Asset Purchase Agreement

ASSET PURCHASE AGREEMENT


DATED AS OF OCTOBER 19, 2005


BY AND BETWEEN


ABLE LABORATORIES, INC., AS DEBTOR-IN-POSSESSION


AND


AUROBINDO PHARMA USA, INC., AS PURCHASER


Table of Contents


Page


ARTICLE I DEFINITIONS...................................................................


1.1 Definitions.............................................................


ARTICLE II SALE OF ASSETS................................................................


2.1 Purchase and Sale of Assets.............................................


2.2 Excluded Assets.........................................................


2.3 Assumed Liabilities.....................................................


2.4 Excluded Liabilities....................................................


2.5 Purchase Price..........................................................


2.6 Deposit.................................................................


2.7 Allocation of Purchase Price............................................


ARTICLE III THE CLOSING...................................................................


3.1 Closing Date............................................................


3.2 Prorations as of the Closing Date.......................................


ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER......................................


4.1 Organization............................................................


4.2 Authorization...........................................................


4.3 Subsidiaries............................................................


4.4 No Conflict; Required Filings and Consents..............................


4.5 No Consents.............................................................


4.6 Property................................................................


4.7 Intellectual Property...................................................


4.8 Litigation, etc.........................................................


4.9 Environmental Matters...................................................


4.10 Material Contracts......................................................


4.11 Permits.................................................................


ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER...................................


5.1 Organization............................................................


5.2 Authorization; Validity.................................................


5.3 No Conflict.............................................................


5.4 No Consents.............................................................


5.5 No Litigation...........................................................


5.6 Financial Wherewithal...................................................


ARTICLE VI COVENANTS AND AGREEMENTS......................................................


6.1 Further Actions.........................................................


6.2 Notices and Consents....................................................


6.3 Operation of Transferred Assets.........................................


6.4 Seller's Chapter 11 Bankruptcy Case.....................................


6.5 Access to Information...................................................


6.6 Employee Benefit Arrangements...........................................


6.7 Consents and Commercially Reasonable Efforts............................


6.8 Tax Reporting and Other Tax Matters.....................................


6.9 Assumed and Assigned Contracts; Excluded Contracts......................


6.10 Transfer Taxes..........................................................


6.11 Bankruptcy Filings......................................................


6.12 Cranbury Lease..........................................................


6.13 Title Insurance; Survey.................................................


6.14 Power of Attorney; Right of Endorsement, Etc............................


6.15 Original Documentation..................................................


6.16 Filings.................................................................


6.17 Non-Disturbance Agreement...............................................


6.18 Confidentiality.........................................................


ARTICLE VII CONDITIONS TO OBLIGATIONS.....................................................


7.1 Conditions to Obligations of Seller.....................................


7.2 Conditions to the Obligations of Purchaser..............................


ARTICLE VIII CLOSING.......................................................................


8.1 Closing Transactions....................................................


8.2 Deliveries by Seller to Purchaser.......................................


8.3 Deliveries by Purchaser to Seller.......................................


ARTICLE IX TERMINATION...................................................................


9.1 Termination.............................................................


9.2 Status of Agreement after Termination...................................


9.3 Fees and Expenses.......................................................


9.4 Exclusive Remedy........................................................


ARTICLE X GENERAL PROVISIONS............................................................


10.1 Survival................................................................


10.2 Notices.................................................................


10.3 Binding Effect; Benefits................................................


10.4 Public Announcements....................................................


10.5 Entire Agreement........................................................


10.6 Waivers and Amendments..................................................


10.7 Counterparts............................................................


10.8 Headings................................................................


10.9 Assignment..............................................................


10.10 Applicable Law..........................................................


10.11 Jurisdiction............................................................


10.12 Waiver of Jury Trial....................................................


10.13 Severability............................................................


10.14 Third Party Beneficiaries...............................................


10.15 Disbursements by Seller.................................................


10.16 Construction............................................................


SCHEDULES


Schedule 1.1(a) Patents Schedule 2.1(b) Pre-paid Equipment Schedule 2.2 Excluded Assets Schedule 4.5 Consents Schedule 4.6 Real Property Schedule 4.6(p) Material Tangible Property Schedule 4.7 Intellectual Property Schedule 4.8 Litigation Schedule 4.9 Environmental Matters Schedule 4.10(a) Material Contracts Schedule 4.11 Permits Schedule 6.9(a) Assumed Contracts


