Third Amendment to Credit Agreement among Bowater Canadian Forest Products Inc., Bowater Incorporated, and The Bank of Nova Scotia (February 27, 2004)

Summary

This agreement amends the existing credit agreement between Bowater Canadian Forest Products Inc. (the borrower), Bowater Incorporated (the guarantor), The Bank of Nova Scotia (as administrative agent), and several banks. The amendment updates financial covenants, specifically the minimum consolidated net worth and the maximum total debt to total capital ratio that Bowater Incorporated must maintain. The agreement also requires the borrower to pay a small amendment fee to each bank. All other terms of the original credit agreement remain unchanged. The amendments take effect on February 27, 2004.

EX-10.40.3 7 g87588kexv10w40w3.txt THIRD AMENDMENT TO THE CREDIT AGREEMENT Exhibit 10.40.3 CREDIT AGREEMENT DATED AS OF OCTOBER 26, 2001 Between: BOWATER CANADIAN FOREST PRODUCTS INC. (as Borrower) BOWATER INCORPORATED (as Guarantor) THE BANK OF NOVA SCOTIA (as Administrative Agent) -and- THE BANKS FROM TIME TO TIME PARTIES THERETO ========================================== THIRD AMENDING AGREEMENT DATED AS OF FEBRUARY 27, 2004 ========================================== MCCARTHY TETRAULT LLP (Montreal) THIRD AMENDING AGREEMENT (CREDIT AGREEMENT DATED AS OF OCTOBER 26, 2001) THIS AGREEMENT is made as of February 27, 2004, between BOWATER CANADIAN FOREST PRODUCTS INC. (formerly Bowater Pulp and Paper Canada Inc.), a corporation duly amalgamated and validly existing under the Canada Business Corporations Act (the "Borrower"), BOWATER INCORPORATED, a corporation duly organized and validly existing under the General Corporation Law of the State of Delaware (the "Guarantor") and THE BANK OF NOVA SCOTIA ("ScotiaBank"), as administrative agent, and each of the Banks (as defined in the Credit Agreement referred to below) party hereto. RECITALS A. The Borrower, the Guarantor, various financial institutions, as lenders, and ScotiaBank, as administrative agent, entered into a credit agreement dated as of October 26, 2001, as amended from time to time (the "Canadian Credit Agreement") providing for a 364-day revolving credit facility in the principal amount of US $100,000,000. B. Pursuant to the Canadian Credit Agreement, the Guarantor has guaranteed the prompt payment in full when due of the Guaranteed Obligations (as defined in the Canadian Credit Agreement). C. The Borrower and the Guarantor, together with various subsidiaries of the Guarantor, each as a borrower, various financial institutions, as lenders, and JPMorgan Chase Bank, as administrative agent, entered into a credit agreement dated as of May 22, 2002, as amended from time to time (the "US Credit Agreement") providing for a revolving credit facility and term loans in an aggregate principal amount of US $800,000,000. D. On October 18, 2002 and on October 7, 2003, the parties entered into a First Amending Agreement and a Second Amending Agreement (collectively, the "Previous Amending Agreements") to amend the Canadian Credit Agreement. E. The parties wish to further amend the Canadian Credit Agreement in order to revise the covenant regarding (i) Consolidated Net Worth and (ii) Total Debt to Total Capital Ratio. NOW, THEREFORE, the parties have made and entered into this Agreement. -2- ARTICLE 1 INTERPRETATION 1.1 DEFINED TERMS AND EXPRESSIONS Unless such terms or expressions are defined differently, capitalized terms and expressions used in this Agreement have the respective meanings given to them in the Canadian Credit Agreement. ARTICLE 2 AMENDMENTS 2.1 CONSOLIDATED NET WORTH Section 9.07 of the Canadian Credit Agreement is amended in its entirety to read as follows: "9.07 Consolidated Net Worth. The Guarantor will not permit Consolidated Net Worth to be less than the following respective amounts during the following respective periods: (a) during the period from December 31, 2003 through and including April 1, 2005, the sum of (i) US $1,525,000,000 plus (ii) 50% of the consolidated net income of the Guarantor and its Consolidated Subsidiaries for each fiscal quarter of the Guarantor from and including the first fiscal quarter in 2004 to and including the fiscal quarter ending on (or most recently ended prior to) such time; and (b) at all times after April 1, 2005, the sum of (i) US $1,620,000,000 plus (ii) 50% of the consolidated net income of the Guarantor and its Consolidated Subsidiaries for each fiscal quarter of the Guarantor from and including the first fiscal quarter in 2002 to and including the fiscal quarter ending on (or most recently ended prior to) such time; provided that, if there is a consolidated net loss for any such fiscal quarter, consolidated net income for such fiscal quarter shall, for the purposes of clauses (a)(ii) and (b)(ii) of this Section, be deemed to be zero." 2.2 TOTAL DEBT TO TOTAL CAPITAL RATIO Section 9.08 is hereby amended in its entirety to read as follows: "9.08 Total Debt to Total Capital Ratio. The Guarantor will not permit the ratio of (a) Total Debt to (b) Total Capital to exceed the following respective ratios at any time during the following respective periods: -3-

