Document:

Exhibit 10.52

                           PURCHASE AND SALE AGREEMENT

                                 by and between

                  PHL-OPCO, LP, a Delaware limited partnership,

                                   as Seller,

                                       and

               MEDTOX LABORATORIES, INC., a Delaware corporation,

                                  as Purchaser

                            Dated: December 29, 2000

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                                TABLE OF CONTENTS                     Page

1.       Purchase and Sale.............................................1
2.       Purchase Price................................................2
3.       Deposit; Escrow...............................................3
4.       Seller's Initial Deliveries...................................4
5.       Purchaser's Investigations....................................5
6.       Covenants.....................................................6
7.       Subsequent Title Defects......................................8
8.       Fire and Other Casualty.......................................9
9.       Condemnation.................................................10
10.      The Closing..................................................10
11.      Prorations...................................................12
12.      Remedies.....................................................16
13.      Real Estate Commissions......................................17
14.      Notice.......................................................17
15.      Assignment...................................................19
16.      Representations of Seller....................................19
17.      Representations of Purchaser.................................22
18.      No Representations; "As Is" Purchase.........................22
19.      Attorney's Fees and Legal Expenses...........................24
20.      Section Headings; Other Terms................................24
21.      Interpretation...............................................24
22.      Entire Agreement.............................................24
24.      Reporting of Foreign Investment..............................25
25.      Exhibits.....................................................25
26.      Applicable Law...............................................25
27.      Confidentiality..............................................25
28.      Tax Reduction Proceedings....................................25
29.      Counterparts.................................................26
30.      Facsimile Signatures.........................................26
31.      No Offer.....................................................26
32.      Business Day.................................................27
33.      Strict Performance...........................................27
34.      Non-Solicitation of Employees................................27

Exhibit A     LEGAL DESCRIPTION OF THE LAND .........................A-1
Exhibit B     FORM OF ESTOPPEL CERTIFICATE ..........................B-1
Exhibit C     FORM OF DEED ..........................................C-1
Exhibit D     FORM OF GENERAL ASSIGNMENT AND ASSUMPTION .............D-1
Exhibit E     FORM OF ASSIGNMENT AND ASSUMPTION OF LEASES AND
              SECURITY DEPOSITS .....................................E-1
Exhibit F     FORM OF TENANT NOTICE .................................F-1
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Exhibit G     FORM OF CERTIFICATE OF NON-FOREIGN STATUS .............G-1
Exhibit H     DESIGNATION AGREEMENT .................................H-1
Exhibit I     FORM OF CERTIFICATE CONFIRMING REPRESENTATIONS AND
              WARRANTIES ............................................I-1
Exhibit J     OUTSTANDING TENANT INDUCEMENT COSTS AND BROKERAGE
              COMMISSIONS PAYABLE BY SELLER..........................J-1
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                           PURCHASE AND SALE AGREEMENT

 .........THIS PURCHASE AND SALE AGREEMENT (this "Agreement") made as of December
29,  2000,  by  and  between  PHL-OPCO,   LP,  a  Delaware  limited  partnership
("Seller"), and MEDTOX LABORATORIES, INC., a Delaware corporation ("Purchaser").

                              W I T N E S S E T H:

 .........WHEREAS, Seller is the fee owner of the Land and the Improvements (each
as  defined  in  Section  1  below)  known  as New  Brighton  I and II,  as more
particularly described on Exhibit A hereto; ---------

 .........WHEREAS,  Seller  desires to sell its entire right,  title and interest
in, and  Purchaser  desires to  purchase,  the Property (as defined in Section 1
below) upon and subject to the terms and conditions hereinafter set forth;

     .........NOW,  THEREFORE,  in  consideration of the foregoing and for other
     good and valuable  consideration,  the receipt and sufficiency of which are
     hereby acknowledged, the parties hereto agree as follows:

         .........1........Purchase and Sale.
                           -----------------

     .........Seller  hereby agrees to sell and convey, subject to the Permitted
     Encumbrances  (as defined in Section  4(a)  below),  and  Purchaser  hereby
     agrees to purchase and pay for, notwithstanding the Permitted Encumbrances,

                           (a) that certain tract of land (the "Land")  situated
         in  New  Brighton,  Ramsey  County,  Minnesota,  as  more  particularly
         described on Exhibit A hereto;

               (b) all buildings, together with all other permanent improvements
          situated  on the Land and all  fixtures  and  other  property  affixed
          thereto (collectively, the "Improvements");

                           (c) all rights and  appurtenances  pertaining  to the
         Land and the Improvements,  including any right,  title and interest of
         Seller (but without warranty whether statutory,  express or implied) in
         and to adjacent streets, alleys or rights-of-way;

                           (d) any furniture,  furnishings,  equipment, systems,
         facilities  and machinery,  and conduits to provide life safety,  heat,
         ventilation,  air conditioning,  electrical power, lighting,  plumbing,
         security,  gas, sewer and water thereto,  to the extent owned by Seller
         and now located on or within the Land and the  Improvements and used in
         connection therewith (collectively, the "Personal Property");

                           (e) all of  Seller's  right,  title and  interest  as
         landlord  in the leases  for space  situated  within  the  Improvements
         (collectively,  the "Space Leases"),  all prepaid rents under the Space

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         Leases  applicable to the period from and after the Closing (as defined
         in Section 10 below),  and security and other  deposits under the Space
         Leases;

                           (f) all of  Seller's  interest,  to the  extent  such
         interest may be lawfully  assigned to Purchaser without cost to Seller,
         in all contracts relating to the improvement,  maintenance or operation
         of, or the  provision  of  services  or  supplies  to,  the Land or the
         Improvements  (such as trash removal or elevator,  HVAC or  landscaping
         maintenance contracts) which have been delivered to Purchaser by Seller
         according to Section  4(e),  but  excluding  any contract with Seller's
         managing  or leasing  agents and  excluding  any other  contracts  that
         Seller is required to terminate by Closing in  accordance  with Section
         6(h) (collectively, the "Service Contracts");

                           (g) all of  Seller's  interest,  to the  extent  such
         interest may be lawfully  assigned to Purchaser without cost to Seller,
         in  all  unexpired   warranties,   guaranties   and  bonds   (including
         manufacturers'   warranties  on  Personal   Property  and  contractors'
         warranties   for  tenant  finish  work)  that  relate  to  any  of  the
         Improvements or Personal Property (the "Warranties");

                           (h) all of  Seller's  interest,  to the  extent  such
         interest may be lawfully  assigned to Purchaser without cost to Seller,
         in all governmental permits, licenses, certificates and authorizations,
         including, without limitation,  certificates of occupancy,  relating to
         the Land, Improvements or Personal Property (the "Permits"); and

                           (i) all of  Seller's  interest,  to the  extent  such
         interest may be lawfully  assigned to Purchaser without cost to Seller,
         in all intangible  property,  including,  without limitation,  the name
         "New Brighton Business  Center," relating to the Land,  Improvements or
         Personal Property.

         .........The  matters  described  in items  (a)  through  (i) above are
hereinafter  collectively  referred to as the "Property." To the extent that any
of the  personal  property  described in clause (d) above is owned by tenants or
other  occupants  of space at the  Property  or  owned by any  service  provider
pursuant to any of the Service  Contracts or owned by a utility  pursuant to one
or more Permitted Encumbrances,  it shall be excluded from the definition of the
term Property and from the term Personal Property as used in this Agreement.

         .........2........Purchase Price.
                           --------------

     .........The  total  purchase  price (the  "Purchase  Price") to be paid by
     Purchaser to Seller for the  Property is SIX MILLION  THREE  HUNDRED  FIFTY
     THOUSAND  DOLLARS  ($6,350,000).  The  Purchase  Price  is  to be  paid  by
     Purchaser as follows:

                           (a) the amount of ONE HUNDRED FIFTY THOUSAND  DOLLARS
         ($150,000)  (the "Initial  Deposit") upon the execution by Purchaser of
         this Agreement by check,  subject to  collection,  payable to the order
         of, or by wire transfer in immediately  available funds sent to Chicago
         Title Insurance Company, 222 South 9th Avenue, Suite 3250, Minneapolis,

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         Minnesota 55402, Attn: John Haley (in such capacity, "Escrow Agent") to
         be held in escrow pursuant to the terms set forth in Section 3 below;

                           (b)  the  amount  of  TWO  HUNDRED  THOUSAND  DOLLARS
         ($200,000) (the "Additional  Deposit"),  prior to the expiration of the
         Inspection Period (as defined in Section 5) if Purchaser does not elect
         to  terminate  this  Agreement  pursuant to Section 5, by  cashier's or
         certified  check  payable  to the  order  of,  or by wire  transfer  in
         immediately  available  funds sent to Escrow Agent to be held in escrow
         pursuant to the terms set forth in Section 3 below;

                           (c) In the  event  Purchaser  elects  to  extend  the
         originally-scheduled  Closing Date as provided in Section 10 below, the
         amount of TWO  HUNDRED  THOUSAND  DOLLARS  ($200,000)  (the  "Extension
         Deposit"),  by cashier's or certified check payable to the order of, or
         wire transfer in immediately available funds sent to Escrow Agent to be
         held in escrow  pursuant to the terms set forth in Section 3 below (the
         Initial  Deposit and,  when and if made by  Purchaser,  the  Additional
         Deposit and the Extension Deposit are collectively  referred to in this
         Agreement as the "Deposit");

                           (d) the balance of the  Purchase  Price,  as adjusted
         pursuant  to the  terms  of  this  Agreement,  at the  Closing  by wire
         transfer in immediately  available funds sent to Escrow Agent. The wire
         transfer required by this Section 2(d) must be received by Escrow Agent
         not later than 12:00 noon  (Minneapolis  time) on the Closing  Date (as
         defined in Section 10 below).  If such wire transfer is received  later
         than  12:00  noon  (Minneapolis  time)  on  the  Closing  Date,  but is
         nevertheless  received by 5:00 p.m.  (Minneapolis  time) on the Closing
         Date,  then all  prorations  made  pursuant  to Section 11 hereof  will
         remain  unchanged  but Purchaser  will pay to Seller an additional  ONE
         THOUSAND SIX HUNDRED EIGHTY DOLLARS  ($1,680) to compensate  Seller for
         the  additional  day's  interest  Seller will be  obligated  to pay its
         lender and the  interest  income  Seller  will not be able to obtain by
         investing its proceeds on the Closing Date.

         .........3........Deposit; Escrow.
                           ---------------

         .........At  the  Closing,  Escrow  Agent shall  deliver the Deposit to
Seller and/or otherwise in accordance with written instructions signed by Seller
and the Deposit  shall be applied to the Purchase  Price.  The Deposit  shall be
held in an  interest-bearing  account  at a bank or trust  company  selected  by
Escrow  Agent and approved by Seller and all interest  earned  thereon  shall be
paid to the party to which the  Deposit  shall be paid.  Escrow  Agent  makes no
representations or warranties as to the yield of the interest-bearing account in
which the Deposit is held.  In all other  cases,  if either party makes a demand
upon Escrow  Agent for  delivery of the Deposit,  or any portion  thereof,  then
Escrow  Agent  shall  give  notice to the  non-demanding  party of such  demand;
provided, however, no such notice shall be required with respect to a demand for
delivery of the Deposit made by Purchaser  upon Escrow Agent in connection  with
the termination of this Agreement by Purchaser  during the Inspection  Period in
accordance  with Section 5. If a notice of objection to the proposed  payment is
not  received by Escrow  Agent from the  non-demanding  party  within  seven (7)
business  days  after the  giving of notice by Escrow  Agent,  time being of the
essence,  then Escrow Agent is hereby  authorized  to deliver the Deposit or the

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demanded portion to the party which made the demand.  If Escrow Agent receives a
notice of objection  within such seven (7)  business  day period,  or if for any
other reason Escrow Agent in good faith elects not to deliver the Deposit or the
demanded portion  thereof,  then Escrow Agent shall continue to hold the Deposit
or the  demanded  portion  thereof  and  thereafter  pay the  same to the  party
entitled when Escrow Agent receives (a) a notice from the  non-requesting  party
withdrawing  the  objection,  (b) a notice signed by both parties  directing the
disposition of the Deposit or the demanded  portion thereof or (c) a judgment or
order of a court of competent jurisdiction. In the event of any dispute or doubt
as to the genuineness of any document or signature,  or uncertainty as to Escrow
Agent's  duties,  then Escrow  Agent shall have the right to either  continue to
hold the Deposit or the demanded portion thereof in escrow or to pay the Deposit
or the demanded  portion  thereof into court pursuant to relevant  statute.  The
parties  agree  jointly to defend,  indemnify  and hold  harmless  Escrow  Agent
against  and  from  any  claim,  judgment,  loss,  liability,  cost  or  expense
(including,  without limitation,  reasonable  attorneys' fees and disbursements)
resulting  from any dispute or litigation  arising out of or  concerning  Escrow
Agent's duties or services  hereunder.  Escrow Agent shall not be liable for any
error in judgment or for any act done or step taken or omitted in good faith, or
for any  mistake of fact or law,  except for Escrow  Agent's own  negligence  or
willful  misconduct.  The  parties  acknowledge  that  Escrow  Agent is merely a
stakeholder.  In the event Escrow Agent shall require the execution and delivery
of any  additional  escrow  instructions  as a condition to its acting as Escrow
Agent,  the terms and  provisions of this Section 3 shall govern in the event of
any conflict.  The signing of this Agreement by Escrow Agent is only to evidence
Escrow Agent's acceptance of the terms and conditions of this Section 3.

         .........4........Seller's Initial Deliveries.
                           ---------------------------

     .........Prior  to the  execution  and  delivery of this  Agreement by both
     Seller and  Purchaser,  Seller has  delivered  or caused to be delivered to
     Purchaser the following:

                           (a)  a  current   title   insurance   commitment   or
         preliminary  title report  issued by Chicago  Title  Insurance  Company
         ("Title Company"), including copies of all recorded exceptions to title
         referred to therein (collectively, the "Title Commitment"), showing the
         status  of title to the Land and  Improvements  according  to the Title
         Company.  Purchaser  will  review the Title  Commitment  as part of its
         investigations  hereunder  and will  have the right to  negotiate  with
         Title  Company  in order to cause  Title  Company  to modify  the Title
         Commitment  to  reflect  only  those   exceptions  to  title  that  are
         acceptable to Purchaser. If Purchaser does not terminate this Agreement
         pursuant to Section 5, then the  exceptions  to title  disclosed in the
         Title  Commitment  as of the  expiration of the  Inspection  Period (as
         defined in Section 5), i.e.,  including any endorsements or supplements
         to the Title  Commitment  issued  prior to such  expiration,  and those
         matters affecting title that are reflected on the Survey (as defined in
         Section  4(b) below) will be the  "Permitted  Encumbrances"  hereunder,
         excluding (i) any delinquent taxes or assessments, or (ii) any monetary
         liens or encumbrances  arising by, through or under Seller. At or prior
         to Closing,  Seller will cause any delinquent  taxes or assessments and
         any monetary liens or encumbrances  arising by, through or under Seller
         to be paid off or otherwise removed of record;
<PAGE>

                           (b) a copy of the survey of the Land and Improvements
         obtained by Seller when Seller acquired the same, or any update thereof
         since obtained by Seller (the "Survey").  As part of its investigations
         hereunder,  Purchaser will have the right, at its expense,  to have the
         Survey  updated by the  surveyor  who  prepared  the same or by another
         surveyor selected by Purchaser.  If Purchaser elects to obtain any such
         update,  Purchaser  will  provide  copies  thereof  to Seller and Title
         Company,  any matters  affecting  title shown  thereon will be deemed a
         part of the Permitted  Encumbrances  and such update will  otherwise be
         deemed a part of the "Survey" under this Agreement;

     (c) a list of all movable furniture and equipment  included in the Personal
     Property;

                           (d)   copies   of  all  Space   Leases  in   Seller's
         possession,  excluding,  however,  that  certain  Space  Lease  between
         Phoenix Mutual Life Insurance  Company,  a  predecessor-in-interest  to
         Seller,    as   landlord,    and   Medtox    Laboratories,    Inc.,   a
         predecessor-in-interest   to  Psychiatric  Diagnostic  Laboratories  of
         America, Inc., now known as Purchaser,  as tenant, executed as of March
         5, 1992 (as amended from time to time, the "Purchaser's Space Lease");

                    (e) copies of all  written  Services  Contracts  in Seller's
               possession;

                           (f) a current rent roll for the  Property  (the "Rent
         Roll") and copies of the real  property  tax bills for the last two (2)
         tax years of the  jurisdiction in which the Property is located (or for
         such shorter period as Seller has owned the Property) and a copy of any
         notice of valuation received by Seller since the last tax bill; and

                           (g) copies of all  environmental  assessment  reports
         prepared by third parties concerning the Property,  addressed to Seller
         and  in  Seller's  possession,  including  the  Phase  I  environmental
         assessment  report  concerning  the Property  that Seller  caused to be
         prepared in connection with Seller's acquisition of the Property.

         .........5........Purchaser's Investigations.
                           --------------------------

         .........Purchaser  will have  until 5:00 p.m.,  Minneapolis  time,  on
January 31, 2001 (the  "Inspection  Period") to investigate the Property and all
matters relevant to its acquisition,  ownership and operation.  If, prior to the
expiration of the  Inspection  Period,  Purchaser  gives Seller  written  notice
setting  forth  Purchaser's  dissatisfaction  with the  Property  for any reason
whatsoever,  and  states in such  notice  Purchaser's  unequivocal  election  to
terminate this Agreement, then (i) Escrow Agent will promptly return the Deposit
to Purchaser,  and (ii) Purchaser will, as consideration  for the  investigation
privileges  afforded to Purchaser by Seller hereunder,  deliver to Seller copies
of all studies,  inspection  reports and similar  matters made for  Purchaser by
third  parties  engaged  by  Purchaser  to do so during  the  Inspection  Period
concerning  the  Property,  whereupon  this  Agreement  will  terminate and both
parties will be relieved of any further obligations hereunder,  except for those
obligations  which expressly  survive any termination  hereof. If Purchaser does
not give such  termination  notice  prior to the  expiration  of the  Inspection
Period,  then this  Agreement will remain in full force and effect in accordance

<PAGE>

with its terms and the Deposit will become  nonrefundable  to Purchaser  for any
reason whatsoever, except as expressly provided to the contrary in Section 6(e),
7, 8, 9, 12(a) or 16. If Purchaser does not give such  termination  notice prior
to the expiration of the  Inspection  Period but fails to deliver the Additional
Deposit in  accordance  with Section 2(b) above prior to the  expiration  of the
Inspection  Period,  then this Agreement will remain in full force and effect as
provided  above,  but Purchaser will be deemed in default and, if Purchaser does
not cure such  default  within one (1)  business  day after  delivery  of notice
thereof by Seller to Purchaser,  Seller may, at Seller's option,  terminate this
Agreement by notice to Purchaser and Escrow Agent whereupon Seller shall receive
the Deposit as liquidated damages and not as a penalty.

