Exhibit 99.6
FW Integrated Orthopaedics Investors, L.P.
and FW Integrated Orthopaedics Investors II, L.P.
201 Main Street, Suite 3100
Fort Worth, Texas 76102
July 26, 2000
Robert L. Stein
Chartwell Capital Management, Inc.
1 Independent Drive
Suite 3120
Jacksonville, FL 32202
Re: Conversion of Series A and Series B Preferred shares of Integrated
Orthopaedics, Inc.
Dear Bobby,
The following represents our understanding of how the Integrated Orthopaedics,
Inc. (IOI) Series A and Series B would be treated if the Series B determines to
convert at a price greater than that which they are legally entitled. Our
intention in such a conversion would be to transfer additional value to the
Common shareholder and to leave the Series A unaffected by the conversion of the
Series B at a higher price. Accordingly, the percentage ownership that the
holders of the Series A would receive if both the Series A and B converted at
the prices set forth in the preferred stock documents should not change due to
the conversion of the Series B at a higher price. This will be accomplished by
the Series A holders converting its shares at a slightly higher price if and
when the adjusted Series B conversion price has been established.
For example:
As illustrated below, if the Series A and Series B converted their shares at
$1.00/share, the Series A holders would receive 8.21% of the shares outstanding
and the Series B holders would receive 76.64%. If the Series B holders
converted at $1.25 rather than $1.00, the Series A would convert at $1.20 per
share and thus their ownership of the total shares would also be 8.21% and the
Series B will have transferred 3.04% to the Common shareholders.
Share price Convestion price
Common shares n/a 6,161,000 15.15%
Series A $ 1.00 3,339,231 8.21%
Series B $ 1.00 31,167,863 76.64%
----------------------
Total 40,668,094 100.00%
----------------------
Share price Convestion price
Common shares n/a 6,161,000 18.19%
Series A $ 1.200 2,781,611 8.21%
Series B $ 1.250 24,934,290 73.60%
----------------------
Total 33,876,901 100.00%
----------------------
Our understanding is that Series A will convert at a conversion price that will
give the holders of the Series A the percentage that they would have received if
both the Series A and Series B had converted their shares on the date that the
Series A chooses as the marking date (as set forth below).
For these purposes, the following steps would be followed:
1. The holders of Series B shall provide the Series A with copies of any
agreements that relate to the Series B holders converting their shares at a
value different than that to which holders of the Series B are legally
entitled. The price contained in the Series B contract (the "Series B
Contract") is the "Series B Adjusted Conversion Price".
2. The holders of Series A shall provide written notice to the holders of the
Series B on the day that they choose to use as the "Marking Date", which may
be before any Series B Contract is entered into.
3. The "Target Percentage" would be the percentage that the Series A would
receive if both the Series A and Series B converted their shares on the
Marking Date in accordance with the current provisions of the respective
securities.
4. The "Series A Adjusted Conversion Price" shall be the greater of (i) the
conversion price specified in the documents governing the Series A and (ii)
the conversion price that when divided into the Series A value plus
accrued dividends results in shares sufficient to provide the Series A
holders the Target Percentage assuming the Series B had converted at the
Series B Adjusted Conversion Price.
5.If the holders of the Series B convert their Series B shares into Common
Stock, and on conversion convert at the Series B Adjusted Conversion Price,
the holders of the Series A agree that if such holders determine to convert
their Series A shares they will do so at the Series A Adjusted Conversion
Price. If the holders of the Series A shall have already converted their
Series A shares at the date upon which the Series B holders convert at the
Series B Adjusted Conversion Price, the Series A holders shall return to IOI
for cancellation such number of shares of Common Stock that will allow the
holders of the Series A to retain the number of shares of Common Stock that
they would have received if they had converted at the Series A Adjusted
Conversion Price.
The agreements set forth herein shall be of no further force or effect after
December 31, 2002. If the foregoing reflects your agreement and understanding
with respect to the matters set forth herein, please so indicate by executing a
counterpart of this letter and returning it to me.
FW INTEGRATED ORTHOPAEDICS INVESTORS, L.P.
By Group 31, Inc., General Partner
By:
Scott Hancock, Vice President
FW INTEGRATED ORTHOPAEDICS
INVESTORS II, L.P.
By FW Group Genpar, Inc., General Partner
By
Scott J. Hancock, Vice President
ACCEPTED AND AGREED TO
this ___ day of July, 2000
CHARTWELL CAPITAL
MANAGEMENT, INC.
By:
Print Name:
Title:
