As filed with the Securities and Exchange Commission on May 22, 2002
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-----------------
ISLE OF CAPRI CASINOS, INC.
(Exact Name of Registrant as Specified in Its Charter)
-----------------
(For Co-registrants, Please See Table of Other Registrants on the Following
Page)
Delaware 7990 41-1659606
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification No.)
Incorporation or Classification Code
Organization) Number)
1641 Popps Ferry Road
Biloxi, Mississippi 39532
(228) 396-7000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
-----------------
Allan B. Solomon
Executive Vice President, Secretary and General Counsel
2200 Corporate Boulevard, N.W., Suite 310
Boca Raton, Florida 33431
Telephone No.: (561) 995-6660
Facsimile No.: (561) 995-6665
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
-----------------
Copy to:
Paul W. Theiss, Esq.
Robert J. Wild, Esq.
Mayer, Brown, Rowe & Maw
190 South LaSalle Street
Chicago, Illinois 60603
Telephone No.: (312) 782-0600
Facsimile No.: (312) 701-7711
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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.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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CALCULATION OF REGISTRATION FEE
================================================================================
Proposed Proposed
Amount Maximum Maximum
Title of each Class of to be Offering Price Aggregate Amount of
Securities to be Registered registered Per Unit Offering Price Registration Fee
- ---------------------------------------------------------------------------------------------------
9% Senior Subordinated Notes
Due March 15, 2012................... $200,000,000 100%(1) $200,000,000(1) $ 18,400
- ---------------------------------------------------------------------------------------------------
Subsidiary Guarantees of 9% Senior
Subordinated Notes Due March 15, 2012 $200,000,000 None(2) None(2) None(2)
- ---------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Calculated based on the book value of the securities to be received by the
registrant in the exchange in accordance with Rule 457(f)(2) under the
Securities Act.
(2) Pursuant to Rule 457(n) under the Securities Act, no separate fee is
payable for the subsidiary guarantees.
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The co-registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the co-registrants
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 or until this registration statement shall become effective
on such date as the SEC, acting pursuant to said Section 8(a), may determine.
================================================================================
TABLE OF OTHER REGISTRANTS
State of Primary standard
incorporation I.R.S. Employer industrial classification
Exact name of registrant as specified in its charter or organization Identification No. code number
- ---------------------------------------------------- --------------- ------------------ -------------------------
CSNO, L.L.C...................................... Louisiana 64-0925262 7990
Gemini, Inc...................................... Nevada 88-0103475 7990
Grand Palais Riverboat, Inc...................... Louisiana 72-1235423 7990
IOC-Boonville, Inc............................... Nevada 88-0303425 7990
IOC-Coahoma, Inc................................. Mississippi 64-0925253 7990
IOC-Davenport, Inc............................... Iowa 64-0928290 7990
IOC-Kansas City, Inc............................. Missouri 64-0921931 7990
IOC Holdings, LLC................................ Louisiana 64-0934982 7990
IOC-Lula, Inc.................................... Mississippi 88-0301634 7990
IOC-Natchez, Inc................................. Mississippi 88-0277687 7990
Isle of Capri Bettendorf, LC..................... Iowa 62-1810319 7990
Isle of Capri Casino-Tunica, Inc................. Mississippi 64-0907593 7990
Isle of Capri Casino Colorado, Inc............... Colorado 64-0863907 7990
Isle of Capri Marquette, Inc..................... Iowa 62-1810746 7990
LL Holding Corporation........................... Nevada 88-0445106 7990
Louisiana Riverboat Gaming Partnership........... Louisiana 72-1235811 7990
LRGP Holdings, L.L.C............................. Louisiana 64-0925264 7990
PPI, Inc......................................... Florida 65-0585198 7990
Riverboat Corporation of Mississippi............. Mississippi 64-0795563 7990
Riverboat Corporation of Mississippi-Vicksburg... Mississippi 42-1400605 7990
Riverboat Services, Inc.......................... Iowa 42-1360145 7990
St. Charles Gaming Company, Inc.................. Louisiana 72-1235262 7990
c/o Isle of Capri Casinos, Inc.
1641 Popps Ferry Road
Biloxi, Mississippi 39532
(228) 396-7000
(Address, including zip code, and telephone number, including area code, of
each of the co-registrant's principal executive offices)
Allan B. Solomon
Executive Vice President, Secretary and General Counsel
2200 Corporate Boulevard, N.W., Suite 310
Boca Raton, Florida 33431
Telephone No.: (561) 995-6660
Facsimile No.: (561) 995-6665
(Name, address, including zip code, and telephone number, including area code,
of agent for service for each of the co-registrants)
Copy to:
Paul W. Theiss, Esq.
Robert J. Wild, Esq.
Mayer, Brown, Rowe & Maw
190 South LaSalle Street
Chicago, Illinois 60603
Telephone No.: (312) 782-0600
Facsimile No.: (312) 701-7711
The information 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 is not soliciting an offer to buy these
securities in any state where the offer to sell is not permitted.
Subject to Completion, dated May 22, 2002
PROSPECTUS
ISLE OF CAPRI CASINOS, INC.
Offer to Exchange $200,000,000 of its
9% Senior Subordinated Notes due 2012
for any and all of its outstanding
9% Senior Subordinated Notes due 2012
... The exchange offer expires at 5:00 p.m., New York City time, on ,
2002, unless extended.
... The exchange offer is subject only to the conditions that the exchange
offer will not violate any applicable law or any interpretation of
applicable law by the staff of the SEC.
... All outstanding notes that are validly tendered and not validly withdrawn
will be exchanged.
... Tenders of outstanding notes may be withdrawn at any time before 5:00 p.m.,
New York City time, on the expiration date of the exchange offer.
... The exchange of notes will not be a taxable exchange for U.S. federal
income tax purposes.
... We will not receive any proceeds from the exchange offer.
... The form and terms of the new notes to be issued are substantially
identical to your old notes, except that the new notes will not have
transfer restrictions and you will not have registration rights.
... There is no established trading market for the new notes, and we do not
intend to apply for listing of the new notes on any securities exchange.
... All broker-dealers must comply with the registration and prospectus
delivery requirements of the Securities Act. See "Plan of Distribution."
For a discussion of factors that you should consider before you participate
in the exchange offer, see "Risk Factors" beginning on page 10 of this
prospectus.
Neither the SEC nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful
and complete. Any representation to the contrary is a criminal offense.
None of the Louisiana Gaming Control Board, the Louisiana Riverboat Gaming
Enforcement Division of the Louisiana State Police, the Mississippi Gaming
Commission, the Missouri Gaming Commission, the Iowa Racing and Gaming
Commission, the Nevada Gaming Commission, the Nevada State Gaming Control
Board, the Colorado Department of Revenue Division of Gaming, the Colorado
Limited Gaming Control Commission, the Florida Department of Business and
Professional Regulation or any other regulatory agency has approved or
disapproved of these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is unlawful.
The date of this prospectus is , 2002.
TABLE OF CONTENTS
Page
----
Incorporation of Information We File with the SEC i
Forward-Looking Statements....................... ii
Where You Can Find More Information.............. ii
Prospectus Summary............................... 1
Risk Factors..................................... 10
Use of Proceeds.................................. 19
Isle of Capri Casinos, Inc....................... 20
The Exchange Offer............................... 21
Description of the New Notes..................... 31
Certain Federal Income Tax Considerations........ 67
Plan of Distribution............................. 71
Legal Matters.................................... 71
Independent Auditors............................. 71
You should rely only on the information contained in or incorporated by
reference into this prospectus. We have not authorized any other person to
provide you with different or additional information. If anyone provides you
with different or additional information, you should not rely on it. The
information in this prospectus is accurate as of the date on the front cover.
The information we have filed and will file with the SEC that is incorporated
by reference into this prospectus is accurate as of the filing date of those
documents. Our business, financial condition, results of operations and
prospects may have changed since those dates and may change again.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
This prospectus "incorporates by reference" important business and financial
information about our company that is not included in or delivered with the
prospectus. This means:
. incorporated documents are considered part of this prospectus;
. we can disclose important information to you by referring you to those
documents; and
. information that we file with the SEC will automatically update and
supersede this prospectus.
The following documents are incorporated into this prospectus by reference:
. our Annual Report on Form 10-K for the fiscal year ended April 29, 2001;
. our Quarterly Report on Form 10-Q for the fiscal quarter ended July 29,
2001;
. our Quarterly Report on Form 10-Q for the fiscal quarter ended October
28, 2001;
. our Quarterly Report on Form 10-Q for the fiscal quarter ended January
27, 2002; and
. all documents filed by us under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this prospectus and
before the exchange offer is complete.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus is modified or superseded for
purposes of this prospectus to the extent that a statement contained in this
prospectus or in any subsequently filed document which also is or is deemed to
be
i
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded does not, except as so modified or
superseded, constitute a part of this prospectus. You may obtain copies of the
information incorporated by reference into this prospectus without charge upon
oral or written request to: Isle of Capri Casinos, Inc.; Attention: Chief
Financial Officer; 1641 Popps Ferry Road, Biloxi, Mississippi, 39532;
Telephone: (228) 396-7000.
To obtain timely delivery of any of this information, you must make your
request at least five business days prior to the expiration of the exchange
offer. The date by which you must make your request is , 2002.
FORWARD-LOOKING STATEMENTS
This prospectus includes or incorporates by reference forward-looking
statements as they are defined in the Securities Act and the Exchange Act. We
based these forward-looking statements on our current expectations and our
projections about future events. These forward-looking statements could be
negatively affected by risks, uncertainties and assumptions about us,
including, among other things:
. the effect of general economic, credit and capital market conditions on
our business;
. our substantial indebtedness;
. competition in our existing and any future markets;
. changes in gaming and non-gaming laws and regulations;
. our failure to obtain or retain licenses or regulatory approvals;
. our failure to obtain adequate financing to meet our goals; and
. the other factors described in the "Risk Factors" section.
All future written and oral forward-looking statements made by us or on our
behalf are also subject to these factors. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in or
incorporated by reference into this prospectus might not occur.
WHERE YOU CAN FIND MORE INFORMATION
You may read and copy the reports, statements and other information we file
with the SEC at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can request copies of these documents by writing to
the SEC but must pay photocopying fees. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference rooms. Our SEC
filings are also available to the public on the SEC's Internet site
(http://www.sec.gov).
ii
PROSPECTUS SUMMARY
This summary contains basic information about this exchange offer. This
summary does not contain all of the information that may be important to you in
deciding whether to participate in the exchange offer. We encourage you to read
the entire prospectus, including the information described under the heading
"Risk Factors," and the business and financial information incorporated by
reference into this prospectus before you participate in the exchange offer.
Unless the context otherwise requires, the terms "Isle of Capri," "we," "our,"
"us" and other similar terms mean Isle of Capri Casinos, Inc. and all of its
subsidiaries (except where it is clear that the terms exclude the Isle-Black
Hawk or any unrestricted subsidiaries).
Isle of Capri Casinos, Inc.
We are a leading developer, owner and operator of branded gaming and related
lodging and entertainment facilities in growing markets in the United States.
Our principal executive office is located at 1641 Popps Ferry Road, Biloxi,
Mississippi 39532. Our telephone number is (228) 396-7000. We maintain an
Internet web site at http://www.theislecorp.com. Information contained on our
web site is not incorporated by reference into this prospectus and you should
not consider information contained on our web site as part of this prospectus.
The Exchange Offer
We sold $200.0 million of our 9% senior subordinated notes due 2012 to the
initial purchasers on March 27, 2002. The initial purchasers resold those notes
in reliance on Rule 144A, Regulation S and other exemptions under the
Securities Act.
We entered into a registration rights agreement with the initial purchasers
on March 27, 2002 in which we agreed, among other things, to:
. file a registration statement with the SEC relating to the exchange offer
on or before June 10, 2002;
. deliver to you this prospectus;
. cause the registration statement, which includes this prospectus, to
become effective on or before July 25, 2002; and
. complete the exchange offer within 30 business days after the
registration statement becomes effective.
You are entitled to exchange your old notes for new registered 9% Senior
Subordinated Notes due 2012 with substantially identical terms as the old
notes, except for transfer restrictions and registration rights. If we do not
complete the exchange offer on or before 30 business days after the
registration statement becomes effective, the interest rate on your notes will
be increased. You should read the discussion under the heading "The Exchange
Offer--Purpose and Effect; Registration Rights" and "Description of the Notes"
for further information regarding the new notes that we are offering in
exchange for your old notes.
We believe that you may resell the new notes issued in the exchange offer
without compliance with the registration and prospectus delivery provisions of
the Securities Act, subject to the conditions described under "The Exchange
Offer." You should read that section for further information regarding the
exchange offer.
Recent Developments
We entered into an amended and restated $500.0 million senior credit
facility on April 26, 2002. This facility consists of a five-year $250.0
million revolving credit facility and a six-year $250.0 million term loan
facility.
On March 14, 2002, we announced that our Board of Directors authorized us to
embark on plans to sell or otherwise dispose of our Isle-Tunica and Lady
Luck-Las Vegas properties. We expect to record a pre-tax asset impairment
charge of approximately $ million for our fiscal fourth quarter ended
April 28, 2002. This charge will consist of $ million related to the
write-down of our Tunica and Las Vegas properties and $ million related to
the write-down of barges and hulls held by us for development. The impairment
loss on the write-down of assets, net of tax, will be approximately
$ million, or $ per diluted share.
1
Terms of the Exchange Offer
The exchange offer relates to the exchange of up to $200.0 million aggregate
principal amount of old notes for an equal aggregate principal amount of
registered new notes. The new notes will be obligations of Isle of Capri and
will be governed by the same indenture that governs the old notes.
New Notes.......................... We are offering registered 9% Senior Subordinated Notes due 2012
for your notes. The form and terms of the new notes and your old
notes are substantially identical, except:
. the new notes will be registered under the Securities Act;
. the new notes will not bear any legends restricting transfer;
and
. except under limited circumstances, your rights under the
registration rights agreement, including your right to receive
additional interest, will terminate.
The Exchange Offer................. We are offering to exchange an aggregate of $200.0 million principal
amount of our new notes for $200.0 million of our old notes. Old notes
may be tendered in integral multiples of $1,000 principal amount. As
of the date of this prospectus, $200.0 million aggregate principal
amount of the old notes is outstanding.
Expiration Date.................... You have until 5:00 p.m., New York City time, on , 2002 to
validly tender your old notes if you want to exchange your old notes
for new notes. We may extend that date under certain conditions.
Conditions of the Exchange Offer;
Extensions; Amendments........... The exchange offer is not subject to any conditions other than that it
not violate applicable law or any applicable interpretation of the staff
of the SEC. The exchange offer is not conditioned upon any minimal
principal amount of old notes being tendered. We may waive any
condition or amend the terms of the exchange offer. If we materially
amend the exchange offer, we will notify you.
We may also delay or extend the exchange offer and, if the above
conditions are not met, we may terminate the exchange offer. We will
notify you of any delay, extension or termination of the exchange
offer.
Interest........................... You will receive interest on the new notes from the date interest was
last paid on your old notes. If no interest was paid on your old notes,
you will receive interest from March 27, 2002. If your old notes are
exchanged for new notes, you will not receive any accrued interest on
your old notes.
Procedures for Tendering Old Notes;
Special Procedures for Beneficial If you want to participate in the exchange offer, you must transmit a
Owners........................... properly completed and signed letter of transmittal, and all other
documents required by the letter of transmittal, to the exchange agent.
Please send these materials to the exchange agent at the address set
forth in the accompanying letter of transmittal prior to 5:00 p.m., New
York City time, on the expiration date. You must also send one of the
following:
2
. certificates of your old notes;
. a timely confirmation of book-entry transfer of your old notes
into the exchange agent's account at The Depository Trust
Company; or
. the items required by the guaranteed delivery procedures
described below.
If you are a beneficial owner of your old notes and your old notes are
registered in the name of a nominee, such as a broker, dealer,
commercial bank or trust company, and you wish to tender your old
notes in the exchange offer, you should instruct your nominee to
promptly tender the old notes on your behalf.
If you are a beneficial owner and you want to tender your old notes on
your own behalf, you must, before completing and executing the letter
of transmittal and delivering your old notes, make appropriate
arrangements to either register ownership of your old notes in your
name or obtain a properly completed bond power from the registered
holder of your old notes.
By executing the letter of transmittal, you will represent to us that:
. you are not our "affiliate" (as defined in Rule 405 under the
Securities Act);
. you will acquire the new notes in the ordinary course of your
business;
. you are not a broker-dealer that acquired your notes directly
from us in order to resell them pursuant to Rule 144A under
the Securities Act or any other available exemption under the
Securities Act;
. if you are a broker-dealer that acquired your notes as a result
of market-making or other trading activities, you will deliver
a prospectus in connection with any resale of new notes; and
. you are not participating, do not intend to participate and
have no arrangement or understanding with any person to
participate in the distribution of the new notes.
If your old notes are not accepted for exchange for any reason, we will
return your old notes to you at our expense.
Guaranteed Delivery Procedures If you wish to tender your old notes and:
. your old notes are not immediately available;
. you are unable to deliver on time your old notes or any other
document that you are required to deliver to the exchange
agent; or
. you cannot complete the procedures for delivery by book-
entry transfer on time;
then you may tender your old notes according to the guaranteed
delivery procedures that are discussed in the letter of transmittal and in
"The Exchange Offer--Guaranteed Delivery Procedures."
3
Acceptance of Old Notes and
Delivery of New Notes...... We will accept all old notes that you have properly tendered on time
when all conditions of the exchange offer are satisfied or waived. The
new notes will be delivered promptly after we accept the old notes.
Withdrawal Rights.......... You may withdraw tenders of your old notes at any time prior to 5:00
p.m., New York City time, on the expiration date
The Exchange Agent......... State Street Bank and Trust Company is the exchange agent. Its
address and telephone number are set forth in "The Exchange Offer--
The Exchange Agent; Assistance."
Fees and Expenses.......... We will pay all expenses relating to the exchange offer and
compliance with the registration rights agreement. We will also pay
certain transfer taxes, if applicable, relating to the exchange offer.
Resales of New Notes....... We believe, based on an interpretation by the staff of the SEC
contained in no-action letters issued to third parties in other
transactions, that the new notes may be offered for resale, resold and
otherwise transferred by you without further compliance with the
registration and prospectus delivery requirements of the Securities Act
if:
. you are not our "affiliate" (as defined in Rule 405 under the
Securities Act);
. you acquire the new notes in the ordinary course of your
business;
. you are not a broker-dealer that purchased old notes from us
to resell them pursuant to Rule 144A under the Securities Act
or any other available exemption under the Securities Act;
and
. you are not participating, and have no arrangement or
understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of the new notes.
You should read the information under the heading "The Exchange
Offer--Resales of the New Notes" for a more complete description of
why we believe that you can freely transfer new notes received in the
exchange offer without registration or delivery of a prospectus.
All broker-dealers that are issued new notes for their own accounts in
exchange for old notes that were acquired as a result of market-making
or other trading activities must acknowledge that they will deliver a
prospectus meeting the requirements of the Securities Act in
connection with any resale of the new notes. If you are a broker-dealer
and are required to deliver a prospectus, you may use this prospectus
for an offer to resell, a resale or other transfer of the new notes.
Certain Tax Considerations. The issuance of the new notes will not constitute a taxable exchange
for U.S. federal income tax purposes. You will not recognize any gain
or loss upon receipt of the new notes. See "Certain Federal Income
Tax Considerations."
4
Registration Rights Agreement In connection with the sale of the old notes, we entered into a
registration rights agreement with the initial purchasers of the old
notes that grants the holders of the old notes registration rights. As a
result of making and consummating this exchange offer, we will have
fulfilled most of our obligations under the registration rights
agreement. If you do not tender your old notes in the exchange offer,
you will not have any further registration rights under the registration
rights agreement or otherwise unless you were not eligible to
participate in the exchange offer or do not receive freely transferrable
new notes in the exchange offer. See "The Exchange Offer--Purpose
and Effect; Registration Rights."
Consequences of Not Exchanging Old Notes
If you do not exchange your old notes for new notes in the exchange offer,
your old notes will continue to be subject to the restrictions on transfer
contained in the legend on the old notes. In general, the old notes may not be
offered or sold unless they are registered under the Securities Act. However,
you may offer or sell your old notes under an exemption from, or in a
transaction not subject to, the Securities Act and applicable state securities
laws. We do not currently anticipate that we will register the old notes under
the Securities Act.
5
Terms of the New Notes
Issuer................ Isle of Capri Casinos, Inc.
Notes Offered......... $200,000,000 in principal amount of 9% senior subordinated notes due
2012.
Maturity.............. March 15, 2012.
Interest Payment Dates March 15 and September 15 of each year, commencing September 15,
2002.
Guarantees............ Our obligations under the new notes will be, and our obligations under
the indenture are, jointly, severally and unconditionally guaranteed on
an unsecured senior subordinated basis by all of our existing and future
significant restricted subsidiaries. Our restricted subsidiaries that are
not significant restricted subsidiaries and our unrestricted subsidiaries
that own and operate the Isle-Black Hawk will not be guarantors. See
"Description of the New Notes--Subsidiary Guarantees."
Ranking............... The new notes and the subsidiary guarantees are general, unsecured
obligations that will rank:
. junior to all of our and the guarantors' existing and future
senior indebtedness, including any indebtedness under our
senior credit facility;
. senior to any of our and the guarantors' future indebtedness
subordinated to the new notes and the guarantees;
. equally with all of our outstanding 83/4% senior subordinated
notes due 2009 and any future senior subordinated
indebtedness that we or the guarantors incur; and
. effectively junior to all existing and future liabilities,
including trade payables, of our non-guarantor subsidiaries.
Assuming we had completed this exchange offer on January 27, 2002,
the new notes and the guarantees would have ranked:
. junior to $366.9 million of our and our restricted subsidiaries'
senior debt;
. effectively junior to $82.9 million of debt and other liabilities
of our subsidiaries that are not guarantors; and
. equal to the $390.0 million 83/4% senior subordinated notes
due 2009.
Optional Redemption... On or after March 15, 2007, we may redeem some or all of the new
notes at any time at the redemption prices listed in the section
"Description of the New Notes--Redemption and Repurchase
Offers-- Optional Redemption."
On or before March 15, 2005, we may redeem up to 35% of the new
notes with the net proceeds of a public equity offering if at least
6
$130.0 million in aggregate principal amount of the new notes and the
old notes remains outstanding. See "Description of the New Notes--
Redemption and Repurchase Offers--Equity Proceeds Redemption."
Regulatory Redemption.. The new notes will be subject to mandatory redemption in the event of
certain determinations by the gaming authorities in jurisdictions in
which we conduct gaming operations. See "Description of the New
Notes--Redemption and Repurchase Offers--Gaming Redemption."
Change of Control Offer If we experience specific changes of control, we must offer to
repurchase the new notes at 101% of their principal amount, plus
accrued and unpaid interest. See "Description of the New Notes--
Redemption and Repurchase Offers--Change of Control Repurchase
Offer."
Certain Covenants...... The new notes will be governed by the same indenture under which
the old notes were issued. The indenture, among other things, restricts
our ability and the ability of our restricted subsidiaries to:
. borrow money or guarantee debt;
. use assets as security in other transactions;
. make restricted payments;
. pay dividends on, redeem or repurchase our stock or redeem
our restricted subsidiaries' stock;
. enter into transactions with affiliates;
. issue and sell capital stock of our restricted subsidiaries; and
. sell assets in excess of specified amounts, change the nature
of our business or merge with or into other companies.
These covenants are subject to a number of important qualifications
and exceptions described in the section entitled "Description of the
New Notes--Certain Covenants."
Our subsidiaries that own and operate the Isle-Black Hawk are not
subject to the covenants in the indenture. See "Description of the New
Notes--Certain Covenants."
7
Selected Historical Consolidated Financial Data
The following table presents our selected historical consolidated financial
data for the five fiscal years ended April 27, 1997, April 26, 1998, April 25,
1999, April 30, 2000 and April 29, 2001. This data is from our audited
consolidated financial statements and the notes to those statements. This
information should be read in conjunction with Item 7, "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and the
consolidated financial statements and the related notes included in Item 8 of
our Annual Report on Form 10-K for the fiscal year ended April 29, 2001, which
is incorporated by reference into this prospectus. See "Incorporation of
Information We File with the SEC."
Fiscal Year Ended (1)(2)
------------------------------------------------
April 27, April 26, April 25, April 30, April 29,
1997 1998 1999 2000 2001
--------- --------- --------- --------- ---------
(dollars in millions, except per share data)
Income Statement Data:
Operating Revenues:
Casino............................................................ $322.7 $388.2 $424.4 $ 619.4 $ 957.1
Rooms............................................................. 10.8 17.8 19.1 24.8 50.7
Pari-mutuel commissions and fees.................................. 19.4 22.6 21.3 22.0 22.2
Food, beverage and other.......................................... 55.0 57.5 65.2 93.6 148.3
------ ------ ------ -------- --------
Gross revenues................................................... 407.9 486.1 530.0 759.8 1,178.3
Less promotional allowances...................................... 42.1 69.3 73.2 113.1 195.5
------ ------ ------ -------- --------
Net revenues................................................... 365.8 416.8 456.8 646.7 982.8
Operating costs and expenses:
Casino............................................................ 64.3 76.1 77.7 116.1 192.2
Gaming taxes...................................................... 2.3 78.6 86.9 122.6 192.6
Rooms............................................................. 61.8 3.3 3.9 5.8 12.1
Pari-mutuel....................................................... 16.0 16.3 15.7 16.4 16.2
Food, beverage and other.......................................... 14.3 13.4 14.2 19.1 32.0
Marine and facilities............................................. 20.7 26.2 28.2 39.9 63.6
Marketing and administrative...................................... 121.3 108.2 121.0 167.6 249.9
Accrued litigation settlement (reversal).......................... -- -- (4.2) -- --
Valuation charge.................................................. 7.0 -- 5.1 -- 1.0
Preopening expenses............................................... 2.5 -- 3.3 3.4 0.2
Other charges..................................................... -- -- -- -- 8.2
Depreciation and amortization..................................... 27.1 33.6 36.3 42.3 69.1
------ ------ ------ -------- --------
Total operating expenses....................................... 337.3 355.7 388.1 533.2 837.1
------ ------ ------ -------- --------
Operating income...................................................... 28.5 61.1 68.7 113.5 145.7
Interest expense.................................................. (40.3) (51.6) (48.6) (60.4) (98.9)
Interest income................................................... 1.6 4.7 2.9 4.7 5.1
Gain on disposal of assets........................................ -- -- -- 3.1 0.3
Minority interest................................................. -- 0.8 2.2 (3.7) (6.4)
Equity in income (loss) of unconsolidated joint ventures.......... (0.2) -- (1.3) 0.3 (0.2)
------ ------ ------ -------- --------
Income (loss) before income taxes and extraordinary item.............. (10.4) 15.0 23.9 57.5 45.6
Income tax provision (benefit).................................... (1.6) 7.5 11.8 25.4 20.5
------ ------ ------ -------- --------
Income (loss) before extraordinary item............................... (8.8) 7.5 12.1 32.1 25.1
Extraordinary loss on extinguishment of debt, net of applicable
tax benefit...................................................... (12.3) -- (36.3) (1.0) --
------ ------ ------ -------- --------
Net income (loss)..................................................... $(21.1) $ 7.5 $(24.2) $ 31.1 $ 25.1
------ ------ ------ -------- --------
Earnings (loss) per share - basic..................................... $(0.94) $ 0.32 $(1.03) $ 1.18 $ 0.84
====== ====== ====== ======== ========
Balance Sheet Data and Other Data:
Cash and cash equivalents............................................. $ 51.8 $ 52.5 $ 85.1 $ 168.0 $ 76.7
Total assets.......................................................... 528.4 615.7 676.5 1,305.5 1,382.9
Long-term debt, including current portion............................. 379.5 442.1 532.8 962.9 1,039.1
Stockholders' equity.................................................. 78.0 86.1 62.0 155.5 166.0
Ratio of earnings to fixed charges(3)................................. -- 1.2x 1.3x 1.8x 1.4x
Footnotes on following page
8
- --------
(1) The operating results for fiscal year 1997 are not comparable to other
periods presented because the Isle-Bossier City and Isle-Lake Charles were
accounted for under the equity method until August 6, 1996, when the
remaining interests in these facilities were acquired by Isle of Capri.