         .........6........Covenants.
                           ---------

         .........Purchaser  covenants  and agrees with Seller that prior to the
Closing,  Purchaser,  in the conduct of its due diligence  investigation  of the
Property or otherwise,  will not  interfere  with or hinder the operation of the
Property or the other tenants or occupants  thereof.  Seller and Purchaser  each
acknowledge  that  Purchaser is a tenant of the Property  under the  Purchaser's
Space Lease, and that the foregoing covenant shall not apply to Purchaser in its
capacity as "tenant" under the  Purchaser's  Space Lease.  Seller  covenants and
agrees with Purchaser that, from the date hereof until the Closing, Seller will:

                           (a)  provide  Purchaser  and  Purchaser's  agents and
         representatives  with  reasonable  access to the Property  between 9:00
         a.m. and 5:00 p.m. on weekdays, subject to the rights of the Property's
         tenants or  occupants  and provided  that:  (i)  Purchaser  will notify
         Seller not less than three (3) business days in advance of entering the
         Property;  (ii) neither  Purchaser nor any agent or  representative  of
         Purchaser  will  communicate  directly  with any tenant of the Property
         without the approval of and with, at Seller's option, the accompaniment
         by, Seller or Seller's  manager for the Property;  (iii) Purchaser will
         keep the Property  free and clear of any  mechanic's  or  materialmen's
         liens arising out of any such entry, promptly restore any damage caused
         by Purchaser or its  representatives,  perform all  investigations in a
         safe and  professional  manner,  not allow any  dangerous  or hazardous
         conditions  and  comply  with  all  applicable  laws  and  governmental
         regulations;  (iv) Seller or any of its  representatives  or agents may
         accompany  Purchaser and any of its  representatives  and agents during
         their  visit  to the  Property;  (v)  Purchaser  will not  perform  any
         invasive  testing  of  the  Property  without  Seller's  prior  written
         consent;   and  (vi)   prior  to   Purchaser's   or  its   agent's   or
         representative's  entry upon the  Property,  Purchaser  will deliver to
         Seller  evidence of such  party's  liability  insurance  coverage by an
         insurer reasonably acceptable to Seller and with combined single limits
         of not less  than ONE  MILLION  DOLLARS  ($1,000,000)  per  occurrence.
         Purchaser  agrees to indemnify  and hold  harmless  Seller,  and hereby
         waives and releases Seller,  from all liability,  claims,  loss, liens,
         costs,  expenses and damages,  including reasonable attorneys' fees and
         expenses,  arising out of, and will repair any damages resulting to the
         Property  due to, such  access or, if  requested  by Seller,  reimburse
         Seller for all expenses incurred by Seller in repairing such damages if
         Purchaser  does  not  promptly  repair  such  damages.   The  foregoing
         agreement of indemnity,  repair and reimbursement shall survive Closing
         and/or any termination of this Agreement;
<PAGE>

                           (b)  provide  Purchaser  and  Purchaser's  agents and
         representatives with reasonable access, between 9:00 a.m. and 5:00 p.m.
         on weekdays,  and upon at least one (1) business day's prior notice, to
         all tenant files and books and records  concerning  the  operation  and
         maintenance  of  the  Property  (including,   without  limitation,  the
         Property's  operating  income and expenses),  to the extent that any of
         the same are in Seller's possession, at the offices in Denver, Colorado
         and Bloomington, Minnesota where Seller maintains the same;

                           (c) not enter into (i) any new Space  Lease,  or (ii)
         any  termination,  modification,  amendment  or renewal of any existing
         Space  Lease,  except  pursuant to an existing  provision of such Space
         Lease (collectively,  a "New Lease"), without Purchaser's prior written
         approval,  which approval will not be unreasonably withheld or delayed.
         If Seller  desires  to enter  into a New  Lease,  Seller  will  deliver
         written notice to Purchaser requesting Purchaser's approval thereof and
         providing  therewith  the most current  draft of the proposed New Lease
         and copies of such information concerning the proposed tenant as Seller
         may have in its possession.  Purchaser will respond to Seller's request
         for approval of the New Lease transaction within five (5) business days
         after the  delivery  of  Seller's  notice.  Unless  Purchaser  delivers
         written  notice to Seller  disapproving  the  proposed New Lease within
         such five (5) business days,  Purchaser will be deemed to have approved
         such New Lease  transaction  for all  purposes  of this  Agreement  and
         Seller  may  proceed  to  consummate  such New  Lease in the form  most
         recently approved (or deemed approved) by Purchaser;

                           (d) not enter into any new  Service  Contracts  which
         cannot by their  express  terms be  terminated  on not more than thirty
         (30) days' notice and that will survive Closing or otherwise affect the
         use,  operation or enjoyment of the  Property  after  Closing,  without
         Purchaser's   prior  written   consent,   which  consent  will  not  be
         unreasonably  withheld or delayed,  and which consent will be deemed to
         have been given by Purchaser if Purchaser does not notify Seller to the
         contrary  within  five (5)  business  days after  receipt  of  Seller's
         request for such consent;

                           (e) except with respect to  Purchaser's  Space Lease,
         use commercially  reasonable efforts to obtain and deliver to Purchaser
         a signed estoppel certificate in substantially in the form of Exhibit B
         attached hereto from each of the tenants under the Space Leases (except
         that if any  Space  Lease  prescribes  a  different  form  of  estoppel
         certificate,   Seller  will  only  be  required  to  use   commercially
         reasonable  efforts to obtain an estoppel  certificate from such tenant
         in such  prescribed  form). In the event Seller is unable to obtain and
         deliver to  Purchaser  on or before the date which is five (5) business
         days prior to the Closing Date a Conforming Estoppel (as defined below)
         from tenants occupying not less than seventy-five  percent (75%) of the
         leasable space within the Property that has been leased under the Space
         Leases,  excluding the leasable  space under  Purchaser's  Space Lease,
         Purchaser  may elect to terminate  this  Agreement by giving  notice to
         Seller and to receive a refund in full of the Deposit by giving  Seller
         notice of such  termination.  As used herein,  a "Conforming  Estoppel"
         will mean either (1) an estoppel certificate signed by the tenant under
         a Space  Lease  and in the form of  Exhibit  B (or if any  Space  Lease
         prescribes a different form of estoppel  certificate,  then an estoppel

<PAGE>

         certificate  for such Space Lease in such  prescribed form will also be
         deemed  acceptable),  with all blanks filled in with  information  that
         conforms to the  information  set forth in the Rent Roll  delivered  to
         Purchaser  pursuant  to  Section  4(f)  above  and  with no  additional
         information added that is inconsistent with the statements set forth in
         such form or with the  information  set forth in such Rent Roll; or (2)
         an estoppel  certificate  that is otherwise  acceptable to Purchaser in
         its sole and absolute  discretion,  provided that if Seller  delivers a
         signed estoppel  certificate to Purchaser for review and Purchaser does
         not notify Seller that such estoppel certificate is unacceptable within
         five (5)  business  days after  delivery  thereof,  then such  estoppel
         certificate will be deemed accepted by Purchaser;

                           (f) not  create or permit the  creation  of any title
         exceptions, such as easements or liens encumbering the Property (unless
         caused by Purchaser), without Purchaser's prior written approval, which
         shall not be unreasonably withheld or delayed;

               (g) continue to maintain the Property  consistent  with  industry
               standards in the marketplace; and

                           (h)  at  or  prior  to  Closing,  terminate  (i)  any
         contract with Seller's managing or leasing agents for the Property; and
         (ii) any contract that would  otherwise  constitute a Service  Contract
         but as to which  Purchaser  notifies  Seller,  by the expiration of the
         Inspection  Period,  that  Purchaser  desires  Seller to  terminate  by
         Closing,  provided  that any contract  Purchaser so requests  Seller to
         terminate must, in accordance with the terms and provisions thereof, be
         terminable by Seller without  penalty (unless  Purchaser  agrees to pay
         such penalty) at or prior to Closing.

         .........7........Subsequent Title Defects.
                           ------------------------

         .........If,  subsequent to the expiration of the Inspection Period and
prior to Closing,  Purchaser becomes aware of the existence of any encumbrances,
encroachments,  defects  in or other  matters  affecting  title,  other than the
Permitted Encumbrances and other than any delinquent taxes or assessments or any
monetary liens or encumbrances  arising by, through or under Seller which Seller
is obligated to remove prior to Closing  pursuant to Section  4(a),  that render
title to the Property unmarketable and are unacceptable to Purchaser,  Purchaser
shall as soon as  practicable  notify  Seller  in  writing  of such fact and the
reasons therefor  ("Purchaser's Title Objections").  Seller shall have the right
but  not the  obligation  to  eliminate  or  otherwise  cure  Purchaser's  Title
Objections  (which shall include  causing the Title Company to "insure over" any
Purchaser's  Title  Objections),  provided that (i) Seller shall be obligated to
cure any liens  created  by  Seller  after  the date  hereof  and (ii) if Seller
receives  notice  of any  Purchaser's  Title  Objections,  Seller  shall  notify
Purchaser in writing within five (5) business days after its receipt  thereof as
to whether Seller intends to eliminate or cure Purchaser's  Title Objections and
if Seller, in its sole discretion, elects to eliminate or cure Purchaser's Title
Objections,  Seller shall have the right to postpone the Closing for a period of
up to  thirty  (30)  days  anything  else  in  this  Agreement  to the  contrary
notwithstanding.  If Seller is unable or  unwilling  to cure  Purchaser's  Title
Objections,  Purchaser  (as its sole and exclusive  remedy) may  terminate  this
Agreement  by notice in writing to Seller on or before  five (5)  business  days
following  notice from Seller that it is  unwilling  or unable to cure or modify

<PAGE>

Purchaser's Title Objections, failing which Purchaser shall accept such title as
Seller is able or willing to  deliver  without  any  reduction  in the  Purchase
Price,  in which  event  such  uncured  Purchaser's  Title  Objections  shall be
included in the term "Permitted  Encumbrances."  Upon a termination  pursuant to
this Section, the parties shall have no further rights or obligations hereunder,
except  those which  expressly  survive  termination,  and the Deposit  shall be
returned to Purchaser.

         .........8........Fire and Other Casualty.
                           -----------------------

                           (a)  Notice  and  Estimate.  In the  event  that  the
         Improvements should be damaged by any casualty prior to Closing, Seller
         will promptly give Purchaser written notice of such occurrence,  and as
         soon thereafter as practicable, will provide Purchaser with an estimate
         made by an  architect,  engineer or  contractor  selected by Seller and
         approved by Purchaser (which approval will not be unreasonably withheld
         or  delayed)  of the cost and amount of time  required  to repair  such
         damage.  If it is so estimated  that it will take longer than until the
         Closing Date to repair such damage and if neither party terminates this
         Agreement  pursuant to Section 8(c),  then  Purchaser  will be given an
         opportunity  to review and  approve  any  construction  contract  which
         Seller  proposes  to  enter  into  to have  such  damage  repaired  and
         Purchaser will not unreasonably withhold or delay such approval.

                           (b) Minor Damage.  If the estimated cost of repairing
         such damage is less than or equal to ten percent  (10%) of the Purchase
         Price,  then Seller will promptly contract for and commence the repairs
         and  complete  so much  thereof  as may be  accomplished  prior  to the
         Closing  Date. In the event such repairs are not completed on or before
         the  Closing  Date,  Seller  will  assign to  Purchaser  so much of the
         insurance  proceeds  resulting  from such  damage as have not then been
         expended for repairs,  Seller will assign to  Purchaser,  and Purchaser
         will assume, the rights and obligations under the construction contract
         pursuant to which such repairs are being completed, and at Closing, the
         Purchase  Price  will be reduced  both to the extent of any  deductible
         provided for in Seller's  casualty policy that has not been expended by
         Seller as of  Closing  for  repairs  and to the  extent  the  insurance
         proceeds  are   insufficient   to  cover  the  amounts  due  under  the
         construction  contract or amounts  estimated  to make or complete  such
         repairs.

                           (c)  Major  Damage.  If the  estimated  cost  of such
         repairs is more than ten  percent  (10%) of the  Purchase  Price,  then
         either Seller or Purchaser may elect to terminate  this  Agreement upon
         written  notice to the other  given  within  ten (10) days  after  both
         parties'  receipt of the  estimate  in which  event  Escrow  Agent will
         return the Deposit to  Purchaser  and both  parties will be relieved of
         any further obligations  hereunder,  except for those obligations which
         expressly  survive any termination  hereof;  however,  if neither party
         elects to so terminate this Agreement,  then this Agreement will remain
         in full force and effect and the  parties  will  proceed in  accordance
         with Section 8(b).
<PAGE>

         .........9........Condemnation.
                           ------------

         .........Within  seven (7) business  days after  service on Seller of a
suit for condemnation of any part of the Property by an appropriate governmental
authority,  Seller will notify Purchaser of the pendency of such proceedings. In
the event of the  condemnation of any portion of the Property or the sale of any
portion of the Property in lieu of condemnation,  this Agreement shall remain in
full force and effect,  and in such event Seller at the Closing  shall assign to
Purchaser  any and  all  claims  for the  proceeds  of  such  condemnation,  and
Purchaser  shall take title to the remainder of the Property with the assignment
of such proceeds and subject to such  condemnation and without  reduction in the
Purchase Price; provided, however, that if such condemnation would result in the
taking (but not the forced  grant of an  easement or right of way for  municipal
sewerage  or utility  lines) of at least  fifteen  percent  (15%) of the Land on
which Improvements are situated,  then Purchaser may terminate this Agreement by
notice in  writing  to Seller  sent  within  ten (10) days  following  notice in
writing by Seller to Purchaser of such  condemnation  of the Property,  in which
event the parties shall have no further rights or obligations  hereunder (except
those which expressly survive  termination) and the Deposit shall be returned to
Purchaser.  If Purchaser  does not elect to terminate in writing within said ten
(10) day period  following such notice by Seller,  Purchaser  shall be deemed to
have waived all rights to terminate  pursuant to this Section and this Agreement
shall  remain in full force and  effect.  Purchaser  shall  perform  its own due
diligence  to  determine,  to  Purchaser's  satisfaction,  whether  there is any
pending or threatened  condemnation  or eminent  domain  proceeding  which would
affect the Property.

         .........10.......The Closing.
                           -----------

         .........The  consummation  of the  transaction  contemplated  by  this
Agreement (the  "Closing")  shall take place through an escrow with Escrow Agent
on or before  February  15, 2001  ("Closing  Date"),  TIME BEING OF THE ESSENCE.
Purchaser  will have the one-time  right to extend the Closing Date by up to ten
(10) business days by delivering written notice of Purchaser's  exercise of such
extension  right to Seller and Escrow  Agent at least five (5) days prior to the
originally-scheduled Closing Date and simultaneously delivering to Escrow Agent,
by cashier's or certified  check or by wire  transfer of  immediately  available
funds, the Extension  Deposit,  which Extension Deposit will be deemed a part of
the Deposit under this  Agreement,  will apply as a credit  against the Purchase
Price and will not be refundable to Purchaser for any reason except as expressly
provided  to the  contrary  in  Sections  6(e),  7, 8, 9,  12(a)  and 16. At the
Closing, the following shall occur:

                           (a) Seller shall deliver to Purchaser a duly executed
         and  acknowledged  Limited  Warranty Deed (the "Deed") in substantially
         the form attached  hereto as Exhibit C, and Seller and Purchaser  shall
         each  execute  and  deliver  to each  other a  General  Assignment  and
         Assumption  in  substantially  the form  attached  hereto as Exhibit D.
         Seller  shall  include  a  statement  on the Deed  that  Seller  has no
         knowledge  of any "Wells" on the  Property  within the meaning of Minn.
         Stat. ss. 103I.005, subdivision 21.
<PAGE>

                           (b)  Purchaser  shall pay the balance of the Purchase
         Price as provided in Section 2(d) hereof and the parties  shall execute
         settlement  statements  reflecting the Purchase Price,  the Deposit and
         the prorations, adjustments and closing costs described in Section 11.

                           (c)  Seller  and   Purchaser   shall  enter  into  an
         Assignment and Assumption of Leases and Security Deposits substantially
         in the form attached  hereto as Exhibit E whereby  Seller shall deliver
         as provided in this Agreement and assign to Purchaser Seller's interest
         as landlord in the (i) the existing Space Leases affecting the Property
         and (ii) any and all deposits paid to Seller under the Space Leases and
         not previously  applied in accordance  with the applicable  Space Lease
         and whereby  Purchaser  shall  assume from and after the Closing all of
         the  obligations of the landlord  under the Space Leases  including the
         obligation to account for the security deposits assigned to Purchaser.

                           (d)  The  parties  shall  execute  a  written  notice
         addressed to each tenant under the Space Leases  notifying  such tenant
         of the  acquisition of the Property by Purchaser in  substantially  the
         form  attached  hereto as Exhibit F. The notices  shall be delivered to
         Escrow Agent with  instructions  to forward the notices to Purchaser at
         Closing,  whereupon  Purchaser shall deliver the notices to the tenants
         immediately  after the Closing.  The costs of sending the notices shall
         be shared equally by Purchaser and Seller.

                           (e) Seller  shall  deliver to  Purchaser  each of the
         executed  Space  Leases  (to the extent  such  Space  Leases are within
         Seller's possession).

                           (f) The present  insurance  coverage on the  Property
         shall be terminated at Closing and there shall be no proration.  Public
         utility  services  shall be transferred or terminated as of the date of
         Closing. The provisions of this Section shall survive Closing.

                           (g)  Pursuant  to the  terms and  conditions  of this
         Agreement,  possession of the Property  shall be delivered to Purchaser
         at Closing, subject to the rights of tenants under the Space Leases and
         the other Permitted Encumbrances.

               (h) Seller shall  deliver to  Purchaser  all keys to all locks on
          the Property  within  Seller's  possession  (or the  possession of its
          agents).

                           (i) Purchaser shall execute,  acknowledge and deliver
         such state and local  transfer or sales tax returns and  statements  as
         are  required  for  the  transfer  of  the  Property   (including   the
         Certificate of Real Estate Value required in order to record the Deed).

                           (j) Seller shall deliver to Purchaser a  "non-foreign
         affidavit" in  substantially  the form of Exhibit G acknowledging  that
         Seller is not a nonresident alien within the meaning of Section 1445 of
         the Internal Revenue Code of 1986, as amended.
<PAGE>

                           (k)  Seller and  Purchaser  shall  each  execute  and
         deliver  to the other  party such  disclosures  as may be  required  by
         applicable law.

                           (l)  Seller  and  Purchaser   shall  each  reasonably
         cooperate  with  each  other  to  effect  a  tax-free  exchange  of the
         Property,  but only to the extent  that such  cooperation  does not (i)
         cause such party to incur any  liability  or  otherwise  increase  such
         party's  risk  relating  to  the   transaction   contemplated  by  this
         Agreement,  (ii) cause such party to incur any monetary  obligations or
         to otherwise  expend any monies other than those  amounts that would be
         payable  notwithstanding  a tax-free exchange of the Property and which
         amounts are otherwise  expressly assumed by such party pursuant to this
         Agreement  or (iii)  otherwise  result in a reduction  of such  party's
         rights,  remedies and privileges hereunder or under applicable federal,
         state, local or other law or an increase of such party's obligations or
         duties hereunder or under any applicable federal, state, local or other
         law.

                           (m) Each party shall  deliver to the other party such
         documentary  and other  evidence as may be reasonably  required by such
         other party or the Title Company including,  without  limitation,  such
         documents  evidencing its good standing and the authority of the person
         or persons who are  executing  the various  documents  on its behalf in
         connection   with  this   Agreement,   a   Designation   Agreement   in
         substantially  the form attached hereto as Exhibit H, and a certificate
         confirming such party's representations and warranties in substantially
         the form attached hereto as Exhibit I.

         .........11.......Prorations.
                           ----------

                           (a) Taxes.  General real estate taxes,  sewer charges
         and assessments  payable in the then current  calendar year relating to
         the  Property  shall be prorated as of the  Closing.  If Closing  shall
         occur  before the actual taxes for the then current tax year are known,
         Purchaser  shall  assume  and  pay  all  such  unknown  taxes  and  the
         apportionment  of taxes  shall be upon the  basis of the  taxes for the
         Property for the immediately  preceding year. Such proration shall be a
         final  settlement  between Seller and Purchaser,  regardless of whether
         the taxes for the current tax year are thereafter determined to be more
         or less than the taxes upon which such proration was based. All special
         taxes or assessments payable on or before the Closing shall be prorated
         as set forth above,  and those  payable after the Closing shall be paid
         by Purchaser.

                           (b) Fixed, Minimum and Base Rents. Subject to Section
         11 (h) below, Seller shall be entitled to fixed, minimum and base rents
         which are due or past due or not yet due but accrued under the terms of
         the Space Leases, prorated to midnight of the day prior to the Closing,
         regardless of when such payments are actually  made. At Closing,  rents
         received  by  Seller  for the  month of  Closing  will be  prorated  as
         provided below, but there shall be no proration at Closing of unpaid or
         delinquent rents. All payments of fixed, minimum or base rents received
         by either party for the month of Closing  shall be prorated  based upon
         the number of days in that month occurring before the Closing,  and the
         party  receiving  the  payment  shall  credit  (in the case of  payment
         received by Seller before the Closing) or remit (in the case of payment

<PAGE>

         received by  Purchaser  on or after the Closing) to the other party its
         proportionate share.

