Master Equipment Lease Agreement - KeyCorp Leasing




Exhibit 10.9





MASTER EQUIPMENT LEASE AGREEMENT




        
THIS MASTER  EQUIPMENT  LEASE AGREEMENT dated as of December 5, 1997, is made by
and between KEYCORP LEASING, A DIVISION OF KEY CORPORATE CAPITAL INC., having an
address at 54 State Street,  Albany,  New York 12207  (“Lessor”),  and
BIOANALYTICAL  SYSTEMS INC, an Indiana  corporation  with its principal place of
business at 2701 Kent Avenue,  West  Lafayette,  IN 47906  (“Lessee”).




TERMS AND CONDITIONS OF LEASE



        1.        
Lease.    
Lessor  hereby  leases to Lessee,  and Lessee  hereby  leases from  Lessor,  the
Equipment,  subject to and upon the terms and conditions set forth herein.  Each
Equipment   Schedule  shall   constitute  a  separate  and   enforceable   lease
incorporating  all the terms  and  conditions  of this  Master  Equipment  Lease
Agreement  as if such  terms  and  conditions  were  set  forth  in full in such
Equipment  Schedule.  In the event that any term or condition  of any  Equipment
Schedule  conflicts with or is  inconsistent  with any term or condition of this
Master  Equipment  Lease  Agreement,  the terms and  conditions of the Equipment
Schedule shall govern. 



        2.        
Disclaimer of  Warranties.    
LESSOR  MAKES NO (AND  SHALL NOT BE  DEEMED TO HAVE MADE ANY)  WARRANTIES,
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER,  INCLUDING, WITHOUT LIMITATION,
THE DESIGN, OPERATION OR CONDITION OF, OR THE QUALITY OF THE MATERIAL, EQUIPMENT
OR WORKMANSHIP  IN, THE EQUIPMENT,  ITS  MERCHANTABILITY  OR ITS FITNESS FOR ANY
PARTICULAR  PURPOSE,  THE STATE OF TITLE THERETO OR ANY COMPONENT  THERETO,  THE
ABSENCE OF LATENT OR OTHER  DEFECTS  (WHETHER OR NOT  DISCOVERABLE),  AND LESSOR
HEREBY  DISCLAIMS THE SAME; IT BEING  UNDERSTOOD THAT THE EQUIPMENT IS LEASED TO
LESSEE "AS IS" AND ALL SUCH RISKS, IF ANY, ARE TO BE BORNE BY LESSEE. NO
DEFECT  IN, OR  UNFITNESS  OF,  THE  EQUIPMENT,  OR ANY OF THE  OTHER  FOREGOING
MATTERS,  SHALL  RELIEVE  LESSEE OF THE  OBLIGATION  TO PAY RENT OR OF ANY OTHER
OBLIGATION  HEREUNDER.  LESSEE HAS MADE THE SELECTION OF THE EQUIPMENT  FROM THE
SUPPLIER BASED ON ITS OWN JUDGMENT AND EXPRESSLY DISCLAIMS ANY RELIANCE UPON ANY
STATEMENTS OR REPRESENTATIONS MADE BY LESSOR.  LESSOR IS NOT RESPONSIBLE FOR ANY
REPAIRS,  SERVICE,  MAINTENANCE  OR DEFECT  IN THE  EQUIPMENT  OR THE  OPERATION
THEREOF.  IN NO EVENT  SHALL  LESSOR  BE LIABLE  FOR ANY  INDIRECT,  SPECIAL  OR
CONSEQUENTIAL DAMAGES (WHETHER UNDER THE UCC OR OTHERWISE),  INCLUDING,  WITHOUT
LIMITATION, ANY LOSS, COST OR DAMAGE TO LESSEE OR OTHERS ARISING FROM ANY OF THE
FOREGOING MATTERS, INCLUDING, WITHOUT LIMITATION,  DEFECTS, NEGLIGENCE,  DELAYS,
FAILURE OF DELIVERY OR  NON-PERFORMANCE  OF THE  EQUIPMENT.  ANY WARRANTY BY THE
SUPPLIER IS HEREBY ASSIGNED TO LESSEE BY LESSOR WITHOUT RECOURSE.  SUCH WARRANTY
SHALL NOT RELEASE  LESSEE FROM ITS  OBLIGATION TO LESSOR TO PAY RENT, TO PERFORM
ALL  OTHER  OBLIGATIONS  HEREUNDER  AND TO  KEEP,  MAINTAIN  AND  SURRENDER  THE
EQUIPMENT  IN THE  CONDITION  REQUIRED BY  SECTIONS  12 AND 13 HEREOF.  Lessee's
execution  and  delivery of a  Certificate  of  Acceptance  shall be  conclusive
evidence  as between  Lessor and Lessee  that the Items of  Equipment  described
therein are in all of the foregoing respects  satisfactory to Lessee, and Lessee
shall not assert any claim of any nature whatsoever  against Lessor based on any
of the foregoing matters; provided, however, that nothing contained herein shall
in any way bar,  reduce or defeat any claim that  Lessee  may have  against  the
Supplier or any other person (other than Lessor). 





        3.        
Non-Cancelable Lease.    
THIS LEASE IS A NET LEASE AND  LESSEE’S  OBLIGATION TO PAY RENT AND PERFORM
ITS OBLIGATIONS HEREUNDER ARE ABSOLUTE,  IRREVOCABLE AND UNCONDITIONAL UNDER ANY
AND ALL  CIRCUMSTANCES  WHATSOEVER  AND SHALL NOT BE SUBJECT TO ANY RIGHT OF SET
OFF,  COUNTERCLAIM,  DEDUCTION,  DEFENSE OR OTHER  RIGHT  WHICH  LESSEE MAY HAVE
AGAINST THE SUPPLIER,  LESSOR OR ANY OTHER PARTY.  LESSEE SHALL HAVE NO RIGHT TO
TERMINATE  (EXCEPT AS EXPRESSLY  PROVIDED  HEREIN) OR CANCEL THIS LEASE OR TO BE
RELEASED OR DISCHARGED FROM ITS OBLIGATION  HEREUNDER FOR ANY REASON WHATSOEVER,
INCLUDING,  WITHOUT  LIMITATION,  DEFECTS  IN,  DESTRUCTION  OF,  DAMAGE  TO  OR
INTERFERENCE  WITH  ANY  USE  OF  THE  EQUIPMENT  (FOR  ANY  REASON  WHATSOEVER,
INCLUDING,   WITHOUT  LIMITATION,  WAR,  ACT  OF  GOD,  STRIKE  OR  GOVERNMENTAL
REGULATION),  THE INVALIDITY,  ILLEGALITY OR UNENFORCEABILITY (OR ANY ALLEGATION
THEREOF)  OF  THIS  LEASE  OR ANY  PROVISION  HEREOF,  OR ANY  OTHER  OCCURRENCE
WHATSOEVER,  WHETHER SIMILAR OR DISSIMILAR TO THE FOREGOING, WHETHER FORESEEN OR
UNFORESEEN. 



        4.        
Definitions.    
Unless the context  otherwise  requires,  as used in this Lease,  the  following
terms shall have the respective  meanings  indicated  below and shall be equally
applicable to both the singular and the plural forms thereof.