ARTICLE 3 GENERAL 3.1 CONFIRMATION OF CREDIT AGREEMENT The parties acknowledge and agree that, except as amended pursuant to this Agreement and to the Previous Amending Agreements, the provisions of the Canadian Credit Agreement, including the guarantee granted by the Guarantor, remain in full force and effect, unamended. 3.2 AMENDMENT AND RENEWAL FEES In consideration of the amendments provided for herein, the Borrower shall pay to each Bank a fee in an amount equal to 5 basis points of such Bank's Commitment. 3.3 COUNTERPARTS This Agreement may be executed in separate counterparts, all of which taken together shall constitute one and the same instrument, and a party may execute this Agreement by signing any such counterpart. 3.4 GOVERNING LAW This Agreement shall be governed by and construed in accordance with the laws of the Province of Quebec and the laws of Canada applicable therein. 3.5 EFFECTIVE DATE This Agreement and the amendments to the Canadian Credit Agreement provided for herein shall become effective on February 27, 2004. [Signature Pages Follow] -4- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. BOWATER CANADIAN FOREST PRODUCTS INC., as Borrower By: /s/ William G. Harvey ---------------------------------- William G. Harvey Vice President and Treasurer BOWATER INCORPORATED, as Guarantor By: /s/ David G. Maffucci ---------------------------------- David G. Maffucci Senior Vice President and Chief Financial Officer [Signatures of the Agent and the Banks Follow] -4- BANK OF MONTREAL, as a Bank By: /s/ Bruno Jarry ---------------------------------- Bruno Jarry Director By: __________________________________ This is a counterpart signature page to the Third Amending Agreement dated as of February 27, 2004 between Bowater Canadian Forest Products Inc., as borrower, Bowater Incorporated, as guarantor, The Bank of Nova Scotia as administrative agent and each of the lenders parties hereto as a Bank. - 5 - THE BANK OF NOVA SCOTIA, as Administrative Agent By: __________________________________ David Maddocks Director By: /s/ Kimberley Snyder ---------------------------------- Kimberley Snyder Associate Director This is a counterpart signature page to the Third Amending Agreement dated as of February 27, 2004 between Bowater Canadian Forest Products Inc., as borrower, Bowater Incorporated, as guarantor, The Bank of Nova Scotia as administrative agent and each of the lenders parties hereto as a Bank. -3- CANADIAN IMPERIAL BANK OF COMMERCE, as a Bank By: /s/ Mark Chandler ---------------------------------- Mark Chandler Executive Director BY: /s/ Scott Curtis ---------------------------------- SCOTT CURTIS EXECUTIVE DIRECTOR This is a counterpart signature page to the Third Amending Agreement dated as of February 27, 2004 between Bowater Canadian Forest Products Inc., as borrower, Bowater Incorporated, as guarantor, The Bank of Nova Scotia as administrative agent and each of the lenders parties hereto as a Bank. THE BANK OF NOVA SCOTIA, as a Bank By: /s/ David Angel ---------------------------------- David Angel Director By: /s/ John Santillo ---------------------------------- John Santillo Associate Director This is a counterpart signature page to the Third Amending Agreement dated as of February 27, 2004 between Bowater Canadian Forest Products Inc., as borrower, Bowater Incorporated, as guarantor, The Bank of Nova Scotia as administrative agent and each of the lenders parties hereto as a Bank. -2- THE TORONTO-DOMINION BANK, as a Bank By: /s/ Oana Frumosu ---------------------------------- Oana Frumosu Vice President, Corporate Credit By: /s/ [ILLEGIBLE] ---------------------------------- This is a counterpart signature page to the Third Amending Agreement dated as of February 27, 2004 between Bowater Canadian Forest Products Inc., as borrower, Bowater Incorporated, as guarantor, The Bank of Nova Scotia as administrative agent and each of the lenders parties hereto as a Bank.