to execute one or more financing
statements describing the Collateral on Debtor's behalf and to file same, and
Debtor will pay the cost of filing and recording the same in all public offices
whenever filing and/or recording is deemed by Secured Party to be necessary or
desirable.


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         5. Debtor will not sell, exchange or otherwise dispose of the
Collateral, or any part thereof or any interest therein without the express
written authorization of Secured Party, except for any such sale, exchange or
disposition as may occur in the ordinary course of business or to compensate
professionals as may be necessary or appropriate. In the event of the sale,
exchange or other disposition of the Collateral or any part thereof or any
interest therein, other than any sale, exchange or disposition as may occur in
the ordinary course of business or to compensate professionals as may be
necessary or appropriate, (and no such sale, exchange or other disposition is
hereby authorized or consented to), the security interest of Secured Party shall
nevertheless continue in said Collateral (including all proceeds, cash and
non-cash) notwithstanding said sale, exchange or other disposition; all of said
proceeds shall remain Collateral hereunder and shall be transferred and paid
over to Secured Party immediately following said sale, exchange, or other
disposition and shall be applied at the option of Secured Party either to
installments due hereunder or referred to herein in their inverse order of
maturity or to the payment of any monies payable under this Agreement, or to any
Obligation of Debtor to Secured Party; and the receipt by Secured Party of all
or any part of said proceeds shall not be deemed or construed to be an
authorization or consent of Secured Party to such sale, exchange or other
disposition of said Collateral.

         6. Debtor will have and maintain insurance at all times with respect to
all Collateral against risks of fire (including so-called extended coverage),
theft and such risks as Secured Party may reasonably require, containing such
terms, in such form, and for such periods, and written by such companies as may
be satisfactory to Secured Party, such insurance to be payable to Secured Party
and Debtor as their interests may appear; each policy of insurance shall have a
loss payee endorsement providing:

         a.   That loss or damage, if any, under the policy, shall be payable to
              Secured Party, as secured party, as its interest may appear.
         b.   That the insurance as to the interest of Secured Party shall not
              be invalidated by any act or neglect of the insured or owner of
              the property described in said policy, nor by any foreclosure, or
              other proceeding, or notice of sale relating to said property, nor
              by any change in the title of ownership of said property, nor by
              the occupation of the premises where the property is located for
              purposes more hazardous than are permitted by said policy;
         c.   That, if the policy is canceled at any time by the insurance
              carrier, in such case the policy shall continue in force for the
              benefit of Secured Party for not less than thirty (30) days after
              written notice of cancellation to Secured Party from the insurance
              carrier; and
         d.   That the policy will not be reduced or canceled at the request of
              the insured nor will said loss payee endorsement be amended or
              deleted without thirty (30) days prior written notice to Secured
              Party from the insurance carrier.

              Debtor shall furnish Secured Party with certificates or other
evidence satisfactory to Secured Party of compliance with the foregoing
insurance provisions; and Secured Party may act as attorney for Debtor in
obtaining, adjusting, settling and canceling such insurance and receiving and
endorsing any drafts. Debtor hereby assigns to Secured Party any and all monies
which may become due and payable under any policy insuring the Collateral
covered by this Security Agreement, including return of unearned premiums, and
hereby directs any insurance company issuing any such policy to make payment
directly to Secured Party and authorizes Secured Party, at its option, (i) to
apply such monies in payment on account of any Obligation hereunder, whether or
not due, or (ii) to return said funds to Debtor for the purpose of replacement
of the Collateral, and (iii) to remit any surplus to Debtor.

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         7. Other than Permitted Encumbrances, Debtor will keep the Collateral
free from any lien, security interest or encumbrance and in good order and
repair, and will not waste or destroy the Collateral or any part thereof; Debtor
will not use the Collateral in violation of any statute or ordinance; and
Secured Party may examine and inspect the Collateral at any time, wherever
located; and Debtor will notify Secured Party in the event of loss, theft,
damage, destruction, sale or encumbrance to or of any of the Collateral or the
making of any levy, seizure or attachments thereof or thereon, or the placing of
any lien or liens thereon or generally on the property of Debtor by the United
States of America or any federal, state or local governmental agency or
authority.

