LEASE AGREEMENT

     THIS LEASE  AGREEMENT,  made and  entered  into this 15th day of  November,
1999, by and between H2C2 & ASSOCIATES LLC, hereinafter called LESSOR, and R-TEC
CORPORATION, an Idaho corporation, hereinafter called LESSEE.

                                   WITNESSETH:

     FOR AND IN  CONSIDERATION  OF the  rentals  hereinafter  provided,  and the
covenants and agreements  herein set forth,  LESSOR hereby leases and demises to
LESSEE,  for the term stated below, the portion  described in Exhibit A-1 of the
premises  situated in the County of Ada,  State of Idaho more fully set forth in
Exhibit  A-2.  Both  Exhibits  are attached  hereto and  incorporated  herein by
reference.

     This Agreement is subject to the following terms and  conditions,  to which
the parties mutually agree:

     1. Lease  Term.  The  initial  term of this Lease  shall be five (5) years,
commencing  the 1st day of  December,  1999.  At the option of the Lessee,  this
Lease may be extended for an additional five (5) year period, subject to Cost of
Living Index increases.

     2. Rental. LESSEE shall pay to LESSOR the following rentals:

          A. Minimum  Rental.  LESSEE shall pay to LESSOR upon execution of this
     Lease  the sums set  forth  in  Exhibit  C which  is  attached  hereto  and
     incorporated herein by reference.

          B.  Utilities.  LESSOR shall provide  LESSEE a statement each month of
     LESSEE'S prorata share of utilities used for the leased premises and LESSEE
     shall pay LESSOR for the utilities  within ten (10) days of receipt of said
     statement.

          C.  Telephone.  LESSEE  shall  provide  and pay for its own  telephone
     service.

          D. Past Due Charges.  In the event that any rental or utilities herein
     payable  to  LESSOR  is not  paid  within  ten  (10)  days  after  the date
     recognized  as the due date,  the LESSOR shall have the right and option to
     invoke a one and  one-half  percent (1 1/2) per month  service  charge (18%
     annual rate) on all unpaid balances.

     3. Use of  Premises.  LESSEE  shall  not use the  leased  premises  for any
purpose other than the business of LESSEE as contemplated by this lease, without
the prior written


LEASE AGREEMENT - PG. 1
<PAGE>

consent of LESSOR, which consent shall not be unreasonably  withheld.  Nor shall
LESSEE use the  premises in any  unlawful  manner,  or in any manner which would
cause  increases  in fire  insurance  rates  upon the  premises,  or  result  in
increases in maintenance  expenses over those normally experienced in connection
with the business purpose above stated.

     4.  Remodeling  and  Additions  by Lessee:  LESSEE may at its expense  make
reasonable  alterations,  additions,  and  improvements  to the  interior of the
leased  premises from time to time,  but plans  therefore  shall be submitted to
LESSOR for  approval  prior to  commencement  of such work.  Floor  covering and
installation  thereof within the leased area is at LESSEE'S expense.  Other than
removable trade fixtures, all such alteration, additions, and improvements shall
at the  expiration or termination of this Lease become a part of the real estate
and remain upon the premises. All such alterations,  additions, and improvements
shall be in accordance  with all applicable  fire,  safety,  and building codes,
laws,  and  regulations.  LESSEE shall  promptly pay for all labor and materials
utilized  in any such  work,  and  shall not  permit  any liens to attach to the
premises.

     5. Repairs and  Maintenance.  LESSEE shall pay and be  responsible  for all
repairs and maintenance.

     6.  Emergency  Access;  Necessary  Repairs.  LESSOR shall have the right to
enter upon the leased  premises at all  reasonable  times for making  repairs or
maintenance  should the LESSEE fail to timely perform the same.  LESSOR shall be
entitled to be  reimbursed  for the same within  thirty (30) days of providing a
statement for the same to LESSEE.  LESSEE shall provide LESSOR a current key for
said access.

