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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: July 6, 1999
(Date of earliest event reported)
drkoop.com, Inc.
(exact name of registrant as specified in its charter)
Delaware Commission File: 95-4697615
(State or other jurisdiction 000-26275 (I.R.S. Employer
of incorporation or Identification No.)
organization)
8920 Business Park Drive
Austin, Texas 78759
(Address of Principal executive offices, including zip code)
(512) 726-5110
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On July 6, 1999, our company, drkoop.com, Inc., a Delaware corporation (the
"Company"), and American Online, Inc. ("AOL") jointly disseminated a press
release announcing a four-year, strategic alliance between the two companies.
That press release is attached to this Report as Exhibit 5.1 and is incorporated
herein by this reference. The incorporated press release shall not be deemed to
include any material in any of the hyperlinks to Internet sites included
therein.
As indicated in the press release, the compensation payable to AOL includes
cash and warrants to purchase drkoop.com common stock. The warrants consist of
the following:
. Warrants to purchase 1,570,932 shares of our common stock for a purchase
price of $15.94 per share (the closing price on June 30, 1999). These
warrants are fully vested and may be exercised at any time on or after
June 30, 2000 and on or prior to June 30, 2008, subject to limited
exceptions relating to a change in control of drkoop.com or the early
termination of the Interactive Services Agreement between AOL and
drkoop.com.
. Warrants to purchase up to 1,570,932 shares of our common stock for a
purchase price of $20.00 per share. These warrants are not exercisable,
and will not become exercisable unless the AOL relationship delivers to
drkoop.com during the four years of the Interactive Services Agreement
traffic (measured in page views) at or above agreed upon levels.
Accordingly, one-fourth of these warrants (i.e., 392,733 warrants) could
become vested in each of the next four years if those performance
hurdles are met. Any warrants that become vested will be exercisable at
any time on or prior to June 30, 2008
. Warrants to purchase up to 2,749,131 shares of our common stock. These
warrants are not exercisable, and will not become exercisable unless the
AOL relationship delivers specified usage of a new personal medical
records software tool to be developed by drkoop.com and jointly deployed
by drkoop.com and AOL. The warrant specifies four performance hurdles,
measured by usage of the new tool, which if accomplished will result in
392,733, 392,733, 785,466 and 1,178,199 warrants becoming vested and
exercisable. The exercise price of these warrants will be established at
the time they become vested and will be calculated as 80%, 75%, 70% and
65% of fair market value at such time. Any warrants that become vested
will be exercisable at any time on or prior to June 30, 2008.
All of the warrants include customary ancillary provisions, including anti-
dilution adjustments for stock splits, stock dividends and similar structural
changes. None of the warrants may be transferred prior to December 8, 1999 or
if the related warrants have not vested. A change in control transaction
involving drkoop.com could result in an acceleration of the vesting of these
warrants.
The parties also entered into a registration rights agreement which could
require that drkoop.com register any shares of common stock issued to AOL upon
exercise of any warrant for resale under the Securities Act of 1933, although
these rights are subordinated to the rights
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previously granted in the Amended and Restated Registration Rights Agreement
dated January 29, 1999.
In connection with this strategic alliance, AOL will also pay to drkoop.com
approximately $8 million related to specified technology to be provided to AOL
by drkoop.com.
This Report includes forward-looking statements that are based on current
expectations and involve risks and uncertainties. drkoop.com cannot guarantee
that actual future events will not vary materially from those described in this
Report. Specifically, the nature and deployment of new products and services is
subject to revision due to technical and other factors, and such products and
services may not be accepted by consumers. In addition, our traffic growth is
subject to our ability to continue to attract and retain our audience of users
by providing healthcare content, tools and other features which meet the
changing demands of those users. For a further discussion of the business risks
faced by drkoop.com, please see the section captioned "Risk Factors" in our
final prospectus filed June 8, 1999 with the Securities and Exchange Commission.
drkoop.com undertakes no obligation to update any of the forward-looking
statements in this Report.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits
5.1 Joint Press Release dated July 6, 1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized,
drkoop.com, Inc.
Date: July 6, 1999 By /S/ Susan M. Georgen-Saad
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Name: Susan M. Georgen-Saad
Title: Chief Financial Officer
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EXHIBIT INDEX
Sequentially
Exhibit Numbered
No. Description Page
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5.1 Joint Press Release dated July
6, 1999
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EXHIBIT 5.1
JOINT PRESS RELEASE DATED JULY 6, 1999
America Online and drkoop.com Announce Four-year, $89 Million Strategic Alliance
drkoop.com to be Premier Healthcare Resource Across Five AOL Brands
DULLES, Va. & AUSTIN, Texas--(BUSINESS WIRE)--July 6, 1999--
Online Market Leaders Team to Offer Trusted Healthcare Resources to the Largest
Consumer Audience in Cyberspace.
drkoop.com to Leverage Sun-Netscape Alliance Infrastructure Systems To Power Its
Array of Services.
America Online, Inc. (NYSE: AOL - news), the world's leading
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interactive services company, and drkoop.com, Inc. (Nasdaq: KOOP - news), the
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leading dedicated Internet healthcare network led by Dr. C. Everett Koop, former
U.S. Surgeon General, today announced a four-year, $89 million strategic
alliance to bring drkoop.com's specially programmed health information, services
and other resources to the largest consumer audience in cyberspace.
