Document:

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                                  EXHIBIT 4.1

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                    CERTIFICATE OF THE DESIGNATIONS, POWERS,
                             PREFERENCES AND RIGHTS
                                     OF THE
                      SERIES E CONVERTIBLE PREFERRED STOCK
                           (par value $.001 per share)

                                       of

                                  iPARTY CORP.
                             a Delaware Corporation

                                   ----------

                         Pursuant to Section 151 of the
                General Corporation Law of the State of Delaware

                                   ----------

      The undersigned DOES HEREBY CERTIFY that the following resolution was duly
adopted by the Board of Directors (the "Board of Directors") of iParty Corp., a
Delaware corporation (the "Corporation"), at a meeting held on July 28, 2000:

      RESOLVED, that one series of the class of authorized preferred stock,
$.001 par value, per share of the Corporation is hereby created and that the
designations, powers, preferences and relative, participating, optional or other
special rights of the shares of such series, and qualifications, limitations or
restrictions thereof, are hereby fixed as follows (this instrument hereinafter
referred to as the "Designation"):

      1. Number of Shares and Designations. Five Hundred Thirty-Three Thousand
Three Hundred Thirty-Three (533,333) shares of the preferred stock, $.001 par
value, per share of the Corporation are hereby constituted as a series of
preferred stock of the Corporation designated as Series E Convertible Preferred
Stock (the "Series E Preferred Stock").

      2. Dividend Provisions. The holders of shares of Series E Preferred Stock
shall be entitled to receive dividends, out of any assets legally available
therefor, ratably with any declaration or payment of any dividend with holders
of the Common Stock or other junior securities of this Corporation, when, as and
if declared by the Board of Directors.

      3. Rank. The Series E Preferred Stock shall rank: (i) junior to any other
class or series of capital stock of the Corporation hereafter created
specifically ranking by its terms senior to the Series E Preferred Stock (the
"Senior Securities"); (ii) prior to all of the Corporation's common stock, $.001
par value, per share (the "Common Stock"); (iii) prior to any class or series of
capital stock of the corporation hereafter created not specifically ranking by
its terms senior to or on parity with the Series E Preferred Stock
(collectively, with the Common Stock, "Junior Securities"); and (iv) on parity
with the Series A Preferred Stock of the Corporation, the Series B Preferred
Stock of the Corporation, the Series C Convertible Preferred Stock of the
Corporation, the Series D Convertible Preferred Stock, and any class or series
of capital stock of the Corporation hereafter created specifically ranking by
its terms on parity with the Series E

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Preferred Stock (the "Parity Securities"),
in each case as to the distribution of assets upon liquidation, dissolution or
winding up of the Corporation.

      4. Liquidation Preference.

             (a) Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary ("Liquidation"), the holders of
record of the shares of the Series E Preferred Stock shall be entitled to
receive, immediately after any distributions to Senior Securities required by
the Corporation's Certificate of Incorporation and any certificate(s) of
designation, powers, preferences and rights, and before and in preference to any
distribution or payment of assets of the Corporation or the proceeds thereof may
be made or set apart for the holders of Junior Securities, an amount in cash
equal to $0.375 per share (subject to adjustment in the event of stock splits,
combinations or similar events). If, upon such Liquidation, the assets of the
Corporation available for distribution to the holders of Series E Preferred
Stock and any Parity Securities shall be insufficient to permit payment in full
to the holders of the Series E Preferred Stock and Parity Securities, then the
entire assets and funds of the Corporation legally available for distribution to
such holders and the holders of the Parity Securities then outstanding shall be
distributed ratably among the holders of the Series E Preferred Stock and Parity
Securities based upon the proportion the total amount distributable on each
share upon liquidation bears to the aggregate amount available for distribution
on all shares of the Series E Preferred Stock and of such Parity Securities, if
any.

             (b) Upon the completion of the distributions required by
subparagraph (a) of this Paragraph 4, if assets remain in the Corporation, they
shall be distributed to holders of Junior Securities in accordance with the
Corporation's Certificate of Incorporation and any certificate(s) of
designation, powers, preferences and rights.

             (c) For purposes of this Paragraph 4, a merger or consolidation or
a sale of all or substantially all of the assets of the Corporation shall be
considered a Liquidation except in the event that in such a transaction, the
holders of the Series E Preferred Stock receive securities of the surviving
corporation having substantially similar rights as the Series E Preferred Stock.
Notwithstanding Paragraph 7 hereof, such provision may be waived in writing by a
majority of the holders of the then outstanding Series E Preferred Stock.

      5. Redemption. The Series E Preferred Stock is not redeemable.

      6. Conversion. The holders of the Series E Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):

            (a) Voluntary Conversion. Each share of Series E Preferred Stock
shall be convertible, at the option of the holder thereof, at any time after
issuance at the office of the Corporation or any transfer agent for such stock,
or if there is none, then at the office of the transfer agent for the Common
Stock, or if there is no such transfer agent, at the principal executive office
of the Corporation, into that number of fully paid and non-assessable shares of
Common Stock of the Corporation equal to $3.75 divided by the conversion price
in effect at the time of conversion (the "Conversion Price"), determined as
hereinafter provided. The

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Conversion Price shall initially be $0.375. The number of shares of Common Stock
into which each share of Series E Preferred Stock is convertible is hereinafter
collectively referred to as the "Conversion Rate." For purposes of this
Paragraph 6(a), such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the shares of
Series E Preferred Stock to be converted, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock as of such date. Notwithstanding the above, no shares of Series E
Preferred Stock may be converted until the Corporation files an amendment to its
Certificate of Incorporation increasing the number of authorized shares of its
Common Stock.

            (b) Automatic Conversion. In the event the daily closing price
(determined as provided in subparagraph (ii) of Paragraph 6(f)) of the Common
Stock is not less than $10.00 for any twenty (20) days in any thirty (30) day
period, each share of Series E Preferred Stock then outstanding shall, by virtue
of such conditions and without any action on the part of the holder thereof, be
deemed automatically converted into that number of shares of Common Stock into
which the Series E Preferred Stock would then be converted at the then effective
Conversion Rate.

            (c) Mechanics of Conversion. Before any holder of Series E Preferred
Stock shall be entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the Corporation or of any transfer agent for the Series E
Preferred Stock, and shall give written notice to the Corporation at its
principal corporate office, of the election to convert the same and shall state
therein the name or names in which the certificate or certificates for shares of
Common Stock are to be issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver to such holder of Series E Preferred Stock, or to
the nominee or nominees of such holder, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled as
aforesaid. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the shares of Series E
Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock as
of such date.

            (d) Conversion Price Adjustments. The Conversion Price of the Series
E Preferred Stock shall be subject to adjustment from time to time as set forth
below.

                  (i) In the event the Corporation shall, prior to the
      conversion of all the Series E Preferred Stock, (a) issue Common Stock as
      a dividend or distribution on all shares of Common Stock of the
      Corporation, (b) split or otherwise subdivide its outstanding Common
      Stock, (c) combine the outstanding Common Stock into a smaller number of
      shares, or (d) issue by reclassification of its Common Stock (except in
      the case of a merger, consolidation or sale of all or substantially all of
      the assets of the Corporation as set forth in subparagraph 6(d)(iii)
      below) any shares of the capital stock of the Corporation, the Conversion
      Price in effect on the record date for any stock dividend or the effective
      date of any such other event shall be decreased (or increased in the case

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      of a reverse stock split) so that the holder of each share of the Series E
      Preferred Stock shall thereafter be entitled to receive, upon the
      conversion of such share, the number of shares of Common Stock or other
      capital stock which it would own or be entitled to receive immediately
      after the happening of any of the events mentioned above had such share of
      the Series E Preferred Stock been converted immediately prior to the close
      of business on such record date or effective date. The adjustments herein
      provided shall become effective immediately following the record date for
      any such stock dividend or the effective date of any such other events.
      There shall be no reduction in the Conversion Price in the event that the
      Corporation pays a cash dividend.

            (ii) A. In case the Corporation shall issue shares of Common Stock
      or any securities convertible into or exchangeable for Common Stock, other
      than "Excluded Securities" (as defined below), for a consideration per
      share (the "Offering Price") less than the Conversion Price, the
      Conversion Price shall be adjusted immediately thereafter so that it shall
      equal the price determined by multiplying the Conversion Price in effect
      immediately prior to the date of issuance by a fraction, the numerator of
      which shall be the number of shares of Common Stock outstanding
      immediately prior to the issuance of such additional shares plus the
      number of shares of Common Stock which the aggregate consideration
      received for the issuance of such additional shares would purchase at the
      Conversion Price in effect immediately prior to the date of such issuance,
      and the denominator of which shall be the number of shares of Common Stock
      outstanding immediately after the issuance of such additional shares. Such
      adjustment shall be made successively whenever such an issuance is made.
      The provisions of this subparagraph 6(d)(ii)(A) shall not apply
      retroactively to any Series E Preferred Stock that has been converted
      prior to the date of the adjustment.