     7.  Indemnification  and  Insurance.  LESSEE  agrees to indemnify  and save
LESSOR harmless from and against all claims arising from any act,  omission,  or
negligence of LESSEE,  or its  contractors,  licensees,  agents,  servants,  and
employees,  or arising from any accident injury,  or damage whatsoever caused to
any person or any property  within the leased  premises,  and against all costs,
expenses,  and  liabilities  incurred in or in connection with any such claim or
proceeding brought thereon.  LESSEE shall, at its own expense,  maintain in full
force at all  times  during  the  term of this  Lease a policy  or  policies  of
comprehensive  liability  insurance against personal injuries or property damage
within the scope of the foregoing indemnification  agreement, and such insurance
shall name LESSOR as one of the insured parties, as its interest may appear. The
limits of  liability  under such  insurance  shall not be less than one  million
dollars


LEASE AGREEMENT - PG. 2
<PAGE>

for any one  occurrence.  Copies of such  insurance  policies,  or  certificates
evidencing  such  insurance  coverage,  shall be  furnished  to LESSOR  and kept
current at all times. If no verification is furnished LESSOR,  LESSOR may obtain
same at LESSEE's  expense.  Such policies shall contain an  endorsement  stating
that such  insurance  coverage  shall not be canceled  except upon ten (10) days
written notice to LESSOR. It shall be the responsibility of LESSEE to carry such
policies of insurance  covering losses to its own personal  property,  fixtures,
and leasehold improvements,  as it may deem fit and proper, and LESSOR shall not
be liable for any losses thereto resulting from any insurable cause.

     8. Default by Lessee. The following  eventualities shall be acts of default
by LESSEE,  upon  occurrence  of which LESSOR shall have the right and option to
declare this Lease  immediately  terminated,  without the  necessity for further
notice to LESSEE:

          A.  Failure of LESSEE to pay.  Failure of LESSE to pay any  rentals or
     utilities  hereunder  within ten (10) days after the same  becomes  due and
     payable.

          B. Breach of any other covenant.  Breach of any other covenant of this
     Lease which shall not have been cured or corrected by LESSEE  within thirty
     (30) days following  written  notice of intent to declare  default given to
     LESSEE by LESSOR.

          C. Commencement of proceedings. Commencement of proceedings to declare
     LESSEE  a  bankrupt,  or  for  relief  under  any of  the  Chapters  of the
     Bankruptcy by reason of any  insolvency of LESSEE,  whether any of the same
     be voluntary or involuntary;  the appointment of any receiver or trustee of
     the  assets of  LESSEE  situated  in or upon the  leased  premises;  or the
     seizure  of all or any  substantial  portion  of the assets of LESSEE in or
     upon the leased  premises  under any levy of attachment or execution  which
     shall not have been released within five (5) days after the date thereof.

          D.  Abandonment  of the premises by LESSEE.  Upon  termination of this
     Lease by declaration  of LESSOR upon  occurrence of any of the causes above
     set forth, LESSOR shall have the immediate right of re-entry and may remove
     all  persons  and  property  from the  leased  premises,  and may cause any
     property so removed to be stored in a public  warehouse or elsewhere at the
     cost and risk of, and for the account of,  LESSEE,  all without  service of
     notice  or resort to legal  process  and  without  being  deemed  guilty or
     trespass, or becoming liable for any loss or damage which may be occasioned
     thereby. Said property may be held by LESSOR until subject indebtedness has
     been resolved, or if not resolved, LESSOR shall have the right and


LEASE AGREEMENT - PG. 3
<PAGE>

option to dispose of said  property to settle said  indebtedness.  The  remedies
hereby granted to LESSOR shall not be exclusive, but shall be in addition to all
of the other  rights and remedies  provided by law to LESSOR,  which said rights
and remedies may be prosecuted by LESSOR contemporaneously or otherwise with the
exercise of the said right of  termination  and re-entry as herein  provided for
(except  in such event  LESSEE'S  liability  for such  rental  payment  shall be
reduced in the amount of any rentals received by LESSOR from others by reason of
re-renting  said  premises  during the balance of the term of this  Lease,  less
LESSOR'S  reasonable  costs and  expenses  of  re-renting  the  same,  including
preparation of the premises for such new tenant or tenants).

     9. Eminent Domain. If any portion of the leased premises shall,  during the
term hereof, be taken by any public authority under the power of eminent domain,
either party hereto may at its option  declare this lease  terminated  as of the
date of such  taking,  whereupon  all rights  and  liabilities  of both  parties
hereunder  shall cease (except for  liabilities  already  accrued at the time of
termination,  including,  but not limited to,  prorated  liability of LESSEE for
annual  percentage  rentals).  All  compensation  received by reason of any such
taking,  except any  compensation  to which  LESSEE may be  entitled  by loss of
business, or depreciation of and cost of removal of stock in trade and removable
trade  fixtures,  shall be the property of LESSOR and LESSEE shall have no right
or interest therein.

     10.  Termination.  Upon  termination  of this  Lease as  provided,  or upon
expiration of its term or any renewal  term,  LESSEE shall quietly and peaceably
quit and surrender possess-ion of the premises to LESSOR in as good condition as
when received, reasonable wear and tear excepted, together with all alterations,
additions,  and  improvements  to the premises  required to remain  therewith as
provided in this Lease, and such possession shall be so surrendered  without the
necessity for any notice or demand therefore on the part of LESSOR.

