Blender

Blender is an open source 3D content creation suite that has built-in support for the file format COLLADA that the HPL1 engine uses to import 3D models.

The great thing with Blender is that it will work great without any additional settings, plugins or similar.
The HPL1 engine supports image formats such as jpg, png and bmp.

1. Make sure to remove all non-mesh components, like lights and cameras.
2. Make sure that your model has unwrapped UVs. Alternatively, you can unwrap your model after adding the texture.
3. Very important! HPL doesn't like when there are orphaned textures and materials. You must be very careful as to not add any unnecessary ones, please read thoroughly.
4. Please keep in mind that all the iterations of the HPL engine only allow up to one material with one texture per mesh (object). No more, no less.
5. Select your mesh and go to the materials tab.

6. Click on the circle next to the Base Color setting.
7. Pick “Image Texture” from the pop-up menu.
8. Click on “Open” and pick your texture file.

9. From now on, if you need to open the texture somewhere (e.g. UV unwrapping), click on the square icon with a triangle and a dot and select it from the drop menu. This way you won't be cloning the texture.
10. Triangulate all faces before exporting, or for less busywork just make sure that in export settings the “Geometry→Triangulate” option is marked. You might also need to set the up axis to be the Y axis (Blender uses Z as up and HPL uses Y).

Note: as of currently, there are no solutions for properly exporting animated files.

The material file (.mat) is an XML file that contains information on what images is used in the material to create the texture and other properties. Unlike it's successors, the HPL1 engine does NOT generate material files automatically. Instead you will have to create them manually by using the HplHelper program.

You can download the tools here if you haven't already.

(This Blender tutorial was done by the help of Darkfire.)