(2) The data presented for fiscal years prior to fiscal 1999 is not comparable
to other fiscal years presented because it does not include the operating
results of Isle-Black Hawk which opened December 30, 1998. The data
presented for fiscal years prior to fiscal 2000 is not comparable to other
fiscal years presented because it does not include the operating results of
Isle-Tunica which opened July 26, 1999 and Isle-Natchez, Isle-Lula,
Isle-Bettendorf, and Isle-Marquette which we acquired on March 2, 2000. The
data presented for fiscal years prior to fiscal 2001 is not comparable to
other fiscal years presented because it does not include the operating
results of Isle-Kansas City which we acquired on June 6, 2000, Lady
Luck-Las Vegas which we acquired on September 12, 2000, and Rhythm
City--Davenport which we acquired on October 10, 2000.
(3) For purposes of determining the ratio of earnings to fixed charges,
earnings consist of earnings before provision for income taxes and
extraordinary item plus fixed charges, excluding capitalized interest.
Fixed charges consist of interest on indebtedness, including capitalized
interest, plus that portion of rental expense that is considered to be
interest. This ratio does not include earnings and fixed charges of
unconsolidated joint ventures. Earnings were inadequate to cover fixed
charges by $10.2 million for fiscal 1997.
9
RISK FACTORS
Your investment in the new notes will involve certain risks. You should
carefully consider the following factors, in addition to the other information
included in this offering memorandum, before you decide whether to purchase the
new notes.
Risks Related to Our Business
Our Substantial Indebtedness Could Adversely Affect Our Business, Financial
Condition and Results of Operations and Prevent Us From Fulfilling Our
Obligations Under the New Notes
We have a significant amount of debt. As of January 27, 2002, and giving
effect to the issuance of the old notes, the restricted group had $1,156.9
million of total debt outstanding, which excludes $82.9 million of debt of our
non-guarantor subsidiaries that is non-recourse to us. In April 2002, we
entered into an amended and restated senior credit facility which refinanced
our prior facility. This amended and restated senior credit facility consists
of a five-year $250.0 million revolving credit facility and a six-year $250.0
million term loan facility.
Our significant indebtedness could have important consequences to you, such
as:
. limiting our ability to satisfy our obligations with respect to the new
notes;
. limiting our ability to obtain additional financing to fund our working
capital requirements, capital expenditures, debt service, general
corporate or other obligations, including our obligations with respect to
the new notes;
. limiting our ability to use operating cash flow in other areas of our
business because we must dedicate a significant portion of these funds to
make principal and interest payments on our indebtedness;
. increasing our interest expense if there is a rise in interest rates,
because a portion of our borrowings are under our senior credit facility
and, as such, we will have interest rate periods with short-term
durations (typically 30 to 180 days) that require ongoing refunding at
the then current rates of interest;
. causing our failure to comply with the financial and restrictive
covenants contained in the indenture and agreements that govern the old
notes and will govern the new notes, and the indenture and agreements
governing the 83/4% senior subordinated notes due 2009, our senior credit
facility and our other indebtedness which could cause a default under
those instruments and which, if not cured or waived, could have a
material adverse effect on us;
. placing us at a competitive disadvantage to our competitors who are not
as highly leveraged; and
. increasing our vulnerability to and limiting our ability to react to
changing market conditions, changes in our industry and economic
downturns.
Any of the factors listed above could have a material adverse effect on our
business, financial condition and results of operations. In addition, as of
April 28, 2002, we had the capacity to issue additional indebtedness, including
the ability to incur additional indebtedness under the revolving portion of our
senior credit facility, of approximately $175.0 million, subject to the
limitations imposed by the covenants in the senior credit facility, the
indenture that governs the old notes, and will govern the new notes, and the
indenture that governs the 8 3/4% senior subordinated notes due 2009. The
indenture that governs the old notes and will govern the new notes, and the
indenture governing the 83/4% senior subordinated notes due 2009 and the senior
credit facility each contain financial and other restrictive covenants, but
will not fully prohibit us from incurring additional debt. If new debt is added
to our current level of indebtedness, related risks that we and you now face
could increase.
10
Servicing Our Debt Requires a Significant Amount of Cash, and Our Ability to
Generate Sufficient Cash Will Depend on Many Factors, Some of Which Are Beyond
Our Control
We must repay all amounts borrowed under our senior credit facility by April
2008, as well as the $390.0 million in aggregate principal amount of 83/4%
senior subordinated notes due 2009 by April 2009. We are required to make
quarterly principal payments on the $250.0 million term loan portion of our
senior credit facility. The amount of these payments is currently $625,000 per
quarter through the quarter ending March 2007, and $59.4 million per quarter
for the quarters ending in June, September and December of 2007. The amount of
these quarterly payments will increase in the event that we exercise our option
to increase the amount of our borrowings under the term loan. In addition, we
are required to make substantial quarterly interest payments on our senior
credit facility and substantial semi-annual interest payments on the new notes
and the 83/4% senior subordinated notes due 2009. Our ability to make payments
on and refinance our indebtedness, including the new notes, and to fund our
capital expenditures will depend on our ability to generate cash flow and
secure financing in the future.
Our ability to generate cash flow will depend on:
. our future operating performance;
. the demand for services we provide;
. general economic conditions;
. competition; and
. legislative and regulatory factors affecting our operations and business.
Some of these factors are beyond our control. In addition, the ability to
borrow funds under our senior credit facility in the future will depend on our
meeting the financial covenants in the senior credit facility. We cannot assure
you that our business will generate cash flow from operations or that future
borrowings will be available to us under our senior credit facility or
otherwise in an amount sufficient to enable us to pay our indebtedness,
including the new notes, or to fund other liquidity needs. As a result, we may
need to refinance all or a portion of our indebtedness, including the new
notes, on or before maturity. We cannot assure you that we will be able to
refinance any of our indebtedness on favorable terms or at all. Any inability
to generate sufficient cash flow or refinance our indebtedness on favorable
terms could have a material adverse effect on our financial condition.
We Face Significant Competition from Other Gaming Operations
We face intense competition in the markets in which we operate. We have
numerous competitors, including land-based casinos, dockside casinos, riverboat
casinos, casinos located on Native American reservations and at racing and
pari-mutuel operations. Several of our competitors have substantially better
name recognition, marketing and financial resources than we do. Legalized
gaming is currently permitted in various forms throughout the United States.
Certain states have recently legalized, and other states are currently
considering legalizing, casino gaming in designated areas. In addition, many
Native American tribes conduct casino gaming on reservations throughout the
United States which have the advantages of being land-based and exempt from
certain state and federal taxes. Some Native American tribes are either in the
process of establishing, or are considering the establishment of, gaming at
additional locations. There is no limit on the number of gaming licenses that
may be granted in several of the markets in which we operate. As a result, new
licenses could be awarded to gaming facilities in such markets, which could
have an adverse effect on our operating results. In particular, we face
significant new competition in the Lake Charles, Louisiana market. In February
2002, Boyd Gaming opened a casino with 15,000 square feet of gaming space with
approximately 1,500 slot machines at Delta Downs, a horse racing facility.
Delta Downs is 25 miles closer to Houston than the Isle-Lake Charles, making it
the closest gaming facility to Houston. In addition, the last available
Louisiana gaming license was recently awarded to Pinnacle Entertainment for a
new development in the Lake Charles market. Expansion of existing gaming
facilities and the development of new gaming facilities and casinos on Native
American-owned lands will increase competition for our existing and future
operations.
11
We also compete with other forms of legalized gaming and entertainment such
as online computer gambling, bingo, pull tab games, card parlors, sports books,
pari-mutuel or telephonic betting on horse racing and dog racing,
state-sponsored lotteries, jai-alai, video lottery terminals, video poker
terminals and, in the future, may compete with gaming at other venues. For
example, there currently is legislation pending in Florida that, if passed,
would legalize video poker, electronic games of chance or video lottery
terminal gaming at pari-mutuel gaming facilities, including our facility in
Pompano Beach, which could have an adverse effect on the operations of the
Isle-Biloxi.
Our existing gaming facilities compete directly with other gaming properties
in Louisiana, Mississippi, Missouri, Iowa, Colorado and Nevada. We also compete
with gaming operations in other gaming jurisdictions such as Atlantic City, New
Jersey. Our existing casinos attract a significant number of their customers
from Houston and Dallas/Fort Worth, Texas; Mobile, Alabama; Jackson,
Mississippi; Memphis, Tennessee; Little Rock, Arkansas and Denver, Colorado.
Our continued success depends upon drawing customers from each of these
geographic markets. Legalization of gaming in jurisdictions closer to these
geographic markets than the jurisdictions in which our facilities are located
would have a material adverse effect on our operating results. We expect
competition to increase as new gaming operators enter our markets, existing
competitors expand their operations, gaming activities expand in existing
jurisdictions and gaming is legalized in new jurisdictions. We cannot predict
with any certainty the effects of existing and future competition on our
operating results.
Our Senior Credit Facility, the Indenture Governing the 83/4% Senior
Subordinated Notes due 2009 and the Indenture that Governs the Old Notes, and
will Govern the New Notes Restrict Our Operations
We have made and will need to make significant capital expenditures at our
existing facilities to remain competitive with current and future competitors
in our markets. Our senior credit facility, the indenture governing the 83/4%
senior subordinated notes due 2009 and the indenture that governs the old
notes, and will govern the new notes, each contain operating and financial
restrictions that may limit our ability to obtain the financing to make these
capital expenditures.
Our senior credit facility, among other things, limits our ability to:
. borrow money;
. make capital expenditures;
. use assets as security in other transactions;
. make restricted payments or restricted investments;
. incur contingent obligations; and
. sell assets and enter into leases and transactions with affiliates.
In addition, the senior credit facility requires us to meet financial ratios
and tests, including:
. a maximum consolidated total leverage test;
. a maximum consolidated senior leverage test;
. a minimum consolidated fixed charge coverage test; and
. a minimum consolidated net worth test.
The indenture governing the 83/4% senior subordinated notes due 2009 and the
indenture that governs the old notes, and will govern the new notes, each
impose operating and financial restrictions on us that limit, among other
things, our ability to:
. borrow money or guarantee debt;
. use assets as security in other transactions;
12
. make restricted payments;
. pay dividends on or redeem or repurchase our stock or our restricted
subsidiaries' stock;
. enter into transactions with affiliates;
. issue and sell stock of restricted subsidiaries; and
. sell assets in excess of specified amounts, change the nature of our
business or merge with or into other companies.
A breach of any restriction or covenant contained in our senior credit
facility, the indenture governing the 83/4% senior subordinated notes due 2009
or the indenture that governs the old notes, and will govern the new notes,
could cause a default under the new notes and other debt and result in a
significant portion of our debt becoming immediately due and payable. We are
not certain whether we would have, or would be able to obtain, sufficient funds
to make these accelerated payments, including payments on the new notes. In
addition, following the occurrence of certain events of default under our
senior credit facility, we may be prohibited from making payments on the new
notes.
We Are Subject to Extensive Regulation From Gaming Authorities
Licensing Requirements. As owners and operators of gaming facilities, we are
subject to extensive state and local regulation. State and local authorities
require us and our subsidiaries to demonstrate suitability to obtain and retain
various licenses and require that we have registrations, permits and approvals
to conduct gaming operations. The regulatory authorities in the jurisdictions
in which we operate may, for any reasonable cause, limit, condition, suspend or
revoke a license to conduct gaming operations or prevent us from owning the
securities of any of our gaming subsidiaries. In addition, regulatory
authorities in certain jurisdictions must approve, in advance, any restrictions
on, transfers of, agreements not to encumber or pledges of equity securities
which are issued by a corporation that is registered as an intermediary company
with such state, or holds a gaming license. If these restrictions are not
approved in advance, they will be invalid. Like all gaming operators in the
jurisdictions in which we operate, we must periodically apply to renew our
gaming licenses. We cannot assure you that we will be able to obtain such
renewals. Regulatory authorities may also levy substantial fines against us or
seize our assets, or the assets of our subsidiaries or of the people involved
in violating gaming laws or regulations. Any of these events could have a
material adverse effect on our business.
We have demonstrated suitability to obtain and have obtained all
governmental licenses, registrations, permits and approvals necessary for us to
operate our existing gaming facilities. We cannot assure you that we will be
able to retain them or continue to demonstrate suitability to obtain any new
licenses, registrations, permits or approvals. If we expand our gaming
operations in the jurisdictions in which we currently operate or to new
jurisdictions, we will have to meet suitability requirements and obtain
additional licenses, registrations, permits and approvals from gaming
authorities in these jurisdictions. The approval process can be time-consuming
and costly and there is no assurance that we will be successful.
Potential Changes in Regulatory Environment. From time to time, legislators
and special interest groups have proposed legislation that would expand,
restrict or prevent gaming operations in the jurisdictions in which we operate.
In addition, from time to time, certain anti-gaming groups propose referenda
that, if adopted, would limit our ability to continue to operate in those
jurisdictions in which such referenda are adopted. Any expansion of gaming or
restriction on or prohibition of our gaming operations could have a material
adverse effect on our operating results.
Taxation. State and local authorities raise a significant amount of revenue
through taxes and fees on gaming activities. We believe that the prospect of
significant revenue is one of the primary reasons that jurisdictions permit
legalized gaming. As a result, gaming companies are typically subject to
significant taxes and fees in addition to normal federal, state, local and
provincial income taxes, and such taxes and fees are subject to increase
13
at any time. We pay substantial taxes and fees with respect to our operations.
From time to time, federal, state, local and provincial legislators and
officials have proposed changes in tax laws, or in the administration of such
laws, affecting the gaming industry. In addition, worsening economic conditions
could intensify the efforts of state and local governments to raise revenues
through increases in gaming taxes. It is not possible to determine with
certainty the likelihood of changes in tax laws or in the administration of
such laws. Such changes, if adopted, could have a material adverse effect on
our business, financial condition and results of operations.
We Are Subject to Non-Gaming Regulation
Several of our riverboats must comply with U.S. Coast Guard requirements as
to boat design, on-board facilities, equipment, personnel and safety and must
hold U.S. Coast Guard Certificates of Documentation and Inspection. The U.S.
Coast Guard requirements also set limits on the operation of the riverboats and
mandate licensing of certain personnel involved with the operation of the
riverboats. Loss of a riverboat's Certificate of Documentation and Inspection
could preclude its use as a riverboat casino. Each of our riverboats is
inspected annually and, every five years, is subject to drydocking for
inspection of its hull, which could result in a temporary loss of service.
We are required to have third parties periodically inspect and certify all
of our casino barges for stability and single compartment flooding integrity.
Our casino barges must also meet local fire safety standards. We would incur
additional costs if any of our gaming facilities were not in compliance with
one or more of these regulations.
We are also subject to certain federal, state and local environmental laws,
regulations and ordinances that apply to non-gaming businesses generally, such
as the Clean Air Act, the Clean Water Act, the Resource Conservation Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act
and the Oil Pollution Act of 1990. Under various federal, state and local laws
and regulations, an owner or operator of real property may be held liable for
the costs of removal or remediation of certain hazardous or toxic substances or
wastes located on its property, regardless of whether or not the present owner
or operator knows of, or is responsible for, the presence of such substances or
wastes. We have not identified any issues associated with our properties that
could reasonably be expected to have an adverse effect on us or the results of
our operations. However, certain of our properties are located in industrial
areas or were used for industrial purposes for many years. As a consequence, it
is possible that historical or neighboring activities have affected one or more
of our properties and that, as a result, environmental issues could arise in
the future, the precise nature of which we cannot now predict. The coverage and
attendant compliance costs associated with these laws, regulations and
ordinances may result in future additional costs.
Regulations adopted by the Financial Crimes Enforcement Network of the U.S.
Treasury Department require us to report currency transactions in excess of
$10,000 occurring within a gaming day, including identification of the patron
by name and social security number. Substantial penalties can be imposed
against us if we fail to comply with these regulations.
We are also subject to a variety of other local rules and regulations,
including zoning, environmental, construction and land-use laws and regulations
governing the serving of alcoholic beverages.
We Depend on Our Management and Employees
Our continued success will depend, among other things, on the efforts and
skills of a few key executive officers and the experience of our property
managers as well as our ability to attract and retain additional highly
qualified personnel with gaming industry experience and qualifications to
obtain the requisite licenses. We do not maintain ''key man'' life insurance
for any of our employees. There is no assurance that we would be able to
attract and hire suitable replacements for any of our key employees. We need
qualified executives, managers and skilled employees with gaming industry
experience to continue to successfully operate our business. We believe a
shortage of skilled labor in the gaming industry may make it increasingly
difficult and expensive to attract and retain qualified employees. We expect
that increased competition in the gaming industry will intensify this problem.
14
Inclement Weather and Other Conditions Could Seriously Disrupt Our Business,
Financial Condition and Results of Operations
Dockside and riverboat facilities are subject to risks in addition to those
associated with land-based casinos, including loss of service due to casualty,
mechanical failure, extended or extraordinary maintenance, flood, hurricane or
other severe weather. Our riverboats and barges face additional risks from the
movement of vessels on waterways.
Reduced patronage and the loss of a dockside or riverboat casino from
service for any period of time could adversely affect our results of
operations. For example, as a result of flooding of the Mississippi River, we
closed the Isle-Marquette from April 18 to May 2, 2001, and the Rhythm
City-Davenport from April 18 to May 20, 2001. While our business interruption
insurance provided sufficient coverage for those losses, we cannot assure you
that the proceeds from any future claim will be sufficient to compensate us if
one or more of our casinos experiences a closure.
Access to a number of our facilities may also be affected by road
conditions, such as construction and traffic. In addition, severe weather such
as high winds and blizzards occasionally limits access to the Isle-Black Hawk.
We Experience Quarterly Fluctuations in Results of Operations
Our quarterly operating results fluctuate because of seasonality and other
factors. We typically generate the major portion of our income in our first and
fourth fiscal quarters, which end in July and April, respectively.
Energy and Fuel Price Increases May Adversely Affect Our Costs of Operations
and Our Revenues
Our casino properties use significant amounts of electricity, natural gas
and other forms of energy. While no shortages of energy have been experienced,
the recent substantial increases in the cost of electricity in the United
States will negatively affect our results of operations. In addition, energy
and fuel price increases in cities that constitute a significant source of
customers for our properties could result in a decline in disposable income of
potential customers and a corresponding decrease in visitation to our
properties, which would negatively impact our revenues. The extent of the
impact is subject to the magnitude and duration of the energy and fuel price
increases, but this impact could be material.
A Downturn in General Economic Conditions May Adversely Affect Our Results of
Operations
Our business operations are subject to changes in international, national
and local economic conditions, including changes in the economy related to
future security alerts in connection with threatened or actual terrorist
attacks such as those that occurred on September 11, 2001 which may affect our
customers' willingness to travel. A recession or downturn in the general
economy, or in a region constituting a significant source of customers for our
properties, could result in fewer customers visiting our properties, which
would adversely affect our results of operations.
Risks Related to the Exchange Offer and the New Notes
You May Not Be Able to Sell Your Old Notes if You Do Not Exchange Them for New
Notes in the Exchange Offer
If you do not exchange your old notes for new notes in the exchange offer,
your old notes will continue to be subject to the restrictions on transfer as
stated in the legend on the old notes. In general, you may not offer or sell
the old notes unless they are:
. registered under the Securities Act;
15
. offered or sold pursuant to an exemption from the Securities Act and
applicable state securities laws; or
. offered or sold in a transaction not subject to the Securities Act and
applicable state securities laws.
We do not currently anticipate that we will register the old notes under the
Securities Act. In addition, holders who do not tender their old notes, except
for certain instances involving the initial purchasers or holders of old notes
who are not eligible to participate in the exchange offer or who do not receive
freely transferable new notes pursuant to the exchange offer, will not have any
further registration rights under the registration rights agreement or
otherwise and will not have rights to receive additional interest.
The Market for Old Notes May Be Significantly More Limited after the Exchange
Offer
If old notes are tendered and accepted for exchange pursuant to the exchange
offer, the trading market for old notes that remain outstanding may be
significantly more limited. As a result, the liquidity of the old notes not
tendered for exchange may be adversely affected. The extent of the market for
old notes and the availability of price quotations would depend upon a number
of factors, including the number of holders of old notes remaining outstanding
and the interest of securities firms in maintaining a market in the old notes.
An issue of securities with a similar outstanding market value available for
trading, which is called the "float," may command a lower price than would be
comparable to an issue of securities with a greater float. As a result, the
market price for old notes that are not exchanged in the exchange offer may be
affected adversely as old notes exchanged pursuant to the exchange offer reduce
the float. The reduced float also may make the trading price of the old notes
that are not exchanged more volatile.
An Active Trading Market May Not Develop for the New Notes
The new notes are new securities for which there is currently no market. We
cannot assure you as to the liquidity of markets that may develop for the new
notes, your ability to sell the new notes or the price at which you would be
able to sell the new notes. If such markets were to exist, the new notes could
trade at prices lower than their principal amount or purchase price depending
on many factors, including prevailing interest rates and the markets for
similar securities.
Restrictions on the Exchange Offer
Issuance of new notes in exchange for old notes pursuant to the exchange
offer will be made only after timely receipt by the exchange agent of a
properly completed and duly executed letter of transmittal, or an agent's
message in lieu thereof, including all other documents required by such letter
of transmittal. Therefore, holders of old notes desiring to tender such old
notes in exchange for new notes should allow sufficient time to ensure timely
delivery. We and the exchange agent are under no duty to give notification of
defects or irregularities with respect to the tenders of old notes for
exchange. Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. See "The
Exchange Offer--Resales of the New Notes" and "Plan of Distribution."
Your Right to Receive Payment on the New Notes or under the Guarantees Is
Junior to Senior Debt and Effectively Junior to Debt and Other Liabilities of
Our Non-Guarantor Subsidiaries and Is Equal With Our 83/4% Senior Subordinated
Notes due 2009
The new notes will be junior to all of our existing and future senior debt,
including any amounts we borrow under our senior credit facility or under our
existing lines of credit. We must use our operating cash to pay amounts due
under debt that ranks senior to the new notes before we can use operating cash
to make interest or principal payments on the new notes.
16
The subsidiary guarantees will be junior to all existing and future senior
debt of the subsidiary guarantors. All subsidiaries that guarantee the notes
also guarantee our senior credit facility. The subsidiary guarantors must use
their operating cash to pay amounts due under debt that ranks senior to the
guarantees before they can use their operating cash to make payments with
respect to the guarantees of the new notes.
In addition, all payments on the new notes and the subsidiary guarantees
will be blocked in the event of a payment default on senior debt and may be
blocked for up to 179 of 365 days in the event of certain non-payment defaults
on senior debt.
As of January 27, 2002, we and our significant restricted subsidiaries had
approximately $366.9 million of senior debt outstanding. Since some of our
subsidiaries will not guarantee the new notes, the new notes will be
effectively junior to all debt and other liabilities of these non-guarantor
subsidiaries. In the event of a bankruptcy, liquidation, reorganization or
similar proceeding relating to any of our non-guarantor subsidiaries, holders
of their debt and their trade creditors will generally be entitled to payment
of their claims from the assets of those subsidiaries before any assets are
made available for distribution to our creditors. Assuming we had completed
this exchange offer on January 27, 2002, the new notes would have been
effectively junior to approximately $82.9 million of debt and other liabilities
of our non-guarantor subsidiaries and would be equal with the $390.0 million in
aggregate principal amount of our 83/4% senior subordinated notes due 2009.
If there is a distribution to our creditors because of a bankruptcy,
liquidation, reorganization or similar proceeding relating to us or our
property, holders of debt that is senior to the new notes will be paid in full
before any payment may be made with respect to the new notes. Similarly, in the
event of a bankruptcy, liquidation, reorganization or similar proceeding
relating to any subsidiary guarantor, its assets would be available to pay
obligations under its guarantee only after all senior debt of that guarantor is
paid in full.
The New Notes Are Unsecured--Your Right to Enforce Remedies is Limited by the
Rights of Holders of Secured Debt
The new notes will not be secured by any of our assets or any assets of our
subsidiaries. Our obligations under our senior credit facility are secured by
substantially all of our assets and the assets of our subsidiaries other than
our subsidiaries that own and operate the Isle-Black Hawk and Pompano Park. If
we become insolvent or are liquidated, or if payment under our senior credit
facility is accelerated, the lenders under our senior credit facility will be
entitled to exercise the remedies available to a secured lender under
applicable law. These lenders will have a claim on our assets and the assets of
our subsidiaries before the holders of the new notes.
We are a Holding Company and Depend on the Business of Our Subsidiaries to
Satisfy Our Obligations Under the New Notes
We are a holding company and our assets consist primarily of investments in
our subsidiaries. Our subsidiaries conduct substantially all of our
consolidated operations and own substantially all of our consolidated assets.
Consequently, our cash flow and our ability to pay our debts depend upon our
subsidiaries' cash flow and their payment of funds to us. Our subsidiaries are
not obligated to make funds available to us for payment on the new notes or
otherwise. In addition, our subsidiaries' ability to make any payments to us
will depend on their earnings, the terms of their indebtedness, business and
tax considerations, legal and regulatory restrictions and economic conditions.
In addition, the ability of our subsidiaries to make payments to us depends on
applicable law and debt instruments to which they or we are a party, which may
include requirements to maintain minimum levels of working capital and other
assets. Distributions to us from our subsidiaries may not be adequate to permit
us to pay interest and principal on the new notes when due.
The new notes will effectively rank junior to all existing and future
liabilities of our subsidiaries that are not guarantors of the new notes,
including trade payables. In the event of a bankruptcy, liquidation or
dissolution of a non-guarantor subsidiary and following payment of its
liabilities, the subsidiary may not have sufficient assets
17
remaining to make any payments to us so that we can meet our obligations as the
holding company, including our obligations to you under the new notes. As of
January 27, 2002, our non-guarantor subsidiaries had approximately $82.9
million of debt outstanding. The indenture governing the new notes will not
limit the ability of our non-guarantor subsidiaries to incur substantial
additional debt.
The Guarantees May Be Unenforceable Due to Fraudulent Conveyance Statutes
The obligations of the subsidiary guarantors may be subject to challenge
under state or federal fraudulent transfer laws. In general, under fraudulent
conveyance laws, a court can subordinate or void an obligation such as a
guarantee if it determines that the obligation was incurred with actual intent
to hinder, delay or defraud creditors or if the guarantor did not receive fair
consideration or reasonably equivalent value for the guarantee and:
. was insolvent or rendered insolvent as a result of the guarantee;
. was engaged in a business or transaction for which the guarantor's
remaining assets constituted unreasonably small capital; or
. intended to incur, or believed that it would incur, debts beyond its
ability to pay as they mature.
In addition, a court could void any payment by us or the guarantor pursuant
to the new notes or a guarantee and require that payment to be returned to us
or the guarantor, or to a fund for the benefit of our creditors or the
creditors of the guarantor.
Generally an entity is insolvent if:
. the sum of its debts, including contingent or unliquidated debts, is
greater than all of its property at a fair valuation; or
. the present fair saleable value of its assets is less than the amount
required to pay its probable liability on existing debts as they become
due.
We May Not Be Able to Repurchase Notes upon a Change of Control Offer
Upon the occurrence of specific "change of control" events, we must offer to
repurchase all outstanding notes including the 8 3/4% senior subordinated notes
due 2009, the old notes and the new notes. Our senior credit facility prohibits
us from doing so until we have repaid the outstanding principal balance,
accrued interest and other amounts owed under the senior credit facility. Any
future agreements relating to indebtedness to which we become a party may
contain similar provisions. Restrictions in our senior credit facility, the
indenture governing the 8 3/4% senior subordinated notes due 2009 or the
indenture that governs the old notes and will govern the new notes, may also
prevent us from borrowing funds for the repurchase. In that event, we could
refinance our outstanding debt or obtain consents under existing agreements. We
may not be able to do so or may not be able to negotiate favorable refinancing
terms. If we cannot refinance our debt or do not obtain the necessary consents,
we will not be able to repurchase the notes. Our failure to repurchase notes
tendered upon a change of control would cause us to default on the indenture
governing the 8 3/4% senior subordinated notes due 2009, the indenture that
governs the old notes, and will govern the new notes, and our senior credit
facility and other senior debt. In the event of a default, the indentures would
likely restrict payment to noteholders. See "Description of the New
Notes--Redemption and Repurchase Offers."