                  B. Except as otherwise provided in subparagraph 6(d)(iii)
      below, in no event shall the Conversion Price be increased above the
      initial Conversion Price, as otherwise adjusted pursuant to this Section
      6.

                  C. Upon each adjustment of the Conversion Price pursuant to
      this subparagraph 6(d)(i) the total number of shares of Common Stock
      purchasable upon the conversion of each share of Series E Preferred Stock
      shall be such number of shares (calculated to the nearest whole share and
      pursuant to the terms of subparagraph 6(G)(i); provided, however, that in
      no event shall the Conversion Price increase as a result of such rounding
      calculation) purchasable at the Conversion Price in effect immediately
      prior to such adjustment multiplied by a fraction, the numerator of which
      shall be the Conversion Price in effect immediately prior to such
      adjustment and the denominator of which shall be the Conversion Price in
      effect immediately after such adjustment.

                  D. No adjustment in the Conversion Price or the number of
      shares of Common Stock into which a share of Series E Preferred Stock may
      be converted shall be required unless such adjustment (plus any
      adjustments not previously made by reason of this subparagraph (D) would
      require an increase or decrease of at least 0.5% in the number of shares
      of Common Stock into which each share of the Series E Preferred Stock is
      then convertible, provided, however, that any adjustments which are not
      required

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      to be made by reason of this subparagraph (D) shall be carried forward and
      taken into account in any subsequent adjustment. All calculations and
      adjustments shall be made to the nearest cent or to the nearest whole
      share, as the case may be.

                  E. After each adjustment of the Conversion Price the
      Corporation shall promptly prepare a certificate signed by its Chief
      Executive Officer or Chief Financial Officer and a Secretary or Assistant
      Secretary setting forth the Conversion Price, as so adjusted; the number
      of shares of Common Stock into which the Series E Preferred Stock may be
      converted, and a statement of the facts upon which such adjustment is
      based, and such certificate shall forthwith be filed with the transfer
      agent, if any, for the Series E Preferred Stock, and the Corporation shall
      cause such a copy of statement to be sent by ordinary first class mail to
      each holder of Series E Preferred Stock.

                  F. In the case of the issuance of Common Stock for cash, the
      consideration shall be deemed to be the amount of cash paid therefor
      before deducting any reasonable discounts, commissions or other expenses
      allowed, paid or incurred by this Corporation for any underwriting or
      otherwise in connection with the issuance and sale thereof.

                  G. In the case of the issuance of the Common Stock for a
      consideration in whole or in part other than cash, the consideration other
      than cash shall be deemed to be the fair value thereof as determined in
      good faith by the Board of Directors.

                  H. In the case of the issuance after the Issuance Date of
      options to purchase or rights to subscribe for Common Stock, securities by
      their terms convertible into or exchangeable for Common Stock or options
      to purchase or rights to subscribe for such convertible or exchangeable
      securities, the following provisions shall apply for all purposes of this
      subparagraph 6(d)(i) and subparagraph 6(d)(ii):

                        (1) The aggregate maximum number of shares of Common
            Stock deliverable upon exercise (assuming the satisfaction of any
            conditions to exercisability, including without limitation, the
            passage of time, but without taking into account potential
            antidilution adjustments) of such options to purchase or rights to
            subscribe for Common Stock shall be deemed to have been issued at
            the time such options or rights were issued and for a consideration
            (determined in the manner provided in subparagraphs 6(d)(i)(F) and
            6(d)(i)(G)), if any, received by the Corporation upon the issuance
            of such options or rights plus the minimum exercise price provided
            in such options or rights (without taking into account potential
            antidilution adjustments) for the Common Stock covered thereby.

                        (2) The aggregate maximum number of shares of Common
            Stock deliverable upon conversion of or in exchange for (assuming
            the satisfaction of any conditions to convertibility or
            exchangeability, including, without limitation, the passage of time,
            but without taking into account potential

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            antidilution adjustments) any such convertible or exchangeable
            securities or upon the exercise of options to purchase or rights to
            subscribe for such convertible or exchangeable securities and
            subsequent conversion or exchange thereof, shall be deemed to have
            been issued at the time such securities were issued or such options
            or rights were issued and for a consideration equal to the
            consideration, if any, received by the Corporation for any such
            securities and related options or rights (excluding any cash
            received on account of accrued interest or accrued dividends), plus
            the minimum additional consideration, if any, to be received by the
            Corporation (without taking into account potential antidilution
            adjustments) upon the conversion or exchange of such securities or
            the exercise of any related options or rights (the consideration in
            each case to be determined in the manner provided in subparagraphs
            6(d)(i)(F) and 6(d)(i)(G)).

                        (3) In the event of any change in the number of shares
            of Common Stock deliverable or in the consideration payable to the
            Corporation upon exercise of such options or rights or upon
            conversion of or in exchange for such convertible or exchangeable
            securities (excluding a change resulting solely from the
            antidilution provisions thereof if such change results from an event
            which gives rise to an antidilution adjustment under this Paragraph
            6(d)), the Conversion Price of the Series E Preferred Stock, to the
            extent in any way affected by or computed using such options, rights
            or securities, shall be recomputed to reflect such change, but no
            further adjustment shall be made for the actual issuance of Common
            Stock or any payment of such consideration upon the exercise of any
            such options or rights or the conversion or exchange of such
            securities.

                        (4) Upon the expiration of any such options or rights,
            the termination of any such rights to convert or exchange or the
            expiration of any options or rights related to such convertible or
            exchangeable securities, the Conversion Price of the Series E
            Preferred Stock, to the extent in any way affected by or computed
            using such options, rights or securities or options or rights
            related to such securities, shall be recomputed to reflect the
            issuance of only the number of shares of Common Stock (and
            convertible or exchangeable securities which remain in effect)
            actually issued upon the exercise of such options or rights, upon
            the conversion or exchange of such securities or upon the exercise
            of the options or rights related to such securities.

                        (5) The number of shares of Common Stock deemed issued
            and the consideration deemed paid therefor pursuant to subparagraphs
            6(d)(i)(H)(1) and (2) shall be appropriately adjusted to reflect any
            change, termination or expiration of the type described in either
            subparagraph 6(d)(i)(H)(3) or (4).

                        (6) Notwithstanding the provisions of subparagraphs
            6(d)(i)(H)(1)-(5) above, in the event that on or after the date
            hereof the Corporation issues any options to purchase or rights to
            subscribe for Common

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            Stock, securities by their terms convertible into or exchangeable
            for Common Stock or options to purchase or rights to subscribe for
            such convertible or exchangeable securities, if the conversion or
            exercise price is not then determinable or is based on future
            events, such shares of Common Stock shall not be deemed to be issued
            until the price is determinable or such event has occurred and the
            conversion or exercise price shall be subject to adjustment pursuant
            to subparagraph 6(d)(i) above at the time of such determination or
            the occurrence of such event even if the price is determined or such
            event occurs after such date.

                  I. The following issuances of Common Stock ("Excluded
      Securities") shall be excluded from the adjustments set forth in this
      Paragraph 6(d):

                        (1) shares of capital stock issued pursuant to a stock
            dividend or a stock split or other subdivision or recombination of
            shares;

                        (2) securities issued by the Corporation in a public
            offering pursuant to a firm commitment underwriting;

                        (3) securities issued to shareholders of any corporation
            that merges into the Corporation in proportion to their stock
            holdings of such corporation immediately prior to such merger, upon
            such merger; and

                        (5) Common Stock or options or warrants to purchase
            Common Stock issued to officers, directors or employees of or
            consultants to the Corporation pursuant to any compensation
            agreement, plan or arrangement or the issuance of Common Stock upon
            the exercise of any such options or warrants, provided such
            issuances do not exceed 25% of the Corporation's outstanding Common
            Stock, on a fully-diluted basis, on the date of the last closing of
            the Private Placement.

                  (iii) In case of any reclassification or similar change of
      outstanding shares of Common Stock of the Corporation, or in case of the
      consolidation or merger of the Corporation with another corporation, or
      the conveyance of all or substantially all of the assets of the
      Corporation in a transaction in which holders of the Common Stock receive
      shares of stock or other property including cash, each share of the Series
      E Preferred Stock shall, after such event and subject to the other rights
      of the Series E Preferred Stock as set forth elsewhere herein, be
      convertible only into the number of shares of stock or other securities or
      property, including cash, to which a holder of the number of shares of
      Common Stock of the Corporation deliverable upon conversion of such shares
      of the Series E Preferred Stock would have been entitled upon such
      reclassification, change, consolidation, merger or conveyance had such
      share been converted immediately prior to the effective date of such
      event.

