Document:

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, 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, as amended by that certain First Amendment to Credit Agreement of even
date and as further amended from time to time (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

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other 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 to
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 effect from time to time in the Commonwealth
of Massachusetts (hereinafter, 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,

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     (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.

     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.

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     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.

     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

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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.

     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.

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     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
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.

              (The remainder of this page is intentionally blank.)

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered this __ day of February, 2003.

                                                DEBTOR:

Witness:                                        Able Laboratories, Inc.

 /s/Robert Weinstein                            By: /s/Dhananjay G. Wadekar
-------------------------                          -----------------------------
Print Name:  Robert Weinstein                   Name: Dhananjay G. Wadekar
            -------------------------                 --------------------------
                                                Title: President
                                                       -------------------------

                                                SECURED PARTY:
Witness:
                                                Citizens Bank of Massachusetts

                                                By: /s/ Raymond C. Hoefling
                                                    ----------------------------
Print Name:                                     Name: Raymond C. Hoefling
           --------------------                       --------------------------
                                                Title: Vice President
                                                       -------------------------

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                                   EXHIBIT "A"

                                   COLLATERAL
                                   ----------

     This Security Agreement covers the following types (or items) of property:

     All equipment and fixtures, as defined in the Uniform Commercial Code and
all machinery, tools, parts, furniture, furnishings, motor vehicles and other
personal property, tangible or intangible, presently owned or hereafter acquired
by the Debtor, together with additions and accessions thereto and substitutions
and replacements therefor, and the products and proceeds (including insurance
and condemnation proceeds) thereof;

     All inventory and goods as defined in the Uniform Commercial Code, whether
presently owned or hereafter acquired, including, without limitation, all
inventory in the possession of others or in transit, all goods held for sale or
lease or to be furnished under contracts for service or which have been so
furnished, raw materials, work in process, and materials used or consumed or to
be used or consumed in the business of the Debtor, and completed and unshipped
merchandise, and the products and proceeds (including insurance and condemnation
proceeds) of the foregoing;

     All accounts, chattel paper, instruments, documents and general
intangibles, as defined in the Uniform Commercial Code, including those now
existing and those hereafter arising or coming into existence, and including,
without limitation, all rights of payment for goods sold or leased or services
rendered, all rights of payment under contracts whether or not currently due or
not yet earned by performance and accounts receivable arising or to arise
therefrom, and all rights of the Debtor in and to the goods represented thereby
including returned and repossessed goods, and all rights the Debtor may have or
acquire for securing or enforcing the foregoing, including, without limitation,
the rights to reserves, deposits, income tax refunds, chooses in action,
judgments or insurance proceeds, and the products and proceeds of all of the
foregoing;

     All goodwill, trade secrets, computer programs, customer lists, trade
names, trademarks, copyrights, franchises, licenses and patents and the proceeds
thereof;

     All books and records relating to the conduct of Debtor's business;

     All deposit accounts maintained by the Debtor with the Secured Party or
other bank, trust company, investment firm or fund or any similar institution or
organization and the proceeds thereof;

     Any deposits, credits, collateral or property of the Debtor at any time now
or hereafter in the possession, custody, or control of the Secured Party or any
entity under the control of the Secured Party or any affiliate of the Secured
Party or in transit to any of them and the proceeds thereof (the "Deposits and
Securities");

     All investment property, including, without limitation, all financial
assets, all certificated and uncertificated securities, security entitlements,
security accounts, commodity accounts and commodity contracts;

     The Collateral shall include, without limitation, the following categories
of assets as defined in Revised Article 9 of the Uniform Commercial Code
("Revised Article 9"): goods (including inventory, equipment and any accessions
thereto), instruments (including promissory notes), documents, accounts
(including health-care-insurance receivables), chattel paper (whether tangible
or electronic), deposit