	 	
           
(a)        
“Applicable  Law”  shall mean all  applicable  Federal,  state,
local and foreign laws (including,  without  limitation,  any Environmental Law,
industrial  hygiene  and  occupational  safety  or  similar  laws),  ordinances,
judgments, decrees, injunctions,  writs and orders of any Governmental Authority
and  rules,  regulations,  orders,  licenses  and  permits  of any  Governmental
Authority.






	 	
           
(b)        
“Appraisal Procedure” shall mean the following procedure
for obtaining an appraisal of the Fair Market Sales Value or the Fair Market
Rental Value. Lessor shall provide Lessee with the names of three independent
Appraisers. Within ten (10) business days thereafter, Lessee shall select one of
such Appraisers to perform the appraisal. The selected Appraiser shall be
instructed to perform its appraisal based upon the assumptions specified in the
definition of Fair Market Sales Value or Fair Market Rental Value, as
applicable, and shall complete its appraisal within twenty (20) business days
after such selection. Any such appraisal shall be final, binding and conclusive
on Lessee and Lessor and shall have the legal effect of an arbitration award.
Lessee shall pay the fees and expenses of the selected Appraiser.







– 2 –



	 	
           
(c)        
“Appraiser” shall mean a person engaged in the business of
appraising property who has at least ten years’ experience in appraising
property similar to the Equipment.






	 	
           
(d)        
“Authorized Signer” shall mean those officers of Lessee,
set forth on an incumbency certificate (in form and substance satisfactory to
Lessor) delivered by Lessee to Lessor, who are authorized and empowered to
execute this Lease, the Equipment Schedules and all other documents the
execution of which is contemplated hereby.






	 	
           
(e)        
“Certificate of Acceptance” shall mean a
certificate of acceptance, in form and substance satisfactory to Lessor,
executed and delivered by Lessee in accordance with Section 7 hereof indicating,
among other things, that the Equipment described therein has been accepted by
Lessee for all purposes of this Lease.






	 	
           
(f)        
“Default” shall mean any event or condition which, with the
passage of time or the giving of notice, or both, would constitute an Event of
Default.







	 	
           
(g)        
“Environmental Law” shall mean any federal, state, or
local statute, law, ordinance, code, rule, regulation, or order or decree
regulating, relating to or imposing liability upon a person in connection with
the use, release or disposal of any hazardous, toxic or dangerous substance,
waste, or material as same may relate to the Equipment or its operation.







	 	
           
(h)        
“Equipment” shall mean an item or items of personal property
designated from time to time by Lessee which are described on an Equipment
Schedule and which are being or will be leased by Lessee pursuant to this Lease,
together with all replacement parts, additions and accessories incorporated
therein or affixed thereto.







	 	
           
(i)        
“Equipment Group” shall consist of all Items of
Equipment listed on a particular Equipment Schedule.







	 	
           
(j)        
“Equipment Location” shall mean the location of the
Equipment, as set forth on an Equipment Schedule, or such other location
(approved by Lessor) as Lessee shall from time to time specify in writing.







	 	
           
(k)        
“Equipment Schedule” shall mean each equipment lease
schedule from time to time executed by Lessor and Lessee with respect to an
Equipment Group, pursuant to and incorporating by reference all of the terms and
conditions of this Master Equipment Lease Agreement







	 	
           
(l)        
“Event of Default”  shall have the meaning specified in Section
22 hereof.






	 	
           
(m)        
“Fair  Market  Rental  Value”   or  “Fair  Market  Sale
Value”  shall  mean the  value of each Item of  Equipment  for lease or
sale, unless otherwise specified herein as determined between Lessor and Lessee,
or,  if Lessor  and  Lessee  are  unable to  agree,  pursuant  to the  Appraisal
Procedure,  which  would be obtained in an  arms-length  transaction  between an
informed and willing lessor or seller (under no compulsion to lease or sell) and
an  informed  and  willing  lessee  or buyer  (under no  compulsion  to lease or
purchase). In determining the Fair Market Rental Value or Fair Market Sale Value
of the  Equipment,  (a) such Fair Market  Rental Value or Fair Market Sale Value
shall be calculated on the assumption that the Equipment is in the condition and
repair  required by  Sections 12 and 13 hereof,  and (b) there shall be excluded
from the  calculation  thereof the value of any  upgrades and  attachments  made
pursuant to Section 14 hereof in which the Lessor does not own an interest;
provided,  however,  that,  unless  otherwise  provided in such  Section 22, for
purposes of Section 22 of the Lease,  Fair  Market  Sale Value of the  Equipment
shall  be  determined  based  upon  the  actual  facts  and  circumstances  then
prevailing    without    regard   to   the    assumptions    in    clause    (a)
above.







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(n)        
“Governmental Action” shall mean all authorizations,
consents, approvals, waivers, filings and declarations of any Governmental
Authority, including, without limitation, those environmental and operating
permits required for the ownership, lease, use and operation of the Equipment.






	 	
           
(o)        
“Governmental Authority” shall mean any foreign,
Federal, state, county, municipal or other governmental authority, agency, board
or court.






	 	
           
(p)        
“Guarantor” shall mean any guarantor of Lessee's obligations hereunder.







	 	
           
(q)        
“Item of Equipment” shall mean each item of the Equipment.







	 	
           
(r)        
“Late Payment Rate” shall mean an annual interest
rate equal to the lesser of 18% or the maximum interest rate permitted by
Applicable Law.







	 	
           
(s)        
“Lease”, “hereof”, “herein”
and “hereunder” shall mean, with respect to an Equipment Group,
this Master Equipment Lease Agreement and the Equipment Schedule on which such
Equipment Group is described, including all addenda attached thereto and made a
part thereof.






	 	
           
(t)        
“Lien” shall mean all mortgages, pledges, security interests,
liens, encumbrances, claims or other charges of any kind whatsoever.






	 	
           
(u)        
“Purchase Agreement” shall mean any purchase agreement
or other contract entered into between the Supplier and Lessee for the
acquisition of the Equipment to be leased hereunder.






	 	
           
(v)        
“Related Equipment Schedule” shall have the
meaning set forth in Section 27 hereof.






	 	
           
(w)        
RESERVED.







	 	
           
(x)         
RESERVED.







	 	
           
(y)        
“Rent” shall mean the periodic rental payments due hereunder
for the leasing of the Equipment, as set forth on the Equipment Schedules, and,
where the context hereof requires, all such additional amounts as may from time
to time be payable under any provision of this Lease.







– 4 –



	 	
           
(z)        
“Rent  Commencement  Date”  shall  mean,  with  respect  to  an
Equipment  Group,  the date on which Lessor  disburses funds for the purchase of
such    Equipment    Group,    as    determined    by   Lessor   in   its   sole
discretion.






	 	
           
(aa)        
“Rent Payment Date” with respect to an Equipment
Group, shall have the meaning set forth in the Equipment Schedule associated
therewith.