            (e) Reservation of Shares. Following the filing of an amendment to
the Corporation's Certificate of Incorporation increasing the number of
authorized shares of its Common Stock, the Corporation shall at all times
reserve and keep available, out of its

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authorized but unissued shares of Common Stock or out of shares of Common Stock
held in its treasury, solely for the purpose of effecting the conversion of the
shares of the Series E Preferred Stock, the full number of shares of Common
Stock deliverable upon the conversion of all shares of the Series E Preferred
Stock from time to time outstanding.

            (f) Fractional Shares.

                  (i) No fractional shares or scrip representing fractional
      shares of Common Stock shall be issued upon the conversion of the Series E
      Preferred Stock. In lieu of any fractional shares to which a holder would
      otherwise be entitled, the Corporation shall pay cash, equal to such
      fraction multiplied by the current market price per share (determined as
      provided in subparagraph (ii) of this Paragraph 6(f) of the Common Stock
      on the day of conversion).

                  (ii) For the purposes of any computation under subparagraph
      6(f)(i), the current market price per share of Common Stock on any date
      shall be deemed to be the average of the daily closing prices for the
      thirty (30) consecutive business days prior to the day in question. The
      closing price for each day shall be the last sales price or in the event
      no sale takes place on such day, the average of the closing high bid and
      low asked prices in either case (a) as officially quoted by the American
      Stock Exchange ("AMEX") or such other market on which the Common Stock is
      then listed for trading, or (b) if, in the reasonable judgment of the
      Board of Directors of the Corporation, the AMEX is no longer the principal
      United States market for the Common Stock, then as quoted on the principal
      United States market for the Common Stock, as determined by the Board of
      Directors of the Corporation, or (c) if, in the reasonable judgment of the
      Board of Directors of the Corporation, there exists no principal United
      States market for the Common Stock, then as reasonably determined by the
      Board of Directors of the Corporation.

            (g) Taxes, Etc. The Corporation will pay any taxes that may be
payable in respect of any issue or delivery of shares of Common Stock on
conversion of shares of the Series E Preferred Stock. However, the Corporation
shall not be required to pay any tax which may be payable in respect to any
transfer involved in the issue and delivery of shares of Common Stock upon
conversion in a name other than that in which the shares of the Series E
Preferred Stock so converted were registered, and no such issue or delivery
shall be made unless and until the person requesting such issue or delivery has
paid to the Corporation the amount of any such tax, or has established, to the
satisfaction of the Corporation, that such tax has been paid.

            (h) Assurances. The Corporation will not, by amendment of its
Certificate of Incorporation, as amended, or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 6 and in the taking of all
such action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Series E Preferred Stock against
impairment.

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            (i) Reissuance. No shares of Series E Preferred Stock that have been
converted to Common Stock shall be reissued by the Corporation; provided,
however, that any such share, upon being converted and canceled, shall be
restored to the status of an authorized but unissued share of preferred stock
without designation as to series, rights or preferences and may thereafter be
issued as a share of preferred stock not designated as Series E Preferred Stock.

      7. Voting Rights.

            (a) In addition to any other rights provided for herein or by law,
the holders of Series E Preferred Stock shall be entitled to vote, together with
the holders of Common Stock as one class, on all matters as to which holders of
Common Stock shall be entitled to vote, in the same manner and with the same
effect as such Common Stock holders. In any such vote each share of Series E
Preferred Stock shall entitle the holder thereof to the number of votes per
share that equals the number of whole shares of Common Stock into which each
such share of Series E Preferred Stock is then convertible, calculated to the
nearest whole share.

            (b) So long as any shares of the Series E Preferred Stock remain
outstanding, the consent of the holders of one-half of the then outstanding
Series E Preferred Stock, voting as one class, either expressed in writing or at
a meeting called for that purpose, shall be necessary to permit, effect or
validate the creation and issuance of any series of preferred stock or other
security of the Corporation which is senior as to liquidation and/or dividend
rights to the Series E Preferred Stock.

            (c) So long as any shares of the Series E Preferred Stock remain
outstanding, the consent of the holders of one-half of the then outstanding
Series E Preferred Stock, voting as one class, either expressed in writing or at
a meeting called for that purpose, shall be necessary to repeal, amend or
otherwise change this Designation or the Certificate of Incorporation of the
Corporation, as amended, in a manner which would alter or change the powers,
preferences, rights privileges, restrictions and conditions of the Series E
Preferred Stock so as to adversely affect the Series E Preferred Stock.

            (d) Each share of the Series E Preferred Stock shall entitle the
holder thereof to one vote on all matters to be voted on by the holders of the
Series E Preferred Stock, as set forth above.

            (e) In the event that the holders of the Series E Preferred Stock
are required to vote as a class on any other matter, the affirmative vote of
holders of not less than fifty percent (50%) of the outstanding shares of Series
E Preferred Stock shall be required to approve each such matter to be voted upon
and if any matter is approved by such requisite percentage of holders of Series
E Preferred Stock, such matter shall bind all holders of Series E Preferred
Stock.

      8. Miscellaneous.

            (a) There is no sinking fund with respect to the Series E Preferred
Stock.

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            (b) The shares of the Series E Preferred Stock shall not have any
preferences, voting powers or relative, participating, optional, preemptive or
other special rights except as set forth above in this Designation and in the
Certificate of Incorporation of the Corporation, as amended.

            (c) The holders of the Series E Preferred Stock shall be entitled to
receive all communications sent by the Corporation to the holders of the Common
Stock.

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      IN WITNESS  WHEREOF,  iParty  Corp.  has caused this  Designation  to be
executed this ___th day of August 2000.

                                          iPARTY CORP.

                                          By:/s/ Sal Perisano
                                             ---------------------------------
                                             Sal Perisano
                                             Chief Executive Officer

Attest:

By:/s/ Daniel DeWolf
   ---------------------------
   Daniel DeWolf
   Secretary

                                       11<PAGE>   1
                                                                    EXHIBIT 10.1

                                 OFFICE BUILDING
                                TRIPLE NET LEASE

                                FEBRUARY 28, 1990

Between

        BILL B. WILLIAMS, JR. and JUDITH A. WILLIAMS, husband and wife,

                                                                      as Lessor,

and

        TELECT, INC., a Washington corporation,

                                                                      as Lessee.

<PAGE>   2

                                 OFFICE BUILDING
                                TRIPLE NET LEASE
                                Table of Contents

<TABLE>
<CAPTION>
                                                                          Page
<S>     <C>                                                               <C>
1.      Premises                                                             1
2.      Commencement date                                                    1
3.      Term                                                                 1
4.      Monthly rental                                                       1
5.      Additional rental                                                    1
6.      Use of premises                                                      3
7.      Utilities                                                            3
8.      Maintenance and repair                                               3
9.      Alterations and improvements                                         4
10.     Lessor's access                                                      4
11.     Common areas                                                         4
12.     Liability and insurance                                              5
13.     Casualty loss and insurance                                          6
14.     Miscellaneous insurance provisions                                   7
15.     Condemnation                                                         8
16.     Events of default                                                    8
17.     Remedies upon default                                                9
18.     Lease end                                                            9
19.     Renewal options                                                     10
20.     Assignment and subletting                                           10
21.     Subordination                                                       11
22.     Triple Net lease                                                    11
23.     Relationship of parties                                             11
24.     Time of essence                                                     11
25.     Nonwaiver                                                           11
26.     Notices                                                             12
27.     Consent                                                             12
28.     Attorneys' fees and costs                                           12
29.     Arbitration                                                         12
30.     Integration and modification                                        12
31.     Construction and venue                                              12
32.     Benefit and burden                                                  12
</TABLE>

Schedules:        I Site plan
                  II Building elevation
                  III Legal description

                                       i

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                                 OFFICE BUILDING
                                TRIPLE NET LEASE

THIS TRIPLE NET LEASE is made and entered into by and between BILL B. WILLIAMS,
JR. and JUDITH A. WILLIAMS (hereinafter together called "lessor"), husband and
wife; and TELECT, INC., (hereinafter called "lessee"), a Washington corporation;
effective on the 28 day of February, 1990.

WHEREAS, lessor owns real property upon which it intends to construct an office
building with adjacent common parking areas; and

WHEREAS, lessee wishes to lease and occupy said building upon its completion;

NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter expressed, the parties hereto agree as follows:

1.      Premises. Lessor hereby leases unto lessee and lessee hereby leases from
        lessor, for the ten and under the conditions hereinafter set forth, that
        certain parcel of real property (hereinafter called "premises")
        constituting the footprint of the office building (hereinafter called
        "building") to be constructed at North 2111 Molter Road, Liberty Lake,
        Washington, in accordance with the site plan and elevation attached
        hereto as Schedules I and II, respectively, on that tract of land
        (hereinafter called "tract") legally described in the attached Schedule
        III, including all structures and fixtures upon said premises and all
        easements and other rights appurtenant to said premises, including but
        not limited to nonexclusive rights to ingress, egress, and parking in
        adjacent common areas.

