##### 



EXHIBIT 4.1
 Published CUSIP Number:  Revolving Credit CUSIP Number:
 
 CREDIT AGREEMENT
  BOWATER CANADIAN FOREST PRODUCTS INC.
 BOWATER INCORPORATED,
  THE BANK OF NOVA SCOTIA
 BANK OF MONTREAL
 TD SECURITIES LLC,
  WACHOVIA BANK, NATIONAL ASSOCIATION,
 WACHOVIA CAPITAL MARKETS, LLC
 WACHOVIA CAPITAL MARKETS, LLC,




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##### 



Table of Contents
 PageARTICLE I DEFINITIONS
    
    
    1SECTION 1.1
    
    Definitions
    
    
    1SECTION 1.2
    
    Other Definitions and Provisions
    
    
    32SECTION 1.3
    
    Accounting Terms
    
    
    33SECTION 1.4
    
    PPSA and CCQ Terms
    
    
    33SECTION 1.5
    
    Rounding
    
    
    33SECTION 1.6
    
    References to Agreement and Laws
    
    
    33SECTION 1.7
    
    Times of Day
    
    
    34SECTION 1.8
    
    Letter of Credit Amounts
    
    
    34SECTION 1.9
    
    Amount of Obligations
    
    
    34ARTICLE II REVOLVING CREDIT FACILITY
    
    
    34SECTION 2.1
    
    Revolving Credit Loans
    
    
    34SECTION 2.2
    
    Swingline Loans
    
    
    34SECTION 2.3
    
    Procedure for Advances of Revolving Credit Loans and Swingline Loans
    
    
    37SECTION 2.4
    
    Repayment and Prepayment of Revolving Credit Loans and Swingline Loans
    
    
    38SECTION 2.5
    
    Permanent Reduction of the Commitment
    
    
    41SECTION 2.6
    
    Termination of Credit Facility
    
    
    41SECTION 2.7
    
    Terms Applicable to BA Loans
    
    
    42ARTICLE III LETTER OF CREDIT FACILITY
    
    
    47SECTION 3.1
    
    L/C Commitment
    
    
    47SECTION 3.2
    
    Procedure for Issuance of Letters of Credit
    
    
    48SECTION 3.3
    
    Commissions and Other Charges
    
    
    48SECTION 3.4
    
    L/C Participations
    
    
    49SECTION 3.5
    
    Reimbursement Obligation of the Borrower
    
    
    50SECTION 3.6
    
    Obligations Absolute
    
    
    51SECTION 3.7
    
    Effect of Letter of Credit Application
    
    
    51ARTICLE IV GENERAL LOAN PROVISIONS
    
    
    51SECTION 4.1
    
    Interest
    
    
    51SECTION 4.2
    
    Notice and Manner of Conversion or Continuation of Loans
    
    
    54SECTION 4.3
    
    Fees
    
    
    56SECTION 4.4
    
    Manner of Payment
    
    
    56SECTION 4.5
    
    Evidence of Indebtedness
    
    
    57SECTION 4.6
    
    Adjustments
    
    
    57SECTION 4.7
    
    Nature of Obligations of Lenders Regarding Extensions of Credit; Assumptionby the Administrative Agent
    
