STANDARD SUBLEASE
                  American Industrial Real Estate Association
                                     [LOGO]

1. Parties. This Sublease,  dated, for reference purposes only, August 10, 1998,
is made by and  between  Verticom,  Inc.  ("Sublessor")  and  Arterial  Vascular
Engineering, Inc. ("Sublessee").

2.  Premises.  Sublessor  hereby  subleases to Sublessee  and  Sublessee  hereby
subleases  from  Sublessor  for the  term,  at the  rental,  and upon all of the
conditions  set  forth  herein,  that  certain  real  property,   including  all
improvements therein, and commonly known by the street address of 1201 Corporate
Center Parkway,  Santa Rosa located in the County of Sonoma, State of California
and  generally  described  as  (describe  briefly  the  nature of the  property)
approximately  35,490 s.f. of a 47,938 s.f.  building  including  both hazardous
material shed and tank farm known as building B in the complex A.P. #035-133-019
as shown on Exhibit A. Sublessor shall be allowed use and access to tank farm to
store nitrogen  generator,  bulk CO(2) storage tank,  air  compressor  shared by
Sublessee and used and unused bottle gas and fluid storage bins.

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("Premises").

3. Term.

     3.1 Term.  The term of this Sublease shall be for  forty-eight  (48) months
commencing  on November  1, 1998 and ending on October  31,  2002 unless  sooner
terminated pursuant to any provision hereof.

     3.21 [Paragraph omitted]

4. Rent.

4.1 Base Rent.  Sublessee  shall pay to  Sublessor as base rent for the Premises
equal monthly payments of $28,392.00 in advance,  on the first day of each month
of the term hereof.  Sublessee  shall pay Sublessor  upon the  execution  hereof
$28,392.00  (Twenty  Eight  Thousand  Three Hundred Ninety Two) as base rent for
November. See Addendum No. 1, Paragraph 7.

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Base Rent for any period during the term hereof which is for less than one month
shall be a prorata  portion of the monthly  installment.

     4.2 Rent Defined.  All monetary obligations of Sublessee to Sublessor under
the terms of this  Sublease  (except for the Security  Deposit) are deemed to be
rent  ("Rent").  Rent shall be payable in lawful  money of the United  States to
Sublessor at the address stated herein or to such other persons or at such other
places as Sublessor may designate in writing.

5. Security Deposit.  Sublessee has deposited with Sublessor $12,500 as security
for Sublessee's faithful performance of Sublessee's  obligations hereunder.  The
rights and  obligations  of Sublessor and Sublessee as to said Security  Deposit
shall be as set  forth in  Paragraph  5 of the  Master  Lease  (as  modified  by
Paragraph 7.3 of this Sublease).

6. Use.

     6.1 Agreed Use. The Premises  shall be used and occupied  only for research
and development, manufacturing, general office and for no other purpose.

     6.2 Compliance.  Sublessor  warrants that the  improvements on the Premises
comply with all applicable  covenants or  restrictions  of record and applicable
building codes, regulations and ordinances ("Applicable Requirements") in effect
on the  commencement  date.  Said  warranty  does not  apply to the use to which
Sublessee will put the Premises or to any  alterations or utility  installations
made or to be made by Sublessee.  NOTE: Sublessee is responsible for determining
whether or not the zoning is appropriate for its intended use, and  acknowledges
that past uses of the Premises may no longer be allowed.  If the Premises do not
comply with said warranty, or in the event that the Applicable  Requirements are
hereafter  changed,  the rights and obligations of Sublessor and Sublessee shall
be as provided in Paragraph  6.2 of the Master Lease (See  Addendum #1 Paragraph
7.).

     6.3 Acceptance of Premises and Lessee. Sublessee acknowledges that:

         (a) it has been  advised by Brokers to satisfy  itself with  respect to
the condition of the Premises (including but not limited to the electrical, HVAC
and fire sprinkler systems, security, environmental aspects, and compliance with
Applicable Requirements), and their suitability for Sublessee's intended use,

         (b) Sublessee has made such  investigation  as it deems  necessary with
reference  to such matters and assumes all  responsibility  therefor as the same
relate to its occupancy of the Premises, and

         (c) neither Sublessor,  Sublessor's agents, nor any Broker has made any
oral or written representations or warranties with respect to said matters other
than as set forth in this Sublease.

7. Master Lease

     7.1  Sublessor  is the  lessee  of  the  Premises  by  virtue  of a  lease,
hereinafter  the  "Master  Lease",  a copy of which is  attached  hereto  marked
Exhibit 1,  wherein  Santa  Rosa  Corporate  Center  Associates  is the  lessor,
hereinafter the "Master Lessor".

     7.2 This Sublease is and shall be at all times subject and  subordinate  to
the Master Lease.

     7.3 The terms,  conditions  and  respective  obligations  of Sublessor  and
Sublessee to each other under this Sublease shall be the terms and conditions of
the Master  Lease  except for those  provisions  of the Master  Lease  which are
directly contradicted by this Sublease in which event the terms of this Sublease
document  shall  control over the Master Lease.  Therefore,  for the purposes of
this Sublease,  wherever in the Master Lease the word is used it shall be deemed
to mean the  Sublessor  herein all  references  to "this  Lease" shall mean this
Sublease,  and  all  references  to the  "Premises"  shall  mean  the  subleased
Premises, and wherever in the Master Lease the word "Tenant" is used it shall be
deemed to mean the Sublessee herein.

