Document:

Exhibit 10.21

Exhibit 10.21

MASTER EQUIPMENT LEASE

This Master  Equipment Lease dated as of NOVEMBER 15, 2002  (“Master
Lease”)  between  FIFTH  THIRD  BANK,  INDIANA  (CENTRAL),   a  (an)
INDIANA corporation  (hereinafter called together with its successors and
assigns,  if any,  “Lessor”),  251 N. ILLINOIS ST.,  STE 1000,
INDIANAPOLIS,  IN 46204 and  BIOANALYTICAL  SYSTEMS,  INC. a (an) INDIANA
CORPORATION  (hereinafter called  “Lessee”),  2701 KENT AVENUE,
WEST LAFAYETTE, IN 47906-1382. 

TERMS AND CONDITIONS OF LEASE

In  consideration  of  the  premises  and  of  the  rentals  and  the  covenants
hereinafter  mentioned to be kept and performed by Lessee,  Lessor hereby leases
the  equipment  (including  all  replacement  parts,   repairs,   additions  and
accessories  thereto) listed on Equipment Schedule A attached hereto on the date
hereof or as attached hereto at any time in the future or listed or described in
any other  document  which refers to and  incorporates  the terms of this Master
Lease  (collectively  “Equipment”),   upon  the  following  terms  and
conditions: 

Section 1.    Acquisition and Lease of Equipment.

	
(a)	
Lessor will,  subject to the terms of this Master Lease,  purchase the Equipment
set forth in Equipment  Schedule A and  simultaneously  lease such  Equipment to
Lessee.  The  approximate  purchase  price for each unit of  Equipment is as set
forth in Equipment Schedule A. Lessee acknowledges either:

	
 	
(i)	
that Lessee has approved any written Supply  Contract (as defined by the uniform
version of the Uniform  Commercial  Code (UCC) Section  2A-103 (y) as adopted in
the state of Lessor’s  principle place of business)  covering the Equipment
purchased from the  “Supplier”  (as defined by UCC Section  2A-103(x))
thereof for lease to Lessee; or

	
 	
(ii)	
that Lessor has informed or advised Lessee, in writing, either previously or by
this Master Lease of the following:

	
 	
 	
(1)	
the identity of the Supplier;

	
 	
 	
(2)	
that the Lessee may have rights under the Supply Contract; and

	
 	
 	
(3)	
that the Lessee may contact the  Supplier for a  description  of any such rights
Lessee may have under the Supply Contract.

	
(b)	
Lessor hereby  authorizes  Lessee to accept  delivery of the Equipment  from the
manufacturer  or the Supplier.  Upon delivery and  installation  of each item of
Equipment,  if such  Equipment is in good working  order,  and complies with the
specifications of the purchase order, Lessee shall execute and deliver to Lessor
a Certificate of Acceptance in form acceptable to Lessor.  Lessor shall be under
no  obligation to purchase the  Equipment  until it has received the  Acceptance
Certificate executed by Lessee.

	
(c)	
Lessor shall be under no obligation to purchase any item of Equipment if there
shall exist an Event of Default or any condition, event or act which, with
notice or lapse of time or both, would became an Event of Default.

Section 2.    Term and Rent.

	
(a)	
This Master Lease shall  commence on the date set forth above and shall continue
in effect  thereafter so long as any Equipment  Schedule A entered into pursuant
to this Master Lease remains in effect.  The term of each  Equipment  Schedule A
shall  commence  upon the  Effective  Date  specified in each Schedule and shall
continue for the term specified unless earlier terminated  pursuant to the terms
hereof. Unless otherwise stated in Equipment Schedule A, each Equipment Schedule
A term shall be  automatically  extended for  successive  monthly  periods until
terminated  by either  party  giving to the other not less than ninety (90) days
prior written notice of  termination.  Any such  termination  shall be effective
only on the  last day of the  term  specified  in  Equipment  Schedule  A or any
successive period.

	
(b)	
As rent for the Equipment,  Lessee agrees to pay to Lessor the rent specified in
Equipment  Schedule A. All  payments  provided for in this Master Lease shall be
made to the Lessor at the  address of the  Lessor  set forth  above,  or at such
other place as the Lessor,  or its assigns,  shall specify in writing.  The rent
specified in Equipment Schedule A shall be adjusted for any errors,  increase or
decrease  in the  purchase  price  of the  Equipment.  The  payment  of the rent
specified  in  Equipment  Schedule  A also  shall be  secured  by any  presently
existing or hereafter  acquired  property  pledged to Lessor or any affiliate of
Fifth  Third  Bancorp  for any  indebtedness  of Lessee  owed to Lessor  and all
affiliates  of Fifth Third  Bancorp,  whether  direct or  contingent,  due or to
become  due;  provided,  however,  that  this  provision  shall  not  apply to a
“consumer credit  transaction”  as defined in Title I, Consumer Credit
Protection  Act 15  U.S. C.A.  Sections  1601 et.  seq.,  as amended or any
applicable state statute containing similar provisions.

	
(c)	
This  Master  Lease is a net lease  and  Lessee  acknowledges  and  agrees  that
Lessee’s  obligation  to make all  payments  hereunder,  and the  rights of
Lessor in and to all such  payments,  shall be absolute  and  unconditional  and
shall not be subject to any  abatement of rent or reduction  thereof,  including
but not limited to, abatements or reductions due to any present or future claims
of Lessee against Lessor,  the manufacturer of the Equipment,  the Supplier,  or
any party under common  ownership or  affiliated  with Lessor,  by reason of any
defect in the  Equipment,  the condition,  design,  operation or fitness for use
thereof, or by reason of any failure of Lessor to perform any of its obligations
hereunder,  or by reason of any other cause.  It is the intention of the parties
hereto that the rent payable by Lessee hereunder shall continue to be payable in
all  events  and in the  manner  and at the times  herein  provided  unless  the
obligation to pay shall be terminated pursuant to the provisions of this Lease.

Section 3.    Tax Indemnification.

	
(a)	
The terms of this Master Lease,  including  payment  amounts,  have been made in
reliance on the fact that Lessor, its successors and assigns,  shall be entitled
to such deductions, credits and other benefits (the “Tax Benefits”) as
are provided to an owner of property,  to the extent  permitted under applicable
law and provisions of the Internal Revenue Code of 1986 (the  “Code”),
as  amended,   including  but  not  limited  to  depreciation  and  amortization
deductions  allowable  under  Sections  167,  168  and 169 of the  Code  and any
amendments  or  additions   thereto   relating  to  the  leased   property  (the
“Deductions”).

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(b)	
If the Lessor or its  successor or assigns  shall lose,  during the term of this
Master  Lease,  its  right to claim  all or any  part of such  Tax  Benefits  or
Deductions  or any part of such Tax Benefits or Deductions  is  disallowed,  the
rental set forth in Equipment  Schedule A shall be increased by an amount which,
in the reasonable opinion of Lessor,  will cause  Lessor’s total net return
(after all taxes) to be equal to the net return which Lessor would have received
had such Tax Benefits or Deductions not been disallowed.

	
(c)	
In the  event  Lessor’s  claim of all or any part of such Tax  Benefits  or
Deductions with respect to the Equipment is disallowed or lost after the term of
the Lease,  Lessee shall pay Lessor a lump sum which, in the reasonable  opinion
of Lessor  will cause  Lessor’s  total net  return  (after all taxes) to be
equal to the net return  Lessor  would have  received  had such Tax  Benefits or
Deductions not been disallowed.

	
(d)	
In the event that this  Master  Lease is, for any  reason,  canceled  or prepaid
prior to the  expiration  of its term the  Lessee  agrees to pay to  Lessor,  in
addition to all other amounts payable under this Master Lease, a lump sum amount
which, in the reasonable opinion of Lessor,  will cause Lessor’s net return
(when  combined with all other  payments  hereunder but excluding any prepayment
penalties  and after all taxes) to be equal to the net return  Lessor would have
received had this Master Lease not been  terminated  prior to the  expiration of
its term.

	
(e)	
The rent shall not be so increased (or the lump sum payment shall not be due) if
and to the extent that the Lessor  shall have lost the right to claim such a Tax
Benefit or Deduction as a direct result of any one of the following events:

	
 	
(i)	
a casualty  occurrence  with respect to the  Equipment if Lessee shall have paid
the Lessor pursuant to the provisions of Section 13 hereof;

	
 	
(ii)	
the  failure of Lessor to claim the Tax Benefit or  Deduction  on its income tax
return for the appropriate year; or

	
 	
(iii)	
the failure of Lessor to have  sufficient  tax  liability  to fully use such Tax
Benefits or Deductions.