We May Require You to Dispose of Your New Notes or Redeem Your New Notes if Any
Gaming Authority Finds You Unsuitable to Hold Them
We may require you to dispose of your new notes or redeem your new notes if
any gaming authority finds you unsuitable to hold them or in order to otherwise
comply with gaming laws to which we are subject. Gaming
18
authorities can generally require that any beneficial owner of our securities,
including holders of the new notes, file an application for a finding of
suitability. If a gaming authority requires a record or beneficial owner of a
new note to file a suitability application, the owner must apply for a finding
of suitability within 30 days or at an earlier time prescribed by the gaming
authority. The gaming authority has the power to investigate an owner's
suitability and the owner must pay all costs of the investigation. If the owner
is found unsuitable, then the owner may be required, either by law or the terms
of the new notes, to dispose of the new notes. See "Description of the New
Notes--Redemption and Repurchase Offers--Gaming Redemption."
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. In consideration
for issuing the new notes, we will receive outstanding old notes in like
original principal amount at maturity. All old notes received in the exchange
offer will be canceled.
19
ISLE OF CAPRI CASINOS, INC.
We are a leading developer, owner and operator of branded gaming facilities
and related lodging and entertainment facilities in growing markets in the
United States. We wholly own and operate thirteen gaming facilities located in
Lake Charles and Bossier City, Louisiana; Lula, Biloxi, Vicksburg, Natchez and
Tunica, Mississippi; Kansas City and Boonville, Missouri; Bettendorf, Davenport
and Marquette, Iowa; and Las Vegas, Nevada. We also own a 57% interest in and
receive a management fee for operating a gaming facility in Black Hawk,
Colorado. All but two of these gaming facilities operate under the name "Isle
of Capri" and feature our distinctive tropical island theme. In addition, we
wholly own and operate a pari-mutuel harness racing facility in Pompano Beach,
Florida.
20
THE EXCHANGE OFFER
Purpose and Effect; Registration Rights
We sold the old notes to the initial purchasers on March 27, 2002. The
initial purchasers then resold the old notes under an offering memorandum dated
March 21, 2002 in reliance on Rule 144A, Regulation S and other available
exemptions under the Securities Act. On March 27, 2002, we entered into a
registration rights agreement with the initial purchasers. Under the
registration rights agreement, we agreed to:
. file a registration statement with the SEC relating to the exchange offer
under the Securities Act no later than June 10, 2002;
. use our best efforts to cause the exchange offer registration statement
to be declared effective under the Securities Act on or before July 25,
2002;
. commence the exchange offer promptly after the exchange offer
registration statement is declared effective by the SEC;
. keep the exchange offer open for acceptance for at least 20 business days
after notice of the exchange offer is mailed to holders of the old notes;
. cause the exchange offer to be consummated not later than 30 business
days following the date of the effectiveness of the exchange offer
registration statement;
. use our best efforts to promptly issue new notes in exchange for all old
notes that have been properly tendered for exchange prior to the
expiration of the exchange offer; and
. use our best efforts to keep the exchange offer registration statement
effective until the closing of the exchange offer and thereafter until we
have issued new notes in exchange for all old notes that have been
properly tendered for exchange prior to the expiration of the exchange
offer.
In the registration rights agreement, we agreed to file a shelf registration
statement if:
. we are not permitted to effect the exchange offer under applicable law or
applicable interpretations of law by the SEC staff;
. for any reason, the exchange offer is not consummated by August 23, 2002;
. any holder of old notes notifies us that it (1) is not entitled to
participate in the exchange offer, (2) may not resell the new notes
required by it in the exchange offer to the public without delivering a
prospectus and this prospectus is not appropriate or available for
purposes of these resales or (3) is a broker-dealer and owns old notes
acquired directly from us or one of our affiliates; or
. the holders of a majority in aggregate principal amount of the old notes
are not eligible to participate in the exchange offer and to receive new
notes that they may resell to the public without volume restriction under
the Securities Act and without similar restriction under applicable blue
sky or state securities laws.
If we are required to file a shelf registration statement, we must use our
best efforts to file the shelf registration statement relating to the old notes
on or before the 60th day after the obligation to file the shelf registration
statement arises. However, if our obligation arises because this exchange offer
has not been consummated by August 23, 2002, we must use our best efforts to
file the shelf registration statement by September 24, 2002. We will use our
best efforts to cause the shelf registration statement to be declared effective
no later than 120 days after the date that the obligation to file the shelf
registration statement arises.
21
If the shelf registration statement is filed, we will use our best efforts
to keep the shelf registration statement continuously effective, supplemented
and amended until the second anniversary of the effective date of the shelf
registration statement or a shorter period that will terminate when all the
notes covered by the shelf registration statement have been sold pursuant to
the shelf registration statement or otherwise cease to be outstanding.
A holder who sells old notes pursuant to the shelf registration statement
generally will be required to be named as a selling securityholder in the
prospectus and to deliver a copy of the prospectus to purchasers. If we are
required to file a shelf registration statement, we will provide to each holder
of the old notes copies of the prospectus that is a part of the shelf
registration statement and notify each such holder when the shelf registration
statement becomes effective. Such holder will be subject to some of the civil
liability provisions under the Securities Act in connection with these sales
and will be bound by the provisions of the registration rights agreement that
are applicable to such holder (including certain indemnification and
contribution obligations).
The registration rights agreement requires us to pay the holders of the
notes additional interest if a registration default exists. A registration
default will exist if:
. we fail to file any of the registration statements required by the
registration rights agreement on or prior to the date specified for such
filing;
. any of such registration statements is not declared effective by the SEC
on or prior to the date specified for such effectiveness;
. the exchange offer is required to be consummated under the registration
rights agreement and is not consummated by August 23, 2002;
. the shelf registration statement is declared effective but thereafter,
during the period for which we are required to maintain the effectiveness
of the shelf registration statement, it ceases to be effective or usable
in connection with the resale of the new notes covered by the shelf
registration statement; or
. the exchange offer registration statement is declared effective but
thereafter, during the period for which we have agreed to make this
prospectus available to broker-dealers for use in connection with the
resale of new notes, the exchange offer registration statement ceases to
be effective (or we restrict the use of the prospectus included in the
exchange offer registration statement).
If a registration default exists, the interest rate of the old notes will be
increased by 0.25% per year for the first 90-day period following the
registration default. The interest rate will increase by an additional 0.25%
per year at the beginning of each subsequent 90-day period (or portion thereof)
until all registration defaults have been remedied. The interest rate may not
be increased as a result of registration defaults by more than 1.00% per year.
Following the cure of all registration defaults, the accrual of additional
interest on the old notes will cease and the interest rate will revert to the
original rate.
The exchange offer is intended to satisfy our exchange offer obligations
under the registration rights agreement. The above summary of the registration
rights agreements is not complete and is subject to, and qualified by reference
to, all of the provisions of the registration rights agreement. A copy of the
registration rights agreement is filed as an exhibit to the registration
statement that includes this prospectus.
If you participate in the exchange offer, you will, with limited exceptions,
receive notes that are freely tradeable and not subject to restrictions on
transfer. You should read this prospectus under the heading "--Resales of the
New Notes" for more information relating to your ability to transfer new notes.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of old notes in any jurisdiction in which the exchange
offer or the acceptance of the exchange offer would not be in compliance with
the securities laws or blue sky laws of such jurisdiction.
22
Expiration Date; Extensions
The expiration date at the exchange offer is , 2002 at 5:00 p.m., New
York City time. We may extend the exchange offer in our sole discretion. If we
extend the exchange offer, the expiration date will be the latest date and time
to which the exchange offer is extended. We will notify the exchange agent of
any extension by oral or written notice and will make a public announcement of
the extension no later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled expiration date.
We expressly reserve the right, in our sole and absolute discretion:
. to delay accepting any old notes;
. to extend the exchange offer;
. if any of the conditions under "--Conditions of the Exchange Offer" have
not been satisfied, to terminate the exchange offer; and
. to waive any condition or otherwise amend the terms of the exchange offer
in any manner.
If the exchange offer is amended in a manner we deem to constitute a
material change, we will promptly disclose the amendment by means of a
prospectus supplement that will be distributed to the registered holders of the
old notes. Any delay in acceptance, extension, termination or amendment will be
followed promptly by an oral or written notice of the event to the exchange
agent. We will also make a public announcement of the event. Without limiting
the manner in which we may choose to make any pubic announcement and subject to
applicable law, we have no obligation to publish, advertise or otherwise
communicate any such pubic announcement other than by issuing a release to a
national news service.
Terms of the Exchange Offer
We are offering, upon the terms and subject to the conditions set forth in
this prospectus and in the accompanying letter of transmittal, to exchange
$1,000 in principal amount of new notes for each $1,000 in principal amount of
outstanding old notes. We will accept for exchange any and all old notes that
are validly tendered on or before 5:00 p.m., New York City time, on the
expiration date. Tenders of the old notes may be withdrawn at any time before
5:00 p.m., New York City time, on the expiration date. The exchange offer is
not conditioned upon any minimum principal amount of old notes being tendered
for exchange. However, the exchange offer is subject to the terms of the
registration rights agreement and the satisfaction of the conditions described
under "--Conditions of the Exchange Offer." Old notes may be tendered only in
multiples of $1,000. Holders may tender less than the aggregate principal
amount represented by their old notes if they appropriately indicate this fact
on the letter of transmittal accompanying the tendered old notes or indicate
this fact pursuant to the procedures for book-entry transfer described below.
As of the date of this prospectus, $200.0 million in aggregate principal
amount of the old notes were outstanding. Solely for reasons of administration,
we have fixed the close of business on , 2002 as the record date for
purposes of determining the persons to whom this prospectus and the letter of
transmittal will be mailed initially. Only a holder of the old notes (or such
holder's legal representative or attorney-in-fact) whose ownership is reflected
in the records of State Street Bank and Trust Company, as registrar, or whose
notes are held of record by the depositary, may participate in the exchange
offer. There will be no fixed record date for determining the eligible holders
of the old notes who are entitled to participate in the exchange offer. We
believe that, as of the date of this prospectus, no holder is our "affiliate"
(as defined in Rule 405 under the Securities Act).
We will be deemed to have accepted validly tendered old notes when, as and
if we give oral or written notice of our acceptance to the exchange agent. The
exchange agent will act as agent for the tendering holders of old notes and for
purposes of receiving the new notes from us. If any tendered old notes are not
accepted for exchange because of an invalid tender or otherwise, certificates
for the unaccepted old notes will be returned, without expense, to the
tendering holder as promptly as practicable after the expiration date.
23
Holders of old notes do not have appraisal or dissenters' rights under
applicable law or the indenture as a result of the exchange offer. We intend to
conduct the exchange offer in accordance with the applicable requirements of
the Exchange Act and the rules and regulations under the Exchange Act,
including Rule 14e-1.
Holders who tender their old notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the letter of transmittal, transfer taxes with respect to the exchange of
old notes pursuant to the exchange offer. We will pay all charges and expenses,
other than transfer taxes in certain circumstances, in connection with the
exchange offer. See "--Fees and Expenses."
Neither our company nor our board of directors makes any recommendation to
holders of old notes as to whether to tender any of their old notes pursuant to
the exchange offer. In addition, no one has been authorized to make any such
recommendation. Holders of old notes must make their own decision whether to
participate in the exchange offer and, if the holder chooses to participate in
the exchange offer, the aggregate principal amount of old notes to tender,
after reading carefully this prospectus and the letter of transmittal and
consulting with their advisors, if any, based on their own financial position
and requirements.
Conditions of the Exchange Offer
You must tender your old notes in accordance with the requirements of this
prospectus and the letter of transmittal in order to participate in the
exchange offer.
Notwithstanding any other provision of the exchange offer, or any extension
of the exchange offer, we will not be required to accept for exchange any old
notes, and we may terminate or amend the exchange offer if we are not permitted
to effect the exchange offer under applicable law or any interpretation of
applicable law by the staff of the SEC. If we determine in our sole discretion
that any of these events or conditions has occurred, we may, subject to
applicable law:
. terminate the exchange offer and return all old notes tendered for
exchange; or
. waive any condition or amend the terms of the exchange offer.
We expect that the above conditions will be satisfied. The above conditions
are for our sole benefit and may be waived by us at any time in our sole
discretion. Our failure at any time to exercise any of the above rights will
not be a waiver of those rights and each right will be deemed an ongoing right
that may be asserted at any time. Any determination by us concerning the events
described above will be final and binding upon all parties.
The exchange offer is not conditioned upon any minimal principal amount of
old notes being tendered.
Interest
Each new note will bear interest from the most recent date to which interest
has been paid or duly provided for on the old note surrendered in exchange for
such new note or, if no interest has been paid or duly provided for on such old
note, from March 27, 2002. Holders of the old notes whose old notes are
accepted for exchange will not receive accrued interest on their old notes for
any period from and after the last interest payment date to which interest has
been paid or duly provided for on their old notes prior to the original issue
date of the new notes or, if no such interest has been paid or duly provided
for, will not receive any accrued interest on their old notes, and will be
deemed to have waived the right to receive any interest on their old notes
accrued from and after such interest payment date or, if no such interest has
been paid or duly provided for, from and after March 27, 2002.
Procedures for Tendering Old Notes
The tender of a holder's old notes and our acceptance of old notes will
constitute a binding agreement between the tendering holder and us upon the
terms and conditions of this prospectus and the letter of transmittal. Unless a
holder tenders old notes according to the guaranteed delivery procedures or the
book-entry procedures
24
described below, the holder must transmit the old notes, together with a
properly completed and executed letter of transmittal and all other documents
required by the letter of transmittal, to the exchange agent at its address
before 5:00 p.m., New York City time, on the expiration date. The method of
delivery of old notes, letters of transmittal and all other required documents
is at the election and risk of the tendering holder. If delivery is by mail, we
recommend delivery by registered mail, properly insured, with return receipt
requested. Instead of delivery of mail, we recommend that each holder use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure timely delivery.
Any beneficial owner of the old notes whose old notes are registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender old notes in the exchange offer should contact that
registered holder promptly and instruct that registered holder to tender on its
behalf. If the beneficial owner wishes to tender directly, it must, prior to
completing and executing the letter of transmittal and tendering old notes,
make appropriate arrangements to register ownership of the old notes in its
name. Beneficial owners should be aware that the transfer of registered
ownership may take considerable time.
Any financial institution that is a participant in DTC's Book-Entry Transfer
Facility system may make book-entry delivery of the old notes by causing DTC to
transfer the old notes into the exchange agent's account in accordance with
DTC's procedures for such transfer. To be timely, book-entry delivery of old
notes requires receipt of a confirmation of a book-entry transfer before the
expiration date. Although delivery of the old notes may be effected through
book-entry transfer into the exchange agent's account at DTC, the letter of
transmittal, properly completed and executed, with any required signature
guarantees and any other required documents or an agent's message (as described
below), must in any case be delivered to and received by the exchange agent at
its address on or before the expiration date, or the guaranteed delivery
procedure set forth below must be complied with.
DTC has confirmed that the exchange offer is eligible for DTC's Automated
Tender Offer Program. Accordingly, participants in DTC's Automated Tender Offer
Program may, instead of physically completing and signing the applicable letter
of transmittal and delivering it to the exchange agent, electronically transmit
their acceptance of the exchange offer by causing DTC to transfer old notes to
the exchange agent in accordance with DTC's Automated Tender Offer Program
procedures for transfer. DTC will then send an agent's message to the exchange
agent.
The term "agent's message" means a message transmitted by DTC, received by
the exchange agent and forming part of the book-entry confirmation, which
states:
. that DTC has received an express acknowledgment from a participant in
DTC's Automated Tender Offer Program that is tendering old notes that are
the subject of such book-entry confirmation;
. that the participant has received and agrees to be bound by the terms of
the applicable letter of transmittal (or in the case of an agent's
message relating to guaranteed delivery, that the participant has
received and agrees to be bound by the applicable notice of guaranteed
delivery); and
. that we may enforce such agreement against that participant.
Each signature on a letter of transmittal or a notice of withdrawal must be
guaranteed unless the old notes are tendered:
. by a registered holder who has not completed the box entitled "Special
Delivery Instructions"; or
. for the account of an eligible institution (as described below).
If a signature on a letter of transmittal or a notice of withdrawal is
required to be guaranteed, the signature must be guaranteed by a participant in
a recognized Medallion Signature Program (a "Medallion Signature Guarantor").
If the letter of transmittal is signed by a person other than the registered
holder of the old notes, the
25
old notes surrendered for exchange must be endorsed by the registered holder,
with the signature guaranteed by a Medallion Signature Guarantor. If any letter
of transmittal, endorsement, bond power, power of attorney or any other
document required by the letter of transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation
or other person acting in a fiduciary or representative capacity, such person
should sign in that capacity when signing. Such person must submit to us
evidence satisfactory, in our sole discretion, of his or her authority to so
act unless we waive such requirement.
As used in this prospectus with respect to the old notes, a "registered
holder" is any person in whose name the old notes are registered on the books
of the registrar. An "eligible institution" is a firm that is a member of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or any other "eligible guarantor
institution" as such term is defined in Rule 17Ad-15 under the Exchange Act.
We will determine in our sole discretion all questions as to the validity,
form, eligibility (including time of receipt), acceptance and withdrawal of old
notes tendered for exchange. Our determination will be final and binding. We
reserve the absolute right to reject old notes not properly tendered and to
reject any old notes if acceptance might, in our judgment or our counsel's
judgment, be unlawful. We also reserve the absolute right to waive any defects
or irregularities or conditions of the exchange offer as to particular old
notes at any time, including the right to waive the ineligibility of any holder
who seeks to tender old notes in the exchange offer.
Our interpretation of the terms and conditions of the exchange offer,
including the letter of transmittal and its instructions, will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of old notes for exchange must be cured within such
period of time as we determine. Neither our company nor the exchange agent is
under any duty to give notification of defects in such tenders or will incur
any liability for failure to give such notification. The exchange agent will
use reasonable efforts to give notification of defects or irregularities with
respect to tenders of old notes for exchange but will not incur any liability
for failure to give such notification. Tenders of old notes will not be deemed
to have been made until such irregularities have been cured or waived.
By tendering, you will represent to us that, among other things:
. you are not our "affiliate" (as defined in Rule 405 under the Securities
Act);
. you will acquire the new notes in the ordinary course of your business;
. you are not a broker-dealer that acquired your notes directly from us in
order to resell them pursuant to Rule 144A under the Securities Act or
any other available exemption under the Securities Act;
. if you are a broker-dealer that acquired your notes as a result of
market-making or other trading activities, you will deliver a prospectus
in connection with any resale of new notes; and
. you are not participating, do not intend to participate and have no
arrangement or understanding with any person to participate in the
distribution of the new notes.
In connection with a book-entry transfer, each participant will confirm that
it makes the representations and warranties contained in the letter of
transmittal.
Guaranteed Delivery Procedures
If you wish to tender your old notes and:
. your old notes are not immediately available;
. you are unable to deliver on time your old notes or any other document
that you are required to deliver to the exchange agent; or
26
. you cannot complete the procedures for delivery by book-entry transfer on
time;
you may tender your old notes according to the guaranteed delivery procedures
described in the letter of transmittal. Those procedures require that:
. tender must be made by or through an eligible institution and a notice of
guaranteed delivery must be signed by the holder;
. on or before the expiration date, the exchange agent must receive from
the holder and the eligible institution a properly completed and executed
notice of guaranteed delivery by mail or hand delivery setting forth the
name and address of the holder, the certificate number or numbers of the
tendered old notes and the principal amount of tendered old notes; and
. properly completed and executed documents required by the letter of
transmittal and the tendered old notes in proper form for transfer or
confirmation of a book-entry transfer of such old notes into the exchange
agent's account at DTC must be received by the exchange agent within four
business days after the expiration date of the exchange offer.
Any holder who wishes to tender old notes pursuant to the guaranteed
delivery procedures must ensure that the exchange agent receives the notice of
guaranteed delivery and letter of transmittal relating to such old notes before
5:00 p.m., New York City time, on the expiration date.
Acceptance of Old Notes for Exchange; Delivery of New Notes
Upon satisfaction or waiver of all the conditions to the exchange offer, we
will accept old notes that are properly tendered in the exchange offer prior to
5:00 p.m., New York City time, on the expiration date. The new notes will be
delivered promptly after acceptance of the old notes. For purposes of the
exchange offer, we will be deemed to have accepted validly tendered old notes
when, as and if we have given notice to the exchange agent.
Withdrawal Rights
Tenders of the old notes may be withdrawn by delivery of a written or
facsimile transmission notice to the exchange agent at its address set forth
under "--The Exchange Agent; Assistance" at any time before 5:00 p.m., New York
City time, on the expiration date. Any such notice of withdrawal must:
. specify the name of the person having deposited the old notes to be
withdrawn;
. identify the old notes to be withdrawn, including the certificate number
or numbers and principal amount of such old notes, or, in the case of old
notes transferred by book-entry transfer, the name and number of the
account at DTC to be credited;
. be signed by the holder in the same manner as the original signature on
the letter of transmittal by which old notes were tendered, including any
required signature guarantees, or be accompanied by a bond power in the
name of the person withdrawing the tender, in satisfactory form as
determined by us in our sole discretion, executed by the registered
holder, with the signature guaranteed by a Medallion Signature Guarantor,
together with the other documents required upon transfer by the
indenture; and
. specify the name in which the old notes are to be re-registered, if
different from the person who deposited the old notes.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by us, in our sole discretion. Any
old notes withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the exchange offer and will be returned to the holder
without cost as soon as practicable after withdrawal. Properly withdrawn old
notes may be retendered pursuant to the procedures described under "
- --Procedures for Tendering Old Notes" at any time on or before the expiration
date.
27
The Exchange Agent; Assistance
State Street Bank and Trust Company is the exchange agent. All tendered old
notes, executed letters of transmittal and other related documents should be
directed to the exchange agent. Questions and requests for assistance and
requests for additional copies of the prospectus, the letter of transmittal and
other related documents should be addressed to the exchange agent as follows:
By Registered or By Hand or Overnight
Certified Mail: Courier:
State Street Bank and State Street Bank and
Trust Company Corporate Trust Company Corporate
Trust Department P.O. Trust Window, 5th Floor 2
Box 778 Boston, Avenue de
Massachusetts 02102-0778 Lafayette Boston,
Massachusetts 02111-1724
To Confirm by Telephone or for Information:
(617) 662-1525 Attn: Mackenzie Elijah
Fees and Expenses
We will bear the expenses of soliciting old notes for exchange. The
principal solicitation is being made by mail by the exchange agent. Additional
solicitation may be made by telephone, facsimile or in person by officers and
regular employees of our company and our affiliates and by persons so engaged
by the exchange agent.
We will pay the exchange agent reasonable and customary fees for its
services and will reimburse the exchange agent for its reasonable out-of-pocket
expenses in connection with its services and pay other registration expenses,
including fees and expenses of the trustee under the indenture, filing fees,
blue sky fees and printing and distribution expenses.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptance of the exchange offer.
We will pay all transfer taxes, if any, applicable to the exchange of old
notes pursuant to the exchange offer. If, however, a transfer tax is imposed
for any reason other than the exchange of old notes pursuant to the exchange
offer, then the amount of those transfer taxes, whether imposed on the
registered holder or any other persons, will be payable by the tendering
holder. If satisfactory evidence of payment of those taxes or exemption is not
submitted with the letter of transmittal, the amount of those transfer taxes
will be billed directly to such tendering holder.
Accounting Treatment
The new notes will be recorded at the same carrying value as the old notes,
as reflected in our accounting records on the date of the exchange.
Accordingly, we will recognize no gain or loss for accounting purposes. The
expenses of the exchange offer will be amortized over the term of the new notes.
Consequences of Not Exchanging Old Notes
As a result of this exchange offer, we will have fulfilled most of our
obligations under the registration rights agreement. Holders who do not tender
their old notes, except for certain instances involving the initial purchasers
or holders of old notes who are not eligible to participate in the exchange
offer or who do not receive freely transferrable new notes pursuant to the
exchange offer, will not have any further registration rights under the
registration rights agreement or otherwise and will not have rights to receive
additional interest. Accordingly, any
28
holder who does not exchange its old notes for new notes will continue to hold
the untendered old notes and will be entitled to all the rights and subject to
all the limitations applicable under the indenture, except to the extent that
such rights or limitations, by their terms, terminate or cease to have further
effectiveness as a result of the exchange offer.
Any old notes that are not exchanged for new notes pursuant to the exchange
offer will remain restricted securities within the meaning of the Securities
Act. In general, such old notes may be resold only:
. to our company or any of our subsidiaries;
. inside the United States to a "qualified institutional buyer" in
compliance with Rule 144A under the Securities Act;
. inside the United States to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) or
an "accredited investor" that, prior to such transfer, furnishes or has
furnished on its behalf by a U.S. broker-dealer to the trustee under the
indenture a signed letter containing certain representations and
agreements relating to the restrictions on transfer of the new notes, the
form of which letter can be obtained from the trustee;
. outside the United States in compliance with Rule 904 under the
Securities Act;
. pursuant to the exemption from registration provided by Rule 144 under
the Securities Act, if available; or
. pursuant to an effective registration statement under the Securities Act.
Each accredited investor that is not a qualified institutional buyer and
that is an original purchaser of any of the old notes from the initial
purchasers will be required to sign a letter confirming that it is an
accredited investor under the Securities Act and that it acknowledges the
transfer restrictions summarized above.
Resales of the New Notes
We are making the exchange offer in reliance on the position of the staff of
the SEC as set forth in interpretive letters addressed to third parties in
other transactions. However, we have not sought our own interpretive letter.
Although there has been no indication of any change in the staff's position, we
cannot assure you that the staff of the SEC would make a similar determination
with respect to the exchange offer as it has in its interpretive letters to
third parties. Based on these interpretations by the staff, and except as
provided below, we believe that new notes may be offered for resale, resold and
otherwise transferred by a holder who participates in the exchange offer and is
not a broker-dealer without further compliance with the registration and
prospectus delivery provisions of the Securities Act. In order to receive new
notes that are freely tradeable, a holder must acquire the new notes in the
ordinary course of its business and may not participate, or have any
arrangement or understanding with any person to participate, in the
distribution (within the meaning of the Securities Act) of the new notes.
Holders wishing to participate in the exchange offer must make the
representations described in "--Procedures for Tendering Old Notes" above.
Any holder of old notes:
. who is our "affiliate" (as defined in Rule 405 under the Securities Act);
. who did not acquire the new notes in the ordinary course of its business;
. who is a broker-dealer that purchased old notes from us to resell them
pursuant to Rule 144A under the Securities Act or any other available
exemption under the Securities Act; or
29
. who intends to participate in the exchange offer for the purpose of
distributing (within the meaning of the Securities Act) new notes;
will be subject to separate restrictions. Each holder in any of the above
categories:
. will not be able to rely on the interpretations of the staff of the
Securities Act in the above-mentioned interpretive letters;
. will not be permitted or entitled to tender old notes in the exchange
offer; and
. must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or other transfer of old
notes, unless such sale is made pursuant to an exemption from such
requirements.
If you are a broker-dealer, an "affiliate" of ours, or have an arrangement
or understanding with any person to participate in, a distribution of the new
notes issued in the exchange offer, you cannot rely on the position of the
staff of the SEC contained in the no-action letters mentioned above and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction, unless an exemption
from registration is otherwise available.
Each broker-dealer that receives new notes for its own account in exchange
for old notes, which the broker-dealer acquired as a result of market-making
activities or other trading activities, may be deemed an "underwriter" with in
the meaning of the Securities Act and must, therefore, deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
the new notes. Each such broker-dealer that receives new notes for its own
account in exchange for old notes, where the broker-dealer acquired the old
notes as a result of market-making activities or other trading activities, must
acknowledge, as provided in the letter of transmittal, that it will deliver a
prospectus in connection with any resale of such new notes. For more detailed
information, see "Plan of Distribution."
In addition, to comply with the securities laws of various jurisdictions, if
applicable, the new notes may not be offered or sold unless they have been
registered or qualified for sale in the jurisdiction or an exemption from
registration or qualification is available and is complied with. We have
agreed, pursuant to the registration rights agreement and subject to specified
limitations therein, to register or qualify the new notes for offer or sale
under the securities or blue sky laws of the jurisdictions as any holder of the
new notes reasonably requests.
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DESCRIPTION OF THE NEW NOTES
The old notes were, and the new notes will be, issued as a single series of
securities under the Indenture, dated as of March 27, 2002, among Isle of
Capri, as issuer, certain of Isle of Capri's subsidiaries, as subsidiary
guarantors, and State Street Bank and Trust Company, as trustee. The form and
terms of the new notes are substantially identical to the form and terms of the
old notes, except that the new notes:
. will be registered under the Securities Act; and
. will not bear any legends restricting transfer.