	 	
           
(ab)        
“Stipulated Loss Value” shall mean, as of any Rent Payment Date
and with respect to an Item of Equipment,  the amount  determined by multiplying
the Total Cost for such Item of  Equipment  by the  percentage  specified in the
applicable   Stipulated  Loss  Value  Supplement   opposite  such  Rent  Payment
Date.






	 	
           
(ac)        
“Stipulated Loss Value Supplement” with
respect to an Equipment Group, shall have the meaning set forth in the Equipment
Schedule associated therewith.






	 	
           
(ad)        
“Supplier” shall mean the manufacturer or the vendor of the
Equipment, as set forth on each Equipment Schedule.







	 	
           
(ae)        
“Term” shall mean the Initial Term, as defined in Section 8
hereof, and any Renewal Term, as defined in Section 8 hereof.






	 	
           
(af)        
“Total Cost” shall mean, with respect to an Item of
Equipment, (1) the acquisition cost of such Item of Equipment (including
Lessor’s capitalized costs), as set forth on the Equipment Schedule on
which such Item of Equipment is described, or (2) if no such acquisition cost is
specified, the Supplier’s invoice price for such Item of Equipment plus
Lessor’s capitalized costs, or (3) if no such acquisition cost is specified
and no such invoice price is obtainable, an allocated price for such Item of
Equipment based on the Total Cost of all Items of Equipment set forth on the
Equipment Schedule on which such Item of Equipment is described, as determined
by Lessor in its sole discretion.







        5.        
Supplier Not an Agent.    
LESSEE  UNDERSTANDS  AND AGREES  THAT (i) NEITHER  THE  SUPPLIER,  NOR ANY SALES
REPRESENTATIVE OR OTHER AGENT OF THE SUPPLIER,  IS (1) AN AGENT OF LESSOR OR (2)
AUTHORIZED  TO MAKE OR ALTER ANY TERM OR  CONDITION  OF THIS LEASE,  AND (ii) NO
SUCH WAIVER OR  ALTERATION  SHALL VARY THE TERMS OF THIS LEASE UNLESS  EXPRESSLY
SET FORTH HEREIN. 



        6.        
Ordering Equipment.    
Lessee has  selected  and  ordered  the  Equipment  from the  Supplier  and,  if
appropriate,  has entered into a Purchase Agreement with respect thereto. Lessor
shall accept an  assignment  from Lessee of  Lessee’s  rights,  but none of
Lessee’s  obligations,  under any such  Purchase  Agreement.  Lessee  shall
arrange for delivery of the  Equipment so that it can be accepted in  accordance
with  Section  7 hereof.  If an Item of  Equipment  is  subject  to an  existing
Purchase  Agreement  between Lessee and the Supplier,  Lessee warrants that such
Item of  Equipment  has not  been  delivered  to  Lessee  as of the  date of the
Equipment  Schedule  applicable  thereto.  If Lessee  causes the Equipment to be
modified  or  altered,  or  requests  any  additions  thereto  prior to the Rent
Commencement   Date,  Lessee  (i)  acknowledges  that  any  such   modification,
alteration or addition to an Item of Equipment may affect the Total Cost, taxes,
purchase  and  renewal  options,  if any,  Stipulated  Loss  Value and Rent with
respect to such Item of Equipment,  and (ii) hereby  authorizes Lessor to adjust
such Total Cost, taxes,  purchase and renewal options,  if any,  Stipulated Loss
Value and Rent as appropriate.  Lessee hereby authorizes Lessor to complete each
Equipment Schedule with the serial numbers and other  identification data of the
Equipment  Group  associated  therewith,  as such data is  received  by  Lessor.




– 5 –




        7.        
Delivery and Acceptance.    
Upon  acceptance  for lease by Lessee of any  Equipment  delivered to Lessee and
described in any Equipment Schedule,  Lessee shall execute and deliver to Lessor
a Certificate  of  Acceptance.  LESSOR SHALL HAVE NO OBLIGATION TO ADVANCE FUNDS
FOR THE PURCHASE OF THE EQUIPMENT  UNLESS AND UNTIL LESSOR SHALL HAVE RECEIVED A
CERTIFICATE OF ACCEPTANCE  RELATING THERETO EXECUTED BY LESSEE. Such Certificate
of Acceptance shall constitute Lessee’s  acknowledgment that such Equipment
(a) was received by Lessee, (b) is satisfactory to Lessee in all respects and is
acceptable  to Lessee for lease  hereunder,  (c) is suitable  for  Lessee’s
purposes, (d) is in good order, repair and condition, (e) has been installed and
operates properly, and (f) is subject to all of the terms and conditions of this
Lease (including, without limitation, Section 2 hereof). 



        8.        
Term; Survival.    
With respect to any Item of Equipment,  unless otherwise specified thereon,  the
initial term of this Lease (the “Initial  Term”) shall commence on the
date on which such Item of Equipment is delivered to Lessee, and, unless earlier
terminated as provided  herein,  shall expire on the final Rent Payment Date for
such Item of Equipment.  With respect to an Item of Equipment,  any renewal term
of this  Lease  (individually,  a  “Renewal  Term”),  as  contemplated
hereby,  shall commence  immediately  upon the expiration of the Initial Term or
any prior Renewal Term, as the case may be, and,  unless  earlier  terminated as
provided herein,  shall expire on the date on which the final payment of Rent is
due and paid hereunder.  All  obligations of Lessee  hereunder shall survive the
expiration, cancellation or other termination of the Term hereof. 



        9.        
Rent.    
With respect to Each Item of  Equipment,  Lessee shall pay the Rent set forth on
the Equipment Schedule  applicable to such Item of Equipment,  commencing on the
Rent  Commencement  Date,  and,  unless  otherwise  set forth on such  Equipment
Schedule,  on the same day of each payment period  thereafter for the balance of
the Term.  Rent shall be due whether or not Lessee has  received any notice that
such payments are due. All Rent shall be paid to Lessor at its address set forth
on the  Equipment  Schedule,  or as  otherwise  directed  by Lessor in  writing.




        10.        
Location; Inspection; Labels.    
The  Equipment  shall be  delivered to the  Equipment  Location and shall not be
removed therefrom without Lessor’s prior written consent. Lessor shall have
the right to enter upon the Equipment  Location and inspect the Equipment at any
reasonable time.  Lessor may, without notice to Lessee,  remove the Equipment if
the Equipment is, in the opinion of Lessor, being used beyond its capacity or is
in any manner improperly cared for, abused or misused. At Lessor’s request,
Lessee  shall  affix  labels  stating  that the  Equipment  is  owned by  Lessor
permanently in a prominent  place on the Equipment and shall keep such labels in
good repair and condition. 



– 6 –




        11.        
Use; Alterations.    
Lessee shall use the Equipment  lawfully and only in the manner for which it was
designed and  intended  and so as to subject it only to ordinary  wear and tear.
Lessee shall comply with all Applicable  Law.  Lessee shall  immediately  notify
Lessor in writing of any existing, pending or threatened investigation, inquiry,
claim or action by any Governmental  Authority in connection with any Applicable
Law or Governmental  Action which could  adversely  affect the Equipment or this
Lease.  Lessee, at its own expense,  shall make such  alterations,  additions or
modifications  or  improvements to the Equipment as may be required from time to
time to meet the requirements of Applicable Law or Governmental  Action.  Except
as otherwise permitted herein, Lessee shall not make any alterations, additions,
modifications  or  improvements  to the Equipment  without  Lessor’s  prior
written consent. 



