1
EXHIBIT 10.2
ENTITY INTEREST AGREEMENT
THIS ENTITY INTEREST AGREEMENT ("Agreement") is made effective as of
the 7th day of March, 1997, by and between HEALTHTRONICS, INC., a Georgia
corporation ("HealthTronics"), U.S. LITHOTRIPSY, L.P. ("USL"), a Texas Limited
Partnership, and LITHO MANAGEMENT, INC., a Texas corporation.
W I T N E S S E T H:
WHEREAS, HealthTronics holds the exclusive distributorship rights for
the distribution in the United States of America of the LithoTron Lithotripter,
manufactured by H.M.T. of Switzerland; and
WHEREAS, it is the intention of USL to market the LithoTron
Lithotripters through the creation of limited partnership entities, of which USL
will retain approximately twenty percent (20%) of the ownership interest, with
the remainder owned by urologists, as limited partners, practicing within the
Licensed Area; and
WHEREAS, HealthTronics and USL have entered into a Distributor
Agreement (attached hereto as Exhibit "A") granting USL exclusive rights as a
sub-distributor for HealthTronics of the LithoTron Lithotripter and related
equipment in the Licensed Area as defined in the Distributor Agreement; and
WHEREAS, it is now the desire of HealthTronics, USL and Litho
Management, Inc. to enter into the following Entity Interest Agreement pursuant
to the relationship previously established in the Distributor Agreement;
NOW, THEREFORE, in consideration for the sum of Ten and No/100 dollars
($10.00), paid by HealthTronics to USL, and in consideration of the mutual
promises contained herein and for such other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged and confirmed, the
parties hereto now agree as follows:
1. Definitions.
1.01 "Limited Partnership(s)" shall mean the limited partnerships
previously set up by Litho Management, Inc. or to be set up by USL with
practicing urologists as limited partners, for the ownership and operation of
LithoTron Lithotripters in the Licensed Area.
1.02 "Licensed Area" shall mean that portion of the United States
within which HealthTronics has granted USL the exclusive sub-distributorship
rights for the LithoTron Lithotripter, as defined in the Distributor Agreement,
attached hereto as Exhibit "A".
Page 1 of 5
2
2. Term.
2.01 This Agreement shall become effective as of the first day
above-written, and will remain in full force and effect for as long as the
Distributor Agreement is in effect, unless earlier terminated as provided
herein.
2.02 As provided in the Distributor Agreement, USL may assign
and/or sublicense its interest in the Distributor Agreement. Regardless of any
such assignment, this Agreement will continue in force and effect between the
parties hereto, unless otherwise modified as provided in Section 7.01, herein.
3. Entity Interest Terms.
3.01 Under this Agreement, HealthTronics will receive a forty
percent (40%) ownership interest in USL, to be divided between general and
limited partnership interest as follows: .4% general partnership interest, and
39.6% limited partnership interest. It is further agreed that any previously
existing Limited Partnerships, as defined in Section 1.01, above, will be merged
into USL by no later than April 1, 1997. Attached as Exhibit "B" is a chart
showing the proposed entity structure pursuant to this Agreement.
3.02 In return for the percentage interest granted in 3.01, above,
HealthTronics will transfer 200,000 shares of its common stock to Xxxxx X.
Xxxxxx, Xxxx X. House, Xxxxx X. Xxxxx, and X. Xxxxxxxxx Hezmall, the ownership
of said shares to be divided among the above individuals according to the
percentages of their ownership interests in USL.
4. Termination. This Agreement shall be terminated automatically
by the expiration or termination of the Distributor Agreement, or may be
terminated by USL:
(a) on thirty (30) days notice if HealthTronics should
attempt to assign, convey, or otherwise transfer in
whole or in part any of USL's rights or obligations
hereunder to any third party without USL's express
prior written consent, which consent shall be based
upon HealthTronics' fully true and correct disclosure
of the proposed transaction to USL; or
(b) if HealthTronics ceases to function as a going
concern or ceases to conduct its operations in the
normal course of business as a distributor; or
(c) if HealthTronics becomes involved in financial
difficulties requiring the employment of a receiver
or the like, or a moratorium on indebtedness or
petition in bankruptcy or the like, filed by or
against HealthTronics, or an assignment of
HealthTronics' assets occurs on behalf of
HealthTronics' creditors.
Page 2 of 5
3
5. Buy-Back.
5.01 The parties hereto agree that if the LithoTron lithotripter
has not obtained FDA approval by no later than December 31, 1997, after that
date, USL may elect to buy back the 40% interest in USL granted to HealthTronics
in Section 3, above. It is further agreed that if USL should make such election,
the purchase price for said buy-back will be ten dollars ($10.00). In the event
of said buy-back, the 200,000 shares of HealthTronics stock described in 3.02
above, will be returned to HealthTronic by the parties receiving same.
5.02 If the Distributor Agreement is terminated by HealthTronics
for any reason, in that instance, USL may again opt to buy back the 40% interest
in USL granted to HealthTronics in Section 3, above, again for a purchase price
of ten dollars ($10.00). In that event however, the 200,000 HealthTronics shares
described in 3.02, above, may be retained by the parties receiving same.
Conversely, should USL terminate the Distributor Agreement for any reason, the
200,000 shares of HealthTronics described in 3.02 above will be returned to
HealthTronics, and HealthTronics may retain its 40% ownership interest as
described in 3.01 above.