	
(f)	
Lessee agrees that neither it nor any  corporation  controlled by it, in control
of it, or under common control with it, directly or indirectly, will at any time
take any action or file any  returns or other  documents  inconsistent  with the
foregoing and that each of such corporations  will file such returns,  take such
action  and  execute  such  documents  as may be  reasonable  and  necessary  to
facilitate  accomplishment of the intent thereof. Lessee agrees to copy and make
available  for  inspection  and  copying by Lessor  such  records as will enable
Lessor to determine whether it is entitled to the benefit of any amortization or
depreciation  deduction or tax credit  which may be available  from time to time
with respect to the Equipment.

	
(g)	
If, under any circumstances or for any reason whatsoever,  except for acts of the
Lessor,

	
 	
(i)	
Lessor shall become liable for additional tax as a result of Lessee having added
an attachment or made an  alteration to the Equipment  which would  increase the
productivity  or capability of the Equipment so as to violate the  provisions of
Rev. Proc. 75-21,  1975-1 C.B. 715, as modified by Rev. Proc. 79-48, 1979-2 C.B.
529 (and as either or both may hereafter be modified or superseded);

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(ii)	
the  statutory  full-year  marginal  federal  tax rate for  corporations  with a
December 31 tax year-end is different  than the  statutory tax rate in effect on
the date of this Master Lease; or

	
 	
(iii)	
Lessor  shall  not have or shall  lose the  right to  claim,  or there  shall be
disallowed  or  recaptured  all or any portion of the  Federal tax  depreciation
deductions  with respect to any item of Equipment  based on  depreciation of the
Lessor’s full cost of such item of Equipment and computed on the basis of a
method of depreciation provided by the Code as Lessor in its complete discretion
may select;  then Lessee agrees to pay Lessor upon demand an amount which, after
deduction  of all taxes  required to be paid by Lessor in respect of the receipt
thereof  under  the laws of any  federal,  state or local  government  or taxing
authority  of  the  United  States  or of any  taxing  authority  or  government
subsidiary of any foreign country, shall be equal to the sum of:

	
 	
 	
(1)	
an amount equal to the additional income taxes which would be paid or payable by
Lessor in  consequence  of the failure to obtain the  benefit of a  depreciation
deduction  calculated under the assumption that Lessor’s income is taxed at
the highest applicable rate (without regard to the actual taxes paid by Lessor),
and

	
 	
 	
(2)	
any interest  and/or penalty which may be assessed in connection with any of the
foregoing.

	
(h)	
The  provisions  of this  Section 3 shall  survive  the  expiration  or  earlier
termination of this Master Lease.

Section 4.    Acceptance, Use and Maintenance of Equipment.

	
(a)	
Lessor hereby  authorizes  Lessee to accept  delivery of the Equipment  from the
manufacturer  or  Supplier.  Upon  delivery  and  installation  of each  item of
Equipment, if such Equipment is in good working  order,  Lessee shall execute and
deliver to Lessor a Certificate of Acceptance in a form acceptable to Lessor.

	
(b)	
Lessor shall have no obligation and assumes no liability for any matter relating
to  the  ordering,  manufacture,  shipment,  installation,   erection,  testing,
adjusting or servicing of any item of Equipment,  or for any failure or delay in
obtaining or delivering any item of Equipment. Lessee shall provide and maintain
a  suitable  installation  environment  for  each  item of  Equipment  with  all
appropriate utilities,  wiring and other facilities prescribed or recommended by
the appropriate manufacturer’s installation and operating manuals.

	
(c)	
Lessee shall cause the  Equipment to be operated by competent  employees  and in
accordance  with the  manufacturer’s  operating  manuals  and shall pay all
expenses of operating the  Equipment.  The Equipment  shall be maintained at the
location(s) specified in Equipment Schedule A and shall not be removed from such
location(s)  without  the written  consent of the  Lessor.  Lessor will have the
right,  from time to time during  reasonable  business  hours, to enter upon the
Lessee’s premises or any other premises where the Equipment may be located,
for the purpose of  confirming  the  existence,  location,  condition  or proper
maintenance of the Equipment.

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(d)	
Lessee,  at its own cost and expense,  shall keep all  Equipment in good repair,
condition and working order and shall furnish all parts, mechanisms, devices and
servicing  required  therefor.  All such parts,  mechanisms,  and devices  shall
immediately  become the  property  of Lessor and part of the  Equipment  for all
purposes.

	
(e)	
Lessee shall comply with and conform to all laws,  ordinances  and  regulations,
present or future, in any way relating to the possession,  use or maintenance of
the Equipment throughout the term of this Master Lease.

	
(f)	
Lessee shall pay or satisfy and discharge any and all claims against, through or
under Lessee and its successors and assigns,  which, if unpaid, might constitute
or become a lien or a charge upon any of the Equipment, and any liens or charges
which may be levied  against or imposed  upon the  Equipment  as a result of the
failure of Lessee to perform or observe any of its covenants or agreements under
this Master Lease and any other liens or charges which arise by virtue of claims
against,  through or under any other party other than  Lessor,  but Lessee shall
not be required to pay or discharge any such claims so long as it shall, in good
faith and by appropriate legal  proceedings  contest the validity thereof in any
reasonable manner which will not, in the reasonable opinion of Lessor, affect or
endanger  the  interest  of Lessor or other  rights of any  assignee  under this
Master  Lease  hereof in and to the  Equipment  or diminish  the value  thereof.
Lessee’s  obligations  under this Section shall survive the  termination of
this Master Lease.

Section 5.    No Agency.    
Lessee acknowledges and agrees that neither the manufacturer,  the Supplier, nor
any salesman,  representative,  nor other agent of the manufacturer or Supplier,
is an agent of Lessor. No salesman,  representative or agent of the manufacturer
or Supplier is authorized to waive or alter any term or condition of this Master
Lease and no  representation  as to the  Equipment  or any  other  matter by the
manufacturer or Supplier shall in any way affect  Lessee’s duty to pay rent
and perform its obligations as set forth in this Master Lease.

Section 6.    Disclaimer of Warranties.    
LESSEE  ACKNOWLEDGES  THAT:  LESSOR IS NOT THE MANUFACTURER OF THE EQUIPMENT NOR
THE MANUFACTURER’S  AGENT NOR A DEALER THEREIN; THE EQUIPMENT IS OF A SIZE,
DESIGN,  CAPACITY,  DESCRIPTION  AND MANUFACTURE  SELECTED BY LESSEE;  LESSEE IS
SATISFIED  THAT THE EQUIPMENT IS SUITABLE AND FIT FOR ITS  PURPOSES;  AND LESSOR
MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED AS TO THE DESIGN,
OPERATION  OR  CONDITION,  OR AS TO THE QUALITY OF THE  MATERIAL,  EQUIPMENT  OR
WORKMANSHIP IN THE EQUIPMENT LEASED  HEREUNDER,  AND LESSOR MAKES NO WARRANTY OF
MERCHANTABILITY  OR FITNESS OF THE EQUIPMENT FOR ANY  PARTICULAR  PURPOSE OR ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER, IT BEING AGREED THAT ALL SUCH RISKS
AS BETWEEN LESSOR AND LESSEE,  ARE TO BE BORNE BY LESSEE AND THE BENEFITS OF ANY
AND ALL IMPLIED  WARRANTIES  OF LESSOR ARE HEREBY WAIVED BY LESSEE.  LESSOR SHALL
NOT BE  RESPONSIBLE  FOR ANY  INCIDENTAL OR  CONSEQUENTIAL  DAMAGES.  Lessor
agrees that Lessee  shall be entitled to the benefit of any  manufacturer’s
warranties on the Equipment to the extent permitted by applicable law.

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Section 7.    Identification; Personal Property.    
No right, title or interest in the Equipment shall pass to Lessee other than the
right to maintain  possession  and use of the Equipment for the full lease term.
Lessor may require plates or markings to be  conspicuously  affixed to or placed
on the  Equipment  indicating  Lessor  is the  owner.  However,  if any  item of
Equipment  leased  hereunder  is to be operated  by the  public,  such plates or
markings  need  not be  placed  in a  conspicuous  part  of the  Equipment.  The
Equipment  is,  and shall at all times be and  remain,  personal  property  even
though  the  Equipment  or any part  thereof  may  hereafter  become  affixed or
attached to real property.

Section 8.    Quiet Enjoyment.    
So long as Lessee is in compliance with the terms of this Master Lease: Lessee's
right of quiet enjoyment of the Equipment shall not be impaired by the Lessor or
anyone claiming through the Lessor

Section 9.    Assignment.

	
(a)	
LESSEE AGREES NOT TO SELL, ASSIGN, SUBLET, PLEDGE,  HYPOTHECATE, OR OTHERWISE
ENCUMBER, SUFFER A LIEN UPON OR AGAINST ANY INTEREST IN THIS MASTER LEASE OR THE
EQUIPMENT LEASED HEREUNDER.