     7.4 During the term of this  Sublease  and for all periods  subsequent  for
obligations  which  have  arisen  prior  to the  termination  of this  Sublease,
Sublessee does hereby expressly assume and agree to perform and comply with, for
the benefit of  Sublessor  and Master  Lessor,  each,  and every  obligation  of
Sublessor under the Master Lease except for the following  paragraphs  which are
excluded therefrom: Paragraph 3.1 (Paragraph 4.1 rentable payment amount only is
deleted.*

<PAGE>

     7.5 The  obligations  that Sublessee has assumed under paragraph 7.4 hereof
are  hereinafter  referred  to as the  "Sublessee's  Assumed  Obligations".  The
obligations  that  Sublessee  has not  assumed  under  paragraph  7.4 hereof are
hereinafter referred to as the "Sublessor's Remaining Obligations".

     7.6 Sublessee  shall hold  Sublessor  free and harmless from all liability,
judgments,  costs,  damages,  claims or demands,  including reasonable attorneys
fees, arising out of Sublessee's  failure to comply with or perform  Sublessee's
Assumed Obligations.

     7.7 Sublessor agrees to maintain the Master Lease during the entire term of
this Sublease,  subject, however, to any earlier termination of the Master Lease
without the fault of the  Sublessor,  and to comply with or perform  Sublessor's
Remaining  Obligations  and to hold  Sublessee free and harmless of and from all
liability,   judgments,  costs,  damages,  claims  or  demands  arising  out  of
Sublessor's failure to comply with or perform Sublessor's Remaining Obligations.

     7.8  Sublessor  represents  to  Sublessee  that the Master Lease is in full
force  and  effect  and that no  default  exists on the part of any party to the
Master Lease. See Addendum #1 Paragraph 20.

8. Assignment of Sublease and Default.

     8.1 Sublessor hereby assigns and transfers to Master Lessor the Sublessor's
interest in this  Sublease,  subject  however to the provisions of Paragraph 8.2
hereof.  Sublessor  hereby  authorizes  and directs  Sublessee  to pay to Master
Lessor the Rent due and to become due under the Sublease.

     8.2 [Paragraph Omitted}

     8.3 [Paragraph Omitted]

     8.4 No changes or modifications  shall be made to this Sublease without the
consent of Master Lessor.

9. Consent of Master Lessor.

     9.1 In the event that the Master Lease requires that  Sublessor  obtain the
consent of Master  Lessor to any  subletting  by Sublessor  then,  this Sublease
shall not be effective unless, within ten days of the date hereof, Master Lessor
signs this Sublease thereby giving its consent to this Subletting.

     9.2 [Paragraph omitted]

     9.3 In the event that Master Lessor does give such consent then:

         (a) Such consent will not release Sublessor of its obligations or alter
the primary  liability  of Sublessor to pay the Rent and perform and comply with
all of the obligations of Sublessor to be performed under the Master Lease.

         (b) The  acceptance of Rent by Master  Lessor from  Sublessee or anyone
else liable under the Master Lease shall not be deemed a waiver by Master Lessor
of any provisions of the Master Lease.

         (c) The consent to this Sublease  shall not constitute a consent to any
subsequent subletting or assignment.

         (d) In the event of any Default of  Sublessor  under the Master  Lease,
Master Lessor may proceed directly against  Sublessor,  any guarantors or anyone
else liable under the Master Lease or this  Sublease  without  first  exhausting
Master  Lessor's  remedies  against any other person or entity liable thereon to
Master Lessor.

         (e) Master Lessor may consent to subsequent sublettings and assignments
of the Master Lease or this Sublease or any amendments or modifications  thereto
without  notifying  Sublessor  or any one else liable under the Master Lease and
without  obtaining  their consent and such action shall not relieve such persons
from liability.

         (f) In the event that Sublessor shall default in its obligations  under
the Master Lease,  then  Sublessee  shall attorn to Master Lessor in which event
Master Lessor shall  undertake the  obligations of Sublessor under this Sublease
from the time of the exercise of said option to termination of this Sublease but
Master Lessor shall not be liable for any prepaid Rent nor any Security  Deposit
paid by Sublessee,  nor shall Master Lessor be liable for any other  Defaults of
the Sublessor under the Sublease. See Exhibit G.

     9.4 The  signatures of the Master Lessor and any Guarantors of Sublessor at
the end of this  document  shall  constitute  their consent to the terms of this
Sublease.

     9.5  Master  Lessor  acknowledges  that,  to the  best of  Master  Lessor's
knowledge,  no default presently exists under the Master Lease of obligations to
be performed by Sublessor and that the Master Lease is in full force and effect.

     9.6 In the  event  that  Sublessor  defaults  under its  obligations  to be
performed  under the Master Lease by Sublessor,  Master Lessor agrees to deliver
to  Sublessee  a copy of any such notice of  default.  Sublessee  shall have the
right to cure any default of Sublessor described in any notice of default within
ten days after service of such notice of default on  Sublessee.  If such default
is cured by Sublessee then Sublessee shall have the right of  reimbursement  and
offset from and against Sublessor.

10. Brokers Fee.

     10.1 Upon execution hereof by all parties,  Sublessor shall pay to Keegan &
Coppin  Company Inc., a licensed real estate  broker,  ("Broker"),  a fee as set
forth in a separate  agreement  between  Sublessor  and Broker,  or in the event
there is no  separate  agreement  the sum of $_____ per  listing  agreement  for
brokerage services rendered by Broker to Sublessor in this transaction.

     10.2 [Paragraph omitted]

     10.3 [Paragraph omitted]

     10.4 Any fee due from Sublessor hereunder shall be due and payable upon the
execution of any new lease.

     10.5 Any transferee of Sublessor's interest in this Sublease,  by accepting
an  assignment  thereof,   shall  be  deemed  to  have  assumed  the  respective
obligations of Sublessor under this Paragraph 10. Broker shall be deemed to be a
third-party beneficiary of this paragraph 10.