6. Arbitration.
6.01 Should the parties hereto be unable to amicably resolve
between themselves any disagreements relating to or arising from any one or more
of the provisions of this Agreement, neither party shall seek redress against
the other in any court or tribunal in any part of the world, but instead both
parties shall submit such a disagreement to arbitration by the American
Arbitration Association.
6.02 The arbitration proceeding shall be conducted in the English
language in Atlanta, Georgia, United States of America, in accordance with the
rules and regulations of the American Arbitration Association including any Mast
track. or expedited proceedings rules. Any determination, award, or other action
shall be considered the valid action of the arbitrators whose decision shall be
fully and finally binding on both parties.
6.03 Neither party shall have the right to further appeal or
redress in any other court or tribunal except solely for the purpose of
obtaining execution of the judgment or award rendered by the arbitrator(s). The
parties hereto agree to share equally all costs and expenses of such arbitration
proceeding, irrespective of its outcome unless the decision awards fees to one
party as compensation for the other party bringing a dispute to arbitration that
is vexatious or was done to hinder, delay, and/or was brought in bad faith.
7. Law Governing Agreement.
7.01 This Agreement shall be solely governed by and construed in
accordance with the laws of the State of Georgia, USA, excluding, however, (a)
any provision of such laws that would render invalid any provision of this
agreement, and (b) any rule of private international law or the State of Georgia
that would refer the resolution of any issue to the law of any
Page 3 of 5
4
jurisdiction other than the State of Georgia, USA. If any provisions hereof are
deemed to be invalid or void, the remaining portions thereof shall remain in
effect.
7.02 Waiver by either party of any violation or non-performance by
the other party of any of its obligations hereunder shall not be considered a
waiver of any other of the parties obligations, covenants, or agreements, nor
shall any forbearance by other parties be deemed a waiver by such party of its
right to remedies with respect to such violation or non-performance.
8. Miscellaneous.
8.01 Prior Agreements. Excepting the provisions of the Distributor
Agreement, attached hereto as Exhibit "A", which remains in full force and
effect, this Agreement supersedes all prior discussions, negotiations, and
agreements between HealthTronics and USL, and cannot be altered or amended
except by agreement in writing signed by both parties.
8.02 Execution. This Agreement may be executed by duly authorized
officers of the respective-parties hereunder and any number of counterparts, any
of which shall be deemed the original. This Agreement may be translated into any
other language and such translation may be initialed, but only this Agreement in
the English language shall be deemed the original. If any conflict exists
between the English language and the translation, this English language version
shall control.
8.04 Notices. Any notice, demand, or delivery authorized by this
Agreement shall be sufficiently given or made upon receipt by the party to whom
such notice is addressed in the following particulars: if in the case of USL,
addressed to:
000 X. Xxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
If in the case of HealthTronics addressed to:
00 Xxxx Xxxx Xxxxxx
Xxxxx X
Xxxxxxxx, Xxxxxxx 00000
Either party may change its address for this purpose by giving written
notice to the other in the manner above provided.
Page 4 of 5
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
HEALTHTRONICS, INC. LITHO MANAGEMENT, INC.
By: /s/ Xxxxx Xxxxxxxx, M.D. By: /s/ Xxxxxx X. House
-------------------------------- --------------------------------
Xxxxx Xxxxxxxx, M.C., CEO Xxxxxx X. House, President
By: /s/ Xxx X. Xxxxx
--------------------------------
Xxx X. Xxxxx, President
U.S. LITHOTRIPSY, L.P. /s/ Xxxx Xxxxx, M.D.
--------------------------------
Xxxx Xxxxx, M.D.
By: /s/ Xxxxxx X. House
--------------------------------
Xxxxxx X. House /s/ Xxxxx Xxxxx, M.D.
--------------------------------
Xxxxx Xxxxx, M.D.
/s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx, CPA
/s/ X. Xxxxxxxxx Hezmall, M.D.
--------------------------------
X. Xxxxxxxxx Hezmall, M.D.
Page 5 of 5
6
Exhibit "B"
LITHO MANAGEMENT, INCORPORATED .6% General Partner
HEALTHTRONICS, INCORPORATED .4% General Partner
General partner 1%
U.S. LITHOTRIPSY, LP
Limited Partners 99%
Xxxx Xxxxx, MD 40.05%
HealthTronics, Inc. 39.60%
Xxxxx Xxxxx 8.91%
Xxxxx Xxxxxx, CPA 4.44%
Xxxxx Xxxxx, MD 3.00%
Xxx Xxxxxxx, MD 3.00%
10% to 7.5% 31% to 7.5%
Limited Management Limited Management
Partners fee Partners fee
F F F
U U U
METRO I STONE MANAGEMENT, LIMITED MISSISSIPPI VALLEY I T T T
Limited Partners 90% STONE MANAGEMENT, L.P. U U U
Limited Partners 69% R R R
Xxxx Xxxxx, MD 22.5% Xxxx Xxxxx, MD 23.0% E E E
Xxxxx Xxxxx, MD 22.5% Xxxx Xxxx, MD 23.0%
Xxx Xxxxxxx, MD 22.5% Xxxx Xxxxxx, MD 23.0% D D D
Xxxx Xxxxxx, MD 22.5% E E E
A A A
L L L
