<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY , 1999
REGISTRATION NO. 333-70021
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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HEALTHY PLANET PRODUCTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
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DELAWARE 2271 94-260176
<S> <C> <C>
(STATE OF INCORPORATION) (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION (I.R.S. EMPLOYER
CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
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
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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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: [X]
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: [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
<TABLE>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF SECURITY TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
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Rights to Purchase Common Stock.................... 4,627,406 -- -- -- (1)
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Common Stock, $0.01 par value(2)................... 4,627,406 $0.6875(3) $3,181,341 $884.41
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Total.............................................. 4,627,406 $0.6875 $3,181,341 $884.41
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</TABLE>
(1) In connection with this Rights Offering, each Common Stockholder and each
Series D Convertible Preferred Stockholder of record as of the Record Date
is entitled to two Rights for each share of Common Stock, or Series D
Convertible Preferred Stock, owned as of such 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 $[ ] per share, which Subscription Price is
estimated 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 AMEX on December 28, 1998. However,
the actual Subscription Price for the Rights, if higher, 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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<PAGE> 2
PROSPECTUS SUBJECT TO COMPLETION FEBRUARY , 1999
THE RIGHTS OFFERING
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 of the
Prospectus.
This offering entitles our holders of record of our common stock and our series
D convertible preferred stock on January 11, 1999 to the following:
- - Two rights for each share of common stock or series D preferred stock you hold
of record on January 11, 1999
- - Each right entitles you to purchase one share of our common stock at $ [ ]
per share
- - If you exercise all your basic rights, you can elect to subscribe for
additional rights (subject to availability) pursuant to which you may purchase
up to the number of shares you subscribed for under your basic rights, at
$[ ] per share.
- - Your rights are exercisable commencing on the date of this prospectus and
continuing until 5:00 p.m., New York time on , 1999
- - We may extend the exercise period for up to thirty (30) additional days in our
sole discretion.
- - The rights are not transferable and are not assignable; they will not be
listed for trading on any stock exchange or the NASDAQ Stock Market.
For more information, please see "The Rights Offering," beginning on page [ ]
of this prospectus.
4,627,406 SHARES OF
COMMON STOCK
HEALTHY PLANET PRODUCTS, INC.
Our common stock is listed on the American Stock Exchange under the symbol
"HPP". On February , 1999, the closing price for the shares of our common
stock as reported by the American Stock Exchange was $[ ] per share.
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.
<TABLE>
<CAPTION>
PER SHARE TOTAL
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<S> <C> <C>
Subscription Price..... $[ . ] $[ . ]
</TABLE>
In the table above, the numbers quoted in the "Total" column do not reflect
deductions for estimated expenses of this rights offering of approximately
$180,000. A director who is our principal stockholder, and two companies he
controls which are also our stockholders, have agreed to exercise their
respective rights in full, thereby assuring that we will receive gross proceeds
of not less than $[ ] as a result of this rights offering.
THE DATE OF THIS PROSPECTUS IS
FEBRUARY , 1999.
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.
<PAGE> 3
TABLE OF CONTENTS
PROSPECTUS SUMMARY ....................................................... -3-
RISK FACTORS ............................................................. -7-
USE OF PROCEEDS .......................................................... -13-
DIVIDEND POLICY .......................................................... -13-
THE RIGHTS OFFERING ...................................................... -14-
The Offering Period ................................................. -14-
Non-Transferability of Rights ....................................... -14-
Method of Offering .................................................. -15-
Rights Agent ........................................................ -15-
Method of Exercising Rights ......................................... -15-
Payment for Shares of Our Common Stock on Exercise of Your Rights ... -15-
Delivery of Certificates ............................................ -16-
Determination of Subscription Price ................................. -16-
Rights Participation Guarantee by Certain Affiliates ................ -16-
State and Foreign Securities Laws ................................... -16-
Rights of Subscribers ............................................... -17-
Federal Income Tax Consequences ..................................... -17-
PRICE RANGE OF OUR COMMON STOCK .......................................... -18-
DESCRIPTION OF OUR CAPITAL STOCK ......................................... -18-
PRINCIPAL STOCKHOLDERS ................................................... -20-
EXPERTS .................................................................. -24-
LEGAL MATTERS ............................................................ -24-
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS ................................... -25-
<PAGE> 4
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). You may
read, or copy any document we file at the Public Reference Room maintained by
the SEC 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 SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from the SEC's
web site at http://www.sec.gov. Our common stock is listed on the American Stock
Exchange, and reports, proxy and information statements and other information
concerning us is available for inspection at the offices of the American Stock
Exchange located at 86 Trinity Place, New York, New York 10006.
If you are a stockholder, you may request a copy of these filings, at no cost,
by writing or telephoning us at the following address:
Healthy Planet Products, Inc.,
700 Corporate Circle,
Petaluma, California 94954
(707) 778-2280.
The SEC allows us to "incorporate by reference" the information we have filed
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus. This prospectus is part of a
registration statement we filed with the SEC (Registration Statement No.
333-70021). We incorporate by reference the documents listed below.
(a) Our Annual Report on Form 10-KSB for the year ended December 31, 1997, our
Form 10-KSB/A1 for the year ended December 31, 1997; and our Form 10-KSB/A2
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 the fiscal quarter ended March 31, 1998 and our Form
10-QSB/A1 for the 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 the fiscal quarter ended June 30, 1998; and our Form
10-QSB/A1 for the fiscal quarter ended June 30, 1998;
(h) Our Form 10-QSB for the fiscal quarter ended September 30, 1998; and our
Form 10-QSB/A1 for the 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, since September
30, 1998.
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<PAGE> 5
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 incorporated in reliance on such reports and on the
authority of such firm as experts in accounting and auditing to the extent
covered by consents filed with the SEC.
ADDITIONAL INFORMATION
You should rely only on the information provided in this document or other
information that we have referred you to. We have not authorized anyone to
provide you with information that is different. This prospectus and this rights
offering do not constitute an offer or solicitation by anyone in any
jurisdiction in which an offer or solicitation would be unlawful.