	
(b)	
Lessor may assign, pledge, or in any other way transfer this Master Lease either
in whole or in part,  without notice to Lessee.  Should this Master Lease or any
interest  therein be  assigned or should the  rentals  hereunder  be assigned no
breach or default of this Master  Lease by Lessor to its  assignee  shall excuse
performance  by  Lessee  of any  provision  hereof.  Upon  receipt  of notice of
assignment of this Master Lease or the rentals due hereunder,  if so directed by
Lessor,  Lessee  shall  pay the  rentals  hereunder  as they  become  due to any
assignee without any set-off, counterclaims or defense thereto.

Section 10.    Fees - Taxes.    
Lessee agrees to pay and to indemnify and hold Lessor  harmless from all license
and  registration  fees and all  assessments,  taxes and impositions of whatever
nature including income, franchise, sales, use, property, excise and other taxes
now  or  hereinafter  imposed  by any  governmental  body  or  agency  upon  the
Equipment,  or the use  thereof,  including  all  interest  and  penalties,  but
excluding any income taxes payable by Lessor on the receipt of income under this
Master Lease.

Section 11.    Limitation of Liability; Indemnification.

	
(a)	
Lessee  agrees that Lessor  shall not be  responsible  for any loss or damage to
Lessee,  its  customers or anyone  else,  caused by any failure or defect of the
Equipment, or otherwise.

	
(b)	
Lessee hereby  assumes  liability  for, and hereby agrees to indemnify,  defend,
protect,  save and keep harmless  Lessor,  its successors and assigns,  from and
against any and all claims, liabilities,  judgments, suits, obligations, losses,
damages,   expenses,   penalties,   and  disbursements   (including   reasonable
attorneys’  fees  and  expenses)  of any kind and  nature  arising  from or
pertaining to the use, possession, operation, manufacture,  purchase, financing,
ownership,   delivery,   rejection,   non-delivery,    transportation,   storage
maintenance,  repair return or other disposition of the Equipment  including but
not limited to liabilities  resulting from strict  liability in tort or a breach
of any law,  regulation or ordinance of any federal,  state or local  government
agency.

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Section 12.    Return of Equipment.    
Upon the  expiration of the term of this Master  Lease,  unless the Equipment is
sold to the Lessee,  Lessee will at its own cost and expense deliver  possession
of the Equipment to Lessor at a location designated by the Lessor free and clear
of all liens, charges, encumbrances, and rights of others, in good working order
and repair  (except for ordinary wear and tear resulting from proper use) and in
the condition required hereby.

Section 13.    Casualty Loss.    
Lessee hereby assumes and shall bear the risk of loss; damage to or theft of the
Equipment from any and every causes whatsoever,  whether or not insured. No loss
or damage to the  Equipment or any part thereof  shall impair any  obligation of
Lessee under this Master Lease,  which shall  continue in full force and effect.
In the  event  that  any item of  Equipment  shall  become  damaged,  worn  out,
destroyed,  lost or stolen,  or if any item of the Equipment is requisitioned or
taken by any  governmental  authority  under  the  power of  eminent  domain  or
otherwise,  Lessee shall  promptly  notify  Lessor  thereof and at the option of
Lessor, Lessee shall:

	
(a)	
Place the same in good repair, condition and working order; or

	
(b)	
Replace the same with like property in good repair,  condition and working order
which  property  shall  be  thereupon   conveyed  to  Lessor  free,   clear  and
unencumbered and thereupon be subject to this Master Lease; or

	
(c)	
On the  Rental  Payment  date  next  following  the date the  Equipment  becomes
damaged,  worn out,  destroyed,  lost or  stolen,  pay Lessor in cash all of the
following:

	
 	
(i)	
all amounts then owed by Lessee to Lessor under this Master Lease;

	
 	
(ii)	
an  amount  equal to the  greater  of the  estimated  fair  market  value of the
equipment at the end of lease term or 10% of the actual cost of said  Equipment;
and

	
 	
(iii)	
the unpaid  balance of the total rent for the initial  term of this Master Lease
attributable to such Equipment.

Upon Lessor’s receipt of such payment, Lessee shall be entitled to whatever
interest Lessor may have in such  Equipment,  in its then condition and location
“AS IS” and “WHERE IS”, without warranty express or implied.

Section 14.    Insurance.

	
(a)	
Lessee at its expense  will  provide and  maintain  fire and  extended  coverage
insurance  against loss,  theft,  damage or  destruction  of the Equipment in an
amount  not  less  than  100%  of the  insurable  value  of the  Equipment  on a
replacement  cost  basis as  determined  by Lessor.  Each  policy  will  provide
expressly  that  such  insurance,  as to  Lessor  and its  assigns,  will not be
invalidated by any act, omission or neglect of Lessee and will provide expressly
for at least thirty (30) days prior  written  notice to Lessor of  alteration or
cancellation. The proceeds of such insurance will be applied first to any unpaid
obligations  of Lessee under this Master Lease  arising  prior to the receipt of
the proceeds and then toward the  restoration  or repair of the  Equipment or if
Lessor  determines  that any item of Equipment is lost,  stolen,  destroyed,  or
damaged  beyond  repair  toward  payment of the  amounts  required by Section 13
above. Any excess proceeds remaining thereafter will be paid to Lessee, provided
Lessee is not then in default under this Master Lease.

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(b)	
Lessee at its  expense  will carry  public  liability,  property  damage and, if
required by Lessor,  collision  insurance  with respect to the Equipment and the
use thereof in amounts  satisfactory  to Lessor.  Each such policy of  insurance
will name Lessor as an additional insured thereon.

	
(c)	
All policies relating to the insurance  referred to in Subsections 14(a) and (b)
above,  will be in such  form and with such  companies  as are  satisfactory  to
Lessor and will name Lessor as an additional  insured and as an additional  loss
payee.  Lessee  will  furnish  Lessor  proof of such  insurance.  Lessee  hereby
appoints Lessor as  Lessee’s  attorney-in-fact  to make claim for,  adjust,
settle,  receive  payment of and execute and  endorse all  documents,  checks or
drafts for loss or damage under any such insurance policy.

	
(d)	
If Lessee fails to procure, maintain and pay for such fire and extended coverage
insurance or any such public liability, property damage or collision insurance
required by Lessor, Lessor will have the right, but not the duty, to obtain such
insurance on behalf of and at the expense of Lessee. In the event Lessor does
obtain and pay for such insurance, Lessee will reimburse Lessor for the costs
thereof no later than the date of the next scheduled rental payment under this
Master Lease.

Section 15.    Right of Lessor to Perform.    
If the Lessee shall fail to comply with any of its covenants  herein  contained,
the Lessor (or, in the case of an assignment  by the Lessor  pursuant to Section
9(b) hereof, as assignee),  may, but shall not be obligated to, make advances to
perform the same and to take all such action as may be  necessary to obtain such
performance.  Any  payment so made by any such party and all costs and  expenses
(including,  without limitation,  reasonable attorneys’  fees and expenses)
incurred in connection  therewith  shall be  immediately  due and payable by the
Lessee to the party making the same, as additional rent hereunder.

Section 16.    Events of Defaults.    
Any of the following events shall constitute an Event of Default:

	
(a)	
The nonpayment by Lessee for ten (10) days of any rent or other amount  provided
for herein after the same is due and payable;

	
(b)	
The failure of Lessee to observe,  keep or perform any other  provisions of this
Master Lease required to be observed, kept or performed by Lessee, which failure
is not cured ten (10) days after notice thereof by Lessor;

	
(c)	
The failure of Lessee to make any payment when due, or to observe or perform any
covenant or agreement  contained in, or the  occurrence of a default or Event of
Default  under any  agreement  evidencing,  guarantying  or  securing  any other
indebtedness  or  obligation  of Lessee to Lessor,  The Fifth Third Bank, or any
affiliate of Fifth Third Bancorp of any kind or nature;

	
(d)	
The  making  of any  representation  or  warranty  by  Lessee  herein  or in any
agreement,  document or certificate  delivered to Lessor in connection herewith,
or any financial  statement  furnished by Lessee to Lessor  which,  at any time,
proves to be incorrect in any material respect;

	
(e)	
Lessee or any  guarantor  makes an  assignment  for the benefit of  creditors or
commits any other affirmative act of insolvency or bankruptcy,  files a petition
in bankruptcy or for  arrangement  or  reorganization  or having such a petition
filed against it if such  petition is not  dismissed or withdrawn  within thirty
(30) days;

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(f)	
The attachment of a substantial part of the property of Lessee or appointment of
a receiver for Lessee or any substantial part of Lessee's property;

	
(g)	
Lessee ceases to do business as a going concern,  or if there is a change in the
ownership of Lessee which changes the identity of any person or persons  having,
directly  or  indirectly,  more  than 10% of  either  the  legal  or  beneficial
ownership of Lessee;

	
(h)	
There shall occur, in Lessor’s  reasonable  opinion, a deterioration in the
financial  strength of the Lessee or any  guarantor  or any event  occurs  which
might, in Lessor’s  opinion,  have an adverse effect on the Equipment or on
Lessee’s   or   guarantor’s   financial   condition,   operations   or
prospects;

	
(i)	
The death or  dissolution  of  Lessee  or any  guarantor,  or any  guarantor  of
Lessee’s  obligations  hereunder denies his or its obligations to guarantee
any  obligations  then  existing or attempts  to limit or  terminate  his or its
obligations to guaranty the Lessee’s obligations hereunder.