        12.        
Repairs and Maintenance.    
Lessee, at Lessee’s  own cost and expense,  shall (a) keep the Equipment in
good repair,  good operating  condition and working order and in compliance with
the  manufacturer’s  specifications,  and (b)  enter  into and keep in full
force  and  effect  during  the Term  hereof a  maintenance  agreement  with the
manufacturer   of  the  Equipment,   or  a   manufacturer-approved   maintenance
organization,  to maintain,  service and repair the  Equipment so as to keep the
Equipment in as good  operating  condition  and working  order as it was when it
first   became   subject   to   this   Lease   and  in   compliance   with   the
manufacturer’s  specifications.  Upon Lessor’s  request,  Lessee shall
furnish  Lessor  with an executed  copy of any such  maintenance  agreement.  An
alternate source of maintenance may be used by Lessee with  Lessor’s  prior
written  consent.  Lessee,  at its own cost and expense and within a  reasonable
period of time,  shall  replace any part of any Item of  Equipment  that becomes
worn out, lost, stolen,  destroyed,  or otherwise rendered  permanently unfit or
unavailable for use (whether or not such replacement is covered by the aforesaid
maintenance agreement), with a replacement part of the same manufacture,  value,
remaining useful life and utility as the replaced part immediately preceding the
replacement  (assuming  that such replaced part is in the condition  required by
this  Lease).  Such  replacement  part  shall  be free and  clear of all  Liens.
Notwithstanding  the foregoing,  this  paragraph  shall not apply to any Loss or
Damage (as defined in Section 16 hereof) of any Item of Equipment. 



        13.        
Return of Equipment.    
Upon the  expiration  (subject  to Section  32 hereof  and  except as  otherwise
provided in an Equipment Schedule) or earlier termination of this Lease, Lessee,
at its sole expense,  shall return the  Equipment to Lessor by  delivering  such
Equipment  F.A.S.  or  F.O.B.  to such  location  or such  carrier  (packed  for
shipping)  as Lessor  shall  specify.  Lessee  agrees that the  Equipment,  when
returned,  shall  be in  the  condition  required  by  Section  12  hereof.  All
components of the Equipment  shall have been  properly  serviced,  following the
manufacturer’s  written operating and servicing  procedures,  such that the
Equipment  is  eligible  for  a  manufacturer’s   standard,   full  service
maintenance  contract without  Lessor’s  incurring any expense to repair or
rehabilitate the Equipment.  If, in the opinion of Lessor, any Item of Equipment
fails to meet the standards set forth above,  Lessee agrees to pay on demand all
costs and expenses  incurred in connection with repairing such Item of Equipment
and restoring it so as to meet such  standards,  assembling and delivering  such
Item of  Equipment.  If Lessee fails to return any Item of Equipment as required
hereunder,  then, all of Lessee’s  obligations under this Lease (including,
without  limitation,  Lessee’s  obligation  to pay Rent  for  such  Item of
Equipment at the rental then applicable under this Lease) shall continue in full
force and effect  until such Item of Equipment  shall have been  returned in the
condition required hereunder. 



– 7 –




        14.        
Equipment Upgrades/Attachments.    
In addition to the requirements of  Section 11  hereof,  Lessee, at its own
expense,  may from time to time add or install  upgrades or  attachments  to the
Equipment during the Term;  provided,  that such upgrades or attachments (a) are
readily removable  without causing material damage to the Equipment,  (b) do not
materially  adversely  affect the Fair Market Sale Value, the Fair Market Rental
Value, residual value, productive capacity,  utility or remaining useful life of
the Equipment,  and (c) do not cause such Equipment to become  “limited use
property”  within the meaning of Revenue  Procedure 76-30,  1976-2 C.B. 647
(or such other successor tax provision),  as of the applicable  delivery date or
the time of such upgrade or attachment.  Any such upgrades or attachments  which
are not required by Section 11 hereof and which can be removed  without  causing
damage to or adversely affecting the condition of the Equipment, or reducing the
Fair Market Sale Value, the Fair Market Rental Value, residual value, productive
capacity,  utility or remaining  useful life of the  Equipment  shall remain the
property of Lessee; and upon the expiration or earlier termination of this Lease
and provided that no Event of Default exists,  Lessee may, at its option, remove
any such  upgrades or  attachments  and,  upon such  removal,  shall restore the
Equipment to the condition required hereunder. 



        15.        
Sublease and Assignment.    
(a) WITHOUT LESSOR’S PRIOR WRITTEN CONSENT, LESSEE SHALL NOT (i) ASSIGN,
TRANSFER,  PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS LEASE, THE EQUIPMENT
OR ANY INTEREST THEREIN,  OR (ii) SUBLET OR LEND THE EQUIPMENT TO, OR PERMIT THE
EQUIPMENT  TO BE USED BY,  ANYONE OTHER THAN LESSEE OR  LESSEE’S  QUALIFIED
EMPLOYEES.


	 	
           
(b)        
Lessor, at any time with or without notice to Lessee, may sell, transfer, assign
and/or grant a security interest in this Lease, any Equipment Schedule or any
Item of Equipment. In any such event, any such purchaser, transferee, assignee
or secured party shall have and may exercise all of Lessor’s rights
hereunder with respect to the items to which any such sale, transfer, assignment
and/or security interest relates, and LESSEE SHALL NOT ASSERT AGAINST ANY SUCH
PURCHASER, TRANSFEREE, ASSIGNEE OR SECURED PARTY ANY DEFENSE, COUNTERCLAIM OR
OFFSET THAT LESSEE MAY HAVE AGAINST LESSOR. Lessee acknowledges that no such
sale, transfer, assignment and/or security interest will materially change
Lessee’s duties hereunder or materially increase its burdens or risks
hereunder. Lessee agrees that upon written notice to Lessee of any such sale,
transfer, assignment and/or security interest, Lessee shall acknowledge receipt
thereof in writing and shall comply with the directions and demands of
Lessor’s successor or assign.







        16.        
Loss of or Damage to Equipment.    
(a) Lessee shall bear the entire risk of loss,
theft, destruction, disappearance of or damage to any and all Items of Equipment
(“Loss or Damage”) from any cause whatsoever during the Term hereof
until the Equipment is returned to Lessor in accordance with Section 13 hereof.
No Loss or Damage shall relieve Lessee of the obligation to pay Rent or of any
other obligation under this Lease. 