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accounts, letter-of-credit rights (whether or not the letter of credit is
evidenced by a writing), commercial tort claims, securities and all other
investment property, general intangibles (including payment intangibles and
software), supporting obligations and any and all proceeds of any thereof,
wherever located, whether now owned and hereafter acquired. If the Debtor shall
at any time, whether or not Revised Article 9 is in effect in any particular
jurisdiction, acquire a commercial tort claim, as defined in Revised Article 9,
the Debtor shall immediately notify the Secured Party in a writing signed by the
Debtor of the brief details thereof and grant to the Secured Party in such
writing a security interest therein and in the proceeds thereof, all upon the
terms of this Agreement, with such writing to be in form and substance
satisfactory to the Secured Party .

                                        2EXHIBIT 10.7
                                                                    ------------

CITIZENS BANK OF MASSACHUSETTS               THIRD AMENDMENT TO CREDIT AGREEMENT
--------------------------------------------------------------------------------

     This Third Amendment to Credit Agreement is made as of the 30th day of
April, 2003, by and between the following parties:

                        Citizens Bank of Massachusetts (the "Bank"), a
                        Massachusetts banking corporation having a principal
                        place of business at 28 State Street, Boston,
                        Massachusetts 02109; and

                        Able Laboratories, Inc. ( the "Borrower"), a corporation
                        duly organized and existing under the laws of the State
                        of Delaware and having its corporate offices and
                        principal place of business at 6 Hollywood Court, South
                        Plainfield, New Jersey 07080;

in consideration of the mutual covenants and benefits to be derived herefrom.

                              W I T N E S S E T H:

     A. On or about October 24, 2002, the Borrower and the Bank entered into a
certain non-restoring equipment loan facility in the maximum principal amount of
Four Million Dollars ($4,000,000.00) (the "Non-Restoring Loan Facility") as
evidenced by, among other things, a certain Credit Agreement (the "Credit
Agreement") dated October 24, 2002.

     B. On or about February 21, 2003, the Bank established a revolving line of
credit facility (the "Revolving Credit Facility") in favor of the Borrower in
the maximum principal amount of up to Four Million Dollars ($4,000,000.00) for
the Borrower's working capital needs including the issuance of standby letters
of credit, and the Non-Restoring Loan Facility was increased to an amount up to
Five Million Eight Hundred Thousand Dollars ($5,800,000.00) pursuant to, among
other things, a certain First Amendment to Credit Agreement dated February 21,
2003 (the "First Amendment") and the documents executed and delivered in
connection therewith.

     C. The Revolving Credit Facility was increased to an amount up to Five
Million Nine Hundred Thousand Dollars ($5,900,000.00) pursuant to, among other
things, a certain Second Amendment to Credit Agreement dated April 10, 2003 (the
"Second Amendment") and the documents executed and delivered in connection
therewith.

     D. The Borrower has requested that: (i) the Revolving Credit Facility be
extended and increased to an amount up to Ten Million Dollars ($10,000,000.00),
and (ii) the Non-Restoring Loan Facility be increased to an amount up to Ten
Million Dollars ($10,000,000.00), and the Bank is willing to so accommodate the
Borrower's request based upon and subject to the terms and conditions set forth
herein.

     NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrower and the Bank agree as follows:

<PAGE>

     1. DEFINITIONS. Capitalized terms used herein without definition and
defined in the Credit Agreement shall have the same respective meanings herein
as therein, unless the context otherwise requires.

     2. INCREASE TO THE REVOLVING CREDIT FACILITY. The Bank hereby agrees to
increase the maximum availability under the Revolving Credit Facility from Five
Million Nine Hundred Thousand Dollars ($5,900,000.00) to Ten Million Dollars
($10,000,000.00). Specifically, the text "Five Million Nine Hundred Thousand
Dollars ($5,900,000.00)" appearing in the fourth and fifth lines of Section 2A.1
of the Credit Agreement is hereby deleted with the text "Ten Million Dollars
($10,000,000.00)" being substituted in its place and stead.