American Stock Transfer & Trust Company, our transfer agent and Registrar, has
agreed to serve as our rights agent in connection with the Registrar. If you
require assistance please contact our rights agent at 40 Wall Street, New York,
New York 10005, telephone, 212-936-5100, or Bruce Wilson., our Chief Executive
Officer at our executive offices, located at 1700 Corporate Circle, Petaluma,
California, 94954, telephone (707)-778-2280.
FORWARD-LOOKING INFORMATION
This prospectus, including the documents incorporated by reference, contain
forward-looking statements which we believe are within the meaning of the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Actual results could differ materially from those projected in the
forward-looking statements as a result of the risk factors set forth below and
others detailed from time to time in our public reports filed with the SEC.
2
<PAGE> 6
PROSPECTUS SUMMARY
Because this is a summary of the terms of the rights offering, it does not
contain all the information that may be important to you. Certain information
contained in this summary and elsewhere in this prospectus are forward-looking
statements. You should read the following summary, and the "Risk Factors"
section, along with the more detailed information and Financial Statements and
the notes to the Financial Statements appearing elsewhere in this prospectus or
incorporated by reference in this prospectus, before you decide whether to
participate in this rights offering.
ABOUT HEALTHY PLANET
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. 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. We also license the right to use
the Healthy Planet Products name, trademark and art work in connection with the
manufacture, sale and distribution of our products in certain foreign countries.
OUR HISTORY
We were originally organized under the laws of the state of California on July
12, 1979 under the name Carolyn Bean Publishing, Ltd. On April 25, 1985, we
reincorporated under the laws of the State of Delaware. 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 our telephone number is (707) 778-2280, fax number (707)
778-0307.
SUMMARY OF THE TERMS OF THE RIGHTS OFFERING
Securities we are offering...... - We will be offering up to a maximum of
4,627,406 shares of our common stock, par
value $.01 per share, that will be
available on exercise of the rights we
will be distributing to our holders of
common stock and series D preferred
stock. "The Rights Offering".
- You will receive two basic rights for
each share of our common stock, or series
D convertible preferred stock, that you
held of record at the close of business
on January 11, 1999.
What your basic right entitles
you to........................ - Each basic right entitles you to purchase
one share of our common stock at
$[ ] per
3
<PAGE> 7
share. See "The Rights Offering -- Basic
Subscription Right".
What your oversubscription right
entitles you to............... - If you exercise all of your basic rights,
you are entitled to oversubscribe for
additional rights, which will entitle you
to purchase up to the number of shares of
common stock you were entitled to
subscribe for under your basic rights.
- The price you will pay to exercise your
oversubscription rights is $[ ]
per share, the same as the exercise price
for your basic rights.
- The maximum number of shares of common
stock which may be purchased pursuant to
the exercise of all basic rights and
oversubscription rights in this offering
by all stockholders may not exceed
4,627,406.
- If there are an insufficient number of
unpurchased shares of common stock to
fill all oversubscriptions, then the
available shares of common stock will be
allotted pro rata among the
oversubscribers based on the numbers of
shares for which they oversubscribe. See
"The Rights Offering -- Oversubscription
Right".
Record date to be eligible to
receive rights.................. The close of business on January 11, 1999.
Certificates representing the
rights.......................... Your rights will be evidenced by
non-transferable, non-assignable rights
certificates.
Expiration date of the rights... - 5:00 p.m., New York time, on
, 1999 (20 days from the
date of this prospectus).
- We may extend this period at our sole
discretion for a period of up to 30 days.
- The 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 SEC), to and
including the expiration date of the
rights. See "The Rights Offering -- The
Offering Period".
Non-transferability of rights... The rights, including the oversubscription
rights, are not transferable and are not
assignable. They may only be exercised by
you. See "The Rights
Offering -- Non-Transferability of Rights".
Our rights agent................ Our rights agent is American Stock Transfer
and Trust Company, 40 Wall Street, New
York, New
4
<PAGE> 8
York 10007. Telephone, 212-936-5100. See
"The Rights Offering -- Rights Agent".
Use of proceeds................. We will receive a minimum of $[ ]
from this rights offering because of the
commitment on the part of one of our
directors, who is our principal
stockholder, and two companies he controls,
which are also our stockholders, to
exercise all of their respective basic
rights. This will result in the sale of
927,000 shares at the subscription price.
We intend to use these proceeds for general
working capital purposes, including, but
not limited to:
- 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 your
rights.......................... To exercise your basic rights, and to
subscribe for oversubscription rights, you
must complete your rights certificate, and
mail, or hand deliver it, along with your
payment, so that it is received by our
rights agent on or before 5:00 p.m. New
York time on date the rights expire. Your
payment must accompany the rights
certificate.
Payment for the shares of common
stock purchased............... Payment for the shares of common stock
purchased pursuant to the exercise of your
rights (basic and oversubscription) may be
made by check, subject to collection, bank
check or money order payable to the order
of "Healthy Planet Products, Inc." Payment
for basic rights and oversubscription
rights may also be effected through wire
transfer as follows: Chase Manhattan Bank,
ABA Routing Number 021000021, Account
Number 323005225. If you are a holder of
our common stock registered in the name of
a broker, dealer, commercial bank, trust
company or nominee, we urge you to contact
your registered holder promptly if you wish
to subscribe. See "The Rights
Offering -- Payment for Shares of Our
Common Stock on Exercise of Your Rights".
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Commitment by affiliates........ One of our directors, who is also a
principal stockholder, and two companies
which he controls which are also our
stockholders, have agreed with us to
exercise all of their respective basic
rights (for 927,000 shares of our common
stock). See "The Rights Offering -- Rights
Participation Guarantee by Certain
Affiliates."