    
    58SECTION 4.8
    
    Changed Circumstances
    
    
    59
 i




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##### 



PageSECTION 4.9
    
    Indemnity
    
    
    60SECTION 4.10
    
    Increased Costs
    
    
    60SECTION 4.11
    
    Taxes
    
    
    62SECTION 4.12
    
    Mitigation Obligations; Replacement of Lenders
    
    
    64SECTION 4.13
    
    Security
    
    
    65SECTION 4.14
    
    Additional Subsidiary Borrowers
    
    
    65ARTICLE V CLOSING; CONDITIONS OF CLOSING AND BORROWING
    
    
    67SECTION 5.1
    
    Closing
    
    
    67SECTION 5.2
    
    Conditions to Closing and Initial Extensions of Credit
    
    
    67SECTION 5.3
    
    Conditions to All Extensions of Credit
    
    
    70ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BORROWER
    
    
    72SECTION 6.1
    
    Representations and Warranties
    
    
    72SECTION 6.2
    
    Survival of Representations and Warranties, Etc
    
    
    79ARTICLE VII FINANCIAL INFORMATION AND NOTICES
    
    
    79SECTION 7.1
    
    Financial Statements and Projections
    
    
    79SECTION 7.2
    
    Officers Compliance Certificate
    
    
    82SECTION 7.3
    
    Accountants Certificate
    
    
    82SECTION 7.4
    
    Other Reports
    
    
    82SECTION 7.5
    
    Notice of Litigation and Other Matters
    
    
    82SECTION 7.6
    
    Accuracy of Information
    
    
    83ARTICLE VIII AFFIRMATIVE COVENANTS
    
    
    84SECTION 8.1
    
    Preservation of Corporate Existence and Related Matters
    
    
    84SECTION 8.2
    
    Maintenance of Property; Reinvestment
    
    
    84SECTION 8.3
    
    Insurance
    
    
    85SECTION 8.4
    
    Accounting Methods and Financial Records
    
    
    85SECTION 8.5
    
    Payment of Taxes
    
    
    85SECTION 8.6
    
    Compliance With Laws and Approvals
    
    
    85SECTION 8.7
    
    Environmental Laws
    
    
    85SECTION 8.8
    
    Compliance with ERISA
    
    
    86SECTION 8.9
    
    Visits and Inspections
    
    
    86SECTION 8.10
    
    Additional Subsidiary Guarantors and Parent Guarantors
    
    
    86SECTION 8.11
    
    Use of Proceeds
    
    
    87SECTION 8.12
    
    Further Assurances
    
    
    87ARTICLE IX FINANCIAL COVENANTS
    
    
    88SECTION 9.1
    
    Consolidated Senior Secured Leverage Ratio
    
    
    88SECTION 9.2
    
    Interest Coverage Ratio
    
    
    88ARTICLE X NEGATIVE COVENANTS
    
    
    88SECTION 10.1
    
    Limitations on Indebtedness
    
    
    88SECTION 10.2
    
    Limitations on Liens
    
    
    91
 ii




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##### 



PageSECTION 10.3
    
    Limitations on Loans, Advances, Investments and Acquisitions
    
    
    92SECTION 10.4
    
    Limitations on Mergers and Liquidation
    
    
    93SECTION 10.5
    
    Limitations on Asset Dispositions
    
    
    94SECTION 10.6
    
    Limitations on Dividends and Distributions
    
    
    95SECTION 10.7
    
    Limitations on Exchange and Issuance of Capital Stock
    
    
    96SECTION 10.8
    
    Transactions with Affiliates
    
    
    96SECTION 10.9
    
    Certain Accounting Changes; Organizational Documents
    
    
    96SECTION 10.10
    
    Amendments; Payments and Prepayments of Indebtedness
    
    
    97SECTION 10.11
    
    Restrictive Agreements
    
    
    98SECTION 10.12
    
    Nature of Business
    
    
    98SECTION 10.13
    
    Impairment of Security Interests
    
    
    99ARTICLE XI UNCONDITIONAL U.S. BORROWER GUARANTY
    
    
    99SECTION 11.1
    
    Guaranty of Obligations
    
    
    99SECTION 11.2
    
    Nature of Guaranty
    
    
    99SECTION 11.3
    
    Waivers
    
    
    100SECTION 11.4
    
    Modification of Loan Documents, Etc.
    
    
    101SECTION 11.5
    
    Demand by the Administrative Agent
    
    
    102SECTION 11.6
    
    Termination; Reinstatement
    
    
    102SECTION 11.7
    
    No Subrogation
    
    
    103SECTION 11.8
    
    Payments
    
    
    103ARTICLE XII DEFAULT AND REMEDIES
    
    
    104SECTION 12.1
    
    Events of Default
    
    
    104SECTION 12.2
    
    Remedies
    
    
    106SECTION 12.3
    
    Rights and Remedies Cumulative; Non-Waiver; etc
    
    
    107SECTION 12.4
    
    Crediting of Payments and Proceeds
    
    
    107SECTION 12.5
    
    Administrative Agent May File Proofs of Claim
    
    
    108ARTICLE XIII THE ADMINISTRATIVE AGENT
    
    
    109SECTION 13.1
    
    Appointment and Authority
    
    
    109SECTION 13.2
    
    Rights as a Lender
    
    
    110SECTION 13.3
    
    Exculpatory Provisions
    
    
    111SECTION 13.4
    
    Reliance by the Administrative Agent
    
    
    111SECTION 13.5
    
    Delegation of Duties
    
    
    112SECTION 13.6
    
    Resignation of Administrative Agent
    
    
    112SECTION 13.7
    
    Non-Reliance on Administrative Agent, the Arranger and Other Lenders
    
    
    113SECTION 13.8
    
    No Other Duties, etc
    
    
    113SECTION 13.9
    
    Collateral and Guaranty Matters
    
    
    114SECTION 13.10
    
    Swingline Lender
    
    
    114ARTICLE XIV MISCELLANEOUS
    
    
    115SECTION 14.1
    
    Notices
    
    
    115SECTION 14.2
    
    Amendments, Waivers and Consents
    
    
    116
 iii




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##### 



PageSECTION 14.3
    
    Expenses; Indemnity
    
    
    118SECTION 14.4
    
    Right of Setoff
    
    
    120SECTION 14.5
    
    Governing Law
    
    
    121SECTION 14.6
    
    Waiver of Jury Trial
    
    
    121SECTION 14.7
    
    Reversal of Payments
    
    
    122SECTION 14.8
    
    Injunctive Relief; Punitive Damages
    
    
    122SECTION 14.9
    
    Accounting Matters
    
    
    122SECTION 14.10
    
    Successors and Assigns; Participations
    
    
    122SECTION 14.11
    
    Confidentiality
    
    
    125SECTION 14.12
    
    Performance of Duties
    
    
    126SECTION 14.13
    
    All Powers Coupled with Interest
    
    
    126SECTION 14.14
    
    Survival of Indemnities
    
    
    126SECTION 14.15
    
    Titles and Captions
    
    
    126SECTION 14.16
    
    Severability of Provisions
    
    
    126SECTION 14.17
    
    Counterparts
    
    
    127SECTION 14.18
    
    Integration
    
    
    127SECTION 14.19
    
    Term of Agreement
    
    
    127SECTION 14.20
    
    Advice of Counsel, No Strict Construction
    
    
    127SECTION 14.21
    
    Inconsistencies with Other Documents; Independent Effect of Covenants
    
    
    127
 iv




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##### 



EXHIBITS
 Exhibit A-1
    
    
    