	
(j)	
Lessee also agrees, upon any responsible officer of Lessee becoming aware of any
condition which constituted or constitutes an Event of Default under this Master
Lease or which, after notice or lapse of time, or both, would constitute such an
Event of Default,  to promptly furnish to Lessor written notice  specifying such
condition and the nature and status  thereof.  For purposes of this  Section,  a
“responsible  officer”  shall mean, with respect to the subject matter
of any  covenant,  agreement or  obligation  of Lessee  contained in this Master
Lease,  any corporate  officer of Lessee who, in the normal  performance  of his
operational responsibilities,  would or should have knowledge of such matter and
the requirements of this Master Lease with respect thereto.

Section 17.    Remedies.    
Upon the  occurrence  of any Event of  Default,  Lessor  shall have the right to
declare this Master Lease in default without notice to Lessee.  Such declaration
shall apply to all schedules  then in effect  hereunder.  Upon the making of any
such declaration, Lessor shall have the right to exercise any one or more of the
following remedies;

	
(a)	
To take  possession of any and all items of Equipment  without further demand or
notice  wherever  they may be located  without any court order or process of law
(but if Lessor  applies  for a court  order or the  issuance  of legal  process,
Lessee waives any prior notice of the making of this application or the issuance
of such order of legal  process)  and Lessee  hereby  waives any and all damages
occasioned by such taking of possession; any such taking of possession shall not
constitute termination of this Master Lease as to any or all of Equipment unless
Lessor expressly so notified Lessee in writing;

	
(b)	
To  terminate  this  Master  Lease as to any or all items of  Equipment  without
prejudice to  Lessor’s  rights in respect to  obligations  then accrued and
remaining unsatisfied;

	
(c)	
To recover from Lessee (and Lessee agrees to pay in cash the following):

	
 	
(i)	
all amounts then owed by Lessee to Lessor under this Master Lease;

	
 	
(ii)	
the unpaid  balance of the total rent for the initial  term of this Master Lease
attributable to said Equipment.

	
 	
(iii)	
an  amount  equal to the  greater  of the  estimated  fair  market  value of the
equipment at lease termination or 10% of the actual cost of said Equipment; and

- 9 -

	
 	
(iv)	
an amount equal to 10% of the original  cost of the Equipment as liquidated
damages and not as a penalty.

	
(d)	
To sell any or all of the  Equipment  in public or private  sale,  in bulk or in
parcels, for cash or on credit without having the Equipment present at the place
of sale and to  recover  from  Lessee all costs of taking  possession,  storing,
repairing,  and selling the Equipment (and Lessor may use Lessee’s premises
for any or all of the foregoing without liability for rent, costs, or damages or
otherwise) or to otherwise dispose,  hold, use, operate, lease to others or keep
idle such  Equipment all as Lessor in its sole  discretion  may determine and to
apply the proceeds of any such action:

	
 	
(i)	
to all costs,  charges  and  expenses  incurred  in taking,  removing,  holding,
operating,  repairing,  and  selling,  leasing  or  otherwise  disposing  of the
Equipment; then

	
 	
(ii)	
to the amounts set forth in Section (c) (i), (ii), (iii) and (iv) above provided
that Lessee shall pay any deficiency due Lessor;

	
 	
(iii)	
and any surplus shall be retained by Lessor;

	
(e)	
To pursue any other remedy provided for by statute or otherwise available at law or in equity.

Notwithstanding  any  repossession,  or other action which Lessor may take,  the
Lessee shall be and remain liable for the full performance of all obligations on
the part of Lessee to be  performed  under this  Master  Lease to the extent not
paid or  performed  by  Lessee.  All such  remedies  are  cumulative  and may be
exercised concurrently or separately. In addition to the foregoing, Lessee shall
pay Lessor all costs and expenses, including reasonable attorneys’ fees and
fees of collection  agencies  incurred by Lessor in exercising any of its rights
and remedies hereunder.

Section 18.    Repayment of Other Amounts.    
In addition to any other right  granted to Lessor  hereunder to  terminate  this
Master  Lease,  Lessor shall have the right to  terminate  this Master Lease and
collect all amounts due hereunder  (including any lump sum or other tax payments
provided in Section 3 hereof) if Lessee,  whether at the direction or request of
the Lessor or any affiliate of Lessor,  The Fifth Third Bank, or The Fifth Third
Bancorp,  repays all or substantially  all other amounts and obligations owed by
Lessee to the Lessor or any affiliate of the Lessor, The Fifth Third Bank or The
Fifth Third Bancorp.

Section 19.    Further Assurances.    
Lessee will, upon request of Lessor, at Lessee’s  sole cost and expense,  do
and perform any other act and will execute,  acknowledge,  deliver, file, record
and deposit (and will re-file,  re-register,  re-record, and re-deposit whenever
required) any and all further  instruments  required by law or Lessor including,
without  limitation,  financing  statements  or other  documents  needed for the
protection of Lessor’s interest.

Section 20.    Notices.    
Any notices and demands  required to be given  hereunder shall be in writing and
may be  delivered  personally  or  mailed  by  certified  mail,  return  receipt
requested,  to the  respective  addresses of the parties above set forth,  or to
such other address as either party may  hereinafter  indicate by written notice,
as provided in this section.

Section 21.    Financial Statements.    
Within  sixty (60) days after the end of each fiscal  quarter and within  ninety
(90) days after the end of each  fiscal  year of Lessee  during the term of this
Master Lease,  Lessee shall deliver to Lessor yearly Balance Sheets,  Profit and
Loss Statements and Source and  Application of Funds of Lessee  certified by the
independent public  accountants of Lessee or if unaudited,  certified to be true
and correct by the chief financial officer of Lessee.

- 10 -

Section 22.    Filings; Power of Attorney.    
Lessee will execute and deliver to Lessor at Lessor’s request all financing
statements,   continuation  statements,  and  other  documents  that  Lessor  may
reasonably  request,  in form  satisfactory  to Lessor,  to perfect and maintain
Lessor’s interest in the Equipment and to fully consummate all transactions
contemplated   under  this  Master  Lease.  Lessee  hereby  irrevocably  makes,
constitutes and appoints Lessor (or any of Lessor’s officers,  employees or
agents  designated  by Lessor) as  Lessee’s  true and lawful  attorney with
power to sign the  name of  Lessee  on any such  documents.  This  power,  being
coupled with an interest,  is  irrevocable  until all  obligations  of Lessee to
Lessor have been fully satisfied.

Section 23.    Late Payments.    
Interest at the rate of 11⁄2% per month or the maximum rate permitted by law,
whichever  is less,  shall accrue on the amount of any payment not made when due
hereunder from the date thereof until payment is made, and Lessee shall pay such
interest to Lessor, on demand.

Section 24.    Entire Agreement.    
THE MASTER  LEASE AND  ASSOCIATED  SCHEDULES  CONSTITUTES  THE  ENTIRE  AGREEMENT
BETWEEN LESSOR AND LESSEE AND  EXCLUSIVELY  AND COMPLETELY  STATES THE RIGHTS OF
LESSOR AND LESSEE WITH RESPECT TO THE LEASING OF THE  EQUIPMENT  AND  SUPERSEDES
ALL PRIOR  AGREEMENTS,  ORAL OR WRITTEN,  WITH RESPECT THERETO AND ANY COURSE OF
DEALING OF THE PARTIES  HERETO.  The terms and  conditions of all Schedules,
Addenda, and Exhibits, which refer to this Master Lease, are hereby incorporated
herein.

Section 25.    Finance Lease.    
The Lessor and Lessee  hereby  agree that this Master  Lease is a  “finance
lease”  as that term is defined in Section 2A-103 of the Uniform Commercial
Code as adopted in the state of Lessor's  principle  place of business  and that
Lessor  shall be  treated  as a finance  lessor  entitled  to the  benefits  and
releases  from  liability  accorded  to  a  finance  lessor  under  the  Uniform
Commercial Code.

Section 26.    Miscellaneous.

	
(a)	
This  Master  Lease  shall  inure  to the  benefit  of and be  binding  upon the
successors and assigns of the respective parties hereto provided,  however, that
nothing contained in this section shall impair any of the provisions prohibiting
assignment without the consent of Lessor;

	
(b)	
Any provision of this Master Lease,  which is unenforceable in any jurisdiction,
shall not render  unenforceable  such  provision in any other  jurisdiction  and
shall not invalidate the remaining provision of this Master Lease.