     3. MODIFICATION OF THE BORROWING BASE TO REVOLVING CREDIT FACILITY. The
definition of the Borrowing Base contained in Section 1 of the Agreement is
hereby modified to reflect a $5,000,000.00 cap on the amount of Eligible
Inventory upon which the Bank will make Advances under the Revolving Credit
Facility. Specifically, the following definition of "Borrowing Base" is
substituted in place of the current definition:

            "Borrowing Base shall mean the sum of: (A) an amount equal to eighty
            (80%) percent of Eligible Receivables, plus (B) the lesser of
            either: (i) an amount equal to fifty (50%) percent of Eligible
            Inventory, or (ii) Five Million ($5,000,000.00) Dollars."

     4. EXTENSION TO THE REVOLVING CREDIT FACILITY. The Bank hereby agrees to
extend the availability under the Revolving Credit Facility until June 30, 2005,
and the date "June 30, 2004" appearing in Section 2A.1 of the Credit Agreement
with reference to the so-called "Revolving Credit Termination Date" is hereby
replaced with the date "June 30, 2005" so as to evidence such extension of
availability under the Revolving Credit Facility.

     5. INCREASE OF NON-RESTORING CREDIT FACILITY. The Credit Agreement is
hereby further amended so as to increase the Maximum Non-Restoring Credit
Facility Limit from Five Million Eight Hundred Thousand Dollars ($5,800,000.00)
to Ten Million Dollars ($10,000,000.00). Specifically, Section 2 of the Credit
Agreement is hereby modified as follows:

     (a) Section 2.1 of the Credit Agreement is hereby modified be deleting the
text "Five Million Eight Hundred Thousand Dollars ($5,800,000.00)" appearing on
the fifth line of Section 2.1 of the Credit Agreement with reference to the
so-called "Maximum Non-Restoring Credit Facility Limit" and the text "Ten
Million Dollars ($10,000,000.00)" is inserted and substituted in its place so as
to evidence the increase of the Non-Restoring Credit Facility;

     (b) Section 2.2 of the Credit Agreement is hereby modified be deleting the
text "Four Million One Hundred Thousand Dollars ($4,100,000.00)" appearing on
the seventh line of Section 2.2 of the Credit Agreement with reference to the
so-called "Subsequent Advance Amount" and the text "Eight Million Three Hundred
Thousand Dollars ($8,300,000.00)" is inserted and substituted in its place so as
to further evidence the increase of the Non-Restoring Credit Facility after
accounting for the Initial Advance Amount; and

                                        2
<PAGE>

     (c) Section 2.3(a) of the Credit Agreement is hereby modified be deleting
the figure "$2,300,000.00" appearing on the seventh line of Section 2.3(a) of
the Credit Agreement with reference to the so-called "Master Note" and the
figure "$4,100,000.00" is inserted and substituted in its place so as to
evidence the amount of the Master Note being replaced by the replacement Master
Note executed and delivered in connection herewith as described below.

     6. MONTHLY REPORTING MODIFICATION. Section 6.1(e) of the Credit Agreement
is hereby amended by: (i) adding a requirement of submitting a monthly inventory
listing, and (ii) enlarging the time for which the Borrower must submit monthly
Borrowing Base Certificates from 20 days after the close of each calendar month
to 30 days after the close of each calendar month, and sub-paragraph (e) of
Section 6.1 is hereby replaced with the following text:

     "(e) monthly reports of the Borrower: within thirty (30) days after the
     close of each calendar month, in the event that there is any outstanding
     Advance under the Revolving Credit Facility as of such month ending date,
     the Borrower shall furnish the Bank with a Borrowing Base Certificate in
     the form of Exhibit E and reports on accounts payable and an aging of
     Accounts Receivables and an inventory listing in such form and detail as
     shall be acceptable to the Bank in its reasonable discretion."