    Form of Revolving Credit NoteExhibit A-2
    
    
    
    Form of Swingline NoteExhibit B
    
    
    
    Form of Notice of BorrowingExhibit C
    
    
    
    Form of Notice of Account DesignationExhibit D
    
    
    
    Form of Notice of PrepaymentExhibit E
    
    
    
    Form of Notice of Conversion/ContinuationExhibit F
    
    
    
    Form of Officers Compliance CertificateExhibit G
    
    
    
    Form of Assignment and AssumptionExhibit H
    
    
    
    Form of Subsidiary Guaranty AgreementExhibit I
    
    
    
    Form of Collateral AgreementExhibit J
    
    
    
    Form of Intercompany Subordination Agreement
 SCHEDULES
 Schedule 1.1(a)
    
    
    
    Existing Letters of CreditSchedule 1.1(b)
    
    
    
    Specified Existing NotesSchedule 6.1(b)
    
    
    
    Subsidiaries and CapitalizationSchedule 6.1(i-1)
    
    
    
    ERISA PlansSchedule 6.1(i-2)
    
    
    
    Canadian PlansSchedule 6.1(l)
    
    
    
    Significant IndebtednessSchedule 6.1(n)
    
    
    
    Burdensome ProvisionsSchedule 6.1(t)
    
    
    
    LitigationSchedule 10.1
    
    
    
    Permitted IndebtednessSchedule 10.2
    
    
    
    Existing LiensSchedule 10.3
    
    
    
    Existing Loans, Advances and InvestmentsSchedule 10.8
    
    
    
    Transactions with Affiliates
 v




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##### 



Borrower U.S. Borrower Lender Authorization Annex A Section 14.10
 STATEMENT OF PURPOSE
     Definitions
 Administrative Agent Section
13.6
 Administrative Agents Office Section 14.1(c)
 Administrative Questionnaire
 Affiliate
 Aggregate Credit Exposure
 1




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##### 



Agreement
 Applicable Insolvency Laws
 Applicable Law
 Applicable Margin
 Pricing
    
    
    
    
    
    
    
    Canadian Prime RateLevel
    
    Average Utilization Percentage
    
    LIBOR +
    
    or Base Rate +I
    
    Greater than 75%
    
    
    2.00
    %
    
    
    0.75
    %II
    
    Greater than 35%, but less
than or equal to 75%
    
    
    1.75
    %
    
    
    0.50
    %III
    
    Less than or equal to 35%
    
    
    1.50
    %
    
    
    0.25
    %
 Calculation Date provided
 Approved Fund provided
 Asset Coverage Amount
 2




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##### 



Sections 5.2 7.1
 Asset Disposition
 Assignment and Assumption Section 14.10 Exhibit G
 Attributable Indebtedness
 Average Utilization
 BA Discount Rate
 BA Equivalent Loan
 BA Loan
 BA Proceeds
 (a)
    
    the face amount of such Bankers Acceptanceby(b)
    
    the sum of one plus the product of:
 3




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##### 



Bankers Acceptance Depository Bills and Notes Act
 Base Rate plus
 Base Rate Loan Section 4.1(a)
 BCFC Notes
 Borrower
 Borrowing Limit
 less Sections 2.4(b) 5.2(e)(iii)
      4




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##### 



Bowater-Calhoun Arrangement
   Bowater Guaranteed Obligations Section
11.1
 Business Day
   Calculation Date
 Canadian Dollar or C$
 Canadian Employee Benefit Plan
 Canadian Fee Letter
 Canadian GAAP
 Canadian Multiemployer Plan
 5




---



##### 



Canadian Pension Plan
 Canadian Prime Rate
 plus
 plus
  Canadian Prime Rate Loan Section 4.1(a)
 Canadian Qualified Lender
   6




---



##### 



Capital Asset
 Capital Expenditures
 Capital Lease
 Capital Stock
 Cash Equivalents
   provided
   ,
 7




---



##### 



CCQ Civil Code of Québec
 CDOR Rate
 Change in Control provided
 8




---



##### 



provided
 Change in Law
 Closing Date Section 5.2
 Code
 Collateral
 Collateral Agreement Exhibit I
 Commitment
 Commitment Percentage
 Consolidated
 Consolidated Adjusted EBITDA plus minus
 9




---



##### 



provided pro forma Section
10.5(a)-(g)
 Consolidated EBITDA
  plus
  minus
       less
   10




---



##### 



provided pro forma Section 10.5(a)-(g)
 Consolidated Interest Expense plus minus
 Consolidated Net Income
 Consolidated Senior Secured Leverage Ratio
 Consolidated Subsidiary
 Consolidated Total Indebtedness
 Consolidated Total Leverage Ratio
 Consolidated Total Senior Secured Indebtedness
  11




---



##### 



plus plus
 plus
 Coverage Assets
 Credit Facility
 Credit Parties
 DBRS
 Default Section 12.1
 Defaulting Lender
 Determination Time
 Discount Note
 12




