THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

HealthTronics, Inc. (HTRN)

5/1/2006 Proxy Information

In August 2005, SanuWave, Inc., a company controlled by Prides Capital Partners, L.L.C., which beneficially owned approximately 14% of our outstanding common stock as of April 27, 2006 and which Kevin A. Richardson, II, one of our directors, co-founded and is a partner with, acquired our orthopaedics business unit. Under the terms of the transaction, we received $6.4 million in cash, two $2 million unsecured promissory notes, and a small passive ownership interest in SanuWave. The notes bear interest at 6% per annum with no payments for the first five years, then interest-only payments for the next five years with a balloon payment after ten years. As part of the transaction, we agreed to provide SanuWave with certain transition services that include certain manufacturing services, sales support, and office support. We were paid $100,000 per month for the first six months following the closing of the transaction in return for such services, in addition to receiving reimbursement of certain direct costs to provide the services. The term for the transition services varies according to the specific service involved, but will not in any event extend beyond two years from the closing date.

Randy Wheelock, who is the brother of Dr. Wheelock, a member of our board of directors, is a principal of US Orthotripsy, LLC, a limited partner in Orthotripsy Services of Eastern Tennessee, L.P. (“East Tennessee”) and OssaTron Services of the Carolinas, L.P. (“Carolinas”), both of which are limited partnerships that we control by virtue of controlling the general partner and in which we own a limited partner interest. East Tennessee provides Orthotripsy services in East Tennessee and Carolinas provides Orthotripsy services in North Carolina and South Carolina. We engaged US Orthotripsy, LLC to manage East Tennessee and Carolinas and Randy Wheelock was paid a monthly management fee of $4,333 plus reimbursement for reasonable expenses during 2005. Our interests in East Tennessee and Carolinas were sold to SanuWave in connection with the sale of our orthopaedics business unit in August 2005 as described above. After such sale, we no longer paid any management fees to US Orthotripsy, LLC or Randy Wheelock.

Prior to March 31, 2004, Dr. Wheelock directly owned a 2.78% interest and indirectly owned an additional 3.3% interest (through 9% ownership in a corporate partner, NGST, Inc.) in Tenn-Ga Stone Group Two, a Tennessee general partnership. Tenn-Ga Stone Group Two provides lithotripsy services in Tennessee and North Georgia. Dr. Wheelock purchased his interests in Tenn-Ga Stone Group Two in or about 1990. We manage Tenn-Ga Stone Group Two and are a 28% owner and managing partner of Tenn-Ga Stone Group Three, a Tennessee general partnership that has a 38.25% ownership interest in Tenn-Ga Stone Group Two. Tenn-Ga Stone Group Two pays us a management fee of $40,000 per year. We also supply services, parts and consumables to Tenn-Ga Stone Group Two at standard rates. During 2005, Tenn-Ga Stone Group Two paid us $97,500 for such services, parts and consumables. On March 31, 2004, Dr. Wheelock sold his interest in NGST, Inc. to Tenn-Ga Stone Group Three for $120,000. Dr. Wheelock continues to hold his direct interest in Tenn-GA Stone Group Two.

During 2001 and early 2002, Prime made full recourse loans totaling approximately $975,000 to 12 members of its management. The loans bear interest at 6.5% and require annual payments of principal and interest due April 1 of each year. We assumed these loans after the Merger and there are currently 3 of our employees that still have obligations under these loans. All 3 of these loans are current and the net principal balance outstanding as of March 31, 2006 is approximately $213,000.

We lease office space in an office building owned by us and in which our principal executive office is located to American Physician Services Group Inc., or APS. Kenneth S. Shifrin, one of our directors, serves as chairman of the board and chief executive officer of APS. William A. Searles, one of our directors and a member of our compensation committee, serves on the board of directors of APS and as chairman of the board of APS Investment Services, Inc., a wholly-owned subsidiary of APS. As reported in APS’s filings with the Securities and Exchange Commission, Mr. Searles was paid cash compensation of $320,626 in 2005, $346,102 in 2004, and $525,000 in 2003 by APS for his service as chairman of the board of APS Investment Services, Inc. The term of the lease between us and APS expires in September 2006, and monthly rental payments under this lease are $48,943.