Drkoop.com Inc. announced on Monday that it reached a tentative agreement to settle the consolidated securities class action litigation and shareholder’s lawsuit filed against certain former officers and directors for $4.25 million in cash and $10 million in warrants.
The $4.25 million will be funded entirely with proceeds from the company’s directors’ and officers’ liability insurance, the company said, thereby eliminating the any adverse effect on its financial position. The additional $10 million consists of 4 million warrants, priced at $2.50 per share, to purchase the company’s common stock. Drkoop.com traded Monday morning at 16 cents per share.
Elaine Zameck, a drkoop.com spokeswoman, says the promise of the company’s complete restructuring around consumer products and homecare initiatives were likely “a lot of the basis for settling at that price.” Drkoop.com takes its name from the former U.S. Surgeon General.
Under the terms, all claims against the company and all defendants will be dismissed in their entirety without admission of liability or wrongdoing by any party, according to the healthcare content Web site’s newswire release. The settlement is subject to the preparation and execution of definitive settlement documents and court approval.
The consolidated securities class action lawsuit was filed against the company, certain former officers and directors, and one current director of the company in the United States District Court for the Western District of Texas. The shareholder’s derivative lawsuit was filed against certain former officers and directors of drkoop.com in the same court.