BOSTON -- Police seized more than 500 pounds of marijuana when officials broke up a large-scale narcotics delivery in Danvers, according to the Massachusetts State Police.

Troopers set up surveillance Wednesday in the parking lot of the Costco on Route 1. At noon, Brian J. Toto, 42, of Revere, arrived in a rented truck as Phillip Watson, 37, of Saugus, acted as a lookout, police said. Toto allegedly met with the occupants of a tractor-trailer with Indiana license plates.

Troopers observed the men and suspected they were offloading pallets with marijuana from the tractor-trailer onto the rental truck. Police teams followed the rental truck and the tractor-trailer as both vehicles headed in different directions.

Police arrested Toto and Watson, along with Michael Schrimpf, 36, of Saugus, at 134R Newbury St. in Peabody, where further investigation revealed the pallets had been offloaded. Officials said they seized about 543 pounds of marijuana.

Meanwhile, another team of troopers followed the tractor-trailer to Route 128, stopping it just before the Massachusetts Turnpike. Troopers arrested RJ Norton Jr., 41, and Melvin Vanmeter, 38, both of Indianapolis. Police said they found about $200,000 inside the truck.

Toto, Watson, Schrimpf, Norton, and Vanmeter pleaded not guilty Thursday at their arraignments. The men were charged with trafficking Class D marijuana over 200 pounds and conspiracy to violate drug laws.

Bail was set at $250,000 for each defendant, and their cases were continued until June 18 for a status hearing.

If convicted, the men face a maximum sentence of 15 years in state prison, with a minimum mandatory term of three years.