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As filed with the Securities and Exchange Commission on December 31, 1998
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
HEALTHY PLANET PRODUCTS, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware 2271 94-260176
(State of Incorporation) (Primary Standard Industrial Classification (I.R.S. Employer
Code Number) Identification No.)
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1700 Corporate Circle
Petaluma, California 94954
(707) 778-2280
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Bruce A. Wilson
President and Chief Executive Officer
1700 Corporate Circle
Petaluma, California 94954
(707) 778-2280
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
Copy to:
Charles P. Axelrod, Esq.
Camhy Karlinsky & Stein LLP
1740 Broadway, 16th Floor, New York, New York 10019-4315
(212) 977-6600
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act"), other than the
securities offered only in connection with dividend or interest reinvestment
plans, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earliest
effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration number of the earlier effective registration statement for the
same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: / /
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Proposed Proposed
Maximum Maximum Amount of
Amount to be Offering Price Aggregate Registration
Title of Security to be Registered Registered Per Share Offering Price Fee
------------ -------------- -------------- ------------
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Rights to Purchase Common Stock .................... 4,627,406 -- -- --(1)
Common Stock, $0.01 par value (2)................... 4,627,406 $0.6875(3) $3,181,341 $884.41
--------- ------- ---------- -------
Total............................................... 4,627,406 $0.6875 $3,181,341 $884.41
========= ======= ========== =======
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(1) In connection with this Rights Offering, each Common Stockholder and each
Series D Convertible Preferred Stockholder of record as of the Rights Record
Date is entitled to two Rights for each share of Common Stock, or Series D
Convertible Preferred Stock, owned as of such Rights Record Date. The Rights
are not transferable and are not assignable, and accordingly no value is
ascribed thereto for Registration Fee purposes. Therefore, no Registration Fee
is required.
(2) Each Right entitles a stockholder to purchase one share of common stock at
a Subscription Price of $0.6875 per share, which Subscription Price is
estimated solely for the purpose of this Registration Statement and the
calculation of the Registration Fee. The number of shares of Common Stock is
based upon 2,282,368 shares of outstanding Common Stock and 31,335 share of
outstanding Series D Convertible Preferred Stock, convertible into Common
Stock on a one to one basis.
(3) Estimated only for the purpose of computing the Registration Fee and based
upon the closing price as quoted by the American Stock Exchange on December 28,
1998. However, the actual Subscription Price for the Rights will be
subject to a Pricing Amendment.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION ACTING PURSUANT
TO SECTION 8(a) MAY DETERMINE.
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PROSPECTUS Subject to Completion
December 31, 1999
4,627,406 SHARES
HEALTHY PLANET PRODUCTS, INC.
COMMON STOCK
This is an offering to the holders of record of our Common Stock and
our Series D Convertible Preferred Stock, on January 11, 1999 (the "Rights
Record Date") of non-transferable and non-assignable rights (the "Rights") to
subscribe for up to an aggregate of 4,627,406 shares of our common stock (the
"Shares") at a purchase price of $[. ] per Share (the "Subscription Price").
You will receive two Rights for each share of our Common Stock, or
Series D Convertible Preferred Stock, held of record on the Rights Record Date.
Each Right will entitle you to purchase one Share of Common Stock (the "Basic
Subscription Rights"). Any stockholder exercising in full his or her Basic
Subscription Rights, shall be entitled to exercise an oversubscription right
(the "Oversubscription Right") entitling such holder to purchase, in the event
that less than all Shares are purchased through the exercise of all of the Basic
Subscription Rights, up to one time the number of such Shares subscribed for
under his or her Basic Subscription Rights. If the available Shares are
insufficient to satisfy all subscriptions pursuant to Oversubscription Rights,
then the available Shares will be allotted pro rata among oversubscribing
stockholders according to the number of Shares subscribed to by each pursuant to
the Oversubscription Rights.
The Rights are exercisable commencing on the date of this Prospectus
and continuing until 5:00 p.m., New York time on _______, 1999 (the "Rights
Expiration Date") unless extended for up to thirty (30) additional days in our
sole discretion (the "Extended Rights Expiration Date"). See "The Rights
Offering," and "How to Subscribe".
The Rights which you will receive will be non-assignable and
non-transferable. The Rights will not be listed for trading on any stock
exchange or The NASDAQ Stock Market.
Our Common Stock is listed on the American Stock Exchange ("AMEX")
under the symbol HPP. On December 30, 1998, the Closing Price for the shares of
our common stock as reported by the AMEX was $0.625 per share. See "Price
Range of Our Common Stock."
We have determined the Terms of this Rights Offering, including the
Subscription Price. The Subscription Price does not bear any relationship to net
tangible book value, earnings or any other objective criteria of value.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.
YOU SHOULD PURCHASE ONLY IF YOU CAN AFFORD A COMPLETE LOSS.
SEE "RISK FACTORS" BEGINNING ON PAGE .
NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION
HAS APPROVED OR DISAPPROVED THESE SECURITIES,
OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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Per Share Total
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Subscription Price $ [ . ] $[ . ]
Proceeds of the Rights Offering $ [ . ] $[ . ]
Discounts and Commissions $ $
Total (1)(2) $ [ . ] $[ . ]
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(1) Before deducting estimated expenses of this Rights Offering payable by the
Company in the amount of $180,000.
(2) A director and principal stockholder and two of his affiliate companies have
agreed to exercise their respective Basic Subscription Rights in full, thereby
assuring that we will receive not less than $[ ] as a result of this Rights
Offering.
We expect to deliver the Shares purchased by holders of the Rights as
soon as practicable after the exercise of Basic Subscription Rights and as soon
as practicable after the Rights Expiration Date with respect to Shares purchased
under the Oversubscription Rights.
[add red herring language on side : The information contained in this Prospectus
is not complete and may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This Prospectus is not an offer to sell these securities and we are
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
THE DATE OF THIS PROSPECTUS IS ________, 1999.
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TABLE OF CONTENTS
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PROSPECTUS SUMMARY.......................................................... 3
RISK FACTORS................................................................ 6
USE OF PROCEEDS............................................................. 9
DIVIDEND POLICY............................................................. 9
THE RIGHTS OFFERING......................................................... 10
General............................................................ 10
The Offering Period ............................................... 10
Basic Subscription Right........................................... 10
Oversubscription Right............................................. 10
NonTransferability of Rights....................................... 11
Method of Offering................................................. 11
Rights Agent....................................................... 11
Method of Exercising Rights........................................ 11
Delivery of Certificates........................................... 12
Determination of Subscription Price................................ 12
Rights Participation Guarantee by Certain Affiliates............... 12
State and Foreign Securities Laws.................................. 13
Rights of Subscribers.............................................. 13
Federal Income Tax Consequences.................................... 13
PRICE RANGE OF OUR COMMON STOCK............................................. 14
DESCRIPTION OF OUR CAPITAL STOCK............................................ 14
PRINCIPAL STOCKHOLDERS...................................................... 16
EXPERTS ................................................................... 19
LEGAL MATTERS............................................................... 19
ADDITIONAL INFORMATION...................................................... 19
PART II INFORMATION NOT REQUIRED IN PROSPECTUS........................... II-1
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DOCUMENTS INCORPORATED BY REFERENCE
We are incorporating by reference into this Prospectus the following
documents filed with the Securities and Exchange Commission (the "Commission"):
(a) Our Annual Report on Form 10-K for the year ended December 31,
1997;
(b) Our definitive Proxy Statement/Annual Report dated June 23, 1998,
in connection with the Annual Meeting of our Stockholders held on August 5,
1998;
(c) Our Form 8-K, dated April 6, 1998, filed in connection with the
resignation of Robert Fagenson as a Director;
(d) Our Form 10-QSB for fiscal quarter ended March 31, 1998;
(e) Our Form 8-K, dated June 16, 1998, filed in connection with the
resignation of Joseph Furlong as a Director;
(f) Our Form 8-K, dated June 23, 1998, filed in connection with the
election of Michael G. Zybala as a Director;
(g) Our Form 10-QSB for fiscal quarter ended June 30, 1998;
(h) Our Form 10-QSB for fiscal quarter ended September 30, 1998; and
(i) All other reports and other documents filed by us pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") since September 30, 1998.
All documents filed by us after the date of this Prospectus pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities which may be
offered hereby have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Prospectus and
to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Any financial statements and schedules hereafter incorporated in this
Prospectus that have been audited and are the subject of a report by independent
accountants will be so incorporated in reliance upon such reports and upon the
authority of such firm as experts in accounting and auditing to the extent
covered by consents filed with the Commission.
Where You Can Find More Information
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, file annual, quarterly and current reports, proxy statements and
other information with the Commission. Copies of such reports, proxy and
information statements and other information filed by us with the Commission can
be inspected and copied at the Public Reference Room maintained by the
Commission at 450 Fifth Street, NW, Washington, DC 20549, and at the following
Regional Offices of the Commission New York Regional office, Seven World Trade
Center, Suite 1300, New York, New York 10048; and Chicago Regional Office,
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Please call the Commission at 1-800-SEC-0330 for further information on the
public reference rooms. Such material may also be accessed electronically by
means of the Commission's web site at http://www.sec.gov. Our Common Stock is
listed on the AMEX, and reports, proxy and information statements and other
information concerning us is available for inspection at the offices of the AMEX
located at 86 Trinity Place, New York, New York 10006.
We have filed with the Commission a Registration Statement on Form S-3
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission. For
further information with respect to us and the securities we are currently
offering, please see the Registration Statement along with its exhibits, copies
of which are on file at the offices of the
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Commission and may be obtained upon payment of the fee prescribed by the
Commission, or may be examined without charge at the offices of the Commission.
Statements contained in this Prospectus or in any document incorporated in this
Prospectus by reference as to the contents of any contract or other document
referred to herein or therein are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such reference.
We will provide without charge to each person, including any beneficial
owner of any of the Common Stock, to whom a copy of this Prospectus has been
delivered, upon the written or oral request of such person, a copy of any and
all of the documents referred to above which have been or may be incorporated by
reference in this Prospectus, except that exhibits to such documents shall not
be provided unless they are specifically incorporated by reference into such
documents. Requests for copies of any documents should be directed to Secretary,
Healthy Planet Products, Inc., 1700 Corporate Circle, Petaluma, California
94954, telephone number (707) 778-2280.
NO BOARD RECOMMENDATION
The Board of Directors of the Company believes the Rights Offering is
in the best interests of the Company because the Company will be able to use the
net proceeds for working capital purposes and to more fully implement and fund
various aspects of its business plans and programs. However, the Board is not
making any recommendation to you, the holders of our Common Stock and our Series
D Convertible Preferred Stock, as to whether you should exercise your Basic
Subscription Rights or Oversubscription Rights, as the case may be. Each of you
must make your own decision as to whether to exercise your Basic and or
Oversubscription Rights. A director and principal shareholder, and his affiliate
companies have agreed with us to exercise all of their respective Basic
Subscription Rights. This commitment should not be construed to be a
recommendation by the Board, nor is it indicative of the appropriateness of the
investment.
-------------------------
No dealer salesman, or other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus and if given or made, such other information or representations must
not be relied upon as having been authorized by us. This Prospectus and the
Rights Offering made hereby do not constitute an offer or solicitation by anyone
in any jurisdiction in which such offer or solicitation may not lawfully be
made.
-------------------------
American Stock Transfer & Trust Company, our Transfer Agent and Rights
Agent, has agreed to provide certain services in connection with the Rights
Offering. If you require assistance please contact our Rights Agent at 40 Wall
Street, New York, New York 10005, Telephone, 212-936-5100, or Bruce A. Wilson,
our Chief Executive Officer at our executive offices, located at 1700 Corporate
Circle, Petaluma, California, 94954, Telephone (707)-778-2280.
---------------------
We furnish our stockholders and warrantholders with annual reports
containing audited financial statements.
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PROSPECTUS SUMMARY
You should read the following summary, including the "Risk Factors"
section along with the more detailed information and Financial Statements and
notes thereto appearing elsewhere in this Prospectus. This summary highlights
information contained elsewhere in this Prospectus. It is not complete and may
not contain all of the information that you should consider before investing in
the Shares. Certain information contained in this summary and elsewhere in this
Prospectus are forward-looking statements. You should read the entire Prospectus
carefully.
THE COMPANY
OUR BUSINESS
We design, publish and market, predominantly throughout the United
States, a diversified line of cause related, nature and wildlife contemporary
greeting cards, note cards, holiday cards, stationery, collectibles, and gifts.
In response to environmental considerations, and in connection with our
identification with The Sierra Club as a licensee, all of our paper products
are produced on environmentally responsible paper with soy-based inks. We
publish and market over 500 everyday and seasonal cards, including over 300
images which comprise our principal Sierra Club card line. Our products are
marketed predominantly through approximately 130 independent sales
representatives to over 4,900 retail sales outlets comprised of card shops,
stationary stores, gift, notion and variety shops, drug stores, book stores,
department stores and miscellaneous chain and retail sales outlets.
OUR HISTORY
We were originally organized under the laws of the state of California
on July 12, 1979 under the name of Carolyn Bean Publishing, Ltd. On April 25,
1985, we effected a domiciliary reincorporation pursuant to which we
reincorporated under the laws of the State of Delaware, and the California
corporate entity was merged into a new Delaware corporation of the same name. On
August 2, 1993, we changed our name to Healthy Planet Products, Inc. Our
executive offices and warehouse facilities are located at 1700 Corporate Circle,
Petaluma, California 94954, and its telephone number is (707) 778-2280, fax
number (707) 778-0307. See "The Company".
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TERMS OF THE RIGHTS OFFERING
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Securities Offered................. Up to a maximum of 4,627,406 shares (the "Shares") of our Common Stock,
par value $.01 per share (the "Common Stock"), will be issuable pursuant to
the exercise of the Rights being distributed to you, our stockholders. See "The
Rights Offering".
Subscription Price ................. $[ ] per share (the "Subscription Price").
Basic Subscription Right............ You will receive two subscription rights (the "Rights") for each share of our
Common Stock, or Series D Convertible Preferred Stock (the "Basic
Subscription Right") that you hold of record at the close of business on
January 11, 1999 (the "Rights Record Date"). Each Right will entitle you to
purchase one Share at the Subscription Price. See "The Rights
Offering--Basic Subscription Right".
Oversubscription Right.............. If you purchase all the Rights you are entitled to pursuant to the Basic
Subscription Rights, you will also be entitled to oversubscription rights
which shall entitle you to purchase, at the Subscription Price, one time
the number of Shares you were entitled to subscribe to under the
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Basic Subscription Rights (the "Oversubscription Rights"), provided that the
maximum number of Shares which may be purchased pursuant to the exercise of all
Basic Subscription Rights and Oversubscription Rights in this offering by all
stockholders may not exceed 4,627,406 Shares. If there are an insufficient
number of unpurchased Shares to fill oversubscriptions, then the available
Shares will be allotted pro rata among the oversubscribers based on the numbers
of Shares for which they oversubscribe. See "The Rights
Offering--Oversubscription Right".
Rights Record Date ................. The close of business on January 11, 1999.
Rights Certificates................. The Rights are evidenced by certificates ("Rights Certificates") which will be
mailed to those persons who are holders of record of Common Stock on the
Rights Record Date.
Rights Expiration Date.............. 5:00 p.m., New York time, on _______, 1999, (20 days from the date of this
Prospectus unless we extend this period, which we may do at our sole discretion)
for a period of not more than 30 days (the "Extended Rights Expiration Date").
The "Rights Offering Period" is the period from the date of mailing of the
Rights Certificates (which is expected to occur within five business days
following the date the Registration Statement is declared effective by the
Commission (the "Effective Date")) to and including the Rights Expiration
Date. See "The Rights Offering--The Offering Period".
Non-Transferability of Rights....... The Rights (including the Oversubscription Rights) are not transferable and
are not assignable; only you may exercise the Rights. See "The Rights
Offering--Non-Transferability of Rights".
Rights Agent........................ American Stock Transfer and Trust Company, 40 Wall Street, New York,
New York 10007. See "The Rights Offering--Rights Agent".
Use of Proceeds..................... A director and principal stockholder and two of his affiliate companies have
committed to exercise all of their respective Basic Subscription Rights, and as
a result of their commitment, we will receive a minimum of $[ ] from this
Rights Offering. There is no assurance as to the amount of additional
proceeds, if any, that we will receive from the exercise of Basic Subscription
Rights and/or Oversubscription Rights by any other stockholder. We intend
to use the proceeds from the Rights Offering for general working capital
purposes, including the internal carrying of accounts receivable, without need
for lines of credit, regular operating expenses, and the development or
acquisition of new and additional product lines or synergistic businesses. See
"Use of Proceeds".
Risk Factors........................ For a discussion of the high degree of risk involved in this investment, please
see "Forward Looking Statements" and "Risk Factors".
Method of Exercising Rights......... To exercise your Basic Subscription Rights, and to subscribe for additional
Rights pursuant to the Oversubscription Right (after exercising your Basic
Subscription Rights in full as described above), you should complete the
Subscription Certificate and forward, or hand deliver it, along with payment
of the Subscription Price, so that it is received by the Rights Agent on or
before 5:00 p.m. New York time on the Rights Expiration Date. Payment for
Shares purchased pursuant to the exercise of Basic Subscription Rights may
be made by check, subject to collection, bank check or money order payable to
the order of "Healthy Planet Products, Inc." Payments may be effected
through wire transfer in accordance
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with wire instructions given by the Rights Agent to the Company prior to the
effective date of this Registration Statement. Payments will be deposited
upon receipt by the Rights Agent directly into our bank account. PAYMENT FOR
SHARES SUBSCRIBED FOR PURSUANT TO OVERSUBSCRIPTION RIGHTS MUST BE MADE
SEPARATELY FROM PAYMENT FOR SHARES PURCHASED BY EXERCISE OF BASIC
SUBSCRIPTION RIGHTS. The Rights Agent will hold in escrow payments for the
exercise of Oversubscription Rights until the offering is terminated and the
number of available Shares is determined. Oversubscribers will be refunded,
without interest, any portion of amounts paid to us for Oversubscription
Right subscriptions to the extent these subscriptions are not filled. You
will not have the right to revoke subscriptions for Shares pursuant to the
exercise of a Basic Subscription Right or an Oversubscription Right once the
properly completed Rights Certificates accompanied by payment for Shares
subscribed for have been received by the Rights Agent. Holders of Common
Stock registered in the name of a broker, dealer, commercial bank, trust
company or nominee are urged to contact such registered holder promptly if
they wish to subscribe. See "The Rights Offering--Method of Exercising
Rights".