The new notes will be issued solely in exchange for an equal principal
amount of old notes. As of the date of this prospectus, $200.0 million
aggregate principal amount of old notes is outstanding.
In the following summaries:
. "new notes" refers to the registered notes being offered by this
prospectus;
. "old notes" refers to your old notes that may be exchanged for new notes
in the exchange offer;
. "notes" refers collectively to the new notes and the old notes; and
. "Isle of Capri" refers only to Isle of Capri Casinos, Inc. and not to any
of its Subsidiaries.
The following summaries of certain provisions of the indenture are not
complete and are subject to all the provisions of the indenture. Wherever we
refer to particular sections or defined terms used in the indenture, such
sections or defined terms are automatically incorporated into this prospectus.
We have filed a copy of the indenture with the SEC and the indenture is
incorporated by reference into the registration statement. The meanings of some
of the terms that are important in understanding the following summaries are
set forth below under the subheading "Definitions."
Brief Description of the New Notes and the Guarantees
The New Notes
The New Notes will be:
. general unsecured obligations of Isle of Capri;
. subordinated in right of payment to all existing and future Senior
Indebtedness of Isle of Capri;
. equal in right of payment to all existing and future senior subordinated
Indebtedness of Isle of Capri, including the $390.0 million in
outstanding principal amount of Isle of Capri's 83/4% Senior Subordinated
Notes due 2009 (the "Existing Notes");
. effectively subordinated to all secured Indebtedness of Isle of Capri;
. senior in right of payment to any future Indebtedness of Isle of Capri
that is specifically subordinated to the new notes; and
. unconditionally guaranteed by the Subsidiary Guarantors.
The Guarantees
The new notes will be guaranteed by each of the existing and future
Significant Restricted Subsidiaries of Isle of Capri (subject to the receipt of
required approvals of any applicable Gaming Authority), which are initially
substantially all of the subsidiaries of Isle of Capri except Casino America of
Colorado, Inc. and its 57%-owned Subsidiary, Black Hawk LLC, and its
Subsidiaries.
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The Subsidiary Guarantees of the new notes will be:
. general unsecured obligations of each Subsidiary Guarantor;
. subordinated in right of payment to all existing and future Senior
Indebtedness of each Subsidiary Guarantor;
. equal in right of payment to all existing and future senior subordinated
indebtedness of the Subsidiary Guarantors, including the Subsidiary
Guarantees with respect to Existing Notes;
. effectively subordinated to all secured Indebtedness of each Subsidiary
Guarantor; and
. senior in right of payment to any future Indebtedness of each Subsidiary
Guarantor that is specifically subordinated to the Subsidiary Guarantees.
As of January 27, 2002, we and our Significant Restricted Subsidiaries had
approximately $366.9 million of Senior Indebtedness outstanding and our
subsidiaries that are not Subsidiary Guarantors had approximately $82.9 million
of debt and other liabilities outstanding that would be effectively senior to
Isle of Capri's payment obligations on the new notes. As indicated above and as
discussed in detail below under the subheading "Subordination," payments on the
new notes will be subordinated to the payment of Senior Indebtedness of Isle of
Capri and payments under the Subsidiary Guarantees will be subordinated to the
payment of Senior Indebtedness of the Subsidiary Guarantors. The indenture will
permit Isle of Capri and the Subsidiary Guarantors to incur additional Senior
Indebtedness.
All of our Subsidiaries are currently "Restricted Subsidiaries," except for
Casino America of Colorado, Inc., Black Hawk LLC and its Subsidiaries, which
are "Unrestricted Subsidiaries." However, under the circumstances described
below under the subheading "Restricted and Unrestricted Subsidiaries," are
permitted to designate certain of our Subsidiaries as "Unrestricted
Subsidiaries." Unrestricted Subsidiaries are not subject to many of the
restrictive covenants in the indenture. Unrestricted Subsidiaries and
Restricted Subsidiaries that are not Significant Restricted Subsidiaries will
not guarantee the new notes.
Principal, Maturity and Interest
The new notes will be unsecured senior subordinated obligations of Isle of
Capri. Isle of Capri will be permitted to issue additional notes from time to
time under the indenture provided that Isle of Capri is able to incur the
Indebtedness represented by any such additional notes in accordance with the
covenant described under the caption "Certain Covenants--Limitation on
Indebtedness." All notes issued under the indenture, including the new notes
and any such additional notes, will be treated as a single class for all
purposes under the indenture, including without limitation, waivers,
amendments, redemptions and offers to purchase.
The new notes and any additional notes subsequently issued under the
indenture will mature on March 15, 2012; will accrue interest at the rate of 9%
per annum; and interest will be payable semiannually on each March 15 and
September 15, to the holders of record of new notes at the close of business on
each March 1 and September 1 immediately preceding such interest payment date.
Interest on the new notes will accrue from the most recent date to which
interest has been paid or duly provided for on the old notes surrendered in
exchange for such new notes or, if no interest has been paid or duly provided
for on such old notes, from March 27, 2002 and the first interest payment date
thereon will be September 15, 2002. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months.
The new notes will be issued only in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. Principal of,
premium, if any, and interest on the new notes will be payable, and the new
notes will be transferable, at the office or agency of Isle of Capri maintained
for such purposes in the City of New York. Until otherwise designated by Isle
of Capri, Isle of Capri's office or agency in New York will be the office of
the trustee maintained for such purpose. In addition, interest may be paid by
wire transfer or check
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mailed to the Person entitled thereto as shown on the register for the new
notes. No service charge will be made for any registration of transfer or
exchange of the new notes, except for any tax or other governmental charge that
may be imposed in connection therewith.
Ranking
The new notes will rank subordinate in right of payment to all existing and
future Senior Indebtedness of Isle of Capri, senior in right of payment to all
future subordinated Indebtedness of Isle of Capri and equal in right of payment
with any other future senior subordinated Indebtedness of Isle of Capri,
including the Existing new notes and any other notes that are issued under the
indenture. Under the indenture, Isle of Capri and its Restricted Subsidiaries
may incur additional Indebtedness, including Indebtedness which is senior to or
equal in right of payment with the new notes, subject to the limitations set
forth under the subheading "Certain Covenants--Limitation on Indebtedness."
Additional Indebtedness in the form of permitted FF&E Financing or Capitalized
Lease Obligations and certain other Indebtedness may be secured by certain
assets of Isle of Capri or a Restricted Subsidiary, as applicable. See "Certain
Covenants--Limitation on Liens."
Subsidiary Guarantees
Isle of Capri's payment obligations under the new notes will be jointly,
severally, fully and unconditionally guaranteed on an unsecured senior
subordinated basis by each of Isle of Capri's existing and future Significant
Restricted Subsidiaries, subject to the receipt of required approvals of any
applicable Gaming Authority. The Subsidiary Guarantees will be subordinated in
right of payment to all existing and future Senior Indebtedness of the
Subsidiary Guarantors. The new notes are not guaranteed by Casino America of
Colorado, Inc., Black Hawk LLC or their Subsidiaries, any future Unrestricted
Subsidiaries or any existing or future Restricted Subsidiaries that are not
Significant Restricted Subsidiaries.
The indenture contains provisions the intent of which is to provide that the
obligations of each Subsidiary Guarantor will be limited to the maximum amount
that will, after giving effect to all other contingent and fixed liabilities of
such Subsidiary Guarantor and after giving effect to any collections from,
rights to receive contributions from, or payments made by or on behalf of, any
other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its
contribution obligations under the indenture, result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under any applicable federal,
state or foreign law. Each Subsidiary Guarantor that makes a payment or
distribution under a Subsidiary Guarantee shall be entitled to contribution
from each other Subsidiary Guarantor so long as the exercise of such right does
not impair the rights of the holders of the new notes. See "Risk Factors--The
Guarantees May Be Unenforceable due to Fraudulent Conveyance Statutes."
The indenture provides that in the event of:
(1) a sale or other disposition of all or substantially all of the assets of
any Subsidiary Guarantor or the sale of a Subsidiary Guarantor by way of
merger, consolidation or otherwise that, in each case, complies with the
provisions set forth under the subheading "Certain Covenants--Limitation
on Asset Sales and Events of Loss";
(2) a Subsidiary Guarantor becoming an Unrestricted Subsidiary pursuant to
the terms of the indenture; or
(3) a sale or other disposition of all of the Capital Stock of any
Subsidiary Guarantor that complies with the provisions set forth under
the subheading "Certain Covenants--Limitation on Asset Sales and Events
of Loss";
then such Subsidiary Guarantor or the corporation acquiring such assets, as
applicable, shall be immediately released and relieved of any obligations under
its Subsidiary Guarantee without any further action, provided that Isle of
Capri complies with the provisions of the covenant described under the
subheading "Certain Covenants--Limitation on Asset Sales and Events of Loss."
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Redemption and Repurchase Offers
Optional Redemption
The new notes will be redeemable, in whole or in part, at Isle of Capri's
option, at any time on or after March 15, 2007 at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest to the applicable redemption date, if redeemed during the
12-month period beginning on of the years indicated below:
Year Percentage
---- ----------
2007............... 104.500%
2008............... 103.000%
2009............... 101.500%
2010 and thereafter 100.000%
Equity Proceeds Redemption
In the event that Isle of Capri consummates a Qualified Public Equity
Offering on or before March 15, 2005, Isle of Capri may redeem, at its option,
up to 35% of the aggregate outstanding notes at a redemption price of 109.00%
of the principal amount of the notes so redeemed plus accrued and unpaid
interest to the redemption date, provided that, after any such redemption, at
least $130.0 million in principal amount of notes remains outstanding.
Change of Control Repurchase Offer
In the event that a Change of Control shall occur, Isle of Capri is
obligated to make an offer to purchase all outstanding new notes at a
redemption price of 101% of the principal amount thereof, plus accrued and
unpaid interest thereon to the repurchase date. There can be no assurance,
however, that Isle of Capri will have sufficient funds to repurchase the new
notes in that circumstance. If a Change of Control occurs, Isle of Capri is
obligated to notify the holders of new notes in writing of such occurrence and
to make an offer to purchase (the "Change of Control Offer"), on a business day
(the "Change of Control Payment Date") not later than 60 days following the
date of the Change of Control, all new notes then outstanding at a purchase
price equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the Change of Control Payment Date. The Change of Control
Offer is required to remain open for at least 20 business days and until the
close of business on the Change of Control Payment Date. Neither the Board of
Directors nor the trustee may waive or amend Isle of Capri's obligation to so
offer to purchase all outstanding new notes in the event of a Change of Control
without the holders of all of the outstanding notes consenting to such waiver
or amendment. See "Amendments and Waiver."
There can be no assurance that Isle of Capri's debt instruments will permit
a Change of Control Offer to be made. In particular, Isle of Capri's Bank
Credit Facility provides that prior to making any such offer Isle of Capri
would be required to (i) repay in full all obligations (including any unpaid
principal, interest, fees, costs and expenses) owed by Isle of Capri under the
Bank Credit Facility) and terminate all commitments relating to the
Indebtedness under the Bank Credit Agreement or offer to repay in full all
obligations (including any unpaid principal, interest, fees, costs and
expenses) owing by Isle of Capri under the Bank Credit Facility and terminate
all commitments relating to the Indebtedness under the Bank Credit Facility and
to repay such obligations owed to each lender which has accepted such offer, or
(ii) obtain the requisite consents under the Bank Credit Facility to permit the
prepayment of the new notes. Failure to make a Change of Control Offer upon a
Change of Control would constitute a default under the indenture, even if such
Change of Control Offer is prohibited by Isle of Capri's debt instruments.
Gaming Redemption
Notwithstanding any other provision of the indenture, if any Gaming
Authority requires that a holder or beneficial owner of new notes must be
licensed, qualified or found suitable under any appl icable gaming law and the
holder or beneficial owner fails to apply for a license, qualification or a
finding of suitability within 30 days
34
after being requested to do so in such circumstance by the Gaming Authority or
by Isle of Capri pursuant to an order of the Gaming Authority, or if such
holder or such beneficial owner is not so licensed, qualified or found
suitable, Isle of Capri shall have the right, at its option:
(1) to require such holder or beneficial owner to dispose of such holder's
or beneficial owner's new notes within 30 days of receipt of such notice
or such finding by the applicable Gaming Authority or such earlier date
as may be ordered by such Gaming Authority; or
(2) to redeem the new notes of such holder or beneficial owner at a
redemption price equal to the lesser of:
(a) the principal amount thereof, and
(b) the price at which such holder or beneficial owner acquired the new
notes,
together with, in either case, accrued and unpaid interest, if any, to the
earlier of the date of redemption or the date of the finding of unsuitability,
if any, by such Gaming Authority, which may be less than 30 days following the
notice of redemption, if so ordered by such Gaming Authority. Isle of Capri
shall notify the trustee in writing of any such redemption as soon as
practicable. The holder or beneficial owner of new notes applying for a
license, qualification or a finding of suitability is obligated to pay all
costs of the licensure or investigation for such qualification or finding of
suitability.
Selection and Notice
In the event that less than all of the notes are to be redeemed or
repurchased at any time, selection of notes for redemption or repurchase will
be made by the trustee on a pro rata basis, by lot or by such other method, if
any, as the trustee shall deem fair and appropriate; provided that no notes in
a principal amount of $1,000 or less shall be redeemed or repurchased in part.
Unless otherwise specified herein, notice of a redemption of or an offer to
repurchase new notes shall be mailed by first class mail not less than 30 days
nor more than 60 days before the redemption or repurchase date to each holder
of new notes at its registered address. If any new note is to be redeemed or
repurchased in part only, the notice of redemption or offer to repurchase that
relates to such new note shall state the portion of the principal amount
thereof to be redeemed or repurchased. A new note in a principal amount equal
to the unredeemed or unpurchased portion thereof will be issued in the name of
the holder thereof upon cancellation of the original new note. On and after the
redemption or repurchase date, interest will cease to accrue on new notes or
portions thereof redeemed or repurchased or called for redemption pursuant to
the optional and mandatory redemption provisions and not forwarded for
redemption.
Isle of Capri will comply with Rule 14e-1 promulgated under the Exchange
Act, as amended, in making any offer to repurchase new notes described above.
Certain instruments, agreements or other documents evidencing, governing or
otherwise relating to Indebtedness of Isle of Capri and its Subsidiaries may
prohibit any such repurchases or redemptions unless such Indebtedness has been
repaid in full and such instruments, agreements or other documents have been
terminated. In addition, a Change of Control might constitute an event of
default with respect to such Indebtedness permitting the holder (or an agent or
other representative of such holder on its behalf) to accelerate the maturity
thereof. In the event of a Change of Control, Isle of Capri will likely be
required to refinance such Indebtedness and may need to incur additional
Indebtedness in order to make payments for new notes to be redeemed or
repurchased. There can be no assurance that Isle of Capri will be able to
refinance such Indebtedness or to incur additional Indebtedness in order to
make such payments.
Restricted and Unrestricted Subsidiaries
The indenture provides that, subject to the exceptions described below, each
of the Isle of Capri's Subsidiaries other than Casino America of Colorado, Inc.
and Black Hawk LLC and its Subsidiaries, and any entity that becomes a direct
or indirect Subsidiary of Isle of Capri in the future will be a Restricted
Subsidiary
35
unless Isle of Capri designates the Subsidiary to be an Unrestricted
Subsidiary. Except as provided below, Isle of Capri may designate any existing
or future Subsidiary of Isle of Capri as an Unrestricted Subsidiary, provided
that
(1) the Subsidiary to be so designated does not own any Indebtedness or
Capital Stock or own or hold any Lien on any asset or property of Isle
of Capri or any other Restricted Subsidiary;
(2) either (i) the Subsidiary to be so designated has total assets of
$100,000 or less or (ii) immediately before and after giving pro forma
effect to such designation
(a) Isle of Capri could incur $1.00 of Indebtedness pursuant to the
covenant described under the subheading "Certain
Covenants--Limitation on Indebtedness" (other than under clauses 2(a)
through (2)(h) thereof),
(b) no Default or Event of Default shall have occurred and be continuing,
and
(c) Isle of Capri could make, pursuant to the covenant described under
the subheading "Certain Covenants--Limitation on Restricted
Payments," the Restricted Payment arising from the designation as
described in the next paragraph and
(3) all transactions between the Subsidiary to be so designated and its
Affiliates remaining in effect are permitted pursuant to the covenant
described under the subheading "Certain Covenants--Limitation on
Transactions with Affiliates."
Notwithstanding the foregoing, Isle of Capri may not designate any existing
or future Subsidiary that holds, owns or operates, directly or indirectly, any
assets or function directly relating to or necessary for the conduct of casino
gaming at the Isle-Biloxi, the Isle-Vicksburg, the Isle-Bossier City, the
Isle-Lake Charles, the Isle-Lula, the Isle-Boonville, the Isle-Kansas City, the
Isle-Bettendorf and the Rhythm City-Davenport as an Unrestricted Subsidiary.
Any Investment made by Isle of Capri or any Restricted Subsidiary in a
Restricted Subsidiary which is redesignated an Unrestricted Subsidiary shall
thereafter be considered as having been a Restricted Payment (to the extent not
previously included as a Restricted Payment) made on the day such Subsidiary is
designated an Unrestricted Subsidiary in the amount of the greater of
(1) the sum of the Fair Market Value of the interest of Isle of Capri and
any of its Restricted Subsidiaries in such Subsidiary on such date as
determined in accordance with GAAP and the amount of any obligation of
such Subsidiary which Isle of Capri or any Restricted Subsidiary has
guaranteed or for which it is in any other manner liable; and
(2) the amount of the Investments made by Isle of Capri and any of its
Restricted Subsidiaries in such Subsidiary.
Any Subsidiary Guarantee entered into by a Restricted Subsidiary which is
subsequently redesignated an Unrestricted Subsidiary shall be automatically
released at such time as the Restricted Subsidiary becomes an Unrestricted
Subsidiary. Unless so designated as an Unrestricted Subsidiary, any Subsidiary
of Isle of Capri shall be classified as a Restricted Subsidiary.
An Unrestricted Subsidiary may be redesignated a Restricted Subsidiary,
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of Isle of Capri of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if
(1) such Indebtedness is permitted to be incurred under the covenant
described under the subheading "Certain Covenants--Limitation on
Indebtedness" (other than under clauses 2(a) through 2(h) thereof); and
(2) no Default or Event of Default shall have occurred and be continuing.
The designation of an Unrestricted Subsidiary or the removal of such
designation is required to be made by the Board of Directors of Isle of Capri,
such designation to be evidenced by a Board Resolution stating that the
36
Board of Directors has made such designation in accordance with the indenture,
and Isle of Capri is required to deliver to the trustee this Board Resolution
together with an Officers' Certificate certifying that the designation complies
with the indenture. Such designation will be effective as of the date specified
in the applicable Board Resolution, which may not be before the date the
applicable Officers' Certificate is delivered to the trustee.
Subordination
The payment of the principal of, premium, if any, and interest on and any
other amounts owing with respect to the new notes will be subordinated in right
of payment, as described below, to the prior payment in full of all Senior
Indebtedness.
The indenture will provide that in the event of any insolvency or bankruptcy
case or proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relating to Isle of Capri,
or any liquidation, dissolution or other winding-up of Isle of Capri, whether
voluntary or involuntary, or any assignment for the benefit of creditors or
other marshaling of assets or liabilities of Isle of Capri:
(1) all Senior Indebtedness of Isle of Capri and Senior Indebtedness of the
Subsidiary Guarantors must be paid in full before any payment or
distribution (excluding any payment or distribution of certain permitted
equity or subordinated securities) is made on account of the principal
of, premium, if any, or interest on, or any other amounts owing with
respect to the new notes or the Subsidiary Guarantees, respectively; and
(2) until all Senior Indebtedness is paid in full, any distribution to which
holders of the new notes would be entitled but for this provision shall
be made to holders of Senior Indebtedness as their interests may appear,
except that holders of the new notes may receive Capital Stock or any
debt securities that are subordinated to Senior Indebtedness to at least
the same extent as the new notes.
Similarly, in the event of a bankruptcy, liquidation, reorganization or
similar proceeding relating to any Subsidiary Guarantor, its assets would be
available to pay obligations under its Subsidiary Guarantee only after all
Senior Indebtedness of that Subsidiary Guarantor is paid in full.
During the continuance of any default in the payment of any Designated
Senior Indebtedness of Isle of Capri or a Subsidiary Guarantor at maturity or
pursuant to which the maturity thereof may immediately be accelerated beyond
any applicable grace period, no payment or distribution of any assets of Isle
of Capri or such Subsidiary Guarantor of any kind or character (excluding any
payment or distribution of certain permitted equity or subordinated securities
and other than payments from trusts previously created pursuant to the
provisions described under the subheading "Defeasance") shall be made on
account of the principal of, premium, if any, or interest on, or any other
amounts owing with respect to, or the purchase, redemption or other acquisition
of, the new notes unless and until such default has been cured or waived or has
ceased to exist or such Designated Senior Indebtedness shall have been
discharged or paid in full.
During the continuance of any non-payment default with respect to any
Designated Senior Indebtedness of Isle of Capri or a Subsidiary Guarantor
pursuant to which the maturity thereof may be accelerated (in accordance with
its terms a "Non-payment Default") and after the receipt by the trustee from
the representatives of holders of such Designated Senior Indebtedness of a
written notice of such Non-payment Default, no payment or distribution of any
assets of Isle of Capri or such Subsidiary Guarantor of any kind or character
(excluding any payment or distribution of certain permitted equity or
subordinated securities and other than payments from trusts previously created
pursuant to the provisions described under the subheading "Defeasance") may be
made by Isle of Capri or such Subsidiary Guarantor on account of the principal
of, premium, if any, or interest on, or any other amounts owing with respect
to, or the purchase, redemption or other acquisition of, the new notes for the
period specified below (the "Payment Blockage Period").
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The Payment Blockage Period will commence upon the receipt of written notice
of a Non-payment Default by the trustee from the representatives of holders of
Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and will end on the earlier to occur of the following events:
(1) 179 days shall have elapsed since the receipt of such notice of a
Non-payment Default (provided that such Designated Senior Indebtedness
shall not theretofore have been accelerated);
(2) such default is cured or waived or ceases to exist or such Designated
Senior Indebtedness is discharged; or
(3) such Payment Blockage Period shall have been terminated by written
notice to Isle of Capri or the trustee from the representatives of
holders of Designated Senior Indebtedness initiating such Payment
Blockage Period.
After the end of any Payment Blockage Period, Isle of Capri shall promptly
resume making any and all required payments in respect of the new notes,
including any missed payments. Notwithstanding anything in the subordination
provisions of the indenture or the new notes to the contrary,
(1) in no event shall a Payment Blockage Period extend beyond 179 days from
the date of the receipt by the trustee of the notice initiating such
Payment Blockage Period;
(2) there shall be a period of at least 186 consecutive days in each 365-day
period when no Payment Blockage Period is in effect; and
(3) not more than one Payment Blockage Period with respect to the new notes
may be commenced within any period of 365 consecutive days.
A Non-payment Default with respect to Designated Senior Indebtedness that
existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Designated Senior Indebtedness initiating
such Payment Blockage Period cannot be made the basis for the commencement of a
second Payment Blockage Period, whether or not within a period of 365
consecutive days, unless such default has been cured or waived for a period of
not less than 90 consecutive days and subsequently recurs.
As used herein, the term "Designated Senior Indebtedness" means (1)
Indebtedness incurred under the Bank Credit Facility and (2) any other Senior
Indebtedness in a principal amount of at least $25.0 million outstanding which,
at the time of determination, is specifically designated in the instrument
governing such Senior Indebtedness as "Designated Senior Indebtedness" by Isle
of Capri and is otherwise permitted to be "Designated Senior Indebtedness"
under the Bank Credit Facility.
If Isle of Capri fails to make any payment on the new notes when due or
within any applicable grace period, whether or not on account of the payment
blockage provisions referred to above, such failure would constitute an Event
of Default under the indenture and would enable the holders of the new notes to
accelerate the maturity thereof. See the information under the subheading
"Events of Default and Remedies."
By reason of such subordination, in the event of liquidation or insolvency,
creditors of Isle of Capri who are holders of Senior Indebtedness may recover
more, ratably, than the holders of the new notes and funds which would be
otherwise payable to the holders of the new notes will be paid to the holders
of Senior Indebtedness to the extent necessary to pay the Senior Indebtedness
in full, and Isle of Capri may be unable to meet its obligations fully with
respect to the new notes.
Certain Covenants
Set forth below are summaries of certain covenants contained in the
indenture.
Limitation on Indebtedness
(1) The indenture provides that Isle of Capri may not, and may not cause or
permit any Restricted Subsidiary to, directly or indirectly, create, incur,
assume, suffer to exist, guarantee or in any manner become
38
liable for the payment of ("incur") any Indebtedness (including any Acquired
Indebtedness) or any Disqualified Stock unless:
(a) such Indebtedness or Disqualified Stock is incurred by Isle of Capri
or a Subsidiary Guarantor;
(b) no Default or Event of Default shall have occurred and be continuing
at the time of, or would occur after giving pro forma effect to, such
incurrence of Indebtedness or Disqualified Stock; and
(c) on the date of such incurrence (the "Incurrence Date"), the
Consolidated Coverage Ratio of Isle of Capri , after giving pro forma
effect to such incurrence of such Indebtedness, would be at least 2.0
to 1.0.
(2) Notwithstanding the foregoing, Isle of Capri and its Restricted
Subsidiaries may incur:
(a) Indebtedness and Disqualified Stock issued to and held by Isle of
Capri or a wholly owned Restricted Subsidiary of Isle of Capri,
provided that (i) any subsequent issuance or transfer of any Capital
Stock that results in any such wholly owned Restricted Subsidiary
ceasing to be a wholly owned Restricted Subsidiary or (ii) any
transfer of such Indebtedness to a Person other than Isle of Capri or
a wholly owned Restricted Subsidiary of Isle of Capri, will be deemed
to be the incurrence of such Indebtedness or issuance of Disqualified
Stock by the issuer thereof;
(b) Indebtedness under the old notes and the new notes, the Subsidiary
Guarantees and the indenture;
(c) Indebtedness outstanding on March 27, 2002;
(d) FF&E Financing and Capitalized Lease Obligations to acquire or
refinance furniture, fixtures and equipment incident to and useful in
the operation of Casinos, Casino Hotels or any Casino Related
Facility, provided that the sum of the aggregate principal amount of
FF&E Financing and Capitalized Lease Obligations does not exceed, in
the aggregate at any time outstanding, the sum of:
(i) the principal amount of FF&E Financing and Capitalized Lease
Obligations outstanding on April 23, 1999; plus
(ii) $15.0 million; plus
(iii) $10.0 million times the number of Casinos acquired or developed
by the Company and its Restricted Subsidiaries after April 23,
1999; plus
(iv) $7.5 million times the number of Casino Hotels acquired or
developed by the Company and its Restricted Subsidiaries after
April 23, 1999;
(e) Indebtedness in respect of performance bonds, letters of credit,
bankers' acceptances and surety and appeal bonds incurred in the
ordinary course of business, other than such Indebtedness outstanding
on March 27, 2002 (or refinancings thereof permitted under clause (f)
below), in an amount not to exceed $15.0 million in the aggregate at
any time outstanding; Interest Rate and Currency Protection
Obligations entered into in connection with the incurrence of
Indebtedness otherwise permitted under the indenture; and
Indebtedness arising under agreements providing for indemnification,
adjustment of purchase price and similar obligations in connection
with the disposition of property or assets;
(f) Indebtedness issued in exchange for or to repay, prepay, repurchase,
redeem, defease, retire or refinance ("refinance") any Indebtedness
(x) incurred pursuant to the provisions of Section (1) above or (y)
permitted by clauses (b) or (c) above or this clause (f) of this
Section 2, provided that:
(i) if the principal amount of the Indebtedness so issued shall
exceed the sum of the principal amount of the Indebtedness so
exchanged or refinanced plus any prepayment premium and costs
reasonably incurred to effect the exchange or refinancing, then
such excess shall be permitted only to the extent that it is
otherwise permitted to be incurred under this covenant; and
39
(ii) the Indebtedness so issued:
(A) has a Stated Maturity not earlier than the Stated Maturity of
the Indebtedness so exchanged or refinanced;
(B) has an average life to Stated Maturity equal to or greater
than the remaining average life to Stated Maturity of the
Indebtedness so exchanged or refinanced; and
(C) is subordinated to the notes to at least the same extent as
the Indebtedness so exchanged or refinanced if such
Indebtedness that is being exchanged or refinanced is
subordinated to the notes.
