Cardiogenesis Corp · DEFM14A · On 2/12/99

Filed On 2/12/99   ·   SEC File 0-28424   ·   Accession Number 891618-99-560

Definitive Proxy Solicitation Material -- Merger or Acquisition   ·   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEFM14A     Cardiogenesis Definitive Joint Proxy                 213  1,004K 

Document Table of Contents

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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 

Filed by the Registrant [X]                                                     

Filed by a Party other than the Registrant [ ]                                  

Check the appropriate box:                                                      

                                                                · Download Table
                                                                            
[ ]  Preliminary Proxy Statement                                            
[ ]  Confidential, for Use of the Commission Only                           
    (as permitted by Rule 14a-6(e)(2)                                       
[X]  Definitive Proxy Statement                                             
[ ]  Definitive Additional Materials                                        
[ ]  Soliciting Material Pursuant to sec. 240.14(a)-11(c) or sec. 240.14a-12

CARDIOGENESIS CORPORATION 
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

ECLIPSE SURGICAL TECHNOLOGIES, INC. 
CARDIOGENESIS CORPORATION 
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

PAYMENT OF FILING FEE (Check the appropriate box):                              

[ ]  No fee required.                                                           

[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.   

(1)  Title of each class of securities to which transaction applies:  

        ------------------------------------------------------------------------

(2)  Aggregate number of securities to which transaction applies:     

        ------------------------------------------------------------------------

(3)  Per unit price or other underlying value of transaction computed 
         pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined:*  

        ------------------------------------------------------------------------

(4)  Proposed maximum aggregate value of transaction:                 

        ------------------------------------------------------------------------

(5)  Total fee paid:                                                  

        ------------------------------------------------------------------------

[X]  Fee paid previously with preliminary materials.                            

[ ]  Check box if any part of the fee is offset as provided by Exchange Act Rule
  0-11(a)(2) and identify the filing for which the offsetting fee was paid
    previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.                   

(1)  Amount Previously Paid:                                          

        ------------------------------------------------------------------------

(2)  Form, Schedule or Registration Statement No.:                    

        ------------------------------------------------------------------------

(3)  Filing Party:                                                    

        ------------------------------------------------------------------------

(4)  Date Filed:                                                      

        ------------------------------------------------------------------------

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[CARDIOGENESIS LOGO]

540 OAKMEAD PARKWAY 
SUNNYVALE, CALIFORNIA 94086 
------------------------

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS 
TO BE HELD ON MARCH 17, 1999
------------------------

TO THE STOCKHOLDERS OF CARDIOGENESIS CORPORATION:                               

NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the              
"CardioGenesis Special Meeting") of CardioGenesis Corporation, a Delaware       
corporation ("CardioGenesis"), will be held on Wednesday, March 17, 1999, at    
9:00 a.m. local time, at the principal executive offices of CardioGenesis, 540  
Oakmead Parkway, Sunnyvale, California 94086 to consider and vote upon the      
following:                                                                      

(1) A proposal to approve and adopt the Agreement and Plan of Reorganization    
(the "Reorganization Agreement"), dated as of October 21, 1998, among   
    CardioGenesis, Eclipse Surgical Technologies, Inc., a California corporation
("Eclipse"), and RW Acquisition Corporation, a Delaware corporation and 
wholly-owned subsidiary of Eclipse ("Merger Sub"), and as contemplated  
    thereby, the merger of Merger Sub with and into CardioGenesis (the "Merger")
    pursuant to which each share of Common Stock, $0.001 par value per share, of
    CardioGenesis will be converted into the right to receive 0.80 of a share of
common stock, no par value per share, of Eclipse; and                   

(2) To transact such other business as may properly come before the             
CardioGenesis Special Meeting or any adjournment thereof.               

Only stockholders of record at the close of business on February 8, 1999 are    
entitled to notice of, and to vote at, the CardioGenesis Special Meeting and any
adjournments thereof. A list of CardioGenesis stockholders entitled to vote at  
the Special Meeting will be available for examination during ordinary business  
hours at CardioGenesis' principal executive offices for ten days prior to the   
CardioGenesis Special Meeting.                                                  

Approval and adoption of the Reorganization Agreement and approval of the Merger
will require the affirmative vote of the holders of at least a majority of the  
shares of CardioGenesis Common Stock outstanding on the record date. A form of  
proxy and the Joint Proxy Statement/Prospectus accompanying this Notice contain 
more detailed information with respect to the matters to be considered at the   
Special Meeting.                                                                

You are cordially invited to attend the CardioGenesis Special Meeting in person,
but if you are unable to do so, please complete, sign, date and promptly return 
the enclosed proxy in the enclosed envelope. If you attend the CardioGenesis    
Special Meeting and desire to revoke your proxy and vote in person, you may do  
so. A proxy may be revoked at any time before it is voted.                      

THE CARDIOGENESIS BOARD RECOMMENDS THAT YOU VOTE "FOR" THE ABOVE PROPOSAL.      

                                       By Order of the Board of Directors,

                         /s/ RICHARD P. POWERS
                     Richard P. Powers
             Secretary
Sunnyvale, California                                                           

February 10, 1999                                                               

WHETHER OR NOT YOU EXPECT TO ATTEND THE CARDIOGENESIS SPECIAL MEETING, PLEASE   
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED 
ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE   
AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES.                            

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JOINT PROXY STATEMENT/PROSPECTUS

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PROXY STATEMENT/PROSPECTUS  PROXY STATEMENT
            OF                    OF       
     ECLIPSE SURGICAL        CARDIOGENESIS 
    TECHNOLOGIES, INC.        CORPORATION  

The Eclipse Surgical Technologies, Inc. and CardioGenesis Corporation boards of 
directors have approved a reorganization agreement that would merge             
CardioGenesis with a subsidiary of Eclipse. Upon the completion of the merger,  
each CardioGenesis stockholder will receive 0.80 of a share of Eclipse common   
stock for each share of CardioGenesis common stock held by such stockholder.    
Eclipse common stock trades on the Nasdaq National Market under the symbol ESTI.
CardioGenesis common stock trades on the Nasdaq National Market under the symbol
CGCP.                                                                           

A total of approximately 9,908,040 shares of Eclipse common stock are expected  
to be issued in the merger.                                                     

The Eclipse and CardioGenesis boards of directors have each called special      
meetings for their shareholders to vote on matters relating to the merger.      

You may vote at your special meeting if you own shares of Eclipse or            
CardioGenesis as of the close of business on February 8, 1999. The dates, times 
and places of these special meetings are as follows:                            

                                                                · Download Table
                                                                     
FOR ECLIPSE SHAREHOLDERS:             FOR CARDIOGENESIS STOCKHOLDERS:
Wednesday, March 17, 1999             Wednesday, March 17, 1999      
9:00 a.m. local time                  9:00 a.m. local time           
1049 Kiel Court                       540 Oakmead Parkway            
Sunnyvale, CA 94089                   Sunnyvale, CA 94089            

WE STRONGLY URGE YOU TO READ AND CONSIDER CAREFULLY THIS JOINT PROXY            
STATEMENT/PROSPECTUS, INCLUDING THE "RISK FACTORS" SECTION BEGINNING ON PAGE 12.
THE "RISK FACTORS" SECTION DESCRIBES RISKS THAT YOU SHOULD CONSIDER IN          
DETERMINING WHETHER TO APPROVE THE PROPOSALS AT THE ECLIPSE AND CARDIOGENESIS   
SPECIAL MEETINGS.                                                               

------------------------

Neither the Securities and Exchange Commission nor any state securities         
commission has approved or disapproved these securities or passed upon the      
adequacy or accuracy of this joint proxy statement/prospectus. Any              
representation to the contrary is a criminal offense.                           

------------------------

This joint proxy statement/prospectus is dated February 10, 1999 and is expected
to be first sent to Eclipse shareholders and CardioGenesis stockholders on      
February 12, 1999.                                                              

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TABLE OF CONTENTS 

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                                      PAGE
                                      ----
                                          
SUMMARY.............................    1 
  The Companies.....................    1 
  Our Reasons for the Merger........    1 
  What CardioGenesis Stockholders         
     Will Receive in the Merger.....    2 
  Ownership of Eclipse Immediately        
     Following the Merger...........    2 
  Eclipse Shareholders' Meeting.....    2 
  CardioGenesis Stockholders'             
     Meeting........................    3 
  Our Recommendation to Our               
     Shareholders...................    3 
  Record Date; Voting Power.........    3 
  Vote Required.....................    3 
  Voting Procedures.................    3 
  Exchange of Stock Certificates....    4 
  Share Ownership of Management and       
     Certain Holders................    4 
  Voting Agreements Signed by             
     Certain Shareholders...........    4 
  No Appraisal Rights...............    4 
  Markets and Market Prices.........    4 
  Federal Income Tax Consequences...    5 
  Opinions of PaineWebber and Bear        
     Stearns........................    5 
  Interests of Certain Persons in         
     the Merger.....................    5 
  Conditions to the Merger..........    5 
  Termination of the Reorganization       
     Agreement......................    6 
  Expenses and Termination Fees.....    6 
  Expected Accounting Treatment.....    6 
  Regulatory Approvals..............    6 
  Recent CardioGenesis Financial          
     Results........................    6 
  Recent Eclipse Financial                
     Results........................    7 
  Selected Historical and Selected        
     Pro Forma Combined Financial         
     Information....................    8 
  Comparative Per Share Data........   11 
RISK FACTORS........................   12 
  Risks Related to the Merger.......   12 

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                                      PAGE
                                      ----
                                          
  Risks Related to Business of            
     Eclipse and CardioGenesis......   13 
COMPARATIVE MARKET PRICE DATA.......   26 
WHERE YOU CAN FIND MORE                   
  INFORMATION.......................   27 
INCORPORATION OF CERTAIN DOCUMENTS        
  BY REFERENCE......................   27 
FORWARD-LOOKING STATEMENTS..........   28 
ECLIPSE SPECIAL MEETING.............   29 
  Date, Time and Place of Eclipse         
     Special Meeting................   29 
  Purpose...........................   29 
  Record Date and Outstanding             
     Shares.........................   29 
  Vote Required and Voting Rights...   29 
  Proxies...........................   29 
  Solicitation of Proxies;                
     Expenses.......................   30 
  Independent Accountants...........   30 
  Recommendation of the Eclipse           
     Board..........................   30 
CARDIOGENESIS SPECIAL MEETING.......   31 
  Date, Time and Place of                 
     CardioGenesis Special                
     Meeting........................   31 
  Purpose...........................   31 
  Record Date and Outstanding             
     Shares.........................   31 
  Vote Required and Voting Rights...   31 
  Proxies...........................   31 
  Solicitation of Proxies;                
     Expenses.......................   32 
  Independent Accountants...........   32 
  Recommendation of the                   
     CardioGenesis Board............   33 
APPROVAL OF THE MERGER AND RELATED        
  TRANSACTIONS......................   34 
  Joint Reasons For the Merger......   34 
  Eclipse's Additional Reasons For        
     the Merger.....................   35 
  CardioGenesis' Additional Reasons       
     For the Merger.................   36 
  Material Contacts and Board             
     Deliberations..................   38 
  PaineWebber Opinion...............   41 

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                                      PAGE
                                      ----
                                          
  Bear Stearns Opinion..............   48 
  Material Federal Income Tax             
     Consequences...................   53 
  Governmental and Regulatory             
     Approvals......................   55 
  Expected Accounting Treatment.....   55 
THE REORGANIZATION AGREEMENT AND          
  RELATED AGREEMENTS................   56 
  Effective Time; Effect of               
     Merger.........................   56 
  Conversion of Shares..............   56 
  Treatment of Options and Stock          
     Purchase Rights................   57 
  Stock Ownership Immediately             
     Following the Merger...........   57 
  Representations and Warranties....   58 
  Conduct of Eclipse's and                
     CardioGenesis' Business Prior        
     to the Merger..................   58 
  No Solicitation...................   60 
  Board and Management of the             
     Combined Company Following the       
     Merger.........................   62 
  Conditions to the Merger..........   62 
  Termination of the Reorganization       
     Agreement......................   63 
  Termination Fees..................   64 
  Voting Agreements.................   64 
  Affiliate Agreements..............   65 
  Interests of Certain Persons......   65 
  No Dissenters' or Appraisal             
     Rights.........................   66 
COMPARISON OF CAPITAL STOCK.........   67 
  Description of Eclipse Capital          
     Stock..........................   67 
  Description of CardioGenesis            
     Capital Stock..................   68 
  Comparison of Rights of                 
     Stockholders of CardioGenesis        
     and Shareholders of Eclipse....   68 

                                                                · Download Table

                                      PAGE
                                      ----
                                          
ECLIPSE AND CARDIOGENESIS UNAUDITED       
  PRO FORMA COMBINED CONDENSED            
  FINANCIAL STATEMENTS..............   79 
CARDIOGENESIS BUSINESS..............   84 
CARDIOGENESIS MANAGEMENT'S                
  DISCUSSION AND ANALYSIS OF              
  FINANCIAL CONDITION AND RESULTS OF      
  OPERATIONS........................  102 
CARDIOGENESIS MANAGEMENT AND              
  EXECUTIVE COMPENSATION............  110 
  Executive Officers and                  
     Directors......................  110 
  Executive Compensation............  111 
  Summary Compensation Table........  111 
  Option Grants in Last Fiscal            
     Year...........................  111 
  Aggregated Option Exercises in          
     Last Fiscal Year and Fiscal          
     Year-End Option Values.........  112 
SECURITY OWNERSHIP OF CERTAIN             
  BENEFICIAL OWNERS AND MANAGEMENT        
  OF CARDIOGENESIS..................  113 
LEGAL MATTERS.......................  114 
EXPERTS.............................  114 
SHAREHOLDER PROPOSALS...............  115 
OTHER MATTERS.......................  115 
CARDIOGENESIS INDEX TO FINANCIAL          
  STATEMENTS........................  F-1 
APPENDICES:                               
  Reorganization Agreement..........  A-1 
  PaineWebber Opinion...............  B-1 
  Bear Stearns Opinion..............  C-1 

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SUMMARY 

This summary highlights selected information found in greater detail elsewhere  
in this joint proxy statement/prospectus. This summary does not contain all of  
the information that is important to you. We urge you to read the entire        
document (including the appendices) and the documents which Eclipse has         
incorporated by reference before you decide how to vote. The reorganization     
agreement is attached as Appendix A to this joint proxy statement/ prospectus.  
We encourage you to read the reorganization agreement. It is the legal document 
governing the merger.                                                           

THE COMPANIES (PAGES 27 AND 84)                                                 

ECLIPSE SURGICAL TECHNOLOGIES, INC.                                             
1049 Kiel Court                                                                 
Sunnyvale, California 94089                                                     
(408) 747-0120                                                                  

Eclipse is a medical device company which develops, manufactures, and markets   
cardiac revascularization products for the treatment of advanced cardiovascular 
disease and severe angina pain through transmyocardial revascularization (known 
as TMR) procedures and percutaneous transluminal myocardial revascularization   
(known as PTMR) procedures. TMR and PTMR procedures are investigational laser   
heart treatments in which channels are made in the heart muscle. The TMR        
procedure is performed by a heart surgeon through a small incision in the chest.
The PTMR procedure is performed in a catheter-based procedure under local       
anesthesia by a cardiologist.                                                   

CARDIOGENESIS CORPORATION                                                       
540 Oakmead Parkway                                                             
Sunnyvale, California 94086                                                     
(408) 328-8500                                                                  

CardioGenesis develops, manufactures and markets products involving TMR         
technology. CardioGenesis also manufactures and markets disposable products to  
perform intraoperative transmyocardial revascularization (known as ITMR),       
catheter-based percutaneous myocardial revascularization (known as PMR), and    
thorascopic transmyocardial revascularization (known as TTMR) to treat patients 
afflicted with debilitating angina. These probes and catheter systems deliver   
laser energy to create channels in the oxygen-deprived (ischemic) regions of the
heart muscle (myocardium).                                                      

OUR REASONS FOR THE MERGER (PAGE 34)                                            

The Board of Directors of Eclipse and the Board of Directors of CardioGenesis   
believe that the merger may result in a number of benefits, including:          

- Eclipse and CardioGenesis believe that the business combination of Eclipse and
 CardioGenesis will create a leading provider of TMR laser systems employing a
fiber optic platform with a significant clinical/regulatory lead over       
competitors;                                                                

- Eclipse and CardioGenesis believe that their respective product lines are     
complementary and that the combined company can offer products designed with
the best features of each company's approach to TMR procedures;             

- Eclipse and CardioGenesis estimate that the combined company would have a much
 larger installed base of products, many of which will be installed at leading
cardiological and cardiac surgery centers in the United States;             

- Eclipse and CardioGenesis believe that the combined company will have a       
substantial opportunity to consolidate their company's respective ongoing   
clinical trials and product development                                     

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activities and reduce associated expenses;                                      

- Eclipse and CardioGenesis believe that the combined company will possess a    
significant proprietary patent position, supplementing Eclipse's issued     
patents with those of CardioGenesis;                                        

- Eclipse and CardioGenesis expect that the combined company will be able to    
achieve substantial benefits and considerable efficiencies from a single    
  manufacturing plant that produces at higher manufacturing volumes resulting in
improved operating margins;                                                 

- Eclipse and CardioGenesis believe the transaction will create significant     
potential cost savings at the general and administrative expense and        
management levels as well as in sales and marketing; and                    

- The Eclipse shareholders and CardioGenesis stockholders will have the ability 
to participate in the potential for growth of the combined company after the
merger.                                                                     

The ability of the combined company to realize these benefits is subject to a   
number of risks as discussed on pages 12 through 25.                            

We hope to complete the merger in the first quarter of 1999.                    

WHAT CARDIOGENESIS STOCKHOLDERS WILL RECEIVE IN THE MERGER (PAGE 56)            

CardioGenesis stockholders will receive 0.80 of a share of Eclipse common stock 
for each share of CardioGenesis common stock they own prior to the merger. For  
example, if you own 1,000 shares of CardioGenesis common stock, you will receive
800 shares of Eclipse common stock in exchange for your shares. Similarly, each 
option or other right to purchase CardioGenesis common stock will convert into  
an option or other right to purchase 0.80 as many shares of Eclipse common stock
at an adjusted exercise price. Eclipse will assume each employee stock option or
purchase right of CardioGenesis under the terms of the applicable stock option  
or employee stock purchase plan.                                                

Eclipse will not issue fractional shares. Instead, CardioGenesis stockholders   
will receive cash for any fractional share of Eclipse common stock owed to them 
based on the closing price of Eclipse common stock on Nasdaq on the trading day 
immediately prior to the effective time of the merger.                          

OWNERSHIP OF ECLIPSE IMMEDIATELY FOLLOWING THE MERGER                           

Based upon the number of shares of CardioGenesis common stock issued and        
outstanding on the record date, Eclipse will issue an aggregate of approximately
9,908,040 shares of Eclipse common stock in the merger and the former holders of
CardioGenesis common stock will hold approximately 36.0% of the total number of 
shares of Eclipse common stock issued and outstanding immediately after the     
merger.                                                                         

Based on the number of outstanding options and rights to purchase CardioGenesis 
common stock as of the record date, the total number of outstanding             
CardioGenesis options and purchase rights will become options and rights to     
purchase an aggregate of 1,887,085 shares of Eclipse common stock in the merger.

ECLIPSE SHAREHOLDERS' MEETING (PAGE 29)                                         

The Eclipse special meeting will be held at Eclipse's offices located at 1049   
Kiel Court, Sunnyvale, California 94089 on March 17, 1999 at 9:00 a.m. local    
time. At the meeting, Eclipse will ask its shareholders to approve the          
reorganization agreement including the issuance of Eclipse common stock in the  
merger.                                                                         

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CARDIOGENESIS STOCKHOLDERS' MEETING (PAGE 31)                                   

The CardioGenesis special meeting will be held at CardioGenesis' offices located
at 540 Oakmead Parkway, Sunnyvale, California 94086 on March 17, 1999 at 9:00   
a.m. local time. At the meeting, CardioGenesis will ask its stockholders to     
approve and adopt the reorganization agreement and approve the merger.          

OUR RECOMMENDATION TO OUR                                                       
SHAREHOLDERS (PAGES 30 AND 33)                                                  

To the Eclipse shareholders:                                                

The Eclipse Board believes that the merger is fair to Eclipse and is in the best
interests of both you and Eclipse. The Eclipse Board unanimously recommends that
you vote "FOR" the proposal to approve the reorganization agreement including   
the issuance of Eclipse common stock in the merger.                             

To the CardioGenesis stockholders:                                          

The CardioGenesis Board believes that the merger is fair to and is in the best  
interests of both you and CardioGenesis. The CardioGenesis Board unanimously    
recommends that you vote "FOR" the proposal to approve and adopt the            
reorganization agreement and to approve the merger.                             

RECORD DATE; VOTING POWER (PAGES 29 AND 31)                                     

Each shareholder as of the close of business on February 8, 1999, which is the  
"record date," will be entitled to vote at the Eclipse special meeting or the   
CardioGenesis special meeting, as applicable.                                   

At the close of business on the record date, 17,621,323 shares of Eclipse common
stock were outstanding and entitled to vote at the Eclipse special meeting. Each
Eclipse shareholder will have one vote at the Eclipse special meeting for each  
share of Eclipse common stock owned as of the record date.                      

At the close of business on the record date, 12,385,051 shares of CardioGenesis 
common stock were outstanding and entitled to vote at the CardioGenesis special 
meeting. Each CardioGenesis stockholder will have one vote at the CardioGenesis 
special meeting for each share of CardioGenesis common stock owned as of the    
record date.                                                                    

VOTE REQUIRED (PAGES 29 AND 31)                                                 

The approval of the proposal to approve the reorganization agreement including  
the issuance of shares of Eclipse common stock in the merger requires the       
affirmative vote of at least a majority of the shares of Eclipse common stock   
outstanding and entitled to vote on the record date.                            

The approval of the proposal to approve and adopt the reorganization agreement  
and to approve the merger requires the affirmative vote of at least a majority  
of the shares of CardioGenesis common stock outstanding and entitled to vote on 
the record date.                                                                

VOTING PROCEDURES (PAGES 29 AND 31)                                             

There are two ways to vote at the Eclipse special meeting and the CardioGenesis 
special meeting: either by attending the special meeting or by mailing a proxy. 
However, whether or not a shareholder plans to attend the special meeting, such 
shareholder should return his or her proxy. Please fill out and sign the proxy  
card and mail it in the enclosed return envelope as soon as possible. Returning 
the proxy card ensures that the shares will be represented at the special       
meeting.                                                                        

If a shareholder wants to change his or her vote, the shareholder should send in
a later-dated, signed proxy card to the company's secretary before the special  
meeting or attend the special meeting in person and vote.                       

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EXCHANGE OF STOCK CERTIFICATES (PAGE 57)                                        

If you are a CardioGenesis stockholder, you should NOT send in your stock       
certificates now. After the merger is completed, Eclipse will send CardioGenesis
stockholders written instructions for exchanging their stock certificates.      
Eclipse shareholders will keep their current certificates, and will continue to 
hold the same number of shares of Eclipse common stock after the merger.        

SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN HOLDERS (PAGE 113)                    

As of the record date, the directors and executive officers of Eclipse, as a    
group, beneficially owned 4,914,633 shares of Eclipse common stock.             

As of the record date, the directors and executive officers of CardioGenesis, as
a group, beneficially owned 4,271,693 shares of CardioGenesis common stock.     

VOTING AGREEMENTS SIGNED BY CERTAIN SHAREHOLDERS (PAGE 64)                      

Douglas Murphy-Chutorian, M.D., Kenneth E. Bennert, Richard Mueller, Jr., Alan  
L. Kaganov, Robert L. Mortensen, Iain M. Watson, and Janet Kaiser-Castaneda, who
together held or controlled approximately 28% of the Eclipse common stock       
outstanding as of the record date, have entered into voting agreements with     
CardioGenesis. These shareholders have agreed to vote in favor of the approval  
of the reorganization agreement including the issuance of Eclipse common stock  
in the merger and have granted CardioGenesis irrevocable proxies.               

Allen W. Hill, Edward F. Brennan, Richard P. Powers, David C. Hull, Jr., E.     
Walter Lange, Roseanne Varner, Jack M. Gill, and Robert C. Strauss, who together
held or controlled approximately 29% of the CardioGenesis common stock          
outstanding as of the record date, have entered into voting agreements with     
Eclipse. These stockholders have agreed to vote in favor of the approval and    
adoption of the reorganization agreement and approval of the merger and have    
granted Eclipse irrevocable proxies.                                            

NO APPRAISAL RIGHTS                                                             

Neither CardioGenesis stockholders nor Eclipse shareholders are entitled to     
appraisal or dissenters' rights in connection with the merger.                  

MARKETS AND MARKET PRICES (PAGE 26)                                             

Eclipse common stock is quoted on Nasdaq under the symbol "ESTI." CardioGenesis 
common stock is quoted on Nasdaq under the symbol "CGCP." Following the         
completion of the merger, CardioGenesis common stock will cease to be quoted on 
Nasdaq.                                                                         

The following table sets forth the closing price per share of Eclipse common    
stock, and the closing price per share of CardioGenesis common stock, each as   
quoted on Nasdaq on October 21, 1998, the last trading day before Eclipse and   
CardioGenesis announced that they had signed the reorganization agreement. The  
table also includes the equivalent CardioGenesis per share price which equals   
the Eclipse closing per share price multiplied by the 0.80 exchange ratio in the
merger. The equivalent CardioGenesis per share price can be compared to the     
CardioGenesis closing per share price to indicate the premium that may be       
realized by CardioGenesis stockholders as a result of the merger.               

                                                                · Download Table

                       ECLIPSE   CARDIOGENESIS                
                       COMMON       COMMON        EQUIVALENT  
                        STOCK        STOCK       CARDIOGENESIS
                       CLOSING      CLOSING        PER SHARE  
                        PRICE        PRICE           PRICE    
                       -------   -------------   -------------
                                                              
October 21, 1998.....   $8.78       $2.2188         $7.025    

The actual prices of Eclipse and CardioGenesis common stock prior to or at the  
time the merger is completed will vary                                          

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and we cannot predict what they will be at that time or thereafter.             

FEDERAL INCOME TAX CONSEQUENCES (PAGE 53)                                       

We expect the merger to be treated as a tax-free reorganization for federal     
income tax purposes. CardioGenesis stockholders should not recognize gain or    
loss on the exchange of their stock, except for taxes on cash received in lieu  
of fractional shares. Eclipse shareholders will not recognize any gain or loss  
in connection with the merger.                                                  

The reorganization agreement does not require the parties to obtain a ruling    
from the IRS as to the tax consequences of the merger. As a condition to the    
closing of the merger, CardioGenesis and Eclipse must both receive opinions from
their own legal counsel that, based on certain assumptions and certifications,  
the merger will be treated as a tax-free reorganization for federal income tax  
purposes.                                                                       

TAX MATTERS ARE VERY COMPLICATED. THE TAX CONSEQUENCES OF THE MERGER TO YOU WILL
DEPEND IN PART ON THE FACTS OF YOUR OWN SITUATION. WE URGE YOU TO CONSULT YOUR  
OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER, INCLUDING   
APPLICABLE FEDERAL, LOCAL AND FOREIGN TAX.                                      

OPINIONS OF PAINEWEBBER AND BEAR STEARNS (PAGES 41 AND 48)                      

In deciding to approve the merger, each Board considered the opinion of the     
investment banking firm it retained.                                            

- Eclipse received an opinion from PaineWebber Incorporated, that the exchange  
ratio for the merger was fair, from a financial point of view, to Eclipse as
of the date of the opinion.                                                 

- CardioGenesis received an opinion from Bear, Stearns & Co. Inc., that the     
  exchange ratio for the merger was fair, from a financial point of view, to the
public stockholders of CardioGenesis as of the date of the opinion.         

These opinions are attached as Appendices B and C to this joint proxy statement/
prospectus. We encourage you to read these opinions carefully and in their      
entirety.                                                                       

INTERESTS OF CERTAIN PERSONS IN THE MERGER (PAGE 65)                            

Certain members of CardioGenesis management and of the CardioGenesis Board have 
interests in the merger as employees and/or directors that are different from,  
or in addition to, your interests as a stockholder. If Eclipse and CardioGenesis
complete the merger, Eclipse will continue certain indemnification arrangements 
for persons serving as directors and officers of CardioGenesis at the time of   
the merger for six years. Also, Eclipse will maintain a directors' and officers'
liability insurance policy for the benefit of those persons for six years. In   
addition, the Eclipse Board has agreed to nominate and appoint Allen W. Hill,   
Jack M. Gill, and Robert C. Strauss to the Eclipse Board upon completion of the 
merger. The reorganization agreement also provides that, upon completion of the 
merger, Allen W. Hill will be the Chief Executive Officer of Eclipse and Richard
P. Powers will be the Executive Vice President of Finance and Administration,   
Chief Financial Officer and Secretary of Eclipse.                               

CONDITIONS TO THE MERGER (PAGE 62)                                              

The merger will not be completed unless the closing conditions in the           
reorganization agreement are met. Eclipse and CardioGenesis may each waive      
certain of the closing conditions of the other.                                 

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TERMINATION OF THE REORGANIZATION AGREEMENT (PAGE 63)                           

Either Eclipse or CardioGenesis may terminate the reorganization agreement if:  

- we mutually consent in writing;                                               

- we do not complete the merger by April 30, 1999;                              

- a governmental entity takes any action which permanently prevents us from     
consummating the merger;                                                    

- either of us fails to obtain the requisite shareholder approvals;             

- the CardioGenesis Board or the Eclipse Board recommends a superior proposal to
its shareholders, or if either the CardioGenesis Board or the Eclipse Board 
withholds, withdraws, or modifies in an adverse manner to the other company 
its recommendation relating to the merger; or                               

- CardioGenesis or Eclipse breaches any of its representations, warranties or   
covenants contained in the reorganization agreement.                        