         8. Debtor will pay promptly when due all taxes and assessments upon the
Collateral or for its use or operation or upon this Security Agreement or upon
any note or notes evidencing the Obligations of this Security Agreement. At its
option, in its sole and absolute discretion, Secured Party may discharge taxes,
liens, or security interests or other encumbrances at any time levied or placed
on the Collateral, may pay for insurance on the Collateral and may pay for the
maintenance and preservation of the Collateral, including but not limited to
payments on premises leased by Debtor. Debtor agrees to reimburse Secured Party
on demand for any payment made, or any expense incurred by Secured Party
pursuant to the foregoing authorization. Secured Party may, in its sole and
absolute discretion, and without notice to Debtor, make payment of same or any
part thereof. Each amount so paid by Secured Party shall be secured by all
Collateral held by Secured Party. Nothing herein contained shall obligate
Secured Party to make such payment nor shall the making of one or more such
payments constitute (i) an agreement on Secured Party's part to take any further
or similar action or (ii) a waiver of any default by Debtor under the terms
thereof or of this Security Agreement.

         9. From time to time, Debtor will execute, deliver, acknowledge, file,
record or register, or cause to be filed, recorded or registered, any and all
notices, amendments, statements, certificates, documents or other instruments,
and take any and all other action which may be deemed necessary by Secured Party
hereunder.

         10. Debtor shall pay: (i) recording and filing fees, incurred by
Secured Party in connection with the Obligations; (ii) reasonable counsel fees
and expenses (incurred by Secured Party up to and including the date hereof in
connection with negotiations regarding and consultation concerning this
Agreement or any supplemental agreement, or preparation therefor, or the
financing extended thereunder; or; (iii) reasonable counsel fees and expenses
hereafter incurred by Secured Party in efforts to collect the Obligations, or in
the enforcement of any provisions of this Agreement or protecting, enforcing,
increasing or releasing any security held by Secured Party or any Obligation or
any provision of this Agreement or any supplemental agreement, or the financing
extended thereunder. The Debtor's obligation to pay such reasonable fees and
expenses of Secured Party shall exist whether or not proceedings are instituted
or legal appearances made in any court on behalf of Secured Party. The Debtor
agrees that all such reasonable fees and expenses shall constitute Obligations
upon their becoming due.

         11. The Debtor shall furnish to Secured Party the financial information
set forth in the Credit Agreement. Upon providing reasonable notice to the
Debtor, the Secured Party and its representatives shall be entitled to free and
undisturbed access to Debtor's books of account, ledgers and cabinets and may
examine and audit the contents thereof and make excerpts therefrom.

         12. Debtor will at all times hereafter maintain a standard and modern
system of accounting in accordance with generally accepted accounting
principles. Debtor shall promptly notify Secured Party of any material adverse
change in its financial condition.

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         13. At the request of Secured Party, Debtor will furnish Secured Party
with proof satisfactory to Secured Party of the payment or deposit of F.I.C.A.
and withholding taxes required of Debtor by applicable law. Such proof shall be
furnished within five (5) days after the due date established by law for each
such payment or deposit. Should Debtor fail to make any such payment or deposit
or furnish such proof, Secured Party may, in its sole and absolute discretion,
and without notice to Debtor, make payment of the same or any part thereof. Each
amount so paid by Secured Party shall be secured by all Collateral held by
Secured Party. Nothing herein contained shall obligate Secured Party to make
such payment nor shall the making of one or more such payments constitute (i) an
agreement on Secured Party's part to take any further or similar action or (ii)
a waiver of any default by Debtor under the terms hereof or of any other
agreements between Debtor and Secured Party.


