Exhibit 10.40.1
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
=========================================================
FIRST AMENDING AGREEMENT
=========================================================
XXXXXXXX XXXXXXXX LLP
(Montreal)
EXECUTION COPY
FIRST AMENDING AGREEMENT
(CREDIT AGREEMENT DATED AS OF OCTOBER 26, 2001)
-------------------------------------------------
THIS AGREEMENT is made as of October 18, 2002, 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, have entered into a credit
agreement dated as of October 26, 2001 (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, have entered into a credit
agreement dated as of May 22, 2002 (the "US Credit Agreement") providing for a
revolving credit facility and term loans in an aggregate principal amount of US
$800,000,000.
D. The parties wish to amend the Canadian Credit Agreement in order to
(i) provide for an extension of the Revolving Credit Termination Date (as
defined therein), (ii) revise the margins for the calculation of interest rates
and the rates at which facility fees are calculated, (iii) reflect the
acquisition of Alliance Forest Products Inc. and the amalgamation of Bowater
Canadian Forest Products Inc. and Bowater Pulp and Paper Canada Inc., (iv)
enable the anticipated structured receivables financing for the Guarantor and
its Wholly Owned Subsidiary, Bowater America, Inc., and (v) conform certain
covenants and events of default of the Canadian Credit Agreement to the
provisions of the US Credit Agreement.
THEREFORE, in consideration of the foregoing and for good and
valuable consideration, the receipt and adequacy of which are acknowledged, 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 and defined in the Canadian Credit
Agreement have the respective meanings given to them in the Canadian Credit
Agreement.
1.2 FORM OF CERTAIN AMENDMENTS
For convenience, the parties have agreed to indicate certain amendments
in the Canadian Credit Agreement as follows. Words or other provisions that they
wish to add are denoted using bold-faced, double-underlined text. Words or other
provisions that they wish to delete are denoted by striking lines through such
words or provisions.
ARTICLE 2