EXPENSES AND TERMINATION FEES (PAGE 64)                                         

We have agreed that we will each pay our own fees and expenses in connection    
with the merger, except that we will share equally all fees and expenses (other 
than attorneys' and accountants' fees and expenses) in connection with the      
printing and filing of this joint proxy statement/ prospectus and the           
registration statement of which this joint proxy statement/prospectus is a part.
In addition, either CardioGenesis or Eclipse must pay the other company $3.0    
million if the reorganization agreement is terminated under certain             
circumstances.                                                                  

EXPECTED ACCOUNTING TREATMENT (PAGE 55)                                         

We expect the merger will be accounted for as a pooling of interests in         
accordance with GAAP.                                                           

REGULATORY APPROVALS (PAGE 55)                                                  

This transaction was not subject to the filing and waiting period requirements  
of the Hart-Scott-Rodino Antitrust Improvement Act of 1976. Based on information
available to us, we believe that the merger will be effected in compliance with 
federal, state and foreign antitrust laws.                                      

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RECENT CARDIOGENESIS FINANCIAL RESULTS                                          

On February 9, 1999, CardioGenesis reported the following unaudited results of  
operations for the year and fourth quarter ended December 31, 1998. In the      
opinion of management, all adjustments consisting of normal recurring accruals  
and considered necessary for a fair presentation of the results of operations   
for the year have been included.                                                

                                                                · Download Table

                            FISCAL    FOURTH  
(IN THOUSANDS, EXCEPT PER    YEAR     QUARTER 
     SHARE AMOUNTS)        --------   ------- 
                                              
Sales..................    $  3,078        98 
Net loss...............     (27,413)   (7,905)
Net loss per share.....       (2.24)    (0.64)

RECENT ECLIPSE FINANCIAL RESULTS                                                

On February 8, 1999, Eclipse reported the following unaudited results of        
operations for the year and fourth quarter ended December 31, 1998. In the      
opinion of management, all adjustments consisting of normal recurring accruals  
and considered necessary for a fair presentation of the results of operations   
for the year have been included.                                                

                                                                · Download Table

                        FISCAL     FOURTH  
(IN THOUSANDS, EXCEPT    YEAR     QUARTER  
 PER SHARE AMOUNTS)    --------   -------- 
                                           
Sales................  $ 12,002   $  5,346 
Net loss.............   (20,354)  $ (3,472)
Net loss per share...  $  (1.18)  $  (0.20)

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SELECTED HISTORICAL AND SELECTED PRO FORMA
COMBINED FINANCIAL INFORMATION

We are providing the following information to aid you in your analysis of the   
financial aspects of the merger. We derived this information from audited       
financial statements for 1993 through 1997 and unaudited financial statements   
for the nine months ended September 30, 1997 and 1998. This information is only 
a summary and you should read it in conjunction with each company's historical  
financial statements, related notes and accountants' reports, and Management's  
Discussion and Analysis of Financial Condition and Results of Operations        
contained in the annual reports, quarterly reports and other information on file
with the SEC. For more financial information on Eclipse, see "Where You Can Find
More Information" on page 27. For more financial information on CardioGenesis,  
see pages F-1 through F-22.                                                     

ECLIPSE SELECTED HISTORICAL FINANCIAL INFORMATION 
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        · Enlarge/Download Table

                                    NINE MONTHS                                                       
                                       ENDED                                                          
                                   SEPTEMBER 30,                  YEAR ENDED DECEMBER 31,             
                                -------------------   ----------------------------------------------- 
                                  1998       1997       1997      1996      1995      1994      1993  
                                --------   --------   --------   -------   -------   -------   ------ 
                                                                                                      
HISTORICAL CONSOLIDATED                                                                               
  STATEMENT OF OPERATIONS                                                                             
  DATA:                                                                                               
Net revenues..................  $  6,656   $  3,863   $  5,499   $ 9,759   $ 2,707   $ 2,020   $2,105 
Loss from operations..........   (17,941)   (14,715)   (20,668)   (5,712)   (1,505)   (1,547)    (933)
Net loss......................   (16,882)   (13,015)   (18,247)   (4,156)   (2,426)   (1,982)    (936)
Net loss per share - basic and                                                                        
  diluted.....................  $  (0.99)  $  (0.80)  $  (1.11)  $ (0.30)  $ (0.23)  $ (0.19)  $(0.10)
Shares used in computing net                                                                          
  loss per share - basic and                                                                          
  diluted.....................    17,126     16,303     16,404    14,078    10,470    10,231    9,381 

                                                        · Enlarge/Download Table

                                                                       DECEMBER 31,                 
                                        SEPTEMBER 30,  ---------------------------------------------
                                            1998        1997      1996      1995      1994     1993 
                                        -------------  -------   -------   -------   ------   ------
                                                                                                    
HISTORICAL CONSOLIDATED BALANCE SHEET                                                               
  DATA:                                                                                             
Cash and cash equivalents..............    $2,134      $16,997   $24,106   $   123   $  132   $  131
Marketable securities..................    14,786       18,197    27,957        --       --       --
Total assets...........................    28,792       43,474    58,706     2,459    2,922    1,953
Long term debt, less current portion...         5           10        20        --    1,009       --
Total shareholders' equity (deficit)...    22,686       38,228    55,666    (1,429)    (139)   1,011

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CARDIOGENESIS SELECTED HISTORICAL FINANCIAL INFORMATION 
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        · Enlarge/Download Table

                          NINE MONTHS                                                     SEPTEMBER 23,
                             ENDED                                                        1993 (DATE OF
                         SEPTEMBER 30,                YEAR ENDED DECEMBER 31,             INCEPTION) TO
                      -------------------   -------------------------------------------   DECEMBER 31, 
                        1998       1997       1997       1996        1995        1994         1993     
                      --------   --------   --------   --------   -----------   -------   -------------
                                                                                                       
HISTORICAL                                                                                             
  CONSOLIDATED                                                                                         
  STATEMENT OF                                                                                         
  OPERATIONS DATA:                                                                                     
Net sales............ $  2,979   $  5,509   $  7,559   $  3,959   $        --   $    --       $  --    
Loss from                                                                                              
  operations.........  (20,972)   (14,597)   (20,790)   (11,086)       (5,481)   (1,982)       (856)   
Net loss.............  (19,509)   (12,409)   (17,971)    (8,800)       (5,299)   (1,784)       (853)   
Net loss per                                                                                           
  share-basic and                                                                                      
  diluted............ $  (1.60)  $  (1.03)  $  (1.49)  $  (1.18)  $(41,077.52)      N/A         N/A    
Shares used in                                                                                         
  computing net loss                                                                                   
  per share..........   12,189     12,008     12,029      7,427          .129         0           0    

                                                        · Enlarge/Download Table

                                                                       DECEMBER 31,                  
                                       SEPTEMBER 30,  ---------------------------------------------- 
                                           1998        1997      1996      1995      1994      1993  
                                       -------------  -------   -------   -------   -------   ------ 
                                                                                                     
HISTORICAL CONSOLIDATED BALANCE SHEET                                                                
  DATA:                                                                                              
Cash and cash equivalents.............    $ 6,901     $ 6,047   $ 2,080   $ 4,150   $ 1,802   $1,113 
Marketable securities.................     18,459      34,488    56,128     9,886     3,522       -- 
Total assets..........................     32,041      48,240    64,297    16,223     5,885    1,127 
Total stockholders' equity                                                                           
  (deficit)...........................     25,336      44,146    61,395    (7,831)   (2,636)    (852)

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SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION 
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

We have presented below unaudited pro forma combined financial information that 
reflects the pooling of interests method of accounting, which means that for    
accounting and financial reporting purposes, we will treat our companies as if  
they had always been combined. We have included this information to give you a  
better picture of what the results of operations and financial position of the  
combined businesses of Eclipse and CardioGenesis might have been had the merger 
occurred on an earlier date. We have combined Eclipse's consolidated financial  
statements for the years ending 1995, 1996 and 1997 and for the nine months     
ended September 30, 1997 and 1998 with CardioGenesis' consolidated financial    
statements for the same periods in order to prepare the pro forma operating     
data. The unaudited pro forma combined balance sheet data gives effect to the   
merger as if it had occurred on September 30, 1998 and combines the unaudited   
consolidated balance sheet data of Eclipse and the unaudited consolidated       
balance sheet data of CardioGenesis as of September 30, 1998. The unaudited pro 
forma combined statement of operations data for the three years ended December  
31, 1997 and the nine months ended September 30, 1997 and 1998 give effect to   
the merger as if it occurred at the beginning of the earliest period presented. 

We are providing this information for illustrative purposes only. It does not   
necessarily reflect what the results of operations or financial position of the 
combined company would have been if the merger had actually occurred at the     
beginning of the earliest period presented. This information also does not      
necessarily indicate what the combined company's future operating results or    
consolidated financial position will be. Eclipse and CardioGenesis estimate that
in total they will incur transaction and integration costs of approximately $5.0
million associated with the merger, which will be charged to their operations   
when incurred, principally in the quarter in which the merger is completed.     
These transaction costs primarily include financial advisory and legal fees and 
costs associated with combining the operations of the two companies. An         
estimated charge of $5.0 million is reflected in the unaudited pro forma        
combined balance sheet data, but is not reflected in the unaudited pro forma    
combined statement of operations data. This charge is a preliminary estimate    
only, and is, therefore, subject to change. This information does not reflect   
the effect of any potential changes in revenues or any operating synergies which
may result from combining the resources of our companies.                       

                                                        · Enlarge/Download Table

                                                  NINE MONTHS                                     
                                                     ENDED                                        
                                                 SEPTEMBER 30,         YEAR ENDED DECEMBER 31,    
                                              -------------------   ----------------------------- 
                                                1998       1997       1997       1996      1995   
                                              --------   --------   --------   --------   ------- 
                                                                                                  
PRO FORMA COMBINED STATEMENT OF OPERATIONS                                                        
  DATA:                                                                                           
Net revenues................................. $  9,635   $  9,372   $ 13,058   $ 13,718   $ 2,707 
Loss from operations.........................  (38,913)   (29,312)   (41,458)   (16,798)   (6,986)
Net loss.....................................  (36,391)   (25,424)   (36,218)   (12,956)   (7,725)
Net loss per share-basic and diluted.........    (1.35)     (0.98)     (1.39)     (0.65)    (0.73)
Shares used in computing net loss per                                                             
  share......................................   26,877     25,909     26,027     20,020    10,573 

                                                                · Download Table

                                                              SEPTEMBER 30,
                                                                  1998     
                                                              -------------
                                                                           
PRO FORMA COMBINED BALANCE SHEET DATA:                                     
Cash and cash equivalents...................................     $ 9,035   
Marketable securities.......................................      33,245   
Total assets................................................      60,833   
Long-term obligations.......................................           5   
Total shareholders' equity..................................      43,022   

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COMPARATIVE PER SHARE DATA

The following table sets forth certain historical per share data of Eclipse and 
CardioGenesis and combined per share data on an unaudited pro forma basis after 
giving effect to the merger on a pooling of interests basis of accounting. You  
should read the information set forth below in conjunction with the selected    
historical financial data and the unaudited pro forma combined condensed        
financial information, included elsewhere in this joint proxy                   
statement/prospectus. The pro forma combined financial data are not necessarily 
indicative of the operating results that would have been achieved had the merger
been consummated as of the beginning of the periods presented and should not be 
construed as representative of future operations. Historical book value per     
share is computed by dividing total shareholders' equity by the number of shares
outstanding at the end of each period. For purposes of the pro forma combined   
data, Eclipse's financial data for the three fiscal years ended December 31,    
1997 and for the nine month periods ended September 30, 1997 and 1998 have been 
combined with CardioGenesis financial data for the same periods. Pro forma      
combined book value per share is computed by dividing pro forma shareholders'   
equity by the number of shares of Eclipse common stock expected to be           
outstanding immediately after the merger. The equivalent pro forma combined net 
loss per CardioGenesis share and equivalent pro forma combined book value per   
CardioGenesis share are calculated by multiplying the respective pro forma      
amounts by the exchange ratio.                                                  

                                                        · Enlarge/Download Table

                                                      NINE MONTHS                                         
                                                         ENDED                                            
                                                     SEPTEMBER 30,           YEAR ENDED DECEMBER 31,      
                                                   ------------------   --------------------------------- 
                                                     1998       1997      1997       1996        1995     
                                                   --------    ------   --------    ------    ----------- 
                                                                                                          
HISTORICAL -- ECLIPSE:                                                                                    
Net loss per share................................  $(0.99)    $(0.80)   $(1.11)    $(0.30)        $(0.23)

                                                                · Download Table

                                                   SEP. 30,  DEC. 31,  
                                                     1998      1997    
                                                   --------  --------  
                                                                       
Book value per share..............................  $ 1.30    $ 2.27   

                                                        · Enlarge/Download Table

                                                      NINE MONTHS                                         
                                                         ENDED                                            
                                                     SEPTEMBER 30,           YEAR ENDED DECEMBER 31,      
                                                   ------------------   --------------------------------- 
                                                     1998       1997      1997       1996        1995     
                                                   --------    ------   --------    ------    ----------- 
                                                                                                          
HISTORICAL -- CARDIOGENESIS:                                                                              
Net loss per share................................  $(1.60)    $(1.03)   $(1.49)    $(1.18)   $(41,077.52)

                                                                · Download Table

                                                   SEP. 30,  DEC. 31,  
                                                     1998      1997    
                                                   --------  --------  
                                                                       
Book value per share..............................  $ 2.07    $ 3.66   

                                                        · Enlarge/Download Table

                                                      NINE MONTHS                                        
                                                         ENDED                                           
                                                     SEPTEMBER 30,           YEAR ENDED DECEMBER 31,     
                                                   ------------------   ---------------------------------
                                                     1998       1997      1997       1996        1995    
                                                   --------    ------   --------    ------    -----------
                                                                                                         
PRO FORMA AND EQUIVALENT PRO FORMA COMBINED NET                                                          
  LOSS PER SHARE:                                                                                        
  Pro forma net loss per Eclipse share............  $(1.35)    $(0.98)   $(1.39)    $(0.65)       $(0.73)
  Equivalent pro forma net loss per CardioGenesis                                                        
    share.........................................  $(1.08)    $(0.79)   $(1.11)    $(0.52)       $(0.58)

                                                                · Download Table

                                                   SEP. 30,  DEC. 31,  
                                                     1998      1997    
                                                   --------  --------  
                                                                       
PRO FORMA COMBINED BOOK VALUE PER SHARE                                
  (AT PERIOD END):                                                     
  Pro forma combined book value per Eclipse                            
    share.........................................  $ 1.58    $ 2.92   
  Equivalent pro forma combined book value per                         
    CardioGenesis share...........................  $ 1.26    $ 2.33   

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RISK FACTORS

You should carefully consider the following factors in evaluating whether to:   

- approve and adopt the reorganization agreement and to approve the merger; or  

- approve the issuance of Eclipse common stock in the merger.                   

These factors do not contain all of the information that may be important to    
you. You should read the entire joint proxy statement prospectus, including the 
forward looking statements, before deciding how to vote.                        

RISKS RELATED TO THE MERGER                                                     

ECLIPSE AND CARDIOGENESIS MAY NOT RECOGNIZE THE ANTICIPATED BENEFITS OF THE     
MERGER IF THEY ARE NOT ABLE TO INTEGRATE THEIR OPERATIONS EFFECTIVELY. The      
combined company will not achieve the anticipated benefits of the merger unless 
Eclipse and CardioGenesis successfully combine their operations in a timely     
manner. If this does not happen, the combined company may suffer:               

- increased operating costs;                                                    

- lower than anticipated financial results; or                                  

- the loss of customers or employees.                                           

The failure to successfully integrate Eclipse and CardioGenesis would have a    
material adverse effect on the business, financial condition and results of     
operations of the combined company.                                             

Integrating Eclipse and CardioGenesis will be a complex, time-consuming and     
expensive process. Prior to the merger, Eclipse and CardioGenesis operated      
independently, and following the merger, the combined company must operate as a 
combined organization using common:                                             

- information communication systems;                                            

- operating procedures;                                                         

- financial controls;                                                           

- research and development and sales and marketing efforts;                     

- distribution and other sales channels;                                        

- product lines;                                                                

- business cultures; and                                                        

- human resource practices.                                                     

Senior officers of the combined company will be required to devote substantial  
attention to designing and implementing a plan to combine the companies. This   
could distract them from managing the business of the combined company.         

The integration of Eclipse and CardioGenesis may involve additional substantial 
difficulties, costs and delays, including:                                      

- perceived adverse changes in customer service standards, business focus or    
product offerings available to customers; and                               

- inefficiencies in delivering products to the customers.                       

A DECREASE IN THE TRADING PRICE OF ECLIPSE COMMON STOCK WILL REDUCE THE VALUE   
THAT CARDIOGENESIS STOCKHOLDERS WILL RECEIVE IN THE MERGER. Because the exchange
ratio for the merger is fixed, a decrease in the market price of Eclipse common 
stock will reduce the dollar value of the stock received in the merger by       
CardioGenesis stockholders. You are urged to obtain current quotations for      
Eclipse and CardioGenesis common stock before voting your shares at your special
meeting of shareholders.                                                        

Eclipse common stock and CardioGenesis common stock historically have had       
substantial price volatility. The recent market prices of Eclipse common stock  
and CardioGenesis common stock are set forth on page 26 under "Comparative      
Market Price Data."                                                             

EXPENSES RELATED TO THE MERGER WILL HAVE A NEGATIVE EFFECT ON RESULTS OF        
OPERATIONS. We estimate that the negotiation and implementation of the merger   
will result in aggregate pretax expenses to Eclipse and CardioGenesis of        
approximately $5.0 million, primarily relating to costs associated with         
combining the operations of the two companies and the fees of financial         

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advisors, attorneys and accountants. We cannot assure you that our estimate is  
correct or that unanticipated contingencies will not occur. These events could  
substantially increase the costs of combining the operations of the two         
companies. The costs associated with the merger will negatively impact results  
of operations in the quarter ending March 31, 1999.                             

THE COMBINED COMPANY MAY NOT BE ABLE TO RETAIN AND INTEGRATE KEY PERSONNEL AND  
THE FAILURE TO DO SO COULD ADVERSELY AFFECT THE BUSINESS OF THE COMBINED        
COMPANY. The success of the combined company depends upon the continued service 
of key personnel. The loss of services of any of the key members of the combined
company's management team or its failure to attract other qualified personnel   
could materially adversely affect the combined company's business. None of the  
key personnel of the combined company will be subject to an employment          
agreement. The competition to attract, retain and motivate qualified technical, 
sales and operations personnel is intense. We cannot assure you that the        
combined company can retain its key personnel or attract other qualified        
personnel in the future.                                                        

THE CARDIOGENESIS DISTRIBUTION AGREEMENT WITH BOSTON SCIENTIFIC CORPORATION MAY 
INTERFERE WITH THE ABILITY OF THE COMBINED COMPANY TO DISTRIBUTE OUTSIDE OF THE 
U.S. PRODUCTS THAT INCORPORATE CARDIOGENESIS TECHNOLOGY. In January 1997,       
CardioGenesis and Boston Scientific Corporation entered into an International   
Distribution Agreement under which Boston Scientific served as the exclusive    
distributor for CardioGenesis products outside of the U.S. If the Boston        
Scientific agreement were to continue in effect after the merger, CardioGenesis 
could not, without Boston Scientific's approval, license Eclipse to incorporate 
CardioGenesis technology into any Eclipse products to be sold outside of the    
U.S. Furthermore, Boston Scientific would have the exclusive right, if it so    
elected under the agreement, to market outside of the U.S. any products         
manufactured by Eclipse that incorporated CardioGenesis technology. Accordingly,
in such event Eclipse could be required to terminate one or more of its existing
international distribution agreements. Such terminations could result in        
difficulties in integrating product lines, and in delays in distribution, which 
could have a material adverse effect on the combined company.                   

In early January 1999, CardioGenesis sent notice to Boston Scientific           
terminating the agreement for various breaches by Boston Scientific of its      
obligations under the agreement. Boston Scientific has contested such           
termination and has contended that this termination by CardioGenesis was an     
attempt to circumvent a provision of the agreement that requires payment to     
Boston Scientific of a $10.0 million termination fee in the event the agreement 
is terminated by a successor corporation. CardioGenesis has vigorously denied   
Boston Scientific's contentions.                                                

While CardioGenesis and Boston Scientific currently are in settlement           
discussions with respect to the agreement, if CardioGenesis does not prevail in 
its position, or is not able to negotiate a satisfactory resolution of this     
matter with Boston Scientific, the combined company may be required to expend   
significant time, energy and funds to resolve this matter, which could have a   
material adverse effect on the business, financial condition and results of     
operations on the combined company. See "CardioGenesis Business -- Termination  
of Relationship with Boston Scientific" at page 89.                             

RISKS RELATED TO BUSINESS OF ECLIPSE AND CARDIOGENESIS                          

ECLIPSE OR CARDIOGENESIS MAY FAIL TO OBTAIN REQUIRED REGULATORY APPROVALS TO    
MARKET THEIR PRODUCTS IN THE UNITED STATES. Eclipse or CardioGenesis may not be 
able to obtain the regulatory approval required for commercial sale of their TMR
and PTMR laser systems in a timely manner. To date, none of the products of     
Eclipse or CardioGenesis have been approved for sale in the United States.      

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The business, financial condition and results of operations of Eclipse or       
CardioGenesis could be materially and adversely affected by any of the following
events, circumstances or occurrences related to the regulatory process:         

- delays in initiating or completing clinical trials or in the receipt of       
regulatory approvals;                                                       

- the failure to obtain regulatory approvals for such products;                 

- significant limitations in the indicated uses for which such products may be  
marketed, or                                                                

- substantial costs incurred in obtaining such approvals.                       

Eclipse and CardioGenesis must submit and the FDA must approve applications for 
preliminary market approval, known as PMA, before they can sell their TMR and   
PTMR laser systems as medical devices. Before submitting a PMA application, they
must complete clinical testing to demonstrate the safety and effectiveness of   
their products.                                                                 

In 1997, Eclipse submitted a PMA application to the FDA for certain applications
of its TMR laser system. On October 27, 1998, an advisory panel of the FDA      
recommended that the FDA approve Eclipse's PMA application for the TMR laser    
system. Along with its approval, the FDA panel requested that Eclipse conduct   
postmarket surveillance in a form to be determined through further discussions  
with the FDA. Eclipse also has applied for and received IDEs to engage in       
various clinical trials of its PTMR products and procedures. Eclipse must       
successfully complete clinical trials of its PTMR products and procedures before
filing a PMA application for those products and procedures.                     

CardioGenesis has received FDA approval of:                                     

- three IDEs for its ITMR laser system and all three of these trials have begun;
and                                                                         

- one IDE for its Axcis PMR laser system for a multi-center clinical trial of   
no-option patients at up to 12 clinical sites.                              

CardioGenesis has not submitted an application to the FDA for an IDE for its    
TTMR laser system.                                                              

ECLIPSE OR CARDIOGENESIS PRODUCTS MAY CONTAIN DEFECTS WHICH COULD DELAY         
REGULATORY APPROVAL OR MARKET ACCEPTANCE OF THEIR PRODUCTS. In January 1996,    
CardioGenesis reported to the FDA the existence of an error in the software     
incorporated into the Ho:YAG laser included in its TMR laser systems.           
CardioGenesis' laser manufacturer, New Star Lasers, determined that, under      
certain circumstances, the laser could be fired even though its control panel   
indicated it was in the "stand-by" mode. CardioGenesis initiated a voluntary    
field correction of the lasers, categorized as a Class II recall by the FDA, and
the software error has been corrected. FDA defines a Class II recall as one in  
which use of, or exposure to, the product may cause temporary or permanent      
adverse health consequences. The FDA has acknowledged the correction of the     
software error and the completion of the related field activities.              

Eclipse or CardioGenesis may experience future product defects, malfunctions,   
manufacturing difficulties or recalls related to the lasers or other components 
used in their TMR systems. Any such occurrence could cause a delay in regulatory
approvals or adversely affect the acceptance of their products and could have a 
material adverse effect on the business, financial condition and results of     
operations of Eclipse or CardioGenesis.                                         

ECLIPSE OR CARDIOGENESIS MAY FAIL TO COMPLY WITH INTERNATIONAL REGULATORY       
REQUIREMENTS AND COULD BE SUBJECT TO REGULATORY DELAYS, FINES OR OTHER          
PENALTIES. Regulatory requirements in foreign countries for international sales 
of medical devices often vary from country to country. The impact of the        
following factors would have a material adverse effect on the business,         
financial condition and results of operations of Eclipse or CardioGenesis:      

- delays in receipt of, or failure to receive, foreign regulatory approvals or  
clearances;                                                                 

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- the loss of previously obtained approvals or clearances; or                   

- the failure to comply with existing or future regulatory requirements.        

The products of Eclipse and CardioGenesis will be subject to other regulatory   
requirements in the European Union and other countries.                         

Any enforcement action by regulatory authorities with respect to past or future 
regulatory noncompliance could have a material adverse effect on the business,  
financial condition and results of operations of Eclipse or CardioGenesis.      

The time required to obtain approval for sale in foreign countries may be longer
or shorter than required for FDA approval, and the requirements may differ. In  
addition, there may be foreign regulatory barriers other than regulatory        
approval. Except as stated in the following sentence, the FDA must approve      
exports of devices that require a PMA but are not yet approved domestically. An 
unapproved device may be exported without prior FDA approval to any member      
country of the European Union and the other "listed" countries, including       
Australia, Canada, Israel, Japan, New Zealand, Switzerland and South Africa:    

- if the device is approved for sale by that country; or                        

- for investigational use in accordance with the laws of that country.          

Eclipse received the CE Mark for its TMR laser system in December 1996 and for  
its PTMR laser system in July 1998. To sell its TMR laser systems within the    
European Economic Area, CardioGenesis has received approval to affix CE markings
on TMR laser systems to attest CardioGenesis' compliance with the requirements  
of the Medical Device Directive of the European Economic Area. In the European  
Economic Area, Eclipse and CardioGenesis will be:                               

- subject to continued supervision;                                             

- required to report any serious adverse incidents to the appropriate           
authorities; and                                                            

- required to comply with additional national requirements that are outside the 
scope of the Medical Device Directive.                                      

CardioGenesis has not received CE Mark certification for the sale of its TTMR   
laser system in the European Economic Area.                                     

Eclipse became ISO 9001 certified in May 1997. CardioGenesis has received ISO   
9001/ EN 46001 certification, which was required to meet the CE Mark            
certification prerequisites.                                                    

Eclipse or CardioGenesis may not be able to:                                    

- achieve or maintain the compliance required for CE marking on all or any of   
their products; and                                                         

- produce their products profitably and in a timely manner while complying with 
the requirements of the Medical Device Directive and other regulatory       
requirements.                                                               

If Eclipse or CardioGenesis fails to comply with applicable regulatory          
requirements it could face:                                                     

- fines, injunctions, civil penalties;                                          

- recalls or seizures of products;                                              

- total or partial suspensions of production;                                   

- refusals by foreign governments to permit product sales; and                  

- criminal prosecution.                                                         

Furthermore, if existing regulations are changed or new regulations or policies 
are adopted, Eclipse or CardioGenesis may:                                      

- not be able to obtain, or affect the timing of, future regulatory approvals or
clearances;                                                                 

- not be able to obtain necessary regulatory clearances or approvals on a timely
basis or at all; and                                                        

- be required to incur significant costs in obtaining or maintaining such       
foreign regulatory approvals.                                               

ECLIPSE AND CARDIOGENESIS PRODUCTS ARE EXPERIMENTAL AND HAVE NOT BEEN BROADLY   
ADOPTED BY THE MEDICAL COMMUNITY AND UNLESS THEY ARE BROADLY ADOPTED THEIR      
BUSINESSES WILL BE                                                              

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ADVERSELY AFFECTED. TMR and PTMR products using lasers are experimental and have
not yet achieved broad clinical adoption. Eclipse and CardioGenesis cannot      
predict whether or at what rate and how broadly their products will be adopted  
by the medical community. The business, financial condition and results of      
operations of Eclipse or CardioGenesis may be adversely and materially affected 
if:                                                                             

- their respective products fail to achieve significant clinical adoption; or   

- their TMR or PTMR laser systems fail to achieve significant market acceptance.

Positive endorsements by physicians are essential for clinical adoption of TMR  
and PTMR laser systems. Even if the clinical efficacy of TMR and PTMR laser     
systems is established, physicians may elect not to recommend TMR or PTMR laser 
systems for any number of reasons. The reasons why TMR or PTMR laser systems may
effectively treat coronary artery disease are not well understood. Although     
Eclipse and CardioGenesis intend to use research, development and clinical      
efforts to understand better the physiological effects of TMR and PTMR          
treatment, Eclipse and CardioGenesis may not achieve such understanding on a    
timely basis, or at all. TMR and PTMR laser systems may not be clinically       
adopted unless Eclipse or CardioGenesis:                                        

- understand thoroughly the physiological effects of the products, or           

- disseminate such understanding within the medical community.                  

Clinical adoption of these products will also depend upon:                      

- the ability of Eclipse or CardioGenesis to facilitate training of             
cardiothoracic surgeons and interventional cardiologists in TMR and PTMR    
therapy; and                                                                

- the willingness of such physicians to adopt and recommend such procedures to  
their patients.                                                             

Patient acceptance of the procedure will depend on:                             

- physician recommendations;                                                    

- the degree of invasiveness;                                                   

- the effectiveness of the procedure; and                                       

- the rate and severity of complications associated with the procedure as       
compared to other procedures.                                               

ECLIPSE AND CARDIOGENESIS PRODUCTS DEPEND ON TMR TECHNOLOGY WHICH IS RAPIDLY    
CHANGING, WHICH COULD REQUIRE THEM TO INCUR SUBSTANTIAL PRODUCT DEVELOPMENT     
EXPENDITURES TO RESPOND TO INDUSTRY CHANGES. TMR and PTMR laser systems are the 
only products of Eclipse and CardioGenesis. Accordingly, if Eclipse or          
CardioGenesis fails to develop and commercialize successfully their TMR and PTMR
laser systems, then their business, financial condition and results of          
operations would be materially adversely affected.                              

The medical device industry is characterized by rapid and significant           
technological change. The future success of Eclipse and CardioGenesis will      
depend in large part on their ability to respond to such changes. In addition,  
Eclipse and CardioGenesis must expand the indications and applications for their
products by developing and introducing enhanced and new versions of their TMR   
and PTMR laser systems. Product research and development requires substantial   
expenditures and is inherently risky. Eclipse and CardioGenesis may not be able 
to:                                                                             

- identify products for which demand exists; or                                 

- develop products that have the characteristics necessary to treat particular  
indications.                                                                

Even if Eclipse or CardioGenesis identifies and develops such products, they may
not receive regulatory approval and may not be commercially successful.         

THIRD PARTIES MAY LIMIT THE DEVELOPMENT AND PROTECTION OF ECLIPSE AND           
CARDIOGENESIS INTELLECTUAL PROPERTY WHICH COULD ADVERSELY AFFECT THEIR          
COMPETITIVE POSITIONS. The success of                                           

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Eclipse and CardioGenesis is dependent in large part on their ability to:       

- obtain patent protection for their products and processes;                    

- preserve their trade secrets and proprietary technology; and                  

- operate without infringing upon the patents or proprietary rights of third    
parties.                                                                    

The medical device industry has been characterized by extensive litigation      
regarding patents and other intellectual property rights. Companies in the      
medical device industry have employed intellectual property litigation to gain a
competitive advantage. Certain competitors and potential competitors of Eclipse 
and CardioGenesis have obtained United States patents covering technology that  
could be used for certain TMR and PTMR procedures. There can be no assurance    
such competitors, potential competitors or others have not filed and do not hold
international patents covering other TMR or PTMR technology. In addition,       
international patents may not be interpreted the same as any counterpart United 
States patents.                                                                 

In September 1995, one of Eclipse's competitors sent Eclipse a notice of        
potential infringement of their patent regarding a method for TMR utilizing     
synchronization of laser pulses to the electrical signals from the heart. After 
discussion with patent counsel, Eclipse concluded that it did not utilize the   
process and/or apparatus that was the subject of the patent at issue, and       
Eclipse provided a response to the competitor to that effect. Eclipse has not   
received any additional correspondence from this competitor on these matters.   

While Eclipse and CardioGenesis periodically review the scope of their patents  
and other relevant patents of which they are aware, the question of patent      
infringement involves complex legal and factual issues. Any conclusion regarding
infringement may not be consistent with the resolution of any such issues by a  
court.                                                                          

Eclipse and CardioGenesis may not be able to protect their intellectual property
because:                                                                        

- patents may not be issued;                                                    

- patents may be challenged, invalidated or designed around by competitors; or  

- patent protection may not continue to be available for surgical methods in the
future.                                                                     

COSTLY LITIGATION MAY BE NECESSARY TO PROTECT OUR INTELLECTUAL PROPERTY         
RIGHTS. Eclipse and CardioGenesis may have to engage in time consuming and      
costly litigation to protect their intellectual property rights or to determine 
the proprietary rights of others.                                               

In addition, Eclipse or CardioGenesis may become subject to:                    

- patent infringement claims or litigation; or                                  

- interference proceedings declared by the U.S. Patent Office to determine the  
priority of inventions.                                                     

Defending and prosecuting intellectual property suits, U.S. Patent Office       
interference proceedings and related legal and administrative proceedings are   
both costly and time-consuming. Eclipse or CardioGenesis may be required to     
litigate further to:                                                            

- enforce their issued patents;                                                 

- protect their trade secrets or know-how; or                                   

- determine the enforceability, scope and validity of the proprietary rights of 
others.                                                                     

Any litigation or interference proceedings will result in:                      

- substantial expense; and                                                      

- significant diversion of effort by technical and management personnel.        

If the results of such litigation or interference proceedings are adverse to    
Eclipse or CardioGenesis, then the results may:                                 

- subject such company to significant liabilities to third parties;             

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- require such company to seek licenses from third parties;                     

- prevent such company from selling its products in certain markets or at all;  
or                                                                          

- require such company to modify its products.                                  

Although patent and intellectual property disputes regarding medical devices are
often settled through licensing and similar arrangements, costs associated with 
such arrangements may be substantial and could include ongoing royalties.       
Furthermore, there can be no assurance the necessary licenses would be available
on satisfactory terms, if at all.                                               

Adverse determinations in a judicial or administrative proceeding or failure to 
obtain necessary licenses could prevent Eclipse or CardioGenesis from           
manufacturing and selling their products. This would have a material adverse    
effect on the business, financial condition and results of operations of such   
company.                                                                        

ECLIPSE AND CARDIOGENESIS RELY ON PATENT AND TRADE SECRET LAWS WHICH ARE COMPLEX
AND MAY BE DIFFICULT TO ENFORCE. The validity and breadth of claims in medical  
technology patents involve complex legal and factual questions and, therefore,  
may be highly uncertain. Issued patent or patents based on pending patent       
applications or any future patent application may not exclude competitors or may
not provide a competitive advantage to Eclipse or CardioGenesis. In addition,   
patents issued or licensed to Eclipse or CardioGenesis may not be held valid if 
subsequently challenged and others may claim rights in or ownership of such     
patents.                                                                        

Furthermore, there can be no assurance that competitors:                        

- have not developed or will not develop similar products;                      

- will not duplicate products of Eclipse or CardioGenesis; or                   

- will not design around any patents issued to or licensed by Eclipse or        
CardioGenesis.                                                              

Since patent applications in the United States are maintained in secrecy until  
patents issue, Eclipse and CardioGenesis cannot be certain:                     

- others did not first file applications for inventions covered by their pending
patent applications, nor                                                    

- that they will not infringe any patents that may issue to others on such      
applications.                                                               

The U.S. patent laws were recently amended to exempt physicians, other health   
care professionals, and affiliated entities from infringement liability for     
medical and surgical procedures performed on patients. Eclipse and CardioGenesis
are not able to predict if this amendment will materially affect their ability  
to protect their proprietary methods and procedures.                            

Competitors may:                                                                

- independently develop proprietary information substantially equivalent to the 
proprietary information and techniques of Eclipse or CardioGenesis, or      

- otherwise gain access to their proprietary technology.                        

In addition to their patents, Eclipse and CardioGenesis rely upon trade secrets,
technical know-how and continuing technological innovation to develop and       
maintain their competitive position. Eclipse and CardioGenesis may not be able  
meaningfully to protect their unpatented technology because:                    

- their employees, consultants and advisors may breach their confidentiality and
invention assignment agreements and there may not be an adequate remedy for 
such breach;                                                                

- their competitors may independently develop substantially equivalent          
proprietary information and techniques; or                                  

- competitors may somehow otherwise gain access to their proprietary technology.

The inability of Eclipse or CardioGenesis to protect their unpatented           
intellectual property could materially adversely affect their business.         

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ECLIPSE AND CARDIOGENESIS FACE INTENSE COMPETITION AND COMPETITIVE PRODUCTS     
COULD RENDER THEIR PRODUCTS OBSOLETE. The market for TMR and PTMR laser systems 
is intensely competitive and is constantly becoming more competitive. If        
competitors are more effective in developing new products and procedures and    
marketing existing and future products, the business, financial condition and   
results of operations of Eclipse or CardioGenesis may be materially adversely   
affected.                                                                       

The market for TMR and PTMR laser systems is characterized by rapid technical   
innovation. Accordingly, competitors may succeed in developing TMR and PTMR     
products or procedures that:                                                    

- are more effective than products marketed by Eclipse or CardioGenesis;        

- are more effectively marketed than products marketed by Eclipse or            
CardioGenesis; or                                                           

- may render the products or technology of Eclipse or CardioGenesis obsolete.   