	
(c)	
This Master Lease shall he governed by and construed under the laws of the state
of the Lessor’s principal place of business without regard to its conflicts
of laws provisions,

	
(d)	
All covenants of Lessee herein shall survive the  expiration or  termination  of
this  Master  Lease  to the  extent  required  for  their  full  observance  and
performance.

- 11 -

	
(e)	
No delay or omission to exercise any right,  power or remedy  accruing to Lessor
upon any breach or  default of Lessee  hereunder  shall  impair any such  right,
power or remedy nor shall it be  construed  to be a waiver of any such breach or
default,  or an  acquiescence  therein  or of  any  similar  breach  or  default
thereafter  occurring,  nor shall any waiver of any single  breach of default be
deemed a waiver  of any  other  breach  or  default  theretofore  or  thereafter
occurring.  Any waiver,  permit, consent or approval of any kind or character on
the part of Lessor of any breach or default  under this Master  Lease must be in
writing specifically set forth.

	
(f)	
Lessee  agree that the state and federal  courts in the county of  Lessor’s
principal  place of  business,  or any  other  court in which  Lessor  initiates
proceedings  have exclusive  jurisdiction  over all matters  arising out of this
Master  Lease  and that  service  of  process  in any such  proceeding  shall be
effective if mailed to Lessee at its address described in the first paragraph of
this Master Lease. LESSOR AND LESSEE HEREBY WAIVE THE RIGHT TO TRIAL BY JURY
OF ANY MATTERS ARISING OUT OF THIS MASTER LEASE OR THE TRANSACTIONS CONTEMPLATED
THEREBY.

	
(g)	
No variation or  modification or amendment of this Master Lease and no waiver of
any of its provisions or conditions shall be valid unless in writing.

Lessor and Lessee have each caused this Master  Lease to be duly  executed as of
the date set forth on the first page hereof.

	
BIOANALYTICAL SYSTEMS, INC.

By:  /s/ Doug Wieten

Title:  CFO

Lessee	 	
FIFTH THIRD BANK, INDIANA (CENTRAL)

By:  /s/ Richard Moorlach

Title:  V.P.

Lessor

- 12 -

EQUIPMENT SCHEDULE A

EFFECTIVE DATE NOVEMBER 15,2002

This Schedule  forming a part of the MASTER LEASE between  FIFTH  THIRD BANK,
INDIANA (CENTRAL),  Lessor, and BIOANALYTICAL  SYSTEMS,  INC., Lessee, dated NOVEMBER 15, 2002 (“Master Lease”),

	
Description	
Location Street, City,

State, Zip, County	
Serial Number or VIN#	
Cost
	
NEW MASS SPECTROMETER EQUIPMENT MORE FULLY DESCRIBED ON EXHIBIT A	
2701 KENT AVENUE

WEST LAFAYETTE, IN 47906

TIPPECANOE

	
EXHIBIT A	
$1,089,376.00
	
See attached Exhibit A for a complete description of equipment	
 	
Total Cost:	
$1,089,376.00

Section 1.    Equipment.    
Pursuant to the terms of the Master Lease, Lessor agrees to acquire and lease to
Lessee the equipment listed above ("Equipment").

Section 2.    Billing Name and Address.    
BIOANALYTICAL SYSTEMS, INC. 2701 KENT AVENUE, WEST LAFAYETTE, IN 47906-1382

Section 3.    Term in Months:    
60             
             
             
             
Payment Frequency:    Monthly

Section 4.    Rent:

	
(a)	
Rent shall be payable IN ADVANCE          
                    
          First Payment Date:  NOVEMBER 15, 2002

	
Number of Payments
	
Rent

	
60
	
$17,820.00

	
(b)	
Monthly Payments shall include the above Rent plus sales/use tax if applicable.

	
(c)	
For this  Schedule  there  shall be added  to the  first  installment  of Rent a
further sum (Interim Rent) equal to the product  resulting from  multiplying (i)
that part of the cost  of the Equipment  paid by  Lessor  prior to the
Effective  Date of this  Schedule  by (ii) an amount  equal to N/A% per annum in
each case  computed from the  respective  dates of any such payment by Lessor to
the Effective Date of this Schedule.

Section 5.    Tax-Benefits.    
(a)  Depreciable  Life:  Lessor has  assumed a  depreciable  life of 5
years in computing the Rent listed above.

Section 6.    End of Term FMV Options.    
At the end of the initial  Term of this Lease  Schedule,  so long as no Event of
Default has occurred, Lessee shall exercise one of the following options.

- 13 -

	
(a)	
So long as no Event of Default has occurred  and this  Schedule has not been
earlier terminated,  the expiration of the initial Term, provided written notice
has been given to Lessor at least ninety (90) days but not more than one hundred
eighty (180) days prior to the end of Term, purchase all, but not less than all,
of the Equipment in this Schedule on an “AS IS, WHERE IS, BASIS” to be
paid in cash in an amount equal to the fair market value of the Equipment  (plus
all applicable  taxes),  which value shall not exceed  20.0% of Equipment
Cost nor be less than 15.0% of Equipment Cost; or

	
(b)	
Lessee may return the Equipment in accordance with Section of the Master Lease
entitled “Return of Equipment”, and in accordance with High Technology
Equipment Lease Rider Return Provisions; or

	
(c)	
Lessee may renew the Master Lease at a term and rate to be negotiated by the
parties based on the fair market value of the Equipment.

Section 7.    Amendments to Master Lease.    
For purposes of this Schedule,  the terms of the Master Lease are hereby amended
and  supplemented  as follows:  Subsection  (c)(ii) of Section  13 of the
Master Lease entitled Casualty Loss and Subsection (c)(iii) of Section
17 of the Master  Lease  entitled  Remedies are each deleted in the
entirety and each replaced with the following:

"an amount equal to 20.0% of said Equipment cost; and"

EARLY BUYOUT  OPTION:    Lessee shall have the option
to purchase after the payment of the 36TH  rental of this Lease,  all but
not less than all, of the Equipment for an amount equal to  52.5%  of the
Equipment  Cost, or after the payment of the  48TH  rental of this Lease,
all but not less than all, of the Equipment for an amount equal to  34.0%
of the Equipment  Cost, or after the payment of the  54TH  rental of this
Lease,  all but not less  than all,  of the  Equipment  for an  amount  equal to
24.5% of the Equipment Cost; 0 together with all taxes and charges payable
in full upon sale. Lessor and Lessee agree that the Buyout Price is a reasonable
prediction of the fair Market Value of the Equipment.

	
BIOANALYTICAL SYSTEMS, INC.

By:  /s/ Doug Wieten

Title:  CFO

Lessee	 	
FIFTH THIRD BANK, INDIANA (CENTRAL)

By:  /s/ Richard Moorlach

Title:  VP

Lessor

- 14 -

EXHIBIT A

This  Exhibit A  pertains  to an  Equipment  Schedule  A dated  NOVEMBER  I5,
2002  to a certain  Master  Lease dated  NOVEMBER  15,  2002  between
FIFTH  THIRD  BANK,  INDIANA  (CENTRAL),   Lessor,  and  BIOANALYTICAL
SYSTEMS, INC., Lessee,

	
Description	
Location Street, City,

State, Zip & County	
Serial Number or VIN#	
Cost
	
Two (2) New API 4000# MS/MS System  Package with  accessories as described on
Applied Biosystems Invoice #91625472 dated 4/30/02	
2701 KENT AVENUE

WEST LAFAYETTE, IN 47906

TIPPECANOE COUNTY

	
Produce # WC026992 -
package only	
$691,971.00
	
One (1) Refurbished  API3000 Mass  Spectrometer with accessories as described on
Applied Biosystems Invoice #91687662 dated 6/14/02	
Same	
Product #API3000	
$198,352.50

	
One (1) Refurbished  API3000 Mass  Spectrometer with accessories as described on
Applied Biosystems Invoice #91689457 dated 6/15/02	
Same	
Product #API3000	
$199,052.50

	
 	
 	
TOTAL COST	
$1,089,376.00

	
BIOANALYTICAL SYSTEMS, INC.