     7. INSPECTION MODIFICATION. Section 6.5 of the Agreement is hereby amended
to modify the affirmative covenant allowing the Bank a right to inspect the
Borrower's affairs and to conduct field examinations. Specifically, the
following text is hereby substituted for the current text of Section 6.5 of the
Agreement:

     "6.5 Inspection. Allow the Bank by or through any of its officers, agents,
     attorneys, or accountants designated by it, for the purpose of ascertaining
     whether or not each and every provision hereof and of any Related
     Agreement, instrument or document is being performed and for the purpose of
     examining the Borrower's assets and the records relating thereto, to enter
     the Borrower's offices and plants to examine or inspect any of the
     properties, books and records or extracts therefrom and to make copies
     thereof and to discuss the affairs, finances and accounts thereof with the
     Borrower and its management and accountants, all at such reasonable times
     and as often as the Bank may reasonably request. Notwithstanding the
     foregoing and without limiting same, the Bank shall be permitted to conduct
     semi-annual field examinations, and the Borrower shall reimburse the Bank
     for the costs associated with such field exams. So long as there has not
     theretofore occurred an Event of Default hereunder, any other examinations
     and inspections conducted by or on behalf of the Bank in addition to the
     semi-annual field exams provided above shall be undertaken by the Bank at
     its sole cost and expense; in the event, however, there has theretofore
     occurred and there is continuing an Event of Default, the Bank may
     undertake such examinations and inspections as it deems necessary in its
     sole discretion, and the Borrower shall reimburse the Bank for the costs
     associated therewith."

     8. AFFIRMATIVE COVENANT MODIFICATIONS. Section 6 of the Credit Agreement is
hereby further amended by supplementing the current text by inserting the
following additional payment covenant as Section 6.11 immediately after Section
6.10:

     "6.11 Prepayment from Proceeds of Certain Equity Issuances. In the event
     that the Borrower issues any equity security for cash from any source, the
     Borrower shall promptly remit at least twenty five (25%) percent of all
     cash proceeds therefrom as and when received directly to the Bank, with
     such payment(s) being applied to reduce the Borrower's loan

                                        3
<PAGE>

     obligations to the Bank in a manner prescribed by the Bank in its sole
     discretion. It is the intention of the Bank and the Borrower that the
     indebtedness owed to the Bank be reduced by twenty five (25%) percent of
     the cash raised by the Borrower in any transaction where the Borrower
     issues one or more notes, equity securities, warrants or any other
     instrument in consideration for cash provided, that no such payment
     obligation shall arise in connection with any securities issued under any
     incentive stock option plan or other equity compensation arrangement for
     employees or directors of the Borrower."

     9. FINANCIAL COVENANT MODIFICATIONS. Section 8.4 of the Credit Agreement is
hereby amended to modify the Tangible Net Worth covenant by deleting the current
text and inserting the following in its place and stead:

     "8.4 Tangible Net Worth. The Borrower shall not permit its Tangible Net
     Worth, measured quarterly on the final day of each fiscal quarter, to be
     less than the amount prescribed for such measurement date. As of December
     31, 2002, the Borrower's Tangible Net Worth shall be not less than
     $30,000,000.00 as of such measurement date. The prescribed minimum Tangible
     Net Worth amount shall remain at $30,000,000.00 for each quarterly
     measurement date thereafter until December 31, 2003, whereupon the minimum
     Tangible Net Worth amount shall be adjusted to reflect an increase equal to
     fifty (50%) percent of the Borrower's Net Income realized during 2003,
     which amount shall be added to the prior year's minimum prescribed Tangible
     Net Worth amount, with there being no reduction or adjustment in the case
     of a loss, and the sum being the prescribed minimum Tangible Net Worth
     amount for December 31, 2003 and for the following three fiscal quarter
     ending dates until December 31, 2004, whereupon the same process shall be
     applied to compute the minimum Tangible Net Worth amount on a cumulative
     basis. This cumulative escalation of the prescribed minimum Tangible Net
     Worth Amount shall continue during the term of this Agreement."