Eclipse and CardioGenesis compete with:                                         

- PLC Systems, Inc.;                                                            

- U.S. Surgical Corporation; and                                                

- Johnson & Johnson.                                                            

Each of these competitors are currently selling TMR and/or PTMR products for    
investigational use in the U.S. and abroad. Certain companies, including PLC,   
have:                                                                           

- completed enrollment in randomized clinical trials of products and procedures 
involving TMR, and                                                          

- received regulatory approvals in Europe to begin commercially marketing their 
various TMR products.                                                       

Earlier entrants in the market in a therapeutic area often obtain and maintain  
greater market share than later entrants.                                       

Even in the event that Eclipse or CardioGenesis obtains regulatory approval for 
one of their products, they will face competition for market acceptance and     
market share for that product. Their ability to compete may depend in           
significant part on the timing of introduction of competitive products into the 
market, which will be affected by the pace, relative to competitors, at which   
they are able to:                                                               

- develops products;                                                            

- complete clinical testing and regulatory approval processes;                  

- obtain third party reimbursement acceptance; and                              

- supply adequate quantities of the product to the market.                      

ECLIPSE AND CARDIOGENESIS SELL THEIR PRODUCTS INTERNATIONALLY WHICH SUBJECTS    
THEM TO CERTAIN SIGNIFICANT RISKS OF TRANSACTING BUSINESS IN FOREIGN            
COUNTRIES. International sales account for a significant portion of the revenue 
of CardioGenesis. Even if the FDA approves the sale of CardioGenesis products in
the United States, CardioGenesis expects international sales will continue to   
account for a significant portion of its revenues. Eclipse also sells its       
products internationally. The international revenue of Eclipse and CardioGenesis
is subject to the following risks:                                              

- foreign currency fluctuations;                                                

- economic or political instability;                                            

- foreign tax laws;                                                             

- shipping delays;                                                              

- various tariffs and trade regulations;                                        

- restrictions and foreign medical regulations;                                 

- customs duties, export quotas or other trade restrictions; and                

- difficulty in protecting intellectual property rights.                        

Any of these factors could have a material adverse effect on the business,      
financial condition and results of operations of Eclipse or CardioGenesis.      

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ECLIPSE AND CARDIOGENESIS PRODUCTS ALSO COMPETE WITH ALTERNATIVE TREATMENT      
METHODS AND THEIR PRODUCTS MUST REPLACE THESE METHODS TO BE COMMERCIALLY        
SUCCESSFUL. Many of the medical indications that may be treatable with TMR and  
PTMR laser systems are currently being treated by drug therapies or surgery and 
other interventional therapies, including percutaneous transluminal coronary    
angioplasty (known as PTCA) and coronary artery bypass graft.                   

The business, financial condition and results of operations of Eclipse and      
CardioGenesis would be materially adversely affected if TMR technology fails:   

- to replace or augment existing therapies; or                                  

- to be more effective, safer or more cost effective than new therapies.        

A number of the existing therapies:                                             

- are widely accepted in the medical community;                                 

- have a long history of use; and                                               

- continue to be enhanced rapidly.                                              

Procedures using TMR and PTMR technology may not be able to replace or augment  
such established treatments. Clinical research results may not support the use  
of TMR or PTMR procedures to augment or replace existing treatments.            

Others are developing new surgical procedures and new drug therapies to treat   
coronary artery disease. These new procedures and drug therapies could be more  
effective, safer or more cost effective than TMR and PTMR laser systems.        

The market acceptance and commercial success of Eclipse and CardioGenesis TMR   
and PTMR laser systems will depend not only upon their safety and effectiveness,
but also upon the relative safety and effectiveness of alternative treatments.  

ECLIPSE AND CARDIOGENESIS HAVE A HISTORY OF LOSSES AND MAY NOT BE PROFITABLE IN 
THE FUTURE. Eclipse and CardioGenesis cannot assure you that they will become   
profitable in the future. Eclipse and CardioGenesis have incurred significant   
losses since inception. Their revenues and operating income will be constrained:

- until such time, if ever, as they obtain FDA and other regulatory approvals   
for their products; and                                                     

- for an uncertain period of time after such approvals are obtained.            

The combined company may not achieve or sustain profitability in the future.    

IF ECLIPSE AND CARDIOGENESIS EXPERIENCE INCREASED DEMAND FOR THEIR PRODUCTS,    
THEY MAY NOT BE ABLE TO EXPAND THEIR BUSINESSES TO MEET SUCH DEMAND. Eclipse or 
CardioGenesis may be required to expand their business to:                      

- complete the clinical trials that are currently in progress;                  

- prepare additional products for clinical trials;                              

- develop future products; and                                                  

- generally compete successfully.                                               

Such expansion could place a significant strain on managerial, operational and  
financial systems and resources. To accommodate such expansion and compete      
effectively, Eclipse and CardioGenesis must:                                    

- improve information systems, procedures and controls; and                     

- expand, train, motivate and manage their employees.                           

ECLIPSE AND CARDIOGENESIS DEPEND ON SINGLE SOURCE SUPPLIERS FOR CERTAIN KEY     
COMPONENTS AND PRODUCTION COULD BE INTERRUPTED IF A KEY SUPPLIER HAD TO BE      
REPLACED. Eclipse and CardioGenesis currently purchase certain critical laser   
and fiber-optic components from single sources. Although each company has       
identified alternative suppliers, a lengthy process would be required to qualify
them as additional or replacement suppliers. Any significant interruption in the
supply of critical materials or components could adversely affect the ability of
Eclipse or CardioGenesis to manufacture their products and could materially     
adversely affect                                                                

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their manufacturing operations, business and results of operations.             

Eclipse and CardioGenesis anticipate that products will be manufactured based on
forecasted demand and will seek to purchase subassemblies and components in     
anticipation of the actual receipt of purchase orders from customers. Lead times
for materials and components will vary significantly and depend on factors such 
as the business practices of each specific supplier and the terms of particular 
contracts, as well as the overall market demand for such materials and          
components at any given time. If the forecasts are inaccurate, Eclipse or       
CardioGenesis could experience fluctuations in inventory levels, resulting in   
excess inventory, or shortages of critical components, either of which could    
materially adversely affect their business and results of operations.           

Certain suppliers to Eclipse and CardioGenesis could have difficulty expanding  
their manufacturing capacity to meet the needs of Eclipse or CardioGenesis if   
demand for such company's TMR and PTMR laser systems were to increase rapidly or
significantly. In addition, any defect or malfunction in the laser or other     
products provided by such suppliers could cause a delay in regulatory approvals 
or adversely affect product acceptance. There can be no assurance that:         

- materials obtained from outside suppliers will continue to be available in    
adequate quantities; or                                                     

- alternative suppliers can be located on a timely basis.                       

CardioGenesis purchases lasers from suppliers under OEM supply agreements.      
However, Eclipse and CardioGenesis generally operate on a purchase order basis  
with most other suppliers. Such vendors could at any time determine to cease the
supply and production of such components.                                       

ECLIPSE AND CARDIOGENESIS HAVE LIMITED MANUFACTURING EXPERIENCE WHICH COULD     
PREVENT THEM FROM SUCCESSFULLY INCREASING CAPACITY IN RESPONSE TO MARKET        
DEMAND. Eclipse and CardioGenesis have limited experience in manufacturing      
products. Manufacturers often encounter difficulties in increasing production,  
including problems involving:                                                   

- production yields;                                                            

- adequate supplies of components;                                              

- quality control and assurance (including failure to comply with GMP           
regulations, international quality standards and other regulatory           
requirements); and                                                          

- shortages of qualified personnel                                              

There can be no assurance that Eclipse or CardioGenesis:                        

- will be able successfully to increase manufacturing capacity; or              

- will be able to avoid manufacturing difficulties or product recalls.          

ECLIPSE AND CARDIOGENESIS MUST COMPLY WITH FDA MANUFACTURING STANDARDS OR FACE  
FINES OR OTHER PENALTIES INCLUDING SUSPENSION OF PRODUCTION. Eclipse and        
CardioGenesis are required to demonstrate compliance with the FDA's current good
manufacturing practices regulations if they market devices in the United States 
or manufacture finished devices in the United States. The FDA inspects          
manufacturing facilities on a regular basis to determine compliance. If they    
fail to comply with applicable FDA or other regulatory requirements, such       
company can be subject to:                                                      

- fines, injunctions, and civil penalties;                                      

- recalls or seizures of products;                                              

- total or partial suspensions of production; and                               

- criminal prosecutions.                                                        

TO EXPAND THEIR BUSINESSES, ECLIPSE AND CARDIOGENESIS WILL BE REQUIRED TO       
ESTABLISH EFFECTIVE SALES, MARKETING AND DISTRIBUTION SYSTEMS AND THEY HAVE     
LIMITED EXPERIENCE TO DATE ESTABLISHING THESE OPERATIONS. To expand their       
business, Eclipse and CardioGenesis must establish effective systems to sell,   
market and distribute products. To date, Eclipse and CardioGenesis              

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have had limited sales which have consisted primarily of sales of their TMR and 
PTMR laser systems for investigational use only. For this reason, they have     
maintained only a limited sales and marketing organization.                     

If their laser systems receive regulatory approval, Eclipse and CardioGenesis   
each expect to market their products through a direct sales force and through   
relationships with distributors or agents. This will require substantial        
management efforts and financial resources. If Eclipse or CardioGenesis is not  
able to establish relationships with distributors, or if such distributors are  
not effective, their business and results of operations could be materially     
adversely affected.                                                             

ECLIPSE AND CARDIOGENESIS MAY NEED ADDITIONAL CAPITAL OR THEY WILL BE UNABLE TO 
CONTINUE EXPANDING THEIR CLINICAL TRIALS AND TESTING THEIR PRODUCTS. Eclipse and
CardioGenesis currently anticipate that their cash balances, together with sales
of products for investigational use, will be sufficient to meet their capital   
requirements for the next twelve months. If either company cannot raise enough  
additional funds, such company may not be able to continue expanding its        
clinical trials and testing its products. If this were to occur, such company's 
business, results of operations, financial condition and prospects would be     
materially adversely affected.                                                  

Eclipse or CardioGenesis may require additional sources of cash at an earlier   
date. The need for additional cash will depend upon the progress or expansion of
clinical trials and any need for additional trials or other testing of products 
and the timing of these expenditures. Additional financing may not be available 
when needed or on satisfactory terms, if at all.                                

IF CARDIOGENESIS IS NOT ABLE TO RETAIN ITS SCIENTIFIC ADVISORS IT MAY LOSE A    
VALUABLE SOURCE OF PRACTICAL SCIENTIFIC AND MEDICAL KNOWLEDGE. CardioGenesis has
established a Scientific Advisory Board including experts in cardiac surgery,   
interventional cardiology, cardiology and basic science. Members of the         
Scientific Advisory Board consult with CardioGenesis regarding research and     
development efforts at CardioGenesis. The members are employed elsewhere on a   
full-time basis. As a result, they can only spend a limited amount of time on   
CardioGenesis' affairs. There can be no assurance the members of CardioGenesis' 
Scientific Advisory Board will continue to serve in such capacity.              

ECLIPSE AND CARDIOGENESIS WILL BE UNABLE TO OBTAIN FDA APPROVAL IF THEIR        
PRODUCTS ARE NOT PROVEN SAFE AND EFFECTIVE IN CLINICAL TESTS. The FDA has not   
approved Eclipse's or CardioGenesis' TMR or PTMR laser systems for any          
indication in the United States. There can be no assurance regarding the        
clinical safety or efficacy of such systems. CardioGenesis has not begun        
clinical trials of its TTMR laser system and there can be no assurance this     
system will be approved for clinical trials. Conducting TMR clinical trials     
will:                                                                           

- require substantial financial and management resources; and                   

- take several years.                                                           

Eclipse and CardioGenesis cannot assure you that their TMR and PTMR laser       
systems will prove to be safe or effective. The business, financial condition,  
and results of operations of Eclipse or CardioGenesis would be materially and   
adversely affected if their TMR and PTMR laser systems do not prove to be safe  
and effective in clinical trials.                                               

ECLIPSE AND CARDIOGENESIS MAY SUFFER LOSSES FROM PRODUCT LIABILITY CLAIMS IF    
THEIR PRODUCTS CAUSE HARM TO PATIENTS. Eclipse and CardioGenesis are exposed to:

- potential product liability claims; and                                       

- product recalls.                                                              

These risks are inherent in the design, development, manufacture and marketing  
of medical devices. The products of Eclipse and CardioGenesis are designed to be
used in life-threatening situations where there is a high risk of serious injury
or death and such companies could be subject to product liability claims if     

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the use of their TMR or PTMR laser systems is alleged to have caused adverse    
effects on a patient or such products are believed to be defective.             

Any regulatory clearance for commercial sale of these products will not remove  
these risks. Any failure to comply with the FDA's GMP or other regulations could
have a material adverse effect on the ability of Eclipse or CardioGenesis to    
defend against product liability lawsuits. Although neither company has         
experienced any product liability claims to date, any such claims could have a  
material adverse effect on their business, financial condition and results of   
operations.                                                                     

OUR INSURANCE MAY BE INSUFFICIENT TO COVER PRODUCT LIABILITY CLAIMS AGAINST     
US. There can be no assurance that the product liability insurance maintained by
Eclipse or CardioGenesis will:                                                  

- be adequate for any future product liability problems; or                     

- that such insurance coverage will continue to be available on commercially    
reasonable terms, or at all.                                                

If such company were held liable for a product liability claim or series of     
claims in excess of its insurance coverage, such liability could have a material
and adverse effect on such company's business, financial condition and results  
of operations.                                                                  

Eclipse maintains insurance against product liability claims in the amount of:  

- $10 million per occurrence; and                                               

- $10 million in the aggregate.                                                 

CardioGenesis has coverage limits of:                                           

- $5 million per occurrence and in the aggregate; and                           

- additional coverage limits of deutsche mark 1 million (approximately $546,000)
per person and deutsche mark 50 million (approximately $27,300,000) in the  
aggregate for use of CardioGenesis' TMR laser systems in Germany.           

These coverage limits may not adequately protect Eclipse or CardioGenesis from  
liabilities they might incur in connection with the development, manufacture and
sale of their products since:                                                   

- TMR technology is not well understood; and                                    

- there is a lack of data regarding the clinical safety and efficacy of TMR     
laser systems.                                                              

Eclipse or CardioGenesis may require increased product liability coverage if any
products are commercialized. Product liability insurance is expensive and in the
future may not be available on acceptable terms, if at all.                     

ECLIPSE AND CARDIOGENESIS MAY EXPERIENCE ADVERSE EFFECTS ON THEIR BUSINESSES    
RELATED TO YEAR 2000 ISSUES AFFECTING THEIR SUPPLIERS. Many currently installed 
computer systems and software products experience functional difficulty         
distinguishing between twenty-first century dates and twentieth century dates.  
This is commonly known as the Year 2000 Problem. As a result, many companies'   
software and computer systems may need to be upgraded or replaced in order to   
function properly in the future.                                                

As the products that Eclipse itself supplies to its customers are not dependent 
upon date data processing and do not have electrical ports for the connection of
other devices, Eclipse believes that these products are Year 2000 compliant.    

Eclipse does not anticipate any material disruption in its operations as a      
result of any internal or external Year 2000 compliance problems. However,      
Eclipse expects to prepare for minor delays in the receipt of materials and     
services as a result of third parties' failures to meet Year 2000 requirements. 
Eclipse cannot assure you that it will not experience unexpected delays or      
problems as a result of Year 2000 problems.                                     

Eclipse is also working with its suppliers to ensure that its suppliers are Year
2000 compliant. If Eclipse is not able to procure                               

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adequate supplies, it will not be able to manufacture and sell its products,    
which would have a significant material adverse effect on its business and      
results of operations. Eclipse believes that the foregoing describes its most   
reasonably likely worst case Year 2000 scenario.                                

For a description of Year 2000 issues related to CardioGenesis, see page 108.   

THE OPERATING RESULTS OF ECLIPSE AND CARDIOGENESIS ARE EXPECTED TO FLUCTUATE AND
QUARTER TO QUARTER COMPARISONS OF THEIR RESULTS MAY NOT INDICATE FUTURE         
PERFORMANCE. The operating results of Eclipse and CardioGenesis have fluctuated 
significantly from quarter to quarter and are expected to fluctuate             
significantly from quarter to quarter due to a number of events and factors,    
including:                                                                      

- the timing and results of clinical trials;                                    

- delays associated with the FDA and other regulatory approval processes;       

- the enactment of health care reform legislation and any changes in third party
reimbursement policies;                                                     

- the level of product demand and the timing of customer orders;                

- changes in competitive pricing policies;                                      

- the ability to develop, introduce and market new and enhanced versions of     
products on a timely basis;                                                 

- deferrals in customer orders in anticipation of new or enhanced products;     

- product quality problems;                                                     

- personnel changes;                                                            

- changes in strategy; and                                                      

- the level of international sales.                                             

Eclipse and CardioGenesis believe that quarter to quarter comparisons of their  
operating results may not be a good indication of their future performance. It  
is likely that the operating results of Eclipse or CardioGenesis for a future   
quarter will fall below the expectations of public market analysts and          
investors. If this occurs, the price of such company's common stock may fall,   
perhaps substantially.                                                          

ECLIPSE AND CARDIOGENESIS MAY NOT BE ABLE TO SUCCESSFULLY MARKET THEIR PRODUCTS 
IF THEY FAIL TO OBTAIN THIRD PARTY REIMBURSEMENT FOR THE PROCEDURES PERFORMED   
WITH THEIR PRODUCTS. Few individuals are able to pay directly for the costs     
associated with the use of the products of Eclipse and CardioGenesis. In the    
United States, hospitals, physicians and other health care providers that       
purchase medical devices generally rely on third party payors, such as Medicare,
to reimburse all or part of the cost of the procedure in which the medical      
device is being used. A failure by third party payors to provide adequate       
reimbursement for the TMR and PTMR procedures that use Eclipse or CardioGenesis 
products would have a material adverse effect on such company's business,       
financial condition, and results of operations.                                 

Although Eclipse and CardioGenesis do not anticipate receiving reimbursements   
for their laser systems from Medicare during their clinical trials, they will   
seek reimbursement from other third party payors. There can be no assurance,    
however, that such reimbursement will be available.                             

Third party payors may deny reimbursement if they determine that the device used
in a treatment is:                                                              

- unnecessary,                                                                  

- inappropriate;                                                                

- experimental;                                                                 

- used for a non-approved indication; or                                        

- not cost-effective.                                                           

Potential purchasers must determine whether the clinical benefits of Eclipse and
CardioGenesis TMR and PTMR laser systems justify:                               

- the additional cost or the additional effort required to obtain prior         
authorization or coverage; and                                              

- the uncertainty of actually obtaining such authorization or coverage.         

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ECLIPSE AND CARDIOGENESIS MAY NOT ACHIEVE WIDE ACCEPTANCE OF THEIR PRODUCTS IN  
FOREIGN MARKETS IF THEY FAIL TO OBTAIN THIRD PARTY REIMBURSEMENT FOR THE        
PROCEDURES PERFORMED WITH THEIR PRODUCTS. If Eclipse or CardioGenesis obtains   
the necessary foreign regulatory registrations or approvals, market acceptance  
of such company's products in international markets would be dependent, in part,
upon the availability of reimbursement within prevailing health care payment    
systems. Reimbursement and health care payment systems in international markets 
vary significantly by country. They include both government sponsored health    
care and private insurance. Although Eclipse and CardioGenesis expect to seek   
international reimbursement approvals, there can be no assurance any such       
approvals will be obtained in a timely manner, if at all. Failure to receive    
international reimbursement approvals could have a material adverse effect on   
market acceptance of TMR products in the international markets in which such    
approvals are sought.                                                           

OVERALL INCREASES IN MEDICAL COSTS COULD ADVERSELY AFFECT OUR BUSINESS. Eclipse 
and CardioGenesis believe that the overall escalating cost of medical products  
and services has led, and will continue to lead, to increased pressures on the  
health care industry, both foreign and domestic, to reduce the cost of products 
and services, including products offered by them. There can be no assurance in  
either United States or international markets that:                             

- third party reimbursement and coverage will be available or adequate;         

- current reimbursement amounts will not be decreased in the future; or         

- future legislation, regulation or reimbursement policies of third party payors
will not otherwise adversely affect the demand for or the ability of Eclipse
and CardioGenesis to profitably sell their products.                        

Fundamental reforms in the healthcare industry in the United States and Europe  
continue to be considered. Eclipse and CardioGenesis cannot predict whether or  
when any healthcare reform proposals will be adopted and what effect such       
proposals might have on their businesses.                                       

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COMPARATIVE MARKET PRICE DATA 

The table below sets forth, for the calendar quarters indicated, the high and   
low closing prices of Eclipse common stock and CardioGenesis common stock as    
reported on Nasdaq. Eclipse effected the initial public offering of its common  
stock on May 31, 1996 and CardioGenesis effected the initial public offering of 
its common stock on May 22, 1996.                                               

                                                                · Download Table

                                           ECLIPSE COMMON       CARDIOGENESIS       
                                               STOCK             COMMON STOCK       
                                         ------------------   ------------------    
                                          HIGH        LOW      HIGH        LOW      
                                         -------    -------   -------    -------    
                                                                                    
1996 CALENDAR YEAR                                                                  
  Second Quarter........................ $16.50     $12.75    $20.75     $    13.50 
  Third Quarter.........................  14.00       7.50     14.75           9.50 
  Fourth Quarter........................  13.125      8.00     13.625         10.75 

1997 CALENDAR YEAR                                                                  
  First Quarter.........................   9.50       5.625    17.50          11.50 
  Second Quarter........................   8.00       5.00     13.00           7.25 
  Third Quarter.........................   9.625      7.00     13.625          9.75 
  Fourth Quarter........................   9.00       5.50     12.50           5.375

1998 CALENDAR YEAR                                                                  
  First Quarter.........................  12.938      5.875     9.25           6.50 
  Second Quarter........................  12.875      9.375     7.875          4.25 
  Third Quarter.........................  10.125      5.625     5.563          2.125
  Fourth Quarter........................  10.25       6.3125    6.438          1.75 

1999 CALENDAR YEAR                                                                  
  First Quarter (through February 8,                                                
     1999)..............................  12.688      7.375     9.75           5.25 

On October 21, 1998, the last full trading day prior to the public announcement 
of the execution and delivery of the reorganization agreement, the closing      
prices on Nasdaq were $8.7813 per share of Eclipse common stock and $2.2188 per 
share of CardioGenesis common stock. On February 8, 1999, the closing prices on 
Nasdaq were $12.625 per share of Eclipse common stock and $9.5625 per share of  
CardioGenesis common stock.                                                     

Because the exchange ratio for the merger is fixed, changes in the market price 
of Eclipse common stock will affect the dollar value of the shares of Eclipse   
common stock to be received by CardioGenesis stockholders in the merger. Eclipse
shareholders and CardioGenesis stockholders are urged to obtain current market  
quotations for Eclipse common stock and CardioGenesis common stock prior to the 
special meetings.                                                               

Neither Eclipse nor CardioGenesis has ever paid cash dividends. Eclipse and     
CardioGenesis anticipate that the combined company will retain earnings for     
development of its business and will not distribute earnings to shareholders as 
dividends. The declaration and payment by the combined company of any future    
dividends and the amount thereof will depend upon the combined company's results
of operations, financial condition, cash requirements, future prospects,        
limitations imposed by credit agreements or senior securities and other factors 
deemed relevant by its Board of Directors.                                      

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WHERE YOU CAN FIND MORE INFORMATION 

Eclipse and CardioGenesis file annual, quarterly and special reports, proxy     
statements and other information with the SEC. You may inspect and copy such    
material at the public reference facilities maintained by the SEC at Room 1024, 
450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the SEC's regional
offices at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7   
World Trade Center, Suite 1300, New York, New York 10048. You may also obtain   
copies of such material from the SEC at prescribed rates by writing to the      
Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C.   
20549. Please call the SEC at 1-800-SEC-0330 for more information on the public 
reference rooms. You can also find our SEC filings at the SEC's website at      
www.sec.gov, or additional corporate information at Eclipse's website at        
www.eclipsesurg.com and CardioGenesis' website at www.cardiogenesis.com.        
Information found at the Eclipse website or the CardioGenesis website is not    
deemed to be a part of this joint proxy statement/prospectus.                   

Eclipse common stock and CardioGenesis common stock are quoted on the Nasdaq    
National Market and such reports, proxy statements and other information can    
also be inspected at the offices of the National Association of Securities      
Dealers, Inc. located at 9513 Key West Avenue, Rockville, Maryland 20850. After 
the consummation of the merger, CardioGenesis will no longer file reports, proxy
statements or other information with the SEC or Nasdaq. Instead such information
will be provided, to the extent required, in filings made by Eclipse.           

Eclipse was incorporated in California in April 1989. CardioGenesis was         
incorporated in California in September 1993 and changed its state of           
incorporation to Delaware in May 1996.                                          

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

Eclipse is "incorporating by reference" into this joint proxy                   
statement/prospectus the information contained in documents that it files with  
the SEC, which means that Eclipse can disclose important information to you by  
referring you to those documents. The information incorporated by reference is  
considered to be part of this joint proxy statement/prospectus. Information in  
this joint proxy statement/prospectus supersedes information incorporated by    
reference that Eclipse filed with the SEC prior to the date of this joint proxy 
statement/prospectus, while information that Eclipse files later with the SEC   
will automatically update and supersede this information. Eclipse incorporates  
by reference the documents listed below and any future filings it will make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act 
of 1934 subsequent to the date of this joint proxy statement/prospectus:        

   - Eclipse's Annual Report on Form 10-K for the fiscal year ended December
31, 1997;                                                         

 - The description of Eclipse common stock contained in its Registration
Statement on Form 8-A filed with the SEC on April 18, 1996;       

- Eclipse's Definitive Proxy Statement on Schedule 14A dated March 25,
1998;                                                             

     - Eclipse's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998;                       

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- Eclipse's Current Report on Form 8-K dated November 3, 1998; and    

- Eclipse's Current Report on Form 8-K dated December 11, 1998.       

You may request a copy of any of these Eclipse filings, at no cost to you, by   
writing or telephoning Eclipse at:                                              

Eclipse Surgical Technologies, Inc.   
Attention: Investor Relations         
1049 Kiel Court                       
Sunnyvale, CA 94089                   
Telephone (408) 747-0120              

YOU SHOULD MAKE YOUR REQUEST BY MARCH 10, 1999 TO ENSURE DELIVERY OF ANY OF THE 
ABOVE DOCUMENTS PRIOR TO YOUR SPECIAL MEETING.                                  

You should rely only on the information provided or incorporated by reference in
this joint proxy statement/prospectus. We have authorized no one to provide you 
with different information. You should not assume that the information in this  
joint proxy statement/ prospectus is accurate as of any date other than the date
on the front of the document.                                                   

FORWARD-LOOKING STATEMENTS

We have each made forward-looking statements in this joint proxy                
statement/prospectus (and Eclipse has made forward-looking statements in the    
documents that are incorporated by reference in this joint proxy                
statement/prospectus) that are subject to risks and uncertainties.              
Forward-looking statements include information concerning possible or assumed   
future results of operations of Eclipse, CardioGenesis or the combined company. 
Also, when we use words such as "believes," "expects," "anticipates" or similar 
expressions, we are making forward-looking statements within the meaning of     
Section 27A of the Securities Act and Section 21E of the Exchange Act. You      
should note that the merger and an investment in securities of Eclipse involve  
certain risks and uncertainties that could affect the future financial results  
of Eclipse. Some of these risks include: risks related to the integration of    
Eclipse and CardioGenesis, risks associated with a fixed exchange ratio, risks  
relating to the respective businesses of Eclipse and CardioGenesis and other    
risks and uncertainties discussed under "Risk Factors" and elsewhere in this    
joint proxy statement/prospectus and in the Eclipse documents incorporated by   
reference. For more information on these risks, see "Risk Factors" beginning on 
page 12.                                                                        

This joint proxy statement/prospectus contains trademarks of Eclipse and        
CardioGenesis and may contain trademarks of others.                             

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ECLIPSE SPECIAL MEETING 

DATE, TIME AND PLACE OF ECLIPSE SPECIAL MEETING                                 

The Eclipse special meeting will be held at Eclipse's headquarters at 1049 Kiel 
Court, Sunnyvale, California 94089, on Wednesday, March 17, 1999 at 9:00 a.m.   
local time.                                                                     

PURPOSE                                                                         

The purpose of the Eclipse special meeting is to approve the reorganization     
agreement including the issuance of shares of Eclipse common stock to the       
CardioGenesis stockholders in the merger.                                       

RECORD DATE AND OUTSTANDING SHARES                                              

The Eclipse Board has fixed February 8, 1999 as the record date for the Eclipse 
special meeting. Only Eclipse shareholders of record on the record date are     
entitled to notice of and to vote at the Eclipse special meeting. As of the     
record date, there were approximately 178 shareholders of record holding an     
aggregate of approximately 17,621,323 shares of Eclipse common stock.           

VOTE REQUIRED AND VOTING RIGHTS                                                 

Under California law and the charter documents of Eclipse, approval of the      
reorganization agreement including the issuance of shares of Eclipse common     
stock in the merger requires the affirmative vote of at least a majority of the 
shares of Eclipse common stock outstanding on the record date. Each shareholder 
of record of Eclipse common stock on the record date is entitled to cast one    
vote per share, exercisable in person or by properly executed proxy, on each    
matter properly submitted for the vote of the shareholders of Eclipse at the    
Eclipse special meeting.                                                        

The presence, in person or by properly executed proxy, of the holders of at     
least a majority of the outstanding shares of Eclipse common stock entitled to  
vote at the Eclipse special meeting will constitute a quorum. Broker non-votes  
and shares held by persons abstaining will be counted in determining whether a  
quorum is present at the Eclipse special meeting. For the Eclipse proposal,     
abstentions are counted as votes cast and accordingly have the same effect as   
votes against the proposal, whereas broker non-votes are not counted as votes   
cast and therefore once a quorum is present, will have no effect on the         
proposal.                                                                       

The members of the Eclipse Board and certain executive officers of Eclipse, who 
together beneficially hold approximately 28% of the Eclipse common stock        
outstanding as of the record date, have entered into voting agreements with     
CardioGenesis, in which they have agreed, in their capacity as a shareholder of 
Eclipse, to vote in favor of the issuance of Eclipse common stock in the merger 
and have granted CardioGenesis an irrevocable proxy.                            

PROXIES                                                                         

Each of the persons named in the Eclipse proxy as a proxy holder is an officer  
of Eclipse. All shares of Eclipse common stock that are entitled to vote and are
represented at the Eclipse special meeting either in person or by properly      
executed proxies received prior to or at the Eclipse special meeting and not    
duly and timely revoked will be voted at the Eclipse special meeting according  
to the instructions indicated on such proxies. If no such                       

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instructions are indicated, such proxies will be voted for approval of the      
reorganization agreement including the issuance of shares of Eclipse common     
stock in the merger.                                                            

Any proxy given in this solicitation may be revoked by the person giving it at  
any time before it is voted. Proxies may be revoked by:                         

    - filing with the Secretary of Eclipse at or before the taking of the vote
      at the Eclipse special meeting, a written notice of revocation bearing a
later date than the proxy;                                        

- duly executing a later-dated proxy relating to the same shares and  
     delivering it to the Secretary of Eclipse before the taking of the vote
at the Eclipse special meeting; or                                

- attending the Eclipse special meeting and voting in person (although
 attendance at the Eclipse special meeting will not in and of itself
constitute a revocation of a proxy).                              

Any written notice of revocation or later-dated proxy should be sent so as to be
delivered to Eclipse at 1049 Kiel Court, Sunnyvale, California 94089, Attention:
Secretary, or hand-delivered to the Secretary of Eclipse, in each case at or    
before the taking of the vote at the Eclipse special meeting.                   

SOLICITATION OF PROXIES; EXPENSES                                               

Eclipse will bear all costs of soliciting proxies for the Eclipse special       
meeting, except that Eclipse and CardioGenesis have each agreed to pay one-half 
of the filing and printing costs associated with this joint proxy               
statement/prospectus. In addition, Eclipse may reimburse brokerage firms and    
other persons representing beneficial owners of shares for their expenses in    
forwarding solicitation materials to such beneficial owners. Proxies may also be
solicited by certain Eclipse directors, officers and regular employees          
personally or by telephone, telegram, letter or facsimile. Such persons will not
receive additional compensation, but may be reimbursed for reasonable           
out-of-pocket expenses incurred in connection with such solicitation. In        
addition, Eclipse has retained Morrow & Co. to assist in the solicitation of    
proxies from brokers, nominees, institutions and individuals at an estimated fee
of $6,000 plus reimbursement of reasonable expenses. Arrangements will also be  
made with custodians, nominees and fiduciaries for forwarding of proxy          
solicitation materials to beneficial owners of shares held of record by such    
entities, and Eclipse will reimburse such entities for reasonable expenses      
incurred in connection therewith.                                               

INDEPENDENT ACCOUNTANTS                                                         

One or more representatives of PricewaterhouseCoopers LLP, independent          
accountants for Eclipse, are expected to be present at the Eclipse special      
meeting and will have an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions.                      