11. Attorney's fees. If any party or the Broker named herein brings an action to
enforce the terms hereof or to declare rights hereunder, the prevailing party in
any such  action,  on trial and  appeal,  shall be  entitled  to his  reasonable
attorney's  fees to be paid by the  losing  party  as fixed  by the  Court.  

<PAGE>

l2. Additional  Provisions.  [If there are no additional provisions, draw a line
from this point to the next printed word after the space left here. If there are
additional provisions place the same here.]


Addendum #1
Exhibit A - Site Plan
Exhibit B - Floor Plan
Exhibit C - Standard Lease Disclosure
Exhibit D - Agency Disclosure
Exhibit E - Arbitration of Disputes
Exhibit F - Right of First Refusal
Exhibit G - Non-Disturbance and Attornment Agreement
Exhibit H - Option to Extend
Exhibit I - 

ATTENTION:   NO  REPRESENTATION  OR  RECOMMENDATION  IS  MADE  BY  THE  AMERICAN
INDUSTRIAL REAL ESTATE  ASSOCIATION OR BY ANY REAL ESTATE BROKER AS TO THE LEGAL
SUFFICIENCY,  LEGAL  EFFECT,  OR  TAX  CONSEQUENCES  OF  THIS  SUBLEASE  OR  THE
TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS SUBLEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES.  SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS  SUBSTANCES,  THE ZONING OF THE PROPERTY,  THE  STRUCTURAL
INTEGRITY,  THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY
OF THE PREMISES FOR SUBLESSEE'S INTENDED USE.

WARNING:  IF THE SUBJECT  PROPERTY IS LOCATED IN A STATE OTHER THAN  CALIFORNIA,
CERTAIN  PROVISIONS  OF THE  SUBLEASE  MAY NEED TO BE REVISED TO COMPLY WITH THE
LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.

Executed at
           ---------------------------  ----------------------------------------
on         August 20, 1998             By /s/  Stan Mead, V.P. Finance
  ------------------------------------    --------------------------------------
address                                 By     Verticom, Inc.
       -------------------------------    --------------------------------------

--------------------------------------        "Sublessor" (Corporate Seal)

Executed at
           ---------------------------  ----------------------------------------
on         August 21, 1998              By /s/ Scott Wade
  ------------------------------------    --------------------------------------
address                                 By     AVE
       -------------------------------    --------------------------------------

--------------------------------------        "Sublessee" (Corporate Seal)

Executed at
           ---------------------------  ----------------------------------------
on         August 24, 1998
  ------------------------------------  ----------------------------------------
address                                 By /s/ John Hopkins
       -------------------------------    --------------------------------------

--------------------------------------        "Master Lessor" (Corporate Seal)



NOTE:  These forms are often modified to meet changing  requirements  of law and
       needs  of the  industry.  Always  write  or  call to  make  sure  you are
       utilizing  the  most  current  form:   AMERICAN  INDUSTRIAL  REAL  ESTATE
       ASSOCIATION,  700 So. Flower St., Suite 600, Los Angeles, CA 90071. (213)
       687-8777.
<PAGE>
                                   ADDENDUM #1
                 To Lease dated August 10, 1998 by and between
  Sublessor Verticom, Inc., and Sublessee Arterial Vascular Engineering, Inc.,
                                herein called AVE

1.   Tenant Improvement Scope:

     The plans and specifications for the tenant  improvements to be constructed
     in the Premises shall be subject to the prior approval of Master Lessor and
     Sublessor, which approval shall not be unreasonably withheld. Master Lessor
     and Sublessor to respond to Sublessee's  request for approval of such plans
     and  specifications  within ten (10) days after the date they are submitted
     to them. Master Lessee and Sublessor approve items A & B below.

     Sublessee  shall  complete the following  tenant  improvements  at its sole
     cost, with building permits.

     A.  Construct a full  height  demising  wall as  required  to separate  the
         sublessee's  premises  from  sublessor's.  Said  demising wall shall be
         finished  from  floor to t-bar  ceiling  with  sheetrock,  texture  and
         painted on both sides  with  electrical  service as shown on Exhibit B.
         Sublessor shall reimburse  Sublessee  for 31'6" of full height demising
         for storage area.

     B.  HVAC duct work modifications  providing  individual  thermostatic zones
         for Sublessee and Sublessor.

     C.  Any tenant  improvements within the area to be occupied by Sublessee to
         be installed by Sublessee. See Exhibit B Floor Plan.

     Sublessee  to use its best  efforts to  install  Tenant  Improvements  in a
     quality good  workmanlike  manner in  accordance  with  approved  plans and
     specification   within  sixty  (60)  days  of  acceptance  hereof,  and  in
     accordance with all applicable  laws,  codes,  regulations,  statutes,  and
     ordinances (including,  without limitation, the Americans with Disabilities
     Act of 1990), free of defects and using new materials and equipment of good
     quality.  Except  in the  case of force  majeure,  Sublessee's  failure  to
     complete the Tenant  Improvements on or before November 1, 1998,  shall not
     delay the Commencement Date.

     Sublessor  shall  inspect said  premises  within three (3) business days of
     completion to ascertain  that Tenant  Improvements  have been  installed in
     accordance with approved plans and specifications.  Sublessor shall provide
     a "punch list" of items not in accordance with plans and  specifications or
     not  installed  in a good  workmanlike  manner or not approved by the City.
     Sublessee shall have thirty (30) days to correct said punch list items.