Commitment by Affiliate
Participants...................... A director and principal stockholder and two of his affiliate companies have
agreed with us to exercise all of their respective Basic Subscription Rights.
See "The Rights Offering--Rights Participation Guarantee By Certain
Affiliates."
Shares of Common Stock
Outstanding Before Offering....... 2,282,368 Shares (1)
Shares of Common Stock
Outstanding After Offering.......... 6,941,109 shares if all Rights are exercised, or 3,240,703 shares if only the
Affiliate Participants exercise their Rights for the number of Shares which
they have agreed to purchase (i.e., 927,000 Shares). The actual number of
shares of Common Stock to be outstanding will depend upon the number of
Basic Subscription Rights exercised and the number of Shares purchased
pursuant to the Oversubscription Rights.
Principal Securities Market......... Our Common Stock is listed on the American Stock Exchange
(the "AMEX") and is traded under the symbol "HPP." The Rights will not be
registered or listed for trading on any stock exchange or The NASDAQ stock
market.
Federal Income Tax
Consequences...................... Generally, you will not recognize any income or loss upon receipt of the
Basic Subscription Rights and related Oversubscription Rights and no income
or loss will be recognized by you upon your exercise of the Basic
Subscription Rights or Oversubscription Rights. See "The Rights
Offering--Federal Income Tax Consequences".
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(1) Does not include (i) 465,000 shares of Common Stock reserved for issuance
under our Senior Management Incentive Plan; (ii) 85,000 shares of Common
Stock reserved for issuance under our Non-Employee Director Stock Option
Plan; (iii) 360,000 shares of Common Stock reserved for issuance upon
exercise of certain Common Stock Purchase Warrants; (iv) 250,000 shares of
Common Stock reserved for issuance upon exercise of certain Warrants to be
issued in connection with the Affiliate Participants' Subscription
Commitment Agreement; or (v) 31,335 shares of Common Stock issuable upon
exercise of 31,335 shares of Series D Convertible Preferred Stock.
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RISK FACTORS
Investment in the Shares of our Common Stock issuable upon exercise of
the Rights involves a high degree of risk. Prospective investors should give
careful consideration to the following factors, among others, prior to making an
investment decision:
Special Note Regarding Forward-Looking Statements. Certain statements in
this Prospectus constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 (the "Act"). We are
including this special note to take advantage of certain "safe harbor"
provisions of the Act. Forward-looking statements included in this Form S-3 or
hereafter included in other publicly available documents filed with the
Securities and Exchange Commission, reports to our stockholders and other
publicly available statements issued or released by us involve known and unknown
risks, uncertainties, and other factors which could cause our actual results,
performance (financial or operating) or achievements to differ from the future
results, performance (financial or operating) achievements expressed or implied
by such forward looking statements. Such future results are based upon
management's best estimates based upon current conditions and the most recent
results of operations. These include purchasing plans and programs of certain
large chain buyers relating to holiday product, recently experienced decline in
gross margin as well as marginal increases in general and administrative
expenses, the recent adverse trend in the general retail environment, general
economic conditions, competition generally and specifically relating to greeting
cards having environmental, nature or wildlife themes, our ability to sustain
consumer demand for our principal Sierra Club card line, and our ability to
successfully market our newly acquired line of handcrafted sculptures and
figurines. In addition, our ability to enhance and expand our product mix and to
successfully introduce new products which will meet with consumer acceptance may
also affect future results.
Net Operating Losses and Decreased Sales. For the fiscal year ended
December 31, 1997, we experienced net operating losses of $1,103,600, as
compared to $119,800 of net operating income for the fiscal year ended December
31, 1996. For the nine months ended September 30, 1998 and 1997, respectively,
we experienced net operating losses of $2,132,257 and $463,778. We also
experienced a decline in net sales from $4,632,400 for the year ended December
31, 1996, to $4,099,600 for the year ended December 31, 1997, and from
$3,138,656 for the nine months ended September 30, 1997 to $2,751,652 for the
nine months ended September 30, 1998. We cannot be assured that the declining
trend in net sales will cease, or that it can be reversed by increased sale of
existing products or introduction of new product lines.
Dependence on Consumer Demand. Purchasing plans and programs of certain
large chain buyers relating to holiday product, recently experienced decline in
gross margin as well as marginal increases in general and administrative
expenses, the recent adverse trend in the general retail environment, general
economic conditions, competition generally and specifically relating to greeting
cards having environmental, nature or wildlife themes, our ability to sustain
consumer demand for our principal Sierra Club card line, and our ability to
successfully market our newly acquired line of handcrafted sculptures and
figurines. In addition, our ability to enhance and expand our product mix and to
successfully introduce new products which will meet with consumer acceptance may
also affect future results.
Loss of Barnes & Noble as Vendor. As of September 1997, Barnes & Noble
Superstores, a national chain of bookstores which accounted for approximately
13.9% of our net sales for the year ended December 31, 1997, no longer carry our
everyday card line due to a change in vendors. This change has had a material
effect on our revenues.
Dilution of Stockholders' Interests. If you chose not to exercise your
Rights, your relative ownership interests will be diluted by the issuance of
Shares to those stockholders who do exercise their Rights.
Arbitrary Offering Price. We have determined the Subscription Price for
the Shares in consultation with the Affiliate Participants, without regard to
our present net worth, book value or any other financial measure. Consideration
was given to recent closing sale and bid and asked prices of the Common Stock on
AMEX prior to the Rights Record Date, the general conditions of the securities
market and our financial condition. There can be no assurance that our Common
Stock will trade at prices in excess of the Subscription Price at any time after
the date of this Prospectus. See "The Rights Offering--Determination of
Subscription Price."
Ability to Exercise Control by Certain Stockholders. John V. Winfield,
a director and principal stockholder, owns 167,600 shares of Common Stock and
warrants to purchase and aggregate of 150,000 shares of our Common Stock at
prices ranging from $4.00 to $4.50 (the "Common Stock Purchase Warrants"). The
InterGroup Corporation,
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("InterGroup") an affiliate of Mr. Winfield, owns 275,600 shares of our Common
Stock and also own Common Stock Purchase Warrants with respect to an aggregate
of 150,000 shares of our Common Stock, at prices ranging from $4.00 to $4.50 per
share. The Common Stock Purchase Warrants are exercisable commencing September
29, 1997 and may be exercised through September 29, 2002. Santa Fe Financial
Corporation ("Santa Fe"), a subsidiary of InterGroup, owns 20,300 shares of our
Common Stock. The Common Stock Purchase Warrants issued to Mr. Winfield and
InterGroup contain anti-dilution provisions which will be triggered by the
Rights Offering. As of the date of this Rights Offering, Mr. Winfield,
InterGroup and Santa Fe, in the aggregate, own 463,500 shares of Common Stock,
or 20.3% of the Company; or 773,500 shares of Common Stock, or 29.8% of the
Company, giving effect to the Common Stock Purchase Warrants and certain
Director option grants.
Mr. Winfield, InterGroup and Santa Fe have committed to us to exercise
all of their respective Basic Subscription Rights. In consideration of this
commitment, each of Mr. Winfield, InterGroup and Santa Fe are being issued
additional warrants (the "Rights Warrants") to purchase an aggregate of 250,000
shares of our Common Stock, to be distributed to each one, pro rata according to
their ownership percentage prior to this Rights Offering, as follows: 90,399 to
Mr. Winfield, 148,652 to InterGroup and 10,949 to Santa Fe.
As a result, at the conclusion of the Rights Offering, assuming no
other participation in the Rights Offering by other stockholders, Mr. Winfield,
InterGroup and Santa Fe will, at a minimum, own 502,800, 826,800 and 60,900
shares of our Common Stock, respectively. In the aggregate they will own
1,390,500 shares of Common Stock, or 42.9% of the Company, or 2,030,329 shares
of our Common Stock or 52.3% of the Company, when giving effect to certain
anti-dilution provisions contained in Common Stock Purchase Warrants owned by
Mr. Winfield and InterGroup, and giving effect to an aggregate of 250,000 Rights
Warrants and certain Director option grants. If Mr. Winfield, InterGroup and
Santa Fe were to exercise their Common Stock Purchase Warrants, Rights Warrants
and Director option grants, they would have the ability to elect all of our
directors, and to control the business and the policies of the Company. See
"Principal Stockholders."
The Sierra Club License. Since June 4, 1980, we have been licensed by
the Sierra Club to use its name on an exclusive worldwide basis on a line of
greeting, note and seasonal cards as well as stationery products, tablets and
magnets. This license agreement has been extended through December 31, 2005.
Sales of the Sierra Club line represented approximately __% and 70.5% of our
sales for the years ended December 31, 1998 and 1997, respectively. We believe
that the loss of the Sierra Club line would have a material adverse affect upon
our business unless and until such time as other lines having an established
substantial consumer acceptance are developed. No assurance can be given that,
in the event of the loss of the Sierra Club line, other lines can be developed
that would enable us to be profitable.
Seasonality. The greeting card, social stationery, gift and figurine
industries in which we are engaged have historically experienced seasonal sales
effects, primarily due to the emphasis on Christmas and holiday products. These
effects generally include peak seasonal production costs in the second and third
quarters of the year, and a seasonal buildup of accounts receivable in the third
and fourth quarters, thereby resulting in an increase in capital carrying costs
during these periods. During 1998, seasonal effects on our business resulted in
approximately 53% of our sales being made in the third and fourth quarters.
During fiscal year 1998, approximately __% of total annual sales were in
accounts receivable during the third and fourth quarter, and are not collectible
until the first quarter of the following fiscal year. Approximately __% of the
cost of manufacturing inventory was incurred in the second and third quarters of
the 1998 year. Such factors require the application of working capital to either
carry accounts receivable during the last two quarters of the year or to cover
production costs during peak production periods.
Competition. The greeting card, social stationery gift and figurine
industries are highly competitive. We compete with major traditional card
companies, such as Hallmark Cards, Inc., American Greetings Corporation, and
Gibson
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Greetings, Inc. on two distinct levels - first, with respect to retail exposure
and shelf space, and second with respect to reaching the consumer. The major
greeting card companies have greater financial resources, market penetration and
experience than the we have. We primarily compete with the smaller alternative
card companies, several of whom have sales and resources greater than those of
we have; i.e., Recycled Paper Products, Paramount and Sunrise Publications,
among others. Similar competitive considerations apply to our collectibles line
where we compete with other companies with greater financial resources, market
penetration and experience than we have.
The primary basis upon which we compete is the marketing of our cause
related card lines and associated nature and wildlife card lines, which can only
be obtained exclusively through us. This factor is a positive aspect to our
business so long as there continues to be public awareness, support and
identification with a particular cause or environmental issues. Conversely,
should a cause fall out of vogue with the public, the attractiveness of a line
may diminish. We do not view ourselves as being a significant competitive factor
in the greeting card industry, though we do believe that growth and opportunity
does present itself with the niche of cause related and associated card and
other product lines.
Possible Need for Further Capital. The nature of our business is
such that significant amounts of accounts receivable are built up during the
third and fourth quarters of the year by reason of the seasonal sale of cards,
thereby straining our internal cash resources and limiting funds
available for manufacturing costs. We remain dependent upon our internal
cash resources to provide necessary working capital. In addition, if losses
continue, additional capital will be required. In the event of a material
increase in sales of our present card lines, we may not have sufficient cash
resources with which to carry any significant and material increase in its
accounts receivable. No assurance may be given that such additional
capital, if required, will be available to us in the future.
No Independently Owned Manufacturing Facilities to Produce Cards. We do
not manufacture our own products, nor do we have the equipment to do so.
Rather, we contract for the physical production of our products with independent
contractors, using different suppliers at each stage of production, so as not to
rely on any one specific supplier to satisfy our needs. We believe that there
are ample suppliers and production facilities available to us at competitive
costs. We also believe that other necessary contractors and suppliers are
readily available at competitive costs to our present and anticipated future
production needs for our various products.
Dependence Upon Outside Artists to Create Cards. While the overall
concept and design of its cards is developed by us in-house, we principally rely
on independent, unaffiliated artists and photographers to create card lines for
us. Agreements with our artists/photographers apply to specific cards submitted
by an artist/photographer and accepted by us, and are exclusive as to those
cards. We use an available pool of 600-700 artists/photographers, in addition to
unsolicited submissions from various artists/ photographers. When utilizing the
work of a particular artist or photographer, we generally make a one-time
payment of $300 - $400 which entitles us to use the particular work on an
exclusive basis for greeting cards for three to five years without further
royalty payments. No single photographer with whom we have entered into a
license or purchase of rights agreement has created products which have
accounted for 4% or more of our sales. We believe that product from artists and
photographers are readily available to us at competitive costs.
In addition, our new collectibles line of figurines are designed and
hand sculpted by independent artists and craftsmen who generally receive a one
time fee of $400 or a royalty of 4%. Master molds are designed and created in
California, and final product is cast and hand painted by a non-affiliated
manufacturer located in the Far East.
Limited Trading in the Company's Common Stock; Possible Adverse Effects
of Sale of Additional Shares. For the twelve months ended December 31, 1998,
the average monthly trading volume in our Common Stock was approximately
604,239,262 shares. Consequently, it can be expected that sales of substantial
amounts of our Common
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Stock in the public market could adversely affect the market price of our Common
Stock. Immediately prior to the distribution of the Rights, there will be
approximately 1,766,868 shares of our Common Stock freely tradeable in the
public market without restriction. In addition, up to 4,627,406 Shares may be
issued in this Rights Offering, which Shares will be freely tradeable
upon issuance (with the exception of those issued to affiliates).
Shares Eligible for Future Sale. Of the 2,282,368 shares of issued and
outstanding Common Stock, 557,787 shares have not been registered under the
federal securities laws ("Restricted Shares"), and may only be sold in the
public market and without the benefit of registration to the extent permitted
under Rule 144 under the general rules and regulations of the Securities Act of
1933, as amended ("Rule 144"). Rule 144 provides that a person holding
restricted securities for a period of one year may sell in brokerage
transactions an amount equal to the greater of 1% of our outstanding Common
Stock every three months or the average weekly trading volume, if any, during
the four calendar weeks preceding the sale. A person who is a non-affiliate of
us and who has restricted securities for over three years is not subject to the
aforesaid volume limitation as long as the other conditions of the rule are met.
As of the date hereof, approximately 557,787 Restricted Shares are eligible to
be presently sold under Rule 144. In addition, 31,335 shares of our Series D
Preferred Stock are issued and outstanding. Upon conversion of such shares of
Series D Preferred Stock into shares of Common Stock, such additional shares of
Common Stock will be eligible for resale under Rule 144(k).
No Dividends. We have not paid cash dividends on our Common Stock and
we do not expect to pay any dividends in the foreseeable future.
USE OF PROCEEDS
The net proceeds available to us from the Rights Offering will be
approximately $[ .00]. A director and principal stockholder and two of his
affiliated companies have committed to exercise all of their respective Basic
Subscription Rights, and as a result of their commitment, we will receive a
minimum of $[ ] from this Rights Offering. There is no assurance as to the
amount of additional proceeds, if any, that we will receive from the exercise of
Basic Subscription Rights and/or Oversubscription Rights by any other
stockholder. The total maximum proceeds, if all stockholders participate in the
Rights Offering are estimated to be $[__________], after estimated expenses of
$[__________] (assuming that all Shares offered hereby are subscribed for). The
total minimum proceeds of this Rights Offering (assuming that only the Affiliate
Participants purchase a total of [__________] Shares for an aggregate purchase
price of $[__________] pursuant to their commitments) are estimated to be
$[__________], after estimated expenses of $[__________].
We intend to use the proceeds from the Rights Offering for general
working capital purposes, including the internal carrying of accounts
receivable, without the need to use lines of credit, regular operating expenses,
and to establish an available cash fund for the development or acquisition of
new and additional product lines or synergistic businesses. We are not currently
engaged in, nor are we currently contemplating, potential acquisitions.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock
and do not anticipate paying cash dividends on our capital stock in the
foreseeable future.
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THE RIGHTS OFFERING
General
You will receive two subscription rights (the "Rights") for each share
of our Common Stock or Series D Convertible Preferred Stock that you hold of
record at the close of business on January 11, 1999 (the "Rights Record Date").
These Rights will be distributed to you as of the close of business on the
Rights Record Date, for no consideration. For each Right you receive , you may
purchase one share of Common Stock at the Subscription Price (the "Basic
Subscription Right"). See "The Rights Offering--Basic Subscription Right".
In the event that you exercise all of your Rights under the Basic
Subscription Right, you will also be eligible for Oversubscription Rights,
entitling you to purchase, at the Subscription Price, one time the number Shares
you were entitled to subscribe for under your Basic Subscription Right, as more
fully described below. However, the maximum number of Shares which may be
purchased pursuant to the exercise of all Basic Subscription Rights and
Oversubscription Rights by all stockholders may not exceed 4,627,406.
Rights will be evidenced by non-transferable rights certificates ("Rights
Certificates"), which are expected to be mailed within five business days
following the Effective Date.
The Offering Period
The Rights will be exercisable during the period (the "Rights Offering
Period") commencing upon the date of mailing of the Rights Certificates (which
is expected to be on or about _______, 1999) and expiring at 5:00 p.m., New York
time, on _______, 1999, unless we extend the time period as provided below (the
"Rights Expiration Date"). Unless exercised, the Rights will automatically
terminate on the Rights Expiration Date and thereafter the unexercised Rights
and all Rights Certificates relating thereto will be void and have no value.
We may extend the Rights Expiration Date in our sole discretion for
all stockholders for a period of up to 30 days by giving notice of such
extension to the Rights Agent at any time prior to 5:00 p.m. on the then
existing Rights Expiration Date and issuing a press release to that effect by no
later than 10:00 a.m. on the following business day.
Basic Subscription Right
You are entitled to two Rights for each share of our Common Stock, or
Series D Convertible Preferred Stock, held by you on the Rights Record Date.