                           (c)  Adjustment  of  Reimbursable  Expenses.  To  the
         extent  tenants  under the Space Leases are  obligated to reimburse the
         landlord for operating expenses, common area maintenance charges, taxes
         or other costs (collectively, "Reimbursable Expenses"), whether through
         the   payment  of  monthly   estimated   payments   subject  to  annual
         reconciliation  or otherwise,  Seller and Purchaser will adjust between
         themselves the difference  between the Reimbursable  Expenses  actually
         incurred by Seller during the portion of the calendar year in which the
         Closing occurs prior to the Closing  ("Seller's  Ownership Period") and
         the estimated payments of Reimbursable Expenses received by Seller from
         the tenants during Seller's  Ownership Period.  At the Closing,  Seller
         will  deliver to  Purchaser a  statement  (the  "Reimbursable  Expenses
         Statement")  showing (i) the actual  Reimbursable  Expenses incurred by
         Seller during Seller's  Ownership  Period (with respect to taxes,  only
         those taxes paid by Seller during Seller's  Ownership  Period for which
         estimated  payments  are being made by the  tenants  during such period
         will be included in such  statement  of actual  Reimbursable  Expenses;
         taxes paid  during such period but for which  estimated  payments  were
         collected in a prior period will not be  included);  (ii) the estimated
         payments  of  Reimbursable   Expenses  for  Seller's  Ownership  Period
         received by Seller from each tenant (only estimated  payments  received
         for Seller's  Ownership  Period will be included;  payments for a prior
         period or that  constitute  reconciliation  payments for a prior period
         will not be included), (iii) each tenant's share (pursuant to its Space
         Lease) of the actual  Reimbursable  Expenses  incurred by Seller during
         Seller's  Ownership  Period;  (iv) the  amount,  if any,  by which each
         tenant's  estimated  payments exceeds its share of actual  Reimbursable
         Expenses  for  Seller's  Ownership  Period (an  "Overpayment"),  or the
         amount,  if any, by which each  tenant's  share of actual  Reimbursable
         Expenses for Seller's  Ownership Period exceeds its estimated  payments
         (an  "Underpayment");  and  (v)  a  summary  of  all  Overpayments  and
         Underpayments for all tenants. If the total of all Overpayments exceeds
         the total of all  Underpayments,  Purchaser  will receive a credit from
         Seller  at  Closing   for  the   difference.   If  the  amount  of  all
         Underpayments  exceeds  the  amount of all  Overpayments,  Seller  will
         receive a credit from Purchaser at Closing for the  difference.  Seller
         will  prepare the  Reimbursable  Expenses  Statement  based on the best
         information available to Seller at that time. However, Seller will have
         the right, within sixty (60) days after Closing, to prepare and deliver
         to Purchaser a supplemental Reimbursable Expenses Statement showing any
         Reimbursable  Expenses  incurred by Seller,  or  payments of  estimated
         Reimbursable  Expenses  made by  tenants  to  Seller,  during  Seller's
         Ownership  Period that were not known to Seller as of  Closing.  Within
         ten (10)  days  after  delivery  of such  supplemental  statement,  the
         parties will adjust in cash any additional  amounts due to or from each
         other.  The  adjustment of  Reimbursable  Expenses  between  Seller and
         Purchaser   provided  for  in  this  Section   11(c),   including   the
         supplemental  statement and adjustment described above, will constitute
         a final  settlement and,  notwithstanding  the provisions of Section 11
         (h)  below,  Purchaser  will be  entitled  to retain  all  payments  of
         Reimbursable  Expenses received from the tenants under the Space Leases
         subsequent to Closing.
<PAGE>

                           (d) Prepaid Rents and Security Deposits.  All prepaid
         rents and security and other deposits of all tenants under Space Leases
         paid to Seller and not theretofore  applied in accordance with any such
         Space  Lease,  with  interest  thereon to the extent  any  interest  is
         required to be paid to such  tenants,  shall be  delivered by Seller to
         Purchaser at the Closing,  or Purchaser shall receive a credit therefor
         at Closing.

                           (e) Tenant Inducement Costs;  Brokerage  Commissions.
         Seller shall be  responsible  for the payment of all Tenant  Inducement
         Costs and Leasing  Commissions (as such terms are hereinafter  defined)
         that are  required  to be paid as a result of any Space  Lease,  or any
         amendment to a Space Lease, that was signed by Seller during the period
         from  Seller's  acquisition  of  the  Property  to  the  date  of  this
         Agreement,  including,  without  limitation,  those outstanding  Tenant
         Inducement Costs and Leasing  Commissions  listed on Exhibit J attached
         hereto,  and  including  any New Lease  approved or deemed  approved by
         Purchaser  pursuant to Section 6(c) and entered into between Seller, as
         landlord,  and  Qualex,  Inc.,  as tenant,  prior to Closing  (the "New
         Qualex  Lease"),  but  excluding  (i) any  refurbishment  allowance  or
         similar Tenant  Inducement Cost that may become payable pursuant to the
         express  terms  of  such a  Space  Lease  or  amendment  if the  tenant
         thereunder  exercises  subsequent  to the  date  of  this  Agreement  a
         renewal,  extension,  expansion or similar option thereunder;  and (ii)
         any Leasing  Commissions that Purchaser  obligates itself to pay to its
         broker  or  a  tenant's  broker  with  respect  to  any  such  renewal,
         extension,  expansion or similar option. Except with respect to the New
         Qualex  Lease,  Seller shall have no  obligation  to Purchaser  for the
         payment of any other Tenant  Inducement  Costs or Leasing  Commissions,
         including,  without limitation,  any Tenant Inducement Costs or Leasing
         Commissions  payable with  respect to any New Lease  approved or deemed
         approved  by  Purchaser  pursuant  to  Section  6(c).  If  any  Leasing
         Commission or Tenant  Inducement  Cost the payment of which is Seller's
         responsibility,  as provided above, has not been paid by Closing,  then
         Purchaser  will receive a credit at Closing for the unpaid  amount.  If
         before Closing Seller pays any Leasing  Commission or Tenant Inducement
         Cost  required  to be paid  before  Closing but the payment of which is
         Purchaser's  responsibility  (such  as a  Leasing  Commission  due upon
         execution  of a New Lease  approved  or deemed  approved  by  Purchaser
         pursuant to Section  6(c)) but  excluding  the New Qualex  Lease,  then
         Seller will  receive a credit from  Purchaser at Closing for the amount
         so paid. For the purposes hereof,  "Tenant Inducement Costs" shall mean
         any  out-of-pocket  payments required under a Space Lease to be paid by
         the landlord  thereunder to or for the benefit of the tenant thereunder
         which is in the  nature  of a  tenant  inducement,  including,  without
         limitation,  tenant  improvement costs (whether paid by the landlord to
         the tenant as a cash  allowance  or  incurred  by the  landlord  in the
         performance  of such tenant  improvements),  lease  buyout  costs,  and
         moving,   design  and  refurbishment   allowances.   The  term  "Tenant
         Inducement  Costs" shall not include loss of income  resulting from any
         free rental  period,  it being  agreed that Seller  shall bear the loss
         resulting  from any free rental  period until the Closing Date and that
         Purchaser  shall  bear the loss from and after  the  Closing.  The term
         "Leasing Commissions" shall mean any brokerage commission, fee or other
         compensation owing in connection with any Space Lease.
<PAGE>

                           (f) Other  Items of  Expense  or  Receipt.  All other
         customarily  prorated  items of expense or  receipt  shall be  prorated
         between the parties  hereto as of the  Closing.  Except with respect to
         items prorated at the Closing,  Seller shall be responsible for payment
         of any and all bills or charges incurred on or prior to the Closing for
         work,  services,   supplies  or  materials,   and  Purchaser  shall  be
         responsible for payment of any and all bills or charges  incurred after
         the Closing for work, services, supplies or materials. Unless otherwise
         provided for in this Agreement, Purchaser shall not purchase, nor shall
         there be any  proration  credit given for, any of Seller's  receivables
         arising from the operation of the Property.

               (g)   Adjustments.   Prorations   shall  be  accomplished  by  an
          adjustment  in  the  -----------  Purchase  Price  due  Seller  on the
          Closing, except as otherwise expressly provided in this Agreement.

                           (h)  Collections  and  Application  of Payments after
         Closing.  After the  Closing,  Purchaser  shall  bill  tenants  for all
         amounts due under Space Leases, including amounts accruing prior to the
         Closing.  Any  amounts  or  charges  payable by tenants on or after the
         Closing  with  respect to which  Seller is  entitled to receive a share
         under this  Agreement,  which are not paid within sixty (60) days after
         the due date, and any amount due and owing Seller before the Closing by
         tenants under the Space Leases which ere unpaid as of the Closing,  are
         collectively  herein called "Delinquent  Amounts".  Notwithstanding the
         foregoing or any  direction  from tenants to the  contrary,  rental and
         other  payments  received by Purchaser or Seller from tenants  shall be
         first  applied  toward the  payment of rent and other  charges  owed to
         Purchaser  for the month in which the payment is received,  then toward
         the payment of rent and other  charges  owed for the month in which the
         Closing  occurs,  in which case such  payment  shall be prorated to the
         Closing,  then toward any  Delinquent  Amounts,  and any excess  monies
         received  shall be applied  toward any other  amounts due to Purchaser.
         Purchaser may not waive any Delinquent Amounts nor modify a Space Lease
         so as to reduce  amounts or charges owed under Leases for any period in
         which  Seller is  entitled  to receive a share of  charges or  amounts,
         without first  obtaining  Seller's  written  consent.  During the first
         twelve  months  after the  Closing,  Seller shall have and reserves the
         right to pursue any remedy against any tenant owing Delinquent  Amounts
         provided  that (i)  Seller  shall  notify  Purchaser  of its  intent to
         institute any legal  proceeding  relating  thereto not less than thirty
         (30) days  prior to the  institution  thereof,  (ii)  Seller  shall not
         institute any legal  proceedings  for collection of Delinquent  Amounts
         prior to the  expiration  of ninety (90) days  following  the  Closing,
         (iii) Seller shall in no event  institute  any  proceeding  to evict or
         dispossess  a tenant from the  Property  and (iv) Seller shall not take
         any action  which would limit  Purchaser's  rights to pursue any remedy
         Purchaser may have for a default under any Space Lease.  Purchaser may,
         by  written  notice to Seller  within  twenty  (20) days of  receipt of
         Seller's  notice,  restrict  Seller  from  collecting  such  Delinquent
         Amounts,  but only if  Purchaser  first  pays  Seller  such  Delinquent
         Amounts in exchange  for  Seller's  assignment  to  Purchaser of all of
         Seller's rights and causes of action with respect thereto. With respect
         to Delinquent  Amounts owed by tenants who are no longer tenants of the
         Property as of the Closing,  Seller  shall  retain all rights  relating
         thereto.
<PAGE>

                           (i) Service Contract Charges. Amounts due and payable
         under any Service  Contract  assigned to Purchaser shall be prorated as
         of the Closing, and, at the Closing,  Seller or Purchaser,  as the case
         may be, shall pay to the other any amount  required as a result of such
         adjustment,  and this covenant  shall not merge with the deed delivered
         hereunder but shall survive the Closing.

                           (j)  Closing  Costs.  Seller  will pay  for:  (i) any
         recording  fees  necessary  to remove of record any  monetary  liens or
         encumbrances  required hereunder to be paid by Seller; (ii) one-half of
         any closing or escrow fees charged by Escrow Agent;  and (iii) the fees
         of Seller's attorneys, if any. Purchaser will pay for: (i) all costs of
         conducting  its  investigation  of the  Property;  (ii) the premium for
         Purchaser's or its lender's title insurance policy;  (iii) the cost, if
         any,  charged by the Title Company to make  Purchaser's or its lender's
         title policy "extended coverage" or to delete the "standard exceptions"
         therefrom  and the  costs  of any  special  endorsements  requested  by
         Purchaser or its lender;  (iv) all recording  fees in addition to those
         required  to be paid by Seller;  (v)  one-half of any closing or escrow
         fees charged by Escrow Agent;  (vi) the fees of Purchaser's  attorneys,
         if any; and (vii) any local or state transfer or sales taxes, including
         the deed tax.  Except as aforesaid,  any other fees or charges shall be
         paid by the  party who  would  otherwise  be  responsible  therefor  in
         accordance with the customs and practices in Ramsey County, Minnesota.

               (k) Survival.  Unless otherwise  expressly provided herein,  this
          Section 11 shall --------  survive until the first  anniversary of the
          Closing.

         .........12.......Remedies.
                           --------

                           (a) Seller's  Default.  Except if due to  Purchaser's
         default or a  termination  of this  Agreement  by  Purchaser  or Seller
         pursuant to a right to do so under the provisions  hereof, in the event
         that Seller shall fail to  consummate  this  Agreement  for any reason,
         Purchaser,  as its sole and exclusive remedy,  may either (i) terminate
         this  Agreement  by  giving  written  notice of  termination  to Seller
         whereupon  Escrow Agent will return the Deposit to  Purchaser  and both
         Purchaser  and Seller will be relieved  of any further  obligations  or
         liabilities  hereunder,  except for those  obligations  which expressly
         survive any  termination  hereof;  or (ii)  Purchaser may seek specific
         performance  of this  Agreement,  but Purchaser will not be entitled to
         damages and hereby waives all claims therefor;  provided, however, that
         if  Purchaser is denied the remedy of specific  performance  by a final
         and nonappealable judgment,  Purchaser will be entitled to seek damages
         in an amount not to exceed the Cap (as defined in Section  16).  Except
         as expressly  provided  above,  Seller shall not be liable to Purchaser
         for any further actual, punitive,  speculative or consequential damages
         or any other remedy at law or in equity.  In addition,  Purchaser shall
         look solely to Seller's  estate and  interest in the  Property  (or the
         proceeds  thereof) for the  collection of a judgment or other  judicial
         process requiring the payment of money by Seller in connection with any
         claim arising under this Agreement,  and in no event  whatsoever  shall
         Purchaser  look for  recourse  to any of Seller's  other  assets or the
         assets of any of Seller's constituent partners, agents or affiliates or
         any of their  respective  successors and assigns in connection with any

<PAGE>

         breach or alleged  breach of any  representation,  warranty or covenant
         hereunder  or under any other  document  or  certificate  delivered  in
         connection herewith.

                           (b) Purchaser's  Default. In the event that Purchaser
         shall fail to consummate this Agreement for any reason, except Seller's
         default or the  termination  of this  Agreement  by Purchaser or Seller
         pursuant to a right to do so under the provisions hereof,  then Seller,
         as its sole and exclusive  remedy under this  Agreement,  may terminate
         this  Agreement by  notifying  Purchaser  and Escrow Agent  thereof and
         shall receive the Deposit as  liquidated  damages and not as a penalty.
         The  parties  agree that  Seller  will  suffer  damages in the event of
         Purchaser's  default on its  obligations.  Although  the amount of such
         damages at this time is  difficult  or  impossible  to  determine,  the
         parties  agree that the amount of the Deposit is a reasonable  estimate
         of  Seller's  loss in the  event  of  Purchaser's  default  under  this
         Agreement.  Thus,  Seller  shall  accept  and  retain  the  Deposit  as
         liquidated damages but not as a penalty.  Such liquidated damages shall
         constitute  Seller's sole and exclusive remedy for Purchaser's  failure
         to consummate this Agreement.

                           (c)  Post-Closing   Defaults.   Notwithstanding   the
         provisions of Sections  12(a) and (b) above,  if after  termination  of
         this  Agreement  or the  Closing,  as the  case  may be,  a party  (the
         "Defaulting  Party")  breaches an obligation under this Agreement which
         is expressly stated to survive the termination of this Agreement or the
         Closing,  as the case may be, the  Defaulting  Party shall be liable to
         the other party (the  "Non-Defaulting  Party")  for the actual  damages
         incurred by the Non-Defaulting Party as a direct result of such breach.
         In no event shall the Non-Defaulting  Party be entitled to recover from
         the  Defaulting  Party  any  punitive,   consequential  or  speculative
         damages.

         .........13.......Real Estate Commissions.
                           -----------------------

               .........Each  party hereto  represents  to the other that it has
          not authorized any broker or finder to act on its behalf in connection
          with the sale and purchase hereunder,  except C.B. Richard Ellis, Inc.
          (the  "Broker"),  and that such party has not dealt with any broker or
          finder  purporting  to act on behalf of any other  party.  Each  party
          hereto  agrees to indemnify and hold harmless the other party from and
          against any and all losses,  liens,  claims,  judgments,  liabilities,
          costs,  expenses or damages (including  reasonable attorneys' fees and
          disbursements and court costs) of any kind or character arising out of
          or resulting from any agreement,  arrangement or understanding alleged
          to have been made or dealing  by such party or on its behalf  with any
          broker or finder in connection  with this Agreement or the transaction
          contemplated  hereby,  other than the Broker.  Purchaser shall pay any
          commission or fee due to the Broker pursuant to a separate agreement.

         .........14.......Notice.
                           ------

         .........Any  notice required hereunder shall be given in writing (by a
party or by such party's attorney), sent by (a) personal delivery, (b) overnight
delivery  service  with proof of delivery,  (c) United  States  Postal  Service,
postage prepaid,  registered or certified mail, return receipt requested, or (d)
telecopy  (provided that such telecopy is confirmed by  simultaneous  sending by

<PAGE>

one of the other means  provided  for  notice),  except as  otherwise  expressly
provided in this Agreement, addressed as follows:

         .........If to Seller:

                           PHL-OPCO, LP c/o Beta West, Ltd.
                           1050 Seventeenth Street, Suite 1000
                           Denver, Colorado 80265
                           Attention:  Stephanie Lawrence
                           Telephone:  (303) 893-7087
                           Telecopy:  (303) 893-7001

                  with a copy to:

                           Otten, Johnson, Robinson, Neff & Ragonetti, P.C.
                           950 Seventeenth Street, Suite 1600
                           Denver, Colorado 80202
                           Attention:  John D. Sternberg
                           Telephone:  (303) 575-7505
                           Telecopy:  (303) 825-6525

                  If to Purchaser:

                           Medtox Laboratories, Inc.
                           402 West County Road D
                           Saint Paul, Minnesota 55112
                           Attention:  James Lockhart, Chief Financial Officer
                           Telephone:  (651) 286-6225
                           Telecopy:  (651) 286-6299

                  with a copy to:

                           Fredrikson & Byron
                           1100 International Centre
                           900 2nd Avenue South
                           Minneapolis, Minnesota 55402
                           Attention:  Paul B. Jones
                           Telephone:  (612) 347-7000
                           Telecopy:  (612) 347-7077
<PAGE>

                           If to Escrow Agent:

                           Chicago Title Insurance Company
                           222 South 9th Avenue, Suite 3250
                           Minneapolis, Minnesota 55402
                           Attention:  John Haley
                           Telephone:  (612) 339-5370
                           Telecopy:  (612) 337-0331
                           Order No. _______________

Any such notice shall be deemed to have been given and received  either,  in the
case of  personal  delivery,  at the time of personal  delivery,  in the case of
delivery service,  as of the date of the first attempted delivery at the address
and in the manner provided herein, in the case of mailing,  three (3) days after
depositing  with the U.S.  Postal  Service,  or in the  case of  telecopy,  upon
transmission;  provided,  however,  that if the last date  permitted  for notice
shall be the business  day before the Closing or the  Closing,  then such notice
must be given so that it is actually received on such day.

         .........15.......Assignment.
                           ----------

         .........Purchaser  may not  assign  its  interest  in  this  Agreement
without obtaining the prior written consent of Seller,  provided,  however, that
Purchaser  may assign its  interest  in this  Agreement  to any entity  which is
controlled  directly or  indirectly by Purchaser so long as Seller is advised of
such  assignment  not less than seven (7)  business  days prior to the  Closing,
accompanied by satisfactory  evidence of such control.  Purchaser  hereby agrees
that any assignment by Purchaser in  contravention  of this  provision  shall be
void ab initio and shall not relieve  Purchaser  of any of its  obligations  and
liabilities hereunder.

         .........16.......Representations of Seller.
                           -------------------------

               .........Seller  represents and warrants to Purchaser that, as of
               the date hereof and on the Closing Date:

                           (a) Seller is a limited  partnership  duly formed and
         validly  existing  under the laws of the State of Delaware.  Seller has
         the full right, power and authority to enter into this Agreement and to
         perform Seller's obligations hereunder.

                           (b) This Agreement and all other  documents  executed
         and delivered by Seller prior to or at Closing in connection  therewith
         (i) have been, or shall be, duly authorized, executed, and delivered by
         Seller; (ii) are, or shall be, binding obligations of Seller;  (iii) do
         not, and shall not, violate the formation documents of Seller.