Shares of our common stock
outstanding prior to this
offering...................... 2,282,368 shares of common stock are
currently outstanding. Please note that
this number does not include:
- 465,000 shares of common stock reserved
for issuance under our Senior Management
Incentive Plan;
- 85,000 shares of common stock reserved
for issuance under our Non-Employee
Director Stock Option Plan;
- 360,000 shares of common stock reserved
for issuance upon exercise of certain
previously issued warrants;
- 250,000 shares of common stock reserved
for issuance upon exercise of certain
warrants to be issued in connection with
this rights offering; and
- 31,335 shares of common stock issuable
upon exercise of 31,335 shares of series
D convertible preferred stock.
Shares of our common stock that
will be outstanding after this
offering...................... 6,941,109 shares of common stock will be
outstanding after this offering if all
rights are exercised, or 3,240,703 shares
if only our director and the companies he
controls exercise their rights for 927,000
shares of common stock, the number of
shares of common stock which they have
agreed to purchase. The actual number of
shares of common stock to be outstanding
will depend upon the number of basic rights
exercised and the number of shares of
common stock purchased pursuant to the
oversubscription rights.
Principal securities market on
which our securities are
traded........................ Our common stock is listed on the American
Stock Exchange 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.
6
<PAGE> 10
Federal income tax
consequences.................... Generally, you will not recognize any
income or loss upon receipt of the basic
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".
7
<PAGE> 11
RISK FACTORS
Investment in the shares of our common stock issuable upon exercise of the
rights involves a high degree of risk. You should give careful consideration to
the following factors, among others, before making an investment decision.
1. Forward-looking statements contained in this Prospectus are based on
management's best estimates of future results, based upon current conditions and
the most recent results of operations, but unknown risks, uncertainties, and
other factors could cause our actual results, performance (financial or
operating) or achievements to differ from the future results, performance
(financial or operating) or achievements expressed or implied by such forward
looking statements.
Certain statements in this prospectus constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. We
believe that the forward looking statements contained in this prospectus are
within the meaning of the safe harbor provided by section 27A of the Securities
Act of 1933, as amended. Forward-looking statements contained in this prospectus
and the other documents incorporated by reference, 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) or 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 declines in
gross margin as well as marginal increases in general and administrative
expenses, 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.
2. We have experienced operating losses in the past and we may continue to
sustain operating losses in the future.
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 expect that we will continue to experience losses in 1999 and
possibly beyond.
3. We have experienced decreased sales in the past and we may continue to
sustain decreased sales in the future.
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 the introduction of
new product lines, or other efforts by us to increase sales. If the decline in
sales is not reversed, we are unlikely to earn a profit in the foreseeable
future.
8
<PAGE> 12
4. Our greeting card business is heavily dependent on consumer demand, and
fluctuations in demand may effect our business.
The success of our card business is heavily dependent upon consumer demand.
Fluctuations in demand may affect our profitability. Significant changes or
drops in consumer demand, whether caused by changes in consumer taste for
products with a nature or wild life theme, a decline in the general retail
environment, or a decline in general economic conditions, may result in our
inability to maintain sales of our principal Sierra Club card line and other
card lines. A decline in purchasing plans and programs of certain large chain
buyers relating to holiday product may similarly effect our ability to maintain
sales. In addition, consumer demand may be effected by a decline in support for
a cause which we promote through one of our cards.
5. Our collectible and figurine business is heavily dependent on consumer
demand, and fluctuations in demand for these products may effect our business.
The success of our collectible and figurine line of business is also heavily
dependent upon consumer demand. Significant changes or drops in consumer demand
will also effect 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 for this line
of business which will meet with consumer acceptance may also effect future
results.
6. Changes in purchasing plans of certain of our customers has had a material
effect on our revenues.
In September 1997, Barnes & Noble Superstores ("B&N"), a national chain of
bookstores which accounted for approximately 13.9% our net sales for the year
ended December 31, 1997, discontinued carrying our everyday card line. We were
advised by B&N that this change was prompted by its decision to centralize
purchasing of greeting cards from one central vendor, and was not attributable
to any dissatisfaction with the quality or appeal of our products. This change
has had a material adverse effect on our revenues compared to prior periods and,
to date, we have been unable to replace the lost sales, which has contributed to
our recent losses. Although we have no knowledge that other retail chains which
purchase cards or other products from us have or will adopt a similar approach
to their purchases, this possibility exists and, if it occurs, could have a
further adverse effect on sales.
7. If you do not exercise your rights, then your ownership interest in our
company may be substantially diluted.
We are registering up to 4,627,406 shares of common stock to cover exercise of
the rights. If you chose not to exercise your rights, your relative ownership
interests will be diluted by the issuance of these shares of common stock to
those stockholders who do exercise their rights.
8. If our stockholders, other than our affiliates who have agreed to exercise
all their rights, fail to exercise their rights, our affiliates will have the
ability to exercise control over the company.
At the conclusion of this rights offering, assuming no other participation in
the rights offering by other stockholders, John V. Winfield, a director and our
principal stockholder of the company, as well as the InterGroup Corporation, a
company controlled by Mr. Winfield ("InterGroup") and Santa Fe Financial
Corporation, a subsidiary of
9
<PAGE> 13
InterGroup ("Santa Fe") will, at a minimum, own 502,800, 826,800 and 60,900
shares of our common stock, respectively, or 1,390,500 shares of common stock
(42.9% of our issued and outstanding common stock) in the aggregate.
They will also have the right to acquire up to an additional 639,829 shares of
our common stock through the exercise of warrants and options they currently own
and will receive in connection with this offering. After giving effect to the
shares that Mr. Winfield, InterGroup and Santa Fe can acquire through warrants
and options, they will beneficially own an aggregate of 2,030,329 shares of our
common stock, or approximately 52.2% of our company. They will therefore have
the potential to elect all of our directors, and to control the business and the
policies of the company.