– 8 –



	 	
           
(b)        
In the event of Loss or Damage to any Item of Equipment, Lessee, at the option
of Lessor, shall within thirty (30) days following such Loss or Damage: (1)
place such Item of Equipment in good condition and repair, in accordance with
the terms hereof; (2) replace such Item of Equipment with replacement equipment
(acceptable to Lessor) in as good condition and repair, and with the same value,
remaining useful economic life and utility, as such replaced Item of Equipment
immediately preceding the Loss or Damage (assuming that such replaced Item of
Equipment is the condition required by this Lease), which replacement equipment
shall be free and clear of all Liens; or (3) pay to Lessor the sum of (i) all
Rent due and owing hereunder with respect to such Item of Equipment (at the time
of such payment) plus (ii) the Stipulated Loss Value as of the Rent Payment Date
next following the date of such Loss or Damage with respect to such Item of
Equipment, as set forth on the Schedule applicable thereto. Upon Lessor’s
receipt of the payment required under subsection (3) above, Lessee shall be
entitled to Lessor’s interest in such Item of Equipment, in its then
condition and location, “as is” and “where is”, without any
warranties, express or implied. If Lessee replaces the Item of Equipment
pursuant to subsection (b) above, title to such replacement equipment shall
immediately (and without further act) vest in Lessor and thereupon shall be
deemed to constitute Items of Equipment and be fully subject to this Lease as if
originally leased hereunder. If Lessee fails to either restore or replace the
Item of Equipment pursuant to subsection (1) or (2) above, respectively, Lessee
shall make the payment under subsection (3) above.







        17.        
Insurance.    
(a) Lessee,  at all times during the Term hereof (until the Equipment shall have
been  returned  to Lessor)  and at  Lessee’s  own cost and  expense,  shall
maintain  (1)  insurance  against  all risks of  physical  loss or damage to the
Equipment  (including  theft and  collision  for  Equipment  consisting of motor
vehicles) in an amount not less than the full  replacement  value thereof or the
Stipulated Loss Value thereof,  whichever is greater, and (2) commercial general
liability  insurance  (including  blanket  contractual  liability  coverage  and
products liability  coverage) for personal and bodily injury and property damage
in an amount satisfactory to Lessor. 


	 	
           
(b)        
All insurance policies required hereunder shall (1) require 30 days’ prior
written notice of cancellation or material change in coverage to Lessor (any
such cancellation or change, as applicable, not being effective until the
thirtieth (30th) day after the giving of such notice); (2) name “KeyCorp
and its subsidiaries and affiliated companies, including Key Corporate Capital
Inc.” as an additional insured under the public liability policies and name
Lessor as sole loss payee under the property insurance policies; (3) not require
contributions from other policies held by Lessor; (4) waive any right of
subrogation against Lessor; (5) in respect of any liability of any of Lessor,
except for the insurers’ salvage rights in the event of a Loss or Damage,
waive the right of such insurers to set-off, to counterclaim or to any other
deduction, whether by attachment or otherwise, to the extent of any monies due
Lessor under such policies; (6) not require that Lessor pay or be liable for any
premiums with respect to such insurance covered thereby; (7) be in full force
and effect throughout any geographical areas at any time traversed by any Item
of Equipment; and (8) contain breach of warranty provisions providing that, in
respect of the interests of Lessor in such policies, the insurance shall not be
invalidated by any action or inaction of Lessee or any other person (other than
Lessor) and shall insure Lessor regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by Lessee or by
any other person (other than Lessor). Prior to the first date of delivery of any
Item of Equipment hereunder, and thereafter not less than 15 days prior to the
expiration dates of the expiring policies theretofore delivered pursuant to this
Section, Lessee shall deliver to Lessor a duplicate original of all policies (or
in the case of blanket policies, certificates thereof issued by the insurers
thereunder) for the insurance maintained pursuant to this Section.







– 9 –




        18.        
General Tax Indemnification.    
Lessee shall pay when due and shall  indemnify and hold Lessor harmless from and
against (on an after-tax basis) any and all taxes, fees,  withholdings,  levies,
imposts,  duties,  assessments and charges of any kind and nature (together with
interest and penalties thereon)(including, without limitation, sales, use, gross
receipts,  personal property, ad valorem, business and occupational,  franchise,
value added, leasing,  leasing use,  documentary,  stamp or other taxes) imposed
upon or against Lessor,  Lessor’s assigns,  Lessee or any Item of Equipment
by any  Governmental  Authority  with  respect to any Item of  Equipment  or the
manufacturing,  ordering,  sale,  purchase,  shipment,  delivery,  acceptance or
rejection,  ownership, titling, registration,  leasing, subleasing,  possession,
use,  operation,  removal,  return or other  dispossession  thereof  or upon the
rents,  receipts or earnings  arising  therefrom or upon or with respect to this
Lease,  excepting  only all  Federal,  state and local  taxes on or  measured by
Lessor’s  net income  (other  than  income tax  resulting  from  making any
alterations,  improvements,  modifications,  additions,  upgrades,  attachments,
replacements or substitutions  by Lessee).  Whenever this Lease terminates as to
any Item of Equipment,  Lessee shall, upon written request by Lessor, advance to
Lessor the amount  determined  by Lessor to be the  personal  property  or other
taxes  on said  item  which  are not  yet  payable,  but  for  which  Lessee  is
responsible, provided Lessor provides Lessee with copies of tax bills supporting
Lessor’s request. 



        19.        
Lessor's Right to Perform for Lessee.    
If Lessee  fails to  perform  or comply  with any of its  obligations  contained
herein,  Lessor may (but  shall not be  obligated  to do so)  itself  perform or
comply  with  such  obligations,  and the  amount  of the  reasonable  costs and
expenses of Lessor incurred in connection  with such  performance or compliance,
together with interest on such amount at the Late Payment Rate, shall be payable
by Lessee to Lessor upon demand.  No such  performance  or  compliance by Lessor
shall be deemed a waiver of the rights and remedies of Lessor or any assignee of
Lessor  against  Lessee  hereunder  or be deemed to cure the  default  of Lessee
hereunder. 



        20.        
Delinquent Payments; Interest.    
If Lessee  fails to pay any Rent or other  sums  under  this Lease when the same
becomes due, Lessee shall pay to Lessor a late charge equal to five percent (5%)
of such  delinquent  amount.  Such late  charge  shall be payable by Lessee upon
demand by Lessor and shall be deemed Rent hereunder. In no event shall such late
charge exceed the maximum amounts permitted under Applicable Law. 



        21.        
Personal Property; Liens.    
Lessor and Lessee  hereby  agree that the  Equipment  is, and shall at all times
remain,  personal property  notwithstanding  the fact that any Item of Equipment
may now be, or  hereafter  become,  in any manner  affixed or  attached  to real
property  or any  improvements  thereon.  Lessee  shall  at all  times  keep the
Equipment free and clear from all Liens.  Lessee shall (i) give Lessor immediate
written notice of any such Lien, (ii) promptly,  at Lessee’s  sole cost and
expense,  take such action as may be necessary to discharge  any such Lien,  and
(iii)  indemnify  and hold Lessor,  on an  after-tax  basis,  harmless  from and
against  any loss or damage  caused by any such  Lien.