DEFAULT PROVISIONS:

         Debtor hereby agrees that:

         14. Until a Default occurs, Debtor may have possession of the
Collateral and use it in any lawful manner not inconsistent with this Agreement
and not inconsistent with any policy of insurance thereon. If a Default has
occurred and is continuing, the Secured Party may transfer any of the Collateral
into its name or that of its nominee and may receive the income and any
distribution thereon and hold the same as collateral for the Obligations.

         15. Debtor shall be in default under this Agreement, a ("Default") upon
the occurrence of an "Event of Default" as defined in the Credit Agreement.

         16. Upon the happening of any Default specified above, Secured Party
shall have the right to declare all Obligations immediately due and payable and
in addition to its rights hereunder, all of the remedies of a secured party
under the Uniform Commercial Code or any other applicable law, and, further,
Secured Party may sell and deliver any or all Collateral and any or all other
security and collateral held by Secured Party or for Secured Party at public or
private sale, for cash, upon credit or otherwise, at such prices and upon such
terms as Secured Party deems advisable, at Secured Party's sole discretion. In
the event Debtor commits a breach of any provision of this Agreement, in
addition to all other sums due Secured Party, Debtor will pay Secured Party all
costs and expenses incurred by Secured Party, in accordance with Section 10
hereof. Any requirement of reasonable notice shall be met if such notice is
mailed postage prepaid to Debtor at its address as set forth herein at least
five (5) days before the time of sale or other disposition. Secured Party may be
the purchaser at any such sale, if it is public, and, in the event Secured Party
is the purchaser, Secured Party shall have all the rights of a good faith, bona
fide purchaser for value from a secured party after default. The proceeds of
sale shall be applied first to all costs and expenses of sale, including
reasonable attorneys' fees, and second to the payment (in whatever order Secured
Party elects) of all Obligations, and any remaining proceeds shall be applied in
accordance with the provisions of Part 5 of Article 9 of the Uniform Commercial
Code. Debtor shall remain liable to Secured Party for any deficiency.

         17. Upon Default, Secured Party shall have the right to take possession
of its Collateral and to maintain such possession on Debtor's premises or to
remove the Collateral or any part thereof to such places as it may desire. If
Secured Party exercises its right to take possession of its Collateral, Debtor
will, upon Secured Party's demand, assemble the Collateral and make it available
to Secured Party at a place reasonably convenient to both parties.


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         18. No course of dealing between Debtor and Secured Party and no
failure to exercise or delay in exercising on the part of Secured Party any
right, power or privilege under the terms of this Agreement or under the terms
of any other agreements, instruments or other documents between Secured Party
and Debtor shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege. The rights and remedies provided
herein or in any other agreement are cumulative and not exclusive of or in
derogation of any rights or remedies provided in and thereof, by law or
otherwise.

         19. All rights of Secured Party in, to and under this Agreement and in
and to the Collateral shall pass to and may be exercised by any assignee
thereof.


AGREEMENTS AND WAIVERS:

         20. All rights of Secured Party hereunder shall inure to the benefit of
its successors and assigns, and all obligations of Debtor shall bind the
successors and assigns of Debtor.

         21. All Collateral described in this Agreement shall remain collateral
as security for the performance of all obligations of Debtor under this
Agreement until all monies required to be paid under this Agreement have been
paid in full and all obligations on the part of Debtor to be paid, kept and
performed under this Agreement have been paid, kept and performed. At such time
as all monies required to be paid under this Agreement have been paid in full
and all obligations on the part of Debtor to be paid, kept and performed under
this Agreement have been paid, kept and performed, the Secured Party shall
release all liens on the Collateral and terminate all financing statements filed
for the benefit of the Secured Party covering the Collateral.

         22. Debtor hereby waives such rights as it may have to notice and/or
hearing under any applicable federal or state laws pertaining to the exercise by
Secured Party of such rights as the Secured Party may have regarding the right
to seek prejudgment remedies and/or deprive Debtor or any Guarantor of or affect
the use of or possession or enjoyment of Debtor's property prior to the
rendition of a final judgment against the Debtor. The Debtor further waives any
right it may have to require Secured Party to provide a bond or other security
as a precondition to or in connection with any prejudgment remedy sought by
Secured Party, and waives any objection to the issuance of such prejudgment
remedy based on any offsets, claims, defenses or counterclaims to any action
brought by the Secured Party.