ASSET PURCHASE AGREEMENT


THIS ASSET PURCHASE AGREEMENT (this "Agreement") dated as of October 19, 2005, by and between ABLE LABORATORIES, INC., a Delaware corporation ("Seller"), and AUROBINDO PHARMA USA, INC., a Delaware corporation (together with any successor corporation or permitted assign, "Purchaser").


RECITALS


WHEREAS, Seller is currently in possession of certain assets as Debtor-in-Possession pursuant to Title 11, U.S. Code, 11 U.S.C. ss.ss.101-1330 as amended (the "Bankruptcy Code"), in Case No. 05-33129-RTL (hereinafter referred to as the "Bankruptcy Case"), presently pending in the United States Bankruptcy Court for the District of New Jersey (hereinafter referred to as the "Bankruptcy Court"), and Seller, upon proper approval and authorization from the Bankruptcy Court, may sell and assign assets outside of the ordinary course of business;


WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, all of the Transferred Assets (as defined below) free and clear of all Liens other than Assumed Liabilities; and


WHEREAS, time is of the essence in completing the sale by Seller to Purchaser of the Transferred Assets.


NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements set forth herein, the parties agree as follows:


ARTICLE I
DEFINITIONS


1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:


Action. Any action, suit, charge, claim, summons, complaint, lawsuit, investigation, citation, request for investigation, report or notice of alleged violation of Law, arbitration, audit or legal proceeding of any nature filed with or made to or by any Governmental Authority or organization having jurisdiction or authority over Seller, its assets, its property or its operations.


Affiliate. As defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended.


Agreement. This Asset Purchase Agreement, together with all Schedules referred to herein, as the same may be amended, supplemented or otherwise modified from time to time.


Alternative Transaction. As defined in Section 6.4(b).


ANDAs. As defined in Section 2.1(f).


Approval Order. An Order or Orders of the Bankruptcy Court in a form reasonably satisfactory to Seller and Purchaser that, among other things, (i) authorizes and approves the sale to Purchaser pursuant to this Agreement of the Transferred Assets, and approves the terms of this Agreement, (B) finds that Purchaser is acting in good faith and is entitled to the protections of a buyer under section 363(m) of the Bankruptcy Code and (C) contains such other findings and provisions as may be reasonably requested by Purchaser (including a finding that notice of the transactions contemplated by this Agreement has been properly given) to assure that (1) title to the Transferred Assets will be transferred to Purchaser free and clear of all Liens (other than the Assumed Liabilities) and any such Liens shall attach solely to the Total Purchase Price, (2) Seller will be duly authorized to execute and deliver such instruments as are required to be executed and delivered pursuant to the terms of this Agreement, and (3) Seller, upon assuming and assigning to Purchaser each of the Assumed Contracts will have properly assumed and assigned the same, and that upon payment of Cure Amounts being made, there will be no defaults thereunder as of the Closing Date unless such defaults would not have a material adverse effect on the condition of the Transferred Assets and that the assignment and transfer of same to Purchaser will not constitute a default thereunder.


Assumed Contracts. All Contracts set forth on Schedule 6.9(a). When used in Article IV, "Assumed Contracts" shall refer to those Contracts listed on Schedule 6.9(a) (i) as of the date of this Agreement, and (ii) as of the Closing Date as modified pursuant to Section 6.9(a).


Assumed Liabilities. All liabilities and obligations of Seller arising out of the Assumed Contracts (excluding any liabilities and obligations attributable to any breach or default by Seller thereunder) following the Closing Date.


