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                                OPTION AGREEMENT

           THIS AGREEMENT (the "Agreement"), is made and effective this 18th day
of January, 2001, by and between Quantech Ltd., a Minnesota Corporation having
its principal office at 815 Northwest Parkway, Suite 100 Eagan, Minnesota, the
United States of America ("Quantech") and Mitsubishi Chemical Corporation, a
Japanese corporation having its principal office at 5-2, Marunouchi 2-chome,
Chiyoda-ku, Tokyo, Japan ("MCC").

                                    RECITALS:

           WHEREAS, Quantech is engaged in the manufacture and sale of the
Quantech Products (as defined in Paragraph 1.10 hereof);

           WHEREAS, Quantech is developing a Four Port Instrument (as defined in
Paragraph 1.5 hereof) and wishes to have MCC exclusively distribute Quantech
Products in Japan; and

           WHEREAS, MCC wishes to have an option to distribute and resell
Quantech Products exclusively in Japan after successful development of the Four
Port Instrument.

           NOW, THEREFORE, in consideration of these premises, and the mutual
covenants and agreements hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

1.     DEFINITIONS

           For the purposes of interpreting this Agreement, the following
definitions will apply and whenever appropriate, terms used in the singular will
also include the plural and vice versa:

           1.1.       Cartridge means an assembly that holds reagents and other
                      chemistries, receives a human sample (i.e. blood, urine,
                      etc.) and delivers and/or mixes, such sample and/or
                      reagents and/or chemistries, to or in an area that, allows
                      the Four Port Instrument to read a human diagnostic test,
                      which cartridge may contain a Flow Cell.

           1.2.       Effective Date means January 18, 2001.



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           1.3.       Exercise Date means the date that MCC notifies Quantech in
                      writing to exercise MCC's option granted from Quantech
                      pursuant to Paragraph 2, in accordance with the successful
                      evaluation by MCC of the Four Port Instrument which is
                      delivered from Quantech to MCC pursuant to Paragraph 3.
                      The performance requirements for the Four Port Instruments
                      is listed in Schedule A

           1.4.       Flow Cell means a device which (i) allows liquids to flow
                      through it and comprises a base piece which contains a
                      grating pursuant to the Grating SPR Technology; (ii) is
                      coated with a conductive surface; and (iii) has an
                      optically clear cover slip which is attached to the base
                      piece by a means that allows for fluid flow.

           1.5.       Four Port Instrument means a device that reads the events
                      that occur in a Cartridge or Flow Cell and can accommodate
                      reading sumultatenously for such cartridges or Flow cells
                      contains four ports for use in the Field of Medical
                      Diagnostics.

           1.6.       Grating SPR Technology means the use of thin conductive
                      films on a surface or surfaces of a grating or other
                      diffracting substrate to conduct chemical analysis.

           1.7.       Medical Diagnostics Field means those fields, the
                      applications and products which under current laws and
                      regulations of the United States would require approval of
                      the United States Food and Drug Administration if the
                      application or product incorporating the application were
                      sold for clinical use in the United States.

           1.8.       Peripheral Equipment means those devices that are sold in
                      conjunction with the Four Port Instrument and/or
                      Cartridges, including, but not limited to, wireless
                      communication devices that are able to transfer
                      information between the Four Port Instrument and the
                      communication devices.

           1.9.       Quantech Patents means; (i) those patents that Quantech
                      has exclusively licensed or sublicensed from The Serono
                      Companies, with right to sublicense, and are listed in
                      Schedule B of this Agreement; and (ii) those patents, all
                      right, title and interest of which are owned by Quantech
                      and which are listed in Schedule C of this Agreement.
                      Those patents to be granted on the Quantech Technology
                      (defined in Paragraph 1.12) shall be added in Schedule B
                      of this Agreement and shall be included in the Quantech
                      Patents.

           1.10.      Quantech Products means Four Port Instruments, Cartridges,
                      Flow Cells and Peripheral Equipment for Human Diagnostics
                      developed or to be developed by Quantech using Grating SPR
                      Technology covered by one or more valid claims of the
                      Quantech Patents.


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           1.11.      Quantech Technology means any technology owned by Quantech
                      as of the Effective Date and to be developed during the
                      term of this Agreement that (i) is useful for the
                      development of MCC Products and/or Quantech Products for
                      the Medical Diagnostics Field; and (ii) Quantech is not
                      restricted from licensing or sublicensing the technology
                      by an agreement which Quantech may have with a third
                      party. The Grating SPR Technology shall be included in the
                      Quantech Technology.