(g) Indebtedness incurred by Isle of Capri and its Restricted
Subsidiaries under one or more Credit Facilities in an aggregate
principal amount at any one time outstanding not to exceed the
greater of (i) $400.0 million and (ii) 1.5 times the Consolidated
Cash Flow of Isle of Capri and its Restricted Subsidiaries for the
period consisting of the four full fiscal quarters for which
financial statements are available that immediately precede the date
on which the Indebtedness is incurred (less any Indebtedness incurred
pursuant to this clause (g) that is permanently prepaid, repaid,
redeemed, purchased or retired with Net Cash Proceeds from any Asset
Sale or Event of Loss pursuant to the terms of the covenant described
under the subheading "Limitation on Asset Sales and Events of Loss");
and
(h) Indebtedness, other than Indebtedness permitted by clauses (a)
through (g) above, which does not exceed $25.0 million (less any
Indebtedness incurred pursuant to this clause (h) that is permanently
prepaid, repaid, redeemed, purchased or retired with Net Cash
Proceeds from any Asset Sale or Event of Loss pursuant to the terms
of the covenant described under the subheading "Limitation on Asset
Sales and Events of Loss") in the aggregate at any time outstanding.
Limitation on Liens
Isle of Capri may not, and may not cause or permit any Restricted
Subsidiary, directly or indirectly, to, create, incur, assume or suffer to
exist any Lien of any kind upon any of its property or assets (including,
without limitation, any income or profits) now owned or acquired by it after
April 23, 1999 or any proceeds therefrom, unless the new notes are equally and
ratably secured (except that Liens securing Subordinated Indebtedness shall be
expressly subordinate to the Liens securing the notes to the same extent such
Subordinated Indebtedness is subordinate to the notes), other than:
(1) Liens existing on April 23, 1999;
(2) Liens securing Senior Indebtedness of Isle of Capri and the Subsidiary
Guarantors permitted to be incurred under the indenture;
(3) Liens securing FF&E Financing or Capitalized Lease Obligations permitted
pursuant to clause (2)(d) of the covenant described under the subheading
"Limitation on Indebtedness"; provided that:
(a) the amount of such Indebtedness incurred in any individual case
secured by such a Lien, at the time such Indebtedness is incurred,
does not exceed the lesser of (i) the cost and (ii) the Fair Market
Value of the property or assets purchased or acquired with the
proceeds of such FF&E Financing or Capitalized Lease Obligation;
(b) the Indebtedness secured by such Lien shall have otherwise been
permitted to be incurred under the Indenture;
(c) such Lien shall attach to such property or assets upon their
acquisition; and
(d) such Lien (other than a Permitted Vessel Lien) shall not encumber or
attach to any other assets or property of Isle of Capri or any of its
other Restricted Subsidiaries;
(4) Liens securing Indebtedness incurred pursuant to clause (2)(h) of the
covenant described under the subheading "Limitation on Indebtedness";
40
(5) the replacement, extension or renewal of any Lien permitted by clauses
(1) through (4) upon or in the same property theretofore subject thereto
or the replacement, extension or renewal (without increase in the
principal amount (other than to pay any prepayment premium and costs
reasonably incurred to effect the replacement, extension or renewal, or
change in any direct or contingent obligor) of the Indebtedness secured
thereby; and
(6) Permitted Liens.
Limitation on Restricted Payments
Isle of Capri may not make, directly or indirectly, and may not permit any
Restricted Subsidiary to make, directly or indirectly, any Restricted Payment
unless:
(1) no Default or Event of Default shall have occurred and be continuing at
the time of and after giving pro forma effect to such Restricted Payment;
(2) immediately after giving effect to such Restricted Payment, Isle of
Capri could incur at least $1.00 of Indebtedness pursuant to the
covenant described under the subheading "Limitation on Indebtedness"
(other than under clauses (2)(a) through (2)(h) thereof); and
(3) the aggregate amount of all Restricted Payments declared or made after
March 27, 2002 does not exceed the sum of the following amounts (without
duplication):
(a) 50% of Consolidated Net Income (or in the event such Consolidated Net
Income shall be a deficit, minus 100% of such deficit) accrued during
the period (treated as one accounting period) beginning on January
25, 1999 and ending on the last day of Isle of Capri's last fiscal
quarter ending before the date of such proposed Restricted Payment;
plus
(b) an amount equal to the aggregate Net Cash Proceeds received by Isle
of Capri from the issuance or sale (other than to a Subsidiary) of
its Capital Stock (excluding Disqualified Stock, but including
Capital Stock issued upon conversion of convertible Indebtedness and
from the exercise of options, warrants or rights to purchase Capital
Stock (other than Disqualified Stock) of Isle of Capri) on or after
April 23, 1999; plus
(c) to the extent not otherwise included in Isle of Capri's Consolidated
Net Income, 100% of cash dividends, if applicable, or distributions
or the amount of the cash principal and interest payments received
since April 23, 1999 by Isle of Capri or any Restricted Subsidiary
from any Unrestricted Subsidiary or in respect of any Investment
constituting a Restricted Payment (other than dividends, if
applicable, or distributions to pay obligations owed to a person
other than Isle of Capri or any Restricted Subsidiary by or with
respect to such Unrestricted Subsidiary, such as income taxes) until
the entire amount of the Investment in such Unrestricted Subsidiary
has been received or the entire amount of such Investment
constituting a Restricted Payment has been returned, as the case may
be, and 50% of such amounts thereafter;
provided that, if no Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Restricted Payment,
the foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of its
declaration if, at the date of declaration, such payment would be
permitted by such provisions;
(ii) the redemption or repurchase of any Capital Stock or Indebtedness
of Isle of Capri, including the new notes, if required by any
Gaming Authority or if determined, in the good faith judgment of
the Board of Directors, to be necessary to prevent the loss or to
secure the grant or reinstatement of any gaming license or other
right to conduct lawful gaming operations;
(iii) the repurchase of Capital Stock from directors, officers and
employees (or their respective estates or beneficiaries) upon
death, disability, retirement or termination of employment up to
an amount not to exceed an aggregate of $2.0 million in any
fiscal year of Isle of Capri;
41
(iv) Permitted Investments; and
(v) the incurrence, creation, assumption, suffering to exist of, or
payment with respect to any Qualified Guarantee.
The full amount of any Restricted Payment made pursuant to the foregoing
clause (i) or clause (ii) or clause (2) of the definition of Permitted
Investments, however, will be included in the calculation of the aggregate
amount of Restricted Payments available to be made pursuant to clause (3) of
this Section.
With respect to any Qualified Guarantee:
(1) if at any time Isle of Capri or its Restricted Subsidiaries cease to
control the day-to-day gaming operations of the entity that issued the
guaranteed Indebtedness, the aggregate principal amount of such
Indebtedness that is guaranteed pursuant to such Qualified Guarantee
shall thereafter be included in the calculation of the aggregate amount
of Restricted Payments available to be made pursuant to clause (3) of
this Section; and
(2) if Isle of Capri or its Restricted Subsidiaries retain control of the
day-to-day gaming operations of the entity that issued the guaranteed
Indebtedness, (a) any amounts actually paid by Isle of Capri or its
Restricted Subsidiaries with respect to such Qualified Guarantee shall
thereafter be included in the calculation of the aggregate amount of
Restricted Payments available to be made pursuant to clause (3) of this
Section and (b) if and for so long as an event of default occurs and is
continuing with respect to such guaranteed Indebtedness, the aggregate
principal amount of such Indebtedness that is guaranteed pursuant to the
Qualified Guarantee shall be included in the calculation of the
aggregate amount of Restricted Payments available to be made pursuant to
clause (3) of this Section.
Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries
Isle of Capri may not, directly or indirectly, and may not permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or enter into any agreement with any Person that would cause
any consensual encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to:
(1) pay dividends, in cash or otherwise, or make any other distributions on
its Capital Stock or any other interest or participation in, or measured
by, its profits owned by, or pay any Indebtedness owed to, Isle of Capri
or a Restricted Subsidiary;
(2) make any loans or advances to Isle of Capri or any Restricted
Subsidiary; or
(3) transfer any of its properties or assets to Isle of Capri or any
Restricted Subsidiary, except in each case for:
(a) restrictions imposed by the notes, the indenture and the Subsidiary
Guarantees;
(b) customary non-assignment provisions restricting subletting or
assignment of any lease entered into in the ordinary course of
business, consistent with industry practices;
(c) restrictions imposed by applicable gaming laws or any applicable
Gaming Authority;
(d) restrictions under any agreement relating to any property, assets or
business acquired by Isle of Capri or its Restricted Subsidiaries,
which restrictions existed at the time of acquisition, were not put
in place in anticipation of such acquisition and are not applicable
to any Person other than the Person acquired, or to any property,
assets or business other than the property, assets and business of
the Person acquired;
(e) any such contractual encumbrance in existence as of March 27, 2002 or
imposed by or in connection with the incurrence of any FF&E Financing
or Capitalized Lease Obligations permitted pursuant to clause (2)(d)
of the covenant described under the subheading "Limitation on
Indebtedness," provided such encumbrance does not have the effect of
restricting the payment of
42
dividends to Isle of Capri or any Restricted Subsidiary or the
payment of Indebtedness owed to Isle of Capri or any Restricted
Subsidiary or reducing the amount of any such dividends or payments;
(f) any restrictions with respect to Capital Stock or assets,
respectively, of a Restricted Subsidiary of Isle of Capri imposed
pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or
assets of such Restricted Subsidiary;
(g) restrictions imposed by the Bank Credit Facility; and
(h) replacements of restrictions imposed pursuant to clauses (a) through
(g) that are no more restrictive than those being replaced.
Limitation on Asset Sales and Events of Loss
Isle of Capri may not, directly or indirectly, and may not permit any
Restricted Subsidiary to, directly or indirectly, make any Asset Sale unless:
(1) at the time of such Asset Sale, Isle of Capri or such Restricted
Subsidiary, as the case may be, receives consideration at least equal to
the Fair Market Value of the assets sold or otherwise disposed of;
(2) the proceeds therefrom consist of at least 75% cash or Cash Equivalents;
and
(3) no Default or Event of Default shall have occurred and be continuing at
the time of or after giving pro forma effect to such Asset Sale.
Isle of Capri and its Restricted Subsidiaries may, on or before the 180th
day after the date on which Isle of Capri or such Restricted Subsidiary
consummates an Asset Sale or suffers an Event of Loss, apply 100% of the Net
Cash Proceeds therefrom to either (1) prepay, repay, redeem or purchase (and
permanently reduce the commitments under) any Senior Indebtedness or (2) make a
Permitted Related Investment (or enter into a binding agreement to make a
Permitted Related Investment). The amount of such Net Cash Proceeds not so
applied to either prepay, repay, redeem or purchase any Senior Indebtedness or
make a Permitted Related Investment will constitute "Excess Sale/Loss
Proceeds." The indenture provides that, when the aggregate amount of Excess
Sale/Loss Proceeds equals $10.0 million, Isle of Capri is obligated to make an
offer to purchase (a "Excess Sale/Loss Proceeds Offer") from all holders of the
notes in accordance with the procedures set forth in the indenture up to a
maximum principal amount (expressed as a multiple of $1,000) of notes equal to
such Excess Sale/Loss Proceeds, less the accrued and unpaid interest on such
notes. The offer price for the notes will be payable in cash in an amount equal
to 100% of the principal amount of the notes plus accrued and unpaid interest,
if any, to the date of repurchase. Each Excess Sale/Loss Proceeds Offer shall
remain open for a period of at least 20 business days. To the extent an Excess
Sale/Loss Proceeds Offer is not fully subscribed to by the holders of the
notes, Isle of Capri may retain such unutilized portion of the Excess Sale/Loss
Proceeds for any application or use not prohibited by the terms of the
indenture.
Limitation on Disposition of Stock of Restricted Subsidiaries
Isle of Capri shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, issue, transfer, convey, sell, lease or otherwise
dispose of any shares of Capital Stock of a Restricted Subsidiary to any Person
(other than to Isle of Capri or a wholly owned Subsidiary), unless (1) (a) such
transfer, conveyance, sale, lease or other disposition is of all of the Capital
Stock of such Restricted Subsidiary or (b) after giving effect to such
transfer, conveyance, sale, lease or other disposition, Isle of Capri or the
applicable Subsidiary Guarantor remains the owner of a majority of the Capital
Stock of such Restricted Subsidiary and (2) the Net Cash Proceeds from such
transfer, conveyance, sale, lease or other disposition are applied in
accordance with the covenant described under the subheading "Limitation on
Asset Sales and Events of Loss". No Restricted Subsidiary shall issue any
preferred stock or other Capital Stock having a preference as to dividends,
upon liquidation or otherwise over the Capital Stock of such Restricted
Subsidiary owned, directly or indirectly, by Isle of Capri.
43
Limitation on Transactions with Affiliates
Isle of Capri may not, and Isle of Capri may not permit, cause or suffer any
Restricted Subsidiary to, conduct any business or enter into any transaction or
series of transactions (including, without limitation, the sale, transfer,
disposition, purchase, exchange, lease or use of assets, property or services)
or enter into any contract, agreement, understanding, loan, advance or
guarantee with or for the benefit of any of their respective Affiliates,
including, without limitation, any Unrestricted Subsidiary, other than Isle of
Capri or another Restricted Subsidiary (each an "Affiliate Transaction"),
except:
(1) such transactions that are set forth in writing and are entered into in
good faith and on terms that are no less favorable to Isle of Capri or
such Restricted Subsidiary, as the case may be, than those that could
have been obtained in a comparable transaction on an arm's-length basis
from a Person not an Affiliate of Isle of Capri or such Restricted
Subsidiary or, if in the reasonable opinion of a majority of the
Independent directors of Isle of Capri, such standard is inapplicable to
the subject Affiliate Transaction, then such Affiliate Transaction is
fair to Isle of Capri or the Restricted Subsidiary, as the case may be
(or to the stockholders as a group in the case of a pro rata dividend or
other distribution to stockholders permitted under the subheading
"Limitation on Restricted Payments"), from a financial point of view;
(2) such transactions that are existing as of March 27, 2002; and
(3) reasonable and customary compensation and indemnification of directors,
officers and employees.
In addition, Isle of Capri and its Restricted Subsidiaries may not enter
into any Affiliate Transaction (or series of related Affiliate Transactions
that are part of a common plan) under clause (1) above involving aggregate
payments or other Fair Market Value:
(1) in excess of $5.0 million unless, prior to the consummation thereof, the
transaction is approved by the Board of Directors of Isle of Capri,
including a majority of the disinterested directors, such approval to be
evidenced by a Board Resolution delivered to the trustee with an
Officers' Certificate stating that such Board of Directors has
determined that such Affiliate Transaction complies with clause (1)
above; and
(2) in excess of $15.0 million unless, prior to the consummation thereof,
Isle of Capri shall have received an opinion, from an independent
nationally recognized firm experienced in the appraisal or similar
review of similar types of transactions, that such transaction or series
of related transactions is on terms which are fair, from a financial
point of view, to Isle of Capri or such Restricted Subsidiary.
Change In Nature of Business
Isle of Capri may not, and may not permit any of its Restricted Subsidiaries
to, own, manage or conduct any operation other than a Permitted Line of
Business.
Consolidation, Merger, Conveyance, Transfer or Lease
Neither Isle of Capri nor any Restricted Subsidiary may consolidate with or
merge with or into or sell, assign, convey, lease or transfer all or
substantially all of its properties and assets to any Person or group of
affiliated Persons in a single transaction or through a series of transactions,
except that:
(1) Isle of Capri may consolidate with or merge with or into or sell,
assign, convey, lease or transfer all or substantially all of its
properties and assets to any Person or group of affiliated Persons in a
single transaction or through a series of transactions if:
(a) Isle of Capri is the continuing Person or the resulting, surviving or
transferee Person (the "surviving entity") is a corporation organized
and existing under the laws of the United States or any State thereof
or the District of Columbia;
44
(b) the surviving entity expressly assumes, by a supplemental indenture
(or similar instrument) executed and delivered to the trustee, in
form and substance reasonably satisfactory to the trustee, all of the
obligations of Isle of Capri under the notes and the indenture;
(c) immediately before and immediately after giving pro forma effect to
such transaction, or series of transactions (including, without
limitation, any Indebtedness incurred or anticipated to be incurred
in connection with or in respect of such transaction or series of
transactions), no Default or Event of Default shall have occurred and
be continuing;
(d) if the transaction or series of transactions involves Isle of Capri,
Isle of Capri or the surviving entity, immediately before and after
giving effect to such transaction or series of transactions
(including, without limitation, any Indebtedness incurred or
anticipated to be incurred in connection with or in respect of the
transaction or series of transactions), has a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of Isle of Capri
immediately prior to such transaction or series of transactions;
(e) if the transaction or series of transactions involves Isle of Capri,
immediately after giving effect to such transaction or series of
transactions on a pro forma basis, Isle of Capri or the surviving
entity could incur at least $1.00 of Indebtedness pursuant to the
covenant described under the subheading "Limitation on Indebtedness"
(other than under clauses (2)(a) through (2)(h) thereof);
(f) Isle of Capri or the surviving entity has delivered to the trustee an
Officers' Certificate stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction or series of
transactions, such supplemental indenture complies with this covenant
and that all conditions precedent in the indenture relating to the
transaction or series of transactions have been satisfied;
(g) such transaction will not result in the loss of any gaming or other
license necessary for the continued operation of any Restricted
Subsidiary as conducted immediately prior to such consolidation,
merger, conveyance, transfer or lease; and
(h) if any property of Isle of Capri or any Restricted Subsidiary would
thereupon become subject to any Lien, the covenant described under
the subheading "Limitation on Liens" is complied with; and
(2) a Restricted Subsidiary may consolidate with or merge into or sell,
assign, convey, lease or transfer all or substantially all of its
properties and assets to Isle of Capri or to any Restricted Subsidiary
if:
(a) the surviving entity is Isle of Capri or a Restricted Subsidiary;
(b) the surviving entity expressly assumes, by a supplemental indenture
(or similar instrument) executed and delivered to the trustee, in
form and substance reasonably satisfactory to the trustee, all of the
obligations of such Restricted Subsidiary under the notes, the
Subsidiary Guarantees (if applicable) and the indenture; and
(c) such transaction will not result in the loss of any gaming or other
license necessary for the continued operation of any Restricted
Subsidiary as conducted immediately prior to such sale, assignment,
conveyance, transfer or lease.
Reports To Holders Of New Notes
Whether or not Isle of Capri is subject to the periodic reporting
requirements under the Exchange Act, it shall deliver to the trustee and each
holder of new notes (1) all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on Forms 10-Q and
10-K if Isle of Capri was required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
Isle of Capri and its Consolidated
45
Subsidiaries (provided that, such reports shall show in reasonable detail,
either on the face of the financial statements or in the footnotes thereto, the
financial condition and results of operations of Isle of Capri and its
Significant Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries and other Subsidiaries
of Isle of Capri that are not Subsidiary Guarantors with such reasonable detail
as required by the SEC or as would be required by the SEC if Isle of Capri was
subject to the periodic reporting requirements of the Exchange Act) and, with
respect to the annual information only, a report thereon by Isle of Capri's
certified independent accountants and (2) all current reports that would be
required to be filed with the SEC on Form 8-K if Isle of Capri was required to
file such reports, in each case within the time periods specified in the SEC's
rules and regulations. Following the consummation of the exchange offer,
whether or not required by the rules and regulations of the SEC, Isle of Capri
will file a copy of all such information and reports with the SEC for public
availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, Isle of Capri has agreed that, for so long as any notes
remain outstanding, it will furnish to the holders of the notes and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
Limitation on Other Senior Subordinated Indebtedness
Isle of Capri shall not, and shall not cause or permit any of the Restricted
Subsidiaries to, create, incur, assume, guarantee or in any other manner become
liable with respect to any Indebtedness other than the notes and the Subsidiary
Guarantees that is subordinate in right of payment to any Senior Indebtedness
of Isle of Capri or such Restricted Subsidiary, as applicable, unless such
Indebtedness is either (1) equal in right of payment with the notes or the
Subsidiary Guarantees, as applicable or (2) subordinate in right of payment to
the notes or the Subsidiary Guarantees, as applicable, in the same manner and
at least to the same extent as the notes are subordinated to Senior
Indebtedness of Isle of Capri or as such Subsidiary Guarantee is subordinated
to Senior Indebtedness of such Subsidiary Guarantor, as applicable.
Events of Default and Remedies
Events of Default
Any one of the following agents will be an "Event of Default" under the
terms of the indenture:
(1) a default in the payment of any interest on the notes when it becomes
due and payable and the continuance of any such default for a period of
30 days; or
(2) a default in the payment of the principal of or premium, if any, on the
notes when due at maturity, upon acceleration, optional redemption,
required repurchase or otherwise; or
(3) the default by Isle of Capri or any Subsidiary Guarantor in the
performance, or breach, of any term, covenant or agreement in the
indenture (other than defaults specified in clause (1) or (2) above or
clause (4) below), and the continuance of such default or breach for a
period of 30 days after written notice to Isle of Capri by the trustee
or to Isle of Capri and the trustee by the holders of at least 25% in
aggregate principal amount of the outstanding notes; or
(4) the default by Isle of Capri or any Subsidiary Guarantor in the
performance, or breach, of the covenant described under the subheading
"Certain Covenants--Consolidation, Merger, Conveyance, Transfer or
Lease"; the failure of Isle of Capri to make or consummate an Excess
Sale/Loss Proceeds Offer in accordance with the covenant described under
the subheading "Certain Covenants--Limitation on Asset Sales and Events
of Loss"; or the failure of Isle of Capri to make or consummate a Change
of Control Offer in accordance with the provisions described under the
subheading "Certain Covenants--Change of Control Repurchase Offer"; or
46
(5) the failure by Isle of Capri or any Restricted Subsidiary, after any
applicable grace period, to make any payment when due of principal of,
premium in respect of or interest on any other Indebtedness, other than
Non-Recourse Indebtedness, in an aggregate principal amount of $10.0
million or more, or the acceleration of the maturity of other
Indebtedness, other than Non-Recourse Indebtedness, in an aggregate
principal amount of $10.0 million or more for any other reason; or
(6) one or more final judgments, orders or decrees for the payment of money
not covered by insurance in excess of $10.0 million, either individually
or in an aggregate amount, shall be entered against Isle of Capri or any
Restricted Subsidiary or any of their respective properties and not
discharged, and there shall have been a period of 60 days during which a
stay of enforcement of such judgment or order, by reason of pending
appeal or otherwise, shall not be in effect; or
(7) certain events of bankruptcy, insolvency or reorganization with respect
to Isle of Capri or any of its Significant Restricted Subsidiaries shall
have occurred; or
(8) the revocation, termination, suspension or cessation to be effective of
any gaming license or other right to conduct lawful gaming operations at
any Casino in any jurisdiction of Isle of Capri or any Subsidiary which
shall continue for more than 90 consecutive days (other than the
voluntary relinquishment of any such gaming license or right if, in the
reasonable opinion of Isle of Capri (as evidenced by an Officers'
Certificate) such relinquishment (a) is in the best interest of Isle of
Capri and its Subsidiaries, taken as a whole and (b) does not adversely
affect the holders of the notes in any material respect and (c) is not
reasonably expected to have, nor are the reasons therefor reasonably
expected to have, any material adverse effect on the effectiveness of
any gaming license or similar right, or any right to renewal thereof, or
on the prospective receipt of any such license or right, in each case,
in Mississippi, Louisiana or such other jurisdiction in which any
Material Operations of Isle of Capri or its Subsidiaries are located); or
(9) any of (a) a default or material breach by any Restricted Subsidiary of
its obligations under any Subsidiary Guarantee which continues for a
period of 30 days after written notice to Isle of Capri by the trustee
or to Isle of Capri and the trustee by the holders of at least 25% in
aggregate principal amount of the outstanding notes, (b) the repudiation
by any Restricted Subsidiary of its obligations under the Subsidiary
Guarantees or (c) a judgment or decree by a court or governmental agency
of competent jurisdiction declaring the unenforceability of the payment
obligations under the Subsidiary Guarantee.
Acceleration
If an Event of Default other than an Event of Default specified in clause
(7) above occurs, then the trustee or the holders of at least 25% in aggregate
principal amount of the outstanding notes may, by written notice, and the
trustee upon the request of the holders of not less than 25% in aggregate
principal amount of the outstanding notes is obligated to, declare the
principal of and accrued interest on all the notes to be due and payable
immediately provided that so long as the Bank Credit Facility is in effect,
such acceleration shall not be effective until the earlier of (1) five business
days following the delivery of notice of acceleration to the agent under the
Bank Credit Facility and (2) the acceleration of any Indebtedness under the
Bank Credit Facility. If an Event of Default specified in clause (7) above
occurs, then the principal of and accrued interest on all the notes ipso facto
becomes and is immediately due and payable without any declaration or other act
on the part of the trustee or any holder.
After a declaration of acceleration, the holders of a majority in aggregate
principal amount of outstanding notes may, by notice to the trustee, rescind
such declaration of acceleration if all existing Events of Default have been
cured or waived, other than nonpayment of principal of and accrued interest on
the notes that has become due solely as a result of such acceleration and if
the rescission of acceleration would not conflict with any judgment or decree.
The holders of a majority in aggregate principal amount of the outstanding
notes also have the right to waive past defaults under the indenture except a
default in the payment of the principal of or interest on any note, or in
respect of a covenant or a provision which cannot be modified or amended
without the consent of all holders.
In the event of a declaration of acceleration in respect of the notes
because an Event of Default specified in clause (5) above shall have occurred
and be continuing, such declaration of acceleration shall be automatically
47
annulled if the Indebtedness that is the subject of such Event of Default has
been discharged or the holders thereof have rescinded their declaration of
acceleration in respect of such Indebtedness, and written notice of such
discharge or rescission, as the case may be, shall have been given to the
trustee by Isle of Capri and countersigned by the holders of such Indebtedness
or a trustee, fiduciary or agent for such holders, within 30 days after such
declaration of acceleration in respect of the notes, and no other Event of
Default has occurred during such 30-day period which has not been cured or
waived during such period.
No holder of any of the notes has any right to institute any proceeding with
respect to the indenture or any remedy thereunder, unless the holders of at
least 25% in aggregate principal amount of the outstanding notes have made
written request, and offered reasonable indemnity, to the trustee to institute
such proceeding as trustee, the trustee has failed to institute such proceeding
within 15 days after receipt of such notice and the trustee has not within such
15-day period received directions inconsistent with such written request by
holders of a majority in aggregate principal amount of the outstanding notes.
Such limitations do not apply, however, to a suit instituted by a holder of a
note for the enforcement of the payment of the principal of, premium, if any,
or accrued interest on, such note on or after the Stated Maturity thereof.
Defeasance
Isle of Capri may at any time terminate all of its obligations with respect
to the notes ("defeasance"), except for certain obligations, including those
regarding any trust established for a defeasance and obligations to register
the transfer or exchange of the notes, to replace mutilated, destroyed, lost or
stolen notes and to maintain agencies in respect of notes. Isle of Capri may at
any time terminate its obligations under certain covenants set forth in the
indenture, including all of those described under the subheading "Certain
Covenants," and any omission to comply with such obligations will not
constitute a Default or an Event of Default with respect to the notes issued
under the indenture ("covenant defeasance"). In order to exercise either
defeasance or covenant defeasance, Isle of Capri must irrevocably deposit with
the trustee, in trust, for the benefit of the holders of the notes, money or
United States Government Obligations, or a combination thereof, in such amounts
as will be sufficient to pay the principal of and premium, if any, and interest
on the notes to redemption or maturity, together with all other sums payable by
it under the indenture, and comply with certain other conditions, including the
delivery of an opinion as to certain tax matters. Defeasance of the notes will
result in the termination of the obligations of the Subsidiary Guarantors under
their respective Subsidiary Guarantees.