Each Right will entitle you to subscribe for, at a price of $[ ] per share (the
"Subscription Price"), one share of Common Stock (the "Basic Subscription
Rights"). To exercise a Basic Subscription Right, the Rights Certificate must be
properly completed and received by the Rights Agent, in accordance with the
procedure described below under "Method of Exercising Rights". Payment of the
Subscription Price must accompany the Rights Certificate.
Oversubscription Right
If you hold Basic Subscription Rights and fully exercise such Right or
Rights, you will also be entitled to oversubscription rights which shall
entitle you to purchase at the Subscription Price, a number of unsubscribed
Shares up to one time the number of Shares which you are entitled to subscribe
for pursuant to such Basic Subscription Rights (the "Oversubscription
Rights"). There will be no Shares allocated under the Oversubscription
Rights until we have filled all subscriptions pursuant to the exercise of Basic
Subscription Rights. We may accept or reject oversubscriptions at our sole
discretion. All subscriptions pursuant to the exercise of
Oversubscription Rights will be fulfilled out of the Shares not required to
satisfy the Basic Subscription Rights which are exercised. If the Shares so
available are not sufficient to satisfy all subscriptions pursuant to the
Oversubscription Rights, the available Shares will be allotted pro rata among
the stockholders who exercised the Oversubscription Rights, based on the number
of Shares for which each such stockholder oversubscribed.
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To exercise an Oversubscription Right, you must also properly complete the
portion of the exercise form on the reverse side of the Rights Certificate
relating to the Oversubscription Rights simultaneously with completion of the
portion of the form applicable to exercise of Basic Subscription Rights. Payment
of the Subscription Price for such additional Shares must also accompany the
Rights Certificate. HOWEVER, PAYMENT FOR SHARES PURCHASED UPON EXERCISE OF THE
BASIC SUBSCRIPTION RIGHTS AND PAYMENT FOR SHARES PURCHASED PURSUANT TO THE
OVERSUBSCRIPTION RIGHTS MUST BE MADE BY SEPARATE CHECK, SUBJECT TO COLLECTION,
BANK CHECK, OR WIRE TRANSFER PAYABLE TO THE ORDER OF "HEALTHY PLANET PRODUCTS,
INC," AS DESCRIBED BELOW UNDER "METHOD OF EXERCISING RIGHTS." The Rights
Agent will refund, without interest, payments to the extent that the exercise
of any Oversubscription Right is not accepted due to proration. Any such refund
will be made as soon as practicable after the Rights Expiration Date.
Non-Transferability of Rights
Only you may exercise the Basic Subscription Rights and/or the
Oversubscription Rights. You may not assign or transfer the Basic Subscription
Rights or the Oversubscription Rights.
Method of Offering
The offering described in this Prospectus will be made directly by us.
No underwriters, brokers, dealers or other agents have been engaged to
participate in this offering or to solicit any exercise of the Rights or sales
of the Shares. Therefore, we will pay no commission, finder's fees or other
remuneration to any person in connection with any sales of the Shares.
Rights Agent
The Rights Agent is American Stock Transfer and Trust Company, New
York, New York. American Stock Transfer and Trust Company is also the transfer
agent for the Common Stock.
Method of Exercising Rights
You must exercise a Right by completing and executing the Rights
Certificate and mailing or delivering the Rights Certificate together with the
Subscription Price for Shares subscribed for pursuant to the exercise of Basic
Subscription Rights and, if desired, Oversubscription Rights, to the Rights
Agent, so as to arrive no later than 5:00 p.m. New York time, on the Rights
Expiration Date. All subscriptions received after the Rights Expiration Date
will not be honored. Payment for subscriptions pursuant to the exercise of Basic
Subscription Rights (but not Oversubscription Rights) must be made in United
States dollars by check, subject to collection, bank check or money order
payable to the order of "Healthy Planet Products, Inc." Payment may be effected
by wire transfer in accordance with wire instructions given by the Rights Agent
to the Company prior to the effective date of this Registration Statement. Pay-
ment for subscriptions pursuant to the exercise of Oversubscription Rights must
be made in United States dollars by check, subject to collection, bank check or
money order payable to the order of "American Stock Transfer & Trust Co.--Rights
Agent". Payment may be effected by wire transfer in accordance with wire
instructions given by the Rights Agent to the Company prior to the effective
date of this Registration Statement. PAYMENT FOR SHARES PURCHASED UPON EXERCISE
OF THE BASIC SUBSCRIPTION RIGHTS AND PAYMENT FOR SHARES PURCHASED PURSUANT TO
THE OVERSUBSCRIPTION RIGHTS MUST BE MADE BY SEPARATE CHECKS, SUBJECT TO
COLLECTION, BANK CHECK OR MONEY ORDER PAYABLE TO THE ORDER OF "HEALTHY PLANET
PRODUCTS, INC." PAYMENTS MAY BE EFFECTED THROUGH WIRE TRANSFER IN ACCORDANCE
WITH WIRE INSTRUCTIONS GIVEN BY THE RIGHTS AGENT TO THE COMPANY PRIOR TO THE
EFFECTIVE DATE OF THIS REGISTRATION STATEMENT, AS DESCRIBED ABOVE. Subscriptions
must be only for full Shares. Once you have exercised a Basic Subscription
Right or an Oversubscription Right, the exercise is irrevocable. The method
of delivery of the Right Certificate and check or checks for the Subscription
Price is at the election and risk of the person subscribing. Insured
registered mail, return receipt requested, is recommended if the mails are used.
Rights Certificates and the Subscription Price may be mailed or delivered to:
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<PAGE> 15
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10007
Attn: Securities Transfer Department
(212) 936-5100
The instructions accompanying the Rights Certificate should be read
carefully and followed in detail. DO NOT SEND RIGHTS CERTIFICATES OR
PAYMENTS DIRECTLY TO US AT THE COMPANY.
The Rights Agent will hold in escrow amounts paid in respect of the
exercise of Oversubscription Rights until this offering is terminated and the
number of available Shares is determined. As soon as practicable after the
Rights Expiration Date, the Rights Agent will refund without interest any
subscriptions or oversubscriptions not accepted. We are not required to issue
any certificates or refunds to a subscriber until the check or checks of such
subscriber have cleared and the funds have been collected. All questions as to
the validity, form, eligibility, including time of receipt, and acceptance of
any subscription or oversubscription, will be determined by us, in our sole
discretion. Our determination will be final and binding. We reserve the absolute
right to reject any subscription, if such subscription is not in proper form or
if the acceptance thereof or the issuance of Shares pursuant thereto could be
deemed unlawful or is otherwise not permitted under the terms of this offering.
We also reserve the right to waive any defect with regard to any particular
subscription. Both the Rights Agent and the Company are not and shall not be
under any duty to give notification of any defects or irregularities in your
subscriptions, nor shall we or the Rights Agent incur any liability for failure
to give such notification.
DELIVERY OF CERTIFICATES
Certificates for Shares subscribed for pursuant to the Basic Subscription
Rights will be delivered as soon as practicable after receipt by the Rights
Agent of your duly completed and exercised Rights Certificate and payment in
full of the Subscription Price for the Shares pursuant to the Basic Subscription
Rights. As soon as practicable after the Rights Expiration Date, we will
determine the number of Shares, if any, which have been purchased by holders of
Rights who have exercised their Oversubscription Rights, and certificates
representing the Shares of Common Stock so purchased will be sent to the
purchasers. If it is necessary to allocate any available Shares among those
Rights holders exercising Oversubscription Rights, overpayments for Shares not
issued to such holders will be promptly refunded, without interest.
DETERMINATION OF SUBSCRIPTION PRICE
We have determined the Subscription Price in consultation with the
Affiliate Participants, without regard to our present net worth, book value or
any other financial measure. Consideration was given to recent closing sale and
bid and asked prices of the Common Stock on AMEX prior to the Rights Record
Date, the general condition of the securities markets and our financial
condition. The closing price of the Common Stock as reported on AMEX on December
30, 1998, the last business day prior to the date of this Prospectus on which
the Common Stock was traded, was $0.625 per share. There can be no assurance
that the Common Stock will trade at prices in excess of the Subscription Price
at any time after the date of this Prospectus.
RIGHTS PARTICIPATION GUARANTEE BY CERTAIN AFFILIATES
Pursuant to a Subscription Commitment Agreement dated as of _______, 1999,
John V. Winfield, InterGroup and Santa Fe (the "Affiliate Participants") have
agreed with us that they will exercise all or a portion of their respective
Basic Subscription Rights.
In consideration of each Affiliate Participants' commitment to exercise all
of their respective Basic Subscription Rights, we have agreed to issue to the
Affiliate Participants warrants to purchase an aggregate of 250,000
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shares of Common Stock (the "Rights Warrants"). The Rights Warrants are to be
allocated among the Affiliate Participants, pro rata, according to their
ownership percentage prior to this Rights Offering, as follows: 90,399 to Mr.
Winfield, 148,652 to InterGroup and 10,949 to Santa Fe. The Rights Warrants are
exercisable at a price to be determined by the Company, provided however, that
such price shall not be less than 110% of the Subscription Price of the Rights.
The delivery of the Rights Warrants to the Affiliate Participants is subject to
the filing of the Registration Statement with the Commission, the delivery of a
definitive prospectus, and the payment by each Affiliate Participant of the
total Subscription Price for their respective Basic Subscription Rights.
As a result of the Affiliate Participants' commitment, at the conclusion of
the Rights Offering, and assuming that no other stockholders participate in the
Rights Offering, Mr. Winfield, InterGroup and Santa Fe will own a total of
502,800, 826,800 and 60,900 shares of our Common Stock, respectively. In the
aggregate they will own 1,390,500 shares of Common Stock or 42.9% of the
Company, or 2,030,329 shares of our Common Stock or 52.3% of the Company, when
giving effect to (i) certain anti-dilution provisions contained in Common Stock
Purchase Warrants owned by Mr. Winfield and InterGroup, (ii) an aggregate of
250,000 Rights Warrants and (iii) certain Director option grants. See "Principal
Stockholders."
STATE AND FOREIGN SECURITIES LAWS
The Rights may not be exercised by any person in any jurisdiction in which
such would be unlawful. Neither this Prospectus nor any Rights Certificate shall
constitute an offer to sell or solicitation of an offer to purchase any of the
Shares. We believe that, in each of the United States and the District of
Columbia and Puerto Rico, either a registration exemption is available or any
action required by us has been taken to permit exercises of the Rights by
stockholders in those jurisdictions. No action has been taken in any
jurisdiction outside the United States and Puerto Rico to permit offers and
sales of the Shares. Consequently, we may reject subscriptions pursuant to the
exercise of Rights by any stockholder outside the United States unless we
determine that we may lawfully accept such subscriptions. We may also reject
subscriptions from stockholders in jurisdictions within the United States if we
should later determine that we may not lawfully issue Shares to such
stockholders, even if it could do so by qualifying the Shares for sale or by
taking other actions in such jurisdictions.
RIGHTS OF SUBSCRIBERS
As Subscribers, you will have no rights as stockholders of the Company with
respect to the Shares until stock certificates representing Shares for which you
have subscribed are issued to you. If you subscribe, you will not have any right
to revoke your subscriptions after delivery of the subscriptions to the Rights
Agent.
FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain federal income tax considerations
applicable to our stockholders upon the distribution of the Rights (referred to
in this section as the "Distribution").
This summary is based upon laws, regulations, rulings, and decisions now in
effect, all of which are subject to change. This summary does not discuss all
aspects of federal income taxation that may be relevant to a particular investor
or to certain types of investors subject to special treatment under the federal
income tax laws (such as life insurance companies and foreign taxpayers) and
does not discuss any aspects of state, local or foreign tax laws.
We have been advised that under the Internal Revenue Code of 1986, the
Distribution will result in no income to our stockholders for federal income
tax purposes. No ruling has been or will be requested from the Internal Revenue
Service and no assurances can be given that the Internal Revenue Service will
not successfully challenge such assumptions.
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Basis of Rights. If the Rights are exercised, the basis of the Rights will
be zero, unless the fair market value of the Rights on the date of Distribution
is 15% or more of the fair market value (on the date of Distribution) of the
Common Stock held by the stockholder on the Rights Record Date or an election is
made by a stockholder to allocate part of the basis of such stock to the Rights.
In either such event, a stockholder's basis in the Common Stock will be
allocated between such Common Stock and the Rights in proportion to the fair
market values of each on the date of Distribution.
Sale of Shares. A Rights holder who sells Shares acquired by exercise of
the Rights will recognize gain or loss measured by the difference between the
net proceeds from the sale and the cost basis of the Shares sold. The cost basis
of the Shares received by a stockholder upon the exercise of the Rights will be
equal to the sum of the Subscription Price and the Right holder's basis in such
Rights, if any. The holding period for any Shares acquired through the exercise
of the Rights will begin on the date the Rights are exercised.
Lapse of Rights. Stockholders who allow the Rights distributed to them to
lapse will not recognize any gain or loss, and no adjustment will be made in the
basis of the Common Stock owned by such Rights holder.
THE FOREGOING SUMMARY IS INCLUDED FOR GENERAL INFORMATION ONLY. BECAUSE THE
TAX CONSEQUENCES OF THE RECEIPT, EXERCISE, OR EXPIRATION OF RIGHTS OR THE SALE
OF SHARES ACQUIRED PURSUANT TO THE EXERCISE OF RIGHTS MAY VARY FROM HOLDER TO
HOLDER, EACH HOLDER OF RIGHTS IS ENCOURAGED TO CONSULT HIS OR HER OWN PERSONAL
TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF THIS OFFERING, INCLUDING THE
APPLICATION AND EFFECT OF STATE AND LOCAL INCOME AND OTHER TAX LAWS.
PRICE RANGE OF OUR COMMON STOCK
Our Common Stock is traded on the AMEX under the symbol "HPP". The
following table sets forth for the calendar quarters indicated the high and low
closing sales prices of the Common Stock:
1997 HIGH LOW
1st Quarter 4 1/2 3 3/4
2nd Quarter 4 1/2 3 7/16
3rd Quarter 4 1/16 3 3/8
4th Quarter 4 3/8 3 1/2
1998 HIGH LOW
1st Quarter 3 3/4 2 7/16
2nd Quarter 2 7/16 1 5/16
3rd Quarter 1 1/2 3/4
4th Quarter (through 1 1/2
12/23/98
For the most recent closing price of our Common Stock see the cover page of
this Prospectus. At the Rights Record Date, there were 128 record holders of our
Common Stock. Such number of record owners was determined from our shareholder
records, and does not include beneficial owners of our Common Stock whose shares
are held in the names of various security holders, dealers and clearing
agencies. We believe
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<PAGE> 18
that the number of beneficial owners of our Common Stock held by others as or in
nominee names to be approximately 1,500 in number.
DESCRIPTION OF OUR CAPITAL STOCK
The following general summary of our capital stock is qualified in its
entirety by reference to our Restated Certificate of Incorporation, a copy of
which is on file with the Commission. See "Where You Can Find More Information."
We are authorized to issue 12,000,000 shares of Common Stock, $.01 par
value, and 750,000 shares of Preferred Stock, $.10 par value. As of the date
hereof, we have 2,282,368 shares of Common Stock issued and outstanding and
31,335 issued and outstanding shares of Series D Convertible Preferred Stock
(presently convertible into 31,335 shares of Common Stock).
COMMON STOCK
The holders of shares of our Common Stock are entitled to dividends when
and as declared by the Board of Directors from fund legally available therefor,
and, upon liquidation are entitled to share pro rata in any distribution to
stockholders. Such stockholders have one non-cumulative vote for each share
held. There are no pre-emptive, conversion or redemption privileges, nor sinking
fund provisions with respect to the Common Stock.
PREFERRED STOCK
We have designated 371,009 shares of Preferred stock as Series D
Convertible Preferred Stock, of which 31,335 are issued and outstanding. The
holders of the Series D Convertible Preferred Stock are not entitled to receive
dividends. The Series D Convertible Preferred Stock is redeemable at the option
of the Company at its liquidation preference, are entitled to a preference in
liquidation of $5.11 per share and vote as a single class with the Common Stock
on an as converted basis on all matters on which the holders of the Common Stock
are entitled to vote. Each share of Series D Convertible Preferred Stock is
convertible into one share of Common Stock, subject to adjustment.