The following chart details the current collective ownership of Mr. Winfield,
InterGroup and Santa Fe and their ownership as a result of the exercise of all
of their basic rights. For additional information regarding their ownership,
please see "Principal Stockholders," and the paragraphs following this table.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP AND
PERCENTAGE ON EXERCISE OF
ALL BASIC RIGHTS BY
WINFIELD AND HIS AFFILIATES
BENEFICIAL OWNERSHIP AND (ASSUMES NO OTHER
PERCENTAGE SHAREHOLDER PARTICIPATION
BEFORE OFFERING IN THE RIGHTS)
------------------------- ---------------------------
NUMBER OF NUMBER OF
NAME OF BENEFICIAL OWNER SHARES PERCENTAGE SHARES PERCENTAGE
- ------------------------ ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
John Winfield,.......... 773,500 29.5% 2,030,329 52.3%
InterGroup and
Santa Fe
</TABLE>
Mr. Winfield is currently the owner of 167,600 shares of our common stock,
warrants to purchase and aggregate of 150,000 shares of our common stock at
prices ranging from $4.00 to $4.50, and director options to purchase 10,000
shares at exercise prices ranging from $1.50 to $3.40. InterGroup owns 275,600
shares of our common stock and also owns warrants to purchase common stock with
respect to an aggregate of 150,000 shares of our common stock, at prices ranging
from $4.00 to $4.50 per share. These warrants are exercisable commencing
September 29, 1997 and may be exercised through September 29, 2002. These
warrants contain anti-dilution provisions which will be triggered by this rights
offering. Santa Fe owns 20,300 shares of our common stock.
9. We are issuing warrants to our affiliates to purchase an aggregate of
250,000 shares of our common stock, in consideration of their commitment to
exercise all of their respective basic rights.
Mr. Winfield, InterGroup and Santa Fe have agreed to exercise all of their
respective basic rights. In exchange for this commitment, Mr. Winfield,
InterGroup and Santa Fe are being issued additional 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 before this rights offering, as
follows: 90,399 to Mr. Winfield, 148,652 to InterGroup and 10,949 to Santa Fe.
We are not offering these warrants to any other stockholders to induce exercise
of their basic rights.
10. We are heavily dependent on a license from the Sierra Club. If we lose the
Sierra Club license, we may experience a material adverse effect on our
businesses.
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<PAGE> 14
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 70.5% of our sales for the year ended December 31,
1997 and 61.9% for the nine months ended September 30, 1998. 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.
11. We are engaged in a business that is sensitive to seasonal sales
fluctuations, and this results in a build up of accounts receivable in the third
and fourth quarters, and increased capital carrying costs.
The greeting card, social stationery, gift and figurine industries are
historically effected by seasonal sales, 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 16% of total annual sales were in accounts receivable as of
December 31, 1998, and are not collectible until the first quarter of 1999.
Approximately 63% of the cost of manufacturing inventory was incurred in the
second and third quarters of the 1998 year. This seasonality requires us to
apply our working capital to either carry accounts receivable during the last
two quarters of the year, or to cover production costs during peak production
periods. Since we remain dependent upon our internal cash resources to provide
necessary working capital, this may result in a shortage of working capital
during certain periods of the year. In addition, if we experience 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 accounts
receivable. No assurance may be given that such additional capital, if required,
will be available to us in the future.
12. The consolidation of certain retailers has caused increased competition and
has had a material effect on our revenues.
We believe that the recent consolidation of the retail industry for our products
has decreased shelf space for our card and collectible product lines.
Consequently, we are competing with both alternative and traditional card
companies for less shelf space. This has curtailed our products' visibility and
consequently has an adverse effect on our revenues. This adverse effect may
continue in the future.
13. Because we compete with much larger card companies with greater resources
that us, we are at a competitive disadvantage.
Our primary competition is with smaller alternative card companies, several of
which have sales and resources greater than those we have; e.g., Recycled Paper
Products, Paramount and Sunrise Publications, among others. We also compete with
major traditional card companies, such as Hallmark Cards, Inc., American
Greetings Corporation, and Gibson Greetings, Inc, all of which have
significantly greater financial resources, market penetration and experience
than the we have. Similar competitive considerations apply to
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<PAGE> 15
our collectibles line where we compete with other companies with greater
financial resources, market penetration and experience than we have.
14. We do not own manufacturing facilities to produce our card or collectibles
and therefore we are dependent on outside sources for production.
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. However, we do not maintain long term
contracts with our principal suppliers. Consequently our production costs could
escalate without significant advance notice, in which case our financial
condition and results of operations could be adversely effected.
15. We are dependent upon outside artists to create cards, and their loss could
have a material impact on operations.
While the overall concept and design of our 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 artist or 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. However, if these costs were to escalate, our operations
could be effected.
16. We are dependent upon outside sculptors to design our figurines and molds,
and their loss could have a material impact on operations.
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. However, if the fees paid to the artists were to escalate, our
operations could be effected.
17. The failure of our key suppliers and customers to be Year 2000 compliant
may negatively effect our business.
Year 2000 compliance is a measure of the ability of computer hardware and
software to differentiate between the years 1900-1999 and the years 2000-2099.
The underlying problem is caused by the fact that computer programs
traditionally have been written using two digits rather than four to store year
information. Failure to address this problem could result in system failures and
the generation of erroneous data. Moreover, there are a number of software and
product design approaches to achieving Year 2000 compliance, and we may incur
additional costs in maintaining system compatibility with third party suppliers
and customers as a result of any Year 2000 compliance modifications.
12
<PAGE> 16
We have reviewed our internal computer programs and systems to ensure that they
will be Year 2000 compliant. While we believe that our current systems are
compliant and that no additional material expenditures are required to address
Year 2000 compliance of our internal computer systems, there can be no assurance
to that effect. In addition, we cannot predict the effect of the Year 2000
problem on the vendors, customers and other entities with which we transact
business and there can be no assurance that the effect of the Year 2000 problem
on such entities will not have a material adverse effect on our business,
financial condition and results of operations.
18. There has been limited trading in the our common stock the issuance of
additional shares as a result of this offering may have an adverse effects on
the market price of our common stock.