RECOMMENDATION OF THE ECLIPSE BOARD                                             

THE ECLIPSE BOARD HAS UNANIMOUSLY APPROVED THE REORGANIZATION AGREEMENT AND THE 
MERGER AND HAS DETERMINED THAT THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS 
OF, ECLIPSE AND ITS SHAREHOLDERS. AFTER CAREFUL CONSIDERATION, THE ECLIPSE BOARD
UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE APPROVAL OF THE REORGANIZATION    
AGREEMENT INCLUDING THE ISSUANCE OF SHARES OF ECLIPSE COMMON STOCK IN THE       
MERGER.                                                                         

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CARDIOGENESIS SPECIAL MEETING 

DATE, TIME AND PLACE OF CARDIOGENESIS SPECIAL MEETING                           

The CardioGenesis special meeting will be held at CardioGenesis' headquarters at
540 Oakmead Parkway, Sunnyvale, California, on Wednesday, March 17, 1999 at 9:00
a.m. local time.                                                                

PURPOSE                                                                         

The purpose of the CardioGenesis special meeting is to approve and adopt the    
reorganization agreement and to approve the merger. CardioGenesis stockholders  
may also consider and vote upon such other matters as may properly come before  
the CardioGenesis special meeting or any adjournments of the meeting.           

RECORD DATE AND OUTSTANDING SHARES                                              

The CardioGenesis Board has fixed February 8, 1999 as the record date for the   
CardioGenesis special meeting. Only stockholders of record of CardioGenesis     
common stock on the record date are entitled to notice of, and to vote at, the  
CardioGenesis special meeting. As of the record date, there were 88 stockholders
of record holding an aggregate of 12,385,051 shares of CardioGenesis common     
stock.                                                                          

VOTE REQUIRED AND VOTING RIGHTS                                                 

The affirmative vote of the holders of at least a majority of the CardioGenesis 
common stock outstanding as of the record date is required to approve and adopt 
the reorganization agreement and approve the merger, according to the           
requirements of Delaware law and CardioGenesis' restated certificate of         
incorporation. Each stockholder of record of CardioGenesis common stock on the  
record date, will be entitled to cast one vote per share on each matter to be   
acted upon at the CardioGenesis special meeting.                                

The representation, in person or by proxy, of at least a majority of the        
outstanding shares of CardioGenesis common stock entitled to vote at the        
CardioGenesis special meeting is necessary to constitute a quorum for the       
transaction of business. The effect of an abstention or a broker non-vote is the
same as a vote against the proposal for purposes of obtaining the required vote 
of a majority of the outstanding shares of CardioGenesis common stock to approve
and adopt the reorganization agreement and approve the merger.                  

Certain CardioGenesis directors and certain executive officers of CardioGenesis,
who together hold approximately 29% of the CardioGenesis common stock           
outstanding as of the record date, have entered into voting agreements with     
Eclipse in which they have agreed to vote in favor of the approval of the       
reorganization agreement and approval of the merger and have granted Eclipse an 
irrevocable proxy.                                                              

PROXIES                                                                         

Each of the persons named in the CardioGenesis proxy as a proxy holder is an    
officer of CardioGenesis. All shares of CardioGenesis common stock that are     
entitled to vote and are represented at the CardioGenesis special meeting either
in person or by properly executed proxies received prior to or at the           
CardioGenesis special meeting and not duly and timely revoked will be voted at  
the CardioGenesis special meeting according to the instructions                 

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indicated on such proxies. If no such instructions are indicated, such proxies  
will be voted for the approval and adoption of the reorganization agreement and 
approval of the merger.                                                         

If any other matters are properly presented for consideration at the            
CardioGenesis special meeting, including a motion to adjourn the CardioGenesis  
special meeting to another time or place (including for purposes of soliciting  
additional proxies), unless otherwise indicated on a proxy, the person named as 
proxy and acting thereunder will have the discretion to vote on such matters in 
accordance with his or her best judgement. Such person will not vote any proxy  
that votes against the reorganization agreement and the merger in favor of a    
motion to adjourn the special meeting for purposes of soliciting additional     
proxies.                                                                        

Any proxy given pursuant to this solicitation may be revoked by the person      
giving it at any time before it is voted. Proxies may be revoked by:            

     - filing with the Secretary of CardioGenesis at or before the taking of the
       vote at the CardioGenesis special meeting, a written notice of revocation
bearing a later date than the proxy;                              

- duly executing a later-dated proxy relating to the same shares and  
      delivering it to the Secretary of CardioGenesis before the taking of the
vote at the CardioGenesis special meeting; or                     

- attending the CardioGenesis special meeting and voting in person    
       (although attendance at the CardioGenesis special meeting will not in and
of itself constitute a revocation of a proxy).                    

Any written notice of revocation or later-dated proxy should be sent so as to be
delivered to CardioGenesis at 540 Oakmead Parkway, Sunnyvale, California 94086, 
Attention: Secretary, or hand-delivered to the Secretary of CardioGenesis, in   
each case at or before the taking of the vote at the CardioGenesis special      
meeting.                                                                        

SOLICITATION OF PROXIES; EXPENSES                                               

CardioGenesis will bear all costs of soliciting proxies for the CardioGenesis   
special meeting, except that Eclipse and CardioGenesis have each agreed to pay  
one-half of the filing and printing costs associated with this joint proxy      
statement/prospectus. In addition, CardioGenesis may reimburse brokerage firms  
and other persons representing beneficial owners of shares for their expenses in
forwarding solicitation materials to such beneficial owners. Proxies may also be
solicited by certain CardioGenesis directors, officers and regular employees    
personally or by telephone, telegram, letter or facsimile. Such persons will not
receive additional compensation, but may be reimbursed for reasonable out-of-   
pocket expenses incurred in connection with such solicitation. In addition,     
CardioGenesis has retained MacKenzie Partners, Inc. to assist in the            
solicitation of proxies from brokers, nominees, institutions and individuals at 
an estimated fee of $10,000 plus reimbursement of reasonable expenses.          
Arrangements will also be made with custodians, nominees and fiduciaries for    
forwarding of proxy solicitation materials to beneficial owners of shares held  
of record by such entities, and CardioGenesis will reimburse such entities for  
reasonable expenses incurred in the proxy solicitation.                         

INDEPENDENT ACCOUNTANTS                                                         

One or more representatives of PricewaterhouseCoopers LLP, independent          
accountants for CardioGenesis, are expected to be present at the CardioGenesis  
special meeting and will                                                        

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have an opportunity to make a statement if they desire to do so and will be     
available to respond to appropriate questions.                                  

RECOMMENDATION OF THE CARDIOGENESIS BOARD                                       

THE CARDIOGENESIS BOARD HAS UNANIMOUSLY APPROVED THE REORGANIZATION AGREEMENT   
AND THE MERGER AND HAS DETERMINED THAT THE MERGER IS FAIR TO, AND IN THE BEST   
INTERESTS OF, CARDIOGENESIS AND ITS STOCKHOLDERS. AFTER CAREFUL CONSIDERATION,  
THE CARDIOGENESIS BOARD UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF APPROVAL AND  
ADOPTION OF THE REORGANIZATION AGREEMENT AND APPROVAL OF THE MERGER.            

CARDIOGENESIS STOCKHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES WITH THEIR    
PROXY CARDS.                                                                    

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APPROVAL OF THE MERGER AND RELATED TRANSACTIONS 

Certain statements made in this section are forward-looking statements. For a   
discussion of forward-looking statements, see page 28.                          

JOINT REASONS FOR THE MERGER                                                    

The Boards of Directors of Eclipse and CardioGenesis believe that by combining  
the complementary product lines of the two companies, the combined company would
have the potential to realize long-term improved operating and financial results
and a stronger position in the industry. Eclipse and CardioGenesis have each    
identified reasons for the merger, which are discussed below. In addition, the  
Eclipse Board and the CardioGenesis Board believe the following are reasons why 
the merger will be beneficial to both companies and their shareholders:         

- Eclipse and CardioGenesis believe that the business combination of  
   Eclipse and CardioGenesis will create a leading provider of TMR laser
systems employing a fiber optic platform with a significant       
clinical/regulatory lead over competitors.                        

     - Eclipse and CardioGenesis believe that their respective product lines are
     complementary and that the combined company can offer products designed
  with the best features of each company's approach to TMR procedures.

    - Eclipse and CardioGenesis estimate that the combined company will have a
       much larger installed base of products many of which will be installed at
     leading cardiological and cardiac surgery centers in the United States.

   - Eclipse and CardioGenesis believe that the combined company will have a
      substantial opportunity to consolidate their respective ongoing clinical
       trials and product development activities and reduce associated expenses.

    - Eclipse and CardioGenesis believe that the combined company will possess
       a significant proprietary patent position, supplementing Eclipse's issued
patents with those of CardioGenesis.                              

   - Eclipse and CardioGenesis expect that the combined company will be able
  to achieve substantial benefits and considerable efficiencies from a
      single manufacturing plant that produces at higher manufacturing volumes
   and that absorbs manufacturing overhead to improve operating margins.

   - Eclipse and CardioGenesis believe the transaction will create potential
     annual cost savings of approximately $14.6 million. Annual cost savings
     in manufacturing are estimated to be $1.4 million consisting of reduced
 facilities and depreciation costs of $600,000 and salary and fringe
    benefits savings of $800,000. Estimated annual savings in the research
and development and clinical and regulatory areas of $11.3 million
       consist of $10.0 million of reduced costs paid to outside parties related
     primarily to conducting and monitoring clinical trials, $1.2 million in
     savings related to salaries and fringe benefits and $100,000 of reduced
depreciation costs. Estimated annual cost savings in general and  
   administrative, and marketing and sales of approximately $1.9 million
consist of $1.2 million in savings related to salaries and fringe 
 benefits, $400,000 in reduced facilities and depreciation costs and
 $300,000 in reduced advertising costs. The figures above are annual
amounts. Based upon the                                           

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     anticipated closing date of the merger, the combined company expects to
    realize cost savings of approximately $10.9 million during fiscal year
1999.                                                             

     - Eclipse shareholders and CardioGenesis stockholders will have the ability
 to participate in the potential for growth of the combined company.

Each Board of Directors recognizes that the ability of the combined company to  
realize the potential benefits of the merger is subject to a number of risks    
including those discussed on pages 12 through 25.                               

ECLIPSE'S ADDITIONAL REASONS FOR THE MERGER                                     

On October 21, 1998, the Eclipse Board determined the merger to be advisable and
fair and in the best interests of Eclipse and its shareholders and approved the 
reorganization agreement and the merger. The Eclipse Board unanimously          
recommends that the Eclipse shareholders vote FOR the approval of the           
reorganization agreement including the issuance of shares of Eclipse common     
stock in the merger.                                                            

In addition to the joint benefits described above, in the course of its         
deliberations the Eclipse Board considered a number of factors relating to the  
merger, including the following:                                                

     - historical information concerning Eclipse's and CardioGenesis' respective
     businesses, prospects, financial performance and condition, operations,
       technology, management and competitive position, including public reports
     concerning results of operations during the most recent fiscal year and
fiscal quarter for each company filed with the SEC;               

- Eclipse management's view of the financial condition, results of    
     operations and businesses of Eclipse and CardioGenesis before and after
giving effect to the merger;                                      

- current financial market conditions and historical market prices,   
     volatility and trading information with respect to Eclipse common stock
and CardioGenesis common stock;                                   

 - the consideration to be received by CardioGenesis stockholders in the
     merger, the relationship between the market value of the Eclipse common
   stock to be issued in exchange for each share of CardioGenesis common
stock, the market value of the CardioGenesis common stock and a   
comparison of comparable merger transactions;                     

    - the belief that the terms of the reorganization agreement, including the
       parties' representations, warranties and covenants, and the conditions to
their respective obligations, are reasonable;                     

   - Eclipse management's view of the prospects of Eclipse as an independent
company;                                                          

- the likelihood that in the future another party could enter into a  
     strategic relationship with or acquire CardioGenesis if the merger were
not undertaken;                                                   

- the financial analysis performed by PaineWebber presented at Eclipse
       Board meetings on October 18, 1998 and October 21, 1998. This analysis is
     described on page 48 and was the basis for PaineWebber's opinion, dated
   October 21, 1998, that, as of such date, the exchange ratio was fair,
from a financial point of view, to Eclipse;                       

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   - the expected impact of the merger on Eclipse's customers and employees;

   - reports from Eclipse management, legal and financial advisors as to the
results of their due diligence investigation of CardioGenesis; and

 - the expectation that the merger will be accounted for as a pooling of
interests.                                                        

The Eclipse Board also identified and considered a variety of potentially       
negative factors in its deliberations concerning the merger, including:         

  - the risk that the potential benefits sought in the merger might not be
fully realized;                                                   

   - the possibility that the merger might not be consummated and the effect
       of public announcement of the merger on (a) Eclipse's sales and operating
     results, (b) Eclipse's ability to attract and retain key management and
   technical personnel and (c) progress of certain development projects;

    - the potential dilutive effect of the issuance of Eclipse common stock in
the merger;                                                       

 - charges estimated at $4.0 to 6.0 million to be incurred in connection
with the merger, including costs of integrating the businesses and
transaction expenses arising from the merger; and                 

    - the risk that despite the efforts of the combined company, key technical
and management personnel might not remain employed by the combined
       company, and that product lines and sales channels might not be timely or
well integrated.                                                  

The foregoing discussion of the benefits and factors considered by the Eclipse  
Board is not intended to be exhaustive, but summarizes all material benefits and
factors considered. The Eclipse Board did not find it practicable in view of the
wide variety of factors it considered to quantify or otherwise assign relative  
weight to the specific factors considered. However, after taking into account   
all of the factors above, the Eclipse Board determined unanimously that the     
merger was fair and in the best interests of Eclipse and its shareholders and   
that Eclipse should proceed with the merger and the reorganization agreement.   

CARDIOGENESIS' ADDITIONAL REASONS FOR THE MERGER                                

On October 21, 1998, the CardioGenesis Board determined the merger to be        
advisable and fair to, and in the best interests of, CardioGenesis and the      
CardioGenesis stockholders and approved the reorganization agreement and the    
merger. The CardioGenesis Board unanimously recommends that the CardioGenesis   
stockholders vote FOR the proposal to approve and adopt the reorganization      
agreement and approve the merger.                                               

In addition to the joint benefits described above, in the course of its         
deliberations during CardioGenesis Board meetings held on October 12, 1998 and  
October 21, 1998, the CardioGenesis Board reviewed with CardioGenesis management
a number of additional factors relevant to the merger, including the strategic  
overview and prospects for CardioGenesis, its products and its finances. At the 
October 21, 1998 meeting, the CardioGenesis Board considered a financial        
presentation by Bear Stearns, including the opinion of Bear Stearns, which      
concluded that the exchange ratio was fair, from a financial point of view, to  
the public stockholders of CardioGenesis on such date (a copy of which is       
attached as Appendix C).                                                        

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The CardioGenesis Board also considered, among other matters:                   

     - historical information concerning CardioGenesis' and Eclipse's respective
     businesses, prospects, financial performance and condition, operations,
       technology, management and competitive position, including public reports
     concerning results of operations during the most recent fiscal year and
fiscal quarter for each company with the SEC;                     

     - CardioGenesis management's view as to the financial condition, results of
     operations and businesses of Eclipse and CardioGenesis before and after
giving effect to the merger, based on management due diligence and
publicly available financial information;                         

- current financial market conditions and historical market prices,   
     volatility and trading information with respect to Eclipse common stock
and CardioGenesis common stock;                                   

 - the consideration to be received by CardioGenesis stockholders in the
 merger and the relationship between the market value of the Eclipse
   common stock to be issued in exchange for each share of CardioGenesis
common stock and a comparison of comparable merger transactions;  

   - the tax and accounting treatments to be accorded the merger and the pro
forma effect of same on the combined company;                     

   - CardioGenesis management's view as to the prospects of CardioGenesis as
an independent company;                                           

    - CardioGenesis management's view as to the potential for other parties to
  enter into strategic relationships with or to acquire Eclipse if the
merger was not undertaken;                                        

   - the impact of the merger on CardioGenesis' customers and employees; and

     - reports from CardioGenesis management, legal and financial advisors as to
the results of their due diligence investigation of Eclipse.      

The CardioGenesis Board considered generally the material terms of the merger   
and concluded that such terms were appropriate for a transaction of that type.  
The CardioGenesis Board also considered CardioGenesis' and Eclipse's respective 
rights to consider and negotiate other acquisition proposals in certain         
circumstances, as well as the possible effects of the provisions regarding      
termination fees.                                                               

The CardioGenesis Board took note of the fact that the reorganization agreement 
provides for a fixed exchange ratio, which posed some risk to CardioGenesis     
stockholders in the event of a decline in the value of Eclipse common stock. If 
such a decline occurred, the exchange ratio might represent less of a premium   
over the market price of CardioGenesis common stock than it represented on      
October 21, 1998. However, the CardioGenesis Board concluded that, from a       
long-range perspective, as distinguished from the market price of the Eclipse   
common stock on any given date, the exchange ratio represented an attractive    
price for CardioGenesis, in part, because it preserved the "upside" opportunity 
to benefit from any future increase in the market price of Eclipse common stock,
whether due to the combination of the two companies or otherwise. Based on its  
familiarity with the medical device industry generally and information available
to it with respect to Eclipse specifically, the CardioGenesis Board determined  
that the benefits of a fixed                                                    

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exchange ratio at least equaled, and possibly outweighed, the risks of such a   
pricing mechanism.                                                              

The CardioGenesis Board also identified and considered a number of other        
potentially negative factors in its deliberations concerning the merger,        
including:                                                                      

  - the risk that the potential benefits sought in the merger might not be
fully realized;                                                   

   - the possibility that the merger would not be consummated and the effect
      of the public announcement of the merger on (a) CardioGenesis' sales and
     operating results, (b) CardioGenesis' ability to attract and retain key
management, marketing and technical personnel, and (c) progress of
certain development projects;                                     

 - charges estimated at $4.0 to 6.0 million to be incurred in connection
with the merger, including costs of integrating the businesses and
transaction expenses arising from the merger; and                 

    - the risk that despite the efforts of the combined company, key technical
       and management personnel may not remain employed by the combined company.

The CardioGenesis Board believed that these risks were outweighed by the        
potential benefits of the merger. See "Risk Factors -- Risks Related to the     
Merger."                                                                        

The foregoing discussion of benefits and factors considered by the CardioGenesis
Board is not intended to be exhaustive, but summarizes all material benefits and
factors considered. The CardioGenesis Board did not assign any relative or      
specific weights to the foregoing factors nor did it specifically characterize  
any factor as positive or negative (except as described above), and individual  
directors may have given differing weights to different factors and may have    
viewed certain factors more positively or negatively than others. Throughout its
deliberations, the CardioGenesis Board received the advice of Heller Ehrman     
White & McAuliffe, its legal advisor, and Bear Stearns, its financial advisor.  

THE CARDIOGENESIS BOARD UNANIMOUSLY RECOMMENDS THAT CARDIOGENESIS STOCKHOLDERS  
APPROVE THE REORGANIZATION AGREEMENT AND THE MERGER.                            

MATERIAL CONTACTS AND BOARD DELIBERATIONS                                       

In January 1998, Douglas Murphy-Chutorian, M.D., Chairman of the Board and Chief
Executive Officer of Eclipse, contacted Allen W. Hill, President and Chief      
Executive Officer of CardioGenesis, and had a preliminary conversation          
concerning industry issues and generally regarding the possibility of a business
combination. Mr. Hill advised the CardioGenesis Board of his conversation with  
Dr. Murphy-Chutorian. No further discussions were held between the parties.     

In late August 1998, Dr. Murphy-Chutorian contacted Mr. Hill to determine       
whether CardioGenesis might be interested in a possible business combination    
between Eclipse and CardioGenesis. As a result of this conversation, Dr.        
Murphy-Chutorian and Mr. Hill met later in August 1998 and discussed the        
business objectives of each of Eclipse and CardioGenesis. They also discussed a 
possible business combination between the two companies and focused on the      
strengths and weaknesses of each company and the attributes, potential benefits 
and synergies of a business combination. Dr. Murphy-Chutorian and Mr. Hill      
agreed to report on the discussions at this meeting to their respective Boards  
of Directors.                                                                   

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On September 1, 1998, the Eclipse Board held a meeting at which a possible      
business combination with CardioGenesis was discussed. At this meeting, the     
Board directed management to invite Mr. Hill to make a presentation to the      
Eclipse Board.                                                                  

On September 10 and September 16, 1998, Mr. Hill and Richard Powers,            
CardioGenesis' Chief Financial Officer, Executive Vice President of Finance and 
Administration, and Dr. Murphy-Chutorian and Richard Mueller, Eclipse's         
President and Chief Operating Officer, made presentations of non-confidential   
information to the Eclipse Board and the CardioGenesis Board, respectively, that
included a description of each company's products, customer base and history.   
Each presentation included a discussion of each company's financial results for 
its current fiscal year through June 30, 1998 and the potential benefits and    
risks of a strategic combination of Eclipse and CardioGenesis. Following each   
presentation, each Board discussed at length a possible business combination of 
Eclipse and CardioGenesis, including the potential terms of such a transaction. 
Thereafter, each Board authorized its management to proceed with further        
discussions and to commence a more comprehensive review of the other company.   
Each Board also directed its management to engage an investment banking firm to 
render a fairness opinion with respect to a transaction, in the case of Eclipse,
and to act as financial advisor, in the case of CardioGenesis, and to consult   
with their respective legal counsel regarding the structure and timing of a     
possible transaction.                                                           

During the weeks of September 13 and September 20, 1998, Dr. Murphy-Chutorian,  
Mr. Mueller, Kenneth E. Bennert, Chief Financial Officer of Eclipse, Mr. Hill,  
and Mr. Powers, along with their respective legal counsel and independent       
accountants, held discussions regarding the terms and structure of the proposed 
business combination. On September 20, 1998, Eclipse and CardioGenesis executed 
mutual confidential non-disclosure agreements providing for the exchange of     
non-public proprietary information by the two companies for the purpose of      
evaluating a possible business combination. Thereafter, Eclipse and             
CardioGenesis, and their respective legal counsel and independent accountants,  
conducted extensive due diligence reviews of, among other things, each other's  
business, assets, financial condition, results of operations, legal affairs and 
prospects.                                                                      

On October 5, 1998, Eclipse retained PaineWebber to render a fairness opinion   
with respect to the proposed business combination with CardioGenesis and        
CardioGenesis retained Bear Stearns to act as its financial advisor in          
connection with the proposed business combination.                              

On October 12, 1998, the CardioGenesis Board held a special meeting at which the
management of CardioGenesis, and its legal counsel, financial advisor and       
independent accountants, reviewed the status of their due diligence reviews of  
Eclipse, the potential benefits and risks associated with a business combination
with Eclipse, including the likelihood of consummating the transaction, and the 
proposed terms of the reorganization agreement. After an extensive discussion,  
the Board approved the retention of Bear Stearns and authorized senior          
management and the company's legal counsel and financial advisor to continue    
negotiations with Eclipse.                                                      

At a special meeting held on October 16, 1998, the Eclipse Board discussed the  
potential benefits and risks associated with a business combination of Eclipse  
and CardioGenesis. Representatives from Wilson Sonsini Goodrich & Rosati, P.C., 
(WSGR) legal counsel to Eclipse, were also present at the meeting and reviewed  
the terms of the proposed transaction with the Board and reported to the Board  
on their ongoing due diligence review                                           

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of CardioGenesis. WSGR also reviewed with the Board their fiduciary duties under
California law. PaineWebber also attended the special meeting by telephone      
conference call. At the meeting, the Eclipse Board authorized management to     
continue negotiations with CardioGenesis and directed management to work with   
legal counsel and the independent accountants to continue their due diligence   
review.                                                                         

On October 18, 1998, the Eclipse Board met with representatives of WSGR and     
PaineWebber to further consider the potential business combination with         
CardioGenesis. At this meeting, Eclipse senior management, WSGR and PaineWebber 
reported on the ongoing discussions with CardioGenesis, the further results of  
the due diligence evaluation of CardioGenesis and the principal terms of the    
reorganization agreement and related documents. WSGR also reviewed with the     
Board their fiduciary duties under California law. PaineWebber reviewed with the
Eclipse Board its preliminary analysis as to the fairness of the proposed       
exchange ratio for the transaction. The PaineWebber analysis was based on the   
methodology used by PaineWebber to reach its fairness opinion which was         
delivered in final form on October 21, 1998. At the end of the meeting, the     
Eclipse Board authorized management to continue negotiations with CardioGenesis 
and directed management to work with legal counsel and the independent          
accountants to complete their due diligence review.                             

During October 1998, Dr. Murphy-Chutorian, Messrs. Mueller and Bennert and      
Messrs. Hill and Powers, along with their respective legal counsel and          
independent accountants, continued to discuss the terms and structure of the    
proposed business combination. During this time, Eclipse and CardioGenesis and  
their respective legal counsel and independent accountants continued their due  
diligence reviews of the other company.                                         

On October 21, 1998, the CardioGenesis Board held a special meeting to discuss  
with senior management and its legal counsel, financial advisor and independent 
accountants, the proposed terms of the business combination and the status of   
the due diligence reviews on Eclipse. Legal counsel reported on its ongoing     
review of Eclipse's legal affairs, and members of senior management and the     
company's accountants and financial advisor reported on the results of the      
business, financial and FDA due diligence with respect to Eclipse. Bear Stearns 
then presented, and the directors reviewed and discussed, certain financial     
analyses with respect to CardioGenesis, Eclipse and the proposed business       
combination as described under "-- Bear Stearns Opinion" on page 48; and counsel
reviewed the changes negotiated in the form of reorganization agreement. The    
Board agreed to adjourn the meeting and reconvene later in the day to consider  
the final terms of the business combination and further consider the matters    
presented and discussed.                                                        

At the reconvened meeting, the CardioGenesis Board discussed the final changes  
to the reorganization agreement and related documents, and received updated     
reports from its senior management, legal counsel and financial advisor. Bear   
Stearns then delivered to the Board its opinion that the exchange ratio was     
fair, from a financial point of view, to CardioGenesis stockholders. After      
further discussion, the CardioGenesis Board:                                    

- determined that the terms of the reorganization agreement and       
       transactions contemplated thereby were fair to, and in the best interests
of, CardioGenesis stockholders,                                   

- approved the reorganization agreement and related documents, and the
merger, and                                                       

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   - resolved to recommend that the CardioGenesis stockholders vote in favor
       of the approval and adoption of the reorganization agreement and approval
     of the merger at a special meeting of the CardioGenesis stockholders to
be held for such purpose.                                         

On October 21, 1998, the Eclipse Board held a special meeting by telephone      
conference call to discuss with senior management, WSGR and PaineWebber the     
proposed terms of the reorganization agreement and the status of the ongoing    
negotiations with CardioGenesis regarding such agreement and related documents. 
Prior to the meeting, the directors had been provided with the current version  
of the reorganization agreement and related documents. The Board also received  
an update on the additional due diligence that had been conducted. The Eclipse  
Board discussed in detail the terms of the proposed transaction and agreed to   
hold another meeting later in the day to consider the final terms of the        
transaction.                                                                    

Later on October 21, 1998, the Eclipse Board held another special meeting by    
telephone conference call to consider the proposed final terms of the           
reorganization agreement, the merger and related documents. Representatives from
WSGR and PaineWebber also participated in the meeting. The directors discussed  
with WSGR the proposed final changes to the reorganization agreement and related
documents. At this meeting, PaineWebber provided the Eclipse Board with its oral
and written opinion that the exchange ratio was fair, from a financial point of 
view, to Eclipse. Upon further discussion among the directors, the Eclipse Board
unanimously:                                                                    

- determined that the terms of the reorganization agreement and the   
       transactions contemplated thereby were fair to, and in the best interests
of Eclipse shareholders;                                          

- approved the reorganization agreement, the merger and all related   
agreements and                                                    

    - resolved to recommend that the Eclipse shareholders vote in favor of the
     reorganization agreement including the issuance of Eclipse common stock
in connection with the merger at a special meeting of the Eclipse 
shareholders to be held for such purpose.                         

Later on October 21, 1998, following the Eclipse Board meeting and the          
CardioGenesis Board meeting, the reorganization agreement was executed by both  
companies and the related documents were executed by certain officers and       
directors of Eclipse and CardioGenesis. On October 22, 1998, prior to the       
beginning of trading, Eclipse and CardioGenesis issued a joint press release    
announcing the proposed business combination.                                   

PAINEWEBBER OPINION                                                             

THE FULL TEXT OF THE PAINEWEBBER OPINION, DATED OCTOBER 21, 1998, WHICH SETS    
FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND         
LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS APPENDIX B TO THIS         
DOCUMENT. YOU SHOULD READ THE PAINEWEBBER OPINION CAREFULLY AND IN ITS ENTIRETY.
THE SUMMARY OF THE PAINEWEBBER OPINION INCLUDED IN THIS DOCUMENT IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE PAINEWEBBER OPINION.          

Eclipse retained PaineWebber to render an opinion as to whether or not the      
CardioGenesis/Eclipse exchange ratio was fair, from a financial point of view,  
to Eclipse.                                                                     

In connection with the consideration by the Eclipse board of directors of the   
reorganization agreement, PaineWebber delivered its written opinion, dated      
October 21, 1998, to the                                                        

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effect that, as of that date, and based upon its review and assumptions and     
subject to the limitations summarized below, the exchange ratio is fair, from a 
financial point of view, to Eclipse. The PaineWebber opinion was directed to,   
and prepared at the request and for the information of, the Eclipse board of    
directors and does not constitute a recommendation to any holder of Eclipse     
common stock as to how any such shareholder should vote with respect to the     
merger. The methodology used by PaineWebber to reach the fairness opinion formed
the basis for the PaineWebber presentation to the Eclipse Board on October 18,  
1998.                                                                           

In arriving at its opinion, PaineWebber, among other things:                    

    - reviewed, among other public information, CardioGenesis' annual reports,
   forms 10-K and related financial information for the two fiscal years
  ended December 31, 1997 and CardioGenesis' form 10-Q and the related
     unaudited financial information for the six months ended June 30, 1998;

     - reviewed, among other public information, Eclipse's annual reports, forms
   10-K and related financial information for the two fiscal years ended
 December 31, 1997 and Eclipse's form 10-Q and the related unaudited
financial information for the six months ended June 30, 1998;     

    - reviewed certain information, including financial forecasts, relating to
      the business, earnings, cash flow, assets and prospects of CardioGenesis
    and Eclipse, furnished to PaineWebber by or on behalf of CardioGenesis
and Eclipse;                                                      

    - reviewed certain information, including financial forecasts, relating to
      the business, earnings, cash flow, assets and prospects of the pro forma
combined entities, furnished by Eclipse;                          

    - conducted discussions with members of senior management of CardioGenesis
and Eclipse concerning their respective businesses and prospects; 

- reviewed the historical market prices and trading activity for      
   CardioGenesis common stock and Eclipse common stock and compared them
     with those of certain other publicly traded companies which PaineWebber
deemed to be relevant;                                            

- compared the financial position and results of operations of        
CardioGenesis and Eclipse with those of certain companies which   
PaineWebber deemed to be relevant;                                

  - compared the proposed financial terms of the merger with the financial
      terms of certain other mergers and acquisitions which PaineWebber deemed
to be relevant;                                                   

- reviewed a draft of the reorganization agreement; and               

 - reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as  
 PaineWebber deemed necessary, including PaineWebber's assessment of
regulatory, general economic, market and monetary conditions.     

In preparing the PaineWebber opinion:                                           

    - PaineWebber relied upon the accuracy and completeness of all information
      supplied or otherwise made available to it by Eclipse and CardioGenesis.

 - PaineWebber did not assume any responsibility to independently verify
   such information. With respect to the financial forecasts examined by
PaineWebber,                                                      

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    PaineWebber assumed that they were reasonably prepared and reflect the
best currently available estimates and good faith judgments of the
     management of Eclipse and CardioGenesis as to the future performance of
the Eclipse and CardioGenesis.                                    

    - PaineWebber also relied upon assurances of the management of Eclipse and
  CardioGenesis that they are unaware of any facts that would make the
      information or financial forecasts provided to PaineWebber incomplete or
misleading.                                                       

   - PaineWebber did not make any independent evaluation or appraisal of the
assets or liabilities (contingent or otherwise) of Eclipse or     
      CardioGenesis nor was PaineWebber furnished with any such evaluations or
appraisals.                                                       

PaineWebber has also assumed the following with Eclipse's consent:              

- The merger will be a tax-free reorganization.                       

- The merger will be accounted for under the pooling-of-interests     
accounting treatment.                                             

   - Any material liabilities (contingent or otherwise, known or unknown) of
       Eclipse and CardioGenesis were as set forth in the consolidated financial
statements of Eclipse and CardioGenesis.                          

No opinion was expressed in the PaineWebber opinion as to the price at which the
securities of Eclipse may trade at any time. The PaineWebber opinion was based  
on economic, monetary and market conditions existing on the date of the opinion.

The following paragraphs summarize the material analyses performed by           
PaineWebber in arriving at the PaineWebber opinion.                             

Stock trading history.  PaineWebber reviewed trading prices for the shares of   
CardioGenesis common stock. This stock trading history review indicated that for
CardioGenesis' latest twelve months ended October 19, 1998, the low and high    
closing prices were $1.75 and $9.50. PaineWebber also reviewed CardioGenesis    
stock price averages over periods prior to October 19, 1998 as set forth in the 
following table.                                                                

                                                                · Download Table

              TRADING PERIOD                AVERAGE PRICE
              --------------                -------------
                                                         
Latest 30 days............................      $2.41    
Latest 60 days............................      $2.71    
Latest 90 days............................      $3.36    
Latest 120 days...........................      $3.81    

PaineWebber also reviewed trading prices for the shares of Eclipse common stock.
This stock trading history review indicated that for Eclipse's last twelve      
months ended October 19, 1998, the low and high closing prices were $5.50 and   
$13.50. PaineWebber also reviewed Eclipse stock price averages over periods     
prior to October 19, 1998 as set forth in the following table.                  