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<PAGE> 19
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information, as of the Rights Record
Date, with respect to the beneficial ownership of Common Stock by (i) each
person known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) all directors of the Company individually and (iii)
all executive officers and directors of the Company as a group:
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Amount of and Nature
Ownership and Percentage Beneficial Ownership and
Amount of and Nature Beneficial Upon Exercise of Percentage in event all
Name and Address of Ownership and Percentage Before Minimum Number Basic Rights are
Beneficial Owner Offering of Basic Rights(a) Exercised (b)
- ---------------- -------------------------------------- ------------------ -------------
Number of Shares Percentage #Shares % # Shares %
<S> <C> <C> <C> <C> <C> <C>
Bruce A. Wilson 155,600(1)(2) 6.4% 155,600 4.7% 261,000 3.7%
1700 Corporate Circle
Petaluma, CA 94954
John V. Winfield 773,500(3)(4) 29.5% 2,030,329 52.3% 2,238,654 28.7%
2121 Avenue of the Stars
Los Angeles, CA 90067
The InterGroup Corporation 445,900(4)(5) 18.1% 1,237,215 34.5% 1,341,378 18.1%
2121 Avenue of the Stars
Los Angeles, CA 90067
Starr Securities,Inc 191,048(6) 8.0% 191,048 5.1% 453,144 6.5%
19 Rector Street
New York, NY 10006
Paul Bluhdorn 181,256(7) 7.8% 181,256 5.6% 543,768 7.8%
P.O. Box 7854
Burbank, CA 91510
Mark S. Siegel 70,062(8) 3.0% 70,062 2.2% 210,186 3.0%
P.O. Box 7854
Burbank, CA 91510
Yvette Bluhdorn 71,738(8)(9) 3.1% 71,738 2.2% 215,214 3.1%
P.O. Box 7854
Burbank, CA 91510
Estate of Ludwig Jesselson 182,071(10)(11) 7.9% 182,071 5.6% 546,213 7.9%
1301 Avenue of the Americas
New York, NY 10019
Michael Jesselson 92,062(10)(11)(12) 4.0% 92,062 2.8% 276,186 4.0%
1301 Avenue of the Americas
New York, NY 10019
Ricky Williams 55,000(13) 2.3% 55,000 1.7% 55,000 0.8%
1700 Corporate Circle
Petaluma, CA 94954
</TABLE>
-16-
<PAGE> 20
<TABLE>
<CAPTION>
Amount and Nature
Beneficial Amount of and Nature
Ownership and Percentage Beneficial Ownership and
Amount of and Nature Beneficial Upon Exercise of Percentage in event all
Name and Address of Ownership and Percentage Before Minimum Number Basic Rights are
Beneficial Owner Offering of Basic Rights(a) Exercised (b)
- ---------------- -------------------------------------- ------------------------- -------------------------
Number of Shares Percentage #Shares % # Shares %
<S> <C> <C> <C> <C> <C> <C>
M. Scott Foster 102,500(14) 4.2% 102,500 3.1% 102,500 1.5%
1700 Corporate Circle
Petaluma, CA 94954
Daniel R. Coleman 15,000(15) 0.6% 15,000 0.5% 15,000 0.2%
500 108th Avenue, NE
Bellevue, WA 98004
Michael G. Zybala 5,000(16) 0.2% 5,000 0.2% 5,000 0.1%
11315 Rancho Bernardo Road,
Suite 129
San Diego, CA 92127
William J. Nance 5,000(16) 0.2% 5,000 0.2% 5,000 0.1%
ABC Entertainment Center
2040 Avenue of the Stars
Los Angeles, CA 90067
Robert W. Sweitzer, Ph.D 5,000(16) 0.2% 5,000 0.2% 5,000 0.1%
Visiting Professor of Mktg
The Claremont Graduate School
The Peter F. Drucker
Management Center
925 N. Dartmouth Avenue
Claremont, CA 91711
All Officers and Directors 1,111,600 38.3% 2,373,429 56.9% [2,687,954] 33.3%s
a Group (6 persons in
number)(1)(2)(3)(14)
(15)(16)
</TABLE>
(a) The amount of beneficial ownership gives effect to the guarantee by John V.
Winfield, The InterGroup Corporation and Santa Fe Financial Corporation
(the "Affiliate Participants") to the Company to exercise all of their
Basic Subscription Rights. The amount of beneficial ownership assumes no
oversubscription and no participation in the Rights Offering by other
Stockholders. The amount of beneficial ownership includes (i) the number of
shares of Common Stock owned prior to the Rights Offering, (ii) additional
shares issuable on the exercise of the Basic Subscription Rights, (iii) all
vested and presently exercisable options, (iv) the adjustment to both price
and number of Common Stock Purchase Warrants owned by Mr. Winfield and The
InterGroup Corporation as a result of anti-dilution provisions contained in
such warrants, and (v) the issuance of an aggregate of 250,000 new warrants
in connection with this Rights Offering.
(b) The amount of beneficial ownership assumes 100% participation in the Rights
by all stockholders, including the Affiliate Participants and includes, as
in the previous column,(i) the number of shares of Common Stock owned prior
to the Rights Offering, (ii) additional shares issuable on the exercise of
the Basic Subscription Rights, (iii) all vested and presently exercisable
options, (iv) the adjustment to both price and number of Common Stock
Purchase Warrants owned by Mr. Winfield and The InterGroup Corporation as a
result of anti-dilution provisions contained in such warrants, and (v) the
issuance of an aggregate of 250,000 new warrants in connection with this
Rights Offering.
-17-
<PAGE> 21
(1) Includes 102,500 vested and presently exercisable options.
(2) Includes 53,100 restricted shares subject to vesting at the rate of 4,000
shares per year on December 31st in each year.
(3) Based upon information contained in a Form 4 dated December 24, 1998, on
behalf of John V. Winfield, The InterGroup Corporation ("InterGroup") and
Santa Fe Financial Corporation ("Santa Fe") (the "Winfield Form 4").
Includes (i) 167,600 shares of Common Stock and Common Stock Purchase
Warrants to purchase 150,000 shares of Common Stock owned by John V.
Winfield, (ii) 275,600 shares of Common stock and Common Stock Purchase
Warrants to purchase 150,000 (subject to adjustment) shares of Common Stock
owned by InterGroup and as to which Mr. Winfield has shared voting and
dispositive power, and (iii) 20,300 shares of Common Stock owned by Santa
Fe and as to which Mr. Winfield has shared voting and dispositive power.
Also includes options to purchase 10,000 shares of Common Stock granted to
Mr. Winfield upon his election to the Board of Directors pursuant to our
Non-Employee Director Plan. Mr. Winfield is the Chairman and CEO of both
Santa Fe and InterGroup.
(4) As of November 30, 1998, Mr. Winfield owned 44.0% of InterGroup, per a
Proxy dated December 11, 1998. As of December 21, 1998, InterGroup controls
51.7% of Santa Fe, owning 565,595 shares and has an additional 63,600
convertible voting preferred shares. Santa Fe has 1,248,430 shares of its
common stock outstanding and 63,600 shares of its convertible preferred
outstanding. Mr. Winfield owns 49,400 shares of Santa Fe to which he gave a
proxy to InterGroup for all such shares. Mr. Winfield is the Chairman and
CEO of both Santa Fe Financial Corporation and The InterGroup Corporation.
(5) Based upon information contained in the Winfield Form 4, and includes
275,600 shares of Common Stock and 150,000 Common Stock Purchase Warrants
owned by InterGroup.
(6) Based upon (i) information contained in an amendment to a Schedule 13D
dated March 3, 1992 filed on behalf of Starr Securities, Inc. ("Starr") and
its stockholders as members of a group (the "Starr 13D") and (ii) records
of the Company indicating a transfer by Starr of 12,500 Warrants included
in the Starr 13D. Includes 131,048 shares of Common Stock owned of record
by Starr. Includes 60,000 Warrants which vested and became exercisable on
November 4, 1996. According to the Starr 13D, Starr is a registered
broker-dealer and the share ownership reported therein does not include
shares held by Starr in its trading account.
(7) Based on information contained in an amendment to a Schedule 13D dated
January 27, 1993 (the "Bluhdorn 13D"), filed on behalf of Paul Bluhdorn,
Yvette Bluhdorn and Mark Siegel. Includes 31,250 shares of our Common stock
owned by Mr. Bluhdorn, and 150,006 shares of Common Stock issued in
February, 1998 upon conversion of 150,006 shares of Series D Preferred
Stock owned by Mr. Bluhdorn. Does not include shares of Common Stock owned
by Ms. Bluhdorn or Mr. Siegel, as to which shares of Common Stock Mr.
Bluhdorn disclaims beneficial ownership.
(8) Based on information contained in the Bluhdorn 13D and the corporate
records of the Company.
(9) Based on information contained in the Bluhdorn 13D and the corporate
records of the Company. Does not include shares of Common Stock owned by
Mr. Bluhdorn and Mr. Siegel as to which shares of Common Stock Mrs.
Bluhdorn disclaims beneficial ownership.
(10) Ludwig Jesselson died on April 3, 1993. Mr. Michael Jesselson is one of
four Executors of the estate of Mr. Jesselson. As Executor, Mr. Michael
Jesselson retains the authority with regard to the disposition of the
shares.
(11) Based on information contained in an amendment to a Schedule 13D dated
September 21, 1995 (the "Jesselson 13D") on behalf of Ludwig Jesselson,
Michael Jesselson, and the Estate of Ludwig Jesselson. Includes 175,480
shares of our Common Stock owned by Ludwig Jesselson and 6,583 shares of
the Common Stock owned by a trust created under the will of Ludwig
Jesselson, of which Michael Jesselson is the former trustee. Does not
include 92,062 shares of Common Stock owned by Michael Jesselson, as to
which shares of Common Stock Ludwig Jesselson disclaims beneficial
ownership.
(12) Based on information contained in the Jesselson 13D. Does not include
229,821 shares of Common Stock beneficially owned by Ludwig Jesselson, as
to which shares of Common Stock Michael Jesselson had disclaimed beneficial
-18-
<PAGE> 22
ownership. To the extent Michael Jesselson may be a beneficiary under the
Estate of Ludwig Jesselson, Michael Jesselson may be considered an indirect
beneficial owner of these shares.
(13) Includes 55,000 vested and presently exercisable options.
(14) Includes 102,500 vested and presently exercisable options.
(15) Includes 15,000 vested and presently exercisable options.
(16) Includes 5,000 vested and presently exercisable options.
EXPERTS
The balance sheets of the Company for each of the years ended December 31,
1997 and 1996 and the statements of operations, stockholders' equity and cash
flows for the two years ended December 31, 1997, incorporated by reference in
this Prospectus, have been audited by Moss Adams LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
Any financial statements and schedules hereafter incorporated in this
Prospectus that have been audited and are the subject of a report by independent
accountants will be so incorporated in reliance upon such reports and upon the
authority of such firm as experts in accounting and auditing to the extent
covered by consents filed with the Commission.
LEGAL MATTERS
The legality of the Shares to which this Prospectus relates has been passed
upon by Camhy Karlinsky & Stein LLP, 1740 Broadway, New York, New York 10019.
ADDITIONAL INFORMATION
No person has been authorized to give any information or to make any
representation not contained in this Prospectus and, if given or made, such
information or representation must not be relied upon as having been authorized.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the registered securities to which it
relates or an offer to sell or a solicitation of an offer to buy to any person
in any jurisdiction where such offer would be unlawful.
-19-
<PAGE> 23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
<TABLE>
<S> <C>
Filing Fee -- Securities and Exchange Commission................. $ 1,000
Subscription Agent Fees and Expenses............................. 12,500
Accounting Fees and Expenses..................................... 10,000
Legal Fees and Expenses.......................................... 40,000
Printing and Engraving Expenses.................................. 20,000
Listing Fee of American Stock Exchange........................... 17,500
Consulting and Miscellaneous..................................... 79,000
Total Expenses................................. $180,000
</TABLE>
- ----------
* All expenses other than the Securities and Exchange Commission filing fee
are estimated.
All of the fees and other expenses of the Registration Statement will be
borne by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our By-Laws require the Company to indemnify, to the full extent authorized
by Section 145 of the Delaware Corporation Law, any person with respect to any
civil, criminal, administrative or investigative action or proceeding instituted
or threatened by reason of the fact that he, his testator or intestate is or was
a director, officer or employee of the Company or any predecessor of the Company
is or was serving at the request of the Company or a predecessor of the Company
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise.
Section 145(a) of the General Corporation Law of the State of Delaware
provides that a Delaware corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, Partnership' joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no cause to believe their conduct was
unlawful.
Section 145(b) provides that a Delaware corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if the person
acted under similar standards set forth above, except that no indemnification
may be made in respect to any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the court in which such action or suit was brought shall determine
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to be indemnified for
such expenses that the court shall deem proper.
Section 145 further provides that to the extent a present or former
director or officer of a corporation has been successful in the defense of any
action, suit or proceeding referred to in the previous two paragraphs, or in the
defense of any claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith; that indemnification provided for by
Section 145 shall not be deemed exclusive of any other
II-1
<PAGE> 24
rights to which the indemnified Party may be entitled; and that the corporation
may purchase and maintain insurance on behalf of a director or officer of the
corporation against any liability asserted against him or incurred by him in any
such capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liabilities under
such Section 145.
Section 102(b)(7) provides that a corporation in its original certificate
of incorporation or an amendment thereto validly approved by stockholders may
eliminate or limit personal liability of members of its board of directors for
monetary damages for breach of a director's fiduciary duty. However, no such
provision may eliminate or limit the liability of a director for breaching his
duty of loyalty, failing to act in good faith, engaging in intentional
misconduct or knowingly violating a law, paying a dividend or approving a stock
repurchase which was illegal, or obtaining an improper personal benefit. A
provision of this type has no effect on the availability of equitable remedies,
such as injunction or rescission, for breach of fiduciary duty.
The Company also maintains directors' and officers' liability insurance
covering certain liabilities incurred by the directors and officers of the
Company in connection with the performance of their duties.
II-2
<PAGE> 25
EXHIBIT INDEX
The exhibits designated with an asterisk (*) have previously been filed
with the Commission and, pursuant to 17 C.F.R. Secs. 201.24 and 240.12b-32, are
incorporated by reference to the document referenced in brackets following the
descriptions of such exhibits.
Exhibit
No. Description
4.3* Form of Common Stock Certificate [Exhibit 4 to Quarterly
Report on Form 10-Q for the quarterly period ended June 30,
1990]
4.4* Form of Rights, Designation and Preferences of Series D
Preferred Stock [Exhibit 4 to Current Report on Form 8-K
dated January 8, 1993]
5.1 Form of Opinion re: Legality of Camhy Karlinsky & Stein LLP
(executed opinion to be filed by amendment)
5.2 Consent of Camhy Karlinsky & Stein (included on signature
page of Exhibit 5.1)
23 Consent of Moss Adams LLP Independent Auditors
24 Power of Attorney (included on signature page).
99.1 Form of Subscription Commitment Agreement
99.2 Form of Warrant Agreement with Form of Warrant Certificate
attached thereto.
99.3 Form of Registration Rights Agreement
99.4 Form of Rights Agent Agreement with Form of Rights
Certificate and Subscription Form attached thereto.
99.5 Form of Letter to Stockholders as of Record Date
II-3
<PAGE> 26
ITEM 17. UNDERTAKINGS.
A. Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the registrants annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission Pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee", table in the effective
registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) For the purpose of determining any liability under the Securities
Act of 1933, as amended, each such post-effective amendment shall be deemed
to be a new registration statement relating to the, securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-4
<PAGE> 27
Pursuant to the requirements of the Securities Act of 1933, as amended this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
\s\ Bruce A. Wilson President, Chief Executive, Chief Operating and December 30, 1998
Bruce A. Wilson Chief Financial Officer
\s\ John V. Winfield Chairman of the Board December 30, 1998
John V. Winfield
\s\ Michael G. Zybala Director December 30, 1998
Michael G. Zybala
\s\Daniel R. Coleman Director December 30, 1998
Daniel R. Coleman
\s\ William J. Nance Director December 30, 1998
William J. Nance
/s/ Robert W. Sweitzer, Ph.D. Director December 30, 1998
Robert W. Sweitzer, Ph.D.
</TABLE>
II-5
<PAGE> 28
EXHIBIT INDEX
The exhibits designated with an asterisk (*) have previously been filed
with the Commission and, pursuant to 17 C.F.R. Secs. 201.24 and 240.12b-32, are
incorporated by reference to the document referenced in brackets following the
descriptions of such exhibits.
Exhibit
No. Description
4.3* Form of Common Stock Certificate [Exhibit 4 to Quarterly
Report on Form 10-Q for the quarterly period ended June 30,
1990]
4.4* Form of Rights, Designation and Preferences of Series D
Preferred Stock [Exhibit 4 to Current Report on Form 8-K
dated January 8, 1993]
5.1 Form of Opinion re: Legality of Camhy Karlinsky & Stein LLP
(executed opinion to be filed by amendment)
5.2 Consent of Camhy Karlinsky & Stein (included on signature
page of Exhibit 5.1)
23 Consent of Moss Adams LLP Independent Auditors
24 Power of Attorney (included on signature page).
99.1 Form of Subscription Commitment Agreement
99.2 Form of Warrant Agreement with Form of Warrant Certificate
attached thereto.
99.3 Form of Registration Rights Agreement
99.4 Form of Rights Agent Agreement with Form of Rights
Certificate and Subscription Form attached thereto.
99.5 Form of Letter to Stockholders as of Record Date
<PAGE> 1
FORM OF OPINION RE: LEGALITY EXHIBIT 5.1
______________, 1999
Board of Directors
Healthy Planet Products, Inc.
1700 Corporate Circle
Petaluma, CA 94956
Re: HEALTHY PLANET PRODUCTS, INC.
Gentlemen:
We have reviewed the Registration Statement to be filed by the Company
with the Securities and Exchange Commission, (the "Commission") on Form S-3
under the Securities Act of 1933, as amended (the "Act") relating to the Rights
Offering as filed with the Commission on December 31, 1998. Capitalized terms
used herein without definition have the meanings given to them in the
Registration Statement.
The Registration Statement has been filed for the purpose of registering
the following securities of the Company under the Act:
(1) 4,627,406 Rights for distribution to the holders of the common stock
and Series D Convertible Preferred Stock on the Rights Record Date; and
(2) 4,627,406 shares of common stock, $.01 par value, issuable by the
Company upon exercise of subscriptions pursuant to the Rights.
In rendering the opinions hereafter, we have examined the Restated
Articles of Incorporation, as amended, the By-laws, and, to the extent relevant
for purposes of these opinions, minutes of meetings and written consents of the
Boards of Directors and shareholders of the Company. We have also reviewed the
Rights Agent Agreement, and accompanying exhibits, the Subscription Commitment
Agreement, and the Warrant Agreement, and we have relied upon such other
documents and instruments as we have deemed appropriate including, with respect
to certain factual matters, the certificate of officers of the Company.
In conducting our examination, we have assumed, without investigation, the
genuineness of all signatures, the correctness of all certificates, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such copies, and the accuracy
and completeness of all records made available to us by the Company and public
officials. In addition, we have assumed, without investigation, the accuracy of
representations and statements as to factual matters made by officers and
employees of the Company and by public officials. In making our examination of
documents and instruments, we have assumed, without investigation, that each
party (other than the Company) to such documents and instruments has: (i) the
power and capacity to enter into and perform all its obligations under such
documents and instruments, (ii) duly authorized all requisite action with
respect to such documents and instruments, and (iii) duly executed and delivered
such documents and instruments.
In addition, the opinions hereinafter expressed are subject to the
following qualifications:
(1) Our opinions in paragraph 1 below as to the good standing of the
Company are based solely upon certificates from public officials.
(2) Our opinions below are limited to the matters expressly set forth in
this opinion letter, and no opinion is to be implied or may be inferred beyond
the matters expressly so stated.
(3) We disclaim any obligation to update this opinion letter for events
occurring after the date of this opinion letter.