                           (c) No filing or  petition  under the  United  States
         Bankruptcy Law or any insolvency  laws, or any laws for  composition of
         indebtedness or for the  reorganization  of debtors has been filed with
         regard to Seller.
<PAGE>

                           (d) Seller has not  granted,  other than to Purchaser
         and other than as may be set forth in the Space Leases, any outstanding
         option,  right of first  refusal or any other right with respect to the
         purchase of all or any portion of the Property.

                           (e) To Seller's actual knowledge, except as set forth
         in  any  documents   delivered  to  Purchaser   (including   the  Title
         Commitment),  Seller has not received any written notice of any pending
         or threatened condemnation actions against the Property.

                           (f) To Seller's actual  knowledge,  the copies of the
         Space  Leases,  Service  Contracts,  and the  environmental  assessment
         reports  delivered  by  Seller to  Purchaser  are  true,  accurate  and
         complete copies of the documents in Seller's possession that purport to
         be  the  Space  Leases,   Service  Contracts  and  such   environmental
         assessment reports.

                           (g) To Seller's actual knowledge, except as set forth
         in  any  documents   delivered  to  Purchaser   (including   the  Title
         Commitment),  Seller has not  received  written  notice of any  action,
         suit,   arbitration,   unsatisfied  order  or  judgment,   governmental
         investigation or proceeding  pending against Seller which, if adversely
         determined, could individually or in the aggregate materially interfere
         with  the   consummation  of  the  transaction   contemplated  by  this
         Agreement.

          (h) To Seller's actual knowledge, except as set forth in any documents
          delivered  to  Purchaser,  Seller  does not know of any "Wells" on the
          Property   within  the   meaning   of  Minn.   Stat.ss.   103I.   This
          representation  is  intended  to  satisfy  the  requirements  of  that
          statute.

               (i) To  Seller's  actual  knowledge,  except  as set forth in any
          documents  delivered to Purchaser,  no "above ground storage tanks" or
          "underground tanks" (within the meaning of Minn. Stat. ss. 116.46) are
          located in or about the Property,  or have been located  under,  in or
          about the Property and have subsequently been removed or filled.

               (j) Solely for purposes of satisfying the  requirements  of Minn.
          Stat.ss.  115.55,  there is no "individual  sewage  treatment  system"
          (within the meaning of that statute) on or serving the Property.

                           (k) To Seller's actual  knowledge,  (i) the Rent Roll
         is true and accurate and includes all of the leases currently in effect
         demising space with the  Improvements;  and (ii) no one is in occupancy
         of the  Improvements  other than those  tenants shown on the Rent Roll.
         For purposes of the foregoing representation, persons holding easements
         or similar interests pursuant to any of the Permitted Encumbrances will
         not be deemed "in occupancy" of the  Improvements.  Further,  if any of
         the estoppel certificates signed by the tenants under the Spaces Leases
         and  delivered to Purchaser  prior to Closing  pursuant to Section 6(e)
         above contain any  information or statement that is  inconsistent  with
         the Rent Roll and if Purchaser waives any right it may have as a result
         thereof  to  terminate   this  Agreement  and  proceeds  to  close  the
         transaction  contemplated  hereby,  then for purposes of the  foregoing
         representation  the  Rent  Roll  will  be  deemed  modified  so  as  to

<PAGE>

         incorporate any such inconsistent  information or statement and to omit
         any matter that is  inconsistent  with the  information or statement so
         incorporated.

         .........As used herein, the expression "to the knowledge of Seller" or
"to  Seller's  actual  knowledge,"  or  words of  similar  import,  shall  refer
exclusively to matters within the current,  actual, conscious knowledge of Brian
Roach, after inquiry of Seller's property manager of the Property (Rob Loftus of
United  Properties,  LLC),  and shall not be  construed to impose upon Seller or
such  person any duty  (other  than such  inquiry of such  property  manager) to
investigate the matter to which such actual  knowledge,  or the absence thereof,
pertains or impose upon such person or Seller's  property  manager any liability
or personal responsibility whatsoever hereunder.  Seller represents to Purchaser
that Brian  Roach is the  employee of Seller's  asset  manager  with the primary
responsibility for the matters which are the subject of the  representations and
warranties set forth in this Agreement.

         .........At  Closing,  Seller will deliver to Purchaser the certificate
described in Section 10(m)  pursuant to which Seller will reaffirm the foregoing
representations  and  warranties  as of the date of Closing,  provided that such
certificate  may reflect any changes to such  representations  and warranties of
which  Seller  has  become  aware  prior to  Closing.  In the  event  that  such
certificate indicates any material changes to the foregoing  representations and
warranties,  Seller will not be deemed in default hereunder and Purchaser's sole
remedy will be to terminate  this Agreement  whereupon  Escrow Agent will return
the  Deposit to  Purchaser  and both  parties  will be  relieved  of any further
obligations hereunder,  except for those obligations which expressly survive any
termination hereof. In the event such certificate does indicate any such changes
and Purchaser does not elect to terminate this  Agreement,  the  representations
and warranties made by Seller to Purchaser  pursuant to this Agreement as of the
date of Closing  will be deemed made  subject to any such  changes  reflected in
such certificate.

         .........The  representations and warranties  contained in this Section
16 shall  survive  the  Closing  for two  hundred  seventy  (270) days after the
Closing. No claim for a breach of any representation or warranty of Seller shall
be actionable or payable if the breach in question results from or is based on a
condition,  state of facts or other matter which was known to Purchaser prior to
Closing.  Except for the representation and warranty set forth in Section 16(j),
Seller shall have no liability to Purchaser  for a breach of any  representation
or  warranty:  (i) unless the valid  claims for all such  breaches  collectively
aggregate more than TWENTY-FIVE  THOUSAND DOLLARS ($25,000),  in which event the
full  amount  of  such  valid  claims  shall  be  actionable,  up to the Cap (as
hereinafter defined), and (ii) unless written notice containing a description of
the specific  nature of such breach shall have been given by Purchaser to Seller
within two hundred  seventy (270) days after the Closing.  Any suit by Purchaser
for any breach by Seller of any  representation,  warranty or covenant contained
herein  must be filed on or before  one (1) year  after the  Closing or shall be
forever  barred.  As used herein,  the term "Cap" shall mean the total aggregate
amount of THREE HUNDRED FIFTY THOUSAND DOLLARS ($350,000).
<PAGE>

         .........17.......Representations of Purchaser.
                           ----------------------------

               .........Purchaser  represents and warrants to Seller that, as of
          the date hereof and on the Closing Date:

                           (a)  Purchaser  is  a  corporation  duly  formed  and
         validly existing under the laws of the State of Delaware. Purchaser has
         the full right, power and authority to enter into this Agreement and to
         perform Purchaser's obligations hereunder.

                           (b) This Agreement and all other  documents  executed
         and  delivered  by  Purchaser  prior  to or at  Closing  in  connection
         therewith (i) have been, or shall be, duly  authorized,  executed,  and
         delivered by Purchaser;  (ii) are, or shall be, binding  obligations of
         Purchaser; (iii) do not, and shall not, violate the formation documents
         of Purchaser.

                           (c)   Purchaser  is  an   experienced   investor  and
         Purchaser  shall  purchase  the  Property  on  the  basis  of  its  own
         independent  investigation  of the  Property  and shall not rely on any
         projections provided by Seller or Seller's agents.

                           (d) No filing or  petition  under the  United  States
         Bankruptcy Law or any insolvency  laws, or any laws for  composition of
         indebtedness or for the  reorganization  of debtors has been filed with
         regard to Purchaser.

               (e) Purchaser's taxpayer identification number is 52-1130579.

                           (f)  Neither  Purchaser  nor  any of its  constituent
         partners,  members or  shareholders  is  acquiring  the Property or any
         interest therein with the "plan assets" of any "employee  benefit plan"
         (or its  related  trust),  as defined in Section  3(3) of the  Employee
         Retirement Income Security Act of 1974, as amended,  or with the assets
         of any "plan" (or its related trust), as defined in Section  4975(e)(1)
         of the Internal Revenue Code of 1986, as amended.

The  representations  and warranties  contained in this Section 17 shall survive
the Closing.

         .........18.......No Representations; "As Is" Purchase.
                           ------------------------------------

         .........Except  as expressly  set forth herein or called for herein or
called for in any of the instruments  attached as exhibits hereto,  SELLER MAKES
NO WARRANTIES OR REPRESENTATIONS  of any kind or character,  express or implied,
with  respect to the  Property,  its  physical  condition,  income to be derived
therefrom or expenses to be incurred  with respect  thereto,  or with respect to
information  or  documents  previously  furnished  to  Purchaser or furnished to
Purchaser pursuant to this Agreement, or with respect to Seller's obligations or
any other matter or thing  relating to or affecting  the same,  and there are no
oral agreements,  warranties or  representations  collateral to or affecting the
Property except as may otherwise be expressly set forth herein.  Notwithstanding
anything  contained  herein to the  contrary,  this  Section  shall  survive the
Closing or any termination of this Agreement.
<PAGE>

         .........PURCHASER  ACKNOWLEDGES THAT THE CONVEYANCE OF THE PROPERTY IS
SPECIFICALLY  MADE  "AS-IS"  AND  "WHERE-IS,"  WITHOUT  ANY  REPRESENTATIONS  OR
WARRANTIES,   EXPRESS  OR  IMPLIED  (EXCEPT  ANY  EXPRESS   REPRESENTATIONS  AND
WARRANTIES  SET FORTH IN THIS  AGREEMENT OR THE DEED OR GENERAL  ASSIGNMENT  AND
ASSUMPTION  DELIVERED AT CLOSING),  INCLUDING IMPLIED  WARRANTIES OF FITNESS FOR
ANY PARTICULAR PURPOSE OR MERCHANTABILITY OR ANY OTHER WARRANTIES WHATSOEVER.

         .........PURCHASER  ACKNOWLEDGES  THAT, EXCEPT AS EXPRESSLY PROVIDED IN
THIS AGREEMENT, NEITHER SELLER NOR ANY OF ITS AGENTS HAVE MADE, AND SPECIFICALLY
NEGATE AND  DISCLAIM,  ANY  REPRESENTATIONS,  WARRANTIES,  PROMISES,  COVENANTS,
AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR
IMPLIED,  ORAL OR WRITTEN,  OF, AS TO,  CONCERNING,  OR WITH RESPECT TO, (i) THE
VALUE,  NATURE,  QUALITY  OR  CONDITION  OF  THE  PROPERTY,  INCLUDING,  WITHOUT
LIMITATION,  THE WATER,  SOIL AND GEOLOGY,  (ii) THE SUITABILITY OF THE PROPERTY
FOR ANY AND ALL  ACTIVITIES AND USES WHICH MAY BE CONDUCTED  THEREON,  (iii) THE
COMPLIANCE OF OR BY THE PROPERTY WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS
OF   ANY   APPLICABLE   GOVERNMENTAL    AUTHORITY,    (iv)   THE   HABITABILITY,
MERCHANTABILITY,  MARKETABILITY,  PROFITABILITY  OR  FITNESS  FOR  A  PARTICULAR
PURPOSE OF THE  PROPERTY,  OR (v) ANY OTHER MATTER WITH RESPECT TO THE PROPERTY,
AND  SPECIFICALLY,  NEITHER  SELLER  NOR  ANY  OF  ITS  AGENTS  HAVE  MADE,  AND
SPECIFICALLY NEGATE AND DISCLAIM,  ANY  REPRESENTATIONS OR WARRANTIES  REGARDING
COMPLIANCE OF THE PROPERTY WITH ANY ENVIRONMENTAL PROTECTION,  POLLUTION OR LAND
USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS, INCLUDING THOSE PERTAINING
TO  SOLID  WASTE,  AS  DEFINED  BY  THE  U.S.  ENVIRONMENTAL  PROTECTION  AGENCY
REGULATIONS AT 40 C.F.R.,  PART 261, OR THE DISPOSAL OR EXISTENCE,  IN OR ON THE
PROPERTY,  OF  ANY  HAZARDOUS  SUBSTANCES,   AS  DEFINED  BY  THE  COMPREHENSIVE
ENVIRONMENTAL  RESPONSE  COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED, AND
THE REGULATIONS PROMULGATED  THEREUNDER.  PURCHASER SHALL RELY SOLELY ON ITS OWN
INVESTIGATION  OF THE  PROPERTY  AND NOT ON ANY  INFORMATION  PROVIDED  OR TO BE
PROVIDED BY SELLER OR ITS AGENTS OR CONTRACTORS, EXCEPT AS EXPRESSLY PROVIDED IN
THIS AGREEMENT.  SELLER SHALL NOT BE LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL
OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY
OR THE OPERATION THEREOF,  FURNISHED BY ANY PARTY PURPORTING TO ACT ON BEHALF OF
SELLER.

         .........PURCHASER,  FOR ITSELF AND ITS AGENTS, AFFILIATES,  SUCCESSORS
AND ASSIGNS,  HEREBY  WAIVES ITS RIGHT TO RECOVER FROM AND FOREVER  RELEASES AND
DISCHARGES SELLER, ITS AGENTS,  PARTNERS,  AFFILIATES,  SHAREHOLDERS,  OFFICERS,
DIRECTORS, AND EMPLOYEES OF EACH OF THEM, AND THEIR SUCCESSORS AND ASSIGNS, FROM
ANY AND ALL RIGHTS, CLAIMS AND DEMANDS AT LAW OR IN EQUITY, PROCEEDINGS, LOSSES,

<PAGE>

LIABILITIES,  DAMAGES,  PENALTIES,  FINES, LIENS,  JUDGMENTS,  COSTS OR EXPENSES
WHATSOEVER,  WHETHER  DIRECT OR  INDIRECT,  KNOWN OR  UNKNOWN AT THE TIME OF THE
AGREEMENT, FORESEEN OR UNFORESEEN,  ARISING OUT OF OR RELATING TO, OR IN ANY WAY
CONNECTED WITH THE PHYSICAL,  ENVIRONMENTAL,  ECONOMIC OR LEGAL CONDITION OF THE
PROPERTY.

         .........19.......Attorney's Fees and Legal Expenses.
                           ----------------------------------

         .........In the event that either party hereto institutes any action or
proceeding in court to enforce or interpret any provision  hereof or for damages
by reason of any alleged  breach of any  provision of this  Agreement or for any
other judicial  remedy,  the prevailing  party shall be entitled to receive from
the losing party all reasonable  attorneys' fees and disbursements and all court
costs in connection with said proceedings.

         .........20.......Section Headings; Other Terms.
                           -----------------------------

               .........The section headings contained in this Agreement are for
          convenience  only and  shall in no way  enlarge  or limit the scope or
          meaning  of the  various  and  several  paragraphs  hereof.  The words
          "herein,"  "hereof,"  "hereto,"  "hereunder,"  and  others of  similar
          import  refer to the  Agreement  as a whole and not to any  particular
          section,  subsection  or  clause  contained  in  this  Agreement.  The
          singular  of a term shall  include  the  plural  and the plural  shall
          include the singular.  The terms  "includes" and  "including"  are not
          limiting.

         .........21.......Interpretation.
                           --------------

         .........Although  this  Agreement  was  drafted by counsel for Seller,
such fact shall not result in any provision of this  Agreement  being  construed
against Seller by reason of Seller having drafted this Agreement.

         .........22.......Entire Agreement.
                           ----------------

               .........This Agreement embodies the entire agreement between the
          parties hereto and supersedes any prior  understandings  or written or
          oral agreements between the parties concerning the Property.  Further,
          this  Agreement  cannot  be  varied,  modified,  amended,  altered  or
          terminated except by the written agreement of the parties.

         .........23.......Applicability.
                           -------------

         .........The  terms and provisions of this  Agreement  shall be binding
upon and  inure to the  benefit  of the  parties  hereto  and  their  respective
permitted successors and assigns, except as expressly set forth herein.
<PAGE>

         .........24.......Reporting of Foreign Investment.
                           -------------------------------

         .........Seller  and  Purchaser  agree  to  comply  with  any  and  all
reporting requirements applicable to this transaction which are set forth in any
law,  statute,  ordinance,  rule,  regulation,  order  or  determination  of any
governmental  authority,  including The  International  Investment Survey Act of
1976, The Agricultural  Foreign  Investment  Disclosure Act of 1978, The Foreign
Investment in Real Property Tax Act of 1980 and the Tax Reform Act of 1984,  and
further agree upon request of one party to furnish the other party with evidence
of such compliance.

         .........25.......Exhibits.
                           --------

               .........All exhibits and schedules described herein and attached
          hereto are fully  incorporated  into this  Agreement by this reference
          for all purposes.

         .........26.......Applicable Law.
                           --------------

               .........This  Agreement  shall be construed and  interpreted  in
          accordance  with the internal  laws of the State of Minnesota  without
          regard to principles of conflict of law.

         .........27.......Confidentiality.
                           ---------------

         .........Seller  and Purchaser  hereby  covenant and agree that, at all
times after the date hereof and prior to the  Closing,  unless  consented  to in
writing  by the  other  party,  no  press  release  or other  public  disclosure
concerning this transaction shall be made, and each party agrees to use its best
efforts to prevent disclosure of this transaction,  other than (a) to agents and
affiliates  of the parties who are involved in the  ordinary  course of business
with this transaction and prospective  investors and lenders, all of which shall
be  instructed  to  comply  with the  nondisclosure  provisions  hereof;  (b) in
response to lawful process or subpoena or other valid or enforceable  order of a
court  of  competent  jurisdiction;  and (c) in any  filings  with  governmental
authorities  required by reason of the  transactions  provided  for herein or if
required as a result of Purchaser's status as a publicly held company. Purchaser
hereby  covenants  and agrees  that,  at all times  after the date of  execution
hereof  and prior to the  Closing,  unless  consented  to in  writing by Seller,
Purchaser shall keep in strict confidence,  and shall not disclose, the contents
of, or Purchaser's analysis of the contents of, any documentation made available
to  Purchaser  by  Seller or any of  Seller's  agents  in  connection  with this
transaction,  and the content of any appraisal,  engineering,  environmental  or
other  third  party  report  prepared  on behalf of  Purchaser,  subject  to the
qualifications  set forth in  subsections  (a),  (b),  and (c) in the  preceding
sentence.

         .........28.......Tax Reduction Proceedings.
                           -------------------------

         .........Seller  may  file  and/or  prosecute  an  application  for the
reduction of the assessed  valuation of the Property or any portion  thereof for
real estate taxes payable in 2001 (the  "Apportionment Tax Year").  Seller shall
have the right to  withdraw,  settle or  otherwise  compromise  any  protest  or
reduction  proceeding  affecting real estate taxes assessed against the Property
(i) for the Apportionment Tax Year provided  Purchaser shall have consented with
respect thereto, which consent shall not be unreasonably withheld or delayed and
(ii)  for all or any part of any tax year  prior to the  Apportionment  Tax Year

<PAGE>

without the prior written  consent of  Purchaser.  The amount of any tax refunds
(net of  attorneys'  fees and other costs of obtaining  such tax  refunds)  with
respect to any portion of the Property for the  Apportionment  Tax Year shall be
apportioned between Seller and Purchaser as of the Closing. If, in lieu of a tax
refund, a tax credit is received with respect to any portion of the Property for
the  Apportionment  Tax Year,  then (x) within thirty (30) days after receipt by
Seller or  Purchaser,  as the case may be, of evidence  of the actual  amount of
such tax credit (net of  attorneys'  fees and other costs of obtaining  such tax
credit),  the tax credit  apportionment  shall be readjusted  between Seller and
Purchaser,  and (y) upon realization by Purchaser of a tax savings on account of
such  credit  (that is, at the time the tax savings is  actually  realized,  for
example,  when the taxes are paid to which the credit relates),  Purchaser shall
pay to Seller an amount  equal to the savings  realized  (as  apportioned).  All
refunds,  credits  and other  benefits  applicable  to any tax year (or  portion
thereof) prior to the  Apportionment Tax Year shall belong solely to Seller (and
Purchaser  shall have no  interest  therein)  and,  if the same shall be paid to
Seller  within  thirty (30) days  following  receipt  thereof and, if not timely
paid, with interest thereon from the thirtieth (30th) day following such receipt
until  paid to  Seller  at a rate  equal to the rate of  interest  announced  by
Citibank,  N.A. from time to time as its base rate plus three percent (3%).  The
provisions of this Section 28 shall survive the Closing.