Satisfaction and Discharge
The indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of
notes) as to all outstanding notes when either:
(1) all such notes theretofore authenticated and delivered (except lost,
stolen or destroyed notes which have been replaced or paid and notes for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by Isle of Capri and thereafter repaid to
Isle of Capri or discharged from such trust) have been delivered to the
trustee for cancellation; or
(2) (a) all such notes not theretofore delivered to the trustee for
cancellation have become due and payable and Isle of Capri has
irrevocably deposited or caused to be deposited with the trustee as
trust funds in trust for this purpose an amount of money sufficient to
pay and discharge the entire Indebtedness on the notes not theretofore
delivered to the trustee for cancellation, for principal, premium, if
any, and accrued interest to the date of such deposit,
(b) Isle of Capri has paid all sums payable by it under the Indenture; and
(c) Isle of Capri has delivered irrevocable instructions to the trustee
to apply the deposited money toward the payment of the notes at
maturity or the redemption date, as the case may be. In addition,
Isle of Capri must deliver an Officers' Certificate and an Opinion of
Counsel stating that all conditions precedent to satisfaction and
discharge have been complied with.
48
Amendments and Waivers
From time to time Isle of Capri, when authorized by resolutions of the Board
of Directors, and the trustee may, without the consent of the holders of the
notes, amend, waive or supplement the indenture, the notes or the Subsidiary
Guarantees for certain specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies and making any change that does
not adversely affect the rights of any holder. Other amendments and
modifications of the indenture or the notes may be made by Isle of Capri and
the trustee with the consent of the holders of not less than a majority of the
aggregate principal amount of the outstanding notes; provided that no such
modification or amendment may, without the consent of the holder of each
outstanding note affected thereby,
(1) reduce the principal amount outstanding of, change the Stated Maturity
of, or alter the redemption provisions of, the notes;
(2) change the currency in which any notes or any premium or the accrued
interest thereon is payable;
(3) reduce the percentage in principal amount outstanding of notes whose
holders must consent to an amendment, supplement or waiver or consent to
take any action under the indenture or the notes;
(4) impair the right to institute suit for the enforcement of any payment on
or with respect to the notes;
(5) modify the ability to waive defaults or specified covenants, except to
increase the percentage of notes required to effect a waiver;
(6) reduce the rate of or change the time for, payment of interest on the
notes;
(7) modify or change any provision of the indenture or the related
definitions affecting the subordination or ranking of the notes or any
Subsidiary Guarantee in any manner that materially and adversely affects
the holders; or
(8) amend, change or modify the obligation of Isle of Capri to make and
consummate a Change of Control Offer in the event of a Change of Control
or make and consummate an Excess Sale/Loss Proceeds Offer with respect
to any Asset Sale or Event of Loss or modify any of the provisions or
definitions with respect thereto.
In addition to the foregoing, no modification or amendment may, without the
consent of the holders of at least 66 2/3/% of the aggregate principal amount
of the outstanding notes, modify the terms of or release any of the Subsidiary
Guarantees except as provided under the subheading "Subsidiary Guarantees" and
"Restricted and Unrestricted Subsidiaries." /
Regarding the Trustee
State Street Bank and Trust Company is the trustee under the indenture.
Book-Entry Notes
The old notes offered and sold to qualified institutional buyers (as defined
under Rule 144A of the Securities Act) or "QIBs" were each registered in
book-entry form and are represented by a global note in fully registered form
without interest coupons. The global note was deposited with the trustee as
custodian for The Depository Trust Company or "DTC" and registered in the name
of Cede & Co.
The old notes offered and sold to persons outside the United States who
received such old notes pursuant to sales in accordance with Regulation S under
the Securities Act were initially represented by a global note in fully
registered form without interest coupons. This global note was deposited with
the trustee as custodian for DTC and registered in the name of Cede & Co.
Before the expiration of the "40-day restricted period" (within the meaning of
Rule 903 of Regulation S), transfers of interest in this global note were only
effected through records maintained by DTC, Cedel Bank, societe anonyme
("CEDEL") or the Euroclear System ("Euroclear").
49
Except as described below, the new notes will be represented by one or more
global notes. We will deposit the global notes representing the new notes with
DTC. The global notes will be registered in the name of DTC or its nominee.
Except as provided below, the new notes will not be issued in definitive form.
One certificate will be issued in the principal amount of $200 million.
Holders of new notes who elect to take physical delivery of their
certificates instead of holding their interest through the global notes will be
issued a certificated new note in registered form. Upon the transfer of any
certificated new note initially issued to such holders, such certificated new
note will, unless the transferee requests otherwise or the global notes have
previously been exchanged in whole for certificated new notes, be exchanged for
an interest in the global notes representing the new notes.
The Depository Trust Company is a limited-purpose trust company organized
under the New York Banking Law. It is a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its participants (including
CEDEL and Euroclear) deposit with it. DTC also facilitates the settlement among
participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic book-entry changes in participants'
accounts, which eliminates the need for physical movement of certificates.
Direct participants include securities brokers and dealers, banks, trust
companies, clearing corporations and other organizations. DTC is owned by a
number of its direct participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to DTC's book entry system is also available to others,
such as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a direct participant, either
directly or indirectly. These other entities are referred to as "indirect
participants." The rules applicable to DTC and its participants are on file
with the SEC.
Purchases of new notes represented by a global note under DTC's system must
be made by or through direct participants. Direct participants will receive a
credit for the new notes on DTC's records. The ownership interest of each
actual purchaser of each new note will be recorded on the direct and indirect
participants' records. Each actual purchaser is referred to as a "beneficial
owner." Beneficial owners will not receive written confirmation from DTC of
their purchase, but beneficial owners are expected to receive written
confirmations providing details of the transaction and periodic statements of
their holdings from the direct or indirect participant through which the
beneficial owner entered into the transaction.
Transfers of ownership interests in the new notes will be accomplished by
entries made on the books of participants acting on behalf of beneficial
owners. Beneficial owners will not receive certificates representing their
ownership interests in the new notes, except if use of the book-entry system
for the new notes is discontinued. All beneficial ownership interests in the
global notes, including those held through Euroclear or CEDEL, will be subject
to the procedures and requirements of DTC and, where applicable, Euroclear or
CEDEL.
The laws of some states require that certain purchasers of notes take
physical delivery of securities in definitive form. These limits and laws may
impair the ability to transfer beneficial interests in the global notes.
So long as the depository for the global notes, or its nominee, is the
registered owner of the global notes, it will be considered the sole owner or
holder of the notes represented by the global notes. Except as provided below,
owners of beneficial interests in the new notes represented by the global notes
will not be entitled to have their new notes represented by such global notes
registered in their names, will not receive or be entitled to receive physical
delivery of the new notes in definitive form and will not be considered the
owners or holders of the notes under the indenture.
To facilitate subsequent transfers, all notes deposited by participants with
DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of the new notes with DTC and their registration in the
50
name of Cede & Co. cause no change in beneficial ownership. DTC has no
knowledge of the actual beneficial owners of the new note. DTC's records
reflect only the identity of the direct participants to whose accounts the
notes are credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of their holdings on
behalf of their customers. Conveyance of notices and other communications by
DTC to direct participants, by direct participants to indirect participants and
by direct participants and indirect participants to beneficial owners will be
governed by arrangements among them. Those arrangements are subject to any
applicable statutory or regulatory requirements.
Neither DTC nor Cede & Co. will consent or vote with respect to the new
notes. Under its usual procedures, DTC mails an omnibus proxy to us as soon as
possible after the record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to direct participants whose accounts the new notes
are credited on the record date. Those direct participants are identified in a
listing attached to the omnibus proxy.
We will make payments of principal, any premium and interest on the global
notes through the trustee or a paying agent to the depository, as the
registered owner of the global notes. None of the trustee, the paying agent or
our company will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the global notes or for maintaining, supervising or reviewing any
records relating to beneficial ownership interests.
DTC has advised us that, upon its receipt of any payment in respect of a
global note, it will credit direct participants' accounts on the payable date
in accordance with their respective holdings shown on DTC's records unless it
has reason to believe that it will not receive payment on the payable date.
Payments by participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with notes held for the
accounts of customers in bearer form or registered in "street name." These
payments will be the responsibility of the participant and not of DTC, the
paying agent or our company, subject to any applicable statutory or regulatory
requirements.
It is our responsibility or the paying agent's responsibility to make
payments to DTC. It is the responsibility of DTC to disburse the payments to
direct participants. It is the responsibility of direct and indirect
participants to disburse the payments to beneficial owners.
Transfer between participants in DTC will be effected in the ordinary way in
accordance with DTC rules. If a holder requires physical delivery of
certificated notes for any reason, including to sell notes to persons in states
which require physical delivery of such notes or to pledge such notes, the
holder must transfer its interest in the global note in accordance with the
normal procedures of DTC and the procedures set forth in the indenture.
Transfers between participants in Euroclear and CEDEL will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
Cross-market transfers between DTC, on the one hand, and directly or
indirectly through Euroclear or CEDEL participants, on the other, will be
effected by DTC in accordance with DTC rules on behalf of Euroclear or CEDEL,
as the case may be, by its respective depository. However, such cross-market
transactions will require delivery of instructions to Euroclear or CEDEL, as
the case may be, by the counterparty in such system in accordance with its
rules and procedures and within its established deadlines (Brussels time).
Euroclear or CEDEL, as the case may be, will, if the transaction meets its
settlement requirements, deliver instructions to its respective depository to
take action to effect final settlement on its behalf by delivering or receiving
interests in the global note in DTC and making or receiving payment in
accordance with normal procedures for same-day funds settlements applicable to
DTC. CEDEL participants and Euroclear participants may not deliver instructions
directly to the depositories for CEDEL or Euroclear.
Because of time zone differences, the securities account of a Euroclear or
CEDEL participant purchasing an interest in a global note from a DTC
participant will be credited during the securities settlement processing day
(which must be a business day for Euroclear and CEDEL) immediately following
the DTC settlement date. The
51
credit of any transactions in interests in a global note settled during such
processing day will be reported to the relevant Euroclear or CEDEL participant
on such day. Cash received in Euroclear or CEDEL as a result of sales of
interests in a global note by or through a Euroclear or CEDEL participant to a
DTC participant will be received for value on the DTC settlement date but will
be available in the relevant Euroclear or CEDEL cash account only as of the
business day following DTC settlement date.
Subject to certain conditions, any person having a beneficial interest in a
global note may, upon request to the trustee, exchange its beneficial interest
for certificated notes. Upon any such issuance of certificated notes, the
trustee is required to register such certificated notes in the name of, and
cause the same to be delivered to, the person or persons who requested
certificated notes or its nominee. In addition, if DTC is at any time unwilling
or unable to continue as a depositary for the global notes and a successor
depositary is not appointed by us within 90 days, we will issue certificated
notes in exchange for the global notes. If there is an event of default under
the indenture, DTC will exchange the global notes for certificated notes, which
it will distribute to its participants.
According to DTC, the above information has been provided to its
participants and other members of the financial community for informational
purposes only and is not intended to serve as a representation, warranty or
contract modification of any kind.
The information in this section concerning DTC and its book-entry system has
been obtained from sources that we believe to be reliable. However, we take no
responsibility for the accuracy of that information.
Certain Definitions
Set forth below are the meanings of some of the terms that are important in
understanding the above description of the new notes and the terms contained in
the indenture.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Subsidiary of Isle of Capri or that is assumed in
connection with an Asset Acquisition by such Person, but not Indebtedness
incurred in connection with, or in anticipation of, such Person becoming a
Subsidiary of Isle of Capri or such acquisition.
"Affiliate" of any Person means any other Person that, directly or
indirectly, controls, is controlled by or is under direct or indirect common
control with, such Person and with respect to any natural Person, any other
immediate family member of such natural Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of Voting Stock or other equity interests, by
contract or otherwise, and the terms "controlling" and "controlled" have
meanings correlative to the foregoing; provided that, in any event, any Person
that owns directly or indirectly 10% or more of the securities having ordinary
voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person.
"Airplane" means the King Air 200 airplane owned by Isle of Capri on March
27, 2002.
"Asset Acquisition" means (1) any capital contribution (including, without
limitation, transfers of cash or other property to others or payments for
property or services for the account or use of others, or otherwise), or
purchase or acquisition of Capital Stock or other similar ownership or profit
interest, by Isle of Capri or any of its Subsidiaries in any other Person, in
either case pursuant to which such Person shall become a Subsidiary of Isle of
Capri or any of its Subsidiaries or shall be merged with or into Isle of Capri
or any of its Subsidiaries or (2) any acquisition by Isle of Capri or any of
its Subsidiaries of the assets of any Person which constitute substantially all
of an operating unit or business of such Person.
52
"Assets Held for Sale or Development" means:
(1) the FFC Preferred Stock;
(2) the Airplane;
(3) the Real Estate Options;
(4) the Cripple Creek Land; and
(5) the Discontinued Assets.
"Asset Sale" means any direct or indirect sale, conveyance, transfer, lease
(other than an operating lease relating to assets the fair market value of
which, determined in the good faith judgment of the Board of Directors, does
not exceed $2.0 million) assignment, issuance or other disposition (including,
without limitation, by means of a sale-leaseback transaction) by Isle of Capri
or any Restricted Subsidiary to any Person (other than Isle of Capri or a
wholly owned Restricted Subsidiary), in one transaction or a series of related
transactions, of:
(1) any Capital Stock of any Restricted Subsidiary or other similar equity
interest; or
(2) any other property or asset of Isle of Capri or any Restricted
Subsidiary other than:
(a) Assets Held for Sale or Development;
(b) any Excess Land;
(c) current assets, as defined in accordance with GAAP, in the ordinary
course of business;
(d) damaged, worn out or other obsolete property in the ordinary course
of business if such property is no longer necessary for the proper
conduct of such business;
(e) property no longer used or useful in the ordinary course of business
or property replaced with similar property of similar utility in the
ordinary course of business;
(f) each other disposition (or series of related dispositions) that
results in Net Cash Proceeds to Isle of Capri and its Restricted
Subsidiaries of less than or equal to $1.0 million; and
(g) an Investment permitted under the covenant described under the
subheading "Certain Covenants--Limitation on Restricted Payments" or
a disposition made in accordance with the covenant described under
the subheading "Certain Covenants--Consolidation, Merger, Conveyance,
Transfer or Lease."
"Bank Credit Facility" means that certain Amended and Restated Credit
Agreement dated as of March 2, 2000 among Isle of Capri, the lenders named
therein and Canadian Imperial Bank of Commerce, as administrative agent and
issuing lender, including any notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case
as amended (including any amendment and restatement thereof), modified,
extended, deferred, refunded, substituted, replaced or refinanced from time to
time, including any agreement extending the maturity of, refinancing, replacing
or otherwise restructuring (including increasing the amount of available
borrowings thereunder or adding Subsidiaries of Isle of Capri as additional
borrowers or guarantors thereunder) all or any portion of the Indebtedness
under such agreement or any successor or replacement agreement and whether by
the same or any other agent, creditor, lender or group of creditors or lenders.
"Black Hawk LLC" means the Isle of Capri Casino located in Black Hawk,
Colorado.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of Isle of Capri, to have been duly adopted by the
Board of Directors of Isle of Capri, or any duly authorized committee thereof
and to be in full force and effect on the date of such certification, and
delivered to the trustee.
"Capital Stock" means, with respect to any Person, any and all shares,
interests (including partnership and other equity interests), participations,
rights in, or other equivalents (however designated and whether voting or
53
nonvoting) of, such Person's capital stock, whether outstanding on March 27,
2002 or issued after such date, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock.
"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) any
property (whether real, personal or mixed) that is required to be classified
and accounted for as a capital lease obligation under GAAP, and, for the
purpose of the indenture, the amount of such obligation at any date of
determination shall be the capitalized amount thereof at such date, determined
in accordance with GAAP.
"Cash Equivalents" means any of the following, to the extent owned by Isle
of Capri or any of its Restricted Subsidiaries free and clear of all Liens and
having a maturity of not greater than 270 days from the date of acquisition:
(1) any evidence of Indebtedness issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United States of
America is pledged in support thereof);
(2) insured certificates of deposit or acceptances of any commercial bank
that is a member of the Federal Reserve System, that issues (or the
parent of which issues) commercial paper rated as described in clause
(3) below and that has combined capital and surplus and undivided
profits of not less than $500.0 million;
(3) commercial paper issued by a corporation (except an Affiliate of Isle of
Capri) organized under the laws of any state of the United States or the
District of Columbia and rated at least A-1 (or the then equivalent
grade) by Standard & Poor's Corporation or at least Prime-1 (or the then
equivalent grade) by Moody's Investors Service, Inc.; and
(4) repurchase agreements and reverse repurchase agreements relating to
marketable direct obligations issued or unconditionally guaranteed by
the United States government or any agency or other instrumentality
thereof (provided that the full faith and credit of the United States of
America is pledged in support thereof), provided that the terms of such
repurchase and reverse repurchase agreements comply with the guidelines
set forth in the Federal Financial Agreements of Depository Institutions
with Securities Dealers and Others, as adopted by the Comptroller of the
Currency.
"Casino" means a gaming establishment owned by Isle of Capri or a Restricted
Subsidiary and containing at least 600 slot machines and 10,000 square feet of
space dedicated to the operation of games of chance.
"Casino Hotel" means any hotel or similar hospitality facility with at least
100 rooms owned by Isle of Capri or a Restricted Subsidiary and serving a
Casino.
"Casino Related Facility" means any building, restaurant, theater, amusement
park or other entertainment facility, parking or recreational vehicle
facilities or retail shops located at or adjacent to, and directly ancillary
to, a Casino and used or to be used in connection with such Casino, other than
a Casino Hotel.
"Change of Control" means after March 27, 2002, an event or series of events
by which:
(1) any "person" or "group" (as such terms are used in Section 13(d) and
14(d) of the Exchange Act) (other than the Permitted Equity Holders) is
or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a person or group shall be deemed to
have "beneficial ownership" of all shares that any such person or group
has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of
securities representing the greater of
(a) that percentage of the combined voting power of Isle of Capri's
outstanding Voting Stock held by Permitted Equity Holders (including
shares as to which Isle of Capri or a Permitted Equity Holder holds
an effective proxy to vote); or
54
(b) 35% or more of the combined voting power of Isle of Capri's
outstanding Voting Stock;
but excluding in each case from the percentage of voting power held by any
group, the voting power of shares owned by the Permitted Equity Holders who
are deemed to be members of the group provided that such Permitted Equity
Holders beneficially own a majority of the voting power of the Voting Stock
held by such group, and at such time the Permitted Equity Holders together
shall fail to beneficially own, directly or indirectly, securities
representing at least the same percentage of voting power of such Voting
Stock as the percentage "beneficially owned" by such person or group; or
(2) during any period of 24 consecutive months, individuals who at the
beginning of such period constituted the Board of Directors (together
with any new or replacement directors whose election by the Board of
Directors, or whose nomination for election by Isle of Capri's
shareholders, was approved by a vote of at least a majority of the
directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the directors then in office; or
(3) Isle of Capri consolidates with or merges with or into any Person or
conveys, transfers or leases all or substantially all of its assets to
any Person, pursuant to a transaction in which the outstanding Voting
Stock of Isle of Capri is changed into or exchanged for cash, securities
or other property (other than any such transaction where the outstanding
Voting Stock of Isle of Capri is (a) changed only to the extent
necessary to reflect a change in the jurisdiction of incorporation of
Isle of Capri or (b) is exchanged for (i) Voting Stock of the surviving
corporation which is not Disqualified Stock or (ii) cash, securities and
other property (other than Capital Stock of the surviving corporation)
in an amount which could be paid by Isle of Capri as a Restricted
Payment as described under the subheading "Limitation on Restricted
Payments" (and such amount shall be treated as a Restricted Payment) and
no person or group, other than Permitted Equity Holders (including any
Permitted Equity Holders who are part of a group where such Permitted
Equity Holders beneficially own a majority of the voting power of the
Voting Stock held by such group), owns immediately after such
transaction, directly or indirectly, more than 35% of the combined
voting power of the outstanding Voting Stock of the surviving
corporation; or
(4) Isle of Capri is liquidated or dissolved or adopts a plan of liquidation
or dissolution other than in a transaction which complies with the
provisions described under the subheading "Consolidation, Merger,
Conveyance, Transfer or Lease."
"Consolidated" refers to the consolidation of accounts in accordance with
GAAP.
"Consolidated Cash Flow" means, for any period, the sum of:
(1) the Consolidated Net Income of Isle of Capri and its Restricted
Subsidiaries for such period; plus
(2) the sum of the following items to the extent deducted in determining
Consolidated Net Income in accordance with GAAP and without duplication:
(a) all Consolidated Interest Expense;
(b) Consolidated Non-cash Charges;
(c) Consolidated Income Tax Expense; and
(d) any pre-opening expenses.
"Consolidated Coverage Ratio" means the ratio of:
(1) Consolidated Cash Flow of Isle of Capri and its Restricted Subsidiaries
for the period (the "Reference Period") consisting of the four full
fiscal quarters for which financial statements are available that
immediately precede the date of the transaction or other circumstances
giving rise to the need to calculate the Consolidated Coverage Ratio
(the "Transaction Date") to
55
(2) the Consolidated Interest Expense for such Reference Period based upon
the pro forma amount of Indebtedness of Isle of Capri and its Restricted
Subsidiaries outstanding on the Transaction Date and after giving effect
to the transaction in question, unless otherwise provided in the
indenture.
For purposes of this definition, if the Transaction Date occurs before the
date on which Isle of Capri's consolidated financial statements for the four
full fiscal quarters after March 27, 2002 are available, Consolidated Cash Flow
and Consolidated Interest Expense shall be calculated, in the case of Isle of
Capri and its Restricted Subsidiaries, after giving effect on a pro forma basis
as if the Notes outstanding on the Transaction Date were issued on the first
day of such four full fiscal quarter period.
In addition, Consolidated Cash Flow and Consolidated Interest Expense shall
be calculated after giving effect on a pro forma basis for the period of such
calculation to
(1) the incurrence or retirement of any Indebtedness of Isle of Capri and
its Restricted Subsidiaries at any time during the Reference Period or
subsequent to such Reference Period but prior to the Transaction Date,
including, without limitation, the incurrence of the Indebtedness giving
rise to the need to make such calculation (unless otherwise provided in
the indenture), as if such Indebtedness were incurred or retired on the
first day of the Reference Period; provided that if Isle of Capri or any
of its Restricted Subsidiaries directly or indirectly guarantees
Indebtedness of a third Person, the above clause shall give effect to
the incurrence of such guaranteed Indebtedness as if Isle of Capri or
such Restricted Subsidiary had directly incurred such guaranteed
Indebtedness; and
(2) any Asset Sale, Event of Loss or Asset Acquisition (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of Isle of Capri or any of its Restricted
Subsidiaries (including any Person who becomes a Subsidiary as result of
the Asset Acquisition) incurring Acquired Indebtedness) occurring during
the Reference Period or subsequent to such Reference Period but prior to
the Transaction Date, and any permanent prepayment, repayment,
redemption, purchase or retirement of Indebtedness in connection with
such Asset Sale, Event of Loss, Asset Acquisition, as if such Asset
Sale, Event of Loss or Asset Acquisition and/or retirement occurred on
the first day of the Reference Period.
Furthermore, in calculating Consolidated Interest Expense for purposes of
this "Consolidated Coverage Ratio," interest on Indebtedness determined on a
fluctuating basis shall be deemed to accrue at the rate in effect on the
Transaction Date for such entire period.
"Consolidated Income Tax Expense" means, as applied to any Person for any
period, federal, state, local and foreign income taxes (including franchise
taxes imposed in lieu of or as additional income tax) of such Person and its
Restricted Subsidiaries for such period, determined in accordance with GAAP;
provided, that for purposes hereof, "income taxes" shall specifically exclude
any taxes paid to or imposed by a Gaming Authority.
"Consolidated Interest Expense" means as applied to any Person for any
period the sum of the following items, without duplication:
(1) the aggregate amount of interest recognized by such Person and its
Restricted Subsidiaries in respect of their Consolidated Indebtedness,
including all interest capitalized by such Person and its Restricted
Subsidiaries during such period and all commissions, discounts and other
similar fees and charges owed by such Person or any of its Restricted
Subsidiaries for letters of credit and bankers' acceptance financing and
the net costs associated with Interest Rate and Currency Protection
Obligations of such Person and its Restricted Subsidiaries, but
excluding other financing costs, amortization of deferred financing cost
and debt discount or premium;
(2) the aggregate amount of the interest component of rentals in respect of
Capitalized Lease Obligations recognized by such Person and its
Restricted Subsidiaries;
56
(3) to the extent any Indebtedness of any other Person is guaranteed by such
Person or any of its Restricted Subsidiaries, the aggregate amount of
interest paid or accrued by such other Person during such period
attributable to any such guaranteed Indebtedness;
(4) the interest portion of any deferred payment obligation;
(5) an amount equal to 1/3/ of the base rental expense (i.e., not any rent
expense paid as a percentage of revenues) attributable to such Person
and its Restricted Subsidiaries; and /
(6) the amount of dividends payable by such Person and its Restricted
Subsidiaries in respect of Disqualified Stock (other than such dividends
payable to such Restricted Subsidiaries).
"Consolidated Net Income" means, for any period, the aggregate of the
consolidated Net Income or net loss of Isle of Capri and its Restricted
Subsidiaries determined in accordance with GAAP, less (to the extent included
in such consolidated Net Income)
(1) the Net Income or net loss of any Person (the "other Person")
(a) other than a Restricted Subsidiary, except in each such case such Net
Income shall be included to the extent of the amount of management
fees or cash dividends or other cash distributions in respect of
Capital Stock or other interest owned actually paid (out of funds
legally available therefor) to and received by Isle of Capri or its
Restricted Subsidiaries, other than dividends, if applicable, or
other distributions to pay obligations of or with respect to such
Unrestricted Subsidiary, such as income taxes; or
(b) in which Isle of Capri or any of its Restricted Subsidiaries has a
joint interest with a third party (which interest of a third party
causes the Net Income or net loss of such other Person not to be
consolidated into the Net Income or net loss of Isle of Capri and its
Restricted Subsidiaries in accordance with GAAP), except in each such
case such Net Income shall be included to the extent of the amount of
management fees or cash dividends or other cash distributions in
respect of Capital Stock or other interest owned actually paid (out
of funds legally available therefor) to and received by Isle of Capri
or its Restricted Subsidiaries, other than dividends, if applicable,
or other distributions to pay obligations of or with respect to such
Unrestricted Subsidiary, such as income taxes;
(2) items classified as extraordinary or any non-cash item classified as
non-recurring, other than the tax benefit of the utilization of net
operating loss carry forwards or alternative minimum tax credits;
(3) except to the extent includable in clause (1) above, the Net Income or
loss of any other Person accrued or attributable to any period before
the date on which it becomes a Restricted Subsidiary or is merged into
or consolidated with Isle of Capri or any of its Restricted Subsidiaries
or such other Person's property or Capital Stock (or a portion thereof)
is acquired by Isle of Capri or any of its Restricted Subsidiaries; and
(4) the Net Income of any Restricted Subsidiary to the extent that the
declaration of dividends or similar distributions by such Restricted
Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgement, decree, order, statute, law, rule or governmental
regulations applicable to that Restricted Subsidiary or its stockholders.
"Consolidated Net Worth" means, at any date of determination, the sum of:
(1) the consolidated equity of the common stockholders of such Person and
its Restricted Subsidiaries on such date; plus
(2) the respective amounts reported on such Person's most recent balance
sheet with respect to any series of preferred stock (other than
Disqualified Stock) that by its terms is not entitled to the payment of
57
dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but
only to the extent of any cash received by such Person upon issuance of
such preferred stock; less
(a) all write-ups (other than write-ups resulting from foreign currency
translations and write-ups of tangible assets of a going concern
business made within 12 months after the acquisition of such
business) subsequent to the date of the indenture in the book value
of any asset owned by such Person or a Restricted Subsidiary of such
Person;
(b) all investments in Persons that are not Restricted Subsidiaries; and
(c) all unamortized debt discount and expense and unamortized deferred
charges, all of the foregoing determined in accordance with GAAP.
"Consolidated Non-cash Charges" of any Person means, for any period, the
aggregate depreciation, amortization and other non-cash charges of such Person
and its Restricted Subsidiaries on a Consolidated basis for such period, as
determined in accordance with GAAP (excluding any non-cash charge which
requires an accrual or reserve for cash charges for any future period).
"Credit Facility" means one or more debt or commercial paper facilities with
banks or other institutional lenders (including the Bank Credit Facility)
providing for revolving credit loans, term loans or letters of credit, in each
case together with any amendments, supplements, modifications (including by any
extension of the maturity thereof), substitutions, refinancings or replacements
thereof by a lender or a syndicate of lenders in one or more successive
transactions (including any such transaction that changes the amount available
thereunder, replaces such agreement or document or provides for other agents or
lenders).
"Cripple Creek Land" means the real estate owned or leased by Isle of Capri
in Cripple Creek, Colorado.