     Sublessee  shall remove all mechanic's  liens,  and will satisfy all claims
     and  meet  all  contract  requirements  with  suppliers,   contractors  and
     employees  arising out of said  installation of improvements.  Sublessee to
     have workers compensation and liability insurance with a minimum $1,000,000
     per occurrence for said installation and to name Sublessor as an additional
     insured  on the  liability  policy.  Sublessee  shall  indemnify  and  hold
     harmless Sublessor for any claims, losses,  damages,  actions and causes of
     action which may be incurred as a result of the work performed or materials
     furnished in connection with the construction of the Tenant Improvements.

     Sublessor  shall complete at their sole cost the tenant  improvements  with
     their own space,  including  double doors  within  storage area as shown on
     Exhibit B.

2.   Financial Information

     Sublessor and Master Lessor has reviewed and approved financial  statements
     regarding Sublessee.

3.   Permits

     Sublessee will obtain a use permit and a wastewater  discharge  permit from
     the appropriate  municipality within thirty (30) days of acceptance hereof.
     Sublessee  shall use due  diligence  in pursuing  such  permits and pay all
     costs  associated  with them.  Sublessee shall have the  responsibility  to
     maintain  any use permits and to comply  with all terms and  conditions  of
     said use permits during the term of this Lease. If Sublessee's  application
     for a use permit is denied,  Sublessor or Sublessee  may declare this lease
     void,  in which event all  deposits  and prepaid  rent shall be returned to
     Sublessee.  Throughout the sublease Term, Sublessee shall be responsible to
     obtain and maintain any other permits, licenses or authorizations which may
     be required by applicable laws, codes, regulations, statutes and ordinances
     in order to operate Sublessee's business in the Premises.
<PAGE>

4.   Hazardous Waste

     Sublessee has provided Sublessor with its MSDS information. All Sublessee's
     chemicals shall be stored on site.  Sublessor has reviewed and approved the
     use of these  materials in the premises.  The use of such materials and any
     other  hazardous  materials  or  substances  shall be  subject to the prior
     written  consent of Master Lessor. 

     Sublessor  makes no  representation  or  warranty  regarding  the  physical
     condition of the Premises,  which Sublessee  agrees it is subleasing in its
     existing  condition,  "as is" except for the TRANE HVACC unit see Paragraph
     18. 

     Sublessee shall  indemnify,  defend with counsel  reasonably  acceptable to
     Sublessor  and  hold  Sublessor   harmless  from  and  against  any  claim,
     remediation  obligation,  investigation  obligation,  liability,  cause  of
     action,  penalty,  attorneys' fees,  consultant's costs,  expense of damage
     owing or alleged to be owing with  respect to any  hazardous  materials  or
     substances  present on or about the  Premises or the soil,  groundwater  or
     surface water thereof which are caused by Sublessee, its employees, agents,
     contractors  or  invitees.  Sublessee's  representations,   warranties  and
     indemnification under this Sublease shall survive the expiration or earlier
     termination of this Sublease.

     Sublessor shall  indemnify,  defend with counsel  reasonably  acceptable to
     Sublessee  and  hold  Sublessee   harmless  from  and  against  any  claim,
     remediation  obligation,  investigation  obligation,  liability,  cause  of
     action,  penalty,  attorneys' fees,  counsultant's costs, expense of damage
     owing or alleged to be owing with  respect to any  hazardous  materials  or
     substances  present on or about the  Premises or the soil,  groundwater  or
     surface water thereof which are caused by Sublessor, its employees, agents,
     contractors  or  invitees.  Sublessor's  representations,   warranties  and
     indemnification under this Sublease shall survive the expiration or earlier
     termination of this Sublease.

     Sublessor has provided Sublessee with its MSDS information. All Sublessor's
     chemicals shall be stored within their space.

     Sublessee shall have the exclusive use of both Hazardous  Material Sheds as
     identified in Exhibit A.

     Sublessee  and   Sublessor  are  aware  there  is  existing   ground  water
     contamination in the vicinity.

5.   Area Measurement:

     Sublessee   and   Sublessor  has  reviewed  and  approved  the  systemn  of
     measurement,  the  useable  and  rentable  square  footage  of the  subject
     premises.

6.   Associations and Expenses:

     Sublessee has reviewed and approved CC&R's, any common area association and
     budget, rules, expenses, and use conditions pertaining thereto.

7.   Rent:

     Sublessee  shall pay the monthly base rent for the Premises in advance upon
     the Commencement  Date and thereafter on the first day of each month of the
     term hereof  directly to Master  Lessor.  Base rent for any period which is
     less than one month shall be a pro-rata portion of the monthly installment.
     The monthly base rental amount shall be as follows:

     Months 11/1/98 to 12/14/98              35,490 sf x $ .80 = $28,392
     Months 12/15/98 to 12/14/2001           CPI adjustment per paragraph 4.3 
                                             of Master Lease
     Months 12/15/2001 to 10/31/2002         CPI adjustment per paragraph 4.3 
                                             of Master Lease

     Also,  Sublessee  shall pay for its prorata share of common area charges as
     additional  rent.  Said payment  shall be paid  directly to Master  Lessor.
     Additional  rent  was  $70,396.74  for the  calendar  year  1997,  which is
     estimated  to be  approximately  12 cents per  square  foot,  payable  on a
     monthly basis.  Aforementioned rental payments and additional rent payments
     are subject to the terms  stipulated  in sections  4.1, 4.2, 4.3 and 4.4 of
     the Master Lease.