By:  /s/ Doug Wieten

Title:  CFO

Lessee

- 15 -

HIGH TECHNOLOGY EQUIPMENT LEASE RIDER

RETURN PROVISIONS

This Equipment Lease Rider shall be attached to and the provisions  herein shall
be  incorporated  in the terms and  provisions  of the  MASTER  EQUIPMENT  LEASE
between,  Bioanalytical  Systems,  Inc.  located at 2701 Kent Avenue,  W.
Lafayette,  IN  47906  (hereinafter  referred  to  as  “Lessee”)  and,
FIFTH  THIRD  BANK,  INDIANA  (CENTRAL),  a (an)  Indiana  corporation
(“Lessor”),  251 N.  Illinois St., Ste 1000,  Indianapolis,  IN
46204 (hereinafter referred to as  “Lessor”),  dated 11-15-02, and
Equipment Schedule A, Dated 11-15-02 attached thereto,  Lessee and Lessor hereby
agree as follows: 

	
1.	
Maintenance.    
During the term of the Lease,  the Equipment  must be operated and maintained in
accordance with the  manufacturer's  specifications  and in a manner which would
not limit any manufacturer's warranty thereon. All components,  fuels and fluids
installed  on  or  used  in  connection   with  the  Equipment   must  meet  the
manufacturer's minimum standards.

	
2.	
Notification.    Upon     expiration    or    earlier
termination of the Lease Term with respect to any  Equipment,  and provided that
Lessee has no validly  exercised  any  Purchase  Option with respect to thereto,
Lessee shall provide Lessor with at least 365 days prior/advance  written notice
of its intent to return the Equipment  (“Notice  of  Return”) at lease
expiration or any extended term thereof.

	
3.	
Inspection.  At any time after receipt of the Notice of Return, Lessor
shall have the right  during  normal  business  hours to inspect the  Equipment.
Lessee shall  cooperate with Lessor in scheduling  such inspection and in making
the Equipment available for inspection by Lessor or its agents.

	
4.	
Location.  Return  the  Equipment  to a  location  and in the  manner
designated  by Lessor,  including  as  reasonably  required by Lessor,  securing
arrangements  for the  disassembly  and  packing for  shipment by an  authorized
representative of the manufacturer of the Equipment, shipment with all parts and
pieces on a carrier  designated  or approved by Lessor,  and then  reassembly by
such  representative  at the return  location in the  condition the Equipment is
required to be  maintained  by the Lease and in such  condition as will make the
Equipment immediately available to perform all functions for which the Equipment
was originally  designed and immediately  qualified for the  manufacturer’s
then-available Service Contract and Warranty. Lessee shall obtain a warranty for
the benefit of the subsequent  buyer to cover costs associated with any defects,
operational  problems or problems  caused by  installation  that are encountered
during the 90-day period immediately following re-installation.

	
5.	
Records.  Upon delivery,  the Equipment shall be complete with current
set of manuals,  blue prints,  process flow  diagrams,  Equipment  configuration
diagrams,  all maintenance records and other data reasonably requested by Lessor
concerning the configuration and operation of the Equipment.

	
6.	
Transportation.  The Equipment  will be  transported  in accordance  with
Section 4 hereof and the manufacturer's recommendations and applicable governing
laws, rules, and regulations.

- 16 -

	
7.	
Packing.  The Equipment shall be deinstalled,  packed, and reinstalled
by or  under  the  supervision  of the  manufacturer  or  such  other  person(s)
designated by Lessor, all in accordance with the manufacturer's recommendations.

	
8.	
Report. At least sixty (60) days prior to the scheduled date of return
and redelivery, Lessee shall, at its own cost and expense, provide Lessor with
the report of a certified dealer or manufacturer of the Equipment, or such other
qualified party reasonably acceptable to Lessor, stating that such person has
performed inspection and testing of the Equipment and that such Equipment is in
the condition required by Section 9 of this rider.

	
9.	
Software/Hardware.  Acknowledge that the Equipment may include certain
operating,  application  and/or other software  (“Software”)  in which
Lessor and Lessee have no ownership or other proprietary rights.  Where required
by the  Software  owner or  manufacturer,  Lessee  shall enter into a license or
other  Agreement for the use of the Software.  Any Software  Agreement  shall be
separate and distinct from the Lease,  and Lessor shall not have any obligations
thereunder  unless  otherwise agreed.  Lessee shall be responsible for the payment
of, and shall indemnify  Lessor against,  any Software  license or transfer fees
and any  certification or similar fees or charges imposed by the Supplier of the
Equipment,  Software or any Third Party upon Lessor and Lessor’s subsequent
end-user  of any item of  Equipment  following  the  return  of any such item to
Lessor.

	
 	
At the time of return hereunder,  all Equipment shall include all: (i) Software,
upgrades  and related  documentation,  which shall be the then  current  version
available from the manufacturer or supplier;  (ii) cards; (iii) holograms;  (iv)
codes; (v) licenses;  (vi) memory; (vii) hard drives;  (viii) connecting cables;
(ix)  mice;  (x)  keyboards  and (xi) any other  hardware  necessary  for proper
operation of the equipment.

	
10.	
Miscellaneous.  Cooperate  with Lessor in attempting to remarket the
equipment,  including  display and demonstration of the Equipment to prospective
purchasers  or  lessees,  allowing  the Lessor to conduct  any private or public
sale, with reasonable  notice,  of the Equipment on Lessee’s  premises.  Be
fully   responsible   for  any  and  all  costs   associated  with  the  return,
demonstration  and  remarketing  of the  Equipment to a location  designated  by
Lessor anywhere with North America.

	
11.	
Condition of Equipment.  Upon delivery of each item of Equipment, the
Equipment shall be:

	
 	
 	
(a)	
cleaned and/or steam-cleaned as applicable and treated with respect to rust,
corrosion and appearance in accordance with manufacturer’s  recommendations
and consistent  with the best practices of dealers in used equipment  similar to
the Equipment;  and shall be free of all advertising and insignia placed thereon
by Lessee;

- 17 -

	
 	
 	
(b)	
mechanically and structurally sound, capable of performing the functions for
which it was  originally  designed  and able to  operate,  lift,  transport,  or
otherwise move in all directions as designed within original  specifications and
tolerances with no loss in effectiveness or operability.

	
 	
 	
(c)	
accompanied by a detailed  inventory of the Equipment  (including the model
and  serial  number  of  each  major  component  thereof),   including,  without
limitation,  all internal  circuit  boards,  and  original and updated  software
features;

	
LESSEE:    BIOANALYTICAL SYSTEMS, INC.

By:  /s/ Doug Wieten

Its:  C.F.O.

LESSOR:    FIFTH THIRD BANK, INDIANA (CENTRAL)

By:  /s/ Richard Moorlach

Its:  V.P.

- 18 -Form of Escrow Agreement

  
 EXHIBIT 10.1 
  
 FORM OF ESCROW AGREEMENT 
 BETWEEN WELLS REAL ESTATE FUND XIV, L.P.

 AND SOUTHTRUST BANK 

  
 January 15, 2003 
  
 SouthTrust Bank 
 Corporate Trust Department 
 79 West
Paces Ferry Road, N.W. 
 Atlanta, Georgia 30305 
  
 Attn: Virginia
Petty 
  
 Re:    Wells Real Estate Fund XIV, L.P. Escrow Agreement 

 
 Ladies and Gentlemen: 
  
 Leo F. Wells, III and Wells Capital, Inc., a Georgia corporation, are the general partners (the “General Partners”) of Wells Real Estate Fund XIV, L.P. (the “Partnership”), the issuer for an offering of units of
limited partnership interest (the “Units”) pursuant to a registration statement originally filed on Form S-11 with the Securities and Exchange Commission on November 26, 2002, File No. 333-101463. Wells Investment Securities, Inc., a
Georgia corporation (the “Dealer Manager”), will act as Dealer Manager for the offering of the Units. The Partnership will sell a minimum of 125,000 Units at a price of $10.00 per Unit, for a total minimum capital raised of $1,250,000 (the
“Required Capital”). The Partnership hereby appoints SouthTrust Bank, a state banking institution organized and existing under the laws of the State of Alabama (“Escrow Agent”), as escrow agent for purposes of holding the
proceeds from the sale of the Units, and the Partnership shall deposit with Escrow Agent such proceeds to be held by Escrow Agent on the terms and conditions hereinafter set forth: 
  
 1.    Persons subscribing to purchase the Units will be instructed by the Dealer Manager or any soliciting dealers to remit the purchase price in the
form of checks (hereinafter called “instruments of payment”) payable to the order of, or funds wired in favor of, “SouthTrust Bank, as Escrow Agent for Wells Real Estate Fund XIV, L.P.” Within one business day after receipt of
instruments of payment from the offering, the Dealer Manager will send to Escrow Agent: (a) each subscriber’s name, address, tax identification number, number of Units purchased and purchase price remitted, and (b) the instruments of payment
from such subscribers for deposit into the deposit account entitled “SouthTrust Bank, as Escrow Agent for Wells Real Estate Fund XIV, L.P.” (the “Escrow Account”), which deposit shall occur within one business day after Escrow
Agent receives such materials. Instruments of payment and wired funds received from residents of New York shall be placed in a separate deposit account entitled “SouthTrust Bank, as Escrow Agent for New York Residents (Wells Real Estate Fund
XIV, L.P.).” Instruments of payment and wired funds received from residents of Pennsylvania shall be placed in a separate deposit account entitled “SouthTrust Bank, as Escrow Agent for Pennsylvania Residents (Wells Real Estate Fund XIV,
L.P.).” 
  