For the twelve months ended December 31, 1998, the average monthly trading
volume in our common stock was approximately 497,000 shares. Consequently, it
can be expected that sales of substantial amounts of our common stock in the
public market could adversely affect the market price of our common stock.
Immediately before 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).
19. Certain of our shares are restricted securities but they will become
eligible for resale in the future.
Of the 2,282,368 shares of issued and outstanding Common Stock, 557,787 shares
have not been registered under the federal securities laws. Unless registered
for resale under the Securities Act of 1933, as amended, these shares may only
be sold in the public market to the extent permitted under Rule 144 under the
general rules and regulations of the Securities Act of 1933, as amended. 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 not an affiliate of the company and who has restricted securities for over
two 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 common stock issuable on conversion of our series D
preferred stock will be eligible for resale under Rule 144. The possibility of
resale of these restricted securities in the open market may have a depressive
effect on the price of our common stock.
20. We have not paid dividends in the past and do not expect to in the future.
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
We will receive a minimum of $[ ] from this rights offering, after estimated
expenses of $[ ]. The minimum is guaranteed because of the commitment on the
part of one of our directors, who is a principal stockholder, and two companies
he controls, to exercise all of their respective basic rights for an aggregate
purchase price of $[ ]. We are not sure
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<PAGE> 17
of the amount of additional proceeds, if any, that we will receive from the
exercise of basic rights and/or oversubscription rights by any other
stockholder, but if all stockholders participate in the rights offering, the
total maximum amount of proceeds are estimated to be $[ ], after estimated
expenses of $[ ]. Our use of these proceeds, described below, will be the
same, regardless of whether we raise the minimum or the maximum amounts referred
to above.
We intend to use these proceeds for general working capital purposes including,
but not limited to:
- internal carrying of accounts receivable, without need for 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.
THE RIGHTS OFFERING
THE RIGHTS YOU WILL RECEIVE:
BASIC SUBSCRIPTION RIGHTS
You will receive two basic subscription rights for each share of our common
stock or series D convertible preferred stock that you held of record at the
close of business on January 11, 1999. For each right you receive, you may
purchase one share of our common stock at $[ ] per share. Your rights will
be evidenced by non-transferable rights certificates which are expected to be
mailed within five business days following the effective date of this
Registration Statement. To exercise a basic right, the reverse side of your
rights certificate must be properly completed and received by our rights agent,
in accordance with the procedure described below under "Method of Exercising
Rights". Payment for the shares of common stock must accompany the rights
certificate.
OVERSUBSCRIPTION RIGHTS
If you exercise all of your basic rights, you will also be eligible for
oversubscription rights, which will entitle you to purchase, at $[ ] per
share, up to the number shares of common stock you were entitled to subscribe
for under your basic rights. The maximum number of shares which may be purchased
pursuant to the exercise of all basic rights and oversubscription rights by all
stockholders may not exceed 4,627,406.
We will not allocate shares of common stock for oversubscription rights until we
have filled all subscriptions for basic 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 of
common stock not required to satisfy the basic rights which are exercised. If
the shares of common stock are not sufficient to satisfy all subscriptions
pursuant to the oversubscription rights, the available shares of common stock
will be
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<PAGE> 18
allotted pro rata among those of you who exercised the oversubscription rights,
based on the number of shares for which each of you oversubscribed.
To exercise this 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 rights. Payment for
oversubscription shares should be included with the payment for basic shares and
should accompany the rights certificate. See "Method of Exercising Rights."
You may only subscribe for full shares. Once you have exercised a basic right or
an oversubscription right, the exercise is irrevocable.
THE OFFERING PERIOD
The basic rights will be exercisable during the 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. We may extend the date the rights expire in our sole discretion, for a
period of up to 30 days, by giving notice of such extension to the rights agent
at any time before 5:00 p.m. on the then existing expiration date and issuing a
press release to that effect by no later than 10:00 a.m. on the following
business day. Unless exercised before this expiration date, the rights will
automatically terminate. Thereafter, the unexercised rights and all rights
certificates relating to the rights will be void and have no value.
NON-TRANSFERABILITY OF RIGHTS
Both the basic rights and the oversubscription rights are non-transferrable and
non-assignable. Therefore only you may exercise such rights.
METHOD OF OFFERING
The offering described in this prospectus will be made directly by us. We have
not engaged any underwriters, brokers, dealers or other agents to participate in
this offering or to solicit any exercise of the rights or sales of the shares of
common stock. Therefore, we will pay no commission, finder's fees or other
remuneration to any person in connection with any sales of the shares of common
stock.
RIGHTS AGENT
Our rights agent is American Stock Transfer & Trust Company, New York, New York.
American Stock Transfer & Trust Company is also the transfer agent for shares of
our common stock.
METHOD OF EXERCISING RIGHTS
To exercise your rights, you should complete and sign your rights certificate
and mail or hand deliver it, together with your payment for the shares of common
stock subscribed for pursuant to the exercise of your basic rights and, if
desired, your oversubscription rights, to our rights agent. The certificate and
your payment should arrive no later than 5:00 p.m. New York time, on the
expiration date of the rights. All subscriptions received after the expiration
date will not be honored.
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<PAGE> 19
Please note that the method of delivery of the right certificate and check or
checks is at your own risk. We suggest insured registered mail, return receipt
requested, if the mails are used. Rights certificates and payments may be mailed
or delivered to:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10007
Attn: Securities Transfer Department
(212) 936-5100
Please read the instructions accompanying the rights certificate carefully and
follow them in detail. Do not send rights certificates or payments directly to
us at the company.
We are not, nor is our rights agent, under any duty to give notification of any
defects or irregularities in your subscriptions, nor shall we or our rights
agent incur any liability for failure to give such notification.