                                                                · Download Table

              TRADING PERIOD                AVERAGE PRICE
              --------------                -------------
                                                         
Latest 30 days............................     $ 8.88    
Latest 60 days............................     $ 7.75    
Latest 90 days............................     $ 9.88    
Latest 120 days...........................     $10.56    

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Exchange ratio analysis.  PaineWebber calculated exchange ratios based on the   
trading price relationship between CardioGenesis common stock and Eclipse common
stock from May 30, 1996 to October 19, 1998. This exchange ratio review         
indicated that the low and high implied CardioGenesis/Eclipse exchange ratio    
were 0.2238x and 2.6000x. PaineWebber also reviewed the CardioGenesis/Eclipse   
exchange ratio on the dates set forth in the following table.                   

                                                                · Download Table

                  DATE                     EXCHANGE RATIO
                  ----                     --------------
                                                         
October 19, 1998.........................     0.3333x    
30 days prior............................     0.2676x    
60 days prior............................     0.4355x    
90 days prior............................     0.5506x    
120 days prior...........................     0.4734x    
One year prior...........................     1.1429x    

Selected comparable public company analysis. Using publicly available           
information, PaineWebber compared selected historical and projected financial,  
operating and stock market performance data of CardioGenesis and Eclipse to the 
corresponding data of the comparable companies. The comparable companies        
consisted of:                                                                   

                                                                · Download Table
                                                                
CardioGenesis                  Cambridge Heart, Inc.            
Eclipse                        Endosonics Corporation           
PLC Systems Inc.               Heartport, Inc.                  
Arthrocare Corporation         Perclose, Inc.                   
ATS Medical, Inc.              Thoratec Laboratories Corporation

PaineWebber reviewed, among other information, the comparable companies'        
multiples of total enterprise value (market value plus total debt less cash and 
cash equivalents as of June 30, 1998) to (1) projected calendar year 1999       
revenue and (2) projected calendar year 2000 revenue. PaineWebber also reviewed,
among other information, the comparable companies' multiples of market value to 
(1) projected calendar year 1999 earnings per share (EPS) and (2) projected     
calendar year 2000 EPS. All projected calendar year 1999 and 2000 estimates were
based on publicly available research estimates for the comparable companies and 
on the projections for CardioGenesis and Eclipse as provided by Eclipse         
management. The comparable companies analysis resulted in the following range of
values as of October 19, 1998:                                                  

                                                                · Download Table

                ANALYSIS                  MULTIPLE RANGE
                --------                  --------------
                                                        
Projected calendar year 1999 revenue....  1.01x to 4.60x
Projected calendar year 2000 revenue....  0.18x to 3.33x
Projected calendar year 1999 EPS........  9.1x to 87.5x 
Projected calendar year 2000 EPS........  4.4x to 18.9x 

When Eclipse and CardioGenesis were excluded from the comparable companies the  
same multiple ranges resulted as above, except the projected calendar year 1999 
EPS ranged from 12.7x to 87.5x and the projected calendar year 2000 EPS ranged  
from 12.6x to 18.9x.                                                            

PaineWebber applied the comparable companies' median multiples to CardioGenesis'
projected calendar year 1999 and 2000 revenue and EPS, as provided by Eclipse   
management, and derived a range of fully diluted equity values for CardioGenesis
of $8.51 to $23.12 per CardioGenesis share. Based on a closing stock price of   
$8.25 for Eclipse                                                               

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common stock as of October 19, 1998, such derived equity value range for        
CardioGenesis implied an exchange ratio range of 1.0314x to 2.8027x.            

Discounted cash flow analysis.  PaineWebber analyzed CardioGenesis based on an  
unleveraged discounted cash flow analysis of CardioGenesis projections, as      
provided by Eclipse management. The discounted cash flow analysis determined the
discounted present value of the unleveraged after-tax cash flows generated over 
the time period included in the projections and then added a terminal value     
based upon a range of revenue multiples from 1.00x to 1.75x and earnings before 
interest and taxes (EBIT) multiples from 8.0x to 11.0x. The unleveraged         
after-tax cash flows and terminal value were discounted using a range of        
discount rates from 15.0% to 22.5%. Based on this analysis, PaineWebber derived 
a range of possible CardioGenesis fully diluted equity values of $10.66 to      
$23.58 per share. Based on the closing stock price of $8.25 for Eclipse Common  
Stock on October 19, 1998, this range of equity values implied an exchange ratio
range of 1.2924x to 2.8581x.                                                    

PaineWebber also analyzed Eclipse based on an unleveraged discounted cash flow  
analysis of Eclipse projections, as provided by Eclipse management. The         
discounted cash flow analysis was performed using the same methodology, range of
terminal value multiples and range of discount rates as were utilized in the    
analysis of CardioGenesis above. Based on this analysis, PaineWebber derived a  
range of possible Eclipse fully diluted equity values of $6.41 to $9.59 per     
share.                                                                          

Premiums paid analysis.  PaineWebber reviewed purchase price per share premiums 
paid in 153 publicly-disclosed cash and stock merger transactions announced     
since January 1, 1998 with market values between $30.0 million and $200.0       
million. PaineWebber also reviewed purchase price per share premiums paid in 21 
publicly-disclosed cash and stock merger transactions of companies affiliated   
with the life sciences sector announced since January 1, 1997 with market values
between $30.0 million and $200.0 million. This analysis indicated mean premiums 
to the target's closing stock price as indicated in the following table:        

                                                                · Download Table

DATE PRIOR TO      MEAN OF       MEAN OF LIFE SCIENCES
 ANNOUNCEMENT  ALL TRANSACTIONS       TRANSACTIONS    
-------------  ----------------  ---------------------
                                                      
   One Day          27.6%                21.4%        
   One Week          34.4                 29.3        
  Four Weeks         37.0                 41.0        

Based on the closing prices of CardioGenesis' common stock one day, one week and
four weeks prior to its closing stock price of October 19, 1998, applying the   
mean premiums to the applicable stock prices yielded fully diluted equity values
of $2.91 to $3.83 per share. Based on the closing stock price of $8.25 for      
Eclipse common stock on October 19, 1998, this range of equity values implied an
exchange ratio range of 0.3526x to 0.4642x.                                     

Selected comparable mergers and acquisitions analysis.  PaineWebber reviewed    
publicly available financial information for selected mergers and acquisitions  
involving companies that are affiliated with the life sciences sector. The      
selected mergers and acquisitions PaineWebber analyzed included                 
(acquiror/target):                                                              

- Medtronic, Inc./Instent Inc.                                        

- St. Jude Medical Inc./Ventritex, Inc.                               

- Endosonics Corporation/Cardiometrics, Inc.                          

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- Johnson & Johnson/Biopsys Medical, Inc.                             

- Guidant Corporation/EndoVascular Tech.                              

- Hewlett-Packard Company/Heartstream Inc.                            

- Medtronic, Inc./Physio-Control International Corporation            

- Medtronic, Inc./AVECOR Cardiovascular Inc.                          

- Guidant Corporation/InControl Inc.                                  

PaineWebber reviewed the consideration paid (based on stock prices on the day   
prior to the announcement of the transaction) in the comparable transactions and
calculated the multiples of total enterprise value to the following:            

- the target's last twelve months (prior to the announcement of the   
transaction) revenue;                                             

- the target's projected one-year forward revenue;                    

- the target's projected two-year forward revenue;                    

- the target's projected one-year forward EBIT;                       

- the target's projected two-year forward EBIT                        

PaineWebber also calculated multiples of market value to (1) projected one-year 
forward EPS and (2) projected two-year forward EPS. All projected one-year and  
two-year forward results were based on publicly available research estimates    
prior to the announcement of the transaction. PaineWebber also reviewed         
multiples of the consideration paid to the target's book value. The comparable  
transactions analysis resulted in the following range of values:                

                                                                · Download Table

                   ANALYSIS                      MULTIPLE RANGE 
                   --------                      ---------------
                                                                
Last twelve months revenue.....................  2.02x to 79.72x
Projected one-year forward revenue.............  1.91x to 18.43x
Projected two-year forward revenue.............   1.78x to 7.37x
Projected one-year forward EBIT................   20.4x to 90.9x
Projected two-year forward EBIT................   16.6x to 25.0x
Projected one-year forward EPS.................   26.4x to 98.4x
Projected two-year forward EPS.................    8.3x to 37.2x
Book value.....................................    2.7x to 43.4x

Contribution analysis. PaineWebber analyzed Eclipse's and CardioGensis' relative
contribution to the combined entity with respect to projected revenue, EBIT and 
pre-tax income based on projections provided by Eclipse management including    
synergies. Based on the exchange ratio, holders of CardioGenesis common stock   
will own approximately 35.2% of                                                 

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the common stock outstanding of the combined company after giving effect to the 
merger. CardioGenesis is estimated to contribute to the combined entity as      
follows:                                                                        

                                                                · Download Table

                      ANALYSIS                        CONTRIBUTION
                      --------                        ------------
                                                                  
Projected 1999 revenue..............................      32.0%   
Projected 2000 revenue..............................      45.9%   
Projected 1999 EBIT.................................      41.6%   
Projected 2000 EBIT.................................      55.6%   
Projected 1999 pre-tax income.......................      41.4%   
Projected 2000 pre-tax income.......................      53.1%   

The results of this contribution analysis are not necessarily indicative of the 
contributions that the respective businesses may have in the future.            

Pro forma merger analysis. PaineWebber performed an analysis of the potential   
pro forma effect of the merger on Eclipse's projected EPS for the fiscal years  
1999 through 2003. In performing this analysis, PaineWebber assumed, with       
Eclipse's consent, (1) the merger would be accounted for under the              
pooling-of-interests method of accounting; and (2) synergies may be achieved as 
a result of the merger. PaineWebber combined the projected operating results of 
Eclipse (provided by Eclipse management) with the projected operating results of
CardioGenesis (provided by Eclipse management) to arrive at the combined company
projected net income. PaineWebber divided this by the pro forma fully diluted   
shares outstanding to arrive at a combined company fully diluted EPS.           
PaineWebber then compared the combined company projected EPS to Eclipse's       
projected EPS based on the projections to determine the pro forma impact on     
Eclipse's projected EPS.                                                        

The preparation of a fairness opinion involves various determinations as to the 
most appropriate and relevant quantitative methods of financial analyses and the
application of those methods to the particular circumstances and, therefore,    
such an opinion is not readily susceptible to partial analysis or summary       
description. Accordingly, PaineWebber believes that its analysis must be        
considered as a whole and that considering any portion of such analysis and of  
the factors considered, without considering all analyses and factors, could     
create a misleading or incomplete view of the process underlying the PaineWebber
opinion. In its analyses, PaineWebber made numerous assumptions with respect to 
industry performance, general business and economic conditions and other        
matters, many of which are beyond the control of Eclipse and CardioGenesis. Any 
estimates contained in these analyses are not necessarily indicative of actual  
values or predictive of future results or values, which may be significantly    
more or less favorable than as set forth therein. In addition, analyses relating
to the value of businesses do not purport to be appraisals or to reflect the    
prices at which businesses may actually be sold. Accordingly, such analyses and 
estimates are inherently subject to substantial uncertainty. Due to the         
substantial uncertainty inherent in and the subjective nature of the assumptions
underlying its analyses and estimates, PaineWebber's opinion is necessarily     
qualified by the accuracy of these assumptions. PaineWebber cannot and does not 
guarantee the accuracy of these assumptions.                                    

Eclipse selected PaineWebber to render a fairness opinion in connection with the
merger because PaineWebber is a prominent investment banking and financial      
advisory firm with experience in the valuation of businesses and their          
securities in connection with mergers and acquisitions, negotiated              
underwritings, secondary distributions of securities, private placements and    
valuations for corporate purposes.                                              

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Pursuant to an engagement letter between Eclipse and PaineWebber dated October  
5, 1998, PaineWebber earned a fee of $500,000 for rendering the opinion. In     
addition, PaineWebber will be reimbursed for certain of its related expenses.   
Eclipse also agreed, under separate agreement, to indemnify PaineWebber, its    
affiliates and each of its directors, officers, agents and employees and each   
person, if any, controlling PaineWebber or any of its affiliates against certain
liabilities, including liabilities under federal securities laws.               

In the past, PaineWebber and its affiliates, have provided investment banking   
services to Eclipse and have received customary fees for rendering these        
services.                                                                       

In the ordinary course of PaineWebber's business, PaineWebber may actively trade
the securities of Eclipse and CardioGenesis for its own account and for the     
accounts of its customers and, accordingly, may at any time hold long or short  
positions in such securities.                                                   

BEAR STEARNS OPINION                                                            

CardioGenesis retained Bear Stearns to act as its financial advisor in          
connection with the merger. In connection with such engagement, CardioGenesis   
requested that Bear Stearns render its opinion as to the fairness, from a       
financial point of view, of the exchange ratio to the public stockholders of    
CardioGenesis.                                                                  

On October 21, 1998, in connection with the evaluation of the merger by the     
CardioGenesis Board, Bear Stearns rendered its oral opinion that, as of such    
date, and subject to certain assumptions, factors and limitations described     
below, the exchange ratio was fair, from a financial point of view, to the      
public stockholders of CardioGenesis. Bear Stearns also delivered a written     
opinion to the CardioGenesis Board, that, as of October 21, 1998, the exchange  
ratio was fair, from a financial point of view, to the public stockholders of   
CardioGenesis.                                                                  

THE FULL TEXT OF THE BEAR STEARNS FAIRNESS OPINION, WHICH SETS FORTH THE        
PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN IN CONNECTION WITH SUCH OPINION, IS ATTACHED AS APPENDIX C TO 
THIS JOINT PROXY STATEMENT/ PROSPECTUS. STOCKHOLDERS ARE URGED TO READ THE BEAR 
STEARNS OPINION IN ITS ENTIRETY. THE BEAR STEARNS OPINION ADDRESSES ONLY THE    
EXCHANGE RATIO UNDER THE REORGANIZATION AGREEMENT AND DOES NOT CONSTITUTE A     
RECOMMENDATION TO ANY CARDIOGENESIS STOCKHOLDER AS TO HOW SUCH STOCKHOLDER      
SHOULD VOTE AT THE CARDIOGENESIS SPECIAL MEETING. THE DESCRIPTION OF THE BEAR   
STEARNS OPINION SET FORTH IN THIS JOINT PROXY STATEMENT/PROSPECTUS IS QUALIFIED 
IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.                  

In arriving at its opinion, Bear Stearns:                                       

- reviewed the reorganization agreement dated October 21, 1998;       

    - reviewed CardioGenesis' and Eclipse's Annual Reports to Stockholders and
      Annual Reports on Form 10-K for the fiscal years ended December 31, 1996
       and December 31, 1997, and Quarterly Reports on Form 10-Q for the periods
ended March 31, 1998 and June 30, 1998;                           

- reviewed certain operating and financial information, including     
      projections, provided to it by management relating to CardioGenesis' and
Eclipse's business and prospects;                                 

- met with certain members of CardioGenesis' and Eclipse's senior     
   management to discuss each company's operations, historical financial
statements and future                                             

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prospects, including, without limitation, the timing and extent of
     regulatory approvals and successful commercial introductions of certain
products;                                                         

   - reviewed the historical market prices and trading volumes of the common
shares of CardioGenesis and Eclipse;                              

     - reviewed publicly available financial data, stock market performance data
       and valuation parameters of companies which Bear Stearns deemed generally
comparable to CardioGenesis and Eclipse;                          

    - reviewed the terms of recent mergers and acquisitions of companies which
       Bear Stearns deemed generally comparable to CardioGenesis and the merger;

 - considered the pro forma effects of the merger on Eclipse's revenues,
    operating income, and earnings, including pre-tax amounts of synergies
expected by CardioGenesis and Eclipse following the merger; and   

   - conducted such other studies, analyses, inquiries and investigations as
Bear Stearns deemed appropriate.                                  

In conducting its analysis, Bear Stearns relied upon and assumed, without       
independent verification, the following:                                        

- the accuracy and completeness of the financial and other projections
provided by CardioGenesis' and Eclipse's senior managements;      

- the best currently available estimates and judgements of the senior 
managements of CardioGenesis and Eclipse with respect to potential
synergies which could be achieved upon completion of the merger;  

- the assumptions made by the senior managements of CardioGenesis and 
 Eclipse regarding the timing and extent of regulatory approvals and
     reimbursement and successful introductions of certain products and that
  the receipt and timing of regulatory approvals and reimbursement and
successful commercial introductions have a material impact on the 
   projected financial results of the respective companies and potential
synergies;                                                        

 - the assurances of the senior managements of CardioGenesis and Eclipse
    that they were unaware of any facts that would make the information or
projections provided incomplete or misleading; and                

     - the merger will qualify as a tax-free "reorganization" within the meaning
     of Section 368(a) of the Internal Revenue Code and that the merger will
qualify as a pooling of interests under GAAP.                     

In arriving at its opinion, Bear Stearns did not perform or obtain any          
independent appraisals of the assets or liabilities of CardioGenesis or Eclipse,
nor were they furnished with any such appraisals.                               

The Bear Stearns opinion was necessarily based on economic, market and other    
conditions, and the information made available to Bear Stearns, as of the date  
of the Bear Stearns opinion. Bear Stearns did not express any opinion as to the 
price or range of prices at which shares of common stock of Eclipse may trade   
prior to or subsequent to the consummation of the merger.                       

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In connection with preparing and rendering its opinion, Bear Stearns performed a
variety of valuation, financial and comparative analyses. The summary of such   
analyses, as set forth below, does not purport to be a complete description of  
the analyses underlying the Bear Stearns opinion. The preparation of a fairness 
opinion is a complex process and is not necessarily susceptible to summary      
description. Bear Stearns believes that its analyses must be considered as a    
whole, and that selecting portions of its analyses and the factors considered by
it without considering all such factors and analyses, could create an incomplete
view of the processes underlying the Bear Stearns opinion. Moreover, the        
estimates contained in such analyses are not necessarily indicative of actual   
values or predictive of future results or values, which may be significantly    
more or less favorable than those suggested by such analyses. In addition,      
analyses relating to the value of businesses or securities do not purport to be 
appraisals or necessarily reflect the prices at which businesses or securities  
may actually be sold. Accordingly, such estimates are inherently subject to     
substantial uncertainties.                                                      

The following is a summary of the material valuation, financial and comparative 
analyses presented by Bear Stearns to the CardioGenesis Board of Directors on   
October 21, 1998 in connection with its opinion as of such date.                

Historical Stock Performance. Bear Stearns reviewed the performance of the per  
share stock market price and equity value of CardioGenesis common stock and     
Eclipse common stock for selected time periods since the initial public offering
of each company. Time periods selected were; at the initial public offering,    
first close after the initial public offering, average from initial public      
offering to October 21, 1998, trailing 2-year, 12-month, 6-month, 3-month, and  
30-day averages and closing price as of October 21, 1998.                       

The share prices and equity values on the selected dates were as follows:       

                                                        · Enlarge/Download Table

                                         CARDIOGENESIS              ECLIPSE SURGICAL     
                                   --------------------------  --------------------------
                                   SHARE PRICE   EQUITY VALUE  SHARE PRICE   EQUITY VALUE
                                   -----------   ------------  -----------   ------------
                                                                                         
At IPO............................   $20.00         $238.5       $16.00         $250.9   
First close after IPO.............    20.50          244.5        16.50          258.8   
IPO -- October 21, 1998...........     9.75          119.1         8.91          154.1   
Trailing 2-year average...........     9.14          111.6         8.42          145.6   
Trailing 12-months average........     6.08           74.2         8.88          153.5   
Trailing 6-months average.........     4.50           55.0         9.23          159.6   
Trailing 3-months average.........     3.29           40.2         7.63          131.9   
Trailing 30-days average..........     2.41           29.5         8.04          139.0   
Closing price -- October 21,                                                             
  1998............................     2.22           27.1         8.78          151.9   

In addition, Bear Stearns reviewed the trading levels of the common stock of    
each company at different market prices from the initial public offering to     
October 21, 1998. Bear Stearns also reviewed the implied value per share to be  
received by CardioGenesis stockholders based on the exchange ratio. Bear Stearns
determined that based on (i) the October 21, 1998 closing price of $2.22 per    
share of CardioGenesis common stock and (ii) the October 21, 1998 closing price 
of $8.78 per share of Eclipse common stock, the merger implied a value per share
of $7.03 for CardioGenesis common stock, which represented a premium of 216.6%  
over the October 21, 1998 closing price.                                        

Pro Forma Merger Analysis. Bear Stearns prepared pro forma analyses of the      
financial impact of the merger. Using the actual financial results for the      
fiscal year ended                                                               

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December 31, 1997, the latest twelve months ended June 30, 1998, the latest     
quarter annualized, and projected financial results provided by their respective
managements for the fiscal years ending December 31, 1998 through December 31,  
2002, for both CardioGenesis and Eclipse, Bear Stearns compared the results of  
the respective companies on a stand-alone basis with the results of the         
companies combined on a pro forma basis to give effect to the merger. These     
comparisons were based on the following assumptions: (a) an exchange ratio of   
0.80 and (b) the merger being accounted for as a pooling of interests. The      
analysis indicated that the proposed transaction would be accretive to          
CardioGenesis stockholders in the years 1998-2001 and dilutive to earnings in   
2002. From the pro forma analyses, Bear Stearns performed the Relative          
Contribution Analysis and Has/Gets Analysis outlined below.                     

Relative Contribution Analysis. Bear Stearns calculated the relative            
contribution by each of CardioGenesis and Eclipse to the combined company       
(assuming no synergies) with respect to revenue, EBIT and net income. In 1998 to
2000, CardioGenesis, on a stand-alone basis expects to be operating at a loss   
and thus a relative contribution analysis is not meaningful. CardioGenesis'     
relative contribution to the combined company in the years 1998 - 2002 is as    
follows:                                                                        

                                                                · Download Table

                                             CARDIOGENESIS RELATIVE CONTRIBUTION 
                                             ------------------------------------
                                             1998    1999    2000    2001    2002
                                             ----    ----    ----    ----    ----
                                                                                 
Revenue..................................... 34%     21%     37%     42%     44% 
EBIT........................................  NM      NM      NM      27      49 
Net Income..................................  NM      NM      NM      27      48 

By way of comparison, Bear Stearns observed that the exchange ratio would result
in holders of CardioGenesis common stock receiving a 36% ownership position in  
the newly combined company.                                                     

Has/Gets Analysis. Bear Stearns also conducted a has/gets analysis for 1998-2002
estimated revenues, EBIT and earnings per share. Giving effect to the exchange  
ratio, the has/gets analysis, assuming synergies, implies the merger would be   
accretive to CardioGenesis stockholders in 1998, 1999, 2000 and 2001, and       
dilutive to CardioGenesis stockholders in 2002. In performing such analyses Bear
Stearns did not take into account any future equity financings by either company
which may be required to fund future operations. Pro forma for the merger, the  
effect on earnings per share to CardioGenesis stockholders is as follows:       

                                                                · Download Table

                                            CARDIOGENESIS EARNINGS PER SHARE      
                                        ACCRETION/(DILUTION), ASSUMING SYNERGIES  
                                       ------------------------------------------ 
                                        1998     1999     2000     2001     2002  
                                       ------   ------   ------   ------   ------ 
                                                                                  
CardioGenesis earnings per share...... $(2.04)  $(1.54)  $(0.31)  $ 0.55   $ 1.45 
Earnings per share after the merger...  (1.26)    0.09     0.53     0.84     1.22 
Earnings per share                                                                
  accretion/(dilution)................   0.77     1.63     0.84     0.29    (0.23)

Comparable Company Analysis. Bear Stearns compared certain operating, financial,
trading and valuation information for CardioGenesis and Eclipse to certain      
publicly available operating, financial, trading and valuation information of   
seven selected small capitalization medical device companies, which, in Bear    
Stearns' judgement, were the most                                               

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comparable to CardioGenesis and Eclipse for the purposes of this analysis. These
companies included:                                                             

- CardioThoracic Systems Inc.,                                        

- Computer Motion, Inc.,                                              

- EndoSonics Corporation,                                             

- Heartport, Inc.,                                                    

- Novoste Corporation,                                                

- Perclose Inc., and                                                  

- PLC Systems Inc.                                                    

Bear Stearns' analysis was based on the closing prices on October 21, 1998. For 
comparative purposes, Bear Stearns calculated the implied price per share and   
related valuation multiples for CardioGenesis based on the October 21, 1998     
Eclipse closing stock price of $8.78, which implied a per share price of $7.03  
for CardioGenesis. The comparable companies analysis resulted in the following  
set of valuation multiples relative to the merger:                              

                                                                · Download Table

                                                                 SELECTED       
                                                           COMPARABLE COMPANIES 
                                                          ----------------------
                                                  MERGER  LOW     HIGH     MEAN 
                                                  ------  ----    -----    -----
                                                                                
Price/2000 estimated earnings per share..........  12.8x  9.2x    42.1x    14.6x
Price/2001 estimated earnings per share..........   4.8   3.3     17.1      5.9 

Bear Stearns noted in its analysis that all of the comparable companies selected
were small capitalization, early-stage medical device companies operating at a  
loss, as are CardioGenesis and Eclipse, and thus the derivation of meaningful   
valuation parameters was limited.                                               

Precedent Transaction Analysis. Bear Stearns reviewed and analyzed the publicly 
available financial terms of five selected precedent merger and acquisition     
transactions. In Bear Stearns' judgement these were the most comparable recent  
transactions involving small capitalization target companies in the medical     
device industry. These five transactions included:                              

- Johnson & Johnson's pending acquisition of FemRx,                   

- Hewlett Packard's acquisition of Heartstream,                       

- Johnson & Johnson's acquisition of Gynecare,                        

- Urohealth Systems' acquisition of Imagyn Medical, and               

- EndoSonics' acquisition of Cardiometrics.                           

Bear Stearns reviewed the prices paid in the precedent transactions and analyzed
various operating and financial information and imputed premiums paid, valuation
multiples and ratios. For comparative purposes, Bear Stearns calculated the     
Enterprise Value / latest twelve months revenue multiple, premium paid over the 
prior day's closing stock price, and premium paid over the average closing price
for four weeks prior for CardioGenesis based on the 0.80 exchange ratio. Bear   
Stearns noted that all of the target companies used in the                      

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analysis were small capitalization, early-stage medical device companies        
operating at a loss, as are CardioGenesis and Eclipse, and thus the derivation  
of meaningful valuation parameters was limited. The precedent transaction       
analysis resulted in the following set of valuation multiples relative to the   
merger:                                                                         

                                                                · Download Table

                                                                SELECTED        
                                                         PRECEDENT TRANSACTIONS 
                                                         -----------------------
                                                 MERGER   LOW     HIGH     MEAN 
                                                 ------  -----    -----    -----
                                                                                
Enterprise Value / latest twelve months                                         
  revenue.......................................  11.7x   1.8x    17.9x     7.6x
Premium paid / prior day's closing stock                                        
  price.........................................   217%  (7.4%)   41.2%    21.2%
Premium paid / average closing stock price for                                  
  four weeks prior..............................   167%  (9.3%)   81.4%    46.5%

Pursuant to its engagement letter, dated October 5, 1998, CardioGenesis is      
obligated to pay Bear Stearns an opinion fee of $350,000 and an advisory fee of 
$500,000. The opinion fee is to be credited against the advisory fee.           
CardioGenesis has also agreed to reimburse Bear Stearns for its reasonable      
out-of-pocket expenses, including fees and expenses of legal counsel, and to    
indemnify Bear Stearns and certain related persons against certain liabilities. 

Bear Stearns previously acted as an underwriter in connection with              
CardioGenesis' initial public offering on May 22, 1996. In the ordinary course  
of business, Bear Stearns may actively trade the equity securities of           
CardioGenesis for its own account and for the account of its customers and,     
accordingly, may at any time hold a long or short position in such securities.  

Bear Stearns is an internationally recognized investment banking firm and was   
selected as financial advisor to CardioGenesis in connection with the merger and
was asked to render its opinion in connection with the merger based on Bear     
Stearns' qualifications, expertise and reputation in providing advice to        
companies in the health care industry, as well as its familiarity with          
CardioGenesis and Eclipse. As part of its investment banking business, Bear     
Stearns is regularly engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions, negotiated underwritings,          
competitive bidding, secondary distribution of listed and unlisted securities,  
private placements and valuation for estate, corporate and other purposes.      

MATERIAL FEDERAL INCOME TAX CONSEQUENCES                                        

The following discussion summarizes the material federal income tax consequences
of the merger that are generally applicable to CardioGenesis stockholders       
exchanging their CardioGenesis common stock for Eclipse common stock. This      
discussion is based on U.S. federal income tax law, including the Internal      
Revenue Code, regulations, rulings, decisions and administrative practice, all  
as in effect on the date hereof. Future legislation, regulations, administrative
interpretations or court decisions could change such laws either prospectively  
or retroactively. This discussion is also based on the opinions of legal counsel
referred to below. This discussion does not deal with all income tax            
considerations that may be relevant to particular CardioGenesis stockholders in 
light of their particular circumstances, such as stockholders who are dealers in
securities, who are foreign persons, who acquired their shares in connection    
with previous mergers involving CardioGenesis or an affiliate or who acquired   
their shares in connection with stock option or stock purchase plans or in other
compensatory transactions. In addition, the following discussion does not       
address the tax consequences of transactions effectuated prior to or after the  
merger                                                                          

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(whether or not such transactions are in connection with the merger), including 
without limitation transactions in which shares of CardioGenesis common stock   
were or are acquired or shares of Eclipse common stock were or are disposed of. 
Furthermore, no foreign, state or local tax considerations are addressed herein.
Accordingly, CardioGenesis stockholders are urged to consult their own tax      
advisors as to the specific tax consequences of the merger, including the       
applicable federal, state, local and foreign tax consequences to them of the    
merger.                                                                         

Eclipse and CardioGenesis have each received an opinion from their legal        
counsel, WSGR and Heller Ehrman, respectively, to the effect that, for federal  
income tax purposes, the merger will qualify as a "reorganization" within the   
meaning of Section 368(a) of the Internal Revenue Code. As a reorganization, the
merger will have the following federal income tax consequences (subject to the  
limitations and qualifications referred to herein):                             

    - no gain or loss will be recognized by CardioGenesis stockholders (except
      that cash received in lieu of fractional shares may cause recognition of
       gain or loss) upon their receipt of Eclipse common stock in the merger in
exchange for CardioGenesis common stock;                          

  - cash payments in lieu of a fractional share will be treated as if such
    fractional share of Eclipse common stock had been issued in the merger
      and then redeemed by Eclipse. A CardioGenesis stockholder receiving such
  cash will generally recognize capital gain or loss upon such payment
      equal to the difference (if any) between such stockholder's basis in the
fractional share and the amount of cash received;                 

    - the aggregate tax basis of the Eclipse common stock actually received in
the merger by a CardioGenesis stockholder will be the same as the 
  aggregate tax basis of the CardioGenesis common stock surrendered in
      exchange therefor, minus the tax basis allocated to any fractional share
of Eclipse common stock treated as issued and redeemed;           

    - the holding period of the Eclipse common stock received in the merger by
  a CardioGenesis stockholder will include the period during which the
     stockholder held the CardioGenesis common stock surrendered in exchange
 therefor, provided that the CardioGenesis common stock is held as a
capital asset at the time of the merger; and                      

    - none of Eclipse, merger sub or CardioGenesis will recognize gain or loss
solely as a result of the merger.                                 

The parties are not requesting a ruling from the IRS in connection with the     
merger. The tax opinions referred to above neither bind the IRS or a court nor  
preclude the IRS or a court from adopting a contrary position. In addition, the 
tax opinions are subject to certain assumptions and qualifications and are based
on the truth and accuracy of certain customary representations made by Eclipse, 
merger sub and CardioGenesis, including customary representations in            
certificates to be delivered to counsel by the respective managements of        
Eclipse, merger sub and CardioGenesis including, for example:                   

     - representations related to the ownership and operations of merger sub and
CardioGenesis;                                                    

- the terms of the merger; and                                        

- the conduct of the business of CardioGenesis following the merger.  

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A successful IRS challenge to the "reorganization" status of the merger would   
result in a CardioGenesis stockholder recognizing gain or loss with respect to  
each share of CardioGenesis common stock surrendered equal to the difference    
between the stockholder's basis in such share and the fair market value, as of  
the effective time of the merger, of the common stock of Eclipse received in    
exchange therefor. In such event, a stockholder's aggregate basis in the common 
stock of Eclipse so received would equal such fair market value and his holding 
period for such stock would begin the day after the merger.                     

If either Eclipse or CardioGenesis waives the condition that requires delivery  
of a tax opinion from its respective legal counsel and such waiver is due to a  
material change in the tax consequences of the merger, Eclipse and CardioGenesis
will notify their respective shareholders of such change, and if shareholder    
approval has already been obtained, such approval will be resolicited.          

GOVERNMENTAL AND REGULATORY APPROVALS                                           

The parties were not required to file notifications and furnish information to  
comply with requirements of the HSR Act to the Federal Trade Commission or the  
Department of Justice. At any time before or after consummation of the merger,  
the DOJ, the FTC or any state or foreign governmental authority, could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest. Such action could include seeking to enjoin the consummation of the   
merger or seeking divestiture of CardioGenesis or businesses of Eclipse or      
CardioGenesis by Eclipse. Private parties may also seek to take legal action    
under the antitrust laws under certain circumstances.                           

Based on information available to them, Eclipse and CardioGenesis believe that  
the merger will be effected in compliance with federal, state and foreign       
antitrust laws. However, there can be no assurance that a challenge to the      
consummation of the merger on antitrust grounds will not be made or that, if    
such a challenge were made, Eclipse and CardioGenesis would prevail.            

EXPECTED ACCOUNTING TREATMENT                                                   

The merger is intended to qualify as a pooling of interests in accordance with  
GAAP. Consummation of the merger is conditioned upon receipt by Eclipse and     
CardioGenesis at the closing of the merger of letters from                      
PricewaterhouseCoopers LLP, to the effect that, after reasonable investigation, 
they are not aware of any fact concerning Eclipse or CardioGenesis that could   
preclude pooling of interests accounting for the merger under Accounting        
Principles Board Opinion No. 16, if consummated according to the terms of the   
reorganization agreement.                                                       

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THE REORGANIZATION AGREEMENT AND RELATED AGREEMENTS 

The following is a summary of the material provisions of the reorganization     
agreement and other related agreements. A copy of the reorganization agreement  
is attached to this joint proxy statement/prospectus as Appendix A. You are     
encouraged to read the entire reorganization agreement.                         