 2.    The aforesaid instruments of payment are to be promptly processed for
collection by Escrow Agent following deposit by the Dealer Manager into the Escrow Account. The proceeds thereof are to be held in the Escrow Account until such funds are either returned to the subscribers in accordance with paragraph 3 hereof or
otherwise disbursed in accordance with paragraph 6 hereof. In the event any of the instruments of payment are returned to Escrow Agent for nonpayment prior to receipt by Escrow Agent of the Required Capital, Escrow Agent shall promptly notify the
Dealer Manager in writing of such nonpayment, and Escrow Agent is authorized to debit the Escrow Account in the amount of such return payment as well as any interest earned on the investment represented by such payment and return to the Dealer
Manager the returned item. 
  
 3.    In the event that at the close of business on the date
exactly six months after the SEC grants an effective order under Section 8(a) of the Securities Act of 1933 (the “Expiration Date”), which date will be communicated to the Escrow Agent in writing as soon as possible after determination,
Escrow Agent is not in receipt of evidence of subscriptions accepted on or before such date, and instruments of payment dated not later than that date (or actual wired funds), for the purchase of Units providing for total purchase proceeds that at
least equal the Required Capital (exclusive of any funds received from subscriptions for Units from entities which we have
 

 
notified Escrow Agent are affiliated with the General Partners or their Affiliates and exclusive of subscriptions from New York and Pennsylvania residents), Escrow Agent shall promptly notify the
Partnership that such instruments of payment have not been received by Escrow Agent. Thereafter, Escrow Agent agrees to use its best efforts to obtain an executed IRS Form W-9 from each subscriber. Promptly following the Expiration Date, and in any
event no later than thirty business days after the Expiration Date, Escrow Agent shall promptly return by check the funds deposited in the Escrow Account, or shall return the instruments of payment delivered to Escrow Agent if such instruments have
not been processed for collection prior to such time, directly to each subscriber at the address given to the Partnership. Included in the remittance shall be a proportionate share of the income earned in the account allocable to each
subscriber’s investment in accordance with the terms and conditions specified in paragraph 7 hereof, except that in the case of subscribers who have not provided to Escrow Agent an executed Form W-9, Escrow Agent shall withhold thirty-one
percent (31%) of the earnings attributable to those subscribers in accordance with IRS Regulations. Notwithstanding the foregoing, Escrow Agent shall not be required to remit any payments until funds represented by such payments have been collected
by Escrow Agent. 
  
 In the event that the Partnership rejects any subscription for which Escrow Agent has already
collected funds, Escrow Agent shall promptly issue a refund check to the rejected subscriber. If the General Partners reject any subscription for which Escrow Agent has not yet collected funds but have submitted the subscriber’s check for
collection, Escrow Agent shall promptly issue a check in the amount of the subscriber’s check to the rejected subscriber after Escrow Agent has cleared such funds. If Escrow Agent has not yet submitted a rejected subscriber’s check for
collection, Escrow Agent shall promptly remit the subscriber’s check directly to the subscriber. 
  
 4.    Following receipt by Escrow Agent of instruments of payment (or wired funds) of the Required Capital prior to the time provided in paragraph 3 hereinabove, Escrow Agent shall notify the Partnership in
writing within one business day when such funds have been deposited in the Escrow Account and collected through normal banking channels. 
  
 5.    Prior to the disbursement of funds deposited in the Escrow Account in accordance with the provisions of paragraph 3 or 6 hereof, Escrow Agent shall invest all of the funds deposited in the Escrow
Account in “Short-term Investments” (as defined below) and Escrow Agent is further authorized and Escrow Agent agrees to reinvest all earnings and interest derived therefrom in any of the Short-term Investments specified below. In the
absence of written direction from the General Partners, funds deposited in the Escrow Account will be invested in the SouthTrust U.S. Treasury Money Market Fund. In the event that instruments of payment are returned to Escrow Agent for nonpayment,
Escrow Agent is authorized to debit the Escrow Account in accordance with paragraph 2 hereof. 
  
 “Short-term
Investments” include obligations of, or obligations guaranteed by, the United States government or bank money-market accounts or certificates of deposit of national or state banks that have deposits insured by the Federal Deposit Insurance
Corporation (including certificates of deposit of any bank acting as a depository or custodian for any such funds, including, without limitation, such certificates or instruments of the Escrow Agent, which mature on or before the Expiration Date,
unless such instrument cannot be readily sold or otherwise disposed of for cash by the Expiration Date without any dissipation of the offering proceeds invested. 
  
 The following securities are not permissible investments: 
  
 (a)    corporate equity or debt securities; 
 (b)    repurchase agreements;

 (c)    bankers’ acceptances; 
 (d)    commercial paper; and 
 (e)    municipal
securities. 
  
 6.    All disbursements from the Escrow Account, except for disbursements under
the provisions of paragraph 3 hereof, shall be made by Escrow Agent only pursuant to the provisions of this paragraph 6. Except for disbursements authorized upon court order, Escrow Agent shall hold all funds in the Escrow Account until (i) the date
checks for Required Capital have cleared normal banking channels after receipt by Escrow Agent of the Required Capital, and (ii) receipt of letter instructions from the Partnership directing disbursements of such funds to
 

 
 2 

 
the Partnership. Notwithstanding the foregoing, all subscriptions received from New York and Pennsylvania residents must be retained by Escrow Agent until such time as the Partnership raises a
total of $2,500,000. In disbursing such funds, Escrow Agent is authorized to rely solely upon such letter instructions which Escrow Agent receives from the Partnership whether or not such instructions are correct, true or authentic; provided that,
if in Escrow Agent’s opinion such letter instructions from the Partnership are unclear, Escrow Agent is authorized to rely upon the legal counsel to the Partnership in distributing such funds to the effect that distribution of the funds is
authorized by the letter instructions of the Partnership and that distribution of the funds in that manner is authorized by and in compliance with such letter. However, Escrow Agent shall not be required to disburse any funds attributable to
instruments of payment which have not been collected by Escrow Agent, provided that Escrow Agent shall use its best efforts to promptly collect such funds after receipt of disbursement instructions from the Partnership in accordance with this
paragraph, and shall disburse such funds in compliance with the disbursement instructions from the Partnership. 
  
 7.    In the event the offering of Units terminates prior to receipt of the Required Capital, income earned on subscription proceeds deposited in the Escrow Account (“Gross Escrow Income”) minus the
reasonable expenses of the Escrow Agent (“Net Escrow Income”) shall be remitted to subscribers in compliance with paragraph 3. Each subscriber’s pro rata portion of Net Escrow Income shall be determined by the General Partners as
follows: The total amount of Net Escrow Income shall be multiplied by a fraction, the numerator of which is determined by multiplying the number of Units purchased by said subscriber times the number of days said subscriber’s proceeds are
invested prior to termination of the offering, and the denominator of which is the total of the numerators for all such subscribers. Notwithstanding the foregoing, (i) escrow expenses may be deducted from the Escrow Account only to the extent of
Gross Escrow Income, and the General Partners shall reimburse Escrow Agent any reasonable expenses in excess of such amount, and (ii) Maine, Missouri, Ohio and Pennsylvania residents will be paid their pro rata portion of income earned on
subscription proceeds deposited in the Escrow Account without any deductions for escrow expenses. Escrow Agent shall promptly notify the General Partners of the amount of Net Escrow Income which subscribers who are Maine, Missouri, Ohio or
Pennsylvania residents would have received if escrow expenses were not deducted from Gross Escrow Income, and the General Partners shall reimburse Escrow Agent for such pro rata escrow expenses attributable to subscribers who are Maine, Missouri,
Ohio or Pennsylvania residents. Escrow Agent shall promptly remit all such Net Escrow Income in accordance with paragraph 3. 
  
 8.    As compensation for serving as Escrow Agent hereunder, Escrow Agent shall receive a fee, as set forth on Schedule A attached hereto. 
  
 9.    In performing any of Escrow Agent’s duties hereunder, Escrow Agent shall not incur any liability to anyone for any damages, losses or
expenses, except for willful default, breach of trust, or gross negligence, and accordingly Escrow Agent shall not incur any such liability with respect to any action taken or omitted (1) in good faith upon advice of Escrow Agent’s counsel
given with respect to any questions relating to Escrow Agent’s duties and responsibilities under this Escrow Agreement, or (2) in reliance upon any instrument, including any written instrument or instruction provided for in this Escrow
Agreement, not only as to its due execution and validity and effectiveness of its provisions but also as to the truth and accuracy of information contained therein, which Escrow Agent shall in good faith believe to be genuine, to have been signed or
presented by a proper person or persons and to conform to the provisions of this Escrow Agreement. 
  