           1.12.      The Serono Companies means Applied Research Systems Ars
                      Holding N.V., a Netherlands Antilles corporation and
                      Serono Diagnostic S.A.

2.   DISTRIBUTORSHIP OPTION TO MCC BY QUANTECH TO DISTRIBUTE QUANTECH PRODUCTS.

           Quantech hereby grants to MCC an exclusive option to become the sole
and exclusive distributor to market, sell and distribute Quantech Products for
the Medical Diagnostics Field in Japan. MCC is entitled to fulfill such rights
to distribute the Four Port Instrument and Quantech Products through any of its
wholly owned subsidiaries.

3.   NOTIFICATION TO MCC

           3.1        Development of Four Port Instrument: If and when the Four
                      Port Instrument is successfully developed by Quantech,
                      Quantech shall promptly notify MCC of such fact (expected
                      to be on or about April 1, 2001) with sufficient
                      information and data, thereof MCC shall send to Quantech,
                      within 30 days of notice by Quantech, MCC persons to
                      evaluate within 10 days of arrival at Quantech the
                      performance of the Four Port Instrument pursuant to the
                      specifications of Schedule A and such Four Port Instrument
                      will be delivered to MCC after such evaluation of
                      performance. After such 10 days evaluation, if the Four
                      Port Instrument meets the specifications of Schedule A,
                      MCC shall notify in writing whether MCC will exercise
                      MCC's option or not, within five (5) days after the end of
                      the 10 days evaluation period (`'Notification Period"). In
                      case MCC will not notify in writing MCC will not exercise
                      MCC's option during Notification Period, Exercise Date
                      shall be deemed on the next day of the end of Notification
                      Period.

4.   PAYMENTS

           In consideration of the exercise of option by MCC , MCC shall pay
Quantech three hundreds and fifty thousands US Dollars (US$350,000-) within
forty-five (45) days from the Exercise Date.


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5.   EXECUTION OF DISTRIBUTION AGREEMENT

           If the option exercised hereunder, Quantech and MCC shall enter into
distribution agreement attached hereto as Schedule D.

6.   TERM AND TERMINATION

           6.1        Term of Agreement This Agreement shall commence on the
                      Effective Date and continue, unless earlier terminated
                      pursuant to Paragraphs 6.2, 6.3 or 6.4 of this Agreement,
                      until (i) the expiration of two (2) years from the
                      Effective Date; or (ii) the date of the payment pursuant
                      to Paragraph 4 above, whichever comes earlier. It is
                      hereby acknowledged that during the term of this
                      Agreement, Quantech may provide notice of availability of
                      evaluation of the Four Port Instrument and more than one
                      evaluation may occur during the term of this Agreement.

           6.2        Termination by Quantech. If MCC is in material default of
                      any of its obligations under this Agreement, Quantech
                      shall have the right to terminate this Agreement by giving
                      thirty (30) days' written notice of termination specifying
                      the reason for termination, provided that such notice will
                      be of no effect and termination will not occur if the
                      specified default is cured prior to the expiration of said
                      thirty (30) day notice period.

           6.3        Termination by MCC. If Quantech is in material default of
                      any of its obligations under this Agreement, MCC shall
                      have the right to terminate this Agreement by giving
                      thirty (30) days' written notice of termination specifying
                      the reason for termination, provided that such notice will
                      be of no effect and termination will not occur if the
                      specified default is cured prior to the expiration of said
                      thirty (30) day notice period.

           6.4        Termination Resulting from Government Action. Either party
                      may, immediately upon notice, terminate this Agreement in
                      its entirety or with respect to any patent license granted
                      under the Agreement if: (1) such termination is necessary
                      to comply with an order or official request of the
                      government of the terminating party; or (2) normal conduct
                      of the business of the other party as a private enterprise
                      ceases or is substantially altered as a consequence of
                      action taken by governmental or other authority.


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7.   INDEMNIFICATION

           Quantech shall defend, indemnify and hold MCC and its shareholders,
directors, officers, agents, representatives, successors and assigns harmless
from and against any and all claims, damages, costs (including reasonable
attorneys' fees), judgments, fines, penalties, losses, diminution in value and
liabilities of and kind or nature: (a) arising out of the breach by Quantech of
any of its warranties, representations and covenants under this Agreement.