2.      Commencement date. The lease term shall commence at 12:01 a.m. on the
        date (hereinafter called commencement date") that a certificate of
        occupancy is issued for the building.

3.      Term. The term of this lease shall be for the period of eighty-four
        (84) months commencing on the commencement date; provided, however, that
        the term of this lease may be extended as provided in Section 19 hereof.
        The phrase "lease term", as used in this lease, shall be the term of
        this lease and any extension thereof pursuant to said Section 19.

4.      Monthly rental. Lessee shall, during the lease term, pay to lessor at
        East 23003 Euclid, Otis Orchards, Washington 99027, or such other place
        as lessor shall designate in writing, from time to time, without setoff
        or deduction for any reason whatsoever, a monthly rental in the amount
        of Eighteen Thousand Two Hundred Dollars ($18,200.00). The monthly
        rental shall be prorated for partial months falling within the lease
        term, and shall be payable in advance on or before the first day of each
        calendar month during the lease ten; provided, however, that the first
        payment shall be due on the commencement date. If any rent payment is
        not received by lessor within five (5) days after the due date (or on
        the next business day if the fifth day is not a business day), then
        lessee shall pay as additional rent the sum of five percent (5%) of the
        delinquent payment for each month or portion thereof that the payment
        remains overdue.

5.      Additional rental. In addition to the monthly rental, as additional
        rental lessee shall pay to the public authorities charged with the
        collection thereof, promptly as the same become

                                       1
<PAGE>   4

        due and payable, all taxes, general and special, permits, inspection and
        license fees, and other public charges or assessments, whether of a like
        or different nature, levied upon or assessed against the premises and
        any buildings, structures, fixtures or improvements now or hereafter
        located thereon, or arising in respect of the occupancy, use or
        possession of the premises, and which become, or installments of which
        become, due and payable during the lease ten or which may otherwise
        become the obligation of lessor in respect of the lease term. Where
        appropriate, such charges shall be apportioned between lessor and
        lessee to account for the commencement and termination of the lease
        term. Charges to be paid by lessee as additional rental shall include
        but not be limited to the following:

        a.     Real estate taxes. Lessee shall pay all real estate taxes imposed
               in connection with the demised premises, including any increase
               in such taxes whether by reason of an increase in either the tax
               rate or the assessed valuation, or the assessment or imposition
               of any tax on real estate not levied, assessed or imposed at the
               commencement of the lease term, or for any other reason.

        b.     Assessments. In the event of any assessment for public
               betterments or improvements which may be levied on the premises,
               lessee shall pay any such assessment or any installment thereof
               due and payable at any time during the lease term. At lessee's
               option, lessor shall take the benefit of the provisions of any
               statute or ordinance permitting any such assessment to be paid
               over a period of time, and lessee shall be obligated to pay only
               installments which shall become due and payable during the lease
               tent.

        c.     Rental taxes. Lessee shall pay lessor an amount which would be
               sufficient to yield a net monthly rental equal to that set forth
               in section 4, above, after payment by lessor of any tax based or
               levied upon or measured by such gross or net rental income now or
               hereafter imposed on lessor by the State of Washington, the
               County of Spokane, or any political subdivision of either of the
               foregoing.

        d.     Licenses and other taxes. Lessee shall be liable for and shall
               pay for all licenses, excise fees, sales tax, use, business and
               occupation taxes, together with any other taxes incurred in the
               operation of its business. Lessee shall not permit any lien to be
               filed against the premises because or on account of any such fee,
               license, tax or other charge.

        e.     Contest of liability. Lessee shall not be required to pay,
               discharge or remove any tax (including penalties and interest),
               tax lien, forfeiture or other imposition or charge upon or
               against the premises, or any part thereof, or the improvements at
               any time situated thereon, so long as lessee shall in good faith
               contest the same or the validity thereof by appropriate legal
               proceedings which shall operate to prevent the collection of the
               tax, forfeiture, lien or imposition so contested, or the sale of
               said premises or any part thereof to satisfy the same. Pending
               any such legal proceedings, lessor shall not have the right to
               pay, remove or discharge the tax, forfeiture, lien or imposition
               thereby contested. Any proceeding or proceedings for contesting
               the validity or amount of taxes, or other public charges, or to
               recover back any tax or other imposition paid by lessee, may be
               brought by lessee in the name of lessor or in the name of lessee,
               or both, as lessee, may deem advisable. However, if any such
               proceeding be brought by lessee, lessee shall indemnify and hold
               lessor harmless against any and all loss, costs or expenses of
               any kind that may be imposed upon lessor in connection therewith,
               and lessor shall have the right, at any time while such taxes
               remain unpaid, to demand and receive a surety bond satisfactory
               to lessor protecting lessor against loss arising

                                       2
<PAGE>   5

               out of such contested taxes, and lessee agrees to furnish such
               bond promptly on demand by lessor.

        f.     Compliance. Lessee agrees to exhibit to lessor on demand receipts
               evidencing payment of all such taxes, assessments or other
               charges to be paid by lessee as additional rental. If lessee
               shall default in the payment of any taxes or public charges
               required to be paid by lessee, lessor shall have the right, in
               addition to all other remedies, to pay the same, together with
               any penalties and interest, in which event the amount so paid by
               lessor shall be paid by lessee to lessor on demand, together with
               interest thereon at the rate of fifteen percent (15%) per annum.

6.      Use of premises. The premises shall be used and occupied only as an
        office for general business purposes, and for no other purpose without
        the written consent of lessor. Lessee agrees that it shall not permit
        any act to be done on or about the premises that is unlawful or
        improper. Lessee shall not commit, or allow to be committed, any waste,
        and shall not use or permit any part of the premises to be used for any
        illegal or immoral purpose or in any way as to constitute a public or
        private nuisance. Lessee shall, at its own expense, observe and comply
        with all laws, ordinances and regulations of all duly constituted
        governmental authorities, and shall observe such reasonable rules and
        regulations as may be adopted and published by lessor for the safety,
        care, cleanliness and benefit of the premises, and for the preservation
        of good order therein.

7.      Utilities. Lessee shall be liable for and shall timely pay for all
        utilities used on the premises, including but not limited to heat,
        lights, electricity, gas, water, sewage and garbage disposal service.
        Lessee shall promptly reimburse lessor for all such expenses mistakenly
        charged to lessor.

8.      Maintenance and repair. During the lease ten, lessee shall, at its own
        cost and expense, care for and maintain in good condition and repair the
        foundations, exterior walls and roof, and all other exterior portions of
        the building on the premises. Lessee shall replace windows and other
        glass cracked or broken as a result of forces from inside or outside the
        building, and shall otherwise pay for and perform all other maintenance
        necessary to keep the premises in a good state of repair, reasonable
        wear and tear excepted. Without limiting the generality of the
        foregoing, lessee shall, at lessee's expense, keep in good order,
        condition and repair the heating, ventilating and air conditioning
        system, boilers, elevators, doors, frames, moldings, locks and other
        hardware, plumbing and any mechanical or electrical apparatus which
        services or constitutes a fixture or part of the premises. Lessee will
        pay all licenses and fees for the maintenance, inspection and operation
        of any parts of the premises requiring the same. Lessee shall, at the
        expiration or termination of the lease, surrender and deliver the
        premises to lessor in as good condition as when received by lessee from
        lessor, or as thereafter improved, reasonable wear and tear from normal
        use with required maintenance excepted. Lessee shall repair any damage
        to the premises occasioned by lessee's use thereof, or by the removal of
        lessee's trade fixtures or equipment, which repairs shall include the
        patching and filling of any holes and repair of any structural damage.

        Lessee agrees to maintain all sidewalks on or appurtenant to the
        premises in a clean condition according to local ordinances under the
        directions of appropriate governmental officers, at its own costs and
        expense, and to keep such areas reasonably free and clean of foreign
        objects, papers, debris, obstructions, standing water, snow and ice.
        Lessee shall furnish its own janitorial service and shall keep the
        premises in a neat, clean and orderly condition and will operate the
        same at all times in compliance with all state and local laws,
        ordinances and regulations.