         .........29.......Counterparts.
                           ------------

         .........This  Agreement  may be  executed  in  counterparts,  all such
executed counterparts shall constitute the same agreement,  and the signature of
any party to any counterpart shall be deemed a signature to, and may be appended
to, any other counterpart.

         .........30.......Facsimile Signatures.
                           --------------------

         .........In  order to expedite  the  transaction  contemplated  herein,
telecopied  signatures  may be used in  place  of  original  signatures  on this
Agreement.  Seller and  Purchaser  intend to be bound by the  signatures  on the
telecopied  document,  and are  aware  that the  other  party  will  rely on the
telecopied  signatures,  and hereby waive any defenses to the enforcement of the
terms  of this  Agreement  based  upon  the  form of  signature.  If  telecopied
signatures  are  delivered,  Seller and  Purchaser  will each  forward  original
counterpart  signatures to the other  promptly  after delivery of the telecopied
signatures as set forth herein.

         .........31.......No Offer.
                           --------

         .........The  submission of this Agreement to Purchaser  shall and does
not  constitute an option or offer to sell the Property to  Purchaser,  it being
intended that this Agreement shall not be enforceable unless and until such time
as each of  Purchaser,  Seller and Escrow Agent shall have fully  executed  this
Agreement and a copy of such fully executed  Agreement  shall have been given to
each of Purchaser, Seller and Escrow Agent.
<PAGE>

         .........32.......Business Day.
                           ------------

         .........As  used herein,  the term "business day" shall mean all days,
excluding  Saturdays,  Sundays and all days  observed by either the State of New
York or the Federal Government as legal holidays. In the event that any date for
performance  falls on a day other than a business day, then performance shall be
postponed until the next business day.

         .........33.......Strict Performance.
                           ------------------

               .........It is specifically  agreed that "time is of the essence"
          as to all matters provided for in this Agreement.

         .........34.......Non-Solicitation of Employees.
                           -----------------------------

                           (a) For a period of one (1) year  after the  Closing,
         Purchaser  shall  not,  and shall use its best  efforts  to cause  each
         business or entity with which it is or shall employ or associate in any
         capacity,  not to solicit for  employment,  employ or engage any person
         who is  then,  or who  was  at any  time  during  the  period  of  this
         Agreement,   employed  or  engaged  by  BetaWest,   Ltd.  ("BetaWest"),
         including  but not limited to the  employee(s)  set forth in Section 16
         hereof,  or any affiliate of BetaWest,  except such BetaWest  employees
         which are  employed  exclusively  on-site  at the  Property  and not at
         BetaWest's corporate offices in Denver, Colorado or elsewhere.

                           (b)  Purchaser   acknowledges  and  agrees  that  the
         covenants  and  obligations  contained  in this  Section  34  relate to
         special, unique, extraordinary and sensitive matters and are reasonable
         and necessary to protect the legitimate  interests of Seller,  BetaWest
         and their respective affiliates,  and that a breach of any of the terms
         of such  covenants  and  obligations  will cause  Seller  and  BetaWest
         irreparable   injury  for  which  adequate  remedies  at  law  are  not
         available.  Therefore,  Purchaser agrees that,  before any trial of the
         merits,  Seller  and  BetaWest  shall  be  entitled  to an  injunction,
         restraining order or other equitable relief from any court of competent
         jurisdiction restraining Purchaser from any such breach.

               (c) The  representations  and covenants set forth in this Section
          34 shall survive the Closing.
<PAGE>

          .........IN  WITNESS  WHEREOF,  this Agreement is executed in multiple
          originals by Seller and Purchaser.

                                     SELLER:

                          PHL-OPCO, LP, a Delaware limited partnership

                         By: PHL-GP, LLC, a Delaware limited liability company,
its general partner
                         By: PHL-HOLDCO, LLC, a Delaware
liability company, its managing member

Date: January 5, 2001......    By:        /s/ Laura L. Hahn
      ---------------                   --------------------------------------
         ..................    Name:    Laura L. Hahn
                                        ---------------------------------------
         ..................    Title:   Authorized Agent
                                        -----------------------------------

                                   PURCHASER:

                                   MEDTOX LABORATORIES, INC., a Delaware
                                   corporation

Date:  01/02, 2001.........     By:        /s/ James Lockhart
      ------------                       --------------------------------------
         ..................     Name:    James Lockhart
                                         -------------------------------------
         ..................     Title:   CFO
                                         -------------------------------------

ESCROW TERMS PURSUANT TO
SECTION 3 HEREOF
ACCEPTED AND AGREED:

CHICAGO TITLE INSURANCE COMPANY

By:        /s/ illegible...
         -----------------------

Date:    January 9, 2001

<PAGE>

                                    Exhibit A

                          LEGAL DESCRIPTION OF THE LAND

New Brighton I:

That part of the  North  489.9  feet of the South  846.84  feet of  Section  32,
Township 30 North, Range 23 West of the 4th Principal  Meridian,  lying westerly
of the  westerly  right-of-way  line  of  U.S.  Interstate  Highway  No.  35W as
described in Final Certificate  Document No. 1695522,  and lying easterly of the
easterly  right-of-way  line of Minnesota  Transfer  Railway Co.,  said property
being a part of Lot 2, Auditor's Subdivision No. 26, Ramsey County, Minnesota.

Together  with the  easements  created by  Declaration  of Easements and Partial
Releases of Mortgages dated as of December 1, 1983,  recorded  January 12, 1984,
as Document No. 2206885.

New Brighton II:

PARCEL 1:

That part of the North  253.16  feet of the South  1100.0  feet of  Section  32,
Township 30 North, Range 23 West of the 4th Principal  Meridian,  lying Westerly
of the  Westerly  Right  of Way  line  of U.S.  Interstate  Highway  No.  35W as
described in Final Certificate  Document No. 1695522,  and lying Easterly of the
Easterly Right of Way line of Minnesota Transfer Railway Co. Said property being
a part of Lot 2, Auditor's Subdivision No. 26, Ramsey County, Minnesota.

PARCEL 2:

That part of Lot 2, Auditor's Subdivision No. 26, Ramsey County, Minnesota lying
Westerly and Southerly of the following described line:

Beginning at a point on the South line of Section 32,  Township 30 North,  Range
23 West,  distant  677.15 feet West of the Southeast  corner of said Section 32;
thence run  Northeasterly  at an angle of 82 degrees 22 minutes 53 seconds  with
said South Section line 1233.54 feet;  thence run  Northwesterly at right angles
500 feet and terminating, except the Southerly 1100 feet of said Section 32, and
except the Easterly 168 feet thereof;  subject to United States Pipe Line Tract,
said  tract  being 33 feet in width  the  centerline  of which is  described  as
follows:

Beginning  at a point  on the  Easterly  line of said  Section  32,  867.2  feet
Southerly of the Northeast  corner of the Southeast  Quarter of said Section 32;
thence South 57 degrees 31 minutes West,  1147.7 feet,  more or less, to a point
on the  Easterly  right  of way  line,  Minnesota  Transfer  Railway  and  there
terminating,  said point  being  1118.0 feet due North of the South line of said
Section 32.Exhibit 10.53
Record and return to:

Principal Life Insurance Company
801 Grand Avenue
Des Moines, IA  50392-1360
Attn:  David L. Graves

                         MORTGAGE AND SECURITY AGREEMENT

                   THE NOTE SECURED BY THIS MORTGAGE CONTAINS
                           AN ADJUSTABLE INTEREST RATE

                                     752834

A.  THIS  MORTGAGE  AND  SECURITY  AGREEMENT  (as the same may from time to time
hereafter be modified,  supplemented or amended,  this "Mortgage") is made as of
March 16,  2001,  by and between NEW  BRIGHTON  BUSINESS  CENTER LLC, a Delaware
limited  liability  company,  having its  principal  place of business  and post
office  address at c/o Medtox  Scientific,  Inc.,  402 West  County Road D., St.
Paul,  Minnesota  55112,  Attention:  Chief  Financial  Officer,  as  "Borrower"
("Borrower"  to be construed as  "Borrowers"  if the context so  requires),  and
Principal Life Insurance Company, an Iowa corporation,  having a principal place
of business and post office address c/o Principal Capital Management, LLC at 801
Grand Avenue, Des Moines, Iowa 50392-1450, as "Lender".

       WITNESSETH:

B. Borrower is justly  indebted to Lender for money borrowed (the "Loan") in the
original  principal sum of Six Million Two Hundred  Thousand and 00/100  Dollars
($6,200,000.00)  (the "Loan Amount")  evidenced by Borrower's secured promissory
note of even date  herewith,  made  payable and  delivered  to Lender (as may be
modified,  amended,  supplemented,  extended or  consolidated in writing and any
note(s)  issued in exchange  therefor or replacement  thereof) (the "Note"),  in
which Note Borrower  promises to pay to Lender the Loan Amount together with all
accrued and unpaid interest  thereon,  interest  accrued at the Default Rate (if
any),  Late  Charges (if any),  the Make Whole  Premium (if any),  and all other
obligations  and liabilities due or to become due to Lender pursuant to the Loan
Documents and all other amounts,  sums and expenses paid by or payable to Lender
pursuant to the Loan Documents and the Environmental Indemnity (collectively the
"Indebtedness")  until the  Indebtedness  has been paid,  but in any event,  the
unpaid  balance (if any)  remaining  due on the Note shall be due and payable on
April 1,  2011 or such  earlier  date  resulting  from the  acceleration  of the
Indebtedness by Lender (the "Maturity Date").  Capitalized terms used herein and
not otherwise  defined shall have those meanings given to them in the other Loan
Documents.
<PAGE>

C. NOW, THEREFORE,  to secure the payment of the Indebtedness in accordance with
the  terms  and  conditions  of  the  Loan   Documents,   and  all   extensions,
modifications  and renewals  thereof and the  performance  of the  covenants and
agreements  contained  therein,  and also to secure  the  payment of any and all
other Indebtedness, direct or contingent, that may now or hereafter become owing
from  Borrower  to  Lender  in  connection  with  the  Loan  Documents,  and  in
consideration  of the Loan  Amount  in hand  paid,  receipt  of which is  hereby
acknowledged,  Borrower  does  by  these  presents  Mortgage  unto  Lender,  its
successors and assigns  forever,  that certain real estate and all of Borrower's
estate,  right,  title and  interest  therein,  located in the county of Ramsey,
state of Minnesota, more particularly described in Exhibit A attached hereto and
made a part  hereof  (the  "Land"),  which  Land,  together  with the  following
described property,  rights and interests, is collectively referred to herein as
the "Premises".

D.  Together  with  Borrower's  interest  as lessor in and to all Leases and all
Rents,  which  are  pledged  primarily  and on a  parity  with  the Land and not
secondarily.

E.  Together  with all and singular  the  tenements,  hereditaments,  easements,
appurtenances,  passages,  waters, water courses, riparian rights, sewer rights,
rights in trade names,  licenses,  permits and contracts,  and all other rights,
liberties  and  privileges  of any kind or character in any way now or hereafter
appertaining to the Land,  including but not limited to, homestead and any other
claim at law or in  equity as well as any  after-acquired  title,  franchise  or
license and the reversion and reversions and remainder and remainders thereof.

F.  Together  with  the  right  in the  case  of  foreclosure  hereunder  of the
encumbered  property for Lender to take and use the name by which the  buildings
and all other  improvements  situated on the Premises are commonly known and the
right to manage and operate the said buildings  under any such name and variants
thereof.

G.  Together  with all right,  title and  interest  of  Borrower  in any and all
buildings  and  improvements  of every  kind and  description  now or  hereafter
erected or placed on the said Land and all materials  intended for construction,
reconstruction, alteration and repairs of such buildings and improvements now or
hereafter erected thereon, all of which materials shall be deemed to be included
within the Premises  immediately upon the delivery thereof to the Premises,  and
all fixtures now or hereafter  owned by Borrower and attached to or contained in
and used in  connection  with the  Premises  including,  but not limited to, all
machinery, motors, elevators, fittings, radiators, awnings, shades, screens, and
all  plumbing,  heating,  lighting,  ventilating,  refrigerating,  incinerating,
air-conditioning and sprinkler equipment and fixtures and appurtenances thereto;
and all items of furniture,  furnishings,  equipment and personal property owned
by Borrower used or useful in the operation of the Premises; and all renewals or
replacements  of all of the aforesaid  property owned by Borrower or articles in
substitution therefor,  whether or not the same are or shall be attached to said
buildings or improvements in any manner (collectively,  the "Improvements");  it

<PAGE>

being  mutually  agreed,  intended and declared that all the aforesaid  property
owned by Borrower  and placed by it on the Land or used in  connection  with the
operation or maintenance of the Premises  shall,  so far as permitted by law, be
deemed  to form a part  and  parcel  of the  Land  and for the  purpose  of this
Mortgage to be Land and covered by this Mortgage,  and as to any of the property
aforesaid  which  does  not  form a part  and  parcel  of the  Land or does  not
constitute a "fixture" (as such term is defined in the Uniform  Commercial Code)
this  Mortgage is hereby deemed to be, as well, a security  agreement  under the
Uniform  Commercial Code for the purpose of creating hereby a security  interest
in such property which Borrower hereby grants to Lender as secured party.

H.  Together  with all right,  title and interest of Borrower,  now or hereafter
acquired, in and to any and all strips and gores of land adjacent to and used in
connection with the Premises and all right, title and interest of Borrower,  now
owned or hereafter acquired, in, to, over and under the ways, streets, sidewalks
and alleys adjoining the Premises.

I.  Together  with all funds now or  hereafter  held by Lender  under any escrow
security  agreement or under any of the terms hereof,  including but not limited
to funds held under the  provisions  of paragraph 5 hereof,  insurance  proceeds
from all insurance policies required to be maintained by Borrower under the Loan
Documents, and all awards, decrees,  proceeds,  settlements or claims for damage
now or hereafter  made to or for the benefit of Borrower by reason of any damage
to,  destruction  of or taking of the Premises or any part thereof,  whether the
same shall be made by reason of the  exercise of the right of eminent  domain or
by condemnation or otherwise (a "Taking").

J. TO HAVE AND TO HOLD the same unto the  Lender,  its  successors  and  assigns
forever, for the purposes and uses herein expressed.

K.  Borrower  represents  that it is the  absolute  owner in fee  simple  of the
Premises  described in Exhibit A, which Premises are free and clear of any liens
or encumbrances  except as set out in Exhibit B attached hereto,  and except for
taxes which are not yet due or delinquent.  Borrower  shall forever  warrant and
defend the title to the  Premises  against all claims and demands of all persons
whomsoever  and will on demand execute any  additional  instrument  which may be
required to give Lender a valid  first lien on all of the  Premises,  subject to
the "Permitted Encumbrances" set forth in Exhibit B.

L.  Borrower  further  represents  that (i) the  Premises  is not subject to any
casualty  damage;  (ii)  Borrower  has not  received  any written  notice of any
eminent domain or condemnation  proceeding affecting the Premises;  and (iii) to
the best of Borrower's knowledge,  following due and diligent inquiry, there are
no actions,  suits or proceedings  pending,  completed or threatened  against or
affecting  Borrower  or any person or entity  owning an  interest  (directly  or
indirectly) in Borrower ("Interest Owner(s)") or any property of Borrower or any
Interest Owner in any court or before any arbitrator of any kind or before or by
any  governmental  authority  (whether local,  state,  federal or foreign) that,

<PAGE>

individually or in the aggregate,  could  reasonably be expected by Lender to be
materially adverse to the transaction contemplated hereby.

       BORROWER COVENANTS AND AGREES AS FOLLOWS:

       1.     Borrower shall

               (a) pay each item of  Indebtedness  secured by this Mortgage when
          due according to the terms of the Loan Documents;

               (b) pay a Late Charge on any payment of principal, interest, Make
          Whole Premium or  Indebtedness  which is not paid on or before the due
          date  thereof to cover the  expense  involved  in  handling  such late
          payment;

               (c)  pay on or  before  the due  date  thereof  any  Indebtedness
          permitted  to be incurred by Borrower  pursuant to the Loan  Documents
          and any other claims which could become a lien on the Premises (unless
          otherwise  specifically  addressed in paragraph 1(e) hereof), and upon
          request  of Lender  exhibit  satisfactory  evidence  of the  discharge
          thereof;

               (d) complete  within a reasonable  time, the  construction of any
          Improvements  now or at any time in process of  construction  upon the
          Land;

               (e)  manage,  operate  and  maintain  the  Premises  and keep the
          Premises,  including  but not  limited to, the  Improvements,  in good
          condition and repair and free from mechanics'  liens or other liens or
          claims for liens,  provided however,  that Borrower may in good faith,
          with reasonable diligence and upon written Notice to Lender within ten
          (10) days after Borrower has knowledge of such lien or claim,  contest
          the validity or amount of any such lien or claim and defer payment and
          discharge  thereof  during the  pendency of such contest in the manner
          provided by law,  provided  that (i) such  contest may be made without
          the  payment  thereof;  (ii) such  contest  shall  prevent the sale or
          forfeiture  of the  Premises  or any  part  thereof,  or any  interest
          therein,  to satisfy  such lien or claim;  (iii)  Borrower  shall have
          obtained  a bond  over  such  lien or  claim  from a  bonding  company
          acceptable  to Lender  which has the effect of  removing  such lien or
          collection of the claim or lien so contested;  and (iv) Borrower shall
          pay all costs and expenses  incidental  to such  contest;  and further
          provided,  that in the event of a ruling or  adjudication  adverse  to
          Borrower,  Borrower  shall  promptly  pay such  claim  or lien,  shall
          indemnify and hold Lender and the Premises  harmless from any loss for
          damage  arising  from such  contest  and shall  take  whatever  action
          necessary to prevent  sale,  forfeiture or any other loss or damage to
          the Premises or to the Lender;
<PAGE>

              (f)   comply,  and use  commercially  reasonable  efforts to cause
                    each lessee or other user of the  Premises  to comply,  with
                    all  requirements  of law and  ordinance,  and all rules and
                    regulations, now or hereafter enacted, by authorities having
                    jurisdiction of the Premises and the use thereof,  including
                    but  not   limited   to  all   covenants,   conditions   and
                    restrictions  of  record  pertaining  to the  Premises,  the
                    Improvements,  and the  use  thereof  (collectively,  "Legal
                    Requirements");

              (g)   subject to the  provisions  of paragraph 6 hereof,  promptly
                    repair, restore or rebuild any Improvements now or hereafter
                    a part  of the  Premises  which  may  become  damaged  or be
                    destroyed by any cause  whatsoever,  so that upon completion
                    of  the  repair,   restoration   and   rebuilding   of  such
                    Improvements  there will be no liens of any  nature  arising
                    out  of  the  construction  and  the  Premises  will  be  of
                    substantially the same character and quality as it was prior
                    to the damage or destruction;

              (h)   if other than a natural person,  do all things  necessary to
                    preserve  and keep in full force and  effect its  existence,
                    franchises,  rights  and  privileges  under  the laws of the
                    state  of its  formation  and,  if other  than its  state of
                    formation, the state where the Premises is located;

              (i)   do all things  necessary  to preserve and keep in full force
                    and effect  Lender's title insurance  coverage  insuring the
                    lien of this  Mortgage  as a first and prior  lien,  subject
                    only to the Permitted  Encumbrances  stated in Exhibit B and
                    any  other  exceptions  after  the  date  of  this  Mortgage
                    approved in writing by Lender, including without limitation,
                    delivering  to  Lender  not less  than 30 days  prior to the
                    effective  date  of any  rate  adjustment,  modification  or
                    extension  of the Note or any other Loan  Document,  any new
                    policy or endorsement which may be required to assure Lender
                    of such continuing coverage; and

              (j)   execute  any and all  documents  which  may be  required  to
                    perfect the security interest granted by this Mortgage.