8.   REPRESENTATIONS AND WARRANTIES

           8.1        Quantech hereby warrants and represents to MCC as follows:

                (a)     Quantech is a corporation duly organized, validly
                        existing and in good standing under the laws of the
                        State of Minnesota.

                (b)     This Agreement has been duly authorized, executed and
                        delivered by Quantech and constitutes a valid and
                        binding obligation of Quantech, enforceable in
                        accordance with its terms, except as rights to
                        indemnification thereunder may be limited by applicable
                        law and except as and to the extent that the enforcement
                        thereof may be limited by bankruptcy, insolvency,
                        reorganization, moratorium or other similar laws
                        relating to or affecting creditors' rights generally or
                        by general equitable principles. The execution, delivery
                        and performance of this Agreement and the consummation
                        of the transactions contemplated thereby have been
                        authorized by all necessary corporate action and do not
                        and will not conflict with or result in any material
                        breach of any of the provisions of, or constitute a
                        material default under, or result in a material
                        violation of, or require any authorization, consent or
                        approval, under the provisions of any organizational
                        charter, articles, by-laws, member control, operating or
                        other agreement, contract or instrument to which
                        Quantech is bound or affected, or any law, statute,
                        rule, regulation, judgment order or decree to which
                        Quantech is subject.

                (c)     Quantech is the sole and exclusive licensee, sublicensee
                        or owner, as the case may be, of all the rights of
                        Quantech Patents listed in Schedules B and C, and has
                        full right, power and authority to grant the option
                        under this Agreement.



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                (d)     All Quantech Patents listed in Schedule B are in force
                        having paid all necessary maintenance fees. Quantech has
                        no knowledge of information that would render any of the
                        listed patents invalid or unenforceable.

                (e)     Quantech has good and marketable title to the Quantech
                        Patents free and clear of any and all liens, pledges,
                        claims, licenses, assignments, conditional sales
                        contracts, agreements or encumbrances of any kind that
                        would impair Quantech's ability to grant the licenses
                        under this Agreement.


           8.2        MCC hereby warrants and represents to Quantech as follows:

                (a)     MCC is a corporation duly organized, validly existing
                        and in good standing under the laws of Japan.

                (b)     This Agreement has been duly authorized executed and
                        delivered by MCC and constitutes a valid and binding
                        obligation of MCC, enforceable in accordance with its
                        terms, except as rights to indemnification thereunder
                        may be limited by applicable law and except as the
                        enforcement thereof may be limited by bankruptcy,
                        insolvency, reorganization, moratorium or other similar
                        laws relating to or affecting creditors' rights
                        generally or by general equitable principles. The
                        execution, delivery and performance of this Agreement
                        and the consummation of the transactions contemplated
                        thereby do not and will not conflict with or result in
                        any material breach of any of the provisions of, or
                        constitute a material default under, or result in a
                        material violation of, or require any authorization,
                        consent or approval, under the provisions of the Laws of
                        Japan or articles of incorporation of MCC or other
                        agreement, contract or instrument to which MCC is bound
                        or affected, or any law, statute, rule, regulation,
                        judgment order or decree to which MCC is subject.

9.   MISCELLANEOUS

           9.1        Assignment. Neither party may assign or otherwise transfer
                      its rights and obligations under this Agreement without
                      the prior written consent of the other party, to any third
                      party; provided, however, that either party may assign
                      this Agreement and/or any of the rights granted hereunder
                      without such



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                      consent (i) to its wholly owned subsidiary, and (ii) the
                      successor in interest (by merger, share exchange,
                      combination or consolidation of any type, operation of
                      Law, purchase or otherwise), if such assignee or successor
                      agrees to be bound by the terms hereof.

           9.2        Entire Agreement. This Agreement, together with the
                      Schedules, constitutes the entire agreement of the parties
                      with respect to the subject matter hereof and supersedes
                      all previous proposals or agreements, oral or written, and
                      all negotiations, conversations or discussions heretofore
                      had between the parties related to the subject matter of
                      this Agreement. No modification of this Agreement or
                      waiver of any of its terms shall be binding upon the
                      parties unless said modification or waiver is in writing,
                      signed by both parties, and states that it is an amendment
                      to this Agreement.