 10.    The Partnership hereby agrees to indemnify and hold Escrow Agent harmless against any and all losses, claims, damages, liabilities and expenses, including the reasonable cost of attorneys’ fees and
expenses and disbursements, that may be imposed on Escrow Agent or incurred by Escrow Agent in connection with Escrow Agent’s acceptance of appointment as the Escrow Agent hereunder, or the performance of Escrow Agent’s duties hereunder,
including any litigation arising from this Escrow Agreement or involving the subject matter hereof, except where such losses, claims, damages, liabilities and expenses result from willful default, breach of trust or gross negligence. 

 
 11.    In the event of a dispute between the parties hereto sufficient in Escrow Agent’s discretion to
justify doing so, Escrow Agent shall be entitled to tender into the registry or custody of any court of competent jurisdiction all money or property in Escrow Agent hands under this Escrow Agreement, together with such legal pleadings as Escrow
Agent deems appropriate, and thereupon be discharged from all further duties and liabilities under this Escrow Agreement. In the event of any uncertainty as to Escrow Agent’s duties hereunder, Escrow Agent
 

 
 3 

 
may refuse to act under the provisions of this Escrow Agreement pending order of a court of competent jurisdiction and Escrow Agent shall have no liability to the Partnership or to any other
person as a result of such action. Any such legal action may be brought in such court as Escrow Agent shall determine to have jurisdiction thereof. The filing of any such legal proceedings shall not deprive Escrow Agent of compensation earned prior
to such filing. 
  
 12.    All written notices and letters required hereunder to Escrow Agent
shall only be effective if delivered personally or by certified mail, return receipt requested to SouthTrust Bank, Corporate Trust Department, 79 West Paces Ferry Road, N.W., Atlanta, Georgia, 30305, Attn: Virginia Petty. All written notices and
letters required hereunder to the Partnership, General Partners or the Dealer Manager shall only be effective if delivered personally or by certified mail, return receipt requested to Leo F. Wells, III, 6200 The Corners Parkway, Suite 250, Norcross,
Georgia 30092. 
  
 13.    This Escrow Agreement shall be governed by the laws of the State of
Georgia as to both interpretation and performance. 
  
 14.    The provisions of this Escrow
Agreement shall be binding upon the legal representatives, heirs, successors and assigns of the parties hereto. 
  
 15.    The Partnership hereby acknowledges that Escrow Agent is serving as escrow agent only for the limited purposes herein set forth, and hereby agrees that it will not represent or imply that Escrow Agent, by
serving as escrow agent hereunder or otherwise, have investigated the desirabilities or advisability of investment in the Partnership, or have approved, endorsed or passed upon the merits of the Units or the Partnership. The Partnership further
agrees to instruct the Dealer Manager, and each of its representatives, and any other representative who may offer Units to persons from time to time, that they shall not represent or imply that Escrow Agent has investigated the desirability or
advisability of investment in the Partnership, or have approved, endorsed or passed upon the merits of the Units or the Partnership, nor shall they use Escrow Agent’s name in any manner whatsoever in connection with the offer or sale of the
Units other than by acknowledgment that Escrow Agent has agreed to serve as escrow agent for the limited purposes herein set forth. 
  
 16.    This Escrow Agreement and any amendment hereto may be executed by the parties hereto in one or more counterparts, each of which shall be deemed to be an original. 
  
 17.    In the event that Escrow Agent receives instruments of payment (or wired funds) after the Required Capital has
been received and the proceeds of the Escrow Account have been distributed to the Partnership, Escrow Agent is hereby authorized to deposit such instruments of payment to any deposit account as directed by the Partnership. The application of said
funds into a deposit account directed by the Partnership shall be a full acquittance to Escrow Agent and Escrow Agent shall not be responsible for the application of said funds. 
  
 18.    Escrow Agent shall be bound only by the terms of this Escrow Agreement and shall not be bound or incur any liability with respect to any other
agreements or understanding between any other parties, whether or not the Escrow Agent has knowledge of any such agreements or understandings. 
  
 19.    Indemnification provisions set forth herein shall survive the termination of this Escrow Agreement. 
  
 20.    Upon acceptance and distribution of the Required Capital, this Escrow Agreement shall terminate and Escrow Agent shall have no further
responsibility or liability with regard to the terms of this Escrow Agreement. 
  
 21.    Escrow
Agent has no responsibility for accepting, rejecting or approving subscriptions. 
  
 22.    This
Escrow Agreement shall not be modified, revoked, released or terminated unless reduced to writing and signed by all parties hereto, subject to the following paragraph. 
  
 Should, at any time, any attempt be made to modify this Escrow Agreement in a manner that would increase the duties and responsibilities of Escrow Agent or to modify this
Escrow Agreement in any manner which
 

 
 4 

 
Escrow Agent shall deem undesirable, or at any other time, Escrow Agent may resign by notifying the Partnership in writing, by certified mail, and until (i) the acceptance by a successor escrow
agent as shall be appointed by the Partnership; or (ii) thirty (30) days following the date upon which notice was mailed, whichever occurs sooner, Escrow Agent’s only remaining obligation shall be to perform its duties hereunder in accordance
with the terms of the Escrow Agreement. 
  
 23.    Escrow Agent may resign at any time from its
obligations under this Escrow Agreement by providing written notice to the Partnership. Such resignation shall be effective on the date specified in such notice which shall be not less than thirty (30) days after such written notice has been given.
Escrow Agent shall have no responsibility for the appointment of a successor escrow agent. Unless otherwise provided in this Escrow Agreement, final termination of this Escrow Agreement shall occur on the date that all funds held in the Escrow
Account are distributed either (a) to the Partnership pursuant to paragraph 6 hereof, or (b) to subscribers pursuant to paragraphs 3 and 7 hereof. 
  
 24.    Escrow Agent may be removed for cause by the Partnership by written notice to the Escrow Agent effective on the date specified in such notice. The removal of Escrow Agent
shall not deprive Escrow Agent of its compensation earned prior to such removal. 
  
 [THE REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK] 

 
 5 

  
 Agreed to as of the
             day of January, 2003. 
  
 WELLS REAL ESTATE FUND XIV, L.P. 
 A Georgia Limited Partnership 
  

	 
	  	 	  	 	  	 	  	 	 By:    Wells Capital, Inc.
           A Georgia Corporation
           (General Partner)
 
	 
	 Attest:
 

 	 	  
 
	 	  	 	  	 	  	 	     By:
 

 	 	  
 

	  	 	   Douglas P. Williams
   Assistant Secretary
 	 	  	 	  	 	  	 	  	 	     Leo F. Wells, III
     President
 

 
  
 
	 
	  	 	  	 	  	 	  	 	  	 	 By:
 

 	 	  
 

	  	 	  	 	  	 	  	 	  	 	  	 	     LEO F. WELLS, III
     General
Partner
 

 
  
 WELLS INVESTMENT SECURITIES, INC. 

A Georgia Corporation 
  
 
	 
	 Attest:
 

 	 	  
 
	 	  	 	 By:
 

 	 	  
 

	  	 	     Douglas P. Williams
     Assistant
Secretary
 	 	  	 	  	 	     Leo F. Wells, III
     President
 

 
  
 
	  	 	 The terms and conditions contained above are hereby accepted and agreed to by:
 
	 
	  	 	  	 	  

 
  
 
	  	 	  	 	 SOUTHTRUST BANK
 Escrow Agent
 
	 
	 Attest:
 

 	 	  
 

 	 	  	 	 By:
 	 	  
 

	 Name:
 

 	 	  
 
	 	  	 	  	 	     Virginia Petty
     Vice President and Trust
Officer
 
	 Title:
 

 	 	  
 
	 	  	 	  	 	  

 
  

 
 6 

 SCHEDULE A TO 
 ESCROW AGREEMENT
FOR 
 WELLS REAL ESTATE FUND XIV, L.P. 
  
 Schedule of Fees – Escrow Agency 
 SouthTrust Bank 
  
 
	 Acceptance fee
 	 	 $   750.00 (Due upon execution of Escrow Agreement)
 
	 Annual Administration fee
 	 	 $1,750.00 (Due upon execution of Escrow Agreement)
 

 
  
 
	 Preparation of receipts,
 	    	 $   2.50 each
 
	 Return of subscription price to investors
 	    	 $ 25.00 each
 
	 Each disbursement of funds over one per qtr -
 	    	 $ 10.00
 

 
  
 Charges for filing reports or information as may be required by Internal Revenue Service
regulations or for the performance of any services not contemplated at the time of opening the account, or not of a routine administrative nature, or not specifically covered in this schedule, will be determined by appraisal. 

 
 The above transaction charges and actual out-of-pocket expenses such as counsel fees and expenses, cost of special checks, postage, insurance,
telephone, telegraph, etc... will be billed at cost. 

 
 7

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