                                       3
<PAGE>   6

9.      Alterations and improvements. Lessee shall, at its own expense, make all
        repairs, modifications or alterations to the building on the premises
        that may be lawfully required pursuant to any Federal, state or
        municipal law, ordinance or regulation. Lessee may from time to time and
        at its own expense make repairs, replacements, additions, improvements,
        alterations or changes necessary or appropriate for the proper and
        suitable use of the building; provided, always, that such repairs,
        modifications, replacements, additions, improvements, alterations or
        changes will not lessen the then value of the premises, and shall be in
        accordance with plans and specifications prepared by lessee and
        submitted to lessor for approval, which approval shall not be
        unreasonably withheld. The provisions of the preceding sentence with
        respect to submitting plans and specifications to lessor shall not apply
        if the change to be made involves an expense of less than Five Thousand
        Dollars ($5,000.00). As a condition to giving consent, lessor may
        require that lessee remove any such alterations, improvements or
        additions, including utility installations, at .the expiration of the
        lease term, and restore the premises to its prior condition. If lessor
        shall fail to object to such plans and specifications within thirty (30)
        days after such submission, the same shall be deemed approved. All work
        shall be done in a good and workmanlike manner, and when completed be
        free and clear of all claims for liens by mechanics or materialmen for
        or on account of labor and materials furnished in and about such
        operations. Nothing herein contained shall be construed to authorize or
        empower lessee to encumber the leased premises with any kind or form of
        lien, but such right of lien shall not exist, and this lease and its
        recording or the recording of a memorandum hereof is intended as notice
        to any and all persons doing work or labor or furnishing materials that
        none of them shall have the right to a lien of any kind whatsoever upon
        the premises. Except as specifically provided herein otherwise, any
        improvements made by lessee shall become part of the premises and owned
        by lessor upon termination of this lease. Lessee shall hold lessor
        harmless from any damage, loss or expense arising out of any work done
        pursuant to this Section 9.

10.     Lessor's access. Lessor and its agents shall have free access to all
        portions of the premises at all times for the purpose of examining the
        condition thereof, or for the purpose of showing the premises to
        prospective purchasers, lessees or lenders. Furthermore, in the event it
        becomes necessary in order to preserve the premises, lessor may elect to
        make necessary repairs, alterations or additions thereto, it being
        understood, however, that such repairs, alterations or additions should
        not be made by lessor until having first served lessee with notice of
        the necessity of making the same, and lessee shall have refused to
        comply with such notice for a period of thirty (30) days. Lessee shall,
        on demand, reimburse lessor for all sums expended to make such needed
        repairs, together with interest compounded daily at the rate of twelve
        percent (12%) per annum. No compensation shall be paid to or claimed by
        lessee from lessor by reason of inconvenience, annoyance or damage of
        any kind whatsoever arising from inspecting or showing the premises, or
        of making repairs, maintenance or alterations to the premises. Nothing
        herein shall be construed as an agreement on the part of lessor to make
        any repair or alteration whatsoever.

11.     Common areas. As used herein, the ten "common areas" is defined to
        include all areas and facilities outside the premises, but within the
        tract legally described in the attached Schedule III, that are provided
        and designated by lessor from time to time for the general nonexclusive
        use of lessee, lessor and his other tenants and their respective agents,
        employees, suppliers, shippers, customers and invitees, including
        parking areas, loading and unloading areas, trash areas, roadways,
        sidewalks, walkways, parkways, driveways and landscaped areas.

                                       4
<PAGE>   7

        a.     Taxes and assessments. Lessee agrees to pay as additional rental
               all taxes, assessments and other charges set forth in Section 5
               hereof and incurred in respect of the common areas.

        b.     Maintenance. Lessee agrees to maintain the common parking area,
               landscaping, sprinkler system and other such improvements located
               on the common areas at its own cost and expense, said maintenance
               to include keeping the common parking area reasonably free and
               clear of foreign objects, papers, debris, obstructions, standing
               water, snow and ice, and further to maintain the striping of
               parking spaces thereon.

        c.     Signage. Lessee shall be entitled to place appropriate signage in
               common areas for purposes of identification and advertising,
               subject to the prior written approval of lessor, which shall not
               be unreasonably withheld. All improvements placed in common areas
               for purposes of displaying signage shall become a part of the
               common areas and shall remain upon and be surrendered with the
               premises at the expiration of the lease term, subject to the
               right of lessee to remove the signage itself if it can be done
               without material damage. However, as a condition to giving
               consent to improvements which display signage, lessor may require
               that lessee remove the improvement at the expiration of the lease
               term and restore the common area to its prior condition.

        d.     Parking area. Lessor agrees to provide a common parking area
               reasonably appurtenant to the premises designed to accommodate no
               less than fifty (50) vehicle parking spaces for parking by
               vehicles no larger than full-size passenger automobiles or
               pickup trucks.

        e.     Cost sharing. Lessor shall require that any other tenant sharing
               the common areas with lessee and leasing not less than ten
               thousand (10,000) square feet of space from lessor shall
               proportionately share the taxes, assessments and maintenance
               expenses incurred in respect of common areas, by reimbursement to
               lessee, based on the ratios of square footage leased by lessee
               and other tenants required to share such costs.

12.     Liability and insurance. Lessee, at its sole cost and expense, agrees to
        take out or cause to be taken out and maintained in force during the
        lease term public liability insurance in responsible insurance companies
        to protect lessee and lessor against liability to the public occasioned
        through the use of or resulting from any accident occurring in, upon or
        about the premises and the common areas. Such insurance shall be in the
        minimum amount of Fifty Thousand Dollars ($50,000.00) for property
        damage, the minimum amount of Five Hundred Thousand Dollars
        ($500,000.00) with respect to the claim of one (1) person and One
        Million Dollars ($1,000,000.00) with respect to the claims of two (2) or
        more persons. Lessor shall be named as an additional insured on all such
        policies and lessee shall furnish lessor with a certificate evidencing
        that lessee has obtained or provided for such a policy and that the
        insurance carrier has assumed the liability of lessee as required under
        this agreement.

        a.     Exoneration of lessor. All personal property in and upon the
               premises shall be at the sole risk of lessee, and lessor shall
               not be liable for any damage, either to person or property
               sustained by lessee or any other person because of the use and
               occupancy of the premises, or on account of any act or omission
               of the lessee, its agents, employees, customers or patrons, or
               due to the happening of any accident in connection with the use
               and occupation of the premises, unless such accident shall have
               been occasioned by the negligence of the lessor or its agents or

                                       5
<PAGE>   8

               employees. Lessor shall not be liable for any damage to property
               or person from any water, gas, smoke or electricity which may
               leak from or flow from any part of the premises or from the pipes
               or plumbing works of same.

        b.     Indemnity of lessor. Lessee agrees to indemnify and hold lessor
               harmless from and defend lessor against any and all claims,
               suits, demands or judgments from any injury or damage to any
               person or property, including loss of use thereof, whatsoever
               arising out of the use or occupancy of the premises by lessee or
               occasioned by the negligence of lessee, its agents, employees,
               sublessees, licensees or concessionaires, or of any other person
               entering the premises under the express or implied invitation of
               lessee, or arising out of any breach or default by lessee in the
               performance of its obligations hereunder.

13.     Casualty loss and insurance. At all times during the term of this lease,
        lessee will keep or cause to be kept, at its own expense, the building
        and other improvements now existing or hereafter erected on the
        premises, insured against the risks covered by the uniform standard form
        of fire insurance policy with extended coverage endorsement, in an
        amount sufficient to prevent lessor or lessee from becoming a co-insurer
        within the terms of applicable policies, but in any event in an amount
        of not less than the full replacement insurable cost thereof. Lessee's
        obligation under the preceding sentence shall be deemed to have been
        fully performed if the insurance is based upon the standard valuation
        letter issued by the insuring company or its agent. All insurance
        policies maintained pursuant to this clause shall be carried in favor of
        lessor, lessee and any mortgagee of the premises as their interests may
        appear. The originals of all such policies and renewals shall be
        retained by lessee, and duplicate originals or suitable insurance
        certificates shall be delivered to lessor and any mortgagee of the
        premises.

        a.     Insurable restoration. If at any time after the commencement of
               the tent of this lease any of the improvements on the premises
               shall be damaged or destroyed by any of the perils covered by the
               type of insurance policy described in this Section 13, this lease
               shall continue in full force and effect, and lessee shall
               promptly, and at its sole expense, repair and restore the
               improvements on the premises to substantially the condition in
               which the same existed prior to the casualty. The proceeds of
               such insurance policy shall be disbursed to lessee as
               construction progresses to be used for the purpose of repairing
               and restoring the premises as herein provided.

        b.     Insurable reconstruction. If the building shall be damaged or
               destroyed to such an extent that the construction of an entirely
               new building shall be required or be advisable, lessor may elect
               either to terminate this lease or require the lessee to erect,
               with reasonable diligence, a suitable replacement building, in a
               good and workmanlike manner, at its sole cost and expense, in
               compliance with all requirements of law and governmental rules
               and regulations, and in accordance with plans and specifications
               which shall be approved by lessor. Such new building shall not be
               of substantially cheaper poorer or weaker character or
               construction than the building so destroyed. Lessor shall give
               written notice to lessee of its election within sixty (60) days
               after the occurrence of such casualty.

        c.     Uninsurable damage or destruction. If the improvements on the
               premises are substantially damaged or destroyed as a result of
               any cause or peril not covered by the type of insurance policy
               described in this Section 13, either party shall have the option
               of terminating this lease or of repairing or rebuilding the
               building; provided, however, that lessee shall not have this
               option if such damage or destruction is due to the negligence of
               lessee or any of its agents or employees.

