EXHIBIT 10.3
EXECUTION COPY
**AMENDMENT NO. 1**
          AMENDMENT NO. 1 dated as of April 4, 2005, between BOWATER INCORPORATED, a Delawarecorporation (the “Company”). BOWATER CANADIAN FOREST PRODUCTS, INC., a Canadian corporation(“BCFPI” and, together with the Company, the“Initial Borrowers”), each of the Subsidiaries of theCompany from time to time designated as “SubsidiaryBorrowers” pursuant to the Credit Agreement(each, a “Subsidiary Borrower” and, together withthe Initial Borrowers, the “Borrowers”),the SUBSIDIARY GUARANTORS party hereto, the LENDERS party hereto, JPMORGAN CHASE BANK, N.A.(formerly known as JPMorgan Chase Bank) and THE BANK OF NOVA SCOTIA, as the Administrative Agents.
          The Borrowers, the Subsidiary Guarantors, the Lenders and the Administrative Agents areparties to a Credit Agreement dated as of April 22, 2004 (as heretofore modified and supplementedand in effect on the date hereof, the “Credit Agreement”), providing, subject to the terms andconditions thereof, for loans and extensions of credit to be made by said Lenders to the Borrowersin an aggregate principal or face amount not exceeding U.S. $435,000,000 (which may, pursuant tothe Credit Agreement, be increased to U.S. $500,000,000) at any one time outstanding.
          The Borrowers wish to amend the Credit Agreement in certain respects. Accordingly,the parties hereto hereby agree as follows:
          Section 1. Definitions. Except as otherwise defined in this Amendment No. 1, termsdefined in the Credit Agreement are used herein as defined therein.
          Section 2. Amendments. Subject to the satisfaction of the conditions precedentspecified in Section 4 below, but effective as of the date hereof, the Credit Agreement shall beamended as follows:
          2.01. References in the Credit Agreement (including references to the CreditAgreement as amended hereby) to “this Agreement” (and indirect references such as“hereunder”, “hereby”, “herein” and, “hereof”). shall be deemed to be references to the CreditAgreement as amended hereby.
          2.02. Indebtedness of the Company. Section 7.03(a)(v) is hereby amended in itsentirety to read as follows:
     “(v) unsecured Guarantees by the Company of Indebtedness of Subsidiaries in anaggregate principal amount up to but not exceeding U.S. $100,000,000;”
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     2.03. Indebtedness of Subsidiaries. Section 7.03(b)(x) is hereby amended in itsentirety to read as follows:
     “(x) other Indebtedness of Subsidiaries of the Company, of which no more than U.S.$100,000,000 may be secured at any time, provided that the aggregate outstandingprincipal amount of such Indebtedness, together with the aggregate amount of Indebtedness(whether of the Company or Subsidiaries of the Company) secured by Liens permitted underSection 7.02(1), shall not at any time exceed 5% of Total Assets at such time.”
          2.04. Consolidated Net Worth. Section 7.04 is hereby amended in its entirety toread as follows:
     “SECTION 7.04 Consolidated Net Worth. The Company will not permit ConsolidatedNet Worth at any time to be less than the sum of (a) U.S. $1,400,000,000 plus (b)50% of the Consolidated Net Income for each fiscal quarter of the Company from and includingthe first fiscal quarter in 2004 to and including the fiscal quarter ending on (or mostrecently ended prior to) such time; provided that, if there is a consolidated netloss for any such fiscal quarter, Consolidated Net Income for such fiscal quarter shall, forthe purposes of clause (b) of this Section, be deemed to be zero.”
          2.05. Total Debt to Total Capital Ratio. Section 7.05(a) is hereby amended in itsentirety to read as follows:
     “(a) Total Debt to Total Capital Ratio. The Company will not permit theratio of (a) Total Debt to (b) Total Capital to exceed 0.65 to 1 at any time.”
          Section 3. Representations and Warranties. The Borrowers represent and warrant to theLenders that the representations and warranties set forth in Article IV of the Credit Agreement aretrue and complete on the date hereof as if made on and as of the date hereof (or, if any suchrepresentation or warranty is expressly stated to have been made as of a specific date, as of suchspecific date) and as if each reference in said Article IV to “this Agreement” included referenceto this Amendment No. 1.
          Section 4. Condition Precedent. The amendments set forth in Section 2 hereof shallbecome effective, as of the date hereof, upon (i) the execution and delivery of counterparts ofthis Amendment No. 1 by the Borrowers and the Required Lenders and (ii) the receipt by the U.S.Administrative Agent, for the account of each Lender that has executed and delivered this AmendmentNo. 1 not later than 5:00 p.m. New York City time on April 4, 2005, an amendment fee in an amountequal to 10 bps of the aggregate amount of such Lender’s Revolving Credit Exposure.
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          Section 5.Miscellaneous. Except as provided herein, the Credit Agreement shallremain unchanged and in full force and effect. This Amendment No. 1 may be executed in any numberof counterparts, all of which taken together shall constitute one and the same amendatoryinstrument and any of the parties hereto may execute this Amendment No. 1 by signing any suchcounterpart. This Amendment No. 1 shall be governed by, and construed in accordance with, the lawof the State of New York.
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     IN WITNESS WHEREOF, this Amendment No. 1 has been duly executed as of the date firstwritten above.         BOWATER INCORPORATED        By: /s/ William G. Harvey           Name: William G. Harvey     Title: Senior Vice President and               Chief Financial Officer           BOWATER CANADIAN FOREST PRODUCTS INC.        By: /s/ William G. Harvey           Name: William G. Harvey     Title: Vice President and Treasurer  
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SUBSIDIARY GUARANTORS         BOWATER ALABAMA INC.        By: /s/ William G. Harvey           Name: William G. Harvey