     10. ASSIGNMENTS AND PARTICIPATIONS. The following text is hereby inserted
in the Agreement to supplement the miscellaneous provisions contained in Section
10 of the Agreement by adding the following immediately after Section 10.18 of
the Agreement:

     "10.19 Assignments and Participations. The Bank shall have the unrestricted
     right at any time and from time to time, and without the consent of or
     notice to the Borrower, to grant to one or more banks or other financial
     institutions (each, a "Participant") participating interests in the Bank's
     obligation to lend hereunder and/or any or all of the loans held by the
     Bank hereunder. In the event of any such grant by the Bank of a
     participating interest to a Participant whether or not upon notice to the
     Borrower, the Bank shall remain responsible for the performance of its
     obligations hereunder and the Borrower shall continue to deal solely and
     directly with the Bank in connection with the Bank's rights and obligations
     hereunder. The Bank may furnish any information concerning the Borrower in
     its possession from time to time to prospective Participants, provided that
     the Bank shall require any such prospective Participant to agree in writing
     to maintain the confidentiality of such information."

     11. CONDITIONS TO BANK'S OBLIGATIONS. The willingness of the Bank to
consent to and enter into this Third Amendment is subject to the satisfaction of
the following conditions concurrently with the execution and delivery of this
Third Amendment:

     (a) The Bank shall have received approving resolutions adopted by the
Borrower, certified as of the date hereof by the Secretary of the Borrower,
authorizing the execution and delivery by the Borrower of this Third Amendment
and all documents referenced herein.

                                        4
<PAGE>

     (b) The Borrower shall execute and deliver an amended and restated
revolving credit promissory note (the "Replacement Revolving Note") payable to
the Bank in the maximum restated principal amount of $10,000,000.00, such
Replacement Revolving Note to be in the form of Exhibit A annexed hereto. The
Replacement Revolving Note shall amend, restate and replace the existing Amended
and Restated Revolving Credit Note dated April 10, 2003 in its entirety, but the
Replacement Revolving Note shall not be evidence of satisfaction of the
indebtedness owed by the Borrower to the Bank. Further, any and all references
to the "Revolving Credit Note" in the Credit Agreement and ancillary loan
documents shall include and refer to the Replacement Revolving Note, as it may
be amended in writing from time to time hereafter.

     (c) The Borrower shall execute and deliver an amended and restated master
note (the "Replacement Master Note") payable to the Bank so as to reflect the
increase of the Non-Restoring Credit Facility as set forth in this Third
Amendment, such Replacement Master Note to be in the maximum restated principal
amount of $8,300,000.00 and the form of which is annexed hereto as Exhibit B .
The Replacement Master Note shall amend, restate and replace the existing
Amended and Restated Master Note dated February 21, 2003 in the maximum
principal amount of $4,100,000.00 in its entirety, but the Replacement Master
Note shall not be evidence of satisfaction of the indebtedness owed by the
Borrower to the Bank. Further, any and all references to the "Master Note" in
the Credit Agreement and ancillary loan documents shall include and refer to the
Replacement Master Note, as it may be amended in writing from time to time
hereafter.

     (d) The Bank shall have received the consent and acknowledgement of U.S.
Bank N.A., f/k/a U.S. Bank Trust National Association, as trustee (the
"Trustee") under the IDR Bonds (as such term is defined in the Credit Agreement)
with respect to the establishment and modifications of the Revolving Credit
Facility and the Non-Restoring Credit Facility as evidenced by, among other
things, this Third Amendment, and the Borrower shall seek and obtain the
Trustee's ratification of the Bank's rights as a "Future Lender" with respect to
both the Revolving Credit Facility and the Non-Restoring Credit Facility under
that certain Intercreditor Agreement dated February 21, 2001, as assigned to and
assumed by the Bank pursuant to that certain Assignment and Assumption of
Intercreditor Agreement and Consent dated October 24, 2002. The Trustee's
consent and ratification shall be in a form reasonably acceptable to the Bank.