Assumption Agreement. The Assignment and Assumption Agreement to be entered into by and between Purchaser and Seller at the Closing in a form reasonably satisfactory to Purchaser and Seller.


Bankruptcy Case. As defined in the Recitals hereto.


Bankruptcy Code. As defined in the Recitals hereto.


Bankruptcy Court. As defined in the Recitals hereto.


Bidding Procedures Motion. The Motion filed by Seller on October 7, 2005, with the Bankruptcy Court seeking, among other things, the entry of the Bidding Procedures Order.


Bidding Procedures Order. An Order of the Bankruptcy Court in form and substance satisfactory to Purchaser that, among other things, (i) grants the Bidding Procedures Motion, (ii) approves the Break-up Fee on the terms and conditions set forth in Section 9.3 hereof and (iii) establishes a date by which bids for Alternative Transactions must be submitted by bidders and establishes procedures for the auction process.


Bill of Sale. The Bill of Sale to be executed by Seller in a form reasonably satisfactory to Seller and Purchaser.


Break-up Fee. Six Hundred Forty Five Thousand Dollars ($645,000).


Business Day. A day that is not a Saturday, Sunday or legal holiday in the State of New Jersey.


Claims. As defined in section 101 of the Bankruptcy Code.


Closing. As defined in Section 3.1.


Closing Cash Payment. As defined in Section 2.5(b).


Closing Date. As defined in Section 3.1.


Code. Internal Revenue Code of 1986, as amended.


Consent. Any consent, waiver, approval, permit or authorization of, notice to, or designation, registration, declaration or filing with, any Person.


Contract. Any written or oral contract, agreement, understanding, lease, license, note, plan, instrument, commitment, restriction, arrangement, obligation, undertaking or authorization of any kind or character.


Cranbury Lease. That certain Lease Agreement dated September 17, 2003 between Matrix Cranbury Associates, LLC, as lessor, and Seller, as lessee, with respect to the Leased Real Property.


Cure Amounts. Any amounts due under any Assumed Contract including, without limitation, any amounts necessary to cure existing pre-petition and post-petition defaults which are required to be cured or paid by Seller in order for Purchaser to assume the Assumed Contracts, if any.


Deposit. An aggregate amount in cash, or an irrevocable letter of credit in an amount, equal to $4,300,000 deposited, upon the signing of this Agreement, into the escrow established pursuant to the Escrow Agreement.


Environment. As defined in Section 4.9(a).


Environmental Law. As defined in Section 4.9(a).


Environmental Liabilities. As defined in Section 4.9(a).


Environmental Permits. As defined in Section 4.9(a).


Escrow Agent. LaSalle Bank National Association, a national banking association.


Escrow Agreement. The Escrow Agreement, dated as of the date hereof, by and among Seller, Purchaser and the Escrow Agent.


Excluded Assets. As defined in Section 2.2.


Excluded Contracts. As defined in Section 6.9(b).


Excluded Liabilities. As defined in Section 2.4.


Final Order. An order of the Bankruptcy Court, the operation or effect of which has not been stayed, and which is not subject to any pending appeal, request for leave to appeal or request for reconsideration.


Governmental Authority. Any federal, state, county, local, foreign or other governmental or public agency, court, arbitrator, tribunal, administrative agency, instrumentality, commission, authority, board or body.


Hazardous Materials. As defined in Section 4.9(a).


Hazardous Materials Contamination. As defined in Section 4.9(a).


Intellectual Property. (a) All patents, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, set forth on Schedule 1.1(a), (b) all copyrights and all applications, registrations and renewals in connection therewith, (c) all trade secrets, "know-how", customer lists, supplier lists, pricing and cost information, business and marketing plans and other confidential business information, (d) all computer programs and related software other than commercially available "off-the-shelf" software, (e) all domain name registrations, (f) all other recognizable proprietary rights, and (g) all copies and tangible embodiments thereof.