– 10 –




        22.        
Events of Default; Remedies.    
(a) As used herein, the term “Event of Default”  shall mean any of the
following  events:  (1) Lessee  fails to pay any Rent within ten (10) days after
the same shall have become due; (2) Lessee or any Guarantor becomes insolvent or
makes an assignment for the benefit of its creditors;  (3) a receiver,  trustee,
conservator  or liquidator of Lessee or any Guarantor or of all or a substantial
part of  Lessee’s  or such  Guarantor’s  assets is  appointed  with or
without the  application or consent of Lessee or such  Guarantor,  respectively;
(4) a  petition  is  filed by or  against  Lessee  or any  Guarantor  under  any
bankruptcy,  insolvency  or similar  legislation;  (5)  Lessee or any  Guarantor
violates  or fails to perform  any  provision  of either this Lease or any other
loan,  lease or credit  agreement or any acquisition or purchase  agreement with
Lessor or any other party;  (6) Lessee violates or fails to perform any covenant
or representation made by Lessee herein; (7) any representation or warranty made
herein or in any Lease,  certificate,  financial  statement  or other  statement
furnished  to  Lessor  shall  prove to be false or  misleading  in any  material
respect  as of the date on which  the same was  made;  (8)  Lessee  makes a bulk
transfer of furniture, furnishings, fixtures or other equipment or inventory; or
(9) there is a material adverse change in Lessee’s or any  Guarantor’s
financial  condition  since the first Rent  Commencement  Date of any  Equipment
Schedule  executed in connection  herewith.  An Event of Default with respect to
any Equipment Schedule hereunder shall, at Lessor’s  option,  constitute an
Event of Default for all Equipment  Schedules hereunder and any other agreements
between Lessor and Lessee. 


	 	
           
(b)        
Upon the occurrence of an Event of Default, Lessor may do one or more of the
following as Lessor in its sole discretion shall elect: (1) proceed by
appropriate court action or actions, either at law or in equity, to enforce
performance by Lessee of the applicable covenants of this Lease or to recover
damages for the breach thereof; (2) sell any Item of Equipment at public or
private sale; (3) hold, keep idle or lease to others any Item of Equipment as
Lessor in its sole discretion may determine; (4) by notice in writing to Lessee,
terminate this Lease, without prejudice to any other remedies hereunder; (5)
demand that Lessee, and Lessee shall, upon written demand of Lessor and at
Lessee’s expense forthwith return all Items of Equipment to Lessor or its
order in the manner and condition required by, and otherwise in accordance with
all of the provisions of this Lease, except those provisions relating to periods
of notice; (6) enter upon the premises of Lessee or other premises where any
Item of Equipment may be located and, without notice to Lessee and with or
without legal process, take possession of and remove all or any such Items of
Equipment without liability to Lessor by reason of such entry or taking
possession, and without such action constituting a termination of this Lease
unless Lessor notifies Lessee in writing to such effect; (7) by written notice
to Lessee specifying a payment date, demand that Lessee pay to Lessor, and
Lessee shall pay to Lessor, on the payment date specified in such notice, as
liquidated damages for loss of a bargain and not as a penalty, any unpaid Rent
due prior to the payment date specified in such notice plus whichever of the
following amounts Lessor, in its sole discretion, shall specify in such notice
(together with interest on such amount at the Late Payment Rate from the payment
date specified in such notice to the date of actual payment): (i) an amount,
with respect to an Item of Equipment, equal to the Rent payable for such Item of
Equipment for the remainder of the then current Term thereof, after discounting
such Rent to present worth as of the payment date specified in such notice on
the basis of a per annum rate of discount equal to five percent (5%) from the
respective dates upon which such Rent would have been paid had this Lease not
been terminated; or (ii) the Stipulated Loss Value, computed as of the payment
date specified in such notice or, if such payment date is not a Rent Payment
Date, the Rent Payment Date next following the payment date specified in such
notice (provided, however, that, with respect to any Item of Equipment returned
to or repossessed by Lessor, the amount recoverable under this clause (ii) shall
be reduced (but not below zero) by an amount equal to the Fair Market Sales
Value (taking into account its actual condition) of such Item of Equipment; (8)
cause Lessee, at its expense, to promptly assemble any and all Items of
Equipment and return the same to Lessor at such place as Lessor may designate in
writing; and (9) exercise any other right or remedy available to Lessor under
applicable law or proceed by appropriate court action to enforce the terms
hereof or to recover damages for the breach hereof or to rescind this Lease. In
addition, Lessee shall be liable, except as otherwise provided above, for any
and all unpaid Rent due hereunder before or during the exercise of any of the
foregoing remedies, and for legal fees and other costs and expenses incurred by
reason of the occurrence of any Event of Default or the exercise of
Lessor’s remedies with respect thereto, including without limitation the
repayment in full of any costs and expenses necessary to be expended in
repairing any Item of Equipment in order to cause it to be in compliance with
all maintenance and regulatory standards imposed by this Lease. If an Event of
Default occurs, to the fullest extent permitted by law, Lessee hereby waives any
right to notice of sale and further waives any defenses, rights, offsets or
claims against Lessor because of the manner or method of sale or disposition of
any Items of Equipment. None of Lessor’s rights or remedies hereunder are
intended to be exclusive of, but each shall be cumulative and in addition to any
other right or remedy referred to hereunder or otherwise available to Lessor or
its assigns at law or in equity. No express or implied waiver by Lessor of any
Event of Default shall constitute a waiver of any other Event of Default or a
waiver of any of Lessor’s rights.







– 11 –




        23.        
Notices.    
All notices and other communications  hereunder shall be in writing and shall be
transmitted  by hand,  overnight  courier  or  certified  mail  (return  receipt
requested),  postage  prepaid.  Such notices and other  communications  shall be
addressed  to the  respective  party at the  address  set forth above or at such
other address as any party may from time to time  designate by notice duly given
in accordance with this Section.  Such notices and other communications shall be
effective upon receipt. 



        24.        
General Indemnification.    
Lessee shall pay, and shall  indemnify and hold Lessor  harmless on an after-tax
basis from and  against,  any and all  liabilities,  causes of  action,  claims,
suits, penalties,  damages, losses, costs or expenses (including attorneys’
fees), obligations, liabilities, demands and judgments, and Liens, of any nature
whatsoever (collectively,  a “Liability”) arising out of or in any way
related  to:  (a) this  Lease or any other  written  agreement  entered  into in
connection with the  transactions  contemplated  hereby and thereby  (including,
without limitation,  a Purchase Agreement,  if any) or any amendment,  waiver or
modification  of any of the  foregoing  or the  enforcement  of any of the terms
hereof  or any of the  foregoing,  (b)  the  manufacture,  purchase,  ownership,
selection,  acceptance,  rejection, possession, lease, sublease, operation, use,
maintenance,   documenting,  inspection,  control,  loss,  damage,  destruction,
removal, storage, surrender, sale, use, condition, delivery, nondelivery, return
or other disposition of or any other matter relating to any Item of Equipment or
any part or portion  thereof  (including,  in each case and without  limitation,
latent or other  defects,  whether or not  discoverable,  any claim for  patent,
trademark  or  copyright  infringement  and any and all  Liabilities  in any way
relating to or arising out of injury to persons,  properties or the  environment
or any and all Liabilities based on strict liability in tort, negligence, breach
of warranties or violations of any regulatory law or requirement,  (c) a failure
to comply fully with any  Environmental Law with respect to the Equipment or its
operation  or use, and (d)  Lessee’s  failure to perform any  covenant,  or
breach of any representation or warranty, hereunder;  provided,  that the
foregoing  indemnity shall not extend to the Liabilities to the extent resulting
solely from the gross negligence or willful  misconduct of Lessor.  Lessee shall
deliver promptly to Lessor (i) copies of any documents  received from the United
States  Environmental  Protection  Agency  or any  state,  county  or  municipal
environmental  or health  agency and (ii) copies of any  documents  submitted by
Lessee or any of its subsidiaries to the United States Environmental  Protection
Agency  or any  state,  county  or  municipal  environmental  or  health  agency
concerning the Equipment or its operation. 