EFFECTIVE TIME; EFFECT OF MERGER                                                

The closing of the merger will take place at a time and date to be specified by 
the parties, which will be no later than the second business day after the      
satisfaction or waiver of the conditions set forth in the reorganization        
agreement, or at such other time, date and location as CardioGenesis and Eclipse
agree in writing.                                                               

At the closing, Eclipse and CardioGenesis will cause the merger to be           
consummated by filing a certificate of merger with the Secretary of State of the
State of Delaware in accordance with Delaware law; the time of such filing (or  
such later time as may be agreed to in writing by CardioGenesis and Eclipse) is 
the "effective time." In connection with the merger, Eclipse formed a           
wholly-owned subsidiary, called merger sub in this joint proxy                  
statement/prospectus, solely for the purpose of effectuating the merger.        

At the effective time, the separate corporate existence of merger sub will cease
and CardioGenesis will continue as the surviving corporation. In addition, all  
of the debts, liabilities and duties of CardioGenesis and merger sub will vest  
in and become debts, liabilities and duties of the surviving corporation.       

At the effective time, the certificate of incorporation of merger sub in effect 
immediately prior to the effective time will become the certificate of          
incorporation of the surviving corporation and the bylaws of merger sub will    
become the bylaws of the surviving corporation.                                 

CONVERSION OF SHARES                                                            

At the effective time, by virtue of the merger and without any action on the    
part of merger sub, CardioGenesis or the holders of any CardioGenesis or merger 
sub securities, each share of CardioGenesis common stock issued and outstanding 
immediately prior to the effective time will be canceled and converted into 0.80
of a share of Eclipse common stock. Each share of CardioGenesis common stock    
held by CardioGenesis, merger sub, Eclipse or any direct or indirect            
wholly-owned subsidiary of CardioGenesis or Eclipse immediately prior to the    
effective time will be canceled without any conversion thereof.                 

Each share of common stock of merger sub issued and outstanding immediately     
prior to the effective time will be converted into one share of common stock of 
the surviving corporation.                                                      

The exchange ratio will be adjusted to reflect appropriately the effect of any  
stock split, reverse stock split, stock dividend, reorganization,               
recapitalization or other like change with respect to Eclipse common stock or   
CardioGenesis common stock occurring on or after October 21, 1998 and prior to  
the effective time. None of such actions is planned by either company.          

No fractional shares of Eclipse common stock will be issued in the merger. Each 
holder of CardioGenesis common stock who would otherwise be entitled to a       
fraction of a share of                                                          

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Eclipse common stock will receive an amount of cash equal to the product of such
fraction multiplied by the value of one share of Eclipse common stock.          

Promptly after the effective time, Eclipse will cause the exchange agent to     
deliver to each CardioGenesis stockholder of record as of such date a letter of 
transmittal and instructions for use in effecting the surrender of certificates 
which, prior to the merger, represented shares of CardioGenesis common stock, in
exchange for shares of Eclipse common stock and cash in lieu of fractional      
shares. CERTIFICATES SHOULD NOT BE SURRENDERED BY THE HOLDERS OF CARDIOGENESIS  
COMMON STOCK UNTIL SUCH HOLDERS RECEIVE THE LETTER OF TRANSMITTAL FROM THE      
EXCHANGE AGENT. If you have lost your stock certificate, you will be required to
deliver an affidavit of loss and may be required to post a bond.                

TREATMENT OF OPTIONS AND STOCK PURCHASE RIGHTS                                  

As of the record date there were options to purchase a total of 2,358,856 shares
of CardioGenesis common stock outstanding.                                      

At the effective time, each outstanding CardioGenesis stock option will be      
assumed by Eclipse. Each CardioGenesis stock option so assumed will continue to 
be subject to the same terms and conditions set forth in the applicable         
CardioGenesis stock option plan immediately prior to the effective time, except 
that the number of shares and exercise price of each such CardioGenesis stock   
option will be appropriately adjusted for the exchange ratio. It is intended    
that the CardioGenesis stock options assumed by Eclipse will qualify as         
incentive stock options, as defined in Section 422 of the Internal Revenue Code,
to the extent they qualified as incentive stock options immediately prior to the
effective time.                                                                 

At the effective time, each right to acquire CardioGenesis common stock         
outstanding under the CardioGenesis stock purchase plan will be assumed by      
Eclipse and appropriately adjusted for the exchange ratio.                      

STOCK OWNERSHIP IMMEDIATELY FOLLOWING THE MERGER                                

Based upon the capitalization of CardioGenesis as of the close of business on   
February 8, 1999 and the exchange ratio, an aggregate of approximately 9,908,040
shares of Eclipse common stock will be issued to CardioGenesis stockholders in  
the merger and the former holders of CardioGenesis common stock will hold       
approximately 36.0% of the total number of shares of Eclipse common stock issued
and outstanding immediately after the merger. At the effective time, Eclipse    
will also assume all CardioGenesis options outstanding and all CardioGenesis    
stock purchase rights for an aggregate of up to approximately 1,887,085         
additional shares of Eclipse common stock. Based upon the number of shares of   
Eclipse common stock issued and outstanding as of February 8, 1999, and after   
giving effect to the issuance of Eclipse common stock in the merger as described
in the previous sentence, holders of former CardioGenesis options and stock     
purchase rights would hold options and rights to acquire up to approximately    
6.4% of Eclipse's total issued and outstanding shares immediately after the     
effective time of the merger (assuming the exercise of only such options and    
rights). The foregoing numbers of shares and percentages are subject to change  
in the event that the capitalization of either Eclipse or CardioGenesis changes 
subsequent to February 8, 1999.                                                 

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REPRESENTATIONS AND WARRANTIES                                                  

CardioGenesis, Eclipse and merger sub have made representations and warranties  
in the reorganization agreement relating to, among other things:                

- their respective capitalization and organization and that of their  
respective subsidiaries;                                          

- authorization, execution, delivery and enforceability of the        
reorganization agreement and related matters;                     

     - documents and financial statements filed with the SEC and the accuracy of
information contained in such filings;                            

- absence of undisclosed liabilities;                                 

- taxes, tax returns and tax deficiencies;                            

- intellectual property rights;                                       

- compliance with laws;                                               

- material litigation;                                                

- brokers' and finders' fees;                                         

- employment, environmental and labor matters;                        

- title to properties;                                                

- agreements, contracts and commitments;                              

- ability to account for the merger as a pooling of interests;        

- change of control payments;                                         

- accuracy of information provided for this joint proxy               
statement/prospectus;                                             

- approvals of the CardioGenesis Board and the Eclipse Board; and     

     - opinions received from Bear Stearns and PaineWebber regarding the merger.

The reorganization agreement also contains a representation by CardioGenesis    
relating to the non-applicability of Section 203 of the Delaware General        
Corporation Law. None of the representations and warranties of the parties in   
the reorganization agreement described above will survive the effective time.   

The parties to the reorganization agreement have agreed to make representations 
that will serve as a basis for the tax opinions to be delivered by legal        
counsel.                                                                        

CONDUCT OF ECLIPSE'S AND CARDIOGENESIS' BUSINESS PRIOR TO THE MERGER            

Until the earlier of the termination of the reorganization agreement or the     
effective time, each of CardioGenesis and Eclipse has agreed to:                

- carry on its business diligently in the usual, regular and ordinary 
course;                                                           

- to pay its debts and taxes when due subject to good faith disputes; 

- to pay or perform other material obligations when due; and          

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    - to preserve intact its present business organization, keep available the
services of its present officers and employees and preserve its   
relationships with customers, suppliers, distributors, licensors, 
licensees, and others with which it has business dealings.        

The reorganization agreement further provides that until the date of the merger,
neither CardioGenesis nor Eclipse will do any of the following:                 

     - waive any stock repurchase rights, change the period of exercisability of
 options or restricted stock, reprice any options; or authorize cash
payments in exchange for any options;                             

- grant severance to any employee, except in amounts consistent with  
     existing policies and past practices or pursuant to written agreements,
or adopt any new severance plan;                                  

   - transfer or license, or otherwise extend, amend or modify any rights to
the CardioGenesis intellectual property rights or the Eclipse     
       intellectual property rights, as the case may be, or enter into grants to
 future patent rights, other than in the ordinary course of business
    consistent with past practice; provided, however, that Eclipse will be
       permitted to undertake a transaction involving its Microheart subsidiary;

- declare or pay any dividends on, or make any other distributions in 
       respect of its capital stock, or split, combine or reclassify any capital
  stock, or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for any capital stock;  

   - repurchase any shares of capital stock, except in carrying out existing
rights of repurchase under any stock plan;                        

 - issue or authorize the issuance of any shares of capital stock or any
  securities convertible into capital stock, or subscriptions, rights,
warrants or options to acquire capital stock or any securities    
convertible into capital stock, other than:                       

(a) upon the exercise of stock options;           

             (b) the grant of options to purchase CardioGenesis common stock
                 or Eclipse common stock, as the case may be, at fair market
   value in the ordinary course of business; and

               (c) shares of CardioGenesis common stock or Eclipse common stock,
                 as the case may be, issuable to participants in the Eclipse
            1996 Employee Stock Purchase Plan or the CardioGenesis
               Purchase Plan consistent with past practice and the terms
thereof;                                  

- amend any charter document or bylaw;                                

   - acquire or agree to acquire any business, corporation or other business
     organization, or otherwise acquire or agree to acquire any assets which
       are material to the business of CardioGenesis or Eclipse, as the case may
      be, or enter into any material joint ventures, strategic partnerships or
alliances;                                                        

    - sell, lease, license, encumber or otherwise dispose of any properties or
 assets which are material, individually or in the aggregate, to the
business of CardioGenesis or                                      

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    Eclipse, as the case may be, except in the ordinary course of business
consistent with past practice;                                    

   - incur any indebtedness for borrowed money, other than trade payables or
     under existing credit facilities, or guarantee any such indebtedness or
the debt of others;                                               

  - adopt or amend any employee benefit plan, or enter into any employment
     contract, pay any special bonus or special remuneration to any director
    or employee, or increase the salaries or wage rates of its officers or
      employees other than in the ordinary course of business, consistent with
      past practice, or change in any material respect any management policies
or procedures;                                                    

    - pay, discharge or satisfy any claim, liability or obligation, other than
in the ordinary course of business;                               

- make any grant of exclusive rights to any third party;              

- take any action that would be reasonably likely to interfere with   
       Eclipse's ability to account for the merger as a pooling of interests; or

     - agree in writing or otherwise to take any of the actions described above.

NO SOLICITATION                                                                 

Until the earlier of the date of the merger or termination of the reorganization
agreement, each of Eclipse and CardioGenesis has agreed that it will not, its   
subsidiaries will not, and it will instruct its respective directors, officers, 
employees, representatives, investment bankers, agents and affiliates not to:   

 - solicit or encourage submission of any proposal or offer by any third
party;                                                            

- participate in any discussions or negotiations with, or disclose any
   non-public information to, any third party relating to an acquisition
proposal as described below; or                                   

- enter into any agreement or understanding with any third party in   
connection with any acquisition proposal.                         

For purposes of the reorganization agreement, an "acquisition proposal" means   
any proposal or offer relating to:                                              

- any merger, consolidation, sale of substantial assets or similar    
 transaction involving the entity or any subsidiaries of the entity;

 - sale of 15% or more of the outstanding shares of capital stock of the
entity in a tender or exchange offer or otherwise;                

  - the acquisition of beneficial ownership or right to acquire beneficial
     ownership of, or the formation of any "group" (as defined under Section
   13(d) of the Exchange Act) that beneficially owns or has the right to
  acquire beneficial ownership of, 15% or more of the then outstanding
shares of capital stock of the entity (except for acquisitions for
passive investment purposes only); or                             

     - any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.     

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Each of Eclipse and CardioGenesis and their respective Boards, may take the     
following actions:                                                              

     - participate in discussions or negotiations with and/or furnish non-public
     information to any third party that has made an unsolicited acquisition
proposal in writing; and                                          

- recommend an unsolicited acquisition proposal if the Board of the   
       affected company determines in good faith (a) after consultation with its
 financial advisor, that such acquisition proposal would result in a
   superior proposal, as described below, and (b) following consultation
 with outside legal counsel, that the failure to participate in such
       discussions or negotiations, or to furnish such information or recommend,
   approve or accept such acquisition proposal would violate the Board's
fiduciary duties under applicable law.                            

For purposes of the reorganization agreement, a "superior proposal" means any   
acquisition proposal, made in writing and not initiated, solicited or encouraged
in violation of the reorganization agreement, on terms which the Board of the   
affected company determines in good faith, after consultation with its financial
advisor, to be more favorable to its stockholders than the merger.              

In addition, each of Eclipse and CardioGenesis has agreed to notify the other in
the event an inquiry or acquisition proposal is made or information or access is
requested, and to furnish to the other the significant terms and conditions of  
any acquisition proposal.                                                       

Under the reorganization agreement, the CardioGenesis Board is required to      
recommend to its stockholders approval and adoption of the merger agreement and 
approval of the merger, and the Eclipse Board is required to recommend to its   
shareholders the issuance of the Eclipse common stock required by the           
reorganization agreement. The Boards may not:                                   

- withdraw or modify, or propose to withdraw or modify, in any manner 
  adverse to the other company, its approval and recommendation of the
     merger agreement and the merger, or the issuance of shares, as the case
may be; or                                                        

     - approve or recommend, or propose to approve or recommend, any acquisition
      proposal unless, in each case, the Board of the affected company has (a)
   determined that such acquisition proposal is a superior proposal, (b)
 determined in good faith, following consultation with outside legal
     counsel, that the failure to take such action would violate the Board's
       fiduciary duties under applicable law, and (c) provided the other company
with a copy of the superior proposal 48 hours before.             

If either the CardioGenesis Board or the Eclipse Board determine to recommend a 
superior proposal to its stockholders, such Board may withdraw, modify or       
refrain from making a recommendation concerning the merger and discontinue      
soliciting proxies for the approval and adoption of the reorganization agreement
and approval of the merger, or the issuance of the Eclipse common stock, as the 
case may be; provided, however, that such company shall remain obligated to hold
and convene its special meeting.                                                

The reorganization agreement provides that Eclipse may undertake a transaction  
involving its MicroHeart, Inc. subsidiary and that such a transaction will not  
be considered an "acquisition proposal" for purposes of the reorganization      
agreement.                                                                      

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BOARD AND MANAGEMENT OF THE COMBINED COMPANY FOLLOWING THE MERGER               

After the effective time, the Board of Directors of the combined company will   
consist of seven members, four from Eclipse and three from CardioGenesis. The   
designees from Eclipse will be Douglas Murphy-Chutorian, M.D., Robert L.        
Mortensen, Iain M. Watson and Alan L. Kaganov. The designees from CardioGenesis 
will be Allen W. Hill, Jack M. Gill and Robert C. Strauss. If, prior to the     
effective time, any of the Eclipse or CardioGenesis designees declines or is    
unable to serve, then the company designating such person will designate another
person, reasonably acceptable to the other company, to serve in such person's   
stead.                                                                          

At the effective time, the Eclipse Board will elect Douglas Murphy-Chutorian,   
M.D., as Chairman of the Board; Allen W. Hill as Chief Executive Officer and    
Richard P. Powers as Executive Vice President of Finance and Administration and 
Chief Financial Officer and Secretary.                                          

CONDITIONS TO THE MERGER                                                        

The respective obligations of each party to the reorganization agreement to     
effect the merger are subject to the satisfaction or waiver at or prior to the  
effective time of the following conditions:                                     

   - Eclipse shareholders and CardioGenesis stockholders shall have approved
       the issuance of Eclipse common stock in the merger and the reorganization
agreement and the merger, respectively;                           

     - the SEC shall have declared effective the registration statement of which
   this joint proxy statement/prospectus is a part, and the registration
statement shall not be subject to any stop order suspending its   
effectiveness or to any proceedings seeking a stop order;         

- no governmental entity shall have taken any action which renders the
merger illegal or prohibits the consummation of the merger;       

   - Eclipse and CardioGenesis will each have received written opinions from
its legal counsel to the effect that the merger will constitute a 
       tax-free reorganization within the meaning of Section 368(a) of the Code;

     - the shares of Eclipse common stock issuable to CardioGenesis stockholders
      and such other shares required to be reserved for issuance in connection
  with the merger will have been authorized for listing on Nasdaq; and

  - each of Eclipse and CardioGenesis will have received a letter from its
       independent accountants to the effect that they are not aware of any fact
     that could preclude Eclipse from accounting for the merger as a pooling
of interests in accordance with GAAP.                             

In addition, the obligation of CardioGenesis to consummate the merger is subject
to the satisfaction or waiver at or prior to the effective time of each of the  
following conditions:                                                           

     - the representations and warranties of Eclipse and merger sub contained in
the reorganization agreement will be true and correct;            

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  - Eclipse and merger sub will have performed or complied in all material
       respects with all agreements and covenants required by the reorganization
   agreement to be performed or complied with by them on or prior to the
effective time; and                                               

 - no material adverse effect with respect to Eclipse will have occurred
since the date of the reorganization agreement.                   

Furthermore, the obligations of Eclipse and merger sub to consummate and effect 
the merger are subject to the satisfaction or waiver at or prior to the         
effective time of each of the following additional conditions:                  

- the representations and warranties of CardioGenesis contained in the
reorganization agreement will be true and correct;                

  - CardioGenesis will have performed or complied in all material respects
with all agreements and covenants required by the reorganization  
 agreement to be performed or complied with by it on or prior to the
effective time; and                                               

- no material adverse effect with respect to CardioGenesis will have  
occurred since the date of the reorganization agreement.          

TERMINATION OF THE REORGANIZATION AGREEMENT                                     

The reorganization agreement provides that it may be terminated at any time     
prior to the effective time:                                                    

- by the mutual written consent of Eclipse and CardioGenesis;         

     - by either Eclipse or CardioGenesis if the merger has not been consummated
by April 30, 1999; provided, that this right to terminate the     
      reorganization agreement is not available to any party that breached its
      obligations under the reorganization agreement in a manner that resulted
in the failure of the merger to occur on or before such date;     

 - by either Eclipse or CardioGenesis if a governmental entity takes any
    action, which is final and not appealable, that permanently restrains,
enjoins or otherwise prohibits the merger;                        

    - by either Eclipse or CardioGenesis if the required shareholder approvals
    have not been obtained by reason of the failure to obtain the required
       vote at the CardioGenesis special meeting or the Eclipse special meeting;
    provided, that this right to terminate the reorganization agreement is
not available to any party that breached its obligations under the
    reorganization agreement in a manner that caused the failure to obtain
such shareholder approval;                                        

    - by Eclipse, if the CardioGenesis Board recommends a superior proposal to
     its stockholders, or if the CardioGenesis Board withholds, withdraws or
       modifies in a manner adverse to Eclipse its recommendation concerning the
merger;                                                           

    - by CardioGenesis, if the Eclipse Board recommends a superior proposal to
its shareholders, or if the Eclipse Board withholds, withdraws or 
modifies in a manner adverse to CardioGenesis its recommendation  
      concerning the issuance of shares of Eclipse common stock in the merger;

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     - by CardioGenesis, upon a breach of any representation, warranty, covenant
 or agreement on the part of Eclipse set forth in the reorganization
   agreement, or if any representation or warranty of Eclipse shall have
   become untrue; provided, that if such inaccuracy or breach is curable
     prior to April 30, 1999 through the exercise of commercially reasonable
efforts, then CardioGenesis may not terminate the reorganization  
agreement if Eclipse continues to exercise commercially reasonable
efforts to cure such breach; or                                   

  - by Eclipse, upon a breach of any representation, warranty, covenant or
    agreement on the part of CardioGenesis set forth in the reorganization
    agreement, or if any representation or warranty of CardioGenesis shall
have become untrue; provided, that if such inaccuracy or breach is
  curable prior to April 30, 1999 through the exercise of commercially
   reasonable efforts, then Eclipse may not terminate the reorganization
agreement if CardioGenesis continues to exercise such commercially
reasonable efforts to cure such breach.                           

TERMINATION FEES                                                                

All fees and expenses incurred in connection with the reorganization agreement  
and the transactions contemplated thereby will be paid by the party incurring   
such expenses whether or not the merger is completed, except that Eclipse and   
CardioGenesis will share equally all fees and expenses, other than attorneys'   
and accountants' fees and expenses, incurred in connection with the printing and
filing of this joint proxy statement/prospectus.                                

Each of Eclipse and CardioGenesis has agreed that if (a) its Board withholds,   
withdraws or modifies, in a manner adverse to the other, its recommendation     
under the reorganization agreement, or (b) its Board recommends a superior      
proposal to its shareholders, then it will pay to the other party a $3 million  
termination fee within one business day of the earlier of the termination of the
reorganization agreement by the other party or a negative vote at the Eclipse   
special meeting or at the CardioGenesis special meeting, as appropriate.        

The termination fee will also be payable in the event:                          

     - either of the special meetings is not held on or before April 30, 1999 or
    a negative vote on the reorganization agreement and the merger, or the
     issuance of shares, is recorded at the CardioGenesis or Eclipse special
meeting;                                                          

 - the other party terminates the reorganization agreement in accordance
with its terms; and                                               

     - the party who failed to hold its special meeting or at which the negative
      vote was recorded either enters into a definitive agreement with respect
       to an acquisition proposal or consummates such a transaction, within nine
months of the failed meeting date or the negative vote.           

Eclipse and CardioGenesis have agreed that payment of the termination fees will 
not be the exclusive remedy in the event of a breach of the reorganization      
agreement.                                                                      

VOTING AGREEMENTS                                                               

Each of the directors and executive officers of Eclipse, who together held      
approximately 28% of the Eclipse common stock outstanding as of the record date,
have entered into voting agreements with CardioGenesis and granted it           
irrevocable proxies. These share-                                               

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holders, as such, have agreed to vote all of their shares of Eclipse common     
stock in favor of the issuance of shares of Eclipse common stock in the merger. 

Each of the directors and executive officers of CardioGenesis, who together held
approximately 29% of the CardioGenesis common stock outstanding as of the record
date, have entered into voting agreements with Eclipse and granted it           
irrevocable proxies. These stockholders, as such, have agreed to vote all of    
their shares of CardioGenesis common stock in favor of the approval and adoption
of the reorganization agreement and approval of the merger.                     

AFFILIATE AGREEMENTS                                                            

Each of the directors and executive officers of Eclipse have entered into       
agreements restricting sales, dispositions or other transactions reducing their 
risk of investment in respect of the shares of Eclipse common stock held by them
to help ensure that the merger will be treated as a pooling of interests for    
accounting purposes. Each of the directors and executive officers of            
CardioGenesis have similarly entered into agreements restricting sales,         
dispositions or other transactions reducing their risk of investment in respect 
of the shares of CardioGenesis common stock held by them prior to the merger and
the shares of Eclipse common stock received by them in the merger so as to      
comply with the requirements of applicable federal securities and tax laws and  
to help ensure that the merger will be treated as a pooling of interests for    
accounting purposes.                                                            

INTERESTS OF CERTAIN PERSONS                                                    

Indemnification. The reorganization agreement provides that from and after the  
effective time, the bylaws of the surviving corporation will honor the          
indemnification provisions set forth in CardioGenesis' bylaws, which provisions 
will not be amended or repealed for a period of six years in any manner that    
would adversely affect the rights of individuals who were directors, officers,  
employees or agents of CardioGenesis, at the effective time, unless required by 
law. Eclipse and the surviving corporation will honor and fulfill the           
obligations of CardioGenesis under existing indemnification agreements between  
CardioGenesis and its officers and directors.                                   

The reorganization agreement also provides that for a period of six years after 
the effective time, Eclipse or the surviving corporation will maintain in       
effect, if available, directors' and officers' liability insurance covering     
those persons who are currently covered by CardioGenesis' insurance policy on   
terms comparable to those applicable to the then current directors and officers 
of CardioGenesis. However, in no event will Eclipse or the surviving corporation
be required to pay in excess of 125% of the annual premium currently paid by    
CardioGenesis for such coverage. Furthermore, if the premium for such coverage  
exceeds that amount, Eclipse or the surviving corporation will purchase a policy
with the greatest coverage available for 125% of the current annual premium.    

The indemnification and insurance obligations of the reorganization agreement   
are intended to benefit the indemnified parties and will be binding on all      
successors and assigns of the surviving corporation.                            

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Management. For information regarding the composition of the Board of Directors 
and the senior management of the combined company after the merger, see         
"-- Board and Management of the Combined Company Following the Merger" at page  
62.                                                                             

NO DISSENTERS' OR APPRAISAL RIGHTS                                              

Under Delaware law, stockholders of CardioGenesis are not entitled to appraisal 
rights in connection with the merger. Shareholders of Eclipse are not entitled  
to dissenters' rights under California law in the merger.                       

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COMPARISON OF CAPITAL STOCK 

DESCRIPTION OF ECLIPSE CAPITAL STOCK                                            

The authorized capital stock of Eclipse consists of 50,000,000 shares of common 
stock, no par value per share, and 5,000,000 shares of preferred stock, no par  
value per share.                                                                

Eclipse Common Stock. As of the record date, there were 17,621,323 shares of    
Eclipse common stock outstanding held of record by 178 shareholders. The holders
of Eclipse common stock are entitled to one vote per share on all matters to be 
voted upon by the shareholders. The shareholders have the right to take any     
action which may be taken at any annual or special meeting by written consent   
without a meeting, and may cumulate votes in connection with the election of    
directors. The holders of Eclipse common stock are entitled to receive ratably  
such dividends, if any, as may be declared from time to time by the Board of    
Directors out of funds legally available therefor. In the event of a            
liquidation, dissolution or winding up of Eclipse, the holders of Eclipse common
stock are entitled to share ratably in all assets remaining after payment of    
liabilities and any liquidation preference on the preferred stock. The Eclipse  
common stock has no preemptive or conversion rights or other subscription       
rights. There are no redemption or sinking fund provisions applicable to the    
Eclipse common stock. All outstanding shares of Eclipse common stock are fully  
paid and non-assessable, and the shares of Eclipse common stock to be           
outstanding upon completion of the merger will be fully paid and non-assessable.

Eclipse Preferred Stock. Eclipse has 5,000,000 shares of preferred stock        
authorized, of which, as of the record date, no shares were outstanding.        
Although it presently has no intention to do so, the Eclipse Board, without     
shareholder approval, has the authority to designate one or more series of      
preferred stock and to fix the rights, preferences, privileges and restrictions 
thereof, including dividend rights, conversion rights, voting rights, preemptive
rights, terms of redemption, liquidation preferences and sinking fund terms. The
Board of Directors similarly has the authority to fix the number of shares of   
each such series (up to an aggregate for all series of preferred stock of       
5,000,000 shares); to increase or decrease such number of shares (but not below 
the number of shares of any such series then outstanding) and to issue up to    
5,000,000 shares. The issuance of preferred stock could adversely affect the    
voting power of holders of common stock and the likelihood that such holders    
will receive dividend payments and payments upon liquidation and could have the 
effect of delaying, deferring, or preventing a change in control of Eclipse.    

Eclipse Warrants. As of February 8, 1999, there were warrants outstanding to    
purchase an aggregate of 479,334 shares of Eclipse common stock at exercise     
prices ranging from $1.67 to $4.17 per share and expiration dates through 1999. 
All warrants contain provisions for the adjustment of the exercise price upon   
the occurrence of certain events including stock dividends, stock splits,       
reorganizations, reclassifications and mergers and terminate upon certain public
offerings, mergers or sale of Eclipse assets.                                   

Transfer Agent and Registrar. The transfer agent and registrar of the Eclipse   
common stock is Boston Equiserve LLC and its telephone number is (650) 917-3800.

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DESCRIPTION OF CARDIOGENESIS CAPITAL STOCK                                      

The authorized capital stock of CardioGenesis consists of 40,000,000 shares of  
common stock, $0.001 par value per share, and 2,000,000 shares of preferred     
stock, $0.001 par value per share.                                              

CardioGenesis Common Stock. As of the record date, there were 12,385,051 shares 
of CardioGenesis common stock outstanding held of record by 88 stockholders.    
Holders of CardioGenesis common stock are entitled to one vote per share on all 
matters to be voted upon by the stockholders. The holders of CardioGenesis      
common stock are entitled to receive ratably such dividends, if any, as may be  
declared from time to time by the CardioGenesis Board out of funds legally      
available therefor. In the event of a liquidation, dissolution or winding up of 
CardioGenesis, the holders of CardioGenesis common stock are entitled to share  
ratably in all assets remaining after payment of liabilities and any liquidation
preference on the preferred stock. The CardioGenesis common stock has no        
preemptive or conversion rights or other subscription rights. There are no      
redemption or sinking fund provisions applicable to the CardioGenesis common    
stock. All outstanding shares of CardioGenesis common stock are fully paid and  
non-assessable.                                                                 

Preferred Stock. CardioGenesis has 2,000,000 shares of preferred stock          
authorized, of which, as of the record date, no shares were outstanding. The    
CardioGenesis Board has the authority to provide for the issuance of these      
shares of preferred stock in one or more series, to establish the number of     
shares in each series and to fix the designations, powers, preferences, rights, 
qualifications, limitations and restrictions, without any further vote or action
by the stockholders. Although it presently has no intention to do so, the       
CardioGenesis Board, without stockholder approval, can issue preferred stock    
with voting and conversion rights which could adversely affect the voting power 
or other rights of the holders of CardioGenesis common stock and the issuance of
preferred stock may have the effect of delaying, deferring or preventing a      
change in control of CardioGenesis.                                             

Transfer Agent and Registrar. The transfer agent and registrar of the           
CardioGenesis common stock is Boston Equiserve LLC and its telephone number is  
(650) 917-3800.                                                                 

COMPARISON OF RIGHTS OF STOCKHOLDERS OF CARDIOGENESIS AND SHAREHOLDERS OF       
ECLIPSE                                                                         

The rights of Eclipse's shareholders are governed by its Amended and Restated   
Articles of Incorporation, its Amended and Restated Bylaws and the laws of the  
State of California. The rights of CardioGenesis' stockholders are governed by  
the CardioGenesis certificate, its bylaws and the laws of the State of Delaware.
After the effective time, the CardioGenesis stockholders will become Eclipse    
shareholders and will be governed by the Eclipse articles, Eclipse bylaws and   
the laws of the State of California.                                            

While the rights and privileges of stockholders of a Delaware corporation such  
as CardioGenesis are, in many instances, comparable to those of shareholders of 
a California corporation such as Eclipse, there are certain differences. The    
following is a summary of the material differences between the rights of holders
of CardioGenesis common stock and the rights of holders of Eclipse common stock 
at the date hereof. These differences arise from differences between the        
Delaware General Corporation Law and the California Corporation Code and between
the CardioGenesis certificate and bylaws, on the one hand, and the Eclipse      
articles and bylaws, on the other hand.                                         

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Vote Required for Extraordinary Transactions. California law requires that the  
principal terms of a merger be approved by the affirmative vote of at least a   
majority of the outstanding shares of each class entitled to vote thereon,      
except that, unless required by its articles of incorporation, no shareholder   
vote is required of any corporation if such corporation or its shareholders will
own, immediately after the merger, more than five-sixths of the voting power of 
the surviving or acquiring corporation or its parent. The Eclipse articles do   
not require such a vote or the vote of a greater percentage of the outstanding  
shares. California law further requires the affirmative vote of at least a      
majority of the outstanding shares entitled to vote thereon if:                 

     - the surviving corporation's articles of incorporation will be amended and
would otherwise require shareholder approval; or                  

 - shareholders of such corporation will receive shares of the surviving
corporation having different rights, preferences, privileges or   
      restrictions (including shares in a foreign corporation) than the shares
surrendered.                                                      

Shareholder approval is not required under California law for mergers or        
consolidations in which a parent corporation merges or consolidates with a      
subsidiary of which it owns at least 90% of the outstanding shares of each class
of stock.                                                                       

Delaware law requires the affirmative vote of at least a majority of the        
outstanding stock entitled to vote thereon to authorize any merger or           
consolidation of a corporation, except that, unless required by its certificate 
of incorporation, no stockholder vote is required of the surviving corporation  
if:                                                                             

 - such corporation's certificate of incorporation is not amended in any
respect by the merger;                                            

    - each share of stock of such corporation outstanding immediately prior to
  the effective date of the merger will be an identical outstanding or
     treasury share of the surviving corporation after the effective date of
the merger; and                                                   

  - the number of shares to be issued in the merger does not exceed 20% of
  such corporation's outstanding common stock immediately prior to the
effective date of the merger.                                     

The CardioGenesis certificate does not require such a vote or the vote of a     
greater percentage of the outstanding shares. Stockholder approval is also not  
required under Delaware law for mergers or consolidations in which a parent     
corporation merges or consolidates with a subsidiary of which it owns at least  
90% of the outstanding shares of each class of stock.                           

Both California law and Delaware law require that a sale of all or substantially
all of the corporation's assets be approved by at least a majority of the       
outstanding stock entitled to vote.                                             

Amendment to Governing Documents. Unless otherwise specified in a California    
corporation's articles of incorporation, an amendment to the articles of        
incorporation requires the approval of the corporation's board of directors and 
the affirmative vote of at least a majority of the outstanding shares entitled  
to vote thereon, either before or after the board approval. The Eclipse articles
do not require a greater level of approval for an amendment.                    

