SANTA MONICA, Calif. — Former high flyer Drkoop.com Inc. reached a tentative agreement to settle lawsuits alleging breaches of fiduciary duty and other wrongdoing against the company, its directors and officers.
The $4.25 million cash component of the settlement will be funded entirely by the directors’ and officers’ liability insurance and won’t hurt the company’s financial performance, the online health-information provider said in a prepared statement Monday. The settlement will also include an equity component consisting of four million warrants, priced at $2.50 per share, to purchase the company’s common stock.
As part of the agreement, which is subject to a definitive agreement and court approval, all claims against the company and all defendants will be dismissed without admission of liability or wrongdoing by any party.
The legal action involved a consolidated securities class-action lawsuit and a derivative shareholders’ suit.
“We believe that our decision to settle the consolidated class action and the derivative suit is in the best interest of our shareholders because, among other things, it will remove the uncertainty, expense and distraction of continuing litigations,” Richard Rosenblatt, chairman and chief executive, said in the company’s statement.
“This will enable us to concentrate on driving growth and profitability in our operations,” he said.
Drkoop was among the high profile dot-com companies struck down in the technology market plunge. Nasdaq delisted the company, which traded as high as $22.25 in 1999, in April for failure to maintain a $1 minimum bid price.
Drkoop now trades on the over-the-counter Bulletin Board. In morning trading, shares of Drkoop were little changed at nearly 16 cents.
Drkoop also is being sued by a company that says it improperly took possession of equipment after Drkoop’s merger with Drdrew.com.
In April, PricewaterhouseCoopers LLC, the company’s auditor, notified Drkoop of doubts about its ability to continue as a going concern.
In the same month, Drkoop agreed to acquire IVonyx, a closely held home-infusion company based in Livonia, Mich., in a deal expected to close in the third quarter. The company reported to the Securities and Exchange Commission in May that it expects to have enough cash to complete the acquisition. Drkoop said in the SEC filing it may need to get further financing to make the $3 million cash payment called for in the deal if the acquisition is delayed, or if its operating losses before the closing are higher than expected. The company said in the filing that it had an accumulated deficit of $204.2 million as of March
In 2000, Drkoop lost $121.2 million, or $4.16 a share, on revenue of $10.6 million.
Copyright (c) 2001 Dow Jones & Company, Inc.