       2.     Borrower shall not:

              (a)   make any alteration or addition exceeding  $50,000.00 (other
                    than normal repair and  maintenance)  to (i) the roof or any
                    structural component of any Improvements on the Premises, or
                    (ii)  the  building  operating  systems,  including  but not
                    limited to the mechanical,  electrical,  heating, cooling or
                    ventilation  systems (other than  replacement  with equal or
                    better  quality and  capacity),  without  the prior  written

<PAGE>

                    consent of Lender, except such as are required by applicable
                    Legal Requirements;

               (b) remove or demolish any material Improvements,  or any portion
          thereof, which at any time constitutes a part of the Premises;

               (c) cause or permit any change to be made in the  general  use of
          the Premises without Lender's prior written consent;

               (d) initiate any or  acquiesce  to a zoning  reclassification  or
          material  change in zoning  without  Lender's  prior written  consent.
          Borrower shall use all  reasonable  efforts to contest any such zoning
          reclassification or change;

               (e) make or permit  any use of the  Premises  that could with the
          passage of time  result in the  creation  of any right of use,  or any
          claim of adverse  possession or easement on, to or against any part of
          the Premises in favor of any person or entity or the public;

               (f)  allow any of the  following  to occur  (unless  a  Permitted
          Transfer):

                    (i) a Transfer of all or any portion of the  Premises or any
               interest in the Premises;

                    (ii)   a Transfer of any  ownership  interest in Borrower or
                           any entity  which owns,  directly or  indirectly,  an
                           interest in  Borrower  at any level of the  ownership
                           structure; or

                   (iii)   in addition to (i) and (ii) above, if the Borrower is
                           a trust or if a trust owns an  interest,  directly or
                           indirectly,  in any entity  which owns an interest in
                           Borrower at any level of the ownership structure, the
                           addition,  deletion or  substitution  of a trustee of
                           such trust.

                    If any of such events  occur,  it shall be null and void and
                    shall   constitute  an  Event  of  Default  under  the  Loan
                    Documents.

                    It is understood and agreed that the Indebtedness  evidenced
                    by the Note is  personal to Borrower  and in  accepting  the
                    same  Lender  has  relied  upon  what  it  perceived  as the
                    willingness   and   ability  of   Borrower  to  perform  its
                    obligations  under the Loan Documents and the  Environmental
                    Indemnity  and as lessor  under the Leases of the  Premises.
                    Furthermore,  Lender may consent to a Transfer and expressly
                    waive Borrower's covenants contained in this paragraph 2(f),
                    in writing to Borrower;  however any such consent and waiver

<PAGE>

                    shall not constitute any consent or waiver of such covenants
                    as to any Transfer other than that for which the consent and
                    waiver  was   expressly   granted.   Furthermore,   Lender's
                    willingness to consent to any Transfer and waive  Borrower's
                    covenants  contained  in this  paragraph  2(f),  implies  no
                    standard of  reasonableness  in  determining  whether or not
                    such consent shall be granted and the same may be based upon
                    what Lender solely deems to be in its best interest.

                    For  purposes of the Loan  Documents,  the  following  terms
                    shall have the respective meanings set forth below:

                    "Transfer" or  "Transferred"  shall mean with respect to the
                    Premises,  an  interest  in the  Premises,  or an  ownership
                    interest or interest therein:

                         (i) a sale, assignment,  transfer,  conveyance or other
                    disposition (whether voluntary,  involuntary or by operation
                    of law);

                         (ii) the creation,  sufferance or granting of any lien,
                    encumbrance,  security  interest  or  collateral  assignment
                    (whether voluntarily, involuntarily or by operation of law),
                    other  than the lien  hereof,  the  leases  of the  Premises
                    assigned to Lender,  the  Permitted  Encumbrances  and those
                    liens which  Borrower is contesting  in accordance  with the
                    provisions of paragraph 1(e);

                         (iii)  the  issuance  or other  creation  of  ownership
                    interests  in  an  entity;

                         (iv) the  reconstitution  or conversion from one entity
                    to another type of entity; or

                         (v) a  merger,  consolidation,  reorganization  or  any
                    other business combination.

                    "Permitted Transfer" shall mean:

                    (i)    a minor (as  determined  by Lender)  conveyance of an
                           interest  in the  Premises  by  Borrower,  such  as a
                           utility easement,  and for which Lender has given its
                           prior written  consent and imposed such conditions as
                           Lender deems advisable and appropriate;
                    (ii)   a sale, assignment,  transfer or conveyance of all or
                           any  portion of the  Premises  or an  interest in the
                           Premises for which  Borrower has complied with all of
                           the Property Transfer Requirements;
                    (iii)  any of the following Transfers for which Borrower has
                           complied   with   all  of  the   Ownership   Transfer
                           Requirements  as applicable  and Lender has given its
                           prior written  consent (and in  connection  with such
                           consent,  Lender may impose any  conditions it wishes
                           in its  sole  discretion);
<PAGE>

                         (A) a sale,  assignment,  transfer, or conveyance of an
                    ownership interest or interest therein;

                         (B)  the  issuance  or  other   creation  of  ownership
                    interests in an entity;

                         (C) the reconstitution or conversion from one entity to
                    another  type of  entity;  or

                         (D) a  merger,  consolidation,  reorganization  or  any
                    other business combination; or

                (iv) transfers of shares in Medtox Scientific, Inc.

                    "Property Transfer Requirements" are all of the following:

                    1.     Prior review and  approval of the proposed  purchaser
                           or other  transferee  and the subject  transaction by
                           Lender,  at Lender's sole  discretion.  Review of the
                           proposed   purchaser  or  other  transferee  and  the
                           subject  transaction shall encompass various factors,
                           including,   but  not   limited   to,  the   proposed
                           purchaser's or other  transferee's  creditworthiness,
                           financial  strength,  and real estate  management and
                           leasing   expertise   as   well   as   the   proposed
                           transaction's  effect on the Premises,  the Borrower,
                           and other security for the Loan;

                    2.     Payment to Lender of an  assumption  fee equal to the
                           greater  of: (a) one  percent  (1%) of the  principal
                           balance  of the Note;  or (b)  $15,000.00;  provided,
                           however,  that Lender will require $15,000.00 of such
                           fee to be paid at the  beginning  of Lender's  review
                           process,  and such sum  shall  be  nonrefundable  and
                           earned  upon  receipt  by Lender  whether  or not the
                           transaction   is   ultimately   completed  or  Lender
                           ultimately  approves the proposed  purchaser or other
                           transferee;

                    3.     Receipt,   at  Borrower's   expense,  of  either  (at
                           Lender's  discretion) a new ALTA standard loan policy
                           or an endorsement updating the Lender's existing loan
                           policy in the full amount of the Loan, in form and by
                           an issuer  satisfactory to Lender,  and which insures
                           this  Mortgage  to be a first and prior lien  subject
                           only  to  those   exceptions  which  were  previously
                           approved  by Lender  and  provides  coverage  against
                           usury and mechanic's liens;

                    4. Receipt by Lender of copies of all  relevant  information
                    and  documentation  relating  to or  required  by  Lender in
                    connection  with the  proposed  transfer  including  but not
                    limited to (a) the organizational  documents of the proposed
                    transferee and an opinion of counsel  satisfactory to Lender
                    as to its due  formation,  valid  existence and authority to
                    enter into and carry out the proposed  transaction;  (b) the

<PAGE>

                    deeds  or  other   instruments  of  transfer  and  documents
                    relating to the  assignment  and  assumption of Leases;  (c)
                    evidence  of  compliance  with  the  insurance  requirements
                    contained in the Loan  Documents;  and (d)  compliance  with
                    such other closing  requirements as are customarily  imposed
                    by Lender in connection with such transactions;

                    5.     Execution, delivery,  acknowledgment and recordation,
                           as applicable,  of new,  revised  and/or  replacement
                           assumption agreements,  loan modification agreements,
                           indemnification    agreements,     escrow    security
                           agreements,    security    instruments,     financing
                           statements,  UCCs,  new or revised  letters of credit
                           and/or guarantees in form and substance  satisfactory
                           to Lender;

                    6.  Payment  of  outside  counsel  fees  and  costs,   other
                    applicable  professional's fees and costs, taxes,  recording
                    fees and the like,  and any other  fees and costs  incurred;
                    and

                    7.  Receipt by Lender of 60 days advance  written  notice of
                    the proposed Transfer in question.

                    "Ownership  Transfer  Requirements"  are all of the Property
                    Transfer  Requirements which Lender deems appropriate in its
                    discretion,  as well as a  reasonable  processing  fee to be
                    determined  by  Lender;  provided,  however,  that  (i) with
                    respect to item 2 of the Property Transfer Requirements, the
                    1% component of the fee shall be prorated (subject, however,
                    to the $15,000 minimum) based on Lender's calculation of the
                    effective percentage interest in Borrower  transferred,  and
                    (ii) item 3 of the Property Transfer  Requirements  shall be
                    required, at Lender's discretion, only in the event of (A) a
                    merger, consolidation,  reorganization or any other business
                    combination,  or (B) a reconstitution or conversion from one
                    entity to another type of entity.

     3. (a) Except as provided in Section 5,  Borrower  shall pay or cause to be
     paid when due and before any  penalty  attaches  or  interest  accrues  all
     general  taxes,  special  taxes,  assessments  (including  assessments  for
     benefits from public works or  improvements  whenever  begun or completed),
     utility  charges,  water  charges,  sewer  service  charges,   common  area
     maintenance  charges,  if any,  vault or space  charges  and all other like
     charges  against or  affecting  the  Premises  or against  any  property or
     equipment  located on the  Premises,  or which  might  become a lien on the
     Premises, and shall, within 10 days following Lender's request,  furnish to
     Lender a duplicate receipt of such payment.  If any such tax, assessment or

<PAGE>

     charge may legally be paid in  installments,  Borrower  may, at its option,
     pay such tax, assessment or charge in installments.

     (b) If Borrower  desires to contest any tax,  assessment or charge relating
     to the  Premises,  Borrower  may do so by  paying  the same in full,  under
     protest, in the manner provided by law; provided, however, that

          (i) if contest of any tax,  assessment  or charge may be made  without
          the payment thereof, and

          (ii) such contest shall have the effect of preventing  the  collection
          of the  tax,  assessment  or  charge  so  contested  and  the  sale or
          forfeiture of the Premises or any part thereof or any interest therein
          to satisfy the same,

     then Borrower may in its  discretion  and upon the giving of written notice
     to Lender of its intended  action and upon the furnishing to Lender of such
     security or bond as Lender may require, contest any such tax, assessment or
     charge  in good  faith and in the  manner  provided  by law.  All costs and
     expenses incidental to such contest shall be paid by Borrower. In the event
     of a ruling or  adjudication  adverse to Borrower,  Borrower shall promptly
     pay such tax,  assessment  or charge.  Borrower  shall  indemnify  and save
     harmless the Lender and the Premises  from any loss or damage  arising from
     any such contest and shall, if necessary to prevent sale, forfeiture or any
     other loss or damage to the Premises or to Lender, pay such tax, assessment
     or charge  or take  whatever  action  is  necessary  to  prevent  any sale,
     forfeiture or loss.

     4. (a)  Borrower  shall at all times keep in force (i)  property  insurance
     insuring all  Improvements  which now are or hereafter become a part of the
     Premises  for perils  covered by a causes of  loss-special  form  insurance
     policy  with an  ordinance  or law  coverage  endorsement  containing  both
     replacement cost and agreed amount endorsements or options; (ii) commercial
     general  liability   insurance  naming  Lender  as  an  additional  insured
     protecting  Borrower  and Lender  against  liability  for bodily  injury or
     property   damage   occurring  in,  on  or  adjacent  to  the  Premises  in
     commercially  reasonable  amounts;  (iii) boiler and machinery insurance if
     the  property  has a boiler or is an office  building;  (iv)  rental  value
     insurance for the perils specified herein for one hundred percent (100%) of
     the Rents (including operating expenses, real estate taxes, assessments and
     insurance  costs which are lessee's  liability) for a period of twelve (12)
     months; (v) builders risk insurance during all periods of construction; and
     (vi) insurance  against all other hazards as may be reasonably  required by
     Lender, including, without limitation,  insurance against loss or damage by
     flood and earthquake.
<PAGE>

     (b) All insurance shall be in form,  content and amounts approved by Lender
     and written by an insurance  company or companies  rated A, class size X or
     better in the most current issue of Best's  Insurance  Reports and which is
     licensed to do business in the state in which the  Premises are located and
     domiciled in the United States or a governmental  agency or instrumentality
     approved by Lender.  The policies for such  insurance  shall have  attached
     thereto  standard  mortgagee  clauses in favor of and permitting  Lender to
     collect any and all proceeds payable  thereunder and shall include a 30 day
     (except  for  nonpayment  of premium,  in which  case,  a 10 day) notice of
     cancellation  clause in favor of Lender.  All policies or  certificates  of
     insurance shall be delivered to and held by Lender as further  security for
     the payment of the Note and any other  obligations  arising  under the Loan
     Documents,  with evidence of renewal coverage  delivered to Lender at least
     30 days before the expiration date of any policy.  Borrower shall not carry
     separate  insurance,  concurrent  in kind or form and  contributing  in the
     event of loss, with any insurance required in the Loan Documents.

5. (a) Borrower shall deposit with and pay to Lender, on the Closing Date and/or
on each  payment  date  specified  in the Note,  sums  calculated  by Lender for
payment of the following as they become due and payable: (i) the estimated taxes
and assessments assessed or levied against the Premises,  and (ii) the estimated
premiums for  insurance  required by the Loan  Documents,  excluding  commercial
general  liability  insurance.  Lender shall use such deposits to pay the taxes,
assessments  and premiums when the same become due.  Borrower  shall procure and
deliver  to  Lender,  in  advance,  statements  for such  charges.  If the total
payments  made by Borrower  under this  paragraph  exceed the amount of payments
actually  made by Lender for taxes,  assessments  and insurance  premiums,  such
excess  shall  be  credited  by  Lender  on  subsequent  deposits  to be made by
Borrower.  If,  however,  the  deposits  are  insufficient  to  pay  the  taxes,
assessments  and  insurance  premiums  when the same  shall be due and  payable,
Borrower will pay to Lender any amount necessary to make up the deficiency, five
(5) business  days before the date when payment of such taxes,  assessments  and
insurance premiums shall be due. If at any time Borrower shall tender to Lender,
in accordance  with the  provisions of the Note secured by this  Mortgage,  full
payment  of the  entire  Indebtedness  represented  thereby,  Lender  shall,  in
computing the amount of such Indebtedness, credit to the account of Borrower any
balance  remaining  in the  funds  accumulated  and  held by  Lender  under  the
provisions  of this  paragraph.  If there is an Event of Default  resulting in a
public sale of the Premises,  or if Lender otherwise acquires the Premises after
an Event of Default,  Lender shall apply,  at the time of  commencement  of such

<PAGE>

proceedings, or at the time the Premises is otherwise acquired, the balance then
remaining in the funds  accumulated  under this paragraph as a credit toward any
delinquent  or accrued  taxes and then in such  priority as Lender elects to the
other Indebtedness.

     (b) Any funds held under this paragraph shall not constitute any deposit or
     account of the  Borrower or moneys to which the  Borrower is entitled  upon
     demand,  or upon the mere passage of time.  Lender shall not be required to
     segregate  such deposits and may hold such deposits in its general  account
     or any other account and may commingle  such deposits with any other moneys
     of Lender or moneys  which  Lender is holding on behalf of any other person
     or entity.

6. In the event of any damage to or  destruction  of the  Premises,  or any part
thereof:

     (a) Borrower will immediately  notify Lender thereof in the manner provided
     in this  Mortgage  for the giving of notices.  Lender  shall have the right
     (which may be waived by Lender in  writing)  to settle and adjust any claim
     under such insurance policies required to be maintained by Borrower. In all
     circumstances,  the proceeds  thereof shall be paid to Lender and Lender is
     authorized to collect and to give receipts  therefor.  Borrower  agrees and
     acknowledges  that  such  proceeds  shall  be held by  Lender  without  any
     allowance of interest and that in any  bankruptcy  proceeding  of Borrower,
     all such proceeds  shall be deemed to be "Cash  Collateral" as that term is
     defined in Section 363 of the  Bankruptcy  Code.  Provided that no Event of
     Default  exists,  Borrower  shall  have  the  right to  participate  in any
     settlement  or  adjustment;  provided,  however,  that  any  settlement  or
     adjustment  shall be subject to the written  approval of Lender,  not to be
     unreasonably withheld.

     (b) Such  proceeds,  after  deducting  therefrom  any expenses  incurred by
     Lender in the collection  thereof  (including but not limited to reasonable
     attorneys'  fees  and  costs),  shall  be  applied  by  Lender  to pay  the
     Indebtedness  secured hereby  including,  but not limited to the Make Whole
     Premium, whether or not then due and payable, provided, however, that if no
     Event of  Default  exists at the time of such  application,  no Make  Whole
     Premium shall be due.

     Notwithstanding anything hereinabove to the contrary,

                    (i)    in the event the  casualty  occurs  more than six (6)
                           months  prior  to the  Maturity  Date and no Event of
                           Default  exists,  Lender shall apply such proceeds as
                           follows:
<PAGE>

                           (A)      If the aggregate  amount of such proceeds is
                                    less  than  $50,000,  Lender  shall pay such
                                    proceeds directly to Borrower, to be held in
                                    trust for Lender and  applied to the cost of
                                    rebuilding and restoring the Premises.

                           (B)      If the  aggregate  amount  of such  proceeds
                                    equals  or  exceeds   $50,000  Lender  shall
                                    disburse  such  amounts of the  proceeds  as
                                    Lender  reasonably  deems  necessary for the
                                    repair  or   replacement  of  the  Premises,
                                    subject  to  the  conditions  set  forth  in
                                    paragraph 6(c) below.

                    (ii)   in the event (x) an Event of Default  exists,  or (y)
                           the  casualty  occurs  during the last six (6) months
                           prior to the Maturity Date and Lender determines that
                           the repair and restoration of such casualty cannot be
                           completed  prior  to the  Maturity  Date,  or (z) the
                           conditions  set forth in paragraph  6(c) are not met,
                           then Lender, in its sole and absolute  discretion may
                           either:

                           (A)      declare  the  entire   Indebtedness   to  be
                                    immediately  due and  payable  and apply all
                                    such  proceeds  to pay the  Indebtedness  in
                                    such  priority as Lender  elects,  provided,
                                    however,  that if no Event of Default exists
                                    at the  time  of such  application,  no Make
                                    Whole Premium shall be due; or

                           (B)      disburse such proceeds as Lender  reasonably
                                    deems    necessary   for   the   repair   or
                                    replacement of the Premises subject to those
                                    conditions set forth in paragraph 6(c) which
                                    Lender in its sole and  absolute  discretion
                                    may require.

               (c) (i) In the event that Borrower is to be reimbursed out of the
               insurance  proceeds or out of any award or payment  received with
               respect  to a  Taking,  Lender  shall  from  time  to  time  make
               available such proceeds, subject to the following conditions: (a)
               there continues to exist no Event of Default; (b) the delivery to
               Lender  of  satisfactory   evidence  of  the  estimated  cost  of
               completion   of  such  repair  and   restoration   work  and  any
               architect's  certificates,  waivers of lien,  contractor's  sworn
               statements,  and other evidence of cost and of payment and of the
               continued priority of the lien hereof over any potential liens of
               mechanics and materialmen (including,  without limitation,  title
               policy  endorsements) as Lender may require and approve;  (c) the
               time required to complete the repair and restoration work and for
               the income from the  Premises to return to the level it was prior
               to the loss will not  exceed  the  coverage  period of the rental

<PAGE>

               value insurance required hereunder;  (d) the annual net operating
               income from all  approved  executed  Leases,  having at least two
               years  remaining  prior to the expiration of their term,  with no
               uncured  defaults,  shall  equal or exceed  1.35 times the annual
               debt  service on the Note,  and Medtox  Laboratories  confirms in
               writing  to Lender  that it will  occupy the  Premises  after the
               restoration is completed,  its lease is in full force and effect,
               and no defaults have occurred and are continuing thereunder;  (e)
               Lender approves the plans and  specifications of such work before
               such work is commenced if the estimated  cost of  rebuilding  and
               restoration  exceeds  25% of the  Indebtedness  or  involves  any
               structural   changes   or   modifications.   If  said  plans  and
               specifications   substantially   comply  with  those   previously
               approved by Lender,  Lender's  approval shall not be unreasonably
               withheld;  (f) if the amount of any insurance proceeds,  award or
               other payment is  insufficient to cover the cost of restoring and
               rebuilding  the Premises,  Borrower shall pay such cost in excess
               of such proceeds, award or other payment before being entitled to
               reimbursement  out of such funds;  (g) Borrower  pays to Lender a
               non-refundable  processing  fee equal to the greater of $5,000.00
               or .25% of the amount of such proceeds  within sixty (60) days of
               the  occurrence  of any such  damage or  destruction  and  before
               Lender  disburses any proceeds;  and (h) such other conditions to
               such  disbursements,   in  Lender's   discretion,   as  would  be
               customarily  required by a construction  lender doing business in
               the area where the  Premises  is  located or which are  otherwise
               required by any rating agency rating a securitization transaction
               with respect to the Loan.

               (ii) No payment made by Lender prior to the final  completion  of
               the repair or restoration work shall,  together with all payments
               theretofore  made,  exceed 90% of the cost of such work performed
               to the time of payment,  and at all times the undisbursed balance
               of said proceeds shall be at least sufficient to pay for the cost
               of  completion  of such  work free and  clear of all  liens.  Any
               proceeds  remaining  after payment of the cost of rebuilding  and
               restoration shall, at the option of Lender, either be (a) applied
               in  reduction  of  the  Indebtedness  secured  hereby,  provided,
               however,  that if no Event of Default  exists at the time of such
               application,  no Make Whole  Premium shall be due, or (b) paid to
               Borrower.

               (iii) Repair and  restoration  of the Premises shall be commenced
               promptly after the occurrence of the loss and shall be prosecuted
               to completion  diligently,  and the Premises shall be so restored
               and rebuilt to  substantially  the same  character and quality as

<PAGE>

               prior to such damage and  destruction  and shall  comply with all
               building codes and zoning requirements.

               (d) Should such damage or destruction  occur after foreclosure or
               sale proceedings  have been instituted,  the proceeds of any such
               insurance  policy or policies,  if not applied in  rebuilding  or
               restoration  of the  Improvements,  shall  be used to pay (i) the
               Indebtedness  then due and owing in the  event of a  non-judicial
               sale in such priority as Lender elects, or (ii) the amount due in
               accordance with any decree of foreclosure or deficiency  judgment
               that may be entered in connection with such proceedings,  and the
               balance,  if any,  shall be paid to the  owner of the  equity  of
               redemption if he shall then be entitled to the same, or otherwise
               as any court having jurisdiction may direct.

       7.     In the event of the commencement of a Taking affecting the
              Premises:

              (a)   Borrower shall notify Lender thereof in the manner  provided
                    in this  Mortgage  for the  giving of  notices.  Lender  may
                    participate in such  proceeding,  and Borrower shall deliver
                    to Lender  all  documents  requested  by it to  permit  such
                    participation.

              (b)   Borrower  shall  cause  the  proceeds  of any award or other
                    payment made  relating to a Taking,  to be paid  directly to
                    Lender. Lender, in its sole and absolute discretion: (i) may
                    apply  all such  proceeds  to pay the  Indebtedness  in such
                    priority  as Lender  elects,  provided  however,  that if no
                    Event of Default  exists at the time of such  application no
                    Make Whole  Premium  shall be due; or (ii) subject to and in
                    accordance  with the  provisions set forth in paragraph 6(c)
                    above,  may disburse  such amounts of the proceeds as Lender
                    reasonably  deems necessary for the repair or replacement of
                    the Premises.

     8. If by the  laws of the  United  States  of  America  or of any  state or
     governmental  subdivision  having  jurisdiction  over  Borrower  or of  the
     Premises or of the Loan  evidenced by the Loan  Documents or any amendments
     or  modifications  thereof,  any  tax or fee  is due or  becomes  due or is
     imposed upon Lender in respect of the  issuance of the Note hereby  secured
     or the making,  recording and registration of this Mortgage or otherwise in
     connection  with the Loan  Documents,  the  Environmental  Indemnity or the
     Loan, except for Lender's income or franchise tax,  Borrower  covenants and
     agrees to pay such tax or fee in the manner  required  by such law,  and to
     hold harmless and indemnify Lender, its successors and assigns, against any
     liability incurred by reason of the imposition of any such tax or fee.

     9. (a) Upon the  occurrence  of any Event of Default,  Lender may, but need
     not,  make any payment or perform any act herein  required of Borrower,  in

<PAGE>

     any form and manner  deemed  expedient  and may, but need not, make full or
     partial  payments of principal or interest on prior  encumbrances,  if any,
     and purchase,  discharge,  compromise or settle any tax lien or other prior
     lien or title or claim  thereof,  or redeem from any tax sale or forfeiture
     affecting said Premises, or contest any tax or assessment.  All moneys paid
     for any of the purposes herein authorized and all reasonable  expenses paid
     or  incurred  in  connection  therewith,  including  but  not  limited  to,
     reasonable  attorneys'  fees and costs and reasonable  attorneys'  fees and
     costs on appeal,  and any other  money  advanced  by Lender to protect  the
     Premises  and the lien  hereof,  shall be so much  additional  Indebtedness
     secured hereby and shall become  immediately due and payable without notice
     and with interest  thereon at the Default Rate from the date of expenditure
     or advance until paid.

     (b)  In  making  any  payment  hereby  authorized   relating  to  taxes  or
     assessments or for the purchase, discharge, compromise or settlement of any
     prior lien, Lender may make such payment  according to any bill,  statement
     or estimate secured from the appropriate public office without inquiry into
     the  accuracy  thereof or into the validity of any tax,  assessment,  sale,
     forfeiture, tax lien or title or claim thereof or without inquiry as to the
     validity or amount of any claim for lien which may be asserted.

10. If one or more of the following events (herein called "Event(s) of Default")
shall have occurred:

     (a) failure to pay when due any principal,  interest, Make Whole Premium or
     other Indebtedness,  utilities,  taxes or assessments or insurance premiums
     required pursuant to the Loan Documents or the Environmental Indemnity, and
     such failure shall have continued for 10 days, provided,  however,  that if
     (i) the default  provided for in this  subparagraph  10(a) is due solely to
     the negligence of Borrower's  bank,  (ii) the amount  necessary to make the
     payment in question  was in the bank  account from which the payment was to
     be made, (iii) Borrower had properly  authorized and instructed its bank to
     make such  payment,  and (iv) payment is made within two  business  days of
     written Notice from Lender,  then there shall be no Event of Default and no
     Late Charges shall be assessed on said payment;  but further  provided that
     in the event two such  Notices  are  given  over the term of the  Mortgage,
     thereafter  an Event of  Default  shall  occur  and Late  Charges  shall be
     assessed both without notice by Lender to Borrower; or

     (b)  Borrower,  Interest  Owner  or any  guarantor  voluntarily  brings  or
     acquiesces to any of the following: (A) any action for dissolution,  act of
     dissolution or  dissolution or the like of Borrower,  Interest Owner or any

<PAGE>

     guarantor   under  the  Federal   Bankruptcy   Code  as  now  or  hereafter
     constituted;  (B)  the  filing  of  a  petition  or  answer  proposing  the
     adjudication of Borrower,  Interest Owner or any guarantor as a bankrupt or
     its  reorganization  or  arrangement,  or  any  composition,  readjustment,
     liquidation,  dissolution  or similar relief with respect to it pursuant to
     any present or future  federal or state  bankruptcy  or similar law; or (C)
     the  appointment  by  order  of a  court  of  competent  jurisdiction  of a
     receiver,  trustee or  liquidator of the Premises or any part thereof or of
     Borrower,  Interest Owner or any guarantor or of  substantially  all of the
     assets of Borrower, Interest Owner or any guarantor; or

     (c) one or more of the items set forth in paragraph 10(b) above occur which
     were either not (i) voluntarily brought by Borrower,  Interest Owner or any
     guarantor  or  (ii)  acquiesced  in by  Borrower,  Interest  Owner  or  any
     guarantor,  and which are not discharged or dismissed  within 90 days after
     the action, filing or appointment, as the case may be; or

     With  respect  to the  matters in (b) and (c) above for an  Interest  Owner
     only, no Event of Default shall occur until an interested party or Interest
     Owner  asserts a claim or right against  Borrower or the Premises  which in
     any manner may affect Lender's rights, remedies, or interests granted under
     the Loan Documents (whether or not such assertion is successful).

     (d) with respect to the matters not described in the other subparagraphs of
     this  paragraph  10,  failure  to duly  observe or  perform  any  covenant,
     condition or agreement of the Borrower or any  guarantor  contained in this
     Mortgage,  the Note or the  Assignment of Leases from Borrower to Lender or
     in any other  instrument or agreement  which  evidences or secures the Loan
     (the "Loan Documents"), or in the Environmental Indemnity, and such failure
     shall have  continued for 30 days after Notice  specifying  such failure is
     given by Lender to Borrower; or

     If any  failure  to observe  or  perform  under (d) above  shall be of such
     nature that it cannot be cured or remedied  within 30 days,  Borrower shall
     be entitled to a  reasonable  period of time to cure or remedy such failure
     (not to exceed 90 days following the giving of Notice),  provided  Borrower
     commences the cure or remedy thereof within the 30 day period following the
     giving of Notice and thereafter  proceeds with diligence,  as determined by
     Lender, to complete such cure or remedy.

     (e)  the  failure  of  Borrower  to  duly  observe  or  perform  any of the
     covenants, conditions and agreements of the Borrower contained in paragraph
     2(f) of this Mortgage; or
<PAGE>

              (f)   any  representation  made  by  or  on  behalf  of  Borrower,
                    Interest Owner or any guarantor regarding the Premises,  the
                    making  or  delivery  of any of the  Loan  Documents  or the
                    Environmental   Indemnity   or  in  any   material   written
                    information  provided by or on behalf of Borrower,  Interest
                    Owner or any  guarantor  in  connection  with the Loan shall
                    prove to be untrue or inaccurate in any material respect; or

              (g)   the failure of  Borrower to give Notice to Lender  within 60
                    days  after the death of any  individual  who is  personally
                    liable for any  obligation  under the Loan  Documents or the
                    Environmental   Indemnity,   as  Borrower,   indemnitor   or
                    guarantor,  whether or not such  individual had executed the
                    Note or this Mortgage; or

              (h)   subject to the provisions of paragraph  2(f), the failure of
                    Borrower to provide  Lender with an assumption  agreement in
                    form  and   substance   and   executed  by  a  person(s)  or
                    entity(ies)  acceptable to Lender in its sole  discretion to
                    assume the  obligations  of any deceased  individual  who is
                    personally   liable  for  any  obligation   under  the  Loan
                    Documents  or  the  Environmental  Indemnity,  as  Borrower,
                    indemnitor or guarantor,  whether or not such individual had
                    executed the Note or this  Mortgage,  and such failure shall
                    have   continued  for  60  days  after  the  death  of  such
                    individual

              then, in each and every such case, the whole of said principal sum
              hereby  secured  shall,  at the option of the  Lender and  without
              further  notice to Borrower,  become  immediately  due and payable
              together  with  accrued  interest  thereon,  a Make Whole  Premium
              calculated in accordance with the provisions of the Loan Documents
              and  all  other  Indebtedness,  and  whether  or  not  Lender  has
              exercised  said  option,  interest  shall  accrue  on  the  entire
              principal  balance and any interest or Make Whole Premium or other
              Indebtedness  then due, at the Default Rate until fully paid or if
              Lender has not  exercised  said  option,  for the  duration of any
              Event of Default.

       11.    Borrower  agrees that if Lender  accelerates the whole or any part
              of the  principal  sum hereby  secured,  or applies  any  proceeds
              pursuant to the provisions  hereof,  Borrower  waives any right to
              prepay  the  principal  sum  hereby  secured  in  whole or in part
              without premium and agrees to pay, as yield maintenance protection
              and not as a penalty,  a "Make  Whole  Premium".  However,  in the
              event any  proceeds  from a casualty or Taking of the Premises are
              applied to reduce the  principal  balance  under the Note, no Make
              Whole Premium  shall be due so long as no Event of Default  exists
              at the time of such application.
<PAGE>

              The Make Whole Premium shall be the greater of one percent (1%) of
              the  principal  amount to be  prepaid or a premium  calculated  as
              follows:

              (a)   Determine the "Reinvestment  Yield." The Reinvestment  Yield
                    will be equal to the yield on the applicable* U.S.  Treasury
                    Issue  ("Primary  Issue")**  published one week prior to the
                    date of prepayment  and  converted to an equivalent  monthly
                    compounded nominal yield.

                    **In the event  there is no market  activity  involving  the
                    Primary Issue at the time of prepayment, Lender shall choose
                    a comparable Treasury Bond, Note or Bill ("Secondary Issue")
                    which Lender  reasonably  deems to be similar to the Primary
                    Issue's  characteristics  (i.e.,  rate,  remaining  time  to
                    maturity, yield).

               (b) Calculate the "Present  Value of the  Mortgage."  The Present
               Value of the Mortgage is the present  value of the payments to be
               made in accordance  with the Note (all  installment  payments and
               any  remaining  payment due on the Call Date, or if the Call Date
               has already  passed,  on the  Maturity  Date)  discounted  at the
               Reinvestment  Yield for the number of months  remaining  from the
               date of  prepayment  to the Call  Date,  or if the Call  Date has
               already  passed,  to the Maturity Date. In the event of a partial
               prepayment  as a  result  of the  aforementioned  application  of
               proceeds,  the Present Value of the Mortgage  shall be calculated
               in  accordance  with the  preceding  sentence  multiplied  by the
               fraction  which  results from  dividing the amount of the prepaid
               proceeds  by  the   principal   balance   immediately   prior  to
               prepayment.

               (c) Subtract the amount of the prepaid  proceeds from the Present
               Value of the Mortgage as of the date of prepayment. Any resulting
               positive differential shall be the premium.

               As set forth above,  the U.S.  Treasury Issue applicable for each
               prepayment period is as follows:

              Prepayment Period                         U.S. Treasury Issue

              To March 1, 2006                                *
              March 1, 2006 to March 1, 2011                  *

              **At  this  time  there  is not a U.S.  Treasury  Issue  for  this
              prepayment period. At the time of prepayment,  Lender shall select
              in its sole and  absolute  discretion a U.S.  Treasury  Issue with
              similar  remaining  time to the end of the  applicable  prepayment
              period.
<PAGE>

12. Upon the occurrence of any Event of Default, in addition to any other rights
or remedies  provided  in the Loan  Documents,  at law, in equity or  otherwise,
Lender  shall have the right to  foreclose  the lien  hereof,  and to the extent
permitted  herein and by applicable law to sell the Premises by sale independent
of the foreclosure proceedings. In any suit to foreclose the lien hereof, and in
any sale of the  Premises,  there  shall be allowed and  included as  additional
Indebtedness  payable by Borrower to Lender and secured hereby all  expenditures
and  expenses  which may be paid or  incurred  by or on  behalf  of  Lender  for
attorneys'  fees and  costs,  including  attorneys'  fees and  costs on  appeal,
appraisers'   fees,   expenditures   for   documentary   and  expert   evidence,
stenographer's  charges,   publication  and  advertising  costs,  survey  costs,
environmental  audits  and  costs  (which  may be  estimated  as to  items to be
expended  after the entry of any  decree) of  procuring  all such  abstracts  of
title,  title  searches and  examinations,  title  insurance  policies,  torrens
certificates  and similar  data and  assurances  with respect to title as Lender
deems  reasonably  necessary either to prosecute such suit or to consummate such
sale or to evidence to bidders at any sale the true condition of the title to or
the value of the Premises.

13. The  proceeds  of any  foreclosure  sale,  or other sale of the  Premises in
accordance  with the terms hereof or as permitted by law,  shall be  distributed
and applied in the  following  order of priority:  first,  to the payment of all
costs  and  expenses  incident  to  the  foreclosure  and/or  sale  proceedings,
including all items as are  mentioned in any  preceding or succeeding  paragraph
hereof;  second,  to the payment of all other items which under the terms hereof
constitute secured  Indebtedness in addition to that evidenced by the Note, with
interest  thereon as herein  provided;  third,  to the payment of all principal,
accrued interest  remaining  unpaid on the Note and Make Whole Premium;  fourth,
any surplus to the Borrower or Borrower's successors or assigns, as their rights
may appear.

14.  Following the  occurrence of an Event of Default,  unless the same has been
specifically  waived in writing,  Borrower shall forthwith upon demand of Lender
surrender to Lender possession of the Premises,  and Lender shall be entitled to
take actual possession of the Premises or any part thereof  personally or by its
agents or attorneys, and Lender in its discretion may, with or without force and
with or without  process of law, enter upon and take and maintain  possession of
all or any part of the Premises  together with all  documents,  books,  records,
papers and accounts of the  Borrower or the then owner of the Premises  relating
thereto, and may exclude Borrower,  its agents or assigns wholly therefrom,  and
may as attorney-in-fact  or agent of the Borrower,  or in its own name as Lender
and under the powers herein granted:
<PAGE>

          (a) hold, operate, maintain, repair, rebuild, replace, alter, improve,
          manage or  control  the  Premises  as it deems  judicious,  insure and
          reinsure  the same  and any  risks  related  to  Lender's  possession,
          operation  and  management  thereof  and  receive  all  Rents,  either
          personally or by its agents, and with full power to use such measures,
          legal or equitable,  as in its discretion it deems proper or necessary
          to enforce the payment or security of the Rents, including actions for
          the  recovery  of Rent,  actions in forcible  detainer  and actions in
          distress  for  Rents,  hereby  granting  full power and  authority  to
          exercise  each and every of the rights,  privileges  and powers herein
          granted at any and all times  hereafter,  without  notice to Borrower;
          and

          (b)  conduct  leasing  activity  pursuant  to  the  provisions  of the
          Assignment of Leases.

Lender  shall not be  obligated  to  perform  or  discharge,  nor does it hereby
undertake to perform or discharge,  any obligation,  duty or liability under any
Lease.  Should Lender incur any liability,  loss or damage under any Leases,  or
under or by reason of the Assignment of Leases,  or in the defense of any claims
or demands  whatsoever  which may be  asserted  against  Lender by reason of any
alleged  obligations or  undertakings on its part to perform or discharge any of
the terms,  covenants or agreements in any Lease, the amount thereof,  including
costs, expenses and reasonable  attorneys' fees and costs,  including reasonable
attorneys'  fees and costs on  appeal,  shall be added to the  Indebtedness  and
secured hereby.

15. Lender in the exercise of the rights and powers conferred upon it shall have
the full power to use and apply the Rents, less costs and expenses of collection
to the payment of or on account of the items  listed in (a) - (c) below,  at the
election of Lender and in such order as Lender may  determine  unless  otherwise
specifically provided in the Assignment. The manner of the application of Rents,
the  reasonableness of the costs and charges to which such Rents are applied and
the item or items which shall be credited  thereby  shall be within the sole and
unlimited  discretion of Lender unless  otherwise  specifically  provided in the
Assignment.

     (a) to the payment of (i) the expenses of  operating  and  maintaining  the
     Premises,  including,  but not limited to the cost of  management,  leasing
     (which shall  include  reasonable  compensation  to Lender and its agent or
     agents if  management  and/or  leasing is delegated to an agent or agents),
     repairing, rebuilding, replacing, altering and improving the Premises, (ii)
     premiums on insurance as  hereinabove  authorized,  (iii) taxes and special
     assessments  now due or which may hereafter  become due on the Premises and
     (iv)  expenses of placing the Premises in such  condition  as will,  in the
     sole judgment of Lender, make it readily rentable;
<PAGE>

          (b)  to  the  payment  of  any   principal,   interest  or  any  other
     Indebtedness  secured  hereby or any  deficiency  which may result from any
     foreclosure sale;

          (c)  to the  payment  of  established  claims  for  damages,  if  any,
     reasonable  attorneys'  fees and costs and reasonable  attorneys'  fees and
     costs on appeal.

     To the extent  that the costs and  expenses  in (a) - (c) above  exceed the
     amounts  collected,  the  excess  shall be added  to the  Indebtedness  and
     secured hereby.

16.  Upon the  occurrence  of any  Event of  Default,  unless  the same has been
specifically   waived  in  writing,   Lender  may  apply  to  any  court  having
jurisdiction for the appointment of a receiver of the Premises. Such appointment
may be made either before or after sale,  without notice,  without regard to the
solvency or insolvency of Borrower at the time of application  for such receiver
and without regard to the then value of the Premises or the adequacy of Lender's
security.  Lender may be appointed  as such  receiver.  The receiver  shall have
power to collect the Rents  during the pendency of any  foreclosure  proceedings
and, in case of a sale, during the full statutory period of redemption,  if any,
as well as during any further times when Borrower,  except for the  intervention
of such  receiver,  would be entitled to collect such Rents.  In  addition,  the
receiver  shall have all other  powers  which shall be necessary or are usual in
such cases for the protection,  possession, control, management and operation of
the Premises  during the whole of said  period.  The court from time to time may
authorize  the  receiver to apply the net income in its  possession  at Lender's
election and in such order as Lender may determine in payment in full or in part
of those items listed in paragraph 15.