Through the partnership, drkoop.com will be the most expansive,
premier health content partner across five AOL brands, providing AOL and
CompuServe's combined membership of 19 million members -- as well as the
millions more visitors to AOL.COM, Netscape Netcenter and Digital City - with
consumer-focused resources on hundreds of health topics. The companies expect to
rollout drkoop.com content across the AOL brands this fall.
Under the agreement, drkoop.com will provide AOL guaranteed payments
totaling $89 million over four years. AOL will also receive fully vested and
performance-based warrants to purchase shares in drkoop.com. To support sales
efforts for the partnership, drkoop.com will leverage AOL's interactive sales
force of over 600 to build advertising and e-commerce opportunities across all
drkoop.com and its affiliate sites, as well as to support the rollout of several
new products and services throughout the four-year agreement.
drkoop.com will utilize software from the Sun-Netscape alliance to
power the AOL rollout of its services, acquiring a full range of software
solutions including Netscape Application Server, Netscape Certificate Management
System, Netscape Directory Server and Netscape CommerceXpert application
software. The company will deploy these proven solutions to ensure the
scalability and performance necessary to support e-commerce and the anticipated
dramatic increase in traffic to drkoop.com sites as well as to continue to
provide secure access consistent with both companies' strong stance on customer
privacy.
Bob Pittman, AOL's CEO said, "We are delighted to have such a
comprehensive new alliance with drkoop.com across our brands. drkoop.com is the
nation's leading dedicated online consumer healthcare network, and for decades,
Dr. Koop's message of openness and education has resonated with Americans as
they have looked for the information that will allow them to make better health
care decisions. With this new relationship, drkoop.com and America Online are
joining in the cause to simply and conveniently provide sound, reliable health
care information, advice and health management tools to all Americans."
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Mr. Pittman continued, "This agreement is also a clear example of the
end-to-end e-commerce solutions that AOL, the Sun-Netscape Alliance and Sun
Microsystems as a cohesive team can bring to our enterprise customers. This
arrangement enhances our relationship with drkoop.com and demonstrates the power
this team can bring to bear to improve our customers' business."
Dr. C. Everett Koop, chairman said, "The close relationship drkoop.com
is building with America Online will put the power of information back in the
hands of millions of Americans. For every person, in any place and at any stage
of life, there's nothing more central to their lives than the health and the
well-being of themselves and their loved ones. Working together with AOL, we're
empowering millions of Americans to take control of their health care and
wellness decisions."
Don Hackett, drkoop.com president and CEO added, "This partnership
firmly establishes drkoop.com's dominance in the online healthcare arena -- no
one can boast the traffic, presence and critical mass that we've secured through
this exciting alliance with AOL. For consumers, important healthcare information
has just gotten that much easier to access. For advertisers trying to attract
the attention of health-conscious consumers, drkoop.com will be the best online
partner to consider."
The May 1999 Media Metrix report which provides a monthly measurement
of both online and Web usage, cited drkoop.com as the #1 dedicated healthcare
Internet site with 1.4 million unique visitors, a position also achieved in
April. The April 1999 Media Metrix report indicated that AOL's Health Channel is
the #1 health destination online, with more than two million unique users per
month, more than twice as many visitors as other top health Web sites. Combined,
the two online leaders pledge to maintain its focus on delivering quality,
trusted healthcare information, products and services to all Americans.
About AOL
Founded in 1985, America Online, Inc., based in Dulles, Virginia, is
the world's leader in interactive services, Web brands, Internet technologies,
and e-commerce services. America Online, Inc. operates: two worldwide Internet
services, America Online, with more than 17 million members, and CompuServe,
with approximately 2 million members; several leading Internet brands including
ICQ, AOL Instant Messenger and Digital City, Inc.; the Netscape Netcenter and
AOL.COM portals; the Netscape Navigator and Communicator browsers; and AOL
MovieFone, the nation's # 1 movie listing guide and ticketing service. Through
its strategic alliance with Sun Microsystems, the Company develops and offers
easy-to-deploy, end-to-end e-commerce and enterprise solutions for companies
operating in the Net Economy.
About drkoop.com
The Company operates www.drkoop.com, the leading Internet-based
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consumer healthcare network. The Network consists of a consumer-focused
interactive Web site that provides users with comprehensive healthcare
information and services, as well as affiliate relationships with portals, other
Web sites, healthcare organizations and traditional media outlets. The
drkoop.com Network is an Internet healthcare initiative that integrates dynamic
healthcare content on a wide variety of subjects, interactive communities and
tools as well as opportunities to purchase healthcare-related products and
services online. In addition to aligning with AOL, drkoop.com is also the
exclusive provider of health and related content on three Web sites of the GO
Network: GO Health Center, ESPN.com Training Room and the Family.com Health
Channel. drkoop.com is also the premier health content provider for GO's
ABCNEWS.com. Additional information on drkoop.com can be found at
www.drkoop.com.
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This news release includes forward-looking statements that are based
on current expectations and involve risks and uncertainties. drkoop.com cannot
guarantee that actual future events will not vary materially from those
described in this release. Specifically, the nature and deployment of new
products and services is subject to revision due to technical and other factors,
and such products and services may not be accepted by consumers. In addition,
our traffic growth is subject to our ability to continue to attract and retain
our audience of users by providing healthcare content, tools and other features,
which meet the changing demands of those users. For a further discussion of the
business risks faced by drkoop.com,
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please see the section captioned "Risk Factors" in our final prospectus filed
June 8, 1999 with the Securities and Exchange Commission. drkoop.com undertakes
no obligation to update any of the forward-looking statements in this release.
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