8.   Parking:

     Sublessee  shall be  entitled  to the use of one  hundred  forty four (144)
     parking spaces on an unreserved basis free of charge in common.
<PAGE>

9.   Signage:

     Sublessee and Sublessor  agree  Sublessee  shall be entitled to install its
     lettering on the monument  sign and main  entrance door subject to any sign
     program regulations in the business park CC&R's and the City of Santa Rosa.

10.  Janitorial Services:

     Sublessor and Sublessee  shall  contract  directly for their own janitorial
     service.

11.  Utilities:

     Sublessee  shall contract for and pay directly the utility bill for gas and
     electric service and sewer and water. Sublessor shall pay Sublessee for its
     pro-rata share which shall be defined as 25% of the total amount. Sublessee
     shall  provide  Sublessor  with  a  copy  of  any  prorated  expenses  when
     submitting any invoice to Sublessor. If for any reason Sublessor's space is
     not occupied that the  contribution for electric and gas will be reduced to
     5% of total amount.

12.  Early Access:

     Upon full execution of the Sublease Agreement,  Sublessee shall have access
     to portions of the sublet premises upon the schedule  outlined on Exhibit I
     for the purpose of designing,  demolishing and constructing improvements as
     well as for relocating existing  operations.  Accordingly,  Sublessor shall
     vacate said portions of the sublet premises on the same schedule.

     In the event  Sublessor  fails to vacate  portions  of the sublet  premises
     within two weeks of the scheduled dates established in Exhibit I, Sublessor
     shall pay  Sublessee  a penalty  of  $500.00  per day for each  occurrence.
     Nothwithstanding  the above and in the event  Sublessor fails to vacate the
     entire sublet premises by October 31, 1998, then Sublessee's  obligation to
     pay rent shall remain at the current rental rate ($12,500/month) on a daily
     basis until Sublessor vacates the sublet premises.

     Sublessee shall endeavor to minimize the impact of the construction work on
     Sublessor and shall install dust  barriers  around areas of demolition  and
     construction.  Sublessee reserves the right to construct temporary demising
     walls as indicated on Exhibit I.

13.  Telephone Room:

     Sublessee with reasonable notice shall allow Sublessor access and continued
     use of the telephone equipment room for Sublessor's  existing equipment and
     alarm system.

14.  Option to Expand:

     With six (6) months prior written notice to Sublessor, Sublessee shall have
     an option to expand its premises  after the 36th month,  for the balance of
     the space presently occupied by Sublessor in the building at the same terms
     and conditions of the Master Lease. Sublessee shall only have the option to
     expand so long as  Sublessee  is not in  default  (beyond  applicable  cure
     periods) either at the time of the exercise or at any time thereafter until
     the commencement date with respect to the expansion space.

     Included as part of exercising its right to expand,  Sublessee would assume
     the  remaining  term and  conditions  of the  Master  Lease.  In  addition,
     Sublessee  will pay Sublessor the cost of unamortized  tenant  improvements
     that  Sublessor has installed in the building at the start of this Sublease
     dated  August 10,  1998.  However in no event shall the tenant  improvement
     cost exceed  $150,000.  Said costs  shall be prorated  over eighty six (86)
     months at one eighty-sixth  per month. For example,  $150,000 for 86 months
     is  $1,744.19   each  month.   Sublessor   will  provide   Sublessee   with
     documentation to support its  representation  of the costs expended for its
     improvement  work. The amount owing to Sublessor under this paragraph shall
     be delivered to Sublessor in one lump sum by no later than 30 days prior to
     the effective date of the expansion.

15.  Assignment and Subletting:

     Sublessee  shall be allowed to  sublease or assign  this  sublease  without
     Sublessor  and/or  Master  Lessor's   approval  to  any  corporation  which
     controls, or is controlled by or is under common control with Sublessee, or
     to any  corporation  resulting  from the  merger of or  consolidation  with
     Sublessee.  In this  event  Master  Lessor  will  not have  the  option  to
     terminate  the Master Lease under its paragraph  13.(d).  In the event of a
     sublease or assignment to a third party,  Sublessee shall obtain  Sublessor
     and Master Lessor approval which shall not be unreasonably withheld. Master
     Lessor  agrees to the above  provided  that the  substituted  Sublessee has
     equal  or  more  net  worth.  By  signing  this  Sublease,   Master  Lessor
     specifically agrees as follows: In the event

<PAGE>

     worth.  By signing this  Sublease,  Master  Lessor  specifically  agrees as
     follows:  In the event Sublessee  requests the consent of the Master Lessor
     to a further subletting or assignment of the Premises, and if Master Lessor
     elects to terminate the Master Lease,  such termination shall only apply to
     Sublessee's Premises. In such event the Master Lease would be terminated as
     to Sublessee's Premises but not as to Sublessor's remaining Premises.

16.  Existing Lease Agreement:

     Upon  commencement  of this  Sublease  dated August 10, 1998,  the existing
     Sublease between Verticom,  Inc., and Arterial Vascular Engineering,  Inc.,
     dated June 20, 1997 shall be mutually  rescinded  and become null and void,
     provided that any indemnities set forth in the existing  Sublease  relating
     to the period prior to the effective  date of this  Sublease  shall survive
     the termination hereof.

17.  Maintenance, Repairs and Alterations:

     Section  7 of the  Master  Lease  shall  be  modified  to  incorporate  the
     following  language.  "Master  Lessor  shall be  responsible  for the costs
     associated  with a)  replacement  of the roof  membrane  unless  caused  by
     negligence of Lessee or Sublessee, b) The Master Lessor will be responsible
     for the replacement of the base HVAC equipment if replacement is determined
     by a licensed  mechanical  engineering  firm, c) Master Lessor shall not be
     responsible  for any  replacement of the HVAC equipment due to Sublessor or
     Sublessee's negligence.