(4) We are members of the Bar of the State of New York. Our opinions below
are limited to the effect of the laws of the State of New York, of the federal
laws of the United States and, solely with respect to matters governed by the
General Corporation Law of the State of Delaware, of the laws of the State of
Delaware.
<PAGE> 2
Based upon and subject to the foregoing, we are of the opinion that:
(1) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation
and has the corporate power and authority required to carry on its business as
it is currently being conducted and to own, lease and operate its properties.
(2) The Company is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, operations, properties or assets of the
Company.
(3) The Company has an authorized capitalization of 12,750,000
consisting of 12,000,000 shares of Common Stock, $.01 par value and 750,000
shares of Preferred Stock, $.10 par value.
(4) The Rights have been duly authorized and when issued and
distributed as described in the Registration Statement, will be validly issued.
(5) The Shares have been duly authorized and when issued, sold and
paid for upon the exercise if the Rights in accordance with the terms of the
Right, will be validly issued and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Opinions" in the Prospectus forming a part of the Registration Statement.
Very truly yours,
Camhy Karlinsky & Stein LLP
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
----------
The Board of Directors and Stockholders of
Healthy Planet Products, Inc.
We consent to the incorporation by reference in the registration statement of
Healthy Planet Products, Inc. on Form S-3 of our report dated February 6, 1998,
on our audits of the financial statements of Healthy Planet Products, Inc. as of
December 31, 1997 and 1996, and for each of the two fiscal years in the period
ended December 31, 1997.
/s/ Moss Adams LLP
Santa Rosa, California
December 30, 1998
<PAGE> 1
Exhibit 99.1
FORM OF
SUBSCRIPTION COMMITMENT AGREEMENT
This Subscription Commitment Agreement (the "Subscription Commitment
Agreement"), is being entered into as of this __ day of January, 1999, between
Healthy Planet Products, Inc. (the "Company"), John V. Winfield ("Winfield"),
Santa Fe Financial Corporation ("Santa Fe") and The InterGroup Corporation
("InterGroup," and collectively with Winfield, and Santa Fe, the "Affiliate
Participants").
W I T N E S S E T H
WHEREAS, subject to the filing of a Registration Statement on Form S-3,
or such other Form as may be applicable (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission"), the Company intends to
offer to its stockholders of record on the Rights Record Date (as defined
herein) (i) two rights (the "Rights") for each share of the Company's common
stock, or Series D Convertible Preferred Stock, (the "Basic Subscription Right")
held by such Stockholder on the Rights Record Date, each of which shall entitle
such stockholder to purchase one share of common stock, par value $.01 per
share (the "Shares"), at $[ ] per share (the "Subscription Price"); and (ii) an
oversubscription right, available to any stockholder exercising in full his or
her Basic Subscription Rights, (the "Oversubscription Right") entitling such
holder to purchase, at the Subscription Price, in the event that less than all
Shares are purchased through the exercise of all of the Basic Subscription
Rights, up to one time the number of such Shares subscribed to under his or her
Basic Subscription Rights (the "Rights Offering");
WHEREAS, the Company intends to file the Registration Statement with the
Commission, and one or more amendments thereto, with respect to the Rights and
the Shares to be issued pursuant to the Rights Offering;
WHEREAS, the Affiliate Participants desire to commit to exercise all of
their respective Basic Subscription Rights;
WHEREAS, in consideration for their commitment, the Company desires to
issue to the Affiliate Participants warrants to purchase 250,000 shares of
Common Stock; and
WHEREAS, the parties hereto desire to make certain agreements in
connection with the Rights Offering.
NOW, THEREFORE, in consideration of the premises, covenants, and
agreements contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
<PAGE> 2
1. Definitions. Capitalized terms used herein but not defined have the
meaning ascribed to them in the Registration Statement.
2. Subscription Commitment. The Affiliate Participants each own the number
of shares set forth opposite their name in Column I of Exhibit A attached
hereto, and each Affiliate Participant will receive the number of Rights set
forth opposite their name in Column II of Exhibit A, attached hereto.
Furthermore, each Affiliate Participant agrees, subject to the filing of the
Registration Statement with the Commission, and the delivery of a definitive
Prospectus to exercise all of his or its Rights set forth opposite their name
in Column II of Exhibit A attached hereto, for which each Affiliate Participant
will each pay the per share Subscription Price as set forth in the Rights
Offering definitive Prospectus.
3. Affiliate Participant Warrants. In consideration of each Affiliate
Participants' commitment to exercise all of their respective Basic Subscription
Rights as set forth in Paragraph 2 hereof, the Company hereby agrees to issue to
the Affiliate Participants, warrants to purchase an aggregate of 250,000 shares
of Common Stock (the "Warrants"). The form of the Warrant Agreement and the
Warrant Certificate shall be in the form attached as an exhibit to the
Registration Statement. The Warrants shall be allocated among the Affiliate
Participants pro rata according to their current percentage of Common Stock
ownership, as set forth opposite each Affiliate Participants name in Column III
of Exhibit A, attached hereto. The Warrants shall be exercisable at a price to
be determined by the Company, provided, however, that such price shall not be
less than 110% of the Subscription Price of the Rights. The delivery of the
Warrants to the Affiliate Participants is subject to the filing of the
Registration Statement with the Commission, the delivery of a definitive
prospectus, and the payment by each Affiliate Participant of the total
Subscription Price for their respective Basic Subscription Rights.
4. Miscellaneous.
(a) Further Actions. Each party hereto will execute such further documents
and instruments and take such further actions as may reasonably be requested by
the other party to effect the purposes of this Subscription Commitment
Agreement, including the reservation of the Shares issuable upon exercise of the
Rights, and the filing of an additional listing application with the American
Stock Exchange with respect to the shares underlying the Warrants.
(b) Modification. This Subscription Commitment Agreement may be amended,
supplemented or modified only upon a written instrument duly executed by or on
behalf of each party hereto.
<PAGE> 3
(c) Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested or by Federal Express, express mail or similar
overnight delivery or courier service or delivered (in person or by telecopy,
telex or similar telecommunications equipment) against receipt to the party to
which it is to be given at the address of such party set forth in the preamble
to this Agreement (or to such other address as the party shall have furnished in
writing in accordance with the provisions of this Section 5(b) with copies
(which copies shall not constitute notice) as follows:
If to the Company:
1700 Corporate Circle
Petaluma, California 94954
Att: President
with a copy to:
Camhy Karlinsky & Stein LLP
1740 Broadway, 16th Floor
New York, New York 10019
Attn: Charles. P. Axelrod, Esq.
If to John V. Winfield:
c/o The InterGroup Corporation
2121 Avenue of the Stars
Suite 2020
Los Angeles, CA 90067
If to The InterGroup Corporation:
2121 Avenue of the Stars - Suite 2020
Los Angeles, CA 90067
If to Santa Fe Financial Corporation:
2121 Avenue of the Stars - Suite 2020
Los Angeles, CA 90067
Any notice shall be addressed to the attention of the Chief Executive Officer.
Any notice or other communication given by certified mail shall be deemed given
three business days after certification thereof, except for a notice changing a
party's address which will be deemed given at the time of receipt thereof. Any
notice given by other means permitted by this Section 5(c) shall be deemed given
at the time of receipt hereof.
<PAGE> 4
(d) Waiver. Any waiver by any party of a breach of any term of this
Subscription Commitment Agreement shall not operate as or be construed to be a
waiver of any other breach of that term or of any breach of any other term of
this Subscription Commitment Agreement. The failure of a party to insist upon
strict adherence to any term of this Subscription Commitment Agreement on one or
more occasions will not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Subscription Commitment Agreement. Any waiver must be in writing.
(e) Binding Effect. The provisions of this Subscription Commitment
Agreement shall be binding upon and inure to the benefit of the Company and the
Affiliate Participants, and their respective successors and permitted assigns.
(f) Severability. If any provision of this Subscription Commitment
Agreement is hereafter held to be invalid, illegal or unenforceable for any
reason, such provisions shall be reformed to the maximum extent permitted so as
to preserve the parties' original intent, failing which, it shall be severed
from this Subscription Commitment Agreement , with the balance of this
Subscription Commitment Agreement continuing in full force and effect. If any
provision of this Subscription Commitment Agreement is so broad as to be
unenforceable, such provision shall be interpreted to be only so broad as is
enforceable. If any provision is inapplicable to any person or circumstance, it
shall nevertheless remain applicable to all other persons and circumstances.
(g) Assignability. This Subscription Commitment Agreement may not be
assigned by any party without the prior written consent of the other party to
the Agreement.
(h) Headings. The headings in this Subscription Commitment Agreement are
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Subscription Commitment Agreement.
(i) Counterparts; Governing Law; Jurisdiction. This Subscription
Commitment Agreement may be executed in any number of counterparts (and by
facsimile), each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. It shall be governed by, and
construed in accordance with, the laws of the State of California, without
giving effect to the rules governing the conflict of laws. Any action, suit or
proceeding arising out of, based on, or in connection with this Subscription
Commitment Agreement, or any document relating hereto or delivered in connection
with the transactions contemplated hereby, may be brought only and exclusively
in the Federal or State courts located in the State of California; and each
party covenants and agrees not to assert, by way of motion, as a defense or
otherwise, in any such action, suit or proceeding, any claim that it is not
subject personally to the jurisdiction of such court if it has been duly served
with process, that its property is exempt or immune from attachment or
execution,
<PAGE> 5
that the action, suit or proceeding is brought in an inconvenient forum, that
the venue of the action, suit or proceeding is improper, or that this
Subscription Commitment Agreement or the subject matter hereof may not be
enforced in or by such court.
<PAGE> 6
IN WITNESS WHEREOF, this Subscription Commitment Agreement has been
executed by duly authorized officers of each of the parties hereto as of the
date first above written.
HEALTHY PLANT PRODUCTS, INC.
By:__________________________________
Name:
Title:
JOHN V. WINFIELD
By:__________________________________
THE INTERGROUP CORPORATION
By:__________________________________
Name:
Title:
SANTA FE FINANCIAL CORPORATION
By:__________________________________
Name:
Title:
<PAGE> 7
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Name Number of Shares Number of Number of
Owned Rights/Number of Warrants
Rights Committed to
Exercise
- --------------------------------------------------------------------------
<S> <C> <C> <C>
John V. Winfield 167,600 335,200 90,399
The InterGroup 275,600 551,200 148,652
Corporation
Santa Fe Financial 20,300 40,600 10,949
Corporation
TOTAL: 463,500 927,000 250,000
</TABLE>
<PAGE> 1
Exhibit 99.2
FORM OF
WARRANT AGREEMENT
This WARRANT AGREEMENT (the "Agreement") dated January __, 1999, is
made by and between Healthy Planet Products, Inc., a Delaware corporation (the
"Company"), and _________________ (the "Warrantholder").
Pursuant to a Subscription Commitment Agreement between the Company
and the Warrantholder dated the date hereof, the Company has agreed to issue
warrants (the "Warrants") to purchase an aggregate of _________ shares ("Warrant
Shares") of Common Stock, par value $0.01 per share, of the Company (the "Common
Shares") to the Warrantholder at an exercise price of $[ .00] per share.
In consideration of the foregoing and for the purpose of defining the
terms and provisions of the Warrants and the respective rights and obligations
thereunder, the Company and the Warrantholder, for value received, hereby agree
as follows:
Section 1. Form of Warrant Certificates; Transferability of Warrants;
Legend on Warrant Shares.
1.1 Form of Warrant Certificate. The Warrants shall be evidenced by a
Warrant Certificate substantially as set forth in Appendix I attached hereto.
The Warrant Certificate shall be executed on behalf of the Company by its
Chairman of the Board, President or a Vice President, under its corporate seal
reproduced thereon, and attested by its Secretary or an Assistant Secretary. A
Warrant Certificate bearing the signature of an individual who was at any time
the proper officer of the Company shall bind the Company, notwithstanding that
such individual shall have ceased to hold such office prior to the delivery of
such Warrant Certificate or did not hold such office on the date of this
Agreement. Each Warrant Certificate shall be numbered and registered on the
books of the Company when it is issued, and shall be dated as of the date of
signature thereof by the Company either upon initial issuance or upon division,
exchange, substitution or transfer.
1.2 Transfer. The Warrant Certificate shall be transferable only on
the books of the Company maintained at its principal office in Petaluma,
California, or wherever its principal executive offices may then be located upon
delivery thereof duly endorsed by the Warrantholder or its duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment or authority to transfer. Upon any registration of transfer, the
Company shall execute and deliver a new Warrant Certificate to the person
entitled thereto. All transfers shall be made subject to the provisions of
Section 13 hereof. In the event the
<PAGE> 2
Warrants or any portion thereof is transferred, the subsequent holder thereof
shall have no greater rights than those afforded the Warrantholder hereunder.
1.3 Division of Warrants. Subject to all Federal and state securities
laws, a Warrant Certificate may be divided or combined, upon request to the
Company by the Warrantholder, into a Certificate or Certificates representing
the right to purchase the same aggregate number of Warrant Shares. Unless the
context indicates otherwise, the term "Warrantholder" shall include any
transferee or transferees of the Warrants pursuant to this subsection 1.3, and
the term "Warrants" shall include any and all Warrants outstanding pursuant to
this Agreement, including those evidenced by a Certificate or Certificates
issued upon division, exchange, substitution or transfer pursuant to this
Agreement.
1.4 Legend on Warrant Shares. Each Certificate for Warrant Shares
initially issued upon exercise of the Warrant, unless at the time of exercise
such Warrant Shares are registered under the Securities Act of 1933, as amended
(the "Securities Act"), shall bear the following legend:
"The Shares represented by this Certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and may not be
sold, exchanged, hypothecated or transferred in any manner in the absence
of such registration or an exemption therefrom. The Shares are subject to
the terms of a certain Warrant Agreement dated January __, 1999 with
Healthy Planet Products, Inc., pursuant to which they were issued."
Any Certificate issued at any time in exchange or substitution for any
Certificate bearing such legend (except a new Certificate issued upon completion
of a public distribution pursuant to a registration statement under the
Securities Act of the Warrant Shares represented thereby) shall also bear the
above legend unless, in the opinion of counsel satisfactory to the Company, the
securities represented thereby need no longer be subject to such restrictions.
Section 2. Exchange of Warrant Certificate. Any Warrant Certificate
may be exchanged for another Certificate or Certificates entitling the
Warrantholder to purchase a like aggregate number of Warrant Shares as the
Certificate or Certificates surrendered then entitled such Warrantholder to
purchase. Any Warrantholder desiring to exchange a Warrant Certificate shall
make such request in writing delivered to the Company, and shall surrender,
properly endorsed, the Certificate evidencing the Warrants to be so exchanged.
Thereupon, the Company shall execute and deliver to the person entitled thereto
a new Warrant Certificate as so requested.
2
<PAGE> 3
Section 3. Term of Warrants; Exercise of Warrants.
3.1 Term. Subject to the terms of this Agreement, the Warrantholder
shall have the right, at any time during the period commencing at 9:00 a.m.,
California time, on the date hereof and ending at 5:00 p.m., California time, on
January __, 2004 (the "Termination Date"), to purchase from the Company up
to the number of fully paid and nonassessable Warrant Shares which the
Warrantholder may at the time be entitled to purchase pursuant to this
Agreement, upon surrender to the Company, at its principal office in Petaluma,
California, or wherever its principal executive offices may then be located, of
the Certificate evidencing the Warrants to be exercised, together with the
purchase form on the reverse thereof duly filled in and signed, and upon payment
to the Company of the applicable Exercise Price (as set forth in Section 7
hereof and as subject to adjustment pursuant to Section 8 hereof), for the
number of Warrant Shares in respect of which such Warrants are then exercised,
but in no event for less than 25 Warrant Shares, unless the Warrants entitled
the Warrantholder on exercise to less than 25 Warrant Shares, in which event the
Warrants can be exercised for such lesser number of Warrant Shares.
3.2 Exercise. Payment of the applicable Exercise Price shall be made
in cash or by check. Upon surrender of the Warrant Certificates and payment of
such Exercise Price as aforesaid, the Company shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
Warrantholder and in such name or names as the Warrantholder may designate a
Certificate or Certificates for the number of full Warrant Shares so purchased
upon the exercise of the corresponding Warrants, together with cash, as provided
in Section 9 hereof, in respect of any fractional Warrant Shares otherwise
issuable upon such surrender. Such Certificate or Certificates shall be deemed
to have been issued and any person so designated to be named therein shall be
deemed to have become a holder of record of such Warrant Shares as of the date
of the surrender of the Warrant Certificate and the payment of the applicable
Exercise Price, as aforesaid, notwithstanding that the Certificates representing
the Warrant Shares shall not actually have been delivered or that the stock
transfer books of the Company shall then be closed. The Warrants shall be
exercisable, at the election of the Warrantholder, either in full or from time
to time in part and, in the event that a Certificate evidencing the Warrants are
exercised in respect of less than all of the Warrant Shares specified therein at
any time prior to the Termination Date, a new Certificate evidencing the
remaining Warrants will be issued by the Company.
Section 4. Payment of Taxes. The Company will pay all documentary
stamp taxes, if any, attributable to the issuance of the Warrant Shares
hereunder.
Section 5. Mutilated or Missing Warrant Certificate. In case the
Certificate or Certificates evidencing the Warrants shall be mutilated, lost,
stolen or destroyed, the Company shall, at the request of the Warrantholder,
issue and deliver in exchange and substitution for and upon cancellation of the
mutilated Certificate or Certificates, or in lieu of and substitution
3
<PAGE> 4
for the Certificate or Certificates lost, stolen or destroyed, a new Warrant
Certificate or Certificates of like tenor and representing an equivalent right
or interest, but only upon receipt of evidence satisfactory to the Company of
such loss, theft or destruction of such Warrants and a bond of indemnity, if
requested, also satisfactory in form and amount, at the applicant's cost.
Applicants for such substitute Warrant Certificate shall also comply with such
other reasonable requirements and pay such other reasonable charges as the
Company may prescribe.