Inventory. All inventories, including, without limitation, raw materials, work in process (including offsite inventory with contract manufacturers) and finished goods, owned by Seller.


ISRA. The New Jersey Industrial Site Recovery Act.


Law. Any law (including common law), statute, code, ordinance, rule, regulation or Order or other requirement enacted, promulgated, issued or entered by a Governmental Authority.


Leased Real Property. The property commonly known as 1 Able Drive, Cranbury, New Jersey leased by Seller pursuant to the Cranbury Lease.


Letter Agreement. That certain letter agreement dated as of October 7, 2005, by and among Seller, Purchaser and Studley, Inc.


Liabilities and Costs. All indebtedness, Claims, liabilities, obligations, responsibilities, losses, diminutions in value, damages, judgments, punitive damages, economic damages, treble damages, costs or expenses, fines, penalties and monetary sanctions of Seller, including Environmental Liabilities, whether accrued, absolute or contingent, asserted or unasserted, and whether or not of a kind required by United States generally accepted accounting principles to be set forth on a financial statement or in notes thereto.


Liens. Any and all liabilities, obligations, interests, levies, Claims, charges, assessments, defenses, setoffs, recoupments, mortgages, security interests, liens (including Tax liens), pledges, deeds of trust, hypothecation, conditional sales agreements, title retention contracts, leases, subleases, easements, clouds on title, rights of first refusal, options to purchase, restrictions and other encumbrances, or any other similar restriction, claim or right of others, and agreements or commitments to create or suffer any of the foregoing.


Material Adverse Effect. Any change, event or circumstance that would materially adversely affect the Transferred Assets, taken as a whole.


Material Contracts. As defined in Section 4.10(a).


Order. Any decree, consent decree, settlement, injunction, judgment, order, ruling, writ, quasi-judicial decision or award or administrative decision or award of any Governmental Authority to which any Person is a party or that is or may be binding on any Person or its securities, assets or business.


Permit. Any license, permit, consent, franchise, registration, certificate of authority or order, or any waiver of the foregoing, required to be issued by any Governmental Authority.


Person. A natural person or any legal, commercial or Governmental Authority, such as, but not limited to, a business association, corporation, general partnership, joint venture, limited partnership, limited liability company, trust, or any person acting in a representative capacity.


Purchased Real Property. The parcels of land commonly known as 6 Hollywood Court, South Plainfield, New Jersey and more fully described on Schedule 4.6, together with all privileges and appurtenances thereto and all plants, buildings, structures, installations, fixtures, fittings, improvements, betterments and additional situated thereon and together with all easements and rights-of-way used or useful in connection therewith.


Purchaser. As defined in the Recitals hereto.


Purchaser Material Adverse Effect. Any change, event or circumstance that would materially adversely affect or materially delay Purchaser's ability to consummate the transactions contemplated by this Agreement.


Real Property. The Purchased Real Property and the Leased Real Property.


Release. As defined in Section 4.9(a).


Representatives. As defined in Section 6.4(b).


Seller. As defined in the Recitals hereto.


Seller's Knowledge. The actual knowledge of Richard Matthews Shepperd, after reasonable investigation and due inquiry.


Statement of Allocation. As defined in Section 2.7.


Subsidiary. With respect to any Person, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation is at the time, directly or indirectly, owned by such Person, or (ii) any partnership, limited liability company or joint venture or other entity of which more than fifty percent (50%) of the outstanding equity interests are at the time, directly or indirectly, owned by such Person.


Superior Transaction. One or more written or oral proposals (with such oral proposals made on the record at the auction or a hearing before the Bankruptcy Court) made by one or more third parties for one or more Alternative Transactions that represent, alone or in the aggregate, and in Seller's and any applicable secured lender's discretion after consultation with the Official Unsecured Creditors Committee of the Bankruptcy Case, a higher or better offer for the Transferred Assets than the offer made by Purchaser for the Transferred Assets pursuant to the terms of this Agreement.


Survey. As defined in Section 6.13(b).