"Default" means any Event of Default or an event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
"Discontinued Assets" means the following assets held for sale by Isle of
Capri or its Subsidiaries as of March 27, 2002:
(1) the Diamond Lady riverboat;
(2) the Lucky Seven barge and other unused marine equipment; and
(3) gaming equipment held for sale.
"Disqualified Stock" means, with respect to any Person, any Capital Stock or
other similar ownership or profit interest that, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is exchangeable for
Indebtedness, or is redeemable at the option of the holder thereof, in whole or
in part, on or before the Maturity Date of the Notes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Loss" means, with respect to any property or asset (tangible or
intangible, real or personal) that has a Fair Market Value of $5.0 million or
more, any of the following:
(1) any loss, destruction or damage of such property or asset;
(2) any institution of any proceedings for the condemnation or seizure of
such property or asset or for the exercise of any right of eminent
domain or navigational servitude; or
(3) any actual condemnation, seizure or taking, by exercise of the power of
eminent domain or otherwise, of such property or asset, or confiscation
of such property or asset or the requisition of the use of such property
or asset.
58
"Excess Land" means the approximately 12 acres of land owned by Isle of
Capri or its Restricted Subsidiaries as of March 27, 2002 Date adjacent to the
Isle-Bossier City.
"Excess Sale/Loss Proceeds" and ''Excess Sale/Loss Proceeds Offer" have the
meanings set forth in the covenant described under the subheading "Certain
Covenants--Limitation on Asset Sales and Events of Loss."
"Fair Market Value" or "fair value" means, with respect to any asset or
property, the price which could be reasonably expected to be negotiated in an
arm's-length free market transaction, for cash, between a willing seller and a
willing buyer, neither of whom is under undue pressure or compulsion to
complete the transaction. Unless otherwise specified by the indenture, Fair
Market Value shall be determined by the Board of Directors of Isle of Capri
acting in good faith and shall be evidenced by a Board Resolution delivered to
the trustee.
"FFC Preferred Stock" means the shares of preferred stock, $100 par value,
of Freedom Financial Corporation owned by Isle of Capri.
"FF&E" means furniture, fixtures and equipment used in the ordinary course
of business in the operation of a Permitted Line of Business.
"FF&E Financing" means Indebtedness, the proceeds of which will be used
solely to finance or refinance the acquisition or lease by Isle of Capri or a
Restricted Subsidiary of FF&E.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board that are applicable from time to time.
"Gaming Authority" means any agency, authority, board, bureau, commission,
department, office or instrumentality of any nature whatsoever of the United
States federal or any foreign government, any state, province or any city or
other political subdivision or otherwise and whether now or hereafter in
existence, or any officer or official thereof, with authority to regulate any
gaming operation (or proposed gaming operation) owned, managed, or operated by
Isle of Capri or any of its Subsidiaries.
"Indebtedness" of any Person means:
(1) any liability, contingent or otherwise, of such Person:
(a) for borrowed money, whether or not the recourse of the lender is to
the whole of the assets of such Person or only to a portion thereof;
(b) evidenced by a note, bond, debenture or similar instrument, letters
of credit, bankers' acceptances or other similar facilities, other
than a trade payable or other than a current liability incurred in
the ordinary course of business; or
(c) for the payment of money relating to a Capitalized Lease Obligation
or other obligation relating to the deferred purchase price of
property or services (including a purchase money obligation, but not
including any docking fees payable to Louisiana Downs, Inc. or
guarantees thereof);
(2) any liability of others of the kind described in the preceding clause
(1) which such Person has guaranteed or which is otherwise its legal
liability, including, without limitation, any obligation;
(a) to pay or purchase such liability;
(b) to supply funds to or in any other manner invest in the debtor
(including an agreement to pay for property or services irrespective
of whether such property is received or such services are rendered);
and
(c) to purchase or lease (other than pursuant to an operating lease of
hotel rooms or similar lodging facilities entered into for the
principal purpose of providing lodging at or near the site of a
Casino, which facilities are reasonably expected to be beneficial to
Isle of Capri's operating results) property or to purchase services;
59
in each such case primarily for the purpose of enabling a debtor to make a
payment of such Indebtedness or to assure the holder or such Indebtedness
against loss;
(3) any obligation secured by a Lien to which the property or assets of such
Person are subject, whether or not the obligations secured thereby shall
have been assumed by or shall otherwise be such Person's legal liability;
(4) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Capital Stock of or other
ownership or profit interest in such Person or any of its Affiliates or
any warrants, rights or options to acquire such Capital Stock, valued,
in the case of Disqualified Stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends;
(5) all Interest Rate and Currency Protection Obligations; and
(6) any and all deferrals, renewals, extensions and refundings of, or
amendments, modifications or supplements to, any liability of the kind
described in any of the preceding clauses.
"Interest Rate and Currency Protection Obligations" means the obligations of
any Person pursuant to any interest rate swap, cap or collar agreement,
interest rate future or option contract, currency swap agreement, currency
future or option contract and other similar agreement designed to hedge against
fluctuations in interest rates or foreign exchange rates.
"Investment" in any Person means any direct or indirect loan, advance,
guarantee or other extension of credit or capital contribution to (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise), or purchase or
acquisition of Capital Stock, warrants, rights, options, bonds, notes,
debentures or other securities or evidences of Indebtedness issued by, such
Person or Indebtedness of any other Person secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness. The amount of any Investment shall
be the original cost of such Investment, plus the cost of all additions
thereto, and minus the amount of any portion of such Investment repaid to the
Person making such Investment in cash as a repayment of principal or a return
of capital, as the case may be, but without any other adjustments for increases
or decreases in value, or write-ups, write-downs or write-offs with respect to
such Investment. In determining the amount of any Investment involving a
transfer of any property other than cash, such property shall be valued at its
fair value at the time of such transfer, as determined in good faith by the
Board of Directors of the Person making such transfer, whose determination will
be conclusive absent manifest error.
"Isle-Bettendorf" means the Isle of Capri Casino located in Bettendorf, Iowa.
"Isle-Biloxi" means the Isle of Capri Casino located in Biloxi, Mississippi.
"Isle-Boonville" means the Isle of Capri Casino located in Boonville,
Missouri.
"Isle-Bossier City" means the Isle of Capri Casino located in Bossier City,
Louisiana.
"Isle-Kansas City" means the Isle of Capri Casino located in Kansas City,
Missouri.
"Isle-Lake Charles" means the Isle of Capri Casino located in Lake Charles,
Louisiana.
"Isle-Lula" means the Isle of Capri Casino located in Lula, Mississippi.
"Isle-Vicksburg" means the Isle of Capri Casino located in Vicksburg,
Mississippi.
"Lien" means any mortgage, lien (statutory or other), pledge, security
interest, encumbrance, claim, hypothecation, assignment for security, deposit
arrangement or preference or other security agreement of any kind or nature
whatsoever. For purposes of the indenture, a Person shall be deemed to own
subject to a Lien any
60
property which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such Person.
"Marketable Securities" means Cash Equivalents or any fund investing
primarily in Cash Equivalents.
"Material Operations" means assets or operations of Isle of Capri or its
Subsidiaries that (1) that exceed 5% of the assets of Isle of Capri and its
Consolidated Subsidiaries or (2) contributed more than 5% of the income from
continuing operations of Isle of Capri and its Consolidated Subsidiaries
(before income taxes, extraordinary items and intercompany management or
similar fees) for the most recently completed four fiscal quarters of Isle of
Capri for which financial statements are available.
"Maturity" or "Maturity Date" when used with respect to any note, means the
date specified in such note as the fixed date on which the last installment of
principal of such note is due and payable.
"Net Cash Proceeds" means, with respect to any Asset Sale, Event of Loss,
issuance or sale by Isle of Capri of its Capital Stock or incurrence of
Indebtedness, as the case may be, the proceeds thereof in the form of cash or
Cash Equivalents received by Isle of Capri or any of its Restricted
Subsidiaries (whether as initial consideration, through the payment or
disposition of deferred compensation or the release of reserves), after
deducting therefrom (without duplication) (1) reasonable and customary
brokerage commissions, underwriting fees and discounts, legal fees, finders
fees and other similar fees and expenses incurred in connection with such Asset
Sale or Event of Loss, (2) provisions for all taxes payable as a result of such
Asset Sale or Event of Loss, (3) payments made to retire and permanently reduce
any commitment with respect to any Indebtedness (other than payments on the
notes) secured by the assets subject to such Asset Sale or Event of Loss to the
extent required pursuant to the terms of such Indebtedness and (4) appropriate
amounts to be provided by Isle of Capri or any of its Restricted Subsidiaries,
as the case may be, as a reserve, in accordance with GAAP, against any
liabilities associated with such Asset Sale or Event of Loss and retained by
Isle of Capri or any of its Restricted Subsidiaries, as the case may be, after
such Asset Sale or Event of Loss, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale or Event of Loss, in each case to the extent, but only to the
extent, that the amounts so deducted are, at the time of receipt of such cash
or Cash Equivalents, actually paid to a Person that is not an Affiliate of Isle
of Capri or, in the case of reserves, are actually established and, in each
case, are properly attributable to such Asset Sale or Event of Loss.
"Net Income" means, with respect to any Person for any period, the net
income or loss of such Person determined in accordance with GAAP.
"Non-Recourse Indebtedness" means Indebtedness (1) as to which none of Isle
of Capri or any of its Restricted Subsidiaries provides any credit support or
is directly or indirectly liable for the payment of principal or interest
thereof and a default with respect to which would not entitle any party to
cause any other Indebtedness of Isle of Capri or a Restricted Subsidiary to be
accelerated or (2) incurred by Isle of Capri or a Restricted Subsidiary to
purchase one or more assets from the lending source, provided that the lender's
only remedy against the obligor in the event of a default with respect to such
Indebtedness, whether as a result of the failure to pay principal or interest
when due or any other reason, is limited to repossession of such assets
purchased.
"Permitted Equity Holders" means Bernard Goldstein, Irene Goldstein and
their lineal descendents (including adopted children and their lineal
descendents) and any entity the equity interests of which are owned by only
such persons or which was established for the exclusive benefit of, or the
estate of, any of the foregoing.
"Permitted Investments" means
(1) Investments in Marketable Securities;
(2) loans or advances to employees not to exceed an aggregate of $250,000 in
any fiscal year of Isle of Capri and $1.0 million in the aggregate at
any one time outstanding; and
61
(3) Investments in a Permitted Line of Business by Isle of Capri or a
Restricted Subsidiary made in one or more Persons in an aggregate amount
not to exceed $50.0 million at any one time outstanding.
"Permitted Liens" means:
(1) Liens on property acquired by Isle of Capri or any Restricted Subsidiary
(including an indirect acquisition of property by way of a merger of a
Person with or into Isle of Capri or any Restricted Subsidiary or the
acquisition of a Person), provided that such Liens were in existence
prior to the contemplation of such acquisition, merger or consolidation,
and were not created in connection therewith or in anticipation thereof,
and provided that such Liens do not extend to any additional property or
assets of Isle of Capri or any Restricted Subsidiary;
(2) statutory Liens (other than those arising under ERISA) to secure the
performance of obligations, surety or appeal bonds, performance bonds or
other obligations of a like nature, maritime Liens for crew wages,
salvage, suppliers and providers of services incurred in the ordinary
course of business (exclusive of obligations in respect of the payment
of borrowed money), or for taxes, assessments or governmental charges or
claims, provided that in each case the obligations are not yet
delinquent or are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and any reserve
or other adequate provision as shall be required in conformity with GAAP
shall have been made therefor;
(3) leases or subleases granted to others not interfering in any material
respect with the business of Isle of Capri or any Restricted Subsidiary;
(4) any charter of a Vessel, provided that (a) in the good faith judgment of
the Board of Directors of the Company such Vessel is not necessary for
the conduct of the business of Isle of Capri or any of its Restricted
Subsidiaries as conducted immediately prior thereto; (b) the terms of
the charter are commercially reasonable and represent the Fair Market
Value of the charter; and (c) the Person chartering the assets agrees to
maintain the Vessel and evidences such agreement by delivering such an
undertaking to the trustee;
(5) with respect to the property involved, easements, rights-of-way,
navigational servitudes, restrictions, minor defects or irregularities
in title and other similar charges or encumbrances which do not
interfere in any material respect with the ordinary conduct of business
of Isle of Capri and its Subsidiaries as now conducted or as
contemplated herein;
(6) Liens arising in the ordinary course of business in connection with
workers' compensation, unemployment insurance or other types of social
security (other than those arising under ERISA);
(7) any interest or title of a lessor in property subject to any Capitalized
Lease Obligation or an operating lease;
(8) Liens arising from the filing of Uniform Commercial Code financing
statements with respect to leases;
(9) Liens arising from any final judgment or order not constituting an Event
of Default;
(10) Liens on documents or property under or in connection with letters of
credit in the ordinary course of business, if and to the extent that the
related Indebtedness is permitted under clause (1)(e) of the covenant
described under the subheading "Certain Covenants--Limitation on
Indebtedness"; and
(11) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods in the ordinary course of
business.
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"Permitted Line of Business" means, with respect to any Person, any casino
gaming or pari-mutuel wagering business of such Person or any business that is
related to, ancillary to or supportive of, connected with or arising out of the
casino gaming or pari-mutuel wagering business of such Person (including,
without limitation, developing and operating lodging, dining, amusement, sports
or entertainment facilities, transportation services or other related
activities or enterprises and any additions or improvements thereto).
"Permitted Related Investment" means the acquisition of property or assets
by a Person to be used in connection with a Permitted Line of Business of such
Person.
"Permitted Vessel Liens" means a Lien on a Vessel to secure FF&E Financing
or Capitalized Lease Obligations where the holder or holders (or an agent,
trustee or other representative for such holder or holders):
(1) agrees to release such Lien upon satisfaction of such FF&E Financing;
(2) agrees to release such Lien upon payment (or promise of payment) to such
holder or holders (or such representative) of that portion of the
proceeds of the sale of such Vessel attributable to the related FF&E; and
(3) acknowledges that such Lien does not create rights on the hull and other
equipment constituting such Vessel (other than the related FF&E).
"Person" means an individual, partnership, corporation (including a business
trust), joint stock company, limited liability company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.
"Qualified Guarantee" means a guarantee by Isle of Capri or any of its
Restricted Subsidiaries of Indebtedness of any entity primarily engaged or
preparing to engage in a Permitted Line of Business, provided that:
(1) unless such Indebtedness was incurred by a Native American tribe or any
agency or instrumentality thereof, Isle of Capri and its Restricted
Subsidiaries at the time of the incurrence, creation or assumption of
the guarantee (a) own in the aggregate at least 35% of the outstanding
Voting Stock of such entity and (b) control the day to day gaming
operation of such entity pursuant to a written management agreement;
(2) the primary purpose for which such Indebtedness was incurred was to
finance the development, construction or acquisition of a facility that
(a) is located in a jurisdiction in which the conduct of gaming using
electronic gaming devices is permitted pursuant to applicable law and
(b) conducts or, following such development, construction or
acquisition, will conduct gaming utilizing electronic gaming devices or
that is related to, ancillary or supportive of, connected with or
arising out of such gaming business;
(3) the pro forma Consolidated Coverage Ratio of Isle of Capri on the date
of the guarantee would have been greater than 2.50 to 1.00;
(4) none of the Permitted Equity Holders or any Affiliate of such Persons,
other than Isle of Capri or its Restricted Subsidiaries, is a direct or
indirect obligor, contingently or otherwise, of such Indebtedness or a
direct or indirect holder of any Capital Stock of such entity, other
than through their respective ownership interests in Isle of Capri;
(5) at the time of the incurrence, creation or assumption of the guarantee,
the notes shall be rated at least "B2" by Moody's Investor's Services,
Inc. and "B" by Standard & Poor's Corporation or their respective
successors (or, if either such entity or both shall not make a rating of
the notes publicly available, a nationally recognized securities rating
agency or agencies, as the case may be, selected by Isle of Capri); and
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(6) if such Indebtedness is incurred by a Native American tribe or any
agency or instrumentality thereof, including any tribal authority, for
so long as such guarantee is outstanding such tribe and Isle of Capri or
one of its Restricted Subsidiaries will have in effect a written
agreement which has been approved by all required Governmental
Authorities pursuant to which Isle of Capri or one of its Restricted
Subsidiaries will manage such tribe's gaming activities at the facility
or facilities with respect to which the Indebtedness was incurred in
exchange for customary fees and reimbursements.
"Qualified Public Equity Offering" means a firm commitment underwritten
public offering of common stock of Isle of Capri for which Isle of Capri
receives net proceeds of at least $30.0 million and after which the common
stock is traded on a national securities exchange or quoted on The NASDAQ Stock
Market.
"Real Estate Options" means
(1) all options held by Isle of Capri or its Restricted Subsidiaries,
directly or indirectly, at April 23, 1999 for an amount, in each case,
not exceeding $1.0 million to purchase or lease land; and
(2) all options acquired by Isle of Capri, directly or indirectly, after
April 23, 1999 for an amount, in each case, not exceeding $2.0 million,
to purchase or lease land.
"Redeemable Capital Stock" means any class or series of Capital Stock to the
extent that, either by its terms, by the terms of any security into which it is
convertible or exchangeable, or by contract or otherwise, is or upon the
happening of an event or passage of time would be, required to be redeemed
prior to the final Stated Maturity of the notes or is redeemable at the option
of the holder thereof at any time prior to such Stated Maturity, or is
convertible into or exchangeable for debt securities at any time prior to such
Stated Maturity.
"Restricted Payment" means any of
(1) the declaration or payment of any dividend or any other distribution on
Capital Stock of Isle of Capri or any Subsidiary or any payment made to
the direct or indirect holders (in their capacities as such) of Capital
Stock of Isle of Capri or any Subsidiary (other than (a) dividends or
distributions payable solely in Capital Stock (other than Disqualified
Stock) otherwise permitted by the indenture and (b) in the case of a
Subsidiary, dividends or distributions payable to Isle of Capri or to a
Restricted Subsidiary of Isle of Capri);
(2) the purchase, defeasance, redemption or other acquisition or retirement
for value of any Capital Stock of Isle of Capri or any Subsidiary (other
than Capital Stock of such Subsidiary held by Isle of Capri or any of
its Restricted Subsidiaries);
(3) the making of any principal payment on, or the purchase, defeasance,
repurchase, redemption or other acquisition or retirement for value,
before any scheduled maturity, scheduled repayment or scheduled sinking
fund payment, of, any Indebtedness which is subordinated in any manner
in right of payment to the notes (other than Indebtedness acquired in
anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the
date of acquisition); and
(4) the making of any Investment or guarantee of any Investment by Isle of
Capri or any Subsidiary in any Person other than
(a) in a Person that would be, directly or indirectly, a Restricted
Subsidiary of Isle of Capri immediately after giving effect to such
Investment; or
(b) under a plan of reorganization or similar proceeding under applicable
bankruptcy law or in connection with a workout involving creditors of
such Person in exchange for Indebtedness owing by such Person that
did not violate the limitations set forth under the subheading
"Certain Covenants--Limitations on Restricted Payments."
"Restricted Subsidiary" means any Subsidiary of Isle of Capri that has not
been designated as an Unrestricted Subsidiary pursuant to and in compliance
with the provisions described under "Restricted and
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Unrestricted Subsidiaries," or a Subsidiary that has been designated as a
Restricted Subsidiary pursuant to and in compliance with the provisions
described under "Restricted and Unrestricted Subsidiaries."
"Rhythm City-Davenport" means the Rhythm City Casino located in Davenport,
Iowa.
"Senior Indebtedness" means (1) principal of, premium, if any, and interest
(including post-petition interest) on, and all fees, costs, expenses and other
amounts payable with respect to the Indebtedness under the Bank Credit Facility
and (2) the principal of, premium, if any, and interest on any Indebtedness of
Isle of Capri or the Subsidiary Guarantors, whether outstanding on March 27,
2002 or thereafter created, incurred or assumed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to any Indebtedness of
Isle of Capri or the Subsidiary Guarantors, as applicable. Notwithstanding the
foregoing, "Senior Indebtedness" shall not include, to the extent constituting
Indebtedness,
(1) Indebtedness evidenced by the notes or the Subsidiary Guarantees;
(2) Indebtedness that is subordinate or junior in right of payment to any
Indebtedness of Isle of Capri or the Subsidiary Guarantors;
(3) Indebtedness which, when incurred and without respect to any election
under Section 1111(b) of Title 11, U.S. Code, is without recourse to
Isle of Capri or the Subsidiary Guarantors;
(4) Indebtedness which is represented by Redeemable Capital Stock;
(5) Indebtedness for goods, materials or services purchased in the ordinary
course of business or Indebtedness consisting of trade payables or other
current liabilities (other than any current liabilities owing under the
Bank Credit Facility or the current portion of any long-term
Indebtedness which would constitute Senior Indebtedness but for the
operation of this clause (5));
(6) Indebtedness of or amounts owed by Isle of Capri or the Subsidiary
Guarantors for compensation to employees or for services rendered to
Isle of Capri or the Subsidiary Guarantors;
(7) Indebtedness of or amounts owed by Isle of Capri or a Restricted
Subsidiary to Isle of Capri or another Restricted Subsidiary;
(8) any liability for federal, state, local or other taxes owed or owing by
Isle of Capri or the Subsidiary Guarantors;
(9) Indebtedness of Isle of Capri or a Subsidiary Guarantor to any other
Subsidiary of Isle of Capri; and
(10) that portion of any Indebtedness which at the time of issuance is issued
in violation of the indenture.
"Significant Restricted Subsidiary" means any Restricted Subsidiary that is
a guarantor of Isle of Capri's obligations under the Bank Credit Facility or
any other Credit Facility.
"Stated Maturity" means, with respect to any security or Indebtedness, the
date specified in such security or Indebtedness as the fixed date on which the
principal of such security or Indebtedness, as applicable, is due and payable,
including pursuant to any mandatory redemption or repayment provision (but
excluding any provision providing for the repurchase of such security or
repayment of such Indebtedness, as applicable, at the option of the holder
thereof).
"Subordinated Indebtedness" means Indebtedness that is subordinated in right
of payment to the notes in all respects, matures at a date later than the
Maturity Date of the notes and has an average life longer than that applicable
to the notes.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, trust or estate of which (or in which) more than 50% of (1) the issued
and outstanding Capital Stock having ordinary voting power to elect a
65
majority of the Board of Directors or similar governing body of such
corporation or other entity (irrespective of whether at the time Capital Stock
of any other class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency), (2) the interest in the capital
or profits of such partnership or joint venture or (3) the beneficial interest
in such trust or estate is at the time directly or indirectly owned or
controlled by such Person.
"Subsidiary Guarantees" means the guarantees of the Subsidiary Guarantors
with respect to Isle of Capri's obligations under the notes and the indenture.
"Subsidiary Guarantors" means each existing and future Significant
Restricted Subsidiary of Isle of Capri and any other Subsidiary that executes a
Subsidiary Guarantee.
"United States Government Obligations" means securities that are
(1) direct obligations of the United States of America for the payment of
which its full faith and credit is pledged; or
(2) obligations of a Person, the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America.
"Unrestricted Subsidiary" means any Subsidiary of Isle of Capri that
(1) Isle of Capri has designated, pursuant to provisions described under the
subheading "Restricted and Unrestricted Subsidiaries," as an
Unrestricted Subsidiary and that has not been redesignated as a
Restricted Subsidiary pursuant to such paragraph; and
(2) any Subsidiary of any such Unrestricted Subsidiary.
"Vessel" means any riverboat or barge, whether now owned or hereafter
acquired by Isle of Capri or any Restricted Subsidiary, useful for gaming,
administrative, entertainment or any other purpose whatsoever.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or Persons
performing similar functions) of such Person, whether at all times or only as
long as no senior class of securities has such voting power by reason of any
contingency.
"wholly owned" with respect to a Subsidiary of any Person means (1) with
respect to a Subsidiary that is a partnership, limited liability company or
similar entity, a Subsidiary whose capital or other equity interest is 99% or
greater beneficially owned by such Person and (2) with respect to a Subsidiary
that is other than a partnership, limited liability company or similar entity,
a Subsidiary whose capital stock or other equity interest is 100% beneficially
owned by such Person.
66
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
In this section we summarize some of the material U.S. federal income tax
considerations relevant to the exchange of your old notes for new notes in the
exchange offer and the ownership and disposition of the new notes by holders
who acquire the new notes pursuant to the exchange offer and who or which hold
the new notes as capital assets for purposes of the U.S. Internal Revenue Code.
This summary does not purport to be a complete analysis of all potential tax
considerations relating to the new notes. The U.S. Internal Revenue Code
contains rules relating to securities held by special categories of holders,
including financial institutions, certain insurance companies, broker-dealers,
tax exempt organizations, traders in securities that elect to mark-to-market,
investors liable for the alternative minimum tax, investors that hold shares as
part of a straddle or a hedging or conversion transaction, and investors whose
functional currency is not the U.S. dollar. We do not discuss these rules and
holders who are in special categories should consult their own tax advisors.
This discussion is based on the current provisions of:
. the U.S. Internal Revenue Code and current and proposed regulations under
the U.S. Internal Revenue Code;
. the administrative policies published by the U.S. Internal Revenue
Service or "IRS"; and
. judicial decisions:
all of which are subject to change either prospectively or retroactively.
We intend this summary to be a general description of the U.S. federal
income tax considerations material to the exchange of your old notes for new
notes in the exchange offer and the ownership and disposition of the new notes
by holders who acquire the new notes pursuant to the exchange offer. We do not
discuss U.S., state, local, foreign or other tax laws, including gift and
estate tax laws, that may apply.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF
THE UNITED STATES FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION AS WELL
AS ANY TAX CONSEQUENCES ARISING UNDER THE FEDERAL ESTATE OR GIFT TAX RULES OR
UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN OR OTHER TAXING JURISDICTION OR
UNDER ANY APPLICABLE TAX TREATY.
We have not sought and will not seek any rulings from the IRS on the matters
discussed in this section. The IRS may take a different position on the tax
consequences of the exchange of your old notes for new notes in the exchange
offer and the ownership and disposition of the new notes by holders who acquire
the new notes pursuant to the exchange offer and that position may be sustained.
We refer to you as a "U.S. Holder" if you are an individual or entity who or
that is:
. for purposes of the U.S. Internal Revenue Code, a citizen or resident in
the U.S.;
. a corporation or other entity created or organized under the laws of the
U.S. or any political subdivision of the U.S.;
. an estate, the income of which is subject to U.S. federal income taxation
regardless of its source;
. a trust which either (1) is subject to the primary supervision of a court
within the U.S. and the control of one or more U.S. persons, or (2) has
elected to be treated as a U.S. person; or
. otherwise subject to U.S. federal income tax on a net income basis on the
new notes.
We refer to persons who or that are not "U.S. holders" as "non-U.S. holders."
67
U.S. Holders
Interest
We believe that payments of stated interest on the new notes will constitute
"qualified stated interest" for purposes of the original issue discount ("OID")
rules of the code and generally will be taxable to you as ordinary income at
the time that such amounts are paid or accrued, in accordance with your method
of accounting for U.S. federal income tax purposes. We believe that the new
notes will not be issued with OID because they satisfy a statutory de minimus
exception. If the new notes were issued with OID, U.S. holders would be
required to include amounts of OID in income before the receipt of cash
attributable to such OID.
Sale, Exchange or Other Taxable Disposition of a New Note
As a U.S. holder, you will recognize gain or loss on the sale, retirement,
redemption or other taxable disposition of a new note in an amount equal to the
difference between (1) the amount of cash and the fair market value of other
property received in exchange for the new note, other than amounts for accrued
but unpaid stated interest, and (2) your adjusted tax basis in the new note.
Any gain or loss recognized will generally be capital gain or loss. The capital
gain or loss will generally be long-term capital gain or loss your holding
period for the new note is more than one year. Otherwise, the capital gain or
loss will be a short-term capital gain or loss.
Market Discount
U.S. holders should be aware that the resale of the new notes may be
affected by the "market discount" rules of the U.S. Internal Revenue Code under
which a purchaser of a new note acquiring the new note at a market discount
generally would be required to include as ordinary income a portion of the gain
realized upon the disposition or retirement of such new note, to the extent of
the market discount that has accrued but not been included in income while the
debt instrument was held by such purchaser.