– 12 –




        25.        
Severability; Captions.    
Any  provision of this Lease or any  Equipment  Schedule  which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability  shall
not invalidate or render unenforceable such provision in any other jurisdiction.
Captions are  intended  for  convenience  or  reference  only,  and shall not be
construed  to define,  limit or describe  the scope or intent of any  provisions
hereof. 



        26.        
Lessor's Expense.    
Lessee shall pay all costs and expenses of Lessor, including attorneys' fees and
the fees of any collection agencies,  incurred by Lessor in enforcing any of the
terms,  conditions  or  provisions  hereof  or  in  protecting  Lessor's  rights
hereunder.



        27.        
Related Equipment Schedules.    
In the event that any Item of Equipment  covered  under any  Equipment  Schedule
hereunder  may  become  attached  or  affixed  to, or used in  connection  with,
Equipment  covered under another Equipment  Schedule  hereunder (a “Related
Equipment  Schedule”),  Lessee  agrees that, if Lessee elects to exercise a
purchase  or renewal  option  under any such  Equipment  Schedule,  or if Lessee
elects to return the Equipment  under any such  Equipment  Schedule  pursuant to
Section 13 hereof,  then Lessor,  in its sole  discretion,  may require that all
Equipment leased under all Related Equipment Schedules be similarly disposed of.




        28.        
Financial and Other Data.    
During the Term hereof, Lessee shall furnish Lessor, as soon as available and in
any event  within 60 days after the end of each  quarterly  period  (except  the
last) of each fiscal year, and, as soon as available and in any event within 120
days after the last day of each fiscal year,  financial statements of Lessee and
each Guarantor,  in each case certified by an independent  public  accountant if
customarily  available  or  requested.  Lessee  shall  also  furnish  such other
financial  reports,  information or data as Lessor may  reasonably  request from
time to time. 



        29.        
Commitment Fee Requirement.    
An amount equal to the first periodic payment of Rent must accompany each Lessee
proposal  for  an  Equipment   Schedule   hereunder.   THIS  COMMITMENT  FEE  IS
NONREFUNDABLE;   provided,  however,  that,  upon  Lessor’s  acceptance  of
Lessee’s  proposal to enter into such Equipment  Schedule,  such commitment
fee  shall  be  applied  to the  first  periodic  payment  of  Rent  thereunder.




– 13 –




        30.        
No Affiliation with the Supplier.    
Lessee  hereby  represents  and  warrants to Lessor that,  except as  previously
disclosed  in writing  to Lessor,  neither  Lessee  nor any of its  officers  or
directors (if a  corporation)  or partners (if a partnership)  has,  directly or
indirectly, any financial interest in the Supplier. 



        31.        
Representations and Warranties of Lessee.    
Lessee  represents and warrants that: (a) Lessee is a corporation duly organized
and  validly  existing  in good  standing  under  the  laws of the  state of its
incorporation; (b) the execution, delivery and performance of this Lease and all
related  instruments  and  documents:  (1)  have  been  duly  authorized  by all
necessary  corporate  action  on the  part of  Lessee,  (2) do not  require  the
approval of any stockholder,  partner,  trustee, or holder of any obligations of
Lessee  except  such as have  been  duly  obtained,  and (3) do not and will not
contravene  any law,  governmental  rule,  regulation  or order now  binding  on
Lessee, or the charter or by-laws of Lessee, or contravene the provisions of, or
constitute a default under, or result in the creation of any lien or encumbrance
upon the property of Lessee under,  any indenture,  mortgage,  contract or other
agreement  to which  Lessee is a party or by which it or its  property is bound;
(c) this Lease and all related  instruments  and  documents,  when entered into,
will  constitute  legal,  valid and binding  obligations  of Lessee  enforceable
against Lessee in accordance  with the terms  thereof;  (d) there are no pending
actions  or  proceedings  to which  Lessee  is a party,  and  there are no other
pending or  threatened  actions or  proceedings  of which Lessee has  knowledge,
before  any  court,   arbitrator  or  administrative   agency,   which,   either
individually or in the aggregate, would adversely affect the financial condition
of Lessee,  or the ability of Lessee to perform its obligations  hereunder;  (e)
Lessee is not in default under any obligation for the payment of borrowed money,
for the deferred purchase price of property or for the payment of any rent under
any lease agreement which, either  individually or in the aggregate,  would have
the same such effect;  (f) under the laws of the state(s) in which the Equipment
is to be located,  the Equipment  consists  solely of personal  property and not
fixtures;  (g) the  financial  statements  of Lessee  (copies of which have been
furnished to Lessor) have been prepared in accordance with generally  acceptable
accounting  principles  consistently  applied  (“GAAP”),   and  fairly
present  Lessee’s  financial condition and the results of its operations as
of the date of and for the period covered by such statements, and since the date
of such statements  there has been no material adverse change in such conditions
or  operations;  (h) the address stated above is the chief place of business and
chief executive office, or in the case of individuals, the primary residence, of
Lessee;  (i)  Lessee  does  not  conduct  business  under a  trade,  assumed  or
fictitious  name;  and (j) the  Equipment is being leased  hereunder  solely for
business  purposes  and that no item of  Equipment  will be used  for  personal,
family or household purposes. 



        32.        
Renewal And Purchase Options.    
With respect to an Equipment Schedule and the Equipment Group set forth thereon,
Lessee shall have the purchase and renewal  options set forth in such  Equipment
Schedule.



        33.        
Lessee’s Waivers.    
To the extent  permitted by Applicable Law, Lessee hereby waives (a) any and all
rights and remedies  which it may now have or which at any time hereafter may be
conferred upon it by statute (including,  without limitation,  Article 2A of the
Uniform  Commercial  Code, as applicable)  or otherwise,  (1) which may limit or
modify  Lessor’s  rights or remedies hereunder,  (2) to terminate,  cancel,
quit,  repudiate or surrender this Lease,  except as expressly  provided herein;
(3) to reject,  revoke  acceptance or accept partial  delivery of the Equipment;
(4) to recover  damages  from Lessor for any breach of warranty or for any other
reason  provided,  however,  that no such  waiver  shall  preclude  Lessee  from
asserting any such claim against Lessor in a separate cause of action; or (5) to
setoff  or  deduct  all or  any  part  of any  claimed  damages  resulting  from
Lessor’s default, if any, under this Lease. 



– 14 –




        34.        
UCC Filings.    
LESSEE HEREBY APPOINTS LESSOR OR ITS ASSIGNEE AS ITS TRUE AND LAWFUL ATTORNEY IN
FACT, IRREVOCABLY AND COUPLED WITH AN INTEREST, TO EXECUTE AND FILE ON BEHALF OF
LESSEE ALL UCC FINANCING  STATEMENTS WHICH IN LESSOR’S  SOLE DISCRETION ARE
NECESSARY  OR PROPER TO SECURE  LESSOR’S  INTEREST IN THE  EQUIPMENT IN ALL
APPLICABLE JURISDICTIONS. 