         23. DEBTOR AND SECURED PARTY MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR SECURED PARTY TO
ACCEPT this AGREEMENT.

         24. Debtor hereby agrees that the courts of the Commonwealth of
Massachusetts shall have exclusive jurisdiction to hear and determine any claims
or disputes between Debtor and Secured Party pertaining directly or indirectly
to this Agreement or to any matter arising in connection with this Agreement.
Debtor expressly submits and consents in advance to such jurisdiction in any

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action or proceeding commenced in such courts, hereby waiving personal service
of the summons and complaint, or other process or papers issued therein, and
agreeing that service of such summons and complaint, or other process or papers,
may instead be made by registered or certified mail addressed to Debtor at the
address set forth herein. Should Debtor fail to appear or answer any summons,
complaint, process or papers so served within thirty (30) days after the mailing
thereof, it shall be deemed in default and an order and/or judgment may be
entered against it as demanded or prayed for in such summons, complaint, process
or papers. The exclusive choice of forum set forth herein shall not be deemed to
preclude the enforcement of any judgment obtained in such forum or the taking of
any action under this Agreement to enforce the same in any appropriate
jurisdiction.

         25. Debtor hereby grants to Secured Party a lien, security interest and
a right of setoff as security for all of the Obligations, upon and against all
deposits, credits, collateral and property, now or hereafter in the possession,
custody, safekeeping or control of Secured Party or any entity under the control
of Secured Party, or in transit to any of them. At any time a Default has
occurred and is continuing, without demand or notice, Secured Party may set off
the same or any part thereof and apply the same to any liability or obligation
of Debtor regardless of the adequacy of any other collateral securing the
Obligations. ANY AND ALL RIGHTS TO REQUIRE SECURED PARTY TO EXERCISE ITS RIGHTS
OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS,
PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
OR OTHER PROPERTY OF THE DEBTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED. Secured Party shall not be required to marshal any present
or future security for, or guarantees of, the Obligations or to resort to any
such security or guarantee in any particular order and the Debtor waives to the
fullest extent that it lawfully can, (a) any right it might have to require the
Secured Party to pursue any particular remedy before proceeding against the
Secured Party and (b) any right to the benefit of, or to direct the application
of the proceeds of any collateral until the Obligations are paid in full.

         26. All terms used in this Agreement and in all documents referred to
herein and which have been defined in Articles 1, 2 or 9, of the Uniform
Commercial Code, shall be interpreted and construed in light of the sections,
the definitions, the "official comment," and the definitional and substantive
cross-references of the Uniform Commercial Code, as the same may be amended.

         27. This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the laws of
the Commonwealth of Massachusetts, including its conflict of laws principles.
This Agreement may not be amended or modified orally and may only be amended or
modified in writing signed by both the Secured Party and the Debtor.

         28. All exhibits referred to herein and annexed hereto are hereby
incorporated in this Agreement and made a part hereof. All headings herein are
for reference only.




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         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered this 24th day of October, 2002.




                                             DEBTOR:


Witness:                                     Able Laboratories, Inc.


/s/ Daniele Ouellette Levy                   By: /s/ Dhananjay G. Wadekar
----------------------------------               -------------------------------
Print Name: Daniele Ouellette Levy           Name: Dhananjay G. Wadekar
            ----------------------                 -----------------------------
                                             Title: President
                                                    ----------------------------







                                             SECURED PARTY:


Witness:                                     Citizens Bank of Massachusetts


/s/ Louis DiFronzo                           By: /s/ Raymond Hoefling
----------------------------------               -------------------------------
Print Name: Louis DiFronzo                   Name: Raymond Hoefling
            ------------------------               -----------------------------
                                             Title: Vice President
                                                    ----------------------------



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