17. (a)  Borrower  agrees  that all  reasonable  costs,  charges  and  expenses,
including but not limited to, reasonable  attorneys' fees and costs, incurred or
expended by Lender arising out of or in connection  with any action,  proceeding
or hearing, legal, equitable or quasi-legal,  including the preparation therefor
and any  appeal  therefrom,  in any way  affecting  or  pertaining  to the  Loan
Documents,  the Environmental Indemnity or the Premises,  shall be promptly paid
by Borrower.  All such sums not promptly paid by Borrower  shall be added to the
Indebtedness secured hereby and shall bear interest at the Default Rate from the
date of such advance and shall be due and payable on demand.

(b) Borrower  hereby agrees that upon the  occurrence of an Event of Default and
the  acceleration of the principal sum secured hereby pursuant to this Mortgage,
to the full  extent that such rights can be  lawfully  waived,  Borrower  hereby
waives and agrees not to insist upon, plead, or in any manner take advantage of,
any  notice  of  acceleration,  any  stay,  extension,   exemption,   homestead,

<PAGE>

marshaling  or  moratorium  law  or any  law  providing  for  the  valuation  or
appraisement  of all or any  part of the  Premises  prior  to any  sale or sales
thereof  under any  provision  of this  Mortgage  or before or after any decree,
judgment or order of any court or confirmation thereof, or claim or exercise any
right to redeem all or any part of the  Premises  so sold and  hereby  expressly
waives to the full extent  permitted by  applicable  law on behalf of itself and
each and every person or entity acquiring any right,  title or interest in or to
all or any part of the  Premises,  all  benefit and  advantage  of any such laws
which would otherwise be available to Borrower or any such person or entity, and
agrees  that  neither  Borrower  nor any such  person or entity  will  invoke or
utilize any such law to  otherwise  hinder,  delay or impede the exercise of any
remedy  granted or  delegated  to Lender  herein but will permit the exercise of
such  remedy  as  though  any such laws had not been  enacted.  Borrower  hereby
further  expressly  waives to the full extent  permitted  by  applicable  law on
behalf of itself and each and every person or entity acquiring any right,  title
or  interest  in or to all or any part of the  Premises  any and all  rights  of
redemption from any sale or any order or decree of foreclosure obtained pursuant
to provisions of this Mortgage.

18. Borrower  hereby assigns to Lender  directly and absolutely,  and not merely
collaterally,  the  interest  of  Borrower  as lessor  under  the  Leases of the
Premises,  and the Rents  payable under any Lease and/or with respect to the use
of the Premises, or portion thereof, including any oil, gas or mineral lease, or
any  installments of money payable  pursuant to any agreement or any sale of the
Premises or any part  thereof,  subject  only to a license,  if any,  granted by
Lender to Borrower with respect  thereto prior to the  occurrence of an Event of
Default.  Borrower has executed and  delivered  the  Assignment  of Leases which
grants to Lender  specific  rights and  remedies  in respect of said  Leases and
governs the collection of Rents thereunder and from the use of the Premises, and
such rights and remedies so granted shall be cumulative of those granted herein.

The collection of such Rents and the application  thereof as aforesaid shall not
cure or waive any Event of Default or notice of default  hereunder or invalidate
any act done  pursuant  to such  notice,  except to the extent any such Event of
Default is fully cured. Failure or discontinuance of Lender at any time, or from
time to time,  to  collect  any such  moneys  shall not impair in any manner the
subsequent  enforcement  by Lender of the  right,  power  and  authority  herein
conferred on Lender.  Nothing  contained  herein,  including the exercise of any
right, power or authority herein granted to Lender, shall be, or be construed to
be, an affirmation by Lender of any tenancy,  Lease or option,  or an assumption
of liability under, or the  subordination of the lien or charge of this Mortgage
to any such tenancy, Lease or option.  Borrower hereby agrees that, in the event
Lender  exercises  its  rights  as  provided  for in  this  paragraph  or in the

<PAGE>

Assignment of Leases,  Borrower waives any right to compensation  for the use of
Borrower's  furniture,  furnishings  or equipment in the Premises for the period
such assignment of rents or receivership is in effect,  it being understood that
the Rents  derived from the use of any such items shall be applied to Borrower's
obligations hereunder as above provided.

19. All rights and remedies  granted to Lender in the Loan Documents shall be in
addition  to and not in  limitation  of any rights and  remedies  to which it is
entitled in equity,  at law or by statute,  and the  invalidity  of any right or
remedy herein  provided by reason of its conflict with applicable law or statute
shall not affect any other valid right or remedy  afforded to Lender.  No waiver
of any default or Event of Default under any of the Loan Documents  shall at any
time  thereafter  be held to be a waiver of any rights of the Lender  hereunder,
nor shall any waiver of a prior Event of Default or default operate to waive any
subsequent  Event of Default or default.  All remedies  provided for in the Loan
Documents  are  cumulative  and may,  at the  election of Lender,  be  exercised
alternatively,  successively,  or  concurrently.  No  act  of  Lender  shall  be
construed  as an  election  to  proceed  under any one  provision  herein to the
exclusion  of any other  provision  or to  proceed  against  one  portion of the
Premises to the  exclusion of any other  portion.  Time is of the essence  under
this Mortgage and the Loan Documents.

20. By accepting  payment of any sum secured  hereby after its due date,  Lender
does not waive its right either to require  prompt payment when due of all other
sums or  installments so secured or to declare a default for failure to pay such
other sums or installments.

21.  The usury  provisions  of  paragraph  6 of the Note and the  limitation  of
recourse liability  provisions of paragraph 9 of the Note are fully incorporated
herein by reference as if the same were specifically stated here.

22. In the event one or more  provisions of the Loan Documents  shall be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or  unenforceability  shall not affect any other provision hereof,  and the Loan
Documents  shall be construed as if any such  provision had never been contained
herein.

23. If the payment of the  Indebtedness  secured  hereby or of any part  thereof
shall be extended or varied,  or if any part of the  security be  released,  all
persons now or at any time  hereafter  liable  therefor,  or  interested in said
Premises,  shall be held to assent to such extension,  variation or release, and
their  liability and the lien and all  provisions  hereof shall continue in full

<PAGE>

force, the right of recourse  against all such persons being expressly  reserved
by Lender notwithstanding such variation or release.

24. Upon payment in full of the principal sum,  interest and other  Indebtedness
secured by the Loan Documents, these presents shall be null and void, and Lender
shall release this Mortgage and the lien hereof by proper instrument executed in
recordable form.

25. (a) Borrower hereby grants to Lender and its respective  agents,  attorneys,
employees,  consultants,  contractors  and  assigns an  irrevocable  license and
authorization to enter upon and inspect the Premises and all facilities  located
thereon at reasonable times. Lender shall make reasonable efforts to ensure that
the operations of the tenants are not disrupted.

     (b) In connection  with any sale or conveyance of this  Mortgage,  Borrower
     grants  to  Lender  and  its  respective  agents,   attorneys,   employees,
     consultants,   contractors   and   assigns  an   irrevocable   license  and
     authorization  to conduct,  at Lender's  expense,  a Phase I  environmental
     audit of the Premises.

     (c) In the event there has been an Event of Default or in the event  Lender
     has formed a reasonable belief,  based on its inspection of the Premises or
     other factors known to it, that  Hazardous  Materials may be present on the
     Premises,  then  Borrower  grants  to  Lender  and its  respective  agents,
     attorneys, employees,  consultants,  contractors and assigns an irrevocable
     license and authorization to conduct, at Borrower's expense,  environmental
     tests  of  the  Premises,   including   without   limitation,   a  Phase  I
     environmental audit, subsurface testing, soil and ground water testing, and
     other tests which may  physically  invade the Premises or  facilities  (the
     "Tests"). The scope of the Tests shall be such as Lender, in its sole -----
     discretion, determines is necessary to (i) investigate the condition of the
     Premises,  (ii) protect the security interests created under this Mortgage,
     or (iii) determine  compliance with  Environmental  Laws, the provisions of
     the Loan  Documents  and the  Environmental  Indemnity  and  other  matters
     relating thereto.  Notwithstanding  anything  contained  hereinabove to the
     contrary,  except in the event there has been an Event of  Default,  Lender
     shall  provide prior  written  notice prior to conducting  any tests in the
     Premises.

     (d) The foregoing licenses and authorizations are intended to be a means of
     protection  of  Lender's  security  interest  in the  Premises  and  not as
     participation in the management of the Premises.

<PAGE>

26. Within 15 days after any written  request by either party to this  Mortgage,
the requested party shall certify, by a written statement duly acknowledged, the
amount of principal, interest and other Indebtedness then owing on the Note, the
terms of payment,  Maturity  Date and the date to which  interest has been paid.
Borrower shall further certify  whether any defaults,  offsets or defenses exist
against the Indebtedness secured hereby.  Borrower shall also furnish to Lender,
within  30 days of its  request  therefor,  tenant  estoppel  letters  from such
tenants of the  Premises as Lender may  require;  which Lender shall not request
more than one (1) time per annum nor more than one (1) time prior to the date of
the Securitization Transaction.

27. (a) Borrower  shall  furnish to Lender  within 90 days after the end of each
fiscal year of Borrower,  a detailed and analytical financial report prepared in
accordance with generally accepted accounting  principles  consistently applied,
certified in a manner and  otherwise  in form  reasonably  acceptable  to Lender
covering the full and  complete  operation of the  Premises,  including  without
limitation:  (i) income and expense statements, and (ii) a report of the leasing
status of the  Premises  as of the end of such  year,  identifying  the  lessee,
square footage leased, rental amount, base rental increases,  rental concessions
and/or rental  deferments,  if any, an commencement  and expiration  dates under
each Lease of the Premises,  and (iii) a budget and an aged accounts  receivable
report.  Such reports shall be prepared by an accountant  who may be an employee
of Borrower,  or of an affiliate of Borrower,  acceptable to Lender. In addition
to the reports referred to herein, Borrower shall promptly supply any additional
information  or records  relating to the Premises or its operation as Lender may
from time to time reasonably request.  Notwithstanding  anything  hereinabove to
the contrary,  Lender agrees to accept the financial reports  referenced herein,
prepared by the Chief Financial  Officer of Borrower's  parent  company,  Medtox
Scientific, Inc., or such other designee acceptable to Lender.

     (b) Borrower  shall submit to Lender,  within 90 days  following the end of
     each fiscal year, annual balance sheets and income statements for Borrower.

28. Each notice,  consent,  request,  report or other  communication  under this
Mortgage or any other Loan Document (each a "Notice") which any party hereto may
desire  or be  required  to give to the  other  ------  shall be deemed to be an
adequate and sufficient notice if given in writing and service is made by either
(i) registered or certified mail, postage prepaid, in which case notice shall be
deemed to have been received three (3) business days  following  deposit to U.S.
mail; or (ii) nationally  recognized  overnight air courier,  next day delivery,
prepaid, in which case such notice shall be deemed to have been received one (1)
business day  following  delivery to such  nationally  recognized  overnight air
courier.  All Notices shall be addressed to Borrower at its address given on the

<PAGE>

first page hereof or to Lender at c/o  Principal  Capital  Management,  LLC, 801
Grand  Avenue,  Des  Moines,  Iowa  50392-1450,  Attn:  Commercial  Real  Estate
Servicing,  Loan No.  752834,  or to such  other  place as  either  party may by
written  notice to the other  hereafter  designate  as a place  for  service  of
notice.

29. This  Mortgage and all  provisions  hereof shall inure to the benefit of the
heirs,  successors  and assigns of Lender and shall bind the heirs and permitted
successors and assigns of Borrower.

30.  Borrower has had the  opportunity  to fully  negotiate the terms hereof and
modify the draftsmanship of this Mortgage. Therefore, the terms of this Mortgage
shall be construed and interpreted without any presumption,  inference,  or rule
requiring  construction  or  interpretation  of any  provision of this  Mortgage
against the interest of the party  causing this Mortgage or any portion of it to
be drafted.  Borrower  is entering  into this  Mortgage  freely and  voluntarily
without any duress, economic or otherwise.

31. This Mortgage  shall be governed by, and  construed in  accordance  with the
laws  of  the  state  of  Minnesota,  without  regard  to its  conflicts  of law
principles.

32. As used herein,  the term "Default Rate" means a rate equal to the lesser of
(i) four percent (4%) per annum above the then applicable  interest rate payable
under the Note or (ii) the maximum rate allowed by applicable law.

33. BORROWER AND LENDER EACH KNOWINGLY,  VOLUNTARILY AND INTENTIONALLY WAIVE, TO
THE EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY ACTIONS BROUGHT BY BORROWER OR
LENDER  IN  CONNECTION  WITH  THIS  MORTGAGE,  ANY OF THE  LOAN  DOCUMENTS,  THE
INDEBTEDNESS SECURED HEREBY, OR ANY OTHER STATEMENTS OR ACTIONS OF LENDER.

34. This Mortgage and the Indebtedness secured hereby is for the sole purpose of
conducting or acquiring a lawful business,  professional or commercial  activity
or for  the  acquisition  or  management  of  real  or  personal  property  as a
commercial  investment,  and all proceeds of such Indebtedness shall be used for
said business or commercial  investment purpose.  Such proceeds will not be used
for the purchase of any security  within the meaning of the Securities  Exchange
Act of 1934, as amended,  or any regulation issued pursuant  thereto,  including
without  limitation,  Regulations  U, T and X of the Board of  Governors  of the
Federal Reserve System.  This is not a purchase money mortgage where a seller is

<PAGE>

providing  financing  to a buyer for the  payment  of all or any  portion of the
purchase price,  and the Premises secured hereby is not a residence or homestead
or used for mining, grazing, agriculture, timber or farming purposes.

35. Unless Lender shall  otherwise  direct in writing,  Borrower shall appear in
and  defend  all  actions  or  proceedings  purporting  to affect  the  security
hereunder,  or any right or power of the Lender. The Lender shall have the right
to appear in such actions or  proceedings.  Borrower shall save Lender  harmless
from all costs and expenses, including but not limited to, reasonable attorneys'
fees and  costs,  and costs of a title  search,  continuation  of  abstract  and
preparation  of  survey  incurred  by reason of any  action,  suit,  proceeding,
hearing, motion or application before any court or administrative body in and to
which Lender may be or become a party by reason hereof.  Such proceedings  shall
include   but  not  be  limited  to   condemnation,   bankruptcy,   probate  and
administration  proceedings,  as well as any  other  action,  suit,  proceeding,
right,  motion or  application  wherein  proof of claim is by law required to be
filed or in which it  becomes  necessary  to defend or uphold  the terms of this
Mortgage or the Loan  Documents or otherwise  purporting  to affect the security
hereof or the rights or powers of Lender.  All money paid or  expended by Lender
in that regard,  together with interest thereon from date of such payment at the
Default  Rate  shall be  additional  Indebtedness  secured  hereby  and shall be
immediately due and payable by Borrower without notice.

36.  Upon  the  occurrence  of an  Event of  Default,  unless  the same has been
specifically  waived in  writing,  all Rents  collected  or received by Borrower
shall be accepted and held for Lender in trust and shall not be commingled  with
the funds and property of Borrower, but shall be promptly paid over to Lender.

37. If more than one,  all  obligations  and  agreements  of Borrower and of any
general partner of Borrower are joint and several.

38. This Mortgage may be executed in counterparts, each of which shall be deemed
an original;  and such counterparts when taken together shall constitute but one
agreement.

39.  Borrower  has  delivered to Lender an  irrevocable  letter of credit in the
amount of  $300,000.00  having an expiration  date not earlier than 1 year after
its issue date, to be held by Lender as additional security for the Loan;

              Borrower  shall  deliver to Lender not later than 30 days prior to
              the  expiration  date of said  letter of credit and any renewal or
              replacement letter of credit, a renewal or replacement irrevocable
              bank letter of credit  identical in terms and amount,  issued by a
              United States bank acceptable to Lender.
<PAGE>

              Except as hereinafter  provided and so long as no Event of Default
              has occurred under the Loan Documents,  the Letter of Credit shall
              be released at which time Medtox  Scientific,  Inc.  has  achieved
              audited net income after taxes in excess of $1,000,000.00  for two
              consecutive fiscal years as determined by Lender.

              Upon  the  occurrence  of an  Event  of  Default  under  the  Loan
              Documents, Lender may, with respect to the letter of credit or any
              renewal or replacement  thereof,  exercise all enforcement  rights
              and  remedies  granted to Lender under the Loan  Documents  and in
              addition to all other rights and remedies  granted to Lender under
              the Loan  Documents,  Lender  may,  at its  option,  draw upon the
              letter of credit and any renewal or  replacement  letter of credit
              and the  proceeds  of  such  letter  of  credit  shall  constitute
              additional  security for the Loan. Lender may, at its option,  use
              such funds to (1) cure or partially cure any Event of Default; (2)
              prepay the principal  amount of the Loan or any part thereof;  (3)
              pay any interest  accrued under the terms of the Note; (4) pay any
              other  Indebtedness;  (5) pay the Make Whole Premium,  if any, due
              and  payable;  or (6) hold  such  funds in a  non-interest-bearing
              account as additional  security for the Loan, all in such order as
              Lender  may  determine.  In the  event  the  funds or any  portion
              thereof are applied to prepay the principal  amount of the Loan or
              any  part  thereof,  Borrower  waives  any  right  to  prepay  the
              principal amount in whole or in part without  premium,  and agrees
              to pay, as liquidated  damages and not as a penalty,  a Make Whole
              Premium on any principal amount prepaid. The Make Whole Premium on
              any  principal  amount  prepaid  shall be calculated in accordance
              with the provisions of the Loan Documents.

              The letter of credit  and any  renewal  or  replacement  letter of
              credit shall be returned to Borrower and Borrower's  obligation to
              deliver such letter of credit shall  expire,  upon payment in full
              of all sums due to Lender under the Loan Documents.

              Notwithstanding anything contained herein to the contrary,  Lender
              will  accept  $300,000  to be  deposited  with and held by  Lender
              pursuant to an escrow  security  agreement  between  Borrower  and
              Lender   under  terms   acceptable   to  Lender  in  lieu  of  the
              above-referenced letter of credit.

        40.   From the date of its  recording,  this Mortgage shall be effective
              as a financing statement filed as a fixture financing with respect
              to  all  goods   constituting   part  of  the  Premises  (as  more
              particularly  described in the granting  clause of this  Mortgage)
              which are or are to become fixtures  related to the Land described
              herein. For this purpose, the following information is set forth:

              (a)   Name and Address of Debtor:
<PAGE>

                    Medtox Scientific, Inc.
                    402 West County Road
                    St. Paul, Minnesota 55112
                    Attention:  Chief Financial Officer

              (b)   Name and Address of Secured Party:

                    Principal Life Insurance Company
                    c/o Principal Capital Management, LLC
                    801 Grand Avenue
                    Des Moines, Iowa 50392-1450

              (c)   This document covers goods which are or are to become
                    fixtures.

              (d)   The name of the record owner of the Premises is the Debtor
                    described above.

              (e)   Borrowers tax identification number is 41-1997061.

       41.    The  maximum  principal  amount of  indebtedness  secured  by this
              Mortgage  at any one time,  excluding  advances  made by Lender in
              protection  of the Premises or the lien of this Mortgage and other
              indeterminate amounts shall be $12,400,000.00.

                            (Signatures on next page)

<PAGE>

       IN WITNESS WHEREOF, Borrower has caused this Mortgage to be duly executed
and delivered as of the date first above written.

               NEW BRIGHTON BUSINESS CENTER LLC,
               a Delaware limited liability company

               By    ____________________________________
                     Name:
                     Title:

<PAGE>

STATE OF __________________         )
                                            ) ss.
COUNTY OF ________________ )

                The  foregoing  instrument  was  acknowledged  before  me this
______     day     of     ______________________,      ________________     by
______________________________,        the      ____________________        of
_______________________________________,                             a
____________________________________________ organized  under  the laws of the
state of ____________________, on behalf of said _____________________________.

                                           -----------------------------------
                                           Notary Public

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