Section 6. Reservation of Warrant Shares. There has been reserved, and
the Company shall at all times keep reserved so long as all or any portion of
the Warrants remains outstanding, out of its authorized Common Shares, such
number of Warrant Shares as shall be subject to purchase under such portion of
the Warrants which remains outstanding. Every transfer agent for the Common
Shares and other securities of the Company issuable upon the exercise of the
Warrants will be irrevocably authorized and directed at all times to reserve
such number of authorized Warrant Shares and other securities as shall be
requisite for such purpose. The Company will keep a copy of this Agreement on
file with every transfer agent for the Common Shares and other securities of the
Company issuable upon the exercise of the Warrants. The Company will supply such
transfer agent with duly executed stock and other Certificates for such purpose
and will provide or otherwise make available any cash which may be payable as
provided in Section 9 hereof.
Section 7. Exercise Prices. The prices per Share (the "Exercise
Price") at which Warrant Shares shall be purchasable upon the exercise of the
Warrants shall be [$_.__] per share. The Exercise Price for the set forth herein
shall be subject to further adjustment pursuant to Section 8 hereof.
Section 8. Adjustment of Exercise Prices and Number of Warrant Shares.
8.1 General. The number of Warrant Shares purchasable upon the
exercise of the Warrants and the Exercise Price shall be subject to adjustment
from time to time upon the happening of certain events, as follows: (Any
reference the terms "Warrants" and "Warrant Shares" in this Section 8 shall
refer to the number Warrants or Shares, as the case may be, to the extent such
Warrants have not been exercised as of the close of business on the day prior to
the date when any determination pursuant to this Section 8 is required to be
made.)
(a) In case the Company shall (i) pay a dividend in Common
Shares or make a distribution in Common Shares, (ii) subdivide its outstanding
Common Shares, (iii) combine its outstanding Common Shares into a smaller number
of Common Shares (by way of a reverse stock split or otherwise) or (iv) issue by
reclassification of its Common Shares other securities of the Company, the
number of Warrant Shares purchasable upon exercise of the Warrants immediately
prior thereto shall be adjusted so that the Warrantholder shall be entitled to
receive the kind and number of Warrant Shares or other securities of the Company
which it would have owned or would have been entitled to receive after the
happening of any of the
4
<PAGE> 5
events described above, had the Warrants been exercised immediately prior to the
happening of such event or any record date with respect thereto. Any adjustment
made pursuant to this subsection 8.1(a) shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for
such event.
(b) In case the Company shall issue rights, options, warrants or
convertible securities to all or substantially all of the holders of its Common
Shares, without any charge to such holders, entitling them to subscribe for or
purchase Common Shares at a price per share which is lower at the record date
mentioned below than the Exercise Price, the number of Warrant Shares thereafter
purchasable upon the exercise of the Warrants shall be determined by multiplying
the number of Warrant Shares theretofore purchasable upon the exercise of the
Warrants by a fraction, of which the numerator shall be the number of Common
Shares outstanding immediately prior to the issuance of such rights, options,
warrants or convertible securities plus the number of additional Common Shares
offered for subscription or purchase, and of which the denominator shall be the
number of Common Shares outstanding immediately prior to the issuance of such
rights, options, warrants or convertible securities plus the number of Common
Shares which the aggregate offering price of the total number of Common Shares
offered would purchase at the Exercise Price. Such adjustment shall be made
whenever such rights, options, warrants or convertible securities are issued,
and shall become effective immediately and retroactively after the record date
for the determination of shareholders entitled to receive such rights, options,
warrants or convertible securities.
(c) In case the Company shall distribute to all or substantially
all of the holders of its Common Shares evidences of its indebtedness or assets
(excluding cash dividends or distributions out of earnings) or issue, to all or
substantially all of such holders, without any charge to such holders, rights,
options, warrants or convertible securities containing the right to subscribe
for or purchase Common Shares (excluding those referred to in paragraph (b)
above), then in each case the number of Warrant Shares thereafter purchasable
upon the exercise of the Warrants shall be determined by multiplying the number
of Warrant Shares theretofore purchasable upon exercise of the Warrants by a
fraction, of which the numerator shall be the Exercise Price on the date of such
distribution, and of which the denominator shall be the Exercise Price on such
date minus the then fair value of the portion of the assets or evidences of
indebtedness so distributed or of such rights, options, warrants or convertible
securities applicable to one share. Such adjustment shall be made whenever any
such distribution is made and shall be made whenever any such distribution is
made and shall become effective on the date of distribution retroactive to the
record date for the determination of shareholders entitled to receive such
distribution.
(d) No adjustment in the number of Warrant Shares purchasable
hereunder shall be required unless such adjustment would require an increase or
decrease of at least one percent in the aggregate number of Warrant Shares then
purchasable upon the exercise of the Warrants or, if the Warrants are not then
exercisable, the number of Warrant Shares
5
<PAGE> 6
purchasable upon the exercise of the Warrants on the first date thereafter that
the Warrants becomes exercisable; provided however, that any adjustments which
by reason of this subsection 8.a(d) are not required to be made immediately
shall be carried forward and taken into account in any subsequent adjustment.
(e) Whenever the number of Warrant Shares purchasable upon the
exercise of the Warrants is adjusted as herein provided in this subsection 8.1,
the Exercise Price payable upon exercise of the Warrants shall be adjusted by
multiplying such Exercise Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Warrant Shares
purchasable upon the exercise of the Warrants immediately prior to such
adjustment, and of which the denominator shall be the number of Warrant Shares
so purchasable immediately thereafter.
(f)To the extent not covered by paragraphs (b) or (c) hereof, in
case the Company shall sell and issue Common Shares or rights, options, warrants
or convertible securities containing the right to subscribe for or purchase
Common Shares at a price per share (determined, in the case of such rights,
options, warrants or convertible securities, by dividing (i) the total amount
received or receivable by the Company in consideration of the sale and issuance
of such rights, options, warrants or convertible securities, plus the total
consideration payable to the Company upon exercise or conversion thereof, by
(ii) the total number of shares covered by such rights, options, warrants or
convertible securities) lower than the Exercise Price in effect immediately
prior to such sale and issuance, then the Exercise Price shall be reduced to a
price (calculated to the nearest cent) determined by dividing (i) an amount
equal to the sum of (A) the number of Common Shares outstanding immediately
prior to such sale and issuance multiplied by the then existing Exercise Price,
plus (B) the consideration received by the Company upon such sale and issuance,
by (ii) the total number of Common Shares outstanding immediately after such
sale and issuance. The number of Warrant Shares purchasable upon the exercise of
the Warrants shall be that number determined by multiplying the number of
Warrant Shares issuable upon exercise immediately prior to such adjustment by a
fraction, of which the numerator is the Exercise Price in effect immediately
prior to such adjustment and the denominator is the Exercise Price as so
adjusted. For the purposes of such adjustments, the Common Shares which the
holders of any such rights, options, warrants or convertible securities shall be
entitled to subscribe for or purchase shall be deemed to be outstanding as of
the date of such sale and issuance and the consideration received by the Company
therefor shall be deemed to be the consideration received by the Company for
such rights, options, warrants or convertible securities, plus the consideration
stated in such rights, options, warrants or convertible securities to be paid
for the Common Shares covered thereby. In case the Company shall sell and issue
Common Shares or rights, options, warrants or convertible securities containing
the right to subscribe for or purchase Common Shares for a consideration
consisting, in whole or in part, of property other than cash or its equivalent,
then in determining the "price per share" of Common Shares and the
"consideration received by the Company" for purposes of the first sentence of
this paragraph (f), the Board of Directors shall
6
<PAGE> 7
determine the fair value of said property, and such determination, if reasonable
and based upon the Board of Directors' good faith business judgment, shall be
binding upon the Warrantholder. There shall be no adjustment of the Exercise
Price pursuant to this paragraph (f) if the amount of such adjustment would be
less than $.01 per Warrant Share; provided, however, that any adjustment which
by reason of this provision is not required to be made immediately shall be
carried forward and taken into account in any subsequent adjustment.
(g) Whenever the number of Warrant Shares purchasable upon the
exercise of the Warrants or the Exercise Price is adjusted as herein provided in
this subsection 8.1, the Company shall cause to be promptly mailed to the
Warrantholder in accordance with the provisions of Section 12 hereof, notice of
such adjustment or adjustments and a Certificate of a firm of independent public
accountants selected by the Board of Directors of the Company (who may be the
regular accountants employed by the Company) setting forth the number of Warrant
Shares purchasable upon the exercise of the Warrants and the Exercise Price
after such adjustment, a brief statement of the facts requiring such adjustment
and the computation by which such adjustment was made.
(h)For the purpose of this subsection 8.1, the term "Common
Shares" shall mean (i) the class of shares designated as the Common Shares of
the Company at the date of this Agreement or (ii) any other class of shares
resulting from successive changes or reclassifications of such Common Shares
including changes in par value, or from par value to no par value, or from no
par value to par value. In the event that at any time, as a result of an
adjustment made pursuant to this Section 8, the Warrantholder shall become
entitled to purchase any shares of the Company other than Common Shares,
thereafter the number of such other shares so purchasable upon exercise of the
Warrants and the Exercise Price of such shares shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Shares contained in this Section 8.
(i)Upon the expiration of any rights, options, warrants or
conversion privileges referred to in this Section 8, if such shall not have been
exercised, the number of Warrant Shares purchasable upon exercise of the
Warrants and the Exercise Price, to the extent the Warrants has not then been
exercised, shall, upon such expiration, be readjusted and shall thereafter be
such as they would have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) on the basis of (A)
the fact that the only Common Shares so issued were the Common Shares, if any,
actually issued or sold upon the exercise of such privileges, options, warrants
or conversion rights and (B) the fact that such Common Shares, if any, were
issued or sold for the consideration actually received by the Company upon such
exercise plus the consideration , if any, actually received by the Company for
the issuance, sale or grant of all such rights, options, warrants or conversion
rights whether or not exercised; provided, however, that no such readjustment
shall have the effect of increasing the Exercise Price by an amount in excess of
the amount of the adjustment
7
<PAGE> 8
initially made in respect of the issuance, sale or grant of such rights,
options, warrants or convertible rights.
8.2 No Adjustment of Dividends. Except as provided in subsection 8.1,
no adjustment in respect of dividends shall be made during the term of the
Warrants or upon the exercise thereof.
8.3 No Adjustment in Certain Cases. No adjustments shall be made
hereunder in connection with the issuance of Common Shares or warrants or any
other rights to purchase Common Shares: (a) pursuant to any underwriting
agreement relating to any public offering or the issuance of Common Shares upon
exercise of an underwriter's Warrants issued in connection with any public
offering, (b) in connection with the exercise of options or warrants outstanding
on the date hereof, (c) in connection with the grant and/or exercise, pursuant
to stock option plans of the Company, of stock options to employees and
consultants of the Company outstanding as of the date hereof,(d) in connection
with the conversion of any Series D Preferred Stock issued and outstanding on
the date of this Agreement, and (e) in connection with the grant and/or exercise
of stock options to non-employee directors pursuant to a director stock option
plan of the Company.
8.4 Preservation of Purchase Rights Upon Reclassification,
Consolidation, etc. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another person of the property, assets or business of the Company as an entirety
or substantially as an entirety, the Company or such successor or purchaser, as
the case may be, shall execute with the Warrantholder an agreement that the
Warrantholder shall have the right thereafter upon payment of the Exercise Price
in effect immediately prior to such action to purchase upon exercise of the
Warrants the kind and amount of shares and other securities and property which
the Warrantholder would have owned or have been entitled to receive after the
happening of such consolidation, merger, sale or conveyance had the Warrants
been exercised immediately prior to such action. In the event of a merger
described in Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as
amended, in which the Company is the surviving corporation, the right to
purchase Warrant Shares under the Warrants shall terminate on the date of such
merger and thereupon the Warrants shall become null and void but only if the
controlling corporation shall agree to substitute for the Warrants another
Warrants which entitles the holders thereof to purchase, upon exercise thereof,
the kind and amount of shares and other securities and property which the
Warrantholder would have owned or had been entitled to receive had the Warrants
been exercised immediately prior to such merger. The adjustments required by
this Subsection 8.4 shall be effected in a manner which shall be as nearly
equivalent as may be practicable to the adjustments provided for elsewhere in
this Section 8. The provisions of this Subsection 8.4 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
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<PAGE> 9
8.5 Statement on Warrant Certificate. Irrespective of any adjustments
in the Exercise Price or the number or kind of shares purchasable upon the
exercise of the Warrants, the Warrant Certificate or Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable pursuant to this
Agreement.
Section 9. Fractional Shares. The Company shall not be required to
issue fractional Warrant Shares on the exercise of the Warrants. If any fraction
of a Warrant Share would, except for the provisions of this Section 9, be
issuable on the exercise of the Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the then Current Market Price
multiplied by such fraction. For purposes of this Agreement, the term "Current
Market Price" shall mean (i) if the Common Shares are traded on a national
securities exchange or on the Nasdaq Stock Market, the average for the 30
consecutive trading days immediately preceding the date in question of the daily
per share closing prices of the Common Shares on the principal securities
exchange on which they are listed or on Nasdaq, as the case may be, or (ii) if
the Common Shares are traded in the over-the-counter market and not on any
national securities exchange or on the Nasdaq Stock Market, the average of the
mean between the per share closing bid and asked prices of the Common Shares on
the 30 consecutive trading days immediately preceding the date in question, as
reported by Nasdaq or an equivalent generally accepted reporting service. The
closing price referred to in clause (i) above shall be the last reported sales
price or, in case no such reported sale takes place on such day, the average of
the reported closing bid and asked prices on such exchange or Nasdaq, as the
case may be, for the days in question.
Section 10. Registration Rights. Any Warrant Shares issued upon
exercise of the Warrants shall be subject to, and have the benefit of, the
registration rights set forth in the Registration Rights Agreement dated the
date hereof by and between the Company and the Warrantholder.
Section 11. No Rights as Shareholder; Notices to Warrantholder.
Nothing contained in this Agreement or in the Warrant Certificate shall be
construed as conferring upon the Warrantholder, or its transferees, any rights
as a shareholder of the Company, including the right to vote, receive dividends,
consent or receive notices as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or any other matter.
If, however, at any time prior to the expiration of the Warrants and prior to
the exercise thereof, any of the following events shall occur:
(a) any action which would require an adjustment pursuant to Section
8.1 or 8.4; or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger or sale of its property, assets
and business as an entirety) shall be proposed;
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<PAGE> 10
then in any one or more of said events, the Company shall give notice in writing
of such event to the Warrantholder as provided in Section 11 hereof at least 20
days prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the shareholders entitled to any
relevant dividend, distribution, subscription rights or other rights or for the
determination of shareholders entitled to vote on such proposed dissolution,
liquidation or winding up. Such notice shall specify such record date or the
date of closing the transfer books, as the case may be.
Section 12. Notices. Any notice pursuant to this Agreement by the
Company or by the Warrantholder shall be in writing and shall be deemed to have
been duly given if delivered by hand or if mailed by certified mail, return
receipt requested, postage prepaid, addressed as follows:
(a) If to the Warrantholder - to the address as set forth in a certain
separate Securities Purchase Agreement entered into between the Warrantholder
and the Company.
(b) If to the Company - addressed to Healthy Planet Products, Inc.,
1700 Corporate Circle, Petaluma, California 94954, Attention: President; with a
copy to Camhy Karlinsky & Stein LLP, 1740 Broadway, 16th Floor, New York, New
York 10019, Attention:
Charles P. Axelrod, Esq.
or to such other address as any such party may designate by notice to the other
party. Notices shall be deemed given at the time they are delivered personally
or three days after they are mailed in the manner set forth above.
Section 13. Assignment. This Agreement is binding upon and inures to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. This Agreement cannot be assigned, amended or modified by the
parties hereto, except by written agreement executed by the parties.
Section 14. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 15. Headings. The headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section 16. Merger or Consolidation of the Company. The Company will
not merge or consolidate with or into any other corporation or sell all or
substantially all of its property to another person, unless the provisions of
Section 8.4 are complied with.
10
<PAGE> 11
Section 17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts made and to be performed entirely within such State, without regard to
its principles of conflicts of laws.
Section 18. Severability. If any provision of this Agreement shall for
any reason be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision hereof and this Agreement shall be
construed as if such invalid or unenforceable provision had never been contained
herein.
11
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, on the day and year first above written.
Attest: HEALTHY PLANET PRODUCTS, INC.
By:___________________________ By:____________________________
Name: Name: BRUCE WILSON
Title: Title: PRESIDENT
WARRANTHOLDER
____________________________
12
<PAGE> 13
Appendix I to Warrant Agreement
THE WARRANTS REPRESENTED BY THIS Certificate HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION
IS NOT REQUIRED.
WARRANTS TO PURCHASE _______________ COMMON SHARES
VOID AFTER 5:00 P.M., CALIFORNIA TIME, ON THE DATE
INDICATED BELOW
HEALTHY PLANET PRODUCTS, INC.
INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE
This certifies that, for value received, , the
registered holder hereof, or assigns (the "Warrantholder"), is entitled to
purchase from Healthy Planet Products, Inc., a Delaware corporation (the
"Company"), the number of Shares set forth above, at any time during the period
commencing at 9:00 a.m., California time, on the date hereof and ending at 5:00
p.m., California time, on January __, 2004, at the purchase price per Share
(the "Exercise Price") of $____. The number of Shares purchasable upon exercise
of the Warrants represented by this Certificate and the Exercise Price per Share
shall be subject to further adjustment from time to time as set forth in the
Warrants Agreement.
The Warrants represented by this Certificate may be exercised in whole
or in part by presentation of this Certificate with the Purchase Form attached
hereto duly executed and simultaneous payment of the Exercise Price (subject to
adjustment) at the principal office of the Company. Payment of such price shall
be made, at the option of the Warrantholder, in cash or by check.
This Warrant Certificate is issued under and in accordance with the
Warrants Agreement dated the date hereof (the "Warrant Agreement") among the
Company and the Warrantholder and is subject to the terms and provisions
contained in the Warrants Agreement, to all of which the Warrantholder by
acceptance hereof consents.