     11.  Damage  or  Destruction  by Fire,  Etc.  In case the  premises  or the
building in which the same are situated shall be damaged or destroyed by fire or
other  casualty  insurable  under standard  extended risk coverage  (hereinafter
called "insurable loss"), or other cause (hereinafter  called "other loss"), the
respective rights and duties of the parties hereto shall be as follows:

          (a) If the leased premises shall be damaged or destroyed, or more than
     fifty  percent  (50%) of the  building  within  which the same are situated
     shall be damaged or destroyed,


LEASE AGREEMENT - PG. 4
<PAGE>

by a cause above  defined as "other loss",  LESSOR may at its option,  repair or
restore the  premises  within a reasonable  time after such loss,  or by written
notice to LESSEE given within  thirty (30) days after  occurrence  of such loss,
LESSOR may declare this lease terminated.

          (b). If the leased premises shall be damaged by insurable loss so that
     the same may be  repaired  or restored  to  tenantable  condition  within a
     period of sixty (60) days, with reasonable  diligence in prosecution of the
     work,  LESSOR  shall  repair and  restore the said  premises to  tenantable
     condition within a reasonable time following occurrence of such loss.

          (c) If the leased  premises are damaged or destroyed by insurable loss
     other than as described in  Subparagraph B of this Article,  LESSOR may, at
     its  discretion  (notice of which shall be given to LESSEE  within  fifteen
     (15) days after  occurrence of such loss),  repair and restore the premises
     to tenantable condition as rapidly as practicable after the loss, or LESSOR
     may declare this Lease terminated effective as of the date of such loss.

          (d) In any case  wherein the premises  are  rendered  untenantable  by
     reason  of  any  insurable  loss  or  other  loss  as  above   defined,   a
     proportionate  part of the minimum rental  provided for hereunder  shall be
     abated during the time such premises shall remain untenable.

          (e) In any case wherein  LESSOR  elects to, or is obligated to, repair
     and restore the  premises  following  any  insurable  loss or other loss as
     above defined,  its obligation to repair or rebuild shall be limited to the
     basic building, and interior work provided originally hereunder at LESSOR'S
     expense, and shall not extend to any of LESSEE'S leasehold  improvements or
     LESSEE'S fixtures, inventory, or other property situated within or upon the
     leased premises, it being understood that it is the obligation of LESSEE to
     insure against all losses to the same, as provided elsewhere in this Lease.

     12. Other Matters.

          A. Subletting or Assignment.  The premises herein described may not be
     sublet nor may this Lease be assigned by LESSEE  without the prior  written
     consent  of  LESSOR;   provided,   however,   such  consent  shall  not  be
     unreasonably withheld.

          B. Taxes.  LESSEE shall pay all real estate taxes which may during the
     term of this Lease be  assessed  against  the leased  premises,  and LESSEE
     shall pay all personal  property  taxes which may during the term hereof be
     assessed  against  LESSEE'S  improvements  and property  within or upon the
     leased premises.

          C.  Notices.  All notices  hereunder  shall be in writing and shall be
     deemed


LEASE AGREEMENT - PG. 5
<PAGE>

given when  personally  delivered  to the  employee  in charge of the  receiving
party's business  premises during normal working hours, or when deposited in the
United  States  Mail by  certified  mail,  addressed  to the  receiving  party's
business premises at:


          LESSOR                                LESSEE
          H2C2 & ASSOCIATES LLC                 R-TEC CORPORATION
          6190 S. Tarrega Lane                  1471 E. Commercial Ave.
          Meridian, Idaho 83642                 Meridian, Idaho 83642

          D.  Enforcement.  The forbearance or failure of any party hereunder to
     strictly  enforce any covenant of this Lease,  or to give notice of default
     or of  termination  of this  Lease  by  reason  of any  act,  omission,  or
     occurrence,  shall not be deemed a waiver of any of the  provisions of this
     Lease as regards any other or further such breach,  default, act, omission,
     or  occurrence,  nor shall  consent or approval of LESSOR  given in any one
     instance be construed to waive the  necessity  for such consent or approval
     as  regards  any  other or  further  similar  act by  LESSEE,  unless  such
     intention be expressly stated in writing by LESSOR.

          E.  Relationship  of  Parties.   Nothing  herein  contained  shall  be
     construed to create the  relationship  of  partners,  joint  venturers,  or
     parties to a joint enterprise in any manner between LESSOR and LESSEE.