           9.3        Survival. Paragraphs 7, 8 and 9 shall survive termination
                      or expiration of this Agreement for any reason and
                      continue thereafter in full force and effect.

           9.4        Discharge. This Agreement may not be released, discharged,
                      abandoned, changed or modified in any manner, except by an
                      instrument in writing signed on behalf of each of the
                      parties to this Agreement by their duly authorized
                      representatives.

           9.5        Waiver. The failure of either party to enforce at any time
                      any of the provisions of this Agreement shall in no way be
                      construed to be a waiver of any such provision, nor in any
                      way to affect the validity of this Agreement or any part
                      of it or the right of either party after any such failure
                      to enforce each and every such provision. No waiver of any
                      breach of this Agreement shall be held to be a waiver of
                      any other or subsequent breach.

           9.6        Force Majeure. Neither party shall be responsible for any
                      delay or failure in the performance of any obligation
                      hereunder due to strikes, lockouts, fires, floods, acts of
                      God, embargoes, wars, riots, or act or order of any
                      government or governmental agency.


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           9.7        Execution in Counterparts. This Agreement may be executed
                      in one or more counterparts, all of which shall be
                      considered one and the same agreement, and shall become a
                      binding agreement when one or more counterparts have been
                      signed by each party and delivered to the other party.

           9.8        Titles and Headings. The titles and headings to Sections
                      herein are inserted for the convenience of reference only
                      and are not intended to be a part of or to affect the
                      meaning or interpretation of this Agreement.

           9.9        Construction. The parties agree that the restrictions,
                      covenants, agreements and obligations contained in this
                      Agreement are reasonable and necessary to protect the
                      legitimate interests of the parties. This Agreement shall
                      be construed without regard to any presumption or other
                      rule requiring construction hereof against the party
                      causing this Agreement to be drafted.

           9.10       Benefit. Nothing in this Agreement, expressed or implied,
                      is intended to confer on any person other than the parties
                      to this Agreement or their respective permitted successors
                      or assigns, any rights, remedies, obligations or
                      liabilities under or by reason of this Agreement.

           9.11       Notices. All notices, statements, reports, requests or
                      other communications to a party required or permitted
                      hereunder shall be in writing and shall be deemed
                      effective and properly given when sent by registered or
                      certified mail, or by confirmed facsimile transmission to
                      the person as indicated below or such other person as may
                      be designated by MCC or Quantech by such notice;

                      if to MCC, to:
                      Mitsubishi Chemical Corporation.
                      5-2, Marunouchi 2-chome,
                      Chiyoda-ku, Tokyo 100-0005 Japan
                      Attention:  General Manager, Life Science Business
                                  Initiatives Department
                      Facsimile number:  (03) 3283-5809


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                      and, if to Quantech, to:
                      Quantech Ltd.,
                      815 Northwest Parkway, Suite 100
                      Eagan, Minnesota 55121 U.S.A
                      Attention:  President
                      Facsimile number:  (651) 647-6370

                      MCC and Quantech may change their respective
                      above-specified recipient and/or mailing address by notice
                      to the other party given in the manner herein prescribed.
                      All notices shall be deemed given on the day when actually
                      delivered as provided above (if delivered by facsimile) or
                      on the day shown on the return receipt (if delivered by
                      mail).

           9.12       Severability. If any provision of this Agreement is held
                      invalid by a court of competent jurisdiction, the
                      remaining provisions shall nonetheless be enforceable
                      according to their terms. Further, if any provision is
                      held to be overbroad as written, such provision shall be
                      deemed amended to narrow its application to the extent
                      necessary to make the provision enforceable according to
                      applicable law and shall be enforced as amended.

           9.13       Governing Law. This Agreement shall be construed in
                      accordance with the laws of the State of New York,
                      excluding its choice of law provisions. The parties
                      further agree to submit themselves to the non-exclusive
                      jurisdiction of the state and federal courts of the State
                      of New York in the event that any dispute arises under
                      this Agreement.


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           IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed in the manner appropriate to each as of the Effective Date.


                                       MITSUBISHI CHEMICAL CORPORATION

                                       -----------------------------------------
                                       By:  Kiyoshi Nakayama
                                       Its: General Manager, Life Science
                                            Business Initiatives Department

                                       QUANTECH LTD.

                                       -----------------------------------------
                                       By:  Robert Case
                                       Its: Chief Executive Officer