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<PAGE> 14
Upon any partial exercise of the Warrants represented by this
Certificate, there shall be signed and issued to the Warrantholder a new
Certificate in respect of the Warrants which shall not have been exercised. This
Warrant Certificate may be exchanged at the principal office of the Company for
new Certificates in respect of the same aggregate number of Warrants as are
evidenced by this Certificate. No fractional shares will be issued upon the
exercise of rights to purchase hereunder, but the Company shall pay the cash
value of any fraction upon the exercise of one or more Warrants. This Warrant
Certificate is transferable at the office of the Company in the manner and
subject to the limitations set forth in the Warrants Agreement.
These Warrants do not entitle the Warrantholder to any of the rights
of a shareholder of the Company.
HEALTHY PLANET PRODUCTS, INC.
By:___________________________
Name: BRUCE WILSON
Title: PRESIDENT
[Corporate Seal]
Attest:
By:___________________________
Name:
Title:
Dated: January __, 1999
14
<PAGE> 15
HEALTHY PLANET PRODUCTS, INC.
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, ____________ shares (the "Shares"), provided for therein, and
requests that Certificates for the Shares be issued in the name of:
______________________________________________________________________
(Please Print Name, Address and Social Security Number)
______________________________________________________________________
and, if said number of Shares shall not be all the Shares purchasable hereunder,
that a new Warrant Certificate for the balance of the Shares purchasable under
the within Warrant Certificate be registered in the name of the undersigned
Warrantholder or its Assignee as below indicated and delivered to the address
stated below.
The undersigned hereby makes payment of the aggregate amount of
$_________, representing $______ for each such Share.
Dated: _______________, 19___
Name of Warrantholder or Assignee: ____________________
Address: ________________________________________________________
_________________________________________________________________
Signature: ______________________________________________________
Signature Guaranteed: Note: Signature must conform in all
respects to name of holder as
specified on the face of
the Warrant Certificate.
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<PAGE> 16
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
_________________________________________________________________________
(Name and Address of Assignee Must be Printed or Typewritten)
_________________________________________________________________________
Warrants evidenced by the within Warrant Certificate, hereby irrevocably
constituting and appointing __________________ Attorney to transfer said
Warrants on the books of the Company, with full power of substitution in the
premises.
Dated: ___________, 19__ ___________________________________
Signature of Registered Holder
Signature Guaranteed: Notice: Signature must conform in all
respects to name of holder as
specified on the face of
the Warrant Certificate.
16
<PAGE> 1
Exhibit 99.3
FORM OF
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated the __ day of
January, 1999, between __________, having an address of _______________________
(the "Holder") and Healthy Planet Products, Inc., a Delaware corporation having
its principal place of business at 1700 Corporate Circle, Petaluma, California
94954 (the "Company").
WHEREAS, simultaneously with the execution and delivery of
this Agreement, the Holder is being issued ______ warrants ("Warrants")
entitling the Holders to purchase an aggregate of _______ shares ("Warrant
Shares") of Common Stock until January __, 2004 at an exercise price of $[ .00]
per share. The Shares and Warrants are collectively referred to herein as the
"Securities."
WHEREAS, the Company desires to grant to the Holders the
registration rights set forth herein with respect to the Shares and the Warrant
Shares (collectively the "Registrable Shares").
NOW, THEREFORE, the parties hereto mutually agree as follows:
SECTION 1. RESTRICTIONS ON TRANSFER. The Holder agrees that
prior to making any disposition of any of the Shares, Warrants or Warrant
Shares, the Holder shall give written notice to the Company describing briefly
the manner in which any such proposed disposition is to be made and no such
disposition shall be made if the Company has notified the Holder that, in the
opinion of counsel reasonably satisfactory to the Holder, a registration
statement or other notification or post-effective amendment thereto (hereinafter
collectively referred to as a "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act") is required with respect to such
disposition and no such Registration Statement is then in effect with respect
thereto.
SECTION 2. REGISTRATION RIGHTS. (a) The Company shall be
obligated to the Holder to file a Registration Statement only as follows:
(i) Whenever, during the period commencing upon the
date hereof and continuing until January __, 2004, the Company proposes
to file with the Securities and Exchange Commission (the "Commission")
a Registration Statement (other than a Form S-4 or S-8, or an S-3 used
in conjunction with an S-8 (which S-3 is filed solely to facilitate
resales by affiliates of the Company of shares issued under employee
stock incentive plans), or comparable registration statements), it
shall, at least 30 days prior to such filing, give written notice of
such proposed filing to the Holder at the Holder's address appearing on
the records of the Company, and shall offer to include and shall
include in such filing all or a portion of the Registrable Shares upon
receipt by the Company, not less than 10
<PAGE> 2
days prior to the proposed filing date, of a request therefor, subject
to the right of the managing underwriter, in any such offering that is
underwritten, to limit or eliminate entirely the number of securities
that may be included in such offering on a pro rata basis with any
other person on whose behalf securities are being registered.
(ii) In addition to any Registration Statement
pursuant to subparagraph (i) above, the Company will, as promptly as
practicable (but in any event within 60 days) after receipt of written
notice, at any time commencing on the first anniversary of the date
hereof and continuing until January __, 2004, prepare and file at the
written request of the persons holding not less than 50% of the
Registrable Shares (the "Demand Holders"), a registration statement
with the Commission and appropriate state securities authorities
sufficient to permit the public offering of the Registrable Shares
which are held and issuable to such Demand Holders, and will use its
best efforts, at its own expense, through its officers, directors,
auditors and counsel, in all matters necessary or advisable, to cause
such registration statement to become effective as promptly as
practicable following filing thereof; provided, however, that the
Company shall be obligated to file only one registration statement
under this subparagraph (ii), shall only be required to file such
registration statement on Form S-3 or any successor "short form"
registration statement, and shall only be required to file such
registration statement if the Market Value (as hereinafter defined) of
the Registrable Shares to be registered is not less than $1,500,000 on
the date on which the notice requesting registration is sent by the
Demand Holders. "Market Value" for purposes hereof shall be determined
by multiplying the number of Registrable Shares to be registered by (i)
if the Common Stock is traded on a national securities exchange or on
the Nasdaq Stock Market, the average for the 30 consecutive trading
days immediately preceding the date of the notice of the daily per
share closing prices of the Common Stock on the principal securities
exchange on which the Common Stock is listed or on Nasdaq, as the case
may be, or (ii) if the Common Stock is traded in the over-the-counter
market and not on any national securities exchange or on the Nasdaq
Stock Market, the average of the mean between the per share closing bid
and asked prices of the Common Stock on the 30 consecutive trading days
immediately preceding the date of the notice, as reported by Nasdaq or
an equivalent generally accepted reporting service. Promptly upon
receipt of such notice, the Company will begin to prepare the necessary
Registration Statement. Within 10 days after receiving notice hereunder
from the Demand Holders, the Company shall give notice to the other
holders of the Registrable Shares and offer to include in the
Registration Statement such other Registrable Shares.
(b) All fees, disbursements and out-of-pocket expenses and
costs incurred by the Company in connection with the preparation and filing of
any Registration Statement under Section 2(a) and in complying with applicable
securities and Blue Sky laws (including, without limitation, all attorneys'
fees) shall be borne by the Company. The Holder shall bear the cost of
underwriting discounts and commissions, if any, applicable to the Registrable
Shares being registered and the fees and expenses of its counsel. The Company
shall use its best efforts to qualify any of the securities for sale in such
states as such Holder reasonably designates and shall furnish indemnification in
the manner provided in Section 3 hereof. However, the Company shall
2
<PAGE> 3
not be required to qualify in any state which will require an escrow or other
restriction relating to the Company and/or the sellers. The Company at its
expense will supply the Holder with copies of such Registration Statement and
the prospectus or offering circular included therein and other related documents
in such quantities as may be reasonably requested by the Holder.
(c) The Company shall not be required by this Section 2 to
include any Registrable Shares in any Registration Statement which is to be
filed if, in the opinion of counsel for both the Holder and the Company (or,
should they not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for the Holder and the Company) the
proposed offering or other transfer as to which such registration is requested
is exempt from applicable federal and state securities laws and would result in
all purchasers or transferees obtaining securities which are not "restricted
securities", as defined in Rule 144 under the Securities Act.
(d) The Company agrees that until all Registrable Shares have
been sold under a Registration Statement or pursuant to Rule 144 under the
Securities Act, it will keep current in filing all materials required to be
filed with the Commission in order to permit the holders thereof to sell the
Registrable Shares under such Rule 144.
(e) No provision contained herein shall preclude the Company
from selling securities pursuant to any Registration Statement in which it is
required to include Registrable Shares pursuant to this Section 2.
SECTION 3. INDEMNIFICATION.
(a) In the event of the filing of any Registration Statement
with respect to Registrable Shares pursuant to Section 2 hereof, the Company
agrees to indemnify and hold harmless the Holder and each person, if any, who
controls the Holder within the meaning of the Securities Act ("Distributing
Holders") against any losses, claims, damages or liabilities, joint or several
(which shall, for all purposes of this Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys' fees), to which
the Distributing Holders may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any such Registration
Statement, or any related preliminary prospectus, final prospectus, offering
circular, notification or amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, preliminary prospectus,
final prospectus, offering circular, notification or amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
to the Company by the Distributing Holders, specifically for use in the
preparation thereof. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
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<PAGE> 4
(b) Each Distributing Holder agrees that it will indemnify and
hold harmless the Company, and each person, if any, who controls the Company
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities (which shall, for all purposes of this Agreement, include, but not
be limited to, all costs of defense and investigation and all attorneys' fees)
to which the Company or any such controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in a
Registration Statement requested by such Distributing Holder, or any related
preliminary prospectus, final prospectus, offering circular, notification or
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each
case only to the extent that such untrue statement or alleged untrue statement
or omission or alleged omission was made in such Registration Statement,
preliminary prospectus, final prospectus, offering circular, notification or
amendment or supplement thereto in reliance upon, and in conformity with,
written information furnished to the Company by such Distributing Holder,
specifically for use in the preparation thereof and, provided further, that the
indemnity agreement contained in this Section 3(b) shall not inure to the
benefit of the Company with respect to any person asserting such loss, claim,
damage or liability who purchased the Registrable Shares which are the subject
thereof if the Company failed to send or give (in violation of the Securities
Act or the rules and regulations promulgated thereunder) a copy of the
prospectus contained in such Registration Statement to such person at or prior
to the written confirmation to such person of the sale of such Registrable
Shares, where the Company was obligated to do so under the Securities Act or the
rules and regulations promulgated thereunder. This indemnity agreement will be
in addition to any liability which the Distributing Holders may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 3 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 3, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified party
otherwise than as to the particular item as to which indemnification is then
being sought solely pursuant to this Section 3. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, assume the defense thereof, subject to the provisions
herein stated and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 3 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation, unless
the indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
4
<PAGE> 5
satisfactory to the indemnified party; provided that if the indemnified party is
the Distributing Holder, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party or (ii) the named
parties to any such action (including any impleaded parties) include both the
Distributing Holder and the indemnifying party and the Distributing Holder shall
have been advised by such counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to the Distributing Holder (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the Distributing Holder, it being understood, however, that the
indemnifying party shall, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable only for the reasonable
fees and expenses of one separate firm of attorneys for the Distributing Holder,
which firm shall be designated in writing by the Distributing Holder). No
settlement of any action against an indemnified party shall be made without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld.
SECTION 4. CONTRIBUTION. In order to provide for just and
equitable contribution under the Securities Act in any case in which (i) the
Distributing Holder makes a claim for indemnification pursuant to Section 3
hereof but is judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
Section 3 hereof provide for indemnification in such case or (ii) contribution
under the Securities Act may be required on the part of any Distributing Holder,
then the Company and the applicable Distributing Holder shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(which shall, for all purposes of this Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys' fees), in either
such case (after contribution from others) on the basis of relative fault as
well as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the applicable Distributing Holder, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Distributing Holder
agree that it would not be just and equitable if contribution pursuant to this
Section 4 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 4. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this Section 4 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
5
<PAGE> 6
SECTION 5. NOTICES. Any notice pursuant to this Agreement by
the Company or by the Holder shall be in writing and shall be deemed to have
been duly given if delivered by hand or if mailed by certified mail, return
receipt requested, postage prepaid, addressed as follows:
(a) If to the Holder, to his address set forth on the first
page of this Agreement.
(b) If to the Company, to the address set forth on the first
page of this Agreement, with a copy to Camhy Karlinsky & Stein LLP, 1740
Broadway, 16th Floor, New York, New York 10019, Attention: Charles P.
Axelrod, Esq.
or to such other address as any such party may designate by notice to the other
party. Notices shall be deemed given at the time they are delivered personally
or three days after they are mailed in the manner set forth above.
SECTION 6. ASSIGNMENT. This Agreement is binding upon and
inures to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. This Agreement cannot be assigned, amended or
modified by the parties hereto, except by written agreement executed by the
parties.
SECTION 7. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 8. HEADINGS. The headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of California applicable
to contracts made and to be performed entirely within such State, without regard
to its principles of conflicts of laws.
SECTION 10. SEVERABILITY. If any provision of this Agreement
shall for any reason be held invalid or unenforceable, such invalidity or
unenforceablity shall not affect any other provision hereof and this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, on the day and year first above written.
Attest: HEALTHY PLANET PRODUCTS, INC.
By:___________________________ By:___________________________
Name: Name:
Title: Title:
HOLDER
_______________________________
7
<PAGE> 1
Exhibit 99.4
FORM OF
RIGHTS AGENT AGREEMENT
THIS AGREEMENT (the "Agreement"), dated ________, 1999, is by and
between HEALTHY PLANET PRODUCTS, INC., a Delaware corporation (the "Company"),
and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York corporation (the "Rights
Agent").
W I T N E S S E T H:
WHEREAS, the Company intends to issue, at no cost, to holders of
shares of its common stock, $.01 par value per share (the "Common Stock"), and
holders of shares of its Series D Convertible Preferred Stock (collectively, the
"Shareholders"), rights (the "Rights") to purchase shares of its Common Stock
(the "Shares"), at $[ ] per Share, and upon the terms and conditions contained
in the Registration Statement, as defined herein; and
WHEREAS, the Company has filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-3 (the
"Registration Statement") with respect to the offering of the Shares issuable
upon exercise of the Rights; and
WHEREAS, the Company desires the Rights Agent to act on behalf of
the Company, and the Rights Agent is willing to so act in connection with the
issuance of certificates representing the Rights and the issuance of the Shares
upon exercise of Rights, all in accordance with the terms and conditions hereof.
NOW, THEREFORE, in consideration of the premises and mutual promises
made herein, the parties hereto agree as follows:
1. Definitions. As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require:
(a) "Basic Subscription Rights" shall mean the Rights
distributed to Registered Holders (as hereinafter defined) in respect of each
issued and outstanding Share.
(b) "Corporate Office" shall mean the principal place of
business of the Rights Agent (or its successor).
(c) "Exercise Date" shall mean the date a Rights Certificate
is duly surrendered for exercise.
(d) "Expiration Date" shall mean on February __, 1999, unless
extended to a later date as provided in Section 5 of this Agreement, in which
case the Expiration Date shall mean such later date.
<PAGE> 2
(e) "Offering" shall mean the offer of the Shares pursuant to
the Prospectus (as hereinafter defined).
(f) "President's Letter" shall mean the letter from the
President of the Company to Registered Holders to be sent with the Prospectus to
such holders.
(g) "Oversubscription Right" shall mean the Right, granted to
each Registered Holder of Basic Subscription Rights who exercises such Rights in
full, to purchase Shares which are not subscribed for in the Offering by other
Registered Holders, as permitted by Section 4(b) hereof.
(h) "Prospectus" shall mean the prospectus dated __________,
1999 and distributed to the Company's stockholders with respect to the Offering.
(i) "Registered Holder" shall mean the person in whose name
any Rights Certificate shall be registered on the books maintained by the Rights
Agent.
(j) "Rights Certificate" shall mean a certificate evidencing
the Rights.
(k) "Rights Record Date" shall mean such date as the Company
shall advise the Rights Agent in writing prior to the Registration Statement
being declared effective.
(l) "Subscription Period" shall mean the period from the
commencement of the Offering until 5:00 p.m., New York time, on the Expiration
Date.
2. Issuance of Rights Certificates.
(a) Upon a written order of the Company, the Rights Agent
shall mail or deliver Rights Certificates, prospectuses and the President's
Letter to holders of record of the Company's common stock and its Series D
Convertible Preferred Stock, on the Rights Record Date.
(b) The Rights Agent shall keep at its Corporate Office books
in which it shall register the Rights Certificates. All Rights Certificates
surrendered to the Rights Agent shall be promptly canceled by the Rights Agent
(with notice to the Company) and thereafter retained by the Rights Agent for one
year, delivered to the Company or destroyed by the Rights Agent, as directed by
the Company. The Company shall at all times supply the Rights Agent with a
sufficient number of Rights Certificates, Prospectuses and President's Letter
for purposes contemplated by this Agreement.
(c) Where requests are properly made by registered holders
(such as banks or brokers) that hold the Shares as nominees for beneficial
owners, the Rights Agent, upon presentation of satisfactory evidence, shall
deliver Rights Certificates issued in the names of such
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<PAGE> 3
Registered Holders in denominations identical to those of that would have been
issued if such beneficial owners had been holders of record on the Record Date.
3. Form and Execution of Rights Certificates. The Rights
Certificates shall be substantially in the form attached hereto as Exhibit A
(the provisions of which are hereby incorporated herein). The Rights
Certificates shall be dated as of the date of issuance thereof (whether upon
initial issuance or issuance in replacement of mutilated, lost, stolen or
destroyed Rights Certificates). The Rights Certificates shall be numbered
serially with the letter "R" on the Rights Certificates of all denominations.
4. Procedures for Exercise of Rights.
(a) A Basic Subscription Right may be exercised during the
subscription period by completing and signing the former on the back of the
Rights Certificate and delivering it, together with payment in full of the
purchase price for all the Shares subscribed for (the "Basic Subscription
Amount"), to the Rights Agent before the Expiration Date. Payment of the Basic
Subscription Amount must be made in United States dollars by check, subject to
collection, bank check or money order, payable to the order of "Healthy Planet
Products, Inc." Payment may be effected through wire transfer in accordance with
wire instructions given by the Rights Agent to the Company prior to the
effective date of the Registration Statement. If payment is submitted by a
Registered Holder in an amount less than that required to purchase the number of
Shares subscribed for, the Rights Agent shall issue only the number of whole
Shares for which payment is received and shall issue a new Rights Certificate
for the balance of the Rights issued to such holder to the extent there is time
to do so prior to the Expiration Date.