                                       6
<PAGE>   9

               Within sixty (60) days after such damage or destruction, each
               party shall notify the other of such party's intentions.

        d.     Insufficient or excessive insurance proceeds. If for any reason
               whatsoever lessee has failed to keep and maintain insurance in
               the amounts required by this Section 13, lessee agrees to supply
               all such additional funds as may be necessary for the repair,
               restoration or rebuilding of the premises as required by this
               Section 13. In any other case, lessee's obligation to rebuild and
               repair under this Section 13 shall be limited to the extent of
               the net insurance proceeds available to lessee for restoration or
               reconstruction. If the insurance proceeds are in excess of the
               amount used by lessee to replace, repair or restore the premises,
               such excess sums shall inure to the benefit of lessee.

        e.     Abatement of rent. In no event shall the minimum annual rental
               abate hereunder by reason of any damage or destruction, unless
               the lease term is terminated by mutual agreement of the parties
               or at the option of either party as provided in Section 13.

14.     Miscellaneous insurance provisions. All insurance of any kind required
        to be maintained by lessee under this lease shall be governed by the
        following provisions.

        a.     Qualifications. All insurance shall be issued as a primary policy
               for a period of not less than one (1) year, by insurance
               companies authorized to do business in the State of Washington
               and with a financial rating of at least an A status as rated in
               the most recent edition of Best's Insurance Reports. Policies
               shall contain an endorsement requiring twenty (20) days' written
               notice from the insurance company to both parties and any
               mortgagee of the premises before expiration, cancellation or
               change in the coverage, scope or amount of any policy.

        b.     Waiver of subrogation. Lessor and lessee hereby mutually release
               each other and their respective officers, employees, agents and
               representatives from all claims and liabilities for loss or
               damage to any person or to the premises or any property in or on
               the premises, that are caused by or result from risks insured
               against under any insurance policy in force at the time of any
               such loss or damage, whether or not such loss or damage shall be
               caused by the negligence of either party or their agents. Each
               insurance policy required under this lease shall provide that the
               insurance company waives all right of recovery by way of
               subrogation against either party in connection with any loss or
               damage covered by such policy.

        c.     Proof. The originals of all insurance policies and renewals may
               be retained by lessee, but duplicate originals or suitable
               insurance certificates shall be delivered to lessor and any
               mortgagee of the premises. Not less than twenty (20) days prior
               to the expiration of any policy of insurance, lessee will deliver
               to lessor a renewal or new policy to take the place of the policy
               expiring.

        d.     Failure to maintain insurance. If lessee shall fail to furnish
               insurance, policies as provided in this lease, or to deliver said
               policies and renewals or certificates thereof or binders pro
               tempore as provided herein, or to pay any premium on such
               insurance, lessor may procure such insurance or pay the premium
               therefor, or both, and such amounts shall immediately become due
               to lessor payable upon demand by lessor, together with interest
               compounded daily at the rate of twelve percent (12%) per annum.

        e.     Combination insurance. With respect to insurance coverage
               required under this

                                       7
<PAGE>   10

               lease, should lessee desire to carry such coverages so as to
               apply to the premises together with other property owned or
               controlled by lessee, its parent or affiliated companies,
               customary and property certificates of the insurance carrier in
               each instance, as to such insurance coverage, delivered to lessor
               and any mortgagee of the premises shall be deemed sufficient
               proof of compliance with lessee's insurance obligations under
               this lease, as to both original coverage and renewals, provided
               that such certificate shall show that the parties insured are
               lessee, lessor, and any mortgagee of the premises, as their
               interests may appear.

15.     Condemnation. In the event that all or any portion of the premises
        should be taken for any public or quasi-public use under any
        governmental law, ordinance or regulation, or by right of eminent domain
        or by private purchase in lieu thereof, the following provisions shall
        apply:

        a.     Total condemnation. If the entire premises shall be acquired or
               condemned by eminent domain, then the tent of this lease shall
               cease as of the date title or possession shall be transferred in
               such proceedings, whichever date shall first occur, and all
               rentals shall be paid up to that date and lessee shall have no
               claim against lessor for the value of any unexpired term of this
               lease.

        b.     Partial condemnation. If a substantial part of the premises shall
               be acquired or condemned by eminent domain, the whole
               determination of which shall be in the reasonable discretion of
               lessor, then the tent of this lease and all rights and
               obligations thereunder shall cease and terminate as of the date
               of transfer of title or possession in such proceeding, whichever
               date shall first occur. All rentals shall be paid up to that date
               and lessee shall have no claim against lessor for the value of
               any unexpired ten of this lease. In the event of a partial taking
               or condemnation which is not extensive enough to be determined by
               lessee as substantial, this lease shall continue in full force
               and effect. To the extent that funds are paid to lessor out of
               award in condemnation, they will be used by lessor to promptly
               restore the premises insofar as possible to a condition
               comparable to the time before such condemnation, less the portion
               lost in taking.

        c.     Damages. In the event of any condemnation or taking as
               hereinabove provided, whether whole or partial, lessee shall not
               be entitled to any part of the award, as damages or otherwise,
               for such condemnation, and lessor is to receive the full amount
               of such award. Lessee hereby expressly waives any claim or right
               to any part thereof. Although all damages in the event of any
               condemnation are to belong to lessor whether or not such damages
               are awarded as condemnation for the diminution of value in the
               leasehold or to the fee of the premises, lessee shall have the
               right to claim and recover from the condemning authority, but not
               from lessor, such compensation as may be separately awarded or
               recoverable by lessee in the lessee's own right on account of any
               and all damage to lessee's business by reason of the condemnation
               and for and on account of any costs or loss to which lessee might
               be put in removing the furniture, fixtures and equipment.

16.     Events of default. The following events shall be deemed to be events of
        default by lessee under this lease:

        a.     Failure to pay rent. Lessee shall fail to pay any installment of
               rent or additional rent hereunder and such failure shall continue
               for a period of twenty (20) days after written notice thereof to
               lessee.

        b.     Failure of lease terms. Lessee shall fail to comply with any
               term, provision or

                                       8
<PAGE>   11

               covenant of this lease, and shall not cure such failure within
               thirty (30) days after written notice thereof to lessee.

        c.     Financial difficulties. Lessee shall: (i) become insolvent, or
               shall make a transfer in fraud of creditors, or shall make an
               assignment for the benefit of creditors; (ii) file a petition
               under any section or chapter of the National Bankruptcy Act, as
               amended, or under any similar law or statute of the United States
               or any state thereof, or lessee or any guarantor of lessee's
               obligations under this lease shall be adjudged bankrupt or
               insolvent in proceedings filed against lessee; or (iii) have a
               receiver or trustee appointed for all the premises or for-all or
               substantially all of the assets of lessee.

        d.     Abandonment. Lessee shall desert or vacate the premises.

17.     Remedies upon default. In addition to any of the remedies lessor may
        have at law or in equity, upon the occurrence of any event of default
        lessor shall have the option to pursue any one or more of the following
        remedies without any notice or demand whatsoever:

        a.     Continuation of lease. Lessor may continue this lease in full
               force and effect, and the lease will continue in effect as long
               as lessor does not terminate lessee's right to possession, and
               lessor shall have the right to collect rent when due. During the
               period lessee is in default, lessor may enter the premises and
               relet it, or any part of it, to third parties for lessee's
               account. Lessee shall pay to lessor the rent due under this lease
               on the dates the rent is due, less the rent lessor receives from
               any reletting.

        b.     Removal. Lessor may enter upon and take possession of the
               premises and expel or remove lessee and any other person who may
               be occupying said premises or any part thereof, without being
               liable for prosecution or any claim for damages therefor, and if
               lessor so elects, relet the premises on such terms as lessor may
               deem advisable and receive the rent therefor; and lessee agrees
               to pay to lessor on demand any deficiency that may arise by
               reason of such reletting.

        b.     Termination. Lessor may terminate this lease, in which event
               lessee shall immediately surrender the premises to lessor, and if
               lessee fails to do so, lessor may, without prejudice to any other
               remedy which it may have for possession or arrearages in rent,
               enter upon and take possession of the premises and expel or
               remove lessee and any other person who may be occupying said
               premises or any part thereof, without being liable for
               prosecution for any claim or damages therefor; and lessee agrees
               to pay to lessor on demand the amount of all loss and damage
               which lessor may suffer by reason of such termination.