---



##### 



Disputes
 Documentation Agent
 Dollar Amount
 Dollars or $
 Domestic Subsidiary
 Eligible Assignee provided
 Employee Benefit Plan
 Environmental Claims
 13




---



##### 



Environmental Laws
 ERISA
 ERISA Affiliate
 Event of Default Section 12.1 provided
 Exchangeable Shares
 Excluded Taxes Section
4.12(b) Section 4.11(e) Section 4.11(a)
 Existing Facilities
 14




---



##### 



Existing Letters of Credit Schedule 1.1(a)
 Existing Notes Schedule 10.1
 Extensions of Credit
 Federal Funds Rate provided
 Fiscal Year
 Foreign Lender
 GAAP
 Governmental Approvals
 15




---



##### 



Governmental Authority
 Guarantors
 Guaranty Obligation provided
 Hazardous Materials
 Hedging Agreement
 Hedging Obligations
 16




---



##### 



Immaterial Subsidiary
   Indebtedness
        17




---



##### 



Indemnified Taxes
 Insurance and Condemnation Event
 Intercompany Subordination Agreement Exhibit J
 Interest Period Section 4.1(b)
 Interest Rate Contract
 ISP98
 Issuing Lender Schedule
1.1(a)
 ITA
 L/C Commitment
 L/C Facility Article
III
 18




---



##### 



L/C Obligations Section
3.5
 L/C Participants
 L/C Supporting Documentation Section
3.2
 Lender Section 14.10
 Lender Authorization
 Lending Office
 Letter of Credit Application
 Letters of Credit Section 3.1
 LIBOR th
 LIBOR Rate
 19




---



##### 



LIBOR Rate Loan Section 4.1(a)
 Lien
 Loan Documents
 Loans
 Material Adverse Effect
 Material Subsidiary
  Section 8.10(a)(ii)
 Section 10.1(d)
 Maturity Date Section 2.6
 Moodys
 20




---



##### 



Multiemployer Plan
 Net Cash Proceeds
 less provided provided
 less
 Net Hedging Obligations
 New Material Subsidiary Section 8.10(a)
 Non-BA Lender
 Non-Consenting Lender Section 2.6
 Notes
 21




---



##### 



Notice of Account Designation Section
2.3(b)
 Notice of Borrowing Section 2.3(a)
 Notice of Conversion/Continuation Section
4.2
 Notice of Prepayment Section 2.4(c)
 Obligations
 OFAC
 Officers Compliance Certificate Exhibit F
 Operating Lease
 Other Taxes
 Parent Guarantor Article
XI Section 8.10(b)
 Participant Section 14.10(d)
 PBGC
 Pension Plan
 22




---



##### 



Permitted Acquisition
   Section
10.12
  Section 8.10
      23




---



##### 



pro forma Article IX pro forma
      24




---



##### 



Permitted Acquisition Consideration
 Permitted Acquisition Diligence Information
 Permitted Acquisition Documents
 Permitted Currency
 25




---



##### 



Permitted Liens Section 10.2
 Person
 PPSA
 Prime Rate
    QSPE Section 10.5(g) provided
    26




---



##### 



Québec Collateral Documents Section 13.1(b)
 Register Section 14.10(c)
 Reimbursement Obligation Section 3.5
 Related Parties
 Required Agreement Lenders
 Required Lenders plus
 Responsible Officer
 Restricted Subsidiary
 Revolving Credit Facility Article II
 Revolving Credit Loan Section 2.1 Section 2.7
 Revolving Credit Note
 27




---



##### 



Exhibit A-1
 S&P
 SEC
 Sanctioned Entity http://www.treas.gov/offices/enforcement/ofac/sanctions/index.html
 Sanctioned Person http://www.treas.gov/offices/enforcement/ofac/sdn/index.html
 Schedule I Lender Bank Act
 Schedule I Reference Banks Bank
Act
 Schedule II or III Lender Bank Act
 Schedule II or III Reference Banks Bank Act
 Secured Parties
 Security Documents
 Significant Indebtedness
 28




---



##### 



Solvent
 Specified Existing Notes Schedule 1.1(b)
 Stamping Fee Section 2.7(k)
 Standard Securitization Undertakings
 Subordinated Indebtedness
 Subsidiary provided
 Subsidiary Borrower Section 4.14
 29




---



##### 



Subsidiary Guarantors Section
8.10(a)
 Subsidiary Guaranty Agreement Exhibit H
 Swingline Commitment
 Swingline Facility Section
2.2
 Swingline Lender
 Swingline Loan Section 2.2
 Swingline Note Exhibit A-2
 Swingline Termination Date Section 13.10
 Synthetic Lease
 Taxes
 Termination Event
 30




---



##### 



Termination Value
 U.S. Administrative Agent
 U.S. Borrower
 U.S. Borrower Guaranty Article XI
 31




---



##### 



U.S. Credit Agreement
 U.S. Coverage Assets
 U.S. Credit Facility
 U.S. Credit Party
 U.S. Extensions of Credit
 U.S. Fee Letter
 U.S. Lender
 U.S. Loans
 U.S. Maturity Date
 U.S. Obligations
 U.S. Required Agreement Lenders
 U.S. Secured Parties
 U.S. Subsidiary Guarantors
 United States
 Wholly-Owned
 Other Definitions and Provisions
 32