          F.  Sale of  Property.  LESSOR  shall  have the right to sell the real
     property  upon which the leased  premises are  situated,  or to mortgage or
     otherwise hypothecate the same, all subject to this Lease, and LESSEE shall
     recognize the purchaser of said real property as the LESSOR  hereunder from
     and after time of any such  sale,  and in the event of  foreclosure  of any
     mortgage  or  exercise  of any  power  of sale by any  party  to whom  such
     property has been  hypothecated,  LESSEE shall recognize the purchaser from
     such foreclosure or sale as the LESSOR  hereunder,  all with the same force
     and effect as if such party or parties had  originally  executed this Lease
     as the LESSOR.

          G. Quiet Enjoyment.  Upon performing all of its duties and obligations
     hereunder in accordance with the terms and conditions of this Lease, LESSEE
     shall be entitled to quietly and peaceably have, hold, occupy, possess, and
     enjoy the leased  premises  during the term hereof,  without  hinderance or
     ejection by persons lawfully claiming under LESSOR.

          H.  Governing  Law.  This Lease shall be governed by, and construed in
     accordance with, the laws of the State of Idaho.


LEASE AGREEMENT - PG. 6
<PAGE>

          I. Successors and Assigns. This Lease shall endure and be binding upon
     the successors and assigns of the parties hereto, subject to the provisions
     of Subparagraph A of this Article.

          J.  Amendments.  Provisions of this Agreement may be amended only upon
     the written consent of all parties hereto.

     IN WITNESS  WHEREOF,  the parties hereto have caused this  instrument to be
executed effective as of the day and year first above written.

LESSOR


By  /s/ GARY A. CLAYTON
   ------------------------------------
   Its
       --------------------------------

LESSEE


By  /s/ DOUGLAS G. HASTINGS
   ------------------------------------
   Its
       --------------------------------


LEASE AGREEMENT - PG. 7

<PAGE>


STATE OF IDAHO            )
                          )  ss.
County of Ada             )

     On this 15 day of  November,  1999,  before me, a Notary  Public in and for
said State,  personally appeared Douglas Hastings,  known to me to be the person
whose name is subscribed to the foregoing  instrument and acknowledged before me
that s/he executed the same individually and in his/her corporate capacity.

     IN WITNESS  WHEREOF,  I have  hereunto  set my hand and affixed my official
seal the day and year in this certificate first above written.


                                   /s/ VERNETTA HASTINGS
                                  ------------------------------------------
                                  Notary Public for Idaho
                                  Residing at 2910 E. Victory, Meridian, ID.
                                  My Commission Expires:
                                       September 2003


STATE OF IDAHO            )
                          )  ss.
County of Ada             )

     On this 15 day of  November,  1999,  before me, a Notary  Public in and for
said State, personally appeared Gary Clayton, known to me to be the person whose
name is subscribed to the foregoing  instrument and acknowledged  before me that
s/he executed the same  individually  and in his/her  capacity as manager of the
Limited Liability Company.

     IN WITNESS  WHEREOF,  I have  hereunto  set my hand and affixed my official
seal the day and year in this certificate first above written.


                                   /s/ VERNETTA HASTINGS
                                  ------------------------------------------
                                  Notary Public for Idaho
                                  Residing at 2910 E. Victory, Meridian, ID.
                                  My Commission Expires:
                                       September 2003


LEASE AGREEMENT - PG. 8
<PAGE>

                                   EXHIBIT A-1
                                 LEASE AGREEMENT

                                   FLOOR PLAN

                                    [GRAPHIC]

<PAGE>

                                   EXHIBIT A-2
                                 LEASE AGREEMENT

          Lot 3 in Block 3 of RAILSIDE PARK  SUBDIVISION,  according to
          the OFFICIAL Plat thereof, filed in Book 73 of Plats at Pages
          7561-7562, records of Ada County, Idaho.


<PAGE>

                                    EXHIBIT C
                                 LEASE AGREEMENT


LESSEE  shall pay to LESSOR upon  execution  of this Lease the sum of  $2,950.00
which shall be deemed the  payment of minimum  rental for the first month of the
term hereof.  Thereafter,  LESSEE shall pay to LESSOR each month, in advance, on
or before  the 1st day of the  month,  during  the  balance  of the term of this
Lease,  the sum of $2,950.00 as and for minimum  rental for the premises  hereby
leased to LESSEE. The minimum rental payment, at the option of LESSOR,  shall be
subject to Cost of Living Index increases on an annual basis.