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Under California law, the holders of the outstanding shares of a class are      
entitled to vote as a class if a proposed amendment to the articles of          
incorporation would:                                                            

  - effect an exchange, reclassification or cancellation of all or part of
       the shares of such class, including a reverse stock split but excluding a
forward stock split.                                              

    - effect an exchange, or create a right of exchange, of all or part of the
shares of another class into the shares of such class.            

    - change the rights, preferences, privileges or restrictions of the shares
of such class.                                                    

 - create a new class of shares having rights, preferences or privileges
       prior to the shares of such class, or increase the rights, preferences or
       privileges or the number of authorized shares of any class having rights,
preference or privileges prior to the shares of such class; or    

- in the case of preferred shares, divide the shares of any class into
     series having different rights, preferences, privileges or restrictions
or authorize the board of directors to do so.                     

Under California law, a corporation's bylaws may be adopted, amended or repealed
either by the board of directors or the shareholders of the corporation. The    
Eclipse bylaws provide that the bylaws may be adopted, amended or repealed      
either by the vote or written consent of the holders of a majority of the       
outstanding shares entitled to vote or by the board of directors; provided,     
however, that the Eclipse Board of Directors may not amend the Eclipse bylaws in
order to change the authorized number of directors (except to alter the         
authorized number of directors within the existing range of a minimum of four   
and a maximum of seven directors).                                              

Delaware law requires a vote of the corporation's board of directors and the    
affirmative vote of a majority of the outstanding stock of each class entitled  
to vote for any amendment to the certificate of incorporation, unless a greater 
level of approval is required by the certificate of incorporation. The          
CardioGenesis certificate does not require a greater level of approval for      
amendments. If an amendment would alter the powers, preferences or special      
rights of a particular class or series of stock so as to affect them adversely, 
the class or series will be given the power to vote as a class notwithstanding  
the absence of any specifically enumerated power in the certificate of          
incorporation. Delaware law also states that the power to adopt, amend or repeal
the bylaws of a corporation will be in the stockholders entitled to vote,       
provided that the corporation in its certificate of incorporation may confer    
such power on the board of directors in addition to the stockholders. The       
CardioGenesis certificate expressly authorizes the CardioGenesis Board of       
Directors to adopt, amend or repeal the CardioGenesis bylaws.                   

Director Nominations. The CardioGenesis bylaws provide that no nominations for  
directors of CardioGenesis by any person other than the CardioGenesis Board may 
be presented to any meeting of stockholders unless the person making the        
nomination is a record stockholder and has delivered a written notice to the    
secretary of CardioGenesis. In order to be timely, a stockholder's notice must  
be delivered between 30 and 60 days prior to the first anniversary of the       
preceding year's annual meeting; except that if the date of the annual meeting  
is more than 30 days before or 60 days after the anniversary date, or in the    
case of a special meeting, the stockholder notice must be delivered between 30  
and 60 days prior to such meeting or the 10th day following the day on which    
public announcement is first made of the date of the meeting.                   

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The Eclipse bylaws impose comparable conditions on the submission of nominations
for the election of directors. The Eclipse bylaws require that a shareholder who
wishes to submit a nomination for the approval of the Eclipse shareholders at   
any regular or special meeting of shareholders be a shareholder of record who   
has delivered a written notice to the secretary of the corporation not less than
90 days prior to such meeting, except that in the event that less than 100 days'
notice or prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder must be received not later than the     
close of business on the 10th day following the day on which such notice of the 
date of the meeting was mailed or public disclosure was made.                   

Cumulative Voting for Directors. The Eclipse bylaws provide that shareholders   
are entitled to cumulate their votes to elect directors who have been properly  
nominated at a shareholders' meeting at which directors are to be elected. Every
Eclipse shareholder is entitled to cumulate votes in the following manner: the  
shareholder can either (a) give one candidate a number of votes equal to the    
number of directors to be elected multiplied by the number of votes to which    
that shareholder's shares are normally entitled or (b) distribute the           
shareholder's votes on the same principle among any or all of the candidates.   
Votes for directors are then tallied such that candidates receiving the highest 
number of affirmative votes, up to the number of directors to be elected at such
meeting, shall be elected. The CardioGenesis bylaws do not provide for          
cumulative voting. Instead, the CardioGenesis bylaws provide that on all matters
properly to be voted upon by the stockholders, including election of directors, 
each stockholder is entitled to one vote for each share of stock held by such   
stockholder.                                                                    

Shareholder Proposals. There is no specific statutory requirement under either  
California law or Delaware law for advance notice of shareholder proposals. The 
CardioGenesis bylaws provide that no proposal by any person other than the      
CardioGenesis Board may be submitted for the approval of the CardioGenesis      
stockholders at any regular or special meeting of stockholders unless the person
advancing the proposal is a record stockholder and has delivered a written      
notice to the secretary of CardioGenesis between 30 and 60 days prior to the    
first anniversary of the preceding year's stockholder meeting; except that in   
the event that the date of the annual meeting is more than 30 days before or    
more than 60 days after such anniversary date, or in the case of a special      
meeting, the stockholder notice must be delivered between 30 and 60 days prior  
to such meeting or the 10th day following the day on which public announcement  
of the date of such meeting is first made by CardioGenesis.                     

The Eclipse bylaws impose comparable conditions on the submission of shareholder
proposals. The Eclipse bylaws require that a shareholder who wishes to submit a 
proposal for the approval of the Eclipse shareholders at any regular or special 
meeting of shareholders be a record shareholder who has delivered a written     
notice to the secretary of the corporation not less than 90 days prior to such  
meeting, except that in the event that less than 100 days notice or prior public
disclosure of the date of the meeting is given or made to shareholders, notice  
by the shareholder must be received not later than the close of business on the 
10th day following the day on which such notice of the date of the meeting was  
mailed or public disclosure was made.                                           

Shareholder Consent in Lieu of Meeting. Under Delaware law and California law,  
unless otherwise provided in the certificate or articles of incorporation, as   
the case may be, any action required to be taken or which may be taken at an    
annual or special meeting of                                                    

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stockholders may be taken without a meeting if a consent in writing is signed by
the holders of outstanding stock having not less than the minimum number of     
votes that would be necessary to authorize such action at a meeting at which all
shares entitled to vote were present and voted. California law and the Eclipse  
bylaws provide that directors may not be elected by written consent except by   
unanimous written consent of all shares entitled to vote for the election of    
directors. However, the Eclipse bylaws allow a director to be elected at any    
time to fill any vacancy on the Eclipse Board of Directors by written consent of
the holders of a majority of the outstanding shares entitled to vote for the    
election of directors, provided that the vacancy was not created by removal of a
director and that it has not been filled by the directors. The CardioGenesis    
certificate and bylaws provide that any action by the stockholders must be taken
at an annual or special meeting of stockholders and may not be taken by written 
consent.                                                                        

Special Shareholder Meetings. The CardioGenesis bylaws provide that a special   
meeting of the stockholders may only be called by the Board of Directors, the   
chairman of the board, the chief executive officer or the president. The Eclipse
bylaws provide that a special meeting may only be called by the Eclipse Board of
Directors or upon the written request of shareholders entitled to cast not less 
than 10% of the votes at the meeting.                                           

Anti-Takeover Provisions and Interested Stockholder Transactions. Delaware law  
subjects certain transactions involving a corporation and significant           
stockholders to special stockholder approval requirements. California law also  
has provisions that address certain transactions with significant shareholders. 

Delaware law prohibits, in certain circumstances, a "business combination"      
between the corporation and an "interested stockholder" within three years of   
the stockholder becoming an "interested stockholder." An "interested            
stockholder" is a holder who, directly or indirectly, controls 15% or more of   
the outstanding voting stock or is an affiliate or associate of the corporation 
and was the owner of 15% or more of the outstanding voting stock at any time    
within the prior three-year period. A "business combination" includes generally 
a merger or consolidation, a sale or other disposition of assets having an      
aggregate market value equal to 10% or more of the consolidated assets of the   
corporation or the aggregate market value of the outstanding stock of the       
corporation and certain transactions that would increase the interested         
stockholder's proportionate share ownership in the corporation.                 

This three-year moratorium provision does not apply where:                      

    - either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder is approved by the 
corporation's board of directors prior to the date the interested 
stockholder acquired such 15% interest;                           

- upon the consummation of the transaction which resulted in the      
stockholder becoming an interested stockholder, the interested    
   stockholder owned at least 85% of the outstanding voting stock of the
     corporation, excluding for purposes of determining the number of shares
    outstanding shares held by persons who are directors and also officers
     and by employee stock plans in which participants do not have the right
       to determine confidentiality whether shares held subject to the plan will
be tendered;                                                      

- the business combination is approved by a majority of the board of  
       directors and the affirmative vote of two-thirds of the outstanding votes
       entitled to be cast by disinterested stockholders at an annual or special
meeting;                                                          

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     - the corporation does not have a class of voting stock that is listed on a
       national securities exchange, authorized for quotation on Nasdaq, or held
   of record by more than 2,000 stockholders unless any of the foregoing
 results from action taken, directly or indirectly, by an interested
       stockholder or from a transaction in which a person becomes an interested
stockholder; or                                                   

- the corporation has elected not to be governed by this provision.   

The CardioGenesis Board has not made an election to be governed by this         
provision of Delaware law.                                                      

Under California law, there is no comparable provision. However, California law 
does provide that, except where the fairness of the terms and conditions of the 
transaction has been approved by the California Commissioner of Corporations and
except in a "short-form" merger of a parent corporation with an at least        
90%-owned subsidiary, if the surviving corporation or its parent corporation    
owns, directly or indirectly, shares of the target corporation representing more
than 50% of the voting power of the target corporation prior to the merger, the 
nonredeemable common stock of a target corporation may be converted only into   
nonredeemable common stock of the surviving corporation or its parent           
corporation, unless all of the shareholders of the class consent. The effect of 
this provision is to prohibit a cash-out merger of minority shareholders, except
where the majority shareholders already own 90% or more of the voting power of  
the target corporation and could, therefore, effect a short-form merger to      
accomplish such a cash-out of minority shareholders.                            

California law also provides that, with exceptions, when a tender offer or      
proposal for a reorganization or sale of assets is made by an "interested party"
(in general, a controlling or managing party of the target corporation), a      
fairness opinion regarding the consideration to be paid to the shareholders must
be delivered to the shareholders. Furthermore, if a tender offer for shares or  
vote is sought pursuant to an interested party's proposal and another party     
makes a later proposal at least 10 days before the date of acceptance of an     
interested party's tender or proposal, the shareholders must be informed of the 
later offer and be afforded a reasonable opportunity to withdraw any vote,      
consent, proxy or tendered shares.                                              

Limitation of Liability. Delaware law and California law each provide that the  
charter documents of a corporation may include provisions which limit or        
eliminate the liability of directors to the corporation or its stockholders for 
monetary damages for breach of fiduciary duty as a director. The CardioGenesis  
certificate contains a provision limiting the personal monetary liability of its
directors to the fullest extent permitted by Delaware law. The Eclipse articles 
contain a provision limiting the liability of its directors to the fullest      
extent provided by California law.                                              

Under Delaware law, this limitation of liability will not apply where the       
monetary damages arise from:                                                    

- acts or omissions not in good faith or which involve intentional    
misconduct or a knowing violation of law;                         

- breach of the duty of loyalty; or                                   

  - the payment of unlawful dividends or expenditure of funds for unlawful
     stock purchases or redemptions or transactions from which such director
derived an improper personal benefit.                             

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Under California law, this limitation of liability will not apply where the     
monetary damages arise from:                                                    

- intentional misconduct or knowing and culpable violation of law;    

 - acts or omissions that a director believes to be contrary to the best
  interests of the corporation or its shareholders or that involve the
absence of good faith on the part of the director;                

- the receipt of an improper personal benefit;                        

     - acts or omissions that show reckless disregard for the director's duty to
     the corporation or its shareholders, where the director in the ordinary
    course of performing a director's duties was aware or should have been
       aware of a risk of serious injury to the corporation or its shareholders;

 - acts or omissions that constitute an unexcused pattern of inattention
     that amounts to an abdication of the director's duty to the corporation
and its shareholders; or                                          

     - interested transactions between the corporation and a director in which a
   director has a material financial interest and liability for improper
distributions, loans or guarantees.                               

Indemnification. Delaware law provides that a corporation may indemnify its     
present and former directors, officers, employees and agents against expenses   
(including attorneys' fees) and, except in actions initiated by or in the right 
of the corporation, against judgments, fines and amounts paid in settlement     
actually and reasonably incurred by an indemnitee in actions brought against    
them, if such person acted in good faith, and in a manner which the person      
reasonably believed to be in, or not opposed to, the best interests of the      
stockholders and, in the case of a criminal proceeding, had no reasonable cause 
to believe the person's conduct was unlawful. The corporation must indemnify an 
indemnitee to the extent that he or she is successful on the merits or otherwise
in the defense of any action, suit or proceeding or the defense of any claim,   
issue or matter therein. The CardioGenesis bylaws provide for indemnification of
directors or officers to the fullest extent authorized by Delaware law.         

Under Section 317 of the California Corporations Code, a corporation has the    
power to indemnify present and former directors, officers, employees and agents 
against expenses, judgments, fines, settlements and other amounts actually and  
reasonably incurred, other than in connection with actions by or in the right of
the corporation, if that person acted in good faith and in a manner the person  
reasonably believed to be in the best interests of the corporation and, in the  
case of a criminal proceeding, had no reasonable cause to believe the conduct of
the person was unlawful. Furthermore, under Section 317, a corporation has the  
power to indemnify, with certain exceptions, any person who is a party to any   
action by or in the right of the corporation, against expenses actually and     
reasonably incurred by that person in connection with the defense or settlement 
of the action if the person acted in good faith, and in a manner the person     
believed to be in the best interests of the corporation and its shareholders.   

The indemnification authorized by Section 317 of the California Corporations    
Code is not exclusive, and a corporation may grant its directors, officers,     
employees or other agents certain additional rights to indemnification. The     
Eclipse articles and bylaws provide for the indemnification of its agents to the
fullest extent permissible under California law, which                          

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may be in excess of the indemnification expressly permitted by Section 317,     
subject to the limits set forth in Section 204 of the California Corporations   
Code with respect to actions for breach of duty to the corporation and its      
shareholders.                                                                   

Delaware law and California law each allow for the advance payment of an        
indemnitee's expenses prior to the final disposition of an action, provided that
the indemnitee undertakes to repay any such amount advanced if it is later      
determined that the indemnitee is not entitled to indemnification with regard to
the action for which the expenses were advanced.                                

Derivative Action. California law provides that a shareholder bringing a        
derivative action on behalf of the corporation need not have been a shareholder 
at the time of the transaction in question, if certain tests are met. California
law also provides that the corporation or the defendant in a derivative suit may
make a motion to the court for an order requiring the plaintiff shareholder to  
furnish a security bond.                                                        

Derivative actions may be brought in Delaware by a stockholder on behalf of, and
for the benefit of, the corporation. Delaware law provides that a stockholder   
must plead in the complaint that such stockholder was a stockholder of the      
corporation at the time of the transaction of which such stockholder complains. 
A stockholder may not sue derivatively unless such stockholder first makes      
demand on the corporation that it bring suit and such demand has been refused,  
unless it is shown that such demand would have been futile.                     

Interested Director Transactions. Under both California law and Delaware law,   
certain contracts or transactions in which one or more of a corporation's       
directors (or officers in the case of Delaware law) has an interest are not void
or voidable because of such interest provided that certain conditions, such as  
obtaining the required approval and fulfilling the requirements of good faith   
and full disclosure, are met. With certain exceptions, the conditions are       
similar under California law and Delaware law. Under either statute:            

   - the shareholders or the disinterested members of the board of directors
    must approve any such contract or transaction after full disclosure of
    the material facts, and in the case of board approval, the contract or
      transaction must also be "just and reasonable" (in California) or "fair"
(in Delaware) to the corporation, or                              

     - the contract or transaction must have been just and reasonable or fair as
to the corporation at the time it was approved.                   

If the transaction has not been approved by the board of directors or           
shareholders of the corporation, the burden of proof to show the transaction    
meets the applicable statutory standard in both California and Delaware rests   
with the interested party.                                                      

Under California law, if shareholder approval is sought, the interested director
is not entitled to vote his shares at a shareholder meeting with respect to any 
action regarding such contract or transaction. If Board approval is sought, the 
contract or transaction must be approved by a majority vote of a quorum of the  
directors, without counting the vote of any interested directors, except that   
interested directors may be counted for purposes of establishing a quorum. Under
Delaware law, if board approval is sought, the contract or transaction must be  
approved by a majority of the disinterested directors even though less than a   
majority of a quorum.                                                           

Removal of Directors. Under California law, any director or the entire board may
be removed, with or without cause, with the approval of a majority of the       
outstanding shares entitled to vote. However, for corporations like Eclipse that
permit cumulative voting, no                                                    

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director may be removed (unless the entire board is removed) if the number of   
votes cast against removal would be sufficient to elect the director under      
cumulative voting.                                                              

Under Delaware law, a director of a corporation that does not have a classified 
board may be removed with or without cause by the holders of a majority of the  
shares then entitled to vote at an election of directors, subject to limitations
for corporations that permit cumulative voting. CardioGenesis does not have a   
classified Board. The CardioGenesis bylaws provide that directors may be        
removed, with or without cause, at an election of directors.                    

Filling Board Vacancies. Under California law, shareholders may fill any vacancy
on the board not otherwise filled by the board. Unless the articles or bylaws   
provide otherwise, the board may fill any vacancy other than one caused by      
removal of a director. A vacancy created by removal may be filled only by the   
shareholders, unless the corporation's articles of incorporation or bylaws also 
authorize the board to fill such vacancies. The Eclipse bylaws do not permit the
Board to fill vacancies created by a vote of the shareholders or court order.   
Under Delaware law, vacancies and newly-created directorships may be filled by a
majority of the directors then in office or by the stockholders, unless         
otherwise provided in the certificate of incorporation or bylaws. Neither the   
CardioGenesis certificate nor the CardioGenesis bylaws restrict the ability of  
its stockholders to fill Board vacancies.                                       

Certain Loans. California law requires that any loan or guaranty by the         
corporation to or for a director or officer must be approved by shareholders,   
unless extended or granted under a plan approved by shareholders. Shareholders  
may also approve a bylaw authorizing the corporation's board of directors to    
approve loans or guaranties to or for officers (including officers who are also 
directors), if the board determines that the loan or guaranty may reasonably be 
expected to benefit the corporation. The Eclipse bylaws do not contain such a   
provision. Under Delaware law, a corporation may make loans to, guarantee the   
obligations of or otherwise assist its officers or other employees (including   
any officer or other employee who is also a director) when, in the board's      
judgment, such action may reasonably be expected to benefit the corporation.    

Appraisal Rights. Under Delaware law, holders of shares of any class or series  
have the right, in certain circumstances, to dissent from a merger or           
consolidation by demanding payment in cash for their shares equal to the fair   
value (excluding any appreciation or depreciation as a consequence or in        
expectation of the transaction) of such shares, as determined by agreement with 
the corporation or by an independent appraiser appointed by a court in an action
timely brought by the corporation or the dissenters. Delaware law grants        
dissenters' appraisal rights only in the case of mergers or consolidations and  
not in the case of a sale or transfer of assets or a purchase of assets for     
stock regardless of the number of shares being issued. Further, no appraisal    
rights are available for shares of any class or series which are listed on a    
national securities exchange or designated as a national market system security 
on Nasdaq or held of record by more than 2,000 stockholders, unless the         
agreement of merger or consolidation converts such shares into anything other   
than:                                                                           

- stock of the surviving corporation;                                 

- stock of another corporation which is either listed on a national   
       securities exchange or designated as a national market system security on
Nasdaq or held of record by more than 2,000 stockholders;         

- cash in lieu of fractional shares; or                               

- some combination of the above.                                      

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In addition, dissenters' rights are not available for any shares of the         
surviving corporation if the merger did not require the vote of the stockholders
of the surviving corporation. See "The Reorganization Agreement and Related     
Agreements -- No Dissenters' or Appraisal Rights" at page 66.                   

Generally, shareholders of a California corporation who dissent from a merger,  
consolidation or reorganization of the corporation are entitled to exercise     
dissenters' rights but not in the case of this merger, because Eclipse will     
survive this merger as the controlling corporation.                             

Dividends and Repurchases of Shares. California law dispenses with the concept  
of par value and statutory definitions of capital and surplus. Delaware law,    
however, retains the concept of par value and defines capital and surplus.      

Under California law, a corporation may not make any distribution (including    
dividends, whether in cash or other property, and repurchases of its shares)    
unless the corporation's retained earnings immediately prior to the proposed    
distribution equal or exceed the amount of the proposed distribution.           
Alternatively, a corporation may make a distribution if immediately after giving
effect to such distribution, the corporation's assets (exclusive of goodwill,   
capitalized research and development expenses and deferred charges) would be at 
least equal to 1 1/4 times its liabilities (not including deferred taxes,       
deferred income and other deferred credits), and the corporation's current      
assets would be at least equal to its current liabilities (or 1 1/4 times its   
current liabilities if the average pre-tax and pre-interest expense earnings for
the preceding two fiscal years were less than the average interest expense for  
such years). Such tests are applied to California corporations on a consolidated
basis.                                                                          

Delaware law permits a corporation to declare and pay dividends out of surplus. 
If there is no surplus, a corporation is permitted to declare and pay dividends 
out of net profits for the fiscal year in which the dividend is declared and/or 
for the preceding fiscal year as long as the amount of capital of the           
corporation following the declaration and payment of the dividend is not less   
than the aggregate amount of the capital represented by the issued and          
outstanding stock of all classes having a preference upon the distribution of   
assets. In addition, Delaware law generally provides that a corporation may     
redeem or repurchase its shares only if such redemption or repurchase would not 
impair the capital of the corporation.                                          

Inspection of Shareholder List. Both California law and Delaware law allow any  
shareholder to inspect the shareholder list for a purpose reasonably related to 
the shareholder's interest as a shareholder. In addition, California law grants 
an absolute right to inspect and copy the shareholder list to holders of at     
least five percent of a corporation's voting shares and holders of at least one 
percent of such shares who filed a "Schedule 14B" with the SEC relating to the  
election of directors. Delaware law does not provide an absolute right of       
inspection.                                                                     

Dissolution. Under California law, holders of shares having 50 percent or more  
of the corporation's total voting power may authorize a corporation's           
dissolution without board approval. That right may not be modified by the       
articles of incorporation. Under Delaware law, unless the board approves the    
dissolution, the dissolution must be approved by holders of shares having 100   
percent of the corporation's voting power.                                      

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The foregoing discussion of certain similarities and material differences       
between the rights of Eclipse shareholders and the rights of CardioGenesis      
stockholders under their respective articles/certificate of incorporation and   
bylaws is only a summary of certain provisions and does not purport to be a     
complete description of such similarities and differences, and is qualified in  
its entirety by reference to the California Corporations Code and the Delaware  
General Corporation Law, the common law thereunder and the full text of the     
articles/ certificate of incorporation and bylaws of each of Eclipse and        
CardioGenesis.                                                                  

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ECLIPSE AND CARDIOGENESIS 

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS 

The following unaudited pro forma combined condensed financial statements are   
presented for illustrative purposes only and are not necessarily indicative of  
the financial position or results of operations that would have actually been   
reported had the merger occurred at the beginning of the periods presented, nor 
is it necessarily indicative of future financial position or results of         
operations. The following unaudited pro forma combined condensed financial      
statements have been prepared to give effect to the merger using the pooling of 
interests method of accounting. Both Eclipse and CardioGenesis have calendar    
year-ends. These unaudited pro forma combined condensed financial statements are
based upon the respective historical consolidated financial statements of       
Eclipse, which are incorporated by reference in this joint proxy                
statement/prospectus, and of CardioGenesis, which are included elsewhere in this
joint proxy statement/prospectus, and should be read in conjunction with the    
respective historical consolidated financial statements and notes thereto, and  
do not incorporate, nor do they assume any benefits from costs savings or       
synergies of, operations of the combined company.                               

The unaudited pro forma combined condensed balance sheet gives effect to the    
merger as if it had occurred on September 30, 1998 and combines the unaudited   
consolidated balance sheet of Eclipse and the unaudited consolidated balance    
sheet of CardioGenesis as of September 30, 1998. The unaudited pro forma        
combined condensed statements of operations for the nine months ended September 
30, 1998 and 1997 and for each of the three years ended December 31, 1997 give  
effect to the merger as if it occurred as of the beginning of the earliest      
period presented and are a summation of the historical consolidated statements  
of operations of Eclipse and CardioGenesis and include no pro forma adjustments.

Eclipse and CardioGenesis estimate that they will incur transaction costs of    
approximately $4.0-$6.0 million in connection with the merger, which will be    
charged to operations when incurred, principally in the quarter of the          
completion of the merger. The combined company may incur additional costs in    
connection with the merger and the integration of the two companies. Management 
may not be successful in its efforts to integrate the operations of Eclipse and 
CardioGenesis. See "Risk Factors -- Risks Related to Merger."                   

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UNAUDITED PRO FORMA COMBINED CONDENSED

BALANCE SHEET 
(IN THOUSANDS)

ASSETS

                                                        · Enlarge/Download Table

                                                    AS OF SEPTEMBER 30, 1998              
                                      ----------------------------------------------------
                                                                   PRO FORMA     PRO FORMA
                                      CARDIOGENESIS    ECLIPSE    ADJUSTMENTS    COMBINED 
                                      -------------    -------    -----------    ---------
                                                                                          
Current assets                                                                            
  Cash and cash equivalents.........     $ 6,901       $ 2,134                    $ 9,035 
  Marketable securities.............       2,783           252                      3,035 
  Accounts receivable, net..........       1,633         3,271                      4,904 
  Inventories.......................       1,829         5,350                      7,179 
  Other current assets..............       1,614           640                      2,254 
                                         -------       -------                    ------- 
          Total current assets......      14,760        11,647                     26,407 
  Property, plant and equipment.....       1,581         1,269                      2,850 
  Marketable securities                                                                   
     (non-current)..................      15,676        14,534                     30,210 
  Other assets......................          24         1,342                      1,366 
                                         -------       -------                    ------- 
          Total assets..............     $32,041       $28,792                    $60,833 
                                         =======       =======                    ======= 

                           LIABILITIES AND SHAREHOLDERS' EQUITY                           
Current liabilities                                                                       
  Accounts payable and accrued                                                            
     liabilities....................     $ 6,410       $ 5,101      $5,000        $16,511 
  Deferred revenue..................         295            --                        295 
  Note payable......................          --         1,000                      1,000 
                                         -------       -------      ------        ------- 
          Total current                                                                   
            liabilities.............       6,705         6,101       5,000         17,806 
  Long term debt, less current                                                            
     portion........................          --             5          --              5 
                                         -------       -------      ------        ------- 
          Total liabilities.........       6,705         6,106       5,000         17,811 
  Shareholders' equity..............      25,336        22,686      (5,000)        43,022 
                                         -------       -------      ------        ------- 
          Total liabilities and                                                           
            shareholders' equity....     $32,041       $28,792      $   --        $60,833 
                                         =======       =======      ======        ======= 

The accompanying notes are an integral part of these unaudited
pro forma combined condensed financial statements.
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UNAUDITED PRO FORMA COMBINED CONDENSED

STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        · Enlarge/Download Table

                               FOR THE NINE MONTHS ENDED                                   
                                     SEPTEMBER 30,             YEAR ENDED DECEMBER 31,     
                               --------------------------  ------------------------------- 
                                  1998           1997        1997        1996       1995   
                               -----------    -----------  --------    --------    ------- 
                                                                                           
Net revenues..................  $  9,635       $  9,372    $ 13,058    $ 13,718    $ 2,707 
Cost of revenues..............     5,937          5,433       7,770       6,424      1,642 
                                --------       --------    --------    --------    ------- 
          Gross profit........     3,698          3,939       5,288       7,294      1,065 
                                --------       --------    --------    --------    ------- 
Operating expenses............                                                             
  Research and development....    23,279         18,829      26,217      13,726      4,977 
  Sales and marketing.........    12,668          8,434      12,771       5,744      1,215 
  General and                                                                              
     administrative...........     6,664          5,988       7,758       4,622      1,859 
                                --------       --------    --------    --------    ------- 
          Total operating                                                                  
            expenses..........    42,611         33,251      46,746      24,092      8,051 
                                --------       --------    --------    --------    ------- 
Operating loss................   (38,913)       (29,312)    (41,458)    (16,798)    (6,986)
Interest income...............     2,596          3,907       5,301       4,071        184 
Interest expense..............       (74)           (19)        (61)       (229)      (923)
                                --------       --------    --------    --------    ------- 
          Net loss............  $(36,391)      $(25,424)   $(36,218)   $(12,956)   $(7,725)
                                ========       ========    ========    ========    ======= 
Net loss per share --.........                                                             
  Basic and diluted...........  $  (1.35)      $  (0.98)   $  (1.39)   $  (0.65)   $ (0.73)
                                ========       ========    ========    ========    ======= 
Weighted average shares                                                                    
  outstanding --..............    26,877         25,909      26,027      20,020     10,573 
                                ========       ========    ========    ========    ======= 

The accompanying notes are an integral part of these unaudited
pro forma combined condensed financial statements.
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NOTES TO UNAUDITED PRO FORMA

COMBINED CONDENSED FINANCIAL STATEMENTS 

1. PERIODS PRESENTED                                                            

The unaudited pro forma combined condensed balance sheet gives effect to the    
merger as if it had occurred on September 30, 1998 and combines the unaudited   
consolidated balance sheet of Eclipse and the unaudited consolidated balance    
sheet of CardioGenesis as of September 30, 1998.                                

The unaudited pro forma combined condensed statements of operations for the nine
months ended September 30, 1998 and 1997 and the three years ended December 31, 
1997 give effect to the merger as if it occurred as of the beginning of the     
earliest period presented.                                                      

2. PRO FORMA NET LOSS PER SHARE                                                 

The unaudited pro forma combined net loss per share data is based upon the      
weighted average number of common and potential common shares outstanding of    
Eclipse and CardioGenesis for each period using an exchange ratio of 0.80 of a  
share of Eclipse common stock for each share of CardioGenesis common stock.     

Basic net loss per share is computed using the weighted average common shares   
outstanding during the period. Diluted net loss per share is computed using the 
weighted average number of common and potential common shares outstanding during
the period. Potential common shares consist of the incremental common shares    
issuable upon the exercise of stock options (using the treasury stock method).  
Potential common shares which consist of stock options to purchase 4,770,557    
shares of common stock were outstanding at September 30, 1998, but were not     
included in the computation of pro forma diluted net loss per share because     
their effect is anti-dilutive.                                                  

3. CONFORMING ADJUSTMENTS AND INTERCOMPANY TRANSACTIONS                         

There were no material adjustments required to conform the accounting policies  
of Eclipse and CardioGenesis. Certain amounts have been reclassified to conform 
to the pro forma presentation. There are no material intercompany transactions  
included in the unaudited pro forma combined condensed financial statements.    

4. TRANSACTION COSTS                                                            

Eclipse and CardioGenesis estimate that they will incur transaction and         
integration costs of approximately $5.0 million in connection with the merger,  
which will be charged to operations when incurred, principally in the quarter of
the completion of the merger. These charges include direct transaction costs of 
approximately $2,650,000, consisting of financial advisory services of          
approximately $1,000,000, legal fees of approximately $750,000, accounting fees 
of approximately $500,000, printing costs of approximately $150,000 and costs of
solicitation and registration of approximately $250,000. These charges also     
include costs of approximately $1,443,000 related to severance of employees and 
approximately $1,000,000 in costs related to a distribution agreement. An       
estimated charge of approximately $5.0 million is reflected in the pro forma    
combined condensed balance sheet but is not reflected in the unaudited pro forma
combined condensed statements of                                                

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NOTES TO UNAUDITED PRO FORMA

COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED) 

operations. This charge is a preliminary estimate only, and is, therefore,      
subject to change. See "Risk Factors -- Risks Related to Merger -- Expenses     
related to the merger will have a negative effect on results of operations."    

5. ISSUANCE OF ECLIPSE COMMON STOCK                                             

The unaudited pro forma combined condensed financial statements reflect the     
issuance of 0.80 of a share of Eclipse common stock for each share of           
CardioGenesis common stock outstanding. The following table sets forth the pro  
forma share issuances in connection with the merger (shares in thousands):      

                                                                · Download Table
                                                                       
CardioGenesis common stock outstanding as of September 30,             
  1998......................................................     12,266
Exchange ratio..............................................   0.80:1.0
Pro forma number of shares of Eclipse common stock to be               
  exchanged for CardioGenesis common stock..................      9,813
Eclipse common stock outstanding as of September 30, 1998...     17,396
Pro forma shares of Eclipse common stock outstanding after             
  completion of the merger as of September 30, 1998.........     27,209

Upon the consummation of the merger, all outstanding options to purchase        
CardioGenesis common stock will be exchanged for options to purchase Eclipse    
common stock based upon the exchange ratio of 0.80:1.0. As of September 30,     
1998, options to purchase 2,467,369 shares of CardioGenesis common stock were   
outstanding.                                                                    

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CARDIOGENESIS BUSINESS

OVERVIEW                                                                        

The following description of CardioGenesis' business contains forward-looking   
statements. For a discussion of forward-looking information, see page 28.       

GENERAL                                                                         

CardioGenesis is developing proprietary probe and catheter systems to perform   
both surgical and catheter-based percutaneous TMR procedures. TMR procedures are
used to treat patients with severe CAD who suffer from recurrent debilitating   
chest pain known as angina, associated with CAD. Unlike CABG surgery and PTCA   
procedures, which are used to bypass, reopen or widen blocked or narrowed       
arteries, TMR procedures involve the use of laser energy, delivered through     
probes and catheters, to create typically between 15 and 30 channels in the     
ischemic (oxygen-starved) regions of the heart muscle. Clinical studies of TMR  
procedures to treat severe angina at some of the world's leading medical centers
have demonstrated improvements in clinical conditions and have reported         
reductions in the frequency of repeated diagnostic procedures and               
hospitalizations. While the mechanism of the potential clinical benefit of TMR  
procedures is currently unproven, and additional clinical and mechanism         
investigations are ongoing, CardioGenesis believes the reported benefits of TMR 
procedures are associated with angiogenesis, the formation of new blood vessels.