PAYMENT FOR SHARES OF OUR COMMON STOCK ON EXERCISE OF YOUR RIGHTS
Payment for the shares of common stock purchased pursuant to the exercise of
your rights (basic and oversubscription) may be made by check, subject to
collection, bank check or money order payable to the order of "Healthy Planet
Products, Inc." Payment for basic rights and oversubscription rights may also be
effected through wire transfer as follows: Chase Manhattan Bank, ABA Routing
Number 021000021, Account Number 323005225. If you are a holder of our common
stock registered in the name of a broker, dealer, commercial bank, trust company
or nominee, we urge you to contact such registered holder promptly if you wish
to subscribe.
Our 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 of common stock is determined. As soon as practicable after the
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.
DELIVERY OF CERTIFICATES
Certificates for shares of common stock subscribed for pursuant to the basic
rights will be delivered to you as soon as practicable after receipt by the
rights agent of your duly completed and exercised rights certificate and payment
in full for the shares of common stock pursuant to the basic rights. As soon as
practicable after the expiration date of the rights, we will determine the
number of shares of common stock, 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 of common stock
among those
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<PAGE> 20
rights holders exercising oversubscription rights, overpayments for shares of
common stock not issued to such holders will be promptly refunded, without
interest.
DETERMINATION OF SUBSCRIPTION PRICE
We have determined the subscription price of the shares of common stock in
consultation with certain affiliates, without regard to our present net worth,
book value or any other financial measure. Consideration was given to closing
sale and bid and asked prices of the common stock on the American Stock Exchange
prior to the date of this prospectus, the general condition of the securities
markets and our financial condition. The closing price of our common stock as
reported on the American Stock Exchange on February , 1999, the last business
day before the date of this prospectus, was $[ ] 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,
Mr. Winfield, InterGroup and Santa Fe have agreed with us that they will
exercise all of their respective basic rights.
In consideration of their commitment to exercise all of their respective basic
rights, we have agreed to issue to each of them warrants to purchase an
aggregate of 250,000 shares of common stock. These warrants are to be allocated
among them, pro rata, according to their ownership percentage before this rights
offering, as follows: 90,399 to Mr. Winfield, 148,652 to InterGroup and 10,949
to Santa Fe. The warrants are exercisable at a price not less than 110% of the
subscription price. The delivery of these warrants to the aforementioned
affiliates is subject to the payment by each of them of the total price for
their respective basic rights.
As a result of their commitment, at the conclusion of this rights offering, and
assuming that no other stockholders participate in this 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, consisting of an aggregate of
1,390,500 shares of common stock (42.9%) of the company. They may be deemed to
own an aggregate of 2,030,329 shares of our common stock (52.3%) of the company,
when giving effect to (i) warrants previously issued to Mr. Winfield and
InterGroup, (ii) an aggregate of 250,000 warrants issued to Mr. Winfield,
InterGroup and Santa Fe in connection with this rights offering and (iii)
certain Director options. See "Risk Factors" and "Principal Stockholders."
STATE AND FOREIGN SECURITIES LAWS
The rights may not be exercised by any person in any jurisdiction in which such
exercise would be unlawful. Neither this Prospectus, nor the rights
certificates, are an offer to sell or solicitation of an offer to purchase any
of shares of common stock. 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 of common stock. Consequently, we may reject subscriptions
pursuant to the exercise of rights by any stockholder outside the United States
unless we determine that
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<PAGE> 21
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 of common stock to such
stockholders, even if it could do so by qualifying the shares of common stock
for sale or by taking other actions in such jurisdictions.
RIGHTS OF SUBSCRIBERS
As holders of the rights, you will not have rights as stockholders with respect
to the shares of common stock 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
our rights agent.
FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain federal income tax considerations
applicable to you upon the distribution of the rights.
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.
DISTRIBUTION OF RIGHTS. We have been advised that under the Internal Revenue
Code of 1986, the distribution of the rights will result in no income to you 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.
BASIS OF RIGHTS. If you exercise your rights, the basis of your 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 you on January 11, 1999, or you make an election to allocate part
of the basis of such stock to the rights. In either such event, your 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. If you sell shares of common stock acquired by exercise of your
rights, you will recognize a gain or a 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 you upon the exercise of you rights will be
equal to the sum of the price paid for the shares subscribed for pursuant to the
rights and your 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. If you allow your rights to lapse, you will not recognize any
gain or loss, and no adjustment will be made in the basis of the common stock
you own.
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.
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<PAGE> 22
PRICE RANGE OF OUR COMMON STOCK
Our common stock is traded on the American Stock Exchange under the symbol
"HPP". The following table sets forth for the calendar quarters indicated the
high and low closing sales prices of our common stock:
<TABLE>
<CAPTION>
1997 HIGH LOW
- ---- ---- ---
<S> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
1998 HIGH LOW
- ---- ---- ---
<S> <C> <C>
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............................................... 1 1/2
</TABLE>
For the most recent closing price of our common stock, see the cover page of
this prospectus. On January 11, 1999, there were 128 record holders of our
common stock. Such number of record owners was determined from the our
shareholder records, and does not include beneficial owners of common stock
whose shares are held in the names of various security holders, dealers and
clearing agencies. We believe the number of beneficial owners of our common
stock held by others as or in nominee name to be approximately 1,500.
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 SEC. 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).
OUR COMMON STOCK
As holders of shares of our common stock, you are entitled to dividends when and
as declared by the Board of Directors from legally available funds, and, upon
liquidation you are entitled to share pro rata in any stockholder distribution.
You also 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 our preferred stock as series D convertible
preferred stock, of which 31,335 are issued and outstanding. As a holders of the
series D convertible preferred stock, you are not entitled to receive dividends.
The series D convertible
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preferred stock is redeemable at our option, at its liquidation preference of
$5.11 per share. These holders 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.
PRINCIPAL STOCKHOLDERS
The table below sets forth certain information with respect to the ownership
before and after the rights offering, as of January 11, 1999. The following
information explains what each column represents:
(1) The first column sets forth the names and addresses of each officer and
director of the company, or the names and addresses of each person
known by the company to beneficially own more than 5% of the
outstanding shares of our common stock, and all executive officers and
directors of the company as a group, as the case may be.