18.     Lease end. Lessee shall, upon the expiration or sooner termination of
        this lease, peacefully vacate the premises and remove all goods and
        effects not belonging to lessor in a manner which avoids material injury
        to the premises, and will deliver to lessor the premises free and in
        good, neat, clean and sanitary condition in all respects, except for
        reasonable wear and tear and damage not caused by any act or omission of
        lessee, its employees, agents, customers, licensees or concessionaires.
        Lessee shall surrender keys for the premises to lessor and shall inform
        lessor of all combinations, locks, safes and vaults, if any, in the
        premises. Any damage to the premises occasioned by removal of lessee's
        goods and effects shall be repaired and paid for by lessee.

        a.     Removal of fixtures. At the end of the term of this lease, or any
               extension or renewal thereof, lessor will permit the removal of
               all fixtures of the lessee placed

                                       9
<PAGE>   12

               by it in or on the premises, including exterior signs, except
               those fixtures permanently affixed to the real estate or those
               which cannot be removed without permanent injury to said real
               estate. If lessee shall fail to remove any of its property of any
               nature whatsoever from the premises at the termination of this
               lease, or when lessor has the right of re-entry, lessor may, at
               its option, remove and store said property without liability for
               loss thereof or damage thereof, except as a result of lessor's
               negligence, such storage to be for the account, and at the
               expense, of lessee. If lessee shall not pay the cost of storing
               any such property after it has been stored for a period of thirty
               (30) days or more, lessor may, at its option, sell or permit to
               be sold, any or all of such property at public or private sale,
               in such a manner and at such times and places as lessor, in its
               sole discretion, may deem proper, upon ten (10) days' prior
               notice to lessee. The proceeds of sale shall be applied in order
               of priority: (i) to the cost and expense of such sale, including
               reasonable attorneys' fees; (ii) to the payment of the costs or
               charges for storing any such property; (iii) to the payment of
               any other sums of money which may then be, or thereafter become,
               due lessor from lessee under any of the tens hereof; (iv) the
               balance, if any, to lessee. Except as specifically provided
               herein, all erections, alterations, additions and improvements to
               the premises, whether temporary or permanent in character, which
               may be made upon the premises either by lessor or lessee, shall
               be the property of lessor and shall remain upon and be
               surrendered with the premises as a part thereof at the
               termination of this lease, without compensation to lessee.

        b.     Holdover. If lessee, with the consent (expressed or implied) of
               the lessor, shall holdover after the expiration of the lease
               term, the lessee shall remain bound by the terms, covenants and
               agreements hereof, except the tenancy will be one from month to
               month.

        c.     Sale of premises. The voluntary or involuntary sale or other
               disposition of the premises by lessor shall not terminate or in
               any way affect the validity of this lease.

        d.     Notice to vacate. Lessee covenants and agrees to give lessor
               notice of any intention it may have to vacate the premises prior
               to expiration of the initial lease term at least six (6) months
               prior to the date lessee intends to vacate.

19.     Renewal options. Providing that lessee is in compliance with all of the
        terms, covenants and conditions of this lease, lessor agrees that lessee
        shall have the option to renew this lease for two (2) additional periods
        of five (5) years each beyond the initial term hereof at a rental to be
        agreed upon and otherwise upon the same terms and conditions as set
        forth herein. Written notice of the exercise of a renewal option shall
        be given by lessee to lessor at least ninety (90) days prior to the
        expiration of the term of this lease. If the parties hereto cannot agree
        on a rental for the renewal tent prior to thirty (30) days before the
        commencement thereof, then the same is to be submitted to arbitration in
        accordance with Section 29.

20.     Assignment and subletting. Lessee shall not assign or in any manner
        transfer this lease or any estate or interest therein, or sublet the
        premises or any part thereof, or grant a license, concession or other
        right of occupancy of any portion of the premises, without the prior
        written consent of lessor, Consent by lessor to one or more assignments
        or sublettings shall not operate as a waiver of lessor's rights as to
        any subsequent assignments and sublettings. The acceptance of rent from
        any person other than lessee shall not be deemed to have waived any of
        the provisions of this paragraph or to be a consent to the assignment of
        this lease or the subletting of the premises, and shall not relieve
        lessee from its

                                       10
<PAGE>   13

        obligations hereunder. Every permitted assignee shall become such upon
        the express condition that it become and remain responsible for the
        payment of rent and the full performance of the remaining provisions of
        this lease. Notwithstanding any assignment or subletting, lessee and any
        guarantor of lessee's obligations under this lease shall at all times
        remain fully responsible and liable for the payment of the rent herein
        specified and for compliance with all of its other obligations under
        this lease. For the purposes of this lease, the sale, conveyance, lease,
        assignment, transfer, pledge, encumbrance or other transaction which
        changes, or might result in a change, of any ownership of stock in the
        lessee, or control of the assets of lessee, shall be deemed an
        assignment within the meaning of this lease. Any merger, dissolution,
        reorganization or other corporate change modifying the control of lessee
        shall be deemed an "assignment" which cannot be accomplished without the
        prior written consent of lessor. Any assignment, sublease, mortgage,
        pledge or other encumbrance of lessee's interest in this lease or in the
        premises without the prior written consent of the lessor shall be void.

21.     Subordination. This lease shall at all times be subject, subordinate,
        and inferior in lien with respect to any first mortgage or deed of trust
        that may be placed upon the premises or any part thereof given by lessor
        to any institutional or individual lender, and the recording of such
        mortgage or deed of trust shall be deemed prior in lien to this lease,
        irrespective of the date of recording of such mortgage, and lessee will,
        upon demand, execute any instrument necessary to effectuate such
        subordination; provided, however, that such subordination shall not
        affect lessee's right to possession, use and occupancy of the premises
        so long as lessee shall not be in default under any of the terms and
        conditions of this lease.

22.     Triple net lease. It is the intention of tile parties, and this lease is
        to be so construed, that during the term of this lease lessor shall not
        be obligated to pay any charges, expenses, taxes or costs of any sort
        whatsoever arising out of or in connection with ownership of the
        premises and common areas, the maintenance thereof, the use and
        occupation thereof by lessee, or the payment of rent by lessee to
        lessor, all of which are to be borne by lessee alone. However, this
        provision shall not be construed to supersede explicit provisions
        regarding damage to the premises and condemnation of the premises, set
        forth in Sections 13 and 15, respectively.

23.     Relationship of parties. Nothing herein contained shall be deemed or
        construed by the parties hereto, nor by any third party, as creating the
        relationship of principal and agent or of partnership or of joint
        venture between the parties hereto, it being understood and agreed that
        neither the method of computation of rent, nor any other provisions
        contained herein, nor any acts of the parties hereto, shall be deemed to
        create any relationship between the parties hereto other than the
        relationship of lessor and lessee.

24.     Time of essence. Time is declared to be of the essence of this entire
        lease, notwithstanding that as to some provisions it may expressly be
        provided that time is of the essence. However, whenever a period of time
        is herein prescribed for action to be taken by lessor or lessee, the
        parties shall not be liable or responsible for, and there shall be
        excluded from the computation of any such period of time, any delays,
        due to strikes, riots, acts of God, shortages of labor or materials,,
        war, governmental laws, regulations or restrictions or any other causes
        of any kind whatsoever which are beyond the reasonable control of the
        parties.

25.     Nonwaiver. No failure of lessor to insist upon the strict performance of
        any provision of this lease shall be construed as depriving lessor of
        the right to insist upon strict performance of such provision or any
        other provision in the future. No waiver by lessor of any provision of
        this lease shall be deemed to have been made unless expressed in

                                       11
<PAGE>   14

        writing and signed by lessor. No acceptance of rent or of any other
        payment by lessor from lessee after any default by lessee shall
        constitute a waiver of any such default or any other default. Consent by
        lessor in one instance shall not dispense with the necessity of consent
        by lessor in any other instance.

26.     Notices. All notices, requests, demands and other communications which
        are required or y be given under this lease shall be in writing and
        shall be deemed to have been duly given if delivered personally or sent
        by certified mail, return receipt requested, postage prepaid, addressed
        to the last known post office address of the party to be notified.

27.     Consent. Any consent which may be required for any action of lessee
        shall not be unreasonably withheld. In determining the acceptability of
        a proposed assignee or subtenant, the continued liability of lessee
        under the lease shall not be considered as a factor. In addition to
        other criteria which landlord may deem relevant, the assignee or
        subtenant must meet the minimal requirement of being compatible with
        other tenants sharing common areas, if any, and shall have good credit
        standing, the financial ability and business experience necessary to
        perform this lease, and lessor may require that the owners of a
        closely-held business assignee personally guarantee the performance of
        this lease.

28.     Attorneys' fees and costs, Should any action be commenced to enforce any
        of the terms of this lease, or to cancel this lease, or to collect any
        rentals due hereunder, the prevailing party in such action shall be
        entitled to recover reasonable attorneys' fees and costs from the other
        party.

29.     Arbitration. If any dispute shall arise under this lease, the parties
        hereto agree to submit the matter to arbitration. Such arbitration shall
        be conducted, before three (3) arbitrators, unless the lessor and the
        lessee agree to one (1) arbitrator. Said arbitrators shall be designated
        by the American Arbitration Association and said arbitration shall be
        held in accordance with the rules of such Association. The arbitrators
        designated and acting under this lease shall make their award in strict
        conformity with such rules and shall have no power to depart from or
        change any of the provisions hereof. Expenses of the arbitration
        proceedings conducted hereunder shall be borne equally by the parties.