Tangible Property. As defined in Section 4.6(p).


Taxes. Taxes of any kind, including, but not limited to, those measured by or referring to income, gross receipts, sales, use, ad valorem, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, value added, property or windfall profits taxes, customs, duties or similar fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any Governmental Authority, including any taxes of any other Person by reason of Treasury Regulation 1.1502-b, or by reason of similar state, federal or foreign Law, or by Contract or otherwise.


Tax Return. Any return, report or statement required to be filed with any Governmental Authority with respect to Taxes.


Title Commitment. As defined in Section 6.13(a).


Title Company. First American Title Insurance Company, writing through its National Commercial Services division in Chicago, Illinois.


Title Policy. As defined in Section 6.13(a).


Total Purchase Price. As defined in Section 2.5(a).


Transferred Assets. As defined in Section 2.1.


WARN Act. The Worker Adjustment and Retraining Notification Act, as amended, 29 U.S.C. ss.ss. 2101 - 2109.


ARTICLE II
SALE OF ASSETS


2.1 Purchase and Sale of Assets. Subject to the terms and conditions set forth in this Agreement and in reliance upon the representations and warranties of Seller and Purchaser herein set forth, at the Closing, Seller shall sell, transfer, convey, assign and deliver to Purchaser, and Purchaser shall purchase from Seller, all of Seller's right, title and interest, as of the Closing Date, in and to the Transferred Assets pursuant to sections 363 and 365 of the Bankruptcy Code. The Transferred Assets shall be conveyed free and clear of all Liabilities and Costs, obligations, interests and Liens, other than the Assumed Liabilities. For purposes of this Agreement, the term "Transferred Assets" shall mean all of the following assets, properties and rights of Seller (excluding the Excluded Assets):


(a) the Purchased Real Property;


(b) the pre-paid equipment set forth on Schedule 2.1(b);


(c) all machinery, equipment, furniture, phones and other fixed assets located at the Purchased Real Property;


(d) all machinery, equipment, phones, office equipment, materials handling equipment and material, storage racks, laboratory material (including standards, columns, solvents, reagents and glassware), spare parts, calibration equipment, any other material (including consumables) and other fixed assets located at the Leased Real Property;


(e) all of the rights, title, interest and benefits accruing under the Assumed Contracts, including the Cranbury Lease and all leasehold improvements made to the Leased Real Property (excluding any Cure Amounts due and owing thereunder);


(f) copies of all product literature, research files, FDA submissions, Abbreviated New Drug Applications ("ANDAs"), equipment and facility specifications, vendor data, documents related to calibrations, qualifications, validations, commissioning, operating data and engineering drawings related to projects related to the Leased Real Property, general records, customer and supplier lists, employee records, correspondence and other written records, wherever located;


(g) all Intellectual Property, other than the Intellectual Property set forth on Schedule 2.2, and all goodwill associated therewith;


(h) all intangibles of Seller, including know-how, processes and methodologies and all documentation related thereto;


(i) all of the rights to the licenses, Permits, approvals, clearances and authorizations necessary to operate the Transferred Assets;


(j) other than as set forth in Schedule 2.2, all computers and installations, software packages and licenses, and security and environmental monitoring systems (including all related documents, equipment and software);


(k) all unused raw materials still in their original packaging;


(l) copies of all SOP's, protocols, methods of cleaning validation and methods of analysis for raw materials and for finished products; and


(m) any deposits or prepaid advances made by Seller with respect to any Assumed Contract, including the lease for the Leased Real Property.


2.2 Excluded Assets. Notwithstanding anything to the contrary set forth in Section 2.1, Seller shall retain and not sell, transfer, convey, assign and deliver to Purchaser, and Purchaser shall not purchase from Seller, all assets of Seller not constituting Transferred Assets (collectively, the "Excluded Assets"), including, without limitation, the following:


(a) Seller's rights under this Agreement and all cash and non-cash consideration payable or deliverable to Seller pursuant to the terms and provisions hereof;


(b) th ...