CardioGenesis is currently developing three types of TMR systems, based upon its
patented technology, for use by cardiothoracic surgeons and interventional      
cardiologists to treat patients with severe CAD. CardioGenesis' ITMR system and 
TTMR system use an epicardial approach (i.e., creating channels from outside the
heart into the left ventricle) and its PMR system uses an endocardial approach  
(i.e., creating channels from inside the left ventricle partially through the   
myocardium).                                                                    

CardioGenesis' objective is to establish the TMR procedure as a conventional    
therapy to treat CAD and to become the worldwide market leader of TMR systems.  
To establish CardioGenesis as the leading provider of TMR systems, CardioGenesis
intends to continue to conduct clinical trials at, and focus its marketing      
efforts on, high volume, prestigious cardiovascular centers. CardioGenesis'     
clinical efforts have been focused on patients with severe angina for whom      
existing therapies cannot be used (so-called "no-option" patients).             
CardioGenesis plans to conduct clinical trials to broaden the applications for  
its TMR systems to cover multiple indications, including use as an adjunct to   
other interventional therapies, such as CABG and PTCA procedures. CardioGenesis 
intends to build upon its domestic and international intellectual property      
position, particularly its issued percutaneous and intraoperative TMR method    
patents. CardioGenesis seeks to rapidly establish a large installed base of its 
TMR systems in key international markets, emerging secondary markets, and,      
following FDA approval, in the United States, thereby creating an opportunity   
for a recurring revenue stream from the sale of its disposable probes and       
catheters. To help achieve this goal, CardioGenesis entered into an exclusive   
international distribution agreement with Boston Scientific in January 1997. See
" -- Termination of Relationship with Boston Scientific" for information        
regarding the termination of the agreement. Additionally, CardioGenesis intends 
to invest significant resources in research and development and to enhance its  
understanding of the TMR mechanism to enable it to                              

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further develop its products and to promote widespread adoption of TMR in the   
medical community.                                                              

CARDIOGENESIS TMR APPROACHES AND MARKETS                                        

CardioGenesis' proprietary TMR systems are designed to create channels either   
epicardially or endocardially. CardioGenesis' ITMR system and TTMR system use an
epicardial approach and its PMR system uses an endocardial approach.            

ITMR. In an intraoperative TMR procedure, the heart is exposed by a             
cardiothoracic surgeon through either a thoracotomy (an incision through the    
chest wall) or a sternotomy (an incision through the sternum). CardioGenesis'   
ITMR probe is then applied directly onto the myocardium delivering laser energy 
to create channels into the left ventricle. CardioGenesis initiated Phase I     
feasibility clinical trials with the ITMR System in "no-option" patients in     
November 1995. In June 1996, CardioGenesis received approval from the FDA to    
expand its multi-center ITMR clinical trial to a Phase II, prospective,         
randomized clinical trial in "no-option" patients.                              

Enrollment in the Phase II, randomized, no-option trial is now complete.        
CardioGenesis is nearing completion of its submission of data and information on
the CardioGenesis CardioSync ITMR system in a modular format to the FDA. The FDA
has requested that CardioGenesis delay submission of the final clinical package 
until the agency catches up with their September 30, 1998 fiscal year end       
backlog. CardioGenesis is not aware of any FDA issues with their modular        
submission to date. CardioGenesis believes its relationship with the FDA remains
strong, and does not believe that this request will slow CardioGenesis' progress
toward a PMA panel date or ultimate FDA approval.                               

In August 1996, CardioGenesis received an IDE from the FDA and has begun a      
clinical study of its ITMR system used as an adjunctive therapy to CABG in      
patients with severe angina who are only partially treatable by CABG. The       
adjunct to CABG clinical trial is ongoing.                                      

PMR. CardioGenesis' percutaneous PMR system is designed to be used by an        
interventional cardiologist in a cardiac catheterization laboratory. In this    
procedure, the cardiologist accesses the heart by inserting a fiber optic       
equipped catheter system into the femoral artery at the groin and then advancing
it through the aorta into the left ventricle. Once in the ventricle, the fiber  
optic catheter is guided to the ischemic areas of the endocardial wall surface  
to create channels partially through the wall of the heart. CardioGenesis       
believes that PMR, as a catheter-based procedure, is less invasive, less        
traumatic, and more cost-effective than other TMR approaches. In November 1996, 
CardioGenesis initiated clinical testing in Europe of its PMR system in         
"no-option" patients. In July 1997, CardioGenesis received an IDE from the FDA  
which allows a multi-center clinical trial of its PMR system to treat angina in 
no-option patients at up to twelve clinical sites.                              

TTMR. In a thoracoscopic TMR procedure, a TTMR probe is used by a cardiothoracic
surgeon in combination with endoscopic instruments to access and visualize the  
heart. Through these endoscopic instruments, the TTMR probe is maneuvered and   
placed on the beating heart delivering laser energy to create channels into the 
left ventricle.                                                                 

CardioGenesis believes the approaches discussed above may be used for a number  
of CAD indications. However, none of CardioGenesis' TMR systems has received FDA
approval,                                                                       

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and there can be no assurance any of these approaches will receive FDA approval 
for any of the indications discussed below or will be accepted by the medical   
community as viable methods for the treatment of CAD. See "Risk Factors -- Risks
Related to Business of Eclipse and CardioGenesis."                              

POTENTIAL INDICATIONS                                                           

CardioGenesis believes the three approaches it is developing could be used to   
address a range of indications for TMR therapy and estimates each year there are
more than 500,000 patients in the United States and other key markets who could 
potentially benefit from TMR therapy.                                           

"No-option." TMR therapy is currently being studied as a treatment for patients 
with severe CAD not treatable by PTCA, CABG or other interventional therapies.  
These patients have severe diffuse multivessel CAD and may have undergone       
multiple prior cardiac procedures. CardioGenesis believes all of its TMR systems
could be used in the treatment of "no-option" patients.                         

Adjunct to CABG. TMR therapy is also currently being studied in combination with
CABG, in cases where the patient has one or more areas of the heart afflicted by
severe CAD that cannot be adequately bypassed. In these cases, the coronary     
arteries that can be bypassed are grafted, while other areas that are ischemic  
and not suitable for bypass are treated with TMR therapy. CardioGenesis believes
its ITMR and TTMR systems could address this potential indication.              

Adjunct to PTCA. CardioGenesis believes its proprietary PMR system may be used  
in combination with a PTCA procedure, where there is evidence of severely       
ischemic regions of the heart not amenable to treatment with PTCA alone. In this
situation, CardioGenesis' PMR system would be used to treat the regions of the  
heart where a PTCA procedure is not effective.                                  

None of CardioGenesis' TMR systems has been proven to be safe or efficacious nor
has CardioGenesis received regulatory approval to market any of its TMR systems 
in the United States. See "Risk Factors -- Risks Related to Business of Eclipse 
and CardioGenesis."                                                             

PRODUCTS                                                                        

CardioGenesis' TMR systems include disposable fiber optic probes and catheters  
for transmitting laser energy to the myocardium, a Ho:YAG laser unit, and an    
electrocardiogram monitor, which are described below.                           

Disposable Fiber Optic Probes and Catheters. The proprietary probes used in     
CardioGenesis' ITMR and TTMR systems and the proprietary catheters used in      
CardioGenesis' PMR System are flexible, fiber-optic based devices for           
positioning and transmitting laser energy to create channels through the wall of
the heart. The tip of the probe includes a proprietary lens apparatus that      
creates laser energy distribution to allow for progressive, controlled          
penetration of the myocardium. A highly flexible optical fiber, encased within a
protective fiber jacket, transmits energy to the lens from the laser. The probes
and catheters are designed as disposable single-use devices. The PMR aligning   
catheter can be directed anywhere into the left ventricle. The catheter system  
permits steering within the ventricle to guide the optical system to the        
appropriate areas of the heart wall. Once the                                   

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catheter system is oriented toward the target to be treated, the lens is        
independently advanced to the ventricular wall assuring perpendicular contact on
the myocardial wall.                                                            

Ho:YAG Laser. CardioGenesis' TMR systems incorporate a proprietary Ho:YAG laser 
specifically designed for TMR applications. CardioGenesis' current laser is a   
portable unit, weighing approximately 140 pounds, which delivers laser energy.  
CardioGenesis believes that the Ho:YAG laser is optimally suited for TMR        
procedures because of:                                                          

- its tissue ablation characteristics;                                

 - its ability to deliver treatment energy through a fiber optic device,
thereby allowing percutaneous applications;                       

- its reliability when compared with other types of lasers; and       

- its ability to be manufactured cost-effectively.                    

ECG Monitor. CardioGenesis' TMR systems include a commercially available,       
microprocessor-controlled ECG monitor and a CardioGenesis proprietary software  
algorithm. This ECG monitor provides the means for timing the firing of         
CardioGenesis' laser to the patient's cardiac electrical activity. Based on     
early research sponsored by CardioGenesis and conducted at a major academic     
institution, CardioGenesis believes timing the laser to the patient's cardiac   
electrical activity may be a significant factor in minimizing the occurrence of 
arrhythmias (irregular heartbeats).                                             

CardioGenesis' TMR systems are designed to offer the following advantages:      

- Flexible System Design. CardioGenesis' TMR systems are designed to  
    deliver laser energy in a progressive, controlled manner through a fiber
optic probe or catheter, providing CardioGenesis with a technology  
adaptable for multiple approaches and indications.                  

     - Price/Performance. CardioGenesis has designed its TMR systems to be cost-
   effective, enabling flexibility in the pricing of its laser systems and
disposable probes and catheters. CardioGenesis believes that this   
 flexibility will enable it to offer superior price/performance to its
customers.                                                          

- Size and Portability. CardioGenesis' current TMR systems weigh      
  approximately 140 pounds, are portable and do not occupy a significant
amount of space in an operating room or cardiac catheterization     
laboratory.                                                         

 - Reliability. The Ho:YAG laser used in CardioGenesis' TMR systems is a
      solid state laser designed for reliability, thereby minimizing maintenance
     costs. CardioGenesis' TMR systems are also designed to meet and withstand
     the rigors of shipment, installation, repeated use, and relocation within
the hospital environment.                                           

In July 1996, CardioGenesis received the CE Mark approval to market its ITMR    
system in the European Community. The CE Mark is granted to companies whose     
products meet the essential requirements of the MDD and provides the regulatory 
approval necessary for commercialization in the European Community. In October  
1996, at the European Association of Cardio-Thoracic Surgery's annual meeting in
Prague, Czech Republic, CardioGenesis commercially launched the ITMR system in  
Europe. In January 1998, CardioGenesis received the CE Mark approval for use of 
its PMR system in the European Community.                                       

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CardioGenesis is not currently developing any products outside the field of TMR 
therapy. Consequently, CardioGenesis is dependent on the successful development 
and commercialization of CardioGenesis' TMR systems. See "Risk Factors -- Risks 
Related to Business of Eclipse and CardioGenesis.                               

MARKETING, SALES AND DISTRIBUTION                                               

CardioGenesis' marketing strategy is designed to generate broad market          
acceptance of the TMR procedure based on demonstrated clinical efficacy and     
cost-effectiveness. CardioGenesis' strategy includes developing and maintaining 
close working relationships with key cardiothoracic surgeons and interventional 
cardiologists who practice at major cardiac care centers. CardioGenesis seeks to
rapidly establish a large installed base of its TMR systems in key international
markets and emerging secondary markets thereby creating an opportunity for a    
recurring revenue stream from the sale of its disposable probes and catheters.  

CardioGenesis expects that education and awareness of cardiothoracic surgeons,  
interventional cardiologists and patients as to the benefits of CardioGenesis'  
TMR systems will be a key component of its marketing and sales effort for its   
TMR probe and catheter systems. CardioGenesis currently supports and intends to 
support rigorous clinical research designed to support the safety and efficacy  
of its TMR systems. In addition, to increase awareness of its TMR systems,      
CardioGenesis has encouraged and intends to encourage the appropriate           
presentation of the results of this research by the research investigators at   
major national and international medical symposia and by the publication of     
clinical and scientific reports of such results in major peer-reviewed          
publications.                                                                   

In the United States, CardioGenesis intends to market its products, if approved 
by the FDA, with a direct sales organization. CardioGenesis has deployed a U.S. 
sales force. However, additional resources will be required to develop a sales  
force capable of effectively commercializing CardioGenesis' TMR systems in the  
United States. Failure to build an effective sales and marketing organization   
could have a material adverse effect on CardioGenesis' business, financial      
condition and results of operations.                                            

Until such time, if ever, as the FDA approves CardioGenesis' TMR systems for    
marketing in the United States, CardioGenesis anticipates it will continue to   
derive a significant portion of its revenues from international sales. Even if  
FDA approval is obtained, CardioGenesis expects international sales will        
continue to account for a significant portion of CardioGenesis' total revenues. 
As a result, a significant portion of CardioGenesis' revenues both before and   
after such approval is obtained will be subject to the risks associated with    
international sales. See "Risk Factors -- Risks Related to Business of Eclipse  
and CardioGenesis.                                                              

On January 22, 1999, CardioGenesis entered into an Authorized Distributor       
Agreement with Eclipse, under which CardioGenesis was appointed as the exclusive
distributor of the Eclipse holmium laser system and certain related products for
certain states or portions of certain states in the United States. The parties  
decided in mid-January 1999 to enter into the distributor agreement to generate 
revenues for both Eclipse and CardioGenesis from sales by CardioGenesis of      
Eclipse products pending the merger. The distributor agreement allows           
CardioGenesis to set its own resale prices to end-users. CardioGenesis has no   
minimum commitments under the distributor agreement. CardioGenesis will maintain
no                                                                              

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inventory of Eclipse products; the products will be drop-shipped by Eclipse     
directly to customers of CardioGenesis.                                         

The distributor agreement may be terminated by either party upon sixty days'    
prior written notice, and terminates automatically upon FDA approval of         
CardioGenesis' products for sale in the U.S. There is no requirement under the  
Agreement, nor any expectation by CardioGenesis or Eclipse, that the distributor
agreement will be renewed after its termination. The distributor agreement      
contains customary post-termination obligations for CardioGenesis relating to   
the maintenance and availability of records, cessation of use of trademarks and 
logos of Eclipse, payment of outstanding invoices, and return of advertising and
similar materials.                                                              

CardioGenesis does not believe that any sales made by it of Eclipse products    
during the term of the distributor agreement will materially adversely impact   
its ability to sell its own products, following FDA approval of such products,  
if the merger does not occur.                                                   

TERMINATION OF RELATIONSHIP WITH BOSTON SCIENTIFIC                              

In early January 1999, CardioGenesis sent Boston Scientific written notice      
terminating the Boston Scientific agreement because of various breaches by      
Boston Scientific of its obligations under the agreement. The notice also       
demanded that Boston Scientific make required payments to CardioGenesis and make
the required minimum purchases of CardioGenesis products for the fourth quarter 
of 1998 and for calendar year 1998. If the breaches by Boston Scientific are not
cured within the time periods specified in the agreement, the agreement will    
terminate.                                                                      

Subsequently, CardioGenesis sent additional termination notices to Boston       
Scientific relating specifically to Boston Scientific's failure to timely cure  
its payment breach and to timely place and pay for the required minimum purchase
order.                                                                          

CardioGenesis decided to terminate the agreement because of its belief, after   
numerous discussions with Boston Scientific over the past year and taking into  
account Boston Scientific's past breaches, that Boston Scientific will be unable
to, or will not, devote the required resources and focus to marketing and sales 
of CardioGenesis products.                                                      

Boston Scientific has disputed CardioGenesis' right to terminate the agreement. 
CardioGenesis has contested, and intends further if necessary to vigorously     
contest, such dispute. While the parties are currently in settlement            
discussions, the costs to CardioGenesis, and the outcome, of any such dispute   
are not quantifiable at this time.                                              

Boston Scientific does not have the right under the Boston Scientific agreement 
to terminate the Boston Scientific agreement as a result of the merger.         

CardioGenesis has no obligation to repurchase any inventory from Boston         
Scientific upon such termination. CardioGenesis would have no other contingent  
obligations to Boston Scientific under the Boston Scientific agreement after    
such termination, other than:                                                   

    - customary obligations to sell to Boston Scientific or to end-users parts
       for CardioGenesis products that had previously been sold to the end-users
by Boston Scientific;                                             

- to work with Boston Scientific to transfer from Boston Scientific to
     CardioGenesis any end-user leases and rentals of CardioGenesis products
placed by Boston Scientific;                                      

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   - payment of any amounts owed by CardioGenesis to Boston Scientific under
   the Boston Scientific agreement that had accrued prior to the date of
termination;                                                      

- customary warranty obligations; and                                 

 - customary survival of confidentiality and record-keeping obligations.

Due to the early, developing stage of the international markets for             
CardioGenesis' products, and the state of development of its own international  
sales and marketing staff, CardioGenesis believes that the termination of the   
Boston Scientific agreement and the subsequent transition will not have a       
material adverse effect on CardioGenesis, whether or not the merger is          
consummated.                                                                    

Given the expected closing date of the merger, and the normal process of product
integration that would typically follow such closing, CardioGenesis does not    
anticipate that the effective date of such termination, as determined under the 
Boston Scientific agreement, will materially adversely impact the ability of the
combined company to determine and implement the timing and scope of such        
integration.                                                                    

CLINICAL TRIALS                                                                 

ITMR. Clinical data from CardioGenesis' prospective randomized ITMR trial       
presented at recent medical symposia indicate that patients who received        
treatment with the ITMR System achieved approximately a two class drop in angina
class as measured on the Canadian Cardiovascular Society Angina Scale and a 45  
percent improvement in exercise tolerance, as opposed to no improvement in      
angina class or exercise tolerance in study patients who did not receive the    
ITMR therapy. There are no reported operative deaths in CardioGenesis'          
randomized study and the mortality rate in the ITMR therapy group is less than  
six percent.                                                                    

Enrollment in the Phase II, randomized, no-option trial is now complete.        
CardioGenesis is nearing completion of its submission of data and information on
the CardioGenesis CardioSync ITMR System in a modular format to the FDA. The FDA
has requested that CardioGenesis delay submission of the final clinical package 
until the agency catches up with their September 30, 1998 fiscal year end       
backlog. CardioGenesis is not aware of any FDA issues with their modular        
submission to date. CardioGenesis believes its relationship with the FDA remains
strong, and does not believe that this request will slow CardioGenesis' progress
toward a PMA panel date or ultimate FDA approval.                               

Adjunct to CABG. In August 1996, CardioGenesis launched an additional           
prospective, randomized, multi-center clinical study under an FDA authorized IDE
to evaluate the ITMR therapy as an adjunct to CABG surgery in up to 500 patients
at up to 25 clinical sites.                                                     

PMR. Pilot clinical studies for the PMR system were first conducted in Europe in
November 1996 and CardioGenesis treated the first U.S. human patient in July    
1997. CardioGenesis was the first company to initiate clinical studies of a     
minimally invasive percutaneous approach to transmyocardial revascularization.  
More than 350 patients have been treated with the PMR system at clinical        
investigation centers in the U.S. and Europe. In July 1997, CardioGenesis       
received an IDE from the FDA which allows a multi-center clinical trial of the  
Axcis PMR system to treat angina in no-option patients. Enrollment and treatment
for the prospective randomized Phase II trial of CardioGenesis' Axcis PMR system
has been completed and the trials are ongoing with three, six and twelve month  

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patient follow ups. The trial, which includes over 290 patients, is being       
conducted at 12 major cardiovascular treatment centers in both the U.S. and     
Europe. CardioGenesis plans to pursue a modular submission for regulatory       
approval and intends to submit information and updates for the formal follow up 
period of the study. This proactive and collaborative approach to submission    
provides CardioGenesis with a means for frequent reviews by the FDA of          
information required for PMA of the Axcis PMR system. Clinical data presented at
recent medical symposia indicate patients treated with the PMR system are       
achieving angina class reductions and exercise tolerance improvements comparable
to those achieved by patients treated with the ITMR system.                     

Due to the severity of the underlying illnesses of the patients in this         
population, CardioGenesis expects the use of its TMR systems to be accompanied  
by a certain level of patient morbidity and mortality. There can be no assurance
any clinical investigations CardioGenesis conducts when completed, will provide 
sufficient safety and effectiveness data and information to support a PMA       
application and to obtain FDA marketing approval. See "-- Government Regulation"
and "Risk Factors -- Risks Related to Business of Eclipse and CardioGenesis."   

MANUFACTURING                                                                   

GENERAL                                                                         

CardioGenesis' manufacturing activities conducted at its facility in Sunnyvale, 
California consist of assembly and testing of the fiber optic probe and catheter
systems used for the TMR procedures. CardioGenesis has developed various        
proprietary processes used to manufacture its probes and catheters.             
CardioGenesis uses third party suppliers to manufacture the Ho:YAG laser and ECG
monitor included in its TMR systems and for other services and operations       
including sterilization of its products.                                        

CardioGenesis' facilities include a controlled environment room where most      
assembly operations are performed. CardioGenesis has complied with various      
international regulatory requirements including meeting ISO 9001/EN 46001 and   
MDD requirements and has obtained a CE Mark approval to market both the ITMR    
System and the PMR System in Europe. Before the FDA will approve a PMA          
application, it will inspect CardioGenesis' manufacturing facilities and        
processes for compliance with FDA regulations. CardioGenesis' manufacturing     
facilities have not yet been inspected by the FDA. In the event additional      
manufacturing sites are added or manufacturing processes are changed, such new  
facilities and processes are also subject to regulatory inspection for          
compliance with United States and international regulations. See "-- Government 
Regulation" and "Risk Factors -- Risks Related to Business of Eclipse and       
CardioGenesis."                                                                 

SUPPLIERS                                                                       

A major component used in CardioGenesis' TMR systems, the ECG monitor, is       
currently available from a sole source. In addition, several other components   
used in CardioGenesis' TMR systems are purchased by CardioGenesis from a single 
supplier. CardioGenesis periodically conducts assessments of alternative vendors
for various components used in its TMR systems. However, the qualification of   
additional or replacement vendors for certain components is a lengthy process.  
See "Risk Factors -- Risks Related to Business of CardioGenesis and Eclipse."   

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Commencing in the fourth quarter 1997, CardioGenesis began purchasing lasers    
from Carl Baasel Lasertechnik GmbH under an OEM Product Development and Supply  
Agreement. Under the Baasel OEM agreement, CardioGenesis has exclusive rights to
sell or otherwise distribute the laser on a worldwide basis either incorporated 
into CardioGenesis' products or on a stand-alone basis. The Baasel OEM agreement
prohibits Baasel from selling or otherwise distributing the laser in the        
configuration developed for and used by CardioGenesis' TMR systems to any third 
party unless approved in advance in writing by CardioGenesis. During the term of
the Baasel OEM agreement and for a period of one year thereafter, Baasel is     
prohibited from making a laser, or any major subassembly of a laser, that is the
same or as functionally equivalent to CardioGenesis' laser for use competitive  
with that of CardioGenesis.                                                     

PATENTS AND PROPRIETARY RIGHTS                                                  

CardioGenesis relies on a combination of patent, trade secret, copyright and    
trademark laws and contractual restrictions to establish and protect proprietary
rights in its TMR systems.                                                      

CardioGenesis holds seven patents in the United States. One of CardioGenesis'   
United States patents is directed to methods of PMR therapy, in which a catheter
system is inserted through a patient's vascular system into the heart, and      
energy is applied to the inner wall of the heart creating revascularization in  
the myocardium. Two of CardioGenesis' United States patents are directed to     
methods of ITMR and TTMR therapies, where a flexible probe is inserted into a   
patient's chest cavity and energy is applied to the outer wall of the heart     
creating revascularization through the heart muscle. These patents expire in the
year 2012. CardioGenesis also has two patents, which expire in the year 2009,   
one directed to a specialized lens and means for securing the lens to an optical
fiber to provide a desirable energy emission pattern and one of which is related
to a system for detecting broken optical fibers. CardioGenesis also has a patent
which expires in the year 2013 relating to a reinforced optical fiber system.   
CardioGenesis has 28 United States patent applications pending and intends to   
file additional patent applications on various features of its TMR systems in   
the future. CardioGenesis has 15 international patent applications pending and  
intends to file additional international patent applications corresponding to   
most of the pending United States patent applications. Several of the pending   
patent applications have received Notices of Allowance, and CardioGenesis       
expects one or more U.S. patents to issue. However, there can be no assurance   
additional patents will issue with respect to any currently pending or future   
patent application.                                                             

The medical device industry has been characterized by extensive litigation      
regarding patents and other intellectual property rights, and some companies in 
the medical device industry have employed intellectual property litigation to   
attempt in whole or, in part, to gain a competitive advantage. Certain of       
CardioGenesis' competitors and potential competitors have obtained United States
patents covering technology that could be used for certain TMR procedures, and  
there can be no assurance such competitors, potential competitors or others have
not filed and do not hold international patents covering other TMR technology.  
See "Risk Factors -- Risks Related to Business of Eclipse and CardioGenesis."   

RESEARCH AND DEVELOPMENT                                                        

CardioGenesis' research and development efforts to date have been focused on    
development of CardioGenesis' ITMR, PMR and TTMR systems. CardioGenesis is      
committed to enhancing the medical community's knowledge and acceptance of TMR  
therapy for the                                                                 

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treatment of severe angina. CardioGenesis intends to continue its basic research
of the TMR mechanism and to focus on the expansion of the indications and       
approaches for using its TMR systems, in particular its PMR system. In addition,
CardioGenesis will continue to address improvements in the devices that are a   
part of the TMR systems, including improvements which may reduce the cost of its
TMR systems. Based on its research, CardioGenesis believes the reported         
reduction in chest pain, improvement in exercise tolerance, and perceived       
long-term increase in myocardial blood flow may be associated with the formation
of new blood vessels (angiogenesis). Further product research and development by
CardioGenesis will require substantial expenditures and has inherent risks, and 
there can be no assurance CardioGenesis will be successful in identifying       
products for which demand exists or in developing products that have the        
characteristics necessary to treat particular indications, or that any new      
products introduced by CardioGenesis will receive regulatory approval or be     
commercially successful. Total research and development expenses of             
CardioGenesis were approximately $14.2 million, $7.1 million, and $4.0 million  
for the years ended December 31, 1997, 1996 and 1995, respectively, and         
approximately $12.3 million for the nine months ended September 30, 1998.       

Research and development work by CardioGenesis related to TMR therapy is being  
carried out at Columbia University under an agreement that has been extended    
into 1999. Under this agreement, CardioGenesis has a worldwide exclusive license
to any patents that issue in connection with the research conducted. The license
also includes a paid up, exclusive worldwide license to use and disclose        
(subject to certain nondisclosure requirements) information, data and know-how  
relating to the subject matter of the research and CardioGenesis' products      
resulting from the research. The license may become nonexclusive, at the        
election of Columbia, if CardioGenesis fails to use reasonable efforts to       
develop and market the products resulting from the research for commercial sale 
and distribution throughout the world. The license also contains certain        
most-favored licensing provisions in the event that the license becomes         
nonexclusive. The agreement provides for the payment of certain royalties by    
CardioGenesis to Columbia based on its net revenues from products to the extent 
such products include the patented technology developed by Columbia under the   
agreement, including any sales made under an IDE. These royalties are offset by 
funds advanced by CardioGenesis and prior sponsors to whom CardioGenesis is a   
successor under the Columbia agreement to fund such research of Columbia.       
CardioGenesis is not required to pay royalties to Columbia under the agreement  
until certain conditions are met, and such conditions have not been met.        

COMPETITION                                                                     

The TMR market is intensely competitive and is constantly becoming more         
competitive. Some of CardioGenesis' competitors and many of its potential       
competitors have substantially greater name recognition and capital resources   
than does CardioGenesis and also may have greater resources and expertise in the
areas of research and development, obtaining regulatory approvals, manufacturing
and marketing. The TMR market is characterized by rapid technical innovation.   
Accordingly, CardioGenesis' competitors may succeed in developing TMR products  
or procedures that are more effective or more effectively marketed than products
marketed by CardioGenesis or may render CardioGenesis' technology obsolete.     
Additionally, even if CardioGenesis' products provide performance comparable to 
competing products, CardioGenesis may not be able to obtain necessary regulatory
approvals to compete against competitors in terms of manufacturing, marketing   

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and sales. In the field of TMR products, both Eclipse and PLC have received     
favorable PMA review from the FDA and have received regulatory approvals and    
begun to market products in Europe. In addition, PLC has received FDA approval  
to commercially market a TMR product in the U.S. Earlier entrants in the market 
in a therapeutic area often obtain and maintain greater market share than later 
entrants.                                                                       

CardioGenesis believes the primary competitive factors in the market for TMR    
systems include clinical performance, product safety and reliability,           
availability of third party reimbursement, product design specifically for TMR  
product use, product quality, ease of use, price of systems and disposable      
components, customer service, and company reputation. In addition, the length of
time required for products to be developed and receive regulatory approval and  
the ability to use patents or other proprietary rights to prevent sales by      
competitors are also important competitive factors. CardioGenesis believes it   
competes favorably with respect to these factors, although certain competitors  
are at a more advanced stage in the clinical trial and regulatory approval      
processes. There can be no assurance CardioGenesis will be able to continue to  
compete successfully in the future with respect to any or all of the factors    
that are or may be relevant to success in its markets.                          

Many of the medical indications that may be treatable with TMR therapy are      
currently being treated by drug therapies or surgery and other interventional   
therapies, including CABG and PTCA therapies. A number of these therapies are   
widely accepted in the medical community, have a long history of use and        
continue to be enhanced rapidly. Procedures using TMR therapy may not be able to
replace or augment such established treatments or clinical research may not     
support the use of TMR therapy. Additionally, new surgical procedures and new   
drug therapies are being developed to treat CAD. These new procedures and drug  
therapies could be more effective, safer or more cost-effective than TMR        
therapy. If TMR therapy fails to replace or augment existing therapies or its   
therapies are not more effective, safer or cost-effective than new therapies,   
CardioGenesis' business, financial condition and results of operations could be 
materially adversely affected. See "Risk Factors -- Risks Related to Business of
Eclipse and CardioGenesis."                                                     

GOVERNMENT REGULATION                                                           

UNITED STATES                                                                   

CardioGenesis' TMR systems and accessories are regulated in the United States as
medical devices. As such, CardioGenesis is subject to extensive regulation by   
the FDA and state and local authorities including the CDHS. Under the authority 
of the FD&C Act and related regulations, the FDA regulates the pre-clinical and 
clinical testing, manufacture, labeling, distribution, sale, marketing,         
advertising and promotion of medical devices. Noncompliance with applicable     
requirements can result in, among other things, fines, injunctions, civil       
penalties, recall or seizure of products, total or partial suspension of        
production, refusal of the government to grant PMA approval under Section 515 of
the FD&C Act or premarket notification clearance under Section 510(k) of the    
FD&C Act, withdrawal of marketing clearances or approvals, or a recommendation  
by the FDA that CardioGenesis not be permitted to enter into government         
contracts and criminal prosecution. In certain circumstances, the FDA also has  
the authority to order recall, repair, replacement of or refund of the cost of, 
a device manufactured or distributed by CardioGenesis. To date, none of         
CardioGenesis' products has been approved for sale in the United States. FDA    
approval of a PMA for the relevant TMR system will be required before such TMR  
system can be marketed in the United States.                                    

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In the United States, medical devices are classified as Class I, II or III on   
the basis of the controls deemed by the FDA to be necessary to reasonably assure
their safety and effectiveness. Class I devices are subject to general controls 
(e.g., labeling, premarket notification and adherence to FDA-mandated current   
good manufacturing practice GMP requirements), and Class II devices are subject 
to general controls and special controls (e.g., performance standards,          
postmarket surveillance, patient registries and FDA guidelines). Generally,     
Class III devices are those that must receive premarket approval by the FDA to  
assure their safety and effectiveness (e.g., life-sustaining, life-supporting   
and implantable devices, or new devices which have been found not to be         
substantially equivalent to legally marketed devices). Class III devices usually
require clinical testing and FDA approval prior to marketing and distribution.  
CardioGenesis' TMR systems are Class III devices.                               

Before a new medical device can be introduced into the market, the manufacturer 
generally must obtain FDA clearance of a 510(k) or approval of a PMA under      
Section 515 of the FD&C Act. A PMA application is required if a proposed device 
is not substantially equivalent to a legally marketed Class I or Class II       
device, or if it is a Class III device for which the FDA has called for PMAs. A 
PMA must be supported by valid scientific evidence that typically includes      
extensive data, including biocompatability data, preclinical study data (e.g.,  
bench testing, laboratory and animal studies) and clinical study data, to       
demonstrate the safety and efficacy of the device. If human clinical trials of a
device are required and the device presents, in the FDA's view, a "significant  
risk," the sponsor of the trial (usually the manufacturer or the distributor of 
the device) is required to file an IDE application with the FDA prior to        
commencing human clinical trials. The IDE application must be supported by data,
typically including the results of animal and laboratory testing. If the IDE    
application is approved by the FDA and by one or more appropriate institutional 
review boards (IRBs), human clinical trials may begin at a specific number of   
investigational sites with a specific number of patients, as approved by the    
FDA. If the sponsors and all reviewing IRBs conclude that the device presents a 
"nonsignificant risk" to the patient, a sponsor may begin clinical trials after 
obtaining approval for the study protocol by one or more of the appropriate     
IRBs, without the need for FDA approval of the study protocol. Spon