        35.        
Miscellaneous.    
Time is of the essence with respect to this Lease.  Any  failure of Lessor to
require  strict  performance  by Lessee or any waiver by Lessor of any provision
herein shall not be  construed  as a consent or waiver of any  provision of this
Lease.  Neither this Lease nor any Equipment  Schedule may be amended except
by a writing signed by Lessor and Lessee. This Lease and each Equipment Schedule
shall be binding upon,  and inure to the benefit of, the parties  hereto,  their
permitted successors and assigns. This Lease will be binding upon Lessor only if
executed  by  a  duly  authorized   officer  or   representative  of  Lessor  at
Lessor’s  address set forth above. This Lease, and all other documents (the
execution and delivery of which by Lessee is contemplated  hereunder),  shall be
executed on Lessee’s behalf by Authorized Signers of Lessee.  THIS LEASE
IS BEING  DELIVERED  IN THE  STATE OF NEW YORK AND  SHALL BE  GOVERNED  BY,  AND
CONSTRUED IN ACCORDANCE  WITH, THE LAWS OF THE STATE OF NEW YORK,  INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. 



        36.        
Jury Trial Waiver.    
LESSOR AND LESSEE  HEREBY  WAIVE  TRIAL BY JURY IN ANY ACTION OR  PROCEEDING  TO
WHICH LESSOR OR LESSEE MAY BE PARTIES ARISING OUT OF OR IN ANY WAY PERTAINING TO
THIS LEASE.  THIS WAIVER IS MADE  KNOWINGLY,  WILLINGLY AND  VOLUNTARILY  BY THE
LESSOR AND THE LESSEE WHO EACH  ACKNOWLEDGE  THAT NO  REPRESENTATIONS  HAVE BEEN
MADE BY ANY  INDIVIDUAL  TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. 



        37.        
More than One Lessee.    
If more than one person or entity executes this Lease, each Equipment  Schedule,
and all addenda or other documents executed in connection herewith or therewith,
as  “Lessee,”  the obligations of “Lessee”  contained herein
and  therein   shall  be  deemed  joint  and  several  and  all   references  to
“Lessee” shall apply both individually and jointly. 



        38.        
Quiet Enjoyment.    
So long as no Event of Default has  occurred  and is  continuing,  Lessee  shall
peaceably hold and quietly enjoy the Equipment without interruption by Lessor or
any person or entity claiming through Lessor.



– 15 –




        39.        
Entire Agreement.    
This Lease,  together with all Equipment Schedules,  riders and addenda executed
by Lessor  and  Lessee  collectively  constitute  the  entire  understanding  or
agreement  between  Lessor  and  Lessee  with  respect  to  the  leasing  of the
Equipment, and there is no understanding or agreement, oral or written, which is
not set forth herein or therein.  By initialing  below,  Lessee  hereby  further
acknowledges the conditions of this Section 39. 



Lessee’s Initials:  /s/ DW



        40.        
Execution in Counterparts.    
This Master  Equipment Lease Agreement may be executed in several  counterparts,
each of which shall be an original and all of which shall constitute but one and
the same instrument



        
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of the day and
year first above written. 


	
Lessor:



KEYCORP LEASING, A DIVISION OF

KEY CORPORATE CAPITAL, INC.







By:  /s/ Donald C. Davis

Name:  Donald C.  Davis

Title:  Vice President


	
	
Lessee:



BIOANALYTICAL SYSTEMS, INC.









By:  /s/ Doug Wieten

Name:  Doug Wieten

Title:  CFO







– 16 –




CERTIFICATE OF SECRETARY

OF

BIOANALYTICAL SYSTEMS INC





I, Candice Kissinger,  the duly elected and qualified Secretary of Bioanalytical
Systems Inc, (the “Corporation”), do hereby certify: 



        a.        
That  attached  hereto as  Exhibit  A are complete and correct  copies of
resolutions  adopted by the Board of Directors of the  Corporation,  authorizing
the  actions  referred  to  therein;  said  resolutions  constitute  all  of the
resolutions  adopted by such Board of Directors  relating to such matters;  such
resolutions have not been in any way modified,  amended, annulled,  rescinded or
revoked and are in full force and effect as of the date hereof; and



        b.        
The persons listed in Exhibit  B  attached  hereto are duly qualified and
acting officers of the  Corporation,  holding on the date hereof the offices set
forth opposite their names and the signatures appearing opposite their names are
the genuine signatures of such officers.



        
IN WITNESS WHEREOF, I have hereunto signed my name this  17th  day of
December, 1997.





	
	
/s/ Candice Kissinger

Secretary






– 17 –




EXHIBIT A



RESOLUTION OF THE BOARD OF DIRECTORS

OF

BIOANALYTICAL SYSTEMS INC



DATED 12/17/1997





        
WHEREAS,   the  Board  of   Directors   of   Bioanalytical   Systems   Inc  (the
“Corporation”)  desire that the  Corporation  enter into an  equipment
leasing  transaction with KeyCorp Leasing,  a Division of Key Corporate  Capital
Inc.  (“KCL”) as lessor, for the purpose of leasing the equipment (the
“Equipment”)  described  in a Master  Equipment  Lease  Agreement  and
various equipment schedules and other documents (including,  without limitation,
interim funding documents and bills of sale) from time to time entered into with
respect thereto (collectively, the “Lease”); 



        
NOW, THEREFORE, BE IT RESOLVED, that (i) the execution and delivery of the Lease
by the  Corporation  and the financing of the  acquisition  of the Equipment are
hereby authorized, approved, ratified and confirmed in all respects, (ii) if the
Corporation  owns the  Equipment,  the sale of the  Equipment  to KCL is  hereby
authorized,  approved,  ratified and  confirmed in all  respects,  and (iii) the
Corporation  hereby is, and the  Authorized  Officers (as defined  below) hereby
are,  authorized  and  empowered to negotiate  and enter into the Lease and such
other documents,  (including,  without limitation, interim funding documents and
bills of sale) as may be necessary,  advisable, or proper in connection with the
above transaction, and be it; 



        
FURTHER  RESOLVED,  that  Doug  Weiten,  the  Chief  Financial  Officer  of  the
Corporation, and Candice Kissinger, the Secretary of the Corporation (herein the
“Authorized  Officers”)  be, and hereby are, authorized to execute and
deliver the Lease and any and all certificates,  documents, instruments or other
papers as may be necessary or desirable in order to consummate the  transactions
therein contemplated, and that all actions heretofore taken or taken hereinafter
by the Authorized  Officers in furtherance of the actions herein  authorized are
ratified, confirmed, adopted and approved in all respects. 





EXHIBIT B



INCUMBENCY CERTIFICATE





	
Name:



Candice Kissinger

Doug Wieten

























	
	
Office:



Secretary

CFO

























	
	
Signature:



/s/ Candice Kissinger

/s/ Doug Wieten