18.  HVAC:

     Sublessee  shall  maintain  and repair the HVAC,  electrical  systems,  air
     compressors and the boiler after the sublease  commencement date. Sublessor
     to repair the exterior TRANE HVAC unit (chiller) i.e., replace  compressor,
     prior to sublease  commencement.  Sublessor  shall pay up to $5,000  toward
     said cost to repair this unit. If the total cost exceeds $5,000,  then both
     parties shall pay according to their prorata basis.

19.  Prorations:

     Sublessor shall pay to Sublessee for its pro rata share (25%) of any repair
     or maintenance costs to the base building including roof membrane or common
     area.  Maintenance  of HVAC shall be  primarily  conducted  by  Sublessee's
     employees;  however,  major  servicing  i.e.,  equipment  failure  will  be
     conducted  by third  party  vendors.  Sublessor  shall pay for its pro rata
     share of the cost of the  services  provided by said third  party  vendors.
     Repairs  over  $2,000.00  of  base  building,  common  area,  HVAC  or roof
     maintenance  shall be approved by both  Sublessor  and  Sublessee  prior to
     work.  Sublessee  shall  provide  Sublessor  with  a copy  of any  prorated
     expenses, when submitting any invoice to Sublessor.

20.  Notwithstanding  anything  herein to the contrary,  Sublessor  shall not be
     deemed to have assumed any  obligations  of Master  Lessor under the Master
     Lease  (including  work,  services,  repairs,  restorations,  provision  of
     insurance or the performance of any other obligation of Master Lessor under
     the Master Lease), none of which shall be the obligation of Sublessor. Such
     obligations of the Master Lessor shall  include,  without  limitation,  the
     obligations of "Landord" under Articles 7.1, 8.2, 9.2, 9.2, 9.3, and 15.

Exhibit A:      Site Plan
Exhibit B:      Floor Plan
Exhibit C:      Standard Lease Disclosure Addendum
Exhibit D:      Agency Disclosure
Exhibit E:      Arbitration for Lease
Exhibit F:      Right of First Refusal
Exhibit G:      Non-Disturbance and Attornment Agreement
Exhibit H:      Option to Extend
Exhibit I:

Agreed by:   Sublessee:     /s/ Scott Wade                Date:  8/21/88
                           --------------------------           --------------

Agreed by:   Sublessor:     /s/ Stan Mead                 Date:  8/20/98
                           --------------------------           --------------

Agreed by:   Master Lessor: /s/ John Hopkins              Date:  8/24/98
                           --------------------------           --------------

<PAGE>
                                    EXHIBIT A

                                    SITE PLAN

                                [GRAPHIC OMITTED]

<PAGE>

                                   EXHIBIT B
                             
                                   FLOOR PLAN


                               [GRAPHIC OMITTED]


<PAGE>


                                    EXHIBIT C

                       STANDARD LEASE DISCLOSURE ADDENDUM

Notice to Owners,  Buyers and Tenants Regarding  Hazardous Waste or Substances
and Underground Storage Tanks

Comprehensive  federal and state laws and  regulations  have been enacted in the
the last few years in an  effort  to  develop  controls  over the use,  storage,
handling,  cleanup, removal and disposal of hazardous wastes or substances. Some
of these laws and regulations,  such as, for example,  the so-called "Super Fund
Act", provide for broad liability schemes wherein an owner, tenant or other user
of the property may be liable for cleanup costs and damages regardless of fault.
Other laws and  regulations  set  standards  for the  handling  of  asbestos  or
establish  requirements for the use,  modification,  abandonment,  or closing of
underground storage tanks.

It is not  practical or possible to list all such laws and  regulations  in this
Notice.  Therefore,  lessors and lessees are urged to consult  legal  counsel to
determine their  respective  rights and  liabilities  with respect to the issues
described in this Notice as well as other  aspects of the proposed  transaction.
If various  materials  that have been or may be in the future  determined  to be
toxic,  hazardous or undesirable,  or are going to be used,  stored,  handled or
disposed of on the  property,  or if the  property  has or may have  underground
storage tanks for storage of such  hazardous  materials,  or that such materials
may be in the  equipment,  improvements  or soil, it is essential that legal and
technical advice be obtained to determine,  among other things, what permits and
approvals have been or may be required, if any, the estimated costs and expenses
associated with the use, storage, handling,  cleanup, removal or disposal of the
hazardous  wastes or substances and what  contractual  provisions and protection
are necessary or desirable. It may also be important to obtain expert assistance
for site investigations and building inspections.  The past uses of the property
may provide  valuable  information as to the  likelihood of hazardous  wastes or
substances, or underground storage tanks being on the property.

The term  "hazardous  wastes or  substances"  is used in this Notice in its very
broadest  sense and  includes,  but is not  limited to, all those  listed  under
Proposition 65,  petroleum base products,  paints and solvents,  lead,  cyanide,
DDT, printing inks, acids, pesticides,  ammmonium compounds,  asbestos, PCBs and
other chemical products.  Hazardous wastes or substances and underground storage
tanks may be present on all types of real property.  This Notice is,  therefore,
meant to apply to any transaction  involving any type of real property,  whether
improved or unimproved.

Although  Keegan & Coppin  Co.,  Inc.  or its  salespeople,  will  disclose  any
knowledge  it actually  possesses  with  respect to the  existence  of hazardous
wastes or  substances,  or underground  storage tanks on the property,  Keegan &
Coppin Co., Inc. has not made  investigations  or obtained reports regarding the
subject matter of this Notice,  except as may be described in a separate written
document,  studies or  investigation  by experts.  Therefore,  unless  there are
additional documents or studies attached to this notice, lease or contract, this
will serve as  notification  that Keegan & Coppin Co.,  Inc. or its  salespeople
make no  representation  regarding the existence or  non-existence  of hazardous
wastes or substances,  or underground storage tanks on the property.  You should
contact  a  professional,  such  as  a  civil  engineer,  geologist,  industrial
hygienist  or other  persons  with  experience  in these  matters  to advise you
concerning the property.

Americans with Disabilities Act (ADA)

On  July  26,  1991,  the  federal  legislation  known  as  the  Americans  with
Disabilities Act (ADA) was signed into law by President Bush. The purpose of the
ADA is to  integrate  persons  with  disabilities  into the  economic and social
mainstream of American life. Title III of the ADA applies to Lessors and Lessees
of "places of public  accommodation" and "commercial  facilities",  and requires
that places of public  accommodation  undertake "readily  achievable" removal of
communication and access barriers to the disabled. This requirement of Title III
of the ADA is effective January 26, 1992.

It is important that building owners identify and undertake "readily achievable"
removal of any such  barriers in the common areas,  sidewalks,  parking lots and
other areas of the building under their control.

The lessor and lessee is responsible for compliance with ADA relating to removal
of barriers within the workplace i.e.,  arrangement of interior  furnishings and
access within the premises, and any improvements installed by lessor and lessee.

Keegan & Coppin  Company,  Inc.  recommends that both parties seek expert advice
regarding the implications of the Act as it affects this agreement.

Alquist-Priolo:

"The property which is the subject of this contract may be situated in a Special
Study Zone as designated under the Alquist-Priolo  Geologic Hazard Act, Sections
2621-2625,  inclusive, of the Caifornia Public Resources Code; and, as such, the
construction  or  development  on  this  property  of any  structure  for  human
occupancy  may be subject to the  findings  of  geologic  report  prepared  by a
geologist registered in the State of California, unless such report is waived by
the City or  County  under  the terms of that  act.  No  representations  on the
subject  are made by the  lessor or agent,  and the lessee  should  make his own
inquiry or investigation".

Flood Hazard Area Disclosure:

The subject  property  may be situated in a "Special  Flood  Hazard Area" as set
forth on a Federal Emergency Management Agency (FEMA) "Flood Insurance Rate Map"
(FIRM) or "Flood  Hazard  Boundary  Map"  (FHBM).  The law provides  that,  as a
condition of obtaining financing on most structures located in a "Special Floods
Hazard  Area",  lender  requires  flood  insurance  where  the  property  or its
attachments  are  security  for a  loan.  Lessee  should  consult  with  experts
concerning the possible risk of flooding.


     Acknowledgment:

     Lessee: /s/ Scott Wade                      Date:           8/21/98
             ------------------------                          ------------

     Lessor: /s/ Stan Mead                       Date:           8/20/98
             ------------------------                          ------------
<PAGE>


                                   EXHIBIT D

                          LEASING DISCLOSURE REGARDING
                         REAL ESTATE AGENCY RELATIONSHIP

When you enter into a  discussion  with a real  estate  agent  regarding  a real
estate  transaction,  you should from the outset  understand what type of agency
relationship  or  representation  you  wish  to  have  with  the  agent  in  the
transaction.
                                SUBLESSOR'S AGENT
A Sublessor's  agent under a listing  agreement  with the Sublessor  acts as the
agent for the Sublessor. A Sublessor's agent or a subagent of that agent has the
following affirmative obligations:
To the Sublessor:
(a) A fiduciary duty of utmost care,  integrity,  honesty and loyalty in dealing
    with the Sublessor.
To the Sublessee and the Sublessor:
(a) Diligent exercise of reasonable skill and care in performance of the agent's
    duties.
{b) A duty of honest and fair dealing and good faith.
(c) A duty to disclose  all facts known to the agent  materially  affecting  the
    value or  desirability  of the property that are not known to, or within the
    diligent attention and observation of, the parties.

An agent is not obligated to reveal to either party any confidential information
obtained from the other party which does not involve the affirmative  duties set
forth above.
                               SUBLESSEE'S AGENT
A Sublessee's agent can, with a Sublessee's  consent,  agree to act as agent for
the Sublessee only. In these situations, the agent is not the Sublessor's agent,
even if by agreement the agent may receive  compensation for services  rendered,
either  in full or in part  from  the  Sublessor.  An  agent  acting  only for a
Sublessee has the following affirmative obligations.
To the Sublessee:
(a) A fiduciary duty of utmost care, integrity,  honesty and loyalty in dealings
    with the Sublessee.
To the Sublessee and the Sublessor:
(a) Diligent exercise of reasonable skill and care in performance of the agent's
    duties.
(b) A duty of honest and fair dealing and good faith.
(c) A duty to disclose  all facts known to the agent  materially  affecting  the
    value or  desirability  of the property that are not known to, or within the
    diligent attention and observation of, the parties.

An agent is not obligated to reveal to either party any confidential information
obtained from the other party which does not involve the affirmative  duties set
forth above.
                 AGENT REPRESENTING BOTH SUBLESSOR AND SUBLESSEE
A real estate  agent,  either acting  directly or through one or more  associate
licensees, can legally be the agent of both the Sublessor and the Sublessee in a
transaction,  but only with the knowledge and consent of both the  Sublessor and
the Sublessee.

In a dual agency situation,  the agent has the following affirmative obligations
to both the Sublessor and the Sublessee.