(b) Any Registered Holder who exercises his Basic Subscription
Rights in full may also exercise Oversubscription Rights during the Subscription
Period for a number of additional shares not to exceed one time the number of
Shares purchased under the Basic Subscription Rights. Exercise of the
Oversubscription Rights shall be effected by completing the appropriate portion
of the form of the reverse side of the Rights Certificate simultaneously with
completion of the form in respect of the exercise of the Basic Subscription
Rights. In the event the Registered Holder initially exercises less than the
maximum number of Oversubscription Rights which it may seek to exercise, and
subsequently desires to exercise additional Oversubscription Rights prior to the
end of the Subscription Period, it may do so by mailing a notice to the Rights
Agent to that effect, which notice must be received by the Rights Agent before
the end of the Subscription Period. Payment for the purchase of all Shares
subscribed for pursuant to Oversubscription Rights (the "Oversubscribed Amount")
shall be made in United States dollars, by separate check, subject to
collection, bank check or money order in the Oversubscription amount, made
payable to the order of "American Stock Transfer & Trust Co. - Rights Agent".
Payment may be effected through wire transfer in accordance with wire
instructions given by the Rights Agent to the Company prior to the effective
date of the Registration Statement.
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<PAGE> 4
(c) The Rights Agent shall issue certificates representing the
Shares purchased pursuant to exercise of Basic Subscription Rights as soon as
practicable after receipt by the Rights Agent of a duly completed and signed
Rights Certificate and collection by the Company of the payment tendered
therewith. The Rights Agent shall issue certificates representing Shares
pursuant to the exercise of Oversubscription Rights (subject to the limitations
described in Section 7 hereof) as soon as practicable after the Expiration Date.
(d) All questions as to the validity, form, eligibility
(including times of receipt and matters pertaining to beneficial ownership) and
the acceptance of subscriptions and the payment of Subscription Payments will be
determined by the Company, whose determinations will be final and binding. No
alternative, conditional or contingent subscriptions will be accepted. The
Company reserves the absolute right to reject any or all subscriptions not
properly or timely submitted with the exception of acceptance of which would, in
the opinion of the Company's counsel, be unlawful. The Company also reserves the
right to waive any irregularities or conditions, and the Company's
interpretations of the terms and conditions of the Offering shall be final and
binding. Any irregularities in connection with subscriptions must be cured
within such time as the Company shall determine, unless waived. Subscriptions
will not be deemed to have been made until such irregularities had been cured or
waived. The Rights Agent shall promptly notify the Company of any irregularities
in any subscriptions received by the Rights Agent. Rights Certificates received
by the Rights Agent that are not properly submitted and as to which the
irregularities have not been cured or waived shall be returned by the Rights
Agent to the appropriate holder of the Rights, to the extent there is sufficient
time to do so prior to the Expiration Date; and funds submitted with such Rights
Certificates shall be returned without interest by the Rights Agent to such
holder.
(e) The Company and the Rights Agent may deem and treat the
Registered Holder of any Rights Certificate as the absolute owner thereof and
each Right represented thereby for all purposes (notwithstanding any notations
of ownership or writing thereon made by anyone other than the Company or the
Rights Agent) and shall not be affected by any notice to the contrary.
(f) No fractional Rights or Shares may be issued in connection
with the Offering.
(g) The Rights Agent will deliver to a holder of Rights who
subscribes pursuant to Basic Subscription Rights for fewer than all Shares
represented by his Rights Certificate a new Rights Certificate representing the
balance of the unsubscribed Basic Subscription Rights, to the extent there is
time to do so prior to the Expiration Date. If such a holder of Rights later
exercises his Rights prior to the Expiration Date for the balance of the
unsubscribed Basic Subscription Rights, he may at such times seek to exercise
the associated Oversubscription Rights.
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<PAGE> 5
5. Extension of Expiration Date. The Company in its sole discretion
may extend the Expiration Date of the Subscription Period for up to an
additional 30 days by giving notice of such extension to the Rights Agent at any
time prior to 5:30 p.m., New York time, on the existing Expiration Date and
issuing a press release to that effect by no later than 10:00 a.m.
on the following business day.
6. Transmission of Funds to Company.
(a) The Rights Agent shall deliver all amounts received in
respect of exercise of Basic Subscription Rights to the Company within two
business days of receipt their Right.
(b) The Rights Agent shall deposit on a daily basis all funds
received and collected in respect of the exercise of Oversubscription Rights
into an escrow account pending the Expiration Date, at which time the number of
Shares available to fill oversubscriptions will be determined in accordance with
Section 7 hereof. The funds will be returned to subscribers or paid to the
Company as described in the Prospectus.
7. Determination of Shares Available for Oversubscriptions. The
Rights Agent shall compute, upon the termination of the Offering, the number of
Shares subscribed for pursuant to all Basic Subscription Rights, compute at the
same time the number of Shares available pursuant to Oversubscription Rights and
compute the number of Shares to be subscribed for by each subscriber exercising
his Oversubscription Rights, as follows:
(a) If the number of Shares subscribed for pursuant to
Oversubscription Rights exceeds the number of Shares available for purchase by
subscribers exercising their Oversubscription Rights, the Rights Agent shall
allot the Shares available to be purchased by subscribers exercising their
Oversubscription Rights pro rata in proportion to the number of Shares
subscribed for pursuant to all Oversubscription Rights.
(b) If the number of Shares available to be purchased by
subscribers exercising their Oversubscription Rights is equal to or exceeds the
number of Shares subscribed for pursuant to Oversubscription Rights, the Rights
Agent shall allot to each subscriber the number of shares for which he or she
subscribed to pursuant to his or her Oversubscription Rights.
8. Loss or Mutilation. Upon receipt by the Company and the Rights
Agent of evidence satisfactory to them of due ownership of any lost, stolen,
destroyed or mutilated Rights Certificate and (in the case of loss, theft or
destruction) of indemnity satisfactory to them, and (in the case of mutilation)
upon surrender and cancellation of the mutilated Rights Certificate, the Rights
Agent shall deliver in lieu thereof a new Rights Certificate representing an
equal aggregate number of Rights, to the extent there is time to do so prior to
the Expiration Date. Applicants for
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<PAGE> 6
a substitute Rights Certificate shall also comply with such other reasonable
regulations and pay such reasonable charges as the Rights Agent may prescribe.
9. Liabilities of the Rights Agent. The Rights Agent shall not, by
issuing and delivering Rights Certificates or by any other Act hereunder, be
deemed to make any representations as to the validity or value or authorization
of the Rights Certificates or the Rights represented thereby or of the Shares
delivered upon exercise of any Rights or whether the Shares are fully paid or
nonassessable. The Rights Agent shall not (a) be liable for any recital or
statement of facts contained herein or for any action taken, suffered or omitted
by it in reliance on any Rights Certificate or other document or instrument
believed by it in good faith to be genuine and to have been signed or presented
by the proper party or parties, (b) be responsible for any failure on the part
of the Company to comply with any of its covenants and obligations contained in
this Agreement or in the Rights Certificates, or (c) be liable for any act or
omission in connection with this Agreement except for its own negligence or
willful misconduct.
10. Indemnification. The Company agrees to indemnify the Rights
Agent and save it harmless from and against any and all liabilities for anything
done or omitted by the Rights Agent in the execution of its duties hereunder
except liabilities arising as a result of the Rights Agent's negligence or
willful misconduct.
11. Legal Counsel. The Rights Agent may consult with the legal
counsel (who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in accordance with its opinion.
12. Compensation for Services. The Company agrees to pay the Rights
Agent for its services hereunder and reimburse it for its reasonable expenses
hereunder, all in accordance with the fee schedule attached as Exhibit B hereto
and made a part hereof by this reference.
13. Modification of Agreement. This Agreement may not be modified,
in whole or in part, except by a writing executed by the parties hereto. Should
any provision or portion of this Agreement be held unenforceable or unlawful,
the remaining provisions of this Agreement shall remain in full force and
effect.
14. Entire Agreement. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements and understandings relative to such subject
matter.
15. Notices. All notices and other communications required or
permitted under this Agreement shall be deemed to have been duly given and made
if in writing and (i) if served by personal delivery to the party for whom
intended, (ii) if sent to such party by certified or registered mail, return
receipt requested, bearing the address shown in this Agreement for such
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<PAGE> 7
party, (iii) sent to such party at such a address by nationally recognized
overnight delivery service, with delivery confirmed or (iv) sent by telex or
telecopy to such party:
If to the Company:
Healthy Planet Products, Inc.
1700 Corporate Circle
Petaluma, CA 94954
With a copy to:
Camhy Karlinsky & Stein LLP
1740 Broadway, 16th Fl.
New York, NY 10019
Attn: Charles P. Axelrod, Esq.
If to the Rights Agent:
American Stock Transfer & Trust Co.
40 Wall Street
New York, New York 10005
Attn: Compliance Department
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
17. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Company and the Rights Agent, for their respective
successors and permitted assigns, and the holders of the Rights Certificates so
or any of them. This Agreement may not be assigned (by operation of law or
otherwise) by the Rights Agent without the prior written consent of the Company.
Any assignment hereof in violation of the terms hereof of shall be void and of
no force and effect. Nothing in this Agreement is intended or shall be construed
to confer upon any other person any right, remedy or claim or to impose upon any
other person any duty, liability or obligation.
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereof have caused this Agreement to
be duly executed as of the date and year first above written.
HEALTHY PLANET PRODUCTS, INC.
By:_________________________________
Authorized Officer
AMERICAN STOCK TRANSFER &
TRUST COMPANY, as Rights Agent
By:_________________________________
Authorized Officer
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<PAGE> 9
Exhibit A
FORM OF RIGHTS CERTIFICATE
(Front Side of Certificate)
HEALTHY PLANET PRODUCTS, INC.
NONTRANSFERABLE RIGHTS TO PURCHASE SHARES
OF COMMON STOCK
R-_________ Number of Rights:________
This Rights Certificate certifies that the registered holder named
above is the owner of the number of Rights indicated above and is entitled,
subject to acceptance by Healthy Planet Products, Inc., a Delaware corporation
(the "Company"), and proration in the event of oversubscription as described in
the Prospectus delivered herewith (the "Prospectus"), to subscribe for one share
of Common Stock, $.01 par value per share, of the Company (the "Share") for each
Right evidenced by this Rights Certificate at $[ .00] per Share (the "Basic
Subscription Right") and to subscribe for one time the number of Shares
evidenced by this Rights Certificate at $[ . ] per Share (the "Oversubscription
Right"), if the registered holder hereof has subscribed for all of the Shares to
which he is entitled to subscribe under the Basic Subscription Rights.
THE RIGHTS EVIDENCED BY THIS CERTIFICATE EXPIRE AT 5:00 P.M., NEW
YORK TIME, ON FEBRUARY __, 1999 unless extended (the "Expiration Date"). The
holder hereof may subscribe in accordance herewith for any and all of the Shares
to which this Rights Certificate entitles him to subscribe.
Subscriptions pursuant hereto are subject to the terms and
conditions set forth in the Prospectus. Subscription payments pursuant to the
exercise of Basic Subscription Rights shall be made either by check, subject to
collection, bank check or money order to the order of "Healthy Planet Products,
Inc." Subscription payments pursuant to the exercise of Oversubscription Rights
shall be made either by check, bank draft or money order to the account of
"American Stock Transfer & Trust Co. - Rights Agent." Payment may be effected
through wire transfer in accordance with wire instructions given by the Rights
Agent to the Company prior to the effective date of the Registration Statement.
The subscription form on the reverse side hereof must be properly completed and
executed and this Rights Certificate must be surrendered, along with the
applicable subscription payment, to American Stock Transfer & Trust Company (the
"Rights Agent") prior to the Expiration Date.
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<PAGE> 10
The Rights Certificates and the right to subscribe to Shares may not
be transferred or assigned. The Rights Certificate, when surrendered at the
office of the Rights Agent by the registered holder hereof in person or by
attorney duly authorized in writing, may be exchanged for Rights Certificates of
different denominations of like tenor and representing in the aggregate the
number of Rights indicated above.
Instructions for completing this Rights Certificate and subscribing
for Shares are included with the Prospectus and other materials delivered
herewith.
HEALTHY PLANET PRODUCTS, INC.
By:________________________________
Authorized Officer
AMERICAN STOCK TRANSFER
& TRUST COMPANY, as Rights Agent
By:_________________________________
Authorized Officer
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<PAGE> 11
(Reverse Side of Certificate)
TO: Healthy Planet Products
1700 Corporate Circle
Petaluma, CA 94954
The undersigned acknowledges receipt of the Prospectus, dated
_______, 1999 relating to the shares of Common Stock issuable upon
exercise of Rights (the "Shares"). Any Certificates for the Shares
issued in connection with this subscription should be issued in the
name set forth on the face hereof and delivered to the address
stated below.
TO SUBSCRIBE FOR SHARES: Upon the terms and conditions set forth
herein and in the Prospectus, I hereby irrevocably subscribe for
Shares as set forth below and herewith tender Subscription Payments
as calculated below. I understand that my subscription is subject to
acceptance by the Company.
I. A. Number of Shares _____________
subscribed for pursuant to
Basic Subscription Rights
(NOTE: You may subscribe
for any number of Shares
equal to or less than the
number of Rights evidenced
by this Certificate. You may
not subscribe under this Item
I(A) for a number of Shares
greater than the number of
such Rights.)
B. Subscription Price $[ ] per share
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<PAGE> 12
C. Payment for Shares (A x B)
pursuant to Basic (A check, subject to
Subscription Rights collection, bank check
or money order for this amount
should be made payable to the
order of "Healthy Planet
Products, Inc." Payment may be
effected through wire transfer in
accordance with wire instructions
given by the Rights Agent to the
Company prior to the effective
date of the Registration
Statement.)
II.D. Number of Shares subscribed _____________
for pursuant to Oversubscription
Rights. (NOTE: You may
subscribe under this Item II(D)
for any number of Shares equal
to or less than one time the
number of Rights represented by
this Certificate provided you
have subscribed under Item I(A)
for the maximum number of
Shares you are entitled to
subscribe to thereunder.
E. Subscription Price $[ ] per share
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<PAGE> 13
F. Payment for Shares pursuant (D x E) ______________
to Oversubscription Rights (A check, subject to
collection, bank check or money
order for this amount should be
made payable to "America Stock
Transfer & Trust Company - Rights
Agent". Payment may be effected
through wire transfer in
accordance with wire instructions
given by the Rights Agent to the
Company prior to the effective
date of the Registration
Statement.)
Signature(s)_________________________________
_________________________________
(if jointly owned, both must sign)
(NOTE: The above signature(s) must
correspond with the name(s) written upon the
face of this Rights Certificate in every
particular without alteration.)
Social Security or Other
Tax Identification Number___________________
Address_____________________________________
_____________________________________
Area Code____________ Tel No.______________
Dated________________________ , 1999
THIS SUBSCRIPTION IS IRREVOCABLE AND SUBJECT TO
ACCEPTANCE BY THE COMPANY. PAYMENT IN FULL MUST
ACCOMPANY SUBSCRIPTION.
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<PAGE> 14
Exhibit B
SCHEDULE OF FEES
Issuance of Rights and Processing of Rights received .... $10,000.
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<PAGE> 1
Exhibit 99.5
[HP LETTERHEAD]
[__________], 1999
Dear Healthy Plant Shareholder:
We are pleased to enclose a Prospectus, dated [_________], 1999,
describing a rights offering (the "Rights Offering") to be made by Healthy
Planet Products, Inc. (the "Company") to its shareholders of record on the close
of business on December 30, 1998. As part of this Rights Offering, you will
receive two rights (the "Rights") for each share of the Company's common stock,
par value $0.01 per share (the "Common Stock"), or Series D Convertible
Preferred Stock. Each of these Rights will entitle you to purchase one share of
Common Stock (the "Shares") at $[ . ] per Share (the "Subscription Price").
In addition, if you exercise all of your Rights, you will also be
entitled to oversubscription rights (the "Oversubscription Rights") which shall
entitle you to purchase, at the Subscription Price, one time the number of
Shares you were entitled to subscribe for under your Basic Subscription Rights.
Your Oversubscription Rights are subject to availability and to allocation among
other shareholders of the Company who subscribe for additional Shares and to the
terms and conditions outlined in the Prospectus.
The terms and conditions of the Rights Offering as well as other
information is set forth in the accompanying Prospectus.
The Rights, which are non-assignable and non-transferable, expire at 5:00
p.m. __________ time on __________, 1999 (the "Expiration Date"), unless
extended by the Company for an additional 30 days. We encourage you to read
carefully the enclosed Prospectus so that you will be familiar with the terms
and conditions of the Rights Offering and other facts about the Company.
If you wish to subscribe for Shares in this Rights Offering, please do the
following:
(1) Complete the subscription form on the reverse side of the Rights
Certificate. Be sure to indicate in the appropriate blank spaces the
number of Shares desired and the total purchase price.
(2) To purchase additional Shares pursuant to the Oversubscription
Rights, complete section II., also on the reverse side of the Rights
Certificate. Indicate in the appropriate blank spaces the number of Shares
oversubscribed for and the total purchase price therefor.
(3) After completing the reverse side of the Rights Certificate,
please sign it and return it to the address indicated, with your payment
for the total amount of Shares subscribed for, which payment may be made
by bank check or money order payable to the order of "Healthy Planet
Products, Inc." Payments may also be effected through wire transfer in
accordance with wire instructions given by the Rights Agent to the Company
prior to the effective date of this Registration Statement.
The Company will hold in escrow payment for Shares which you wish to
purchase pursuant to the Oversubscription Rights until the Rights Offering is
terminated and the number of available Shares is determined. Any portion of the
amounts paid to the Company for Oversubscription Rights subscriptions not filled
will be returned to you, without interest.
If you have any questions regarding this Rights Offering, or how to
subscribe, please call the Company at the number listed above and one of the
officers will be happy to help you.
Sincerely,
Bruce A. Wilson
Chief Executive Officer