     (e) The Bank shall have received such other documents, certificates,
instruments, and agreements from the Borrower as the Bank may reasonably
request.

     (f) The Bank shall have been reimbursed for all costs and expenses incurred
in connection with this Third Amendment including, but not limited to,
attorneys' fees and disbursements.

     12. CONFIRMATION OF CERTAIN TERMS AND OTHER MATTERS. The Borrower and the
Bank hereby ratify and confirm all terms and provisions of the Credit Agreement,
as amended, and all other documents, instruments, or agreements executed in
connection therewith and agree that, except as expressly modified herein, all of
such terms and provisions remain in full force and effect. The Borrower and the
Bank hereby confirm and acknowledge that the obligations of

                                        5
<PAGE>

the Borrower under the Credit Agreement include all obligations and liabilities
of the Borrower under the Credit Agreement, as it may be amended from time to
time. The Borrower hereby confirms and acknowledges that security interests
granted by the Borrower to the Bank pursuant to that certain Security Agreement
dated October 24, 2002 and that certain Security Agreement dated February 21,
2003 and the collateral granted under that certain Pledge Agreement dated
February 21, 2003 each secure, among other things, all indebtedness owed by the
Borrower to the Bank pursuant to the Revolving Credit Facility and the
Non-Restoring Credit Facility, as amended and increased hereby, and as in effect
from time to time hereafter.

     13. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents
and warrants that: (a) except as otherwise disclosed on the list of "Exceptions
to Representations" annexed as Exhibit 11 to the First Amendment, as
supplemented by Exhibit B to the Second Amendment and Exhibit C, annexed hereto,
the representations and warranties contained in Section 4 of the Credit
Agreement are true and correct in all material respects on the date hereof with
the same effect as though such representations and warranties had been made on
the date hereof; (b) it has complied and is now in compliance in all material
respects, with all of the terms and provisions set forth in the Credit
Agreement, as amended, on its part to be observed and performed; (c) no Event of
Default specified in Section 9 of the Credit Agreement has occurred or is
continuing; and (d) the execution, delivery and performance of this Third
Amendment: (i) has been duly authorized by all requisite corporation action,
(ii) will not violate either (x) any provision of law applicable to the
Borrower, any governmental regulation, or its charter or by-laws, or (y) any
order of any court or other agency of government binding on the Borrower or any
indenture, agreement, or other instrument to which the Borrower is a party, or
by which it or any of its property is bound, and (iii) will not be in conflict
with, result in a breach of, or constitute (with due notice and/or lapse of
time) a default under, any such indenture, agreement, or other instrument.

     14. MISCELLANEOUS. This Third Amendment may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be an
original, but all of the counterparts taken together shall constitute one and
the same instrument. This Third Amendment shall be governed by the laws of the
Commonwealth of Massachusetts and shall be binding upon and inure to the benefit
of the parties hereto and their successors and permitted assigns.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

                                        6
<PAGE>

     IN WITNESS WHEREOF, the parties hereto each have executed this Third
Amendment as a sealed instrument as of the date first written above.

Witness:                                      Able Laboratories, Inc.

/s/Robert Weinstein                           By:  /s/Dhananjay G. Wadekar
---------------------------------                 --------------------------
Print Name: Robert Weinstein                  Name:  Dhananjay G. Wadekar
            ---------------------             Title:  President

Witness:                                      Citizens Bank of Massachusetts

                                              By:  /s/Raymond C. Hoefling
---------------------------------                 --------------------------
Print Name:                                   Name:  Raymond C. Hoefling
            ---------------------             Title:  Vice President

List of Exhibits:

Exhibit A     Form of Replacement Revolving Note
Exhibit B     Form of Replacement Master Note
Exhibit C     Supplement to Schedule of Exceptions

                                        7

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