(2) The second column sets forth the number of shares (and related
percentages) beneficially owned by the person or entity listed in
column one before the offering.
(3) The third column entitled "Amount and Nature of Beneficial Ownership
and Percentage Upon Exercise of Minimum Number of Basic Rights," sets
forth the number of shares (and related percentage of ownership) held
by the persons or entities listed in column one, giving effect to the
guarantee by Mr. Winfield, InterGroup and Santa Fe to exercise all of
their basic rights. This column assumes no oversubscription and no
participation in the rights offering by stockholders other than Mr.
Winfield and his affiliate companies. The amount of beneficial
ownership in this column includes:
(i) the number of shares of common stock owned before this rights
offering,
(ii) additional shares issuable on the exercise of the basic rights,
(iii) all vested and presently exercisable warrants and options,
(iv) the adjustment to the number of shares issuable upon exercise of
warrants to purchase common stock owned by Mr. Winfield and
InterGroup as a result of anti-dilution provisions contained in
such warrants, and
(v) the issuance of an aggregate of 250,000 warrants to Mr. Winfield,
InterGroup and Santa Fe in connection with this rights offering.
(4) The fourth column entitled "Amount and Nature of Beneficial Ownership
and Percentage in Event all Basic Rights are Exercised" sets forth the
number of shares (and related percentages) beneficially owned by the
persons or entities listed in column one giving effect to 100%
participation in the rights offering by all stockholders, including Mr.
Winfield and his affiliated companies. The amount of beneficial
ownership in this column includes:
(i) the number of shares of common stock owned before the rights
offering,
(ii) additional shares issuable on the exercise of the basic rights,
(iii) all vested and presently exercisable warrants and options,
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(iv) the adjustment to the number of shares issuable upon exercise of
warrants to purchase common stock owned by Mr. Winfield and
InterGroup as a result of anti-dilution provisions contained in
such warrants, and
(v) the issuance of an aggregate of 250,000 warrants to Mr. Winfield,
InterGroup and Santa Fe in connection with this rights offering.
Beneficial ownership is determined in accordance with the rules promulgated by
the SEC and the information is not necessarily indicative of beneficial
ownership for any other purpose. This table is based upon information supplied
to us by officers, directors and principal stockholders. Except as otherwise
indicated, we believe that the persons or entities named in the table have sole
voting power with respect to all shares of our common stock shown as
beneficially owned by them, subject to community property laws where applicable.
The table should be read in conjunction with the information which follows it.
<TABLE>
<CAPTION>
AMOUNT AND NATURE AMOUNT OF AND NATURE
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
AMOUNT OF AND NATURE AND PERCENTAGE UPON AND PERCENTAGE
BENEFICIAL OWNERSHIP EXERCISE OF MINIMUM IN EVENT ALL
AND PERCENTAGE NUMBER OF BASIC RIGHTS
BEFORE OFFERING BASIC RIGHTS ARE EXERCISED
---------------------- ---------------------- ----------------------
NAME AND ADDRESS OF NUMBER OF NUMBER OF NUMBER OF
BENEFICIAL OWNER SHARES PERCENTAGE SHARES PERCENTAGE SHARES PERCENTAGE
------------------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Bruce A. Wilson............. 155,600 6.4% 155,600 4.7% 261,800 3.7%
1700 Corporate Circle
Petaluma, CA 94954
John V. Winfield............ 773,500 29.5% 2,030,329 52.3% 2,238,654 28.7%
2121 Avenue of the Stars
Los Angeles, CA 90067
The InterGroup 445,900 18.1% 1,237,215 34.5% 1,341,378 18.1%
Corporation...............
2121 Avenue of the Stars
Los Angeles, CA 90067
Starr Securities, Inc....... 191,048 8.0% 191,048 5.1% 453,144 6.5%
19 Rector Street
New York, NY 10006
Paul Bluhdorn............... 181,256 7.8% 181,256 5.6% 543,768 7.8%
P.O. Box 7854
Burbank, CA 91510
Mark S. Siegel.............. 70,062 3.0% 70,062 2.2% 210,186 3.0%
P.O. Box 7854
Burbank, CA 91510
Yvette Bluhdorn............. 71,738 3.1% 71,738 2.2% 215,214 3.1%
P.O. Box 7854
Burbank, CA 91510
Estate of Ludwig 182,071 7.9% 182,071 5.6% 546,213 7.9%
Jesselson.................
1301 Avenue of the Americas
New York, NY 10019
Michael Jesselson........... 92,062 4.0% 92,062 2.8% 276,186 4.0%
1301 Avenue of the Americas
New York, NY 10019
</TABLE>
21
<PAGE> 25
<TABLE>
<CAPTION>
AMOUNT AND NATURE AMOUNT OF AND NATURE
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
AMOUNT OF AND NATURE AND PERCENTAGE UPON AND PERCENTAGE
BENEFICIAL OWNERSHIP EXERCISE OF MINIMUM IN EVENT ALL
AND PERCENTAGE NUMBER OF BASIC RIGHTS
BEFORE OFFERING BASIC RIGHTS ARE EXERCISED
---------------------- ---------------------- ----------------------
NAME AND ADDRESS OF NUMBER OF NUMBER OF NUMBER OF
BENEFICIAL OWNER SHARES PERCENTAGE SHARES PERCENTAGE SHARES PERCENTAGE
------------------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ricky Williams.............. 55,000 2.3% 55,000 1.7% 55,000 0.8%
1700 Corporate Circle
Petaluma, CA 94954
M. Scott Foster............. 102,500 4.2% 102,500 3.1% 102,500 1.5%
1700 Corporate Circle
Petaluma, CA 94954
Daniel R. Coleman........... 15,000 0.6% 15,000 0.5% 15,000 0.2%
500 108th Avenue, NE
Bellevue, WA 98004
Michael G. Zybala........... 5,000 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 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 0.2% 5,000 0.2% 5,000 0.1%
The Claremont Graduate
School
925 N. Dartmouth Avenue
Claremont, CA 91711
All Officers and Directors
as a Group (6 persons in
number)................... 1,116,600 38.3% 2,373,429 56.9% 2,682,954 33.3%
</TABLE>
Mr. Wilson's beneficial ownership column includes 102,500 vested and presently
exercisable options and 53,100 restricted shares subject to vesting at the rate
of 4,000 shares per year on December 31st in each year.
The information listed for Mr. Winfield is based upon information contained in a
Form 4 dated December 24, 1998, on behalf of Mr. Winfield, InterGroup and Santa
Fe (the "Winfield Form 4"). This row includes (i) 167,600 shares of common stock
and warrants to purchase 150,000 shares of common stock owned by Mr. Winfield,
(ii) 275,600 shares of common stock and 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. This row also includes options to purchase 10,000 shares
of common stock granted to Mr. Winfield pursuant to our Non-Employee Director
Plan. Mr. Winfield is the Chairman and CEO of both Santa Fe and InterGroup.
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.
22
<PAGE> 26
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 and InterGroup.
The beneficial ownership of InterGroup is based upon information contained in
the Winfield Form 4, and includes 275,600 shares of common stock and 150,000
warrants owned by InterGroup.
The beneficial ownership of Starr Securities is 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. The beneficial ownership includes
131,048 shares of common stock owned of record by Starr and 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.
The beneficial ownership of Mr. Bludhorn is 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. It 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. It 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.
The beneficial ownership of Mr. Seigal is based on information contained in the
Bluhdorn 13D and the corporate records of the company.
The beneficial ownership of Ms. Bluhdorn is 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.
Mr. 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. The
information on Mr. Jesselson's beneficial ownership is 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. It 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. It 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. Mr. Michael Jesselson's ownership is based on information
contained in the Jesselson 13D. It also 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 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.
23
<PAGE> 27
The beneficial ownership of Mr. Williams includes 55,000 vested and presently
exercisable options. The beneficial ownership of Mr. Foster includes 102,500
vested and presently exercisable options. The beneficial ownership of Mr.
Coleman includes 15,000 vested and presently exercisable options. The beneficial
ownership of Mr. Nance 5,000 vested and presently exercisable options.
EXPERTS
Moss Adams LLP, independent public accountants have audited our balance sheet
for the each of the years ended December 31, 1997 and 1996 and the statements of
operations, shareholders' equity and cash flows for the two years ended December
31, 1997. Their reports are incorporated by reference 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
Our counsel, Camhy Karlinsky & Stein LLP, 1740 Broadway, New York, New York
10019, has passed on the legality of the shares to which this prospectus
relates.
24
<PAGE> 28
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 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
II-1
<PAGE> 29
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 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> 30
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. Those exhibits designated with a double asterisk
(**) have been filed with the initial filing of this Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
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 Opinion re: Legality of Camhy Karlinsky & Stein LLP
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** Subscription Commitment Agreement.
99.2** Warrant Agreement of John V. Winfield with Form of Warrant
Certificate attached thereto.
99.3** Warrant Agreement of The InterGroup Corporation with Form of
Warrant Certificate attached thereto.
99.4** Warrant Agreement of Santa Fe Financial Corporation with
Form of Warrant Certificate attached thereto.
99.5** Registration Rights Agreement of John V. Winfield.
99.6** Registration Rights Agreement of The InterGroup Corporation.
99.7** Registration Rights Agreement of Santa Fe Financial
Corporation.
99.8** Rights Agent Agreement with Form of Rights Certificate
attached thereto.
99.9** Form of Letter to stockholders of record as of January 11,
1999.
</TABLE>
ITEM 17. UNDERTAKINGS.
A. Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, (the "Act") 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. If 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.
II-3
<PAGE> 31
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> 32
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Amendment No. 1 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City Petaluma,
State of California, on February , 1999.
HEALTHY PLANET PRODUCTS, INC.
By /s/ BRUCE A. WILSON
------------------------------------
Bruce A. Wilson
President and Chief Executive
Officer.
Pursuant to the requirements of the Securities Act of 1933, as amended,
Amendment No. 1 to this Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ BRUCE A. WILSON President and Chief Executive February , 1999
- --------------------------------------------------- Officer (Principal Executive,
Bruce A. Wilson Financial and Accounting
Officer)
/s/ JOHN V. WINFIELD* Chairman of the Board February , 1999
- ---------------------------------------------------
John V. Winfield
/s/ MICHAEL G. ZYBALA* Director February , 1999
- ---------------------------------------------------
Michael G. Zybala
/s/ DANIEL R. COLEMAN* Director February , 1999
- ---------------------------------------------------
Daniel R. Coleman
/s/ WILLIAM J. NANCE* Director February , 1999
- ---------------------------------------------------
William J. Nance
/s/ ROBERT W. SWEITZER, PH.D* Director February , 1999
- ---------------------------------------------------
Robert W. Sweitzer
*By: /s/ BRUCE A. WILSON
-----------------------------------------------
Name: Bruce A. Wilson
Attorney in Fact
</TABLE>
II-5
<PAGE> 1
[Letterhead Camhy Karlinsky & Stein LLP
1740 Broadway, 16th Floor
New York, NY 10019]
OPINION RE: LEGALITY EXHIBIT 5.1
February 4, 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.
<PAGE> 2
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 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> 3
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 and constitute the valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium
and other similar laws generally affecting creditors' rights or remedies
and general principles of equity.
(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,
/s/ Camhy Karlinsky & Stein
-------------------------------
Camhy Karlinsky & Stein LLP
<PAGE> 1
EXHIBIT 23
LETTERHEAD OF MOSS ADAMS LLP
438 FIRST STREET, SUITE 20
SANTA ROSA, CALIFORNIA 95401
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 (File No. 333-70021) 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 and to the reference of our
firm under the caption "Experts."
/s/ Moss Adams LLP
Santa Rosa, California
February 2, 1999