30.     Integration and modification. This lease constitutes the entire
        agreement between the parties pertaining to the subject matter contained
        herein, which alone fully and completely expresses their agreement, and
        the same is entered into after full investigation, neither party relying
        on any statement or representation, not embodied in this lease, made by
        the other. No change shall be effective unless in writing and signed by
        both parties.

31.     Construction and venue. The provisions of this lease shall be
        interpreted and enforced in accordance with the laws of the State of
        Washington, and venue shall lie in Spokane County. If a court of
        competent jurisdiction rules invalid or unenforceable any of the
        provisions of this lease, the remainder shall nevertheless be given full
        force and effect. The captions are for convenience and reference only,
        and they shall not define, limit or construe the contents of any
        provision. Except where the context indicates otherwise, words in the
        singular number shall include the plural, and vice versa, and words in
        the masculine, feminine or neuter gender shall include each other gender
        as well.

32.     Benefit and burden. This lease shall be binding upon and inure to the
        benefit of the parties, their heirs, legal representatives, successors
        and assigns.

                                       12
<PAGE>   15

IN WITNESS WHEREOF, the parties have executed this lease, effective on the day
and date first written above.

DATE:
     --------------                         ------------------------------------
                                            Bill B. Williams, Jr., Lessor

DATE:
     --------------                         ------------------------------------
                                            Judith A. Williams, Lessor

                                            TELECT, INC., a Washington
                                            corporation, Lessee

DATE:                                       By:
     --------------                            ---------------------------------
                                               Bill B. Williams, Jr., President
                                               and Chief Executive Officer

DATE:                                       By:
     --------------                            ---------------------------------
                                               Judith A. Williams, Secretary/
                                               Treasurer

STATE OF WASHINGTON  )
                     ) ss.
County of Spokane    )

I certify that I know or have satisfactory evidence that BILL B. WILLIAMS, JR.
signed this instrument and acknowledged it to be his free and voluntary act, for
the uses and purposes mentioned in the instrument.

DATED: February 28, 1990.

                                            -----------------------------------
                                            NOTARY PUBLIC in and for the State
                                            of Washington, residing at Spokane.
                                            My appointment expires: 2-23-93

                                       13
<PAGE>   16

STATE OF WASHINGTON  )
                     ) ss.
County of Spokane    )

I certify that I know or have satisfactory evidence that JUDITH A. WILLIAMS
signed this instrument and acknowledged it to be her free and voluntary act, for
the uses and purposes mentioned in the instrument.

DATED: February 28, 1990.

                                            -----------------------------------
                                            NOTARY PUBLIC in and for the State
                                            of Washington, residing at Spokane.
                                            My appointment expires: 2-23-93

                                       14
<PAGE>   17

STATE OF WASHINGTON  )
                     ) ss.
County of Spokane    )

I certify that I know or have satisfactory evidence that BILL B. WILLIAMS, JR.
signed this instrument, on oath stated that he was authorized to execute the
instrument and acknowledged it as the President and Chief Executive Officer of
TELECT, INC., to be the free and voluntary act of such corporation, for the uses
and purposes mentioned in the instrument.

DATED: February 28, 1990.

                                            -----------------------------------
                                            NOTARY PUBLIC in and for the State
                                            of Washington, residing at Spokane.
                                            My appointment expires: 2-23-93

STATE OF WASHINGTON  )
                     ) ss.
County of Spokane    )

I certify that I know or have satisfactory evidence that JUDITH A. WILLIAMS
signed this instrument, on oath stated that she was authorized to execute the
instrument and acknowledged it as the Secretary/Treasurer of TELECT, INC., to be
the free and voluntary act of such corporation, for the uses and purposes
mentioned in the instrument.

DATED: February 28, 1990.

                                            -----------------------------------
                                            NOTARY PUBLIC in and for the State
                                            of Washington, residing at Spokane.
                                            My appointment expires: 2-23-90

                                       15
<PAGE>   18

                                 OFFICE BUILDING                      Schedule I
                                TRIPLE NET LEASE

                                    Site Plan

                                       16
<PAGE>   19

                                 OFFICE BUILDING                     Schedule II
                                TRIPLE NET LEASE

                               Building Elevation

                                       17
<PAGE>   20

                                                                    Schedule III
                                 OFFICE BUILDING
                                TRIPLE NET LEASE

                                Legal Description

PARCEL "E"

A parcel of land in the Southeast Quarter of Section 10, Township 25 North,
Range 45 E.W.M. described as follows:

        BEGINNING at the Southeast corner of said Section 10; thence South
        87(degrees)03'56" West along the South line of the Southeast Quarter of
        said Section 10, a distance of 708.58 feet; thence North
        03(degrees)17'39" West a distance of 1129.61 feet to the true point of
        beginning; thence North 03(degrees)17'39" West a distance of 255.00
        feet; thence North 87(degrees)03'56" East a distance of 558.68 feet;
        thence North 42(degrees)03'56" East a distance of 56.06 feet; thence
        North 87(degrees)03'56" East a distance of 50.00 feet to a line parallel
        with and 60.00 feet, West of the centerline of Molter Road, as said
        centerline is shown on the final plat of HOMESTEAD TRADE CENTER, as per
        plat thereof recorded in Volume 15 of Plats, page 9; thence South
        03(degrees)17'39" East along said parallel line a distance of 294.64
        feet; thence South 87(degrees)03'56" West a distance of 648.58 feet to
        the true point of beginning.

Situate in the County of Spokane, State of Washington.

PARCEL "F"

A parcel of land in the Southeast Quarter of Section 10, Township 25 North,
Range 45 E.W.M., described as follows:

        BEGINNING at the Southeast corner of said Section 10; thence South
        987(degrees)03'56" West along the South line of said Southeast Quarter
        of Section 10 a distance of 708.58 feet; thence North 03(degrees)17'36"
        West a distance of 1384.61 feet to the true point of beginning; thence
        North 03(degrees)17'39" West a distance of 190.00 feet; thence North
        87(degrees)03'56" East a distance of 249.44 feet; thence North
        59(degrees)53'21" East, a distance of 43.79 feet; thence North
        87(degrees)03'56" East a distance of 359.03 feet to a point on a
        non-tangent curve concave to the West having a radius of 440.00 feet (to
        which a radial line bears North 82(degrees)47'00" East and said curve
        being parallel with and 60.00 feet West of the centerline of Molter
        Road, as said centerline is shown on the final plat of HOMESTEAD TRADE
        CENTER, as per plat thereof recorded in Volume 15 of Plats, page 9);
        thence Southerly along said curve through central angle of
        03(degrees)55'21" an arc distance of 30.12

                                       18
<PAGE>   21
        feet; thence South 03(degrees)17'39" East parallel with and 60.00 feet
        West of said centerline of Molter Road a distance of 140.26 feet; thence
        South 87(degrees)03'56" West a distance of 50.00 feet; thence South
        42(degrees)03'56" West a distance of 56.06 feet; thence South
        87(degrees)03'56" West a distance of 558.68 feet to the true point of
        beginning;

Situate in the County of Spokane, State of Washington.

PARCEL "G":

A parcel of land in the Southeast Quarter of Section 10, Township 25 North,
Range 45 E.W.M. described as follows:

        BEGINNING at the Southeast corner of said Section 10, thence south
        87(degrees)03'56" West along the South line of said Southeast Quarter of
        Section 10 a distance of 708.58 feet; thence North 03(degrees)17'39"
        West a distance of 1574.61 feet to the true point of beginning; thence
        North 87(degrees)03'56" East a distance of 249.44 feet; thence North
        59(degrees)53'21" East a distance of 43.79 feet; thence North
        87(degrees)03'56" East a distance of 359.03 feet to a point on a
        non-tangent curve concave to the West having a radius of 440.00 feet (to
        which a radial line bears North 82(degrees)47'00" East, and said curve
        being parallel with and 60.00 feet West of the centerline of Molter
        Road, as said centerline is shown on the final plat of HOMESTEAD TRADE
        CENTER, as per plat thereof recorded in Volume 15 of Plats, page 9);
        thence Northerly along said curve through a central angle of
        22(degrees)53'14", an arc distance of 175.76 feet; thence North
        30(degrees)06'14" West parallel with and 60.00 feet West of said
        centerline of Molter Road a distance of 147.86 feet to the Southerly
        margin of the former Chicago, Milwaukee, St. Paul and Pacific Railroad
        right of way; thence South 59(degrees)53'21" West along said Southerly
        margin a distance of 599.00 feet to a point which bears North
        03(degrees)17'39" West from the true point of beginning;

Situate in the County of Spokane, State of Washington.

                                       19

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