(a) A  fiduciary  duty of utmost  care,  integrity,  honest  and  loyalty in the
    dealings with either Sublessor or Sublessee.
(b) Other  duties to the  Sublessor  and the  Sublessee as stated above in their
    respective sections.

In  representing  both Sublessor and Sublessee,  the agent may not,  without the
express permission of the respective party, disclose to the other party that the
Sublessor  will  accept a rent less than the listed  rent or that the  Sublessee
will pay a rent greater than the rent offered.

The above  duties of the agent in a real  estate  transaction  do not  relieve a
Sublessor or Sublessee from the  responsibility  to protect their own interests.
You should carefully read all agreements to assure that they adequately  express
your understanding of the transaction. A real estate agent is a person qualified
to advise  about  real  estate.  If legal or tax  advice is  desired,  consult a
competent professional.

You should read its contents each time it is presented to you,  considering  the
relationship between you and the real estate agent in your specific transaction.

We acknowledge receipt of a copy of this disclosure.

Sublessor /s/ Stan Mead                                     Date 8/20/98
          -----------------------------                          ---------------
Sublessee /s/ Scott Wade                                    Date 8/21/98
          -----------------------------                          ---------------
================================================================================
                    SIGN BELOW TO AUTHORIZE TYPE OF AGENCY

Keegan & Coppin Company, Inc., is the agent of (check one).
(Name of Listing Agent)
     The Sublessor exclusively; or
-----
  X  Both the Sublessee and Sublessor
-----

CONFIRMED AND AUTHORIZED:

Sublessor /s/ Stan Mead                                      Date 8/20/98
          -----------------------------                          ---------------
Sublessor                                                    Date
          -----------------------------                          ---------------

Agent                                            By          Date
     -----------------------------------------     --------      ---------------
--------------------------------------------------------------------------------
Keegan & Coppin Company, Inc., is the agent of (check one):
(Name of Sublessee's agent)
     The Sublessee exclusively; or
-----
     The Sublessor exclusively; or
-----
  X  Both the Sublessee and Sublessor
-----

CONFIRMED AND AUTHORIZED:

Sublessee /s/ Scott Wade                           Date 8/21/98
          -----------------------------                ---------------
Sublessee                                          Date
          -----------------------------                ---------------

Agent                                            By          Date
     -----------------------------------------     --------      ---------------

<PAGE>

                                   EXHIBIT E

                            ARBITRATION OF DISPUTES

                                   FOR LEASE

Any  dispute  or claim in law or  equity  arising  out of this  contract  or any
resulting  transaction  shall be  decided  by  neutral  binding  arbitration  in
accordance with the rules of the American  Arbitration  Association,  and not by
court  action  except as  provided  by  California  law for  judicial  review of
arbitration  proceedings.  Judgment upon the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction  thereof. The parties shall have
the  right to  discovery  in  accordance  with Code of Civil  Procedure  Section
1283.05.  The following matters are excluded from arbitration  hereunder:  (a) a
judicial or non-judicial  foreclosure or other action or proceeding to enforce a
deed of trust,  mortgage,  or real property  sales  contract as defined in Civil
Code  Section  2985,  (b)  an  unlawful  detainer  action,  (c)  the  filing  or
enforcement  of  a  mechanic's   lien,  (d)  any  matter  which  is  within  the
jurisdiction  of a probate court, or small claims court, or an action for bodily
injury or wrongful death, or for latent or patent defects to which Code of Civil
Procedure  Section  337.1 or Section  337.15  applies.  The filing of a judicial
action to enable  the  recording  of a notice of  pending  action,  for order of
attachment,  receivership,  injunction, or other provisional remedies, shall not
constitute a waiver of the right to arbitrate under this provision.

Any  dispute  or claim by or  against  broker(s)  and/or  associate  licensee(s)
participating in this transaction  shall be submitted to arbitration  consistent
with the provision  above only if the  broker(s)  and/or  associate  licensee(s)
making the claim or against  whom the claim is made shall have  agreed to submit
it to arbitration consistent with this provision.


"NOTICE: BY INITIALLING IN THE SPACE BELOW, YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE  'ARBITRATION OF DISPUTES'  PROVISION
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW, AND YOU ARE GIVING
UP ANY RIGHTS YOU MIGHT  POSSESS TO HAVE THE DISPUTE  LITIGATED IN COURT OR JURY
TRIAL. BY INITIALLING IN THE SPACE BELOW, YOU ARE GIVING UP YOUR JUDICIAL RIGHTS
TO DISCOVERY AND APPEAL,  UNLESS THOSE RIGHTS ARE  SPECIFICALLY  INCLUDED IN THE
'ARBITRATION  OF  DISPUTES'  PROVISION.  IF YOU REFUSE TO SUBMIT TO  ARBITRATION
AFTER AGREEING TO THIS  PROVISION,  YOU MAY BE COMPELLED TO ARBITRATE  UNDER THE
AUTHORITY OF THE  CALIFORNIA  CODE OF CIVIL  PROCEDURE.  YOUR  AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY."


"WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES  ARISING
OUT OF THE MATTERS  INCLUDED  IN THE  'ARBITRATION  OF  DISPUTES'  PROVISION  TO
NEUTRAL ARBITRATION."

(    )  (/s/ SW)  Lessee agrees            (    )  (    ) Lessee does not agrees
 ----    -------                            ----    ----                
(    )  (/s/ SM)  Lessor agrees            (    )  (    ) Lessor does not agrees
 ----    -------                            ----    ----                
(    )  (      )  Lessee's Broker agrees             
 ----    -------                
(    )  (      )  Lessor's Broker agrees 
 ----    -------