Exchange Offer
As a U.S. holder, you will not recognize taxable gain or loss from
exchanging old notes for new notes in the registered exchange offer. The
holding period of the new notes will include the holding period of the old
notes that are exchanged for the new notes. The adjusted tax basis of the new
notes will be the same as the adjusted tax basis of the old notes exchanged for
the new notes immediately before the exchange.
Backup Withholding and Information Reporting
As a U.S. holder, you may be subject to information reporting and possible
backup withholding. If applicable, backup withholding would apply at a rate of
up to 31% on interest on, or the proceeds at a sale, exchange, redemption,
retirement, or other disposition of, a new note, unless you (1) are a
corporation or come within other exempt categories and, when required,
demonstrate this fact, or (2) provide us or our agent with your taxpayer
identification number, certify as to no loss of exemption from backup
withholding, and otherwise comply with the backup withholding rules.
Non-U.S. Holders
Interest
If you are a non-U.S. holder, interest paid to you on the new notes will not
be subject to U.S. withholding tax if:
. you do not actually or constructively own 10% or more of the total
combined voting power of all classes of our stock;
68
. you are not a "controlled foreign corporation" for U.S. federal income
tax purposes that is related to us through stock ownership;
. you are not a bank that received the interest on an extension of credit
made under a loan agreement entered into in the ordinary course of your
trade or business; and
. either (1) you, as the beneficial owner of the exchange note, provide us
or our agent with a statement, on U.S. Treasury Form W-8 BEN or a
suitable substitute form, signed under penalties of perjury that includes
your name and address and certifies that your are not a U.S. person, or
(2) an exemption is otherwise established. If you hold your new notes
through certain foreign intermediaries or certain foreign partnerships,
such foreign intermediaries or partnerships must also satisfy the
certification requirements of applicable U.S. Treasury Regulations.
If these requirements are not met, you will be subject to U.S. withholding
tax at a rate of 30%, or lower treaty rate, if applicable, on interest payments.
Effectively Connected Income
Holders whose income on the new notes is subject to U.S. federal income tax
on a net income basis because such income is effectively connected with the
conduct of a trade or business within the United States should consult their
own tax advisors concerning the U.S. tax consequences acquiring of the new
notes.
Sale, Exchange or Other Taxable Disposition of a New Note
As a non-U.S. holder, gain realized by you on the sale, exchange or
redemption of a new note generally will not be subject to U.S. withholding tax.
However, gain will be subject to U.S. tax if (1) you are an individual who is
present in the U.S. for a total of 183 days or more during the taxable year in
which the gain is realized and other conditions are satisfied, or (2) you are
subject to tax under U.S. tax laws that apply to certain U.S. expatriates.
Backup Withholding And Information Reporting
The amount of any interest paid to, and the tax withheld with respect to, a
non-U.S. holder must generally be reported annually to the IRS and to such
non-U.S. holders regardless of whether any tax was actually withheld.
Payments on the new notes made by us or our paying agent to noncorporate
non-U.S. holders may be subject to information reporting and possibly to
"backup withholding" at a rate of up to 31%. Information reporting and backup
withholding generally do not apply, however, to payments made by us or our
paying agent on a new note if we (1) have received from you the U.S. Treasury
Form W-8 BEN or a suitable substitute form as described above under "Non-U.S.
Holders--Interest." or otherwise establish an exemption and (2) do not have
actual knowledge that you are a U.S. holder.
Payment of proceeds from a sale of a new note to or through the U.S. office
of a broker is subject to information reporting and backup withholding unless
you certify as to your non-U.S. status or otherwise establish an exemption from
information reporting and backup withholding and the broker does not have
actual knowledge a new note to or through a foreign office of a "broker," as
defined in the applicable U.S. Treasury Regulations, should not be subject to
information reporting or backup withholding. However, U.S. information
reporting, but not backup withholding, generally will apply to a payment made
outside the U.S. of the proceeds of the sale of a new note through an office
outside the U.S. of a broker if the broker:
. is a U.S. person;
. is a foreign person who derives 50% or more of its gross income from the
conduct of a U.S. trade or business;
69
. is a "controlled foreign corporation" for U.S. federal income tax
purposes; or
. is a foreign partnership, if at any time during its taxable year, one or
more of its partners are U.S. persons, as defined in U.S. Treasury
Regulations, who in the aggregate hold more than 50% of the income or
capital interest in the partnership or if, at any time during its taxable
year, the foreign partnership is engaged in a U.S. trade or business.
However, information reporting will not apply if (1) you certify as to your
non-U.S. status or the broker has documentary evidence in its records that your
are a non-U.S. holder, and certain other conditions are met or (2) an exemption
is otherwise established.
Any amounts withheld under the backup withholding regulations from a payment
to you will be allowed as a refund or credit against your U.S. federal income
tax liability, provided that you follow the requisite procedures.
The foregoing summary is included for general information only. Each holder
of old notes should consult its tax advisor as to the specific tax consequences
to it of the exchange offer, including the application of and effect of state,
local, foreign and other tax laws.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account as a result
of market-making activities or other trading activities in connection with the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of new notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of new notes received in exchange for old notes where such old
notes were acquired as a result of market-making activities or other trading
activities.
We will receive no proceeds in connection with the exchange offer or any
sale of new notes by broker-dealers. New notes received by broker-dealers for
their own account pursuant to the exchange offer may be sold from time to time
in one or more transactions:
. in the over-the-counter market;
. in negotiated transactions;
. through the writing of options on the new notes; or
. a combination of these methods of resale,
at market prices prevailing at the time of resale, at prices related to
prevailing market prices, or at negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers that may receive
compensation in the form of commissions or concessions from the broker-dealers
or the purchasers of any new notes. Any broker-dealer that resells new notes
that were received by it for its own account pursuant to the exchange offer and
any broker or dealer that participates in a distribution of new notes may be
deemed to be an "underwriter" within the meaning of the Securities Act, and any
profit on any resale of new notes and any commissions or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The letter of transmittal states that by acknowledging that it
will deliver, and by delivering, a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
LEGAL MATTERS
Mayer, Brown, Rowe & Maw, Chicago, Illinois will pass on the validity of,
and certain legal matters concerning, the new notes.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K as of April 29,
2001 and April 30, 2000 and for the years ended April 29, 2001, April 30, 2000
and April 25, 1999, as set forth in their report, which is incorporated by
reference into this prospectus and elsewhere in the registration statement. Our
consolidated financial statements are incorporated by reference in reliance on
Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
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================================================================================
$200,000,000
Exchange Offer
ISLE OF CAPRI CASINOS, INC.
9% Senior Subordinated Notes due 2012
-------------------------
PROSPECTUS
-------------------------
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
(a) Section 145 of the Delaware General Corporation Law; Section 83 of the
Louisiana Business Corporation Law; Article 8, Subarticle E of the Mississippi
Business Corporation Law; Article 109 of the Colorado Business Corporation Act;
Division VIII, Part E of the Iowa Business Corporation Act; Section 78.751 of
the Nevada Business Corporation Act; Section 351.355 of the General and
Business Corporation Law of the State of Missouri; and Section 607.0850 of the
Florida Business Corporation Act: (1) give corporations organized in those
states broad powers to indemnify their present and former directors and
officers and those of affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers, subject to specified conditions and
exclusions, (2) give a director or officer who successfully defends an action
the right to be so indemnified and (3) authorize the co-registrants to buy
directors' and officers' liability insurance.
(b) Article 8 of Isle of Capri's Certificate of Incorporation provides for
indemnification of directors and officers to the fullest extent permitted by
law.
In accordance with Section 102(b)(7) of the Delaware General Corporation
Law, Isle of Capri's Certificate of Incorporation provides that directors shall
not be personally liable for monetary damages for breaches of their fiduciary
duty as directors except for (1) breaches of their duty of loyalty to the
registrant or its stockholders, (2) acts or omissions not in good faith or that
involve intentional misconduct or knowing violations of law, (3) unlawful
payment of dividends as prohibited by Section 174 of the Delaware General
Corporation Law or (4) transactions from which a director derives an improper
personal benefit.
Various provisions contained in the Articles of Incorporation, By-laws or
other organizational documents of the other co-registrants provide for
indemnification of the directors and officers of those co-registrants and, in
some cases, limit or eliminate the personal liability of the directors of those
co-registrants in accordance with the laws of the states in which those
co-registrants are organized.
Item 21. Exhibits and Financial Statement Schedules
(a) A list of exhibits filed with this registration statement is contained
in the index to exhibits, which is incorporated by reference.
(b) None required or applicable.
(c) Not applicable.
Item 22. Undertakings
Each of the undersigned registrants 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;
(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) that, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement.
II-1
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
end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(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) That, for the purpose of determining any liability under the Securities
Act, 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 that remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in this
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.
(5) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 20 or otherwise, the
registrant has been advised that, in the opinion of the SEC, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
(6) To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form within one
business day of receipt of such request and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of this
registration statement through the date of responding to the request.
(7) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in this registration statement when it
became effective.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act, each of the registrants
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Biloxi, State of
Mississippi, on May 22, 2002.
ISLE OF CAPRI CASINOS, INC.
By: /s/ Bernard Goldstein
------------------------------
Bernard
Goldstein Chairman, Chief
Executive Officer and Director
CSNO, L.L.C.; GEMINI, INC.; GRAND
PALAISRIVERBOAT, INC.;
IOC-BOONVILLE, INC.; IOC-COAHOMA,
INC.; IOC-DAVENPORT, INC.;
IOC-KANSAS CITY, INC.; IOC
HOLDINGS, LLC;IOC-LULA, INC.;
IOC-NATCHEZ, INC.; ISLE OFCAPRI
BETTENDORF, LC; ISLE OF
CAPRICASINO-TUNICA, INC.; ISLE OF
CAPRICASINO COLORADO, INC.; ISLE
OF CAPRIMARQUETTE, INC.; LL
HOLDINGCORPORATION; LOUISIANA
RIVERBOATGAMING PARTNERSHIP; LRGP
HOLDINGS,L.L.C.; RIVERBOAT
CORPORATION OFMISSISSIPPI;
RIVERBOAT CORPORATION
OFMISSISSIPPI-VICKSBURG;
RIVERBOATSERVICES, INC.; ST.
CHARLES GAMINGCOMPANY, INC.
By: /s/ Bernard Goldstein
------------------------------
Bernard
Goldstein Chairman, Chief
Executive Officer and Director
PPI, INC.
By: /s/ Bernard Goldstein
------------------------------
Bernard
Goldstein Chairman, President,
Chief Executive Officer and
Director
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Allan B.
Solomon and Rexford A. Yeisley, and each of them, the true and lawful
attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement and to
file the same, with all exhibits thereto, and any and all documents in
connection therewith, with the SEC, or with any other regulatory authority, and
hereby grants unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing requisite
and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or either of them, or his or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
II-3
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Bernard Goldstein Chairman, Chief Executive May 22, 2002
- ----------------------------- Officer and Director--Isle of
Bernard Goldstein Capri Casinos, Inc.; CSNO,
L.L.C.; Gemini, Inc.; Grand
Palais Riverboat, Inc.;
IOC-Boonville, Inc.;
IOC-Coahoma, Inc.;
IOC-Davenport, Inc.;
IOC-Kansas City, Inc.; IOC
Holdings, LLC; IOC-Lula,
Inc.; IOC-Natchez, Inc.; Isle
of Capri Bettendorf, LC; Isle
of Capri Casino-Tunica, Inc.;
Isle of Capri Casino
Colorado, Inc.; Isle of Capri
Marquette, Inc.; LL Holding
Corporation; Louisiana
Riverboat Gaming Partnership;
LRGP Holdings, L.L.C.;
Riverboat Corporation of
Mississippi; Riverboat
Corporation of
Missippi-Vicksburg; Riverboat
Services, Inc.; St. Charles
Gaming Company, Inc.
(Principal Executive Officer)
Chairman, President, Chief
Executive Officer and
Director--PPI, Inc.
(Principal Executive Officer)
/s/ John M. Gallaway President, Chief Operating May 22, 2002
- ----------------------------- Officer and Director--Isle of
John M. Gallaway Capri Casinos, Inc.; CSNO,
L.L.C.; Gemini, Inc.; Grand
Palais Riverboat, Inc.;
IOC-Boonville, Inc.;
IOC-Coahoma, Inc.;
IOC-Davenport, Inc.;
IOC-Kansas City, Inc.; IOC
Holdings, LLC; IOC-Lula,
Inc.; IOC-Natchez, Inc.; Isle
of Capri Bettendorf, LC; Isle
of Capri Casino-Tunica, Inc.;
Isle of Capri Casino
Colorado, Inc.; Isle of Capri
Marquette, Inc.; LL Holding
Corporation; Louisiana
Riverboat Gaming Partnership;
LRGP Holdings, L.L.C.;
Riverboat Corporation of
Mississippi; Riverboat
Corporation of
Missippi-Vicksburg; Riverboat
Services, Inc.; St. Charles
Gaming Company, Inc.
Director--PPI, Inc.
II-4
Signature Title Date
--------- ----- ----
/s/ Allan B. Solomon Executive Vice President, May 22, 2002
- ----------------------------- Secretary, General Counsel
Allan B. Solomon and Director--Isle of Capri
Casinos, Inc.; CSNO, L.L.C.;
Gemini, Inc.; Grand Palais
Riverboat, Inc.;
IOC-Boonville, Inc.;
IOC-Coahoma, Inc.;
IOC-Davenport, Inc.;
IOC-Kansas City, Inc.; IOC
Holdings, LLC; IOC-Lula,
Inc.; IOC-Natchez, Inc.; Isle
of Capri Bettendorf, LC; Isle
of Capri Casino-Tunica, Inc.;
Isle of Capri Casino
Colorado, Inc.; Isle of Capri
Marquette, Inc.; LL Holding
Corporation; Louisiana
Riverboat Gaming Partnership;
LRGP Holdings, L.L.C.;
Riverboat Corporation of
Mississippi; Riverboat
Corporation of
Missippi-Vicksburg; Riverboat
Services, Inc.; St. Charles
Gaming Company, Inc.
Secretary and Director--PPI,
Inc.
/s/ Robert S. Goldstein Director--Isle of Capri May 22, 2002
- ----------------------------- Casinos, Inc.
Robert S. Goldstein
/s/ Alan J. Glazer Director--Isle of Capri May 22, 2002
- ----------------------------- Casinos, Inc.
Alan J. Glazer
/s/ Emanuel Crystal Director--Isle of Capri May 22, 2002
- ----------------------------- Casinos, Inc.
Emanuel Crystal
/s/ W. Randolph Baker Director--Isle of Capri May 22, 2002
- ----------------------------- Casinos, Inc.
W. Randolph Baker
/s/ Jeffrey D. Goldstein Director--Isle of Capri May 22, 2002
- ----------------------------- Casinos, Inc.
Jeffrey D. Goldstein
II-5
Signature Title Date
--------- ----- ----
/s/ Rexford A. Yeisley Senior Vice President, Chief May 22, 2002
- ----------------------------- Financial Officer, Treasurer
Rexford A. Yeisley and Assistant Secretary--Isle
of Capri Casinos, Inc.; CSNO,
L.L.C.; Gemini, Inc.; Grand
Palais Riverboat, Inc.;
IOC-Boonville, Inc.;
IOC-Coahoma, Inc.;
IOC-Davenport, Inc.;
IOC-Kansas City, Inc.; IOC
Holdings, LLC; IOC-Lula,
Inc.; IOC-Natchez, Inc.; Isle
of Capri Bettendorf, LC; Isle
of Capri Casino-Tunica, Inc.;
Isle of Capri Casino
Colorado, Inc.; Isle of Capri
Marquette, Inc.; LL Holding
Corporation; Louisiana
Riverboat Gaming Partnership;
LRGP Holdings, L.L.C.;
Riverboat Corporation of
Mississippi; Riverboat
Corporation of
Missippi-Vicksburg; Riverboat
Services, Inc.; St. Charles
Gaming Company, Inc.
(Principal Financial and
Accounting Officer)
Treasurer--PPI, Inc.
(Principal Financial and
Accounting Officer)
II-6
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
1.1 Purchase Agreement, dated as of March 21, 2002, among Isle of Capri Casinos, Inc., the subsidiary
guarantors named therein and Dresdner Kleinwort Wasserstein-Grantchester, Inc. for itself and as
representative of the other initial purchasers
3.1A Certificate of Incorporation of Casino America, Inc.(4)
3.1B Amendment to Certificate of Incorporation of Casino America, Inc.(13)
3.2A By-laws of Casino America, Inc.(4)
3.2B Amendments to By-laws of Casino America, Inc., dated February 7, 1997(10)
3.3 Articles of Organization of CSNO, L.L.C.
3.4 Operating Agreement of CSNO, L.L.C.
3.5 Amended and Restated Articles of Incorporation of Grand Palais Riverboat, Inc.(14)
3.6 By-laws of Grand Palais Riverboat, Inc.(14)
3.7 Articles of Incorporation of IOC-Coahoma, Inc.(14)
3.8 By-laws of IOC-Coahoma, Inc.(14)
3.9 Articles of Incorporation of Isle of Capri Casino-Tunica, Inc.(14)
3.10 By-laws of Isle Capri Casino-Tunica, Inc.(14)
3.11 Articles of Incorporation of Isle of Capri Casino Colorado, Inc.(14)
3.12 By-laws of Isle of Capri Casino Colorado, Inc.(14)
3.13 Amended and Restated Partnership Agreement of Louisiana Riverboat Gaming Partnership(14)
3.14 Articles of Organization of LRGP Holdings, L.L.C.
3.15 Operating Agreement of LRGP Holdings, L.L.C.
3.16 Articles of Incorporation of PPI, Inc.(14)
3.17 By-laws of PPI, Inc.(14)
3.18 Articles of Incorporation of Riverboat Corporation of Mississippi(14)
3.19 By-laws of Riverboat Corporation of Mississippi(14)
3.20 Articles of Incorporation of Riverboat Corporation of Mississippi-Vicksburg(14)
3.21 By-laws of Riverboat Corporation of Mississippi-Vicksburg(14)
3.22 Articles of Incorporation of Riverboat Services, Inc.(14)
3.23 By-laws of Riverboat Services, Inc.(14)
3.24 Articles of Incorporation of St. Charles Gaming Company, Inc.(14)
3.25 By-laws of St. Charles Gaming Company, Inc.(14)
3.26 Articles of Organization of IOC Holdings, LLC
3.27 Operating Agreement of IOC Holdings, LLC
3.28 Articles of Incorporation of IOC-Natchez, Inc.
3.29 By-laws of IOC-Natchez, Inc.
3.30 Articles of Incorporation of IOC-Lula, Inc.
3.31 By-laws of IOC-Lula, Inc.
3.32 Articles of Incorporation of IOC-Boonville, Inc.
3.33 By-laws of IOC-Boonville, Inc.
3.34 Articles of Incorporation of IOC-Kansas City, Inc.
3.35 By-laws of IOC-Kansas City, Inc.
3.36 Articles of Organization of Isle of Capri Bettendorf, LC
3.37 Operating Agreement of Isle of Capri Bettendorf, LC
3.38 Articles of Incorporation of Isle of Capri Marquette, Inc.
3.39 By-laws of Isle of Capri Marquette, Inc.
3.40 Articles of Incorporation of IOC-Davenport, Inc.
3.41 By-laws of IOC-Davenport, Inc.
Exhibit
Number Description
------ -----------
3.42 Articles of Incorporation of Gemini, Inc.
3.43 By-laws of Gemini, Inc.
3.44 Articles of Incorporation of LL Holding Corporation
3.45 By-laws of LL Holding Corporation
4.1 Specimen Certificate of Common Stock(1)
4.2 Isle of Capri Casinos, Inc. agrees to furnish to the Securities
and Exchange Commission, upon its request, the instruments
defining the rights of holders of long term debt where the total
amount of securities authorized thereunder does not exceed 10%
of Isle of Capri Casinos, Inc.'s total consolidated assets
4.3 Indenture, dated as of March 27, 2002 among Isle of Capri
Casinos, Inc., the subsidiary guarantors named therein and State
Street Bank and Trust Company, as trustee
4.4 Registration Rights Agreement, dated as of March 27, 2002, among
Isle of Capri Casinos, Inc., the subsidiary guarantors named
therein and Dresdner Kleinwort Wasserstein-Grantschester, Inc.
for itself and as representative of the other initial purchasers
4.5A Indenture, dated as of April 23, 1999, among Isle of Capri
Casinos, Inc. the subsidiary guarantors named therein and State
Street Bank and Trust Company, as trustee(10)
4.5B First Supplemental Indenture, dated as of September 16, 1999,
among Isle of Capri Casinos, Inc. the subsidiary guarantors
named therein and State Street Bank and Trust Company, as trustee
4.5C Second Supplemental Indenture, dated as of April 30, 2001, among
Isle of Capri Casinos, Inc. the subsidiary guarantors named
therein and State Street Bank and Trust Company, as trustee
4.6 Registration Rights Agreement, dated as of April 23, 1999, among
Isle of Capri Casinos, Inc., the subsidiary guarantors named
therein and Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Wasserstein Perella Securities, Inc., for themselves and on
behalf of the other initial purchasers(10)
4.7 Rights Agreement, dated as of February 7, 1997, between Casino
America, Inc. and Norwest Bank Minnesota, N.A., as rights
agent(9)
5.1 Opinion of Mayer, Brown, Rowe & Maw as to the legality of the
securities being registered
10.1 Casino America, Inc. 1992 Stock Option Plan(2)
10.2 Casino America, Inc. 1992 Stock Option Plan Amendment(3)
10.3 Casino America, Inc. 1993 Stock Option Plan, as amended(7)
10.4 Casino America, Inc. description of Employee Bonus Plan(3)
10.5 Casino America, Inc. Retirement Trust and Savings Plan(3)
10.6 Director's Option Plan(6)
10.7 Biloxi Waterfront Project Lease dated as of April 9, 1994 by and
between the City of Biloxi, Mississippi and Riverboat
Corporation of Mississippi(5)
10.8 First Amendment to Biloxi Waterfront Project Lease (Hotel
Lease), dated as of April 26, 1995, by and between Riverboat
Corporation of Mississippi(7)
10.9 Amended and Restated Lease, dated as of April 19, 1999, among
Port Resources, Inc. and CRU, Inc., as landlords and St. Charles
Gaming Company, Inc., as tenant(13)
10.10 Amended Casino America, Inc. 1992 Stock Option Plan(8)
10.11 Amended Casino America, Inc. 1993 Stock Option Plan(8)
10.12 Amended Casino America, Inc. 1993 Stock Option Plan(11)
10.13 Amended Casino America, Inc. 1993 Stock Option Plan(12)
10.14 Lease of property in Coahoma, Mississippi dated as of November
16, 1993 by and among Roger Allen Johnson, Jr., Charles Bryant
Johnson and Magnolia Lady, Inc.*
10.15 Addendum to Lease dated as of June 22, 1994 by and among Roger
Allen Johnson, Jr., Charles Bryant Johnson and Magnolia Lady,
Inc.(15)
10.16 Second addendum to Lease dated as of October 17, 1995 by and
among Roger Allen Johnson, Jr., Charles Bryant Johnson and
Magnolia Lady, Inc.(15)
10.17 Amended and Restated Operating Agreement of Isle of Capri Black
Hawk, L.L.C., dated as of July 29, 1997, between Casino America
of Colorado, Inc. and Blackhawk Gold, Ltd., as amended*
Exhibit
Number Description
- ------ -----------
10.18 Development Agreement dated as of June 17, 1997, between City of Bettendorf, Lady Luck
Bettendorf, Lady Luck Quad Cities, Inc. and Bettendorf Riverboat Development, LC*
10.19 Operator's Contract, dated as of December 28, 1989, between Riverboat Development Authority and
the Connelley Group, LP, as amended on February 9, 1990, March 1, 1990, January 1, 1991,
September 30, 1994 and March 1, 1998*
10.20 2000 Long-Term Stock Incentive Plan(16)
10.21 Isle of Capri Deferred Bonus Plan(16)
10.22 Employment Agreement dated as of January 1, 2002 between Isle of Capri Casinos, Inc. and John M.
Gallaway*
10.23 Employment Agreement dated as of January 1, 2002 between Isle of Capri Casinos, Inc. and Allan B.
Solomon*
10.24 Employment Agreement dated as of January 1, 2002 by and between Isle of Capri Casinos, Inc. and
Rexford A. Yeisley*
10.25 Employment Agreement dated as of January 1, 2002 by and between Isle of Capri Casinos, Inc. and
Timothy M. Hinkley*
10.26 Employment Agreement dated as of January 1, 2002 between Isle of Capri Casinos, Inc. and Bernard
Goldstein*
10.27 Second Amended and Restated Credit Agreement, dated as of April 26, 2002, among Isle of Capri
Casinos, Inc., the lenders listed therein, Canadian Imperial Bank of Commerce, as administrative
agent and issuing lender, Dresdner Bank AG, New York and Grand Cayman Branches and Deutsche
Bank Trust Company Americas, as co-syndication agents, Credit Lyonnais Los Angeles Branch,
Wells Fargo Bank, N.A. and The CIT Group/Equipment Financing, Inc., as co-documentation agents
and CIBC World Market Corp., as lead arranger
11.1 Computation of ratio of per share earnings
12.1 Computation of ratio of earnings to fixed charges
21.1 Subsidiaries of Isle of Capri Casinos, Inc.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Mayer, Brown, Rowe & Maw (contained in Exhibit 5.1)
24.1 Powers of attorney (contained on the signature page to this registration statement)
25.1 Form T-1 Statement of eligibility under the Trust Indenture Act of 1939 of State Street Bank and
Trust Company
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
- --------
* To be filed by amendment to this registration statement.
(1) Filed as an exhibit to Casino America, Inc.'s Annual Report on Form 10-K
for the fiscal year ended April 30, 1992 (File No. 0-20538) and
incorporated herein by reference.
(2) Filed as an exhibit to Casino America, Inc.'s Current Report on Form 8-K
filed June 17, 1992 (File No. 0-20538) and incorporated herein by reference.
(3) Filed as an exhibit to Casino America, Inc.'s Annual Report on Form 10-K
for the fiscal year ended April 30, 1993 (File No. 0-20538) and
incorporated herein by reference.
(4) Filed as an exhibit to Casino America, Inc.'s Registration Statement on
Form S-1 filed September 3, 1993, as amended (Reg. No. 33-68434), and
incorporated herein by reference.
(5) Filed as an exhibit to Casino America, Inc.'s Annual Report on Form 10-K
for the fiscal year ended April 30, 1994 (File No. 0-20538) and
incorporated herein by reference.
(6) Filed as an exhibit to Casino America, Inc.'s Registration Statement on
Form S-8 filed June 30, 1994 (File No. 33-80918) and incorporated herein by
reference.
(7) Filed as an exhibit to Casino America, Inc.'s Annual Report on Form 10-K
for the fiscal year ended April 30, 1995 (File No. 0-20538) and
incorporated herein by reference.
(8) Filed as an exhibit to Casino America, Inc.'s Proxy Statement for the
fiscal year ended April 30, 1996 (File No. 0-20538) and incorporated herein
by reference.
(9) Filed as an exhibit to Casino America, Inc.'s Current Report on Form 8-K
filed on February 14, 1997 (File No. 0-20538) and incorporated herein by
reference.
(10) Filed as an exhibit to Isle of Capri Casinos, Inc.'s Annual Report on Form
10-K for the fiscal year ended April 27, 1997 (File No. 0-20538) and
incorporated herein by reference.
(11) Filed as an exhibit to Casino America, Inc.'s Proxy Statement for the
fiscal year ended April 27, 1997 (File No. 0-20538) and incorporated
herein by reference.
(12) Filed as an exhibit to Casino America, Inc.'s Proxy Statement for the
fiscal year ended April 26, 1998 (File No. 0-20538) and incorporated
herein by reference.
(13) Filed as an exhibit to Isle of Capri Casinos, Inc.'s Annual Report on Form
10-K for the fiscal year ended April 25, 1999 (File No. 0-20538) and
incorporated herein by reference.
(14) Filed as an exhibit to Isle of Capri Casinos, Inc.'s Registration
Statement on Form S-4 filed on July 2, 1999 (File No. 333-82243) and
incorporated herein by reference.
(15) Filed as an exhibit to Isle of Capri Casinos, Inc.'s Annual Report on Form
10-K for the fiscal year ended April 30, 2000 (File No. 0-20538) and
incorporated herein by reference.
(16) Filed as an exhibit to Isle of Capri Casinos, Inc.'s Proxy Statement for
the fiscal year ended April 30, 2000 (File No. 0-20538) and incorporated
herein by reference.