---



##### 



documents
 Accounting Terms Section 7.1(b) (d) except
 PPSA and CCQ Terms PPSA CCQ
 Rounding
 References to Agreement and Laws
 33




---



##### 



Times of Day
 Letter of Credit Amounts
 Amount of Obligations
  REVOLVING CREDIT FACILITY
 Revolving Credit Loans Section 2.7 Section 2.3 provided less provided
 Swingline Loans
 34




---



##### 



Availability provided
 Refunding
   35




---



##### 



Section 13.10(b)
 Article V Section 12.1(i) (j)
 36




---



##### 



Procedure for Advances of Revolving Credit Loans and Swingline Loans
 Requests for Borrowing Exhibit B Notice of Borrowing
 Disbursement of Revolving Credit and Swingline Loans provided Section 2.7 Exhibit C Notice of Account Designation Section 4.7
 37




---



##### 



Section 2.2(b)
 Overdraft Request
 Repayment and Prepayment of Revolving Credit Loans and Swingline Loans
 Repayment on Maturity Date Section 2.2(b)
 Mandatory Prepayments
 Borrowing Limit Section 2.4(b)(iv)
 plus
 plus
 first second
 38




---



##### 



third Section 2.5(b) Section 12.2(b)
 Excess Swingline Loans Section 2.4(b)(iv) provided
 Excess L/C Obligations Section 2.4(b)(iv) Section
12.2(b) provided
 Testing Section 2.4(b)
 Optional Prepayments Exhibit D Notice of Prepayment
 39




---



##### 



Limitation on Prepayment of LIBOR Rate Loans and BA Loans
 Section 4.9
 Section 2.4(c) provided
 Hedging Agreements
 40




---



##### 



Permanent Reduction of the Commitment
 Voluntary Reduction
 Corresponding Payment Section 12.2(b) Section 12.2(b) Section 4.9 provided
 Termination of Credit Facility
 Section 2.5 Section 12.2(a) Sections 2.6(b) (c) provided
 41




---



##### 



Extension Notice Extension Notice
Date Section 5.3
 Consent Date Consenting
Lender Non-Consenting Lender Section 2.6 Section 2.6
 Section
14.10 Section 2.6
 Terms Applicable to BA Loans
 42




---



##### 



Commitment for BA Loans
 Article II Section 2.7 provided
  less
   Term Section 4.1(b)
 Discount Rate
 Purchase of Bankers Acceptances less Section 2.3 less
 Execution of Bankers Acceptances Section 2.7(f)
 43




---



##### 



Power of Attorney for the Execution of Bankers Acceptances provided
  Depository Bills and
Notes Act
 Depository Bills and Notes Act
 44




---



##### 



Disbursement of BA Loans provided less
 Waiver of Presentment and Other Conditions .
 45




---



##### 



BA Equivalent Loans by Non-BA Lenders
 Terms Applicable to Discount Notes
    Stamping Fees on Bankers Acceptance Stamping
Fee multiplied by divided by
 Depository Bills and Notes Act Depository Bills and Notes Act
 Circumstances Making Bankers Acceptances Unavailable prima facie
  46




---



##### 



Section 2.7(m)
 Prepayment Section 2.4
 Default Section
12.2
  LETTER OF CREDIT FACILITY
 L/C Commitment Section 3.4(a) Letters of Credit th provided th provided
 47




---



##### 



provided th
 Procedure for Issuance of Letters of Credit L/C Supporting Documentation Section 3.1 Article V
 Commissions and Other Charges
 Letter of Credit Commissions multiplied
 48




---



##### 



Issuance Fee multiplied
 Other Costs
 Payments Section 3.3
 L/C Participations
  Section 3.4(a) multiplied
 49




---



##### 



multiplied
 pro rata provided
 Reimbursement Obligation of the Borrower Section 3.3(c) Section
3.3(c) Section 2.3(a) Article
V
 50




---



##### 



Obligations Absolute Article
III Section 3.5
 Effect of Letter of Credit Application Article III Article
III
  GENERAL LOAN PROVISIONS
 Interest
 Interest Rate Options
 51




---



##### 



plus plus provided Section 4.9
 Section 2.7
 plus plus provided Section 4.9
 plus
 plus
 Section 2.3 Section 4.2
 Interest Periods Section 2.3 4.2 Interest Period provided
   52




---



##### 



provided
    Default Rate Section 12.3 Section 12.1(a) (b) (i) (j)
 Interest Payment and Computation
  53




---



##### 



Interest Act
 Maximum Rate
  Section 4.1 Criminal Code Criminal Code Criminal Code
  Notice and Manner of Conversion or Continuation of Loans
  rd
 54




---



##### 



Section 4.1(a)
   rd Section 4.1(a)
  provided
 55




---



##### 



Exhibit E Notice of Conversion/Continuation
 Fees
 Commitment Fee provided pro rata
 Agency Fee
 Other Fees
 Manner of Payment pro rata Section 12.1 pro rata
 56




---



##### 



Sections 4.9 4.10 4.11 14.3 Section 4.1(b)(ii)
 Evidence of Indebtedness
 Extensions of Credit
 Participations
 Adjustments Sections 4.9 4.10 4.11 14.3 pro rata
 57




---



##### 



provided
    Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by
the Administrative Agent Section 2.3(b) multiplied multiplied
 58




---



##### 



Changed Circumstances
 Circumstances Affecting LIBOR Rate and BA Loan Availability
 Laws Affecting LIBOR Rate and BA Loan Availability
 59




---



##### 



Regulatory Limitations
 Indemnity
 Increased Costs
 Increased Costs Generally
 60




---



##### 



Section 4.11
   Capital Requirements
 61




---



##### 



Certificates for Reimbursement
 Exchange Indemnification and Increased Costs
 Delay in Requests provided
 Taxes
 Payments Free of Taxes provided
 Payment of Other Taxes by the Borrower
 62




---



##### 



Indemnification by the Borrower
 Evidence of Payments
 Status of Lenders
  63




---



##### 



Treatment of Certain Refunds provided plus
 Survival
 Mitigation Obligations; Replacement of Lenders
 Designation of a Different Lending Office Section 4.10 Section 4.11 Section 4.10 Section
4.11
 64




---



##### 



Replacement of Lenders Section
4.10 Section 4.11 Section 14.10 provided
 Section 14.10
 Section 4.9
 Section 4.10 Section 4.11
   Security
 Additional Subsidiary Borrowers
 Articles V VI VII
 65




---



##### 



VIII IX X
  Section 5.2
      66




---



##### 



CLOSING; CONDITIONS OF CLOSING AND BORROWING
 Closing
 Conditions to Closing and Initial Extensions of Credit
 Executed Loan Documents
 Closing Certificates; Etc.
 Officers Certificate of the U.S. Borrower provided Section 5.2 Section 5.3
 Certificate of Secretary of each Credit Party Section 5.2(b)(iii)
 67




---



##### 



Certificates of Good Standing
 Opinions of Counsel
 Personal Property Collateral
 Filings and Recordings
 Lien Search
 Hazard and Liability Insurance
 Consents; Defaults
 Governmental and Third Party Approvals
 68




---



##### 



No Injunction, Etc.
 Financial Matters
 Financial Statements
 Financial Projections
 Financial Condition Certificate pro forma Article IX
 69




---



##### 



Payment at Closing; Fee Letters Section 4.3
 Miscellaneous
 Notice of Borrowing Section 2.3(a)
 Existing Facilities
 Closing of the U.S. Credit Facility
 Other Documents
 Conditions to All Extensions of Credit
 Continuation of Representations and Warranties Article VI
 70




---



##### 



provided
 No Existing Default
 Notices Section
2.3(a) Section 4.2
 Post-Closing Conditions
       Section
4.6(b)
 71




---



##### 



Section 4.6(b)
  REPRESENTATIONS AND WARRANTIES OF THE BORROWER
 Representations and Warranties
 Organization; Power; Qualification
 Ownership Schedule 6.1(b) Schedule 6.1(b) Schedule
6.1(b)
 Authorization of Agreement, Loan Documents and Borrowing
 72




---



##### 



Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc.
 Compliance with Law; Governmental Approvals
 Tax Returns and Payments
 73




---



##### 



Intellectual Property Matters
 Environmental Matters
    74




---



##### 



ERISA
 Schedule 6.1(i-1) Schedule 6.1(i-2)
  75




---



##### 



Schedule 6.1(i-1) Schedule 6.1(i-2)
    Margin Stock
 76




---



##### 



Government Regulation
 Significant Indebtedness Schedule 6.1(l) Schedule
6.1(l) Schedule 6.1(l)
 Employee Relations
 Burdensome Provisions Schedule 6.1(n) Schedule 6.1(n)
 Financial Statements Section 5.2(e)(i)
 77




---



##### 



Section
5.2(e)(ii)
 No Material Adverse Change
 Solvency
 Titles to Properties Sections 5.2(e)(i) 7.1(a) (b) (d)
 Liens
 Litigation Schedule 6.1(t)
 Senior Indebtedness Status
 78




---



##### 



OFAC
 Disclosure provided pro forma
 Survival of Representations and Warranties, Etc Article VI
  FINANCIAL INFORMATION AND NOTICES
 Section 14.2 Section 14.1
 Financial Statements and Projections
 79




---



##### 



Quarterly Financial Statements of the U.S. Borrower Section
7.1(a) www.sec.gov www.Bowater.com
 Annual Financial Statements of the U.S. Borrower Section 7.1(b) www.sec.gov www.Bowater.com
 80




---



##### 



Annual Business Plan and Financial Projections of the U.S. Borrower
 Financial Statements of the Borrower and its Subsidiaries
 Quarterly Financial Statements of the Borrower www.sedar.com
 Annual Financial Statements of the Borrower
 81




---



##### 



www.sedar.com
 Officers Compliance Certificate Sections 7.1(a) (b)
 Accountants Certificate Section 7.1(b) Articles IX
 Other Reports
 www.sec.gov www.sedar.com www.Bowater.com
 www.sec.gov www.sedar.com www.Bowater.com
  Notice of Litigation and Other Matters
  82




---



##### 



Section 6.1 Section 6.1
  Accuracy of Information Article VII
 83




---



##### 



Section 6.1(w)
  AFFIRMATIVE COVENANTS
 Section 14.2
 Preservation of Corporate Existence and Related Matters Section 10.4
 Maintenance of Property; Reinvestment
  Section 10.5 Section 14.2 provided Section 10.10
 84
       Section 10.5 Section 14.2
 Insurance
 Accounting Methods and Financial Records
 Payment of Taxes
 Compliance With Laws and Approvals
 Environmental Laws Section 8.6
 85




---



##### 



Compliance with ERISA Section 8.6
 Visits and Inspections
 Additional Subsidiary Guarantors and Parent Guarantors
 Section 8.10(a)(ii) New Material Subsidiary
 86




---



##### 



Schedules 6.1(a) 6.1(b) Section 5.2
  provided Article XI
  Use of Proceeds
 Further Assurances
 87




---



##### 



FINANCIAL COVENANTS
 Section 14.2
 Consolidated Senior Secured Leverage Ratio
 Interest Coverage Ratio
  NEGATIVE COVENANTS
 Section 14.2
 Limitations on Indebtedness
 Section
10.1(c)
 Section
10.1(c)
 provided
 Schedule 10.1
 88




---



##### 



provided pro forma pro forma Schedule 10.1
  (c) (e) (h) (l) (m) provided subsection
(h) (m)
 provided provided
 provided provided
 89




---



##### 



provided
 provided provided Section 10.3(g) provided further
 provided pro forma pro forma
 provided
 provided
 90




---



##### 



provided pro forma
   Limitations on Liens
  Schedule 10.2 Section 10.1(d) Schedule 10.2 provided
    91




---



##### 



Sections 10.1(e) provided
 Section 12.1(m)
 provided
   Limitations on Loans, Advances, Investments and Acquisitions Investments
    92




---



##### 



Section 8.10 Section 8.10
 Schedule 10.3
   Section 10.1
  Section
10.1(g) Section 10.1(g)
 Section 10.1(g) provided provided further
  Limitations on Mergers and Liquidation
  93




---



##### 



provided
 provided
 provided further
  Section 10.5
  Limitations on Asset Dispositions
   provided
  94




---



##### 



Section 8.2(b)
  Limitations on Dividends and Distributions provided
   provided
 provided
  pro forma Article IX
 provided
 95




---



##### 



pro forma Article IX
  pro forma
  Limitations on Exchange and Issuance of Capital Stock Section 10.1 Section 10.1
 Transactions with Affiliates
 Section 10.3 10.4 10.6 10.7
 Schedule 10.8
   Certain Accounting Changes; Organizational Documents
   96




---



##### 



Amendments; Payments and Prepayments of Indebtedness
  Section
14.2
  Section 10.1(d)
 Section 10.1(h)
 Section 10.1(d)
 Section 10.1(d) provided plus
 pro forma
 97




---



##### 



, Section 5.2 7.1
 Section 5.2 7.1
 Restrictive Agreements
  Articles
VIII IX X
 provided Section 10.1(d) provided provided
 Section 6.1(n) provided
 Nature of Business
 98




---



##### 



Impairment of Security Interests Section 10.5
  UNCONDITIONAL U.S. BORROWER GUARANTY
 Guaranty of Obligations Bowater Guaranteed Obligations
 Nature of Guaranty
    99




---



##### 



Section 11.6
   Waivers
    100




---



##### 



Modification of Loan Documents, Etc.
     101




---



##### 



Demand by the Administrative Agent Article XI
 Termination; Reinstatement
   102




---



##### 



No Subrogation
 Payments Section 12.4
 103




---



##### 



DEFAULT AND REMEDIES
 Events of Default
 Default in Payment of Principal of Loans and Reimbursement Obligations
 Other Payment Default
 Misrepresentation
 Default in Performance of Certain Covenants Sections 5.4 7.1 7.2 7.5(e)(i) Articles
IX X
 Default in Performance of Other Covenants and Conditions
 Hedging Agreement
 104




---



##### 



Indebtedness Cross-Default
    Change in Control
 Voluntary Bankruptcy Proceeding
 Involuntary Bankruptcy Proceeding
 105




---



##### 



Failure of Agreements
 Termination Event
 Judgment
 Environmental
 Remedies
 Acceleration; Termination of Facilities
 106




---



##### 



provided Section 12.1(i) (j)
 Letters of Credit
 Rights of Collection
 Rights and Remedies Cumulative; Non-Waiver; etc
 Crediting of Payments and Proceeds
 107




---



##### 



Section 12.2
 First First
 Second Second
 Third Third
 Fourth Fourth
 Fifth Fifth
 Sixth Sixth
 Last
 Administrative Agent May File Proofs of Claim
  108




---



##### 



Sections 3.3 4.3 14.3
  Sections 3.3 4.3 14.3
  Judgment Currency
  THE ADMINISTRATIVE AGENT
 Appointment and Authority
  109




---



##### 



fondé de pouvoir Deed of Hypothec Debenture Act respecting the Special Powers of
Legal Persons Pledge inter alia pro rata mutatis mutandis
 Rights as a Lender
 110




---



##### 



Exculpatory Provisions
  provided
  Section 12.2 Section 14.2 Section 14.1
 Article V
 Reliance by the Administrative Agent
 111




---



##### 



Delegation of Duties
 Resignation of Administrative Agent
  112




---



##### 



Section 14.3
  Non-Reliance on Administrative Agent and Other Lenders
 No Other Duties, etc; Documentation Agent
 subsection (b)
  113




---



##### 



provided
   Collateral and Guaranty Matters
 Section
14.2
    Swingline Lender
 Resignation of Swingline Lender
 114
       provided provided
 Section 2.2(b)
 Knowledge of Defaults Section 2.2(b) Section 14.1
  MISCELLANEOUS
 Notices
 Method of Communication rd
 115




---



##### 



Addresses for Notices
 If to the U.S. Borroweror the Borrower:
    
    Bowater Incorporated55 East Camperdown WayGreenville, SC 29602-1028Attention: TreasurerTelephone No.: (864) 282-9413Telecopy No.: (864) 282-9219With copies to:
    
    Pepper Hamilton LLP3000 Two Logan SquarePhiladelphia, Pennsylvania 19103Attention: J. Bradley BoerickeTelephone No.: (215) 981-4790Telecopy No.: (215) 689-4615If to The Bank ofNova Scotia asAdministrative Agent:
    
    The Bank of Nova Scotia40 King Street WestScotia Plaza, 62nd FloorToronto, Ontario M5W 2X6Attention: Corporate Banking Loan SyndicationTelephone No.:Telecopy No.: (416) 866-3329If to any Lender:
    
    To the address set forth on the Register
 Administrative Agents Office
 Amendments, Waivers and Consents
 116




---



##### 



provided
 Section 5.2
 Section 12.2
 provided Section 8.2(b)
 provided Section 4.1(c)
 Section 4.4 Section 12.4 pro rata
   Section 13.9
 117




---



##### 



Section 13.9
 Article XI
   provided further
 Expenses; Indemnity
 Costs and Expenses
 118




---



##### 



Indemnification Indemnitee provided
 119




---



##### 



Reimbursement by Lenders provided Section 4.7
 Waiver of Consequential Damages, Etc.
 Payments
 Right of Setoff
 120




---



##### 



provided
 Governing Law
 Governing Law
 Submission to Jurisdiction
 Waiver of Venue
 Service of Process Section 14.1
 Waiver of Jury Trial
 121




---



##### 



Reversal of Payments
 Injunctive Relief; Punitive Damages
   Accounting Matters provided
 Successors and Assigns; Participations
 122




---



##### 



Successors and Assigns Generally
 Assignments by Lenders provided
    123




---



##### 



,
 Sections 4.8 4.9 4.10 4.11 14.3
 Register Register
 Participations Participant provided
 124




---



##### 



provided Section 14.2 Sections 4.8 4.9 4.10 4.11 Section 14.4 Section 4.6
 Limitations upon Participant Rights Sections 4.10 4.11 Section 4.11 Section 4.11(e)
 Certain Pledges provided
 Confidentiality
 125




---



##### 



Gold Sheets Information provided
 Performance of Duties
 All Powers Coupled with Interest
 Survival of Indemnities Article XIV
 Titles and Captions
 Severability of Provisions
 126




---



##### 



Counterparts
 Integration provided
 Term of Agreement
 Advice of Counsel, No Strict Construction
 USA Patriot Act Act
 Inconsistencies with Other Documents; Independent Effect of Covenants
 provided
 127




---



##### 



Articles VIII IX X Articles VIII IX X Articles VIII IX X
  128




---



##### 



BOWATER CANADIAN FOREST PRODUCTS INC., as BorrowerBy:
    /s/ William G. HarveyWilliam G. HarveyVice President and TreasurerBOWATER INCORPORATED, as GuarantorBy:
    /s/ William G. HarveyWilliam G. HarveySenior Vice President and
Chief Financial Officer




---



##### 



AGENTS AND LENDERS:
THE BANK OF NOVA SCOTIA, as Administrative Agent, Issuing Lender and LenderBy:
    /s/ David AngelName:
    David AngelTitle:
    Director, Paper For Forest Products/s/ Mark NomaghanMark MonaghanAssociate




---



##### 



WACHOVIA BANK, NATIONAL ASSOCIATION, as Documentation AgentBy:
    /s/ Scott JoyceName:
    Scott JoyceTitle:
    Vice President




---



##### 



BANK OF MONTREAL,as Swingline Lender and LenderBy:
    /s/ Bruno JarryName:
    Bruno JarryTitle:
    Director




---



##### 



THE TORONTO DOMINION BANK, as LenderBy:
    /s/ Parin KarnjName:
    Parn KarnjTitle:
    Manager




---



##### 



Annex A
 LENDER AUTHORIZATION
 Bowater Canadian Forest Products Inc.
Credit Agreement
  nd
 Re:
    
    Credit Agreement dated as of May 31, 2006 (as amended, the Credit
Agreement) by and among Bowater Canadian Forest Products Inc., as borrower (the
Borrower), Bowater Incorporated, as guarantor (the U.S. Borrower),
the banks and financial institutions party thereto, as lenders (the Lenders),
and The Bank of Nova Scotia, as administrative agent (the Administrative
Agent)
   [Insert name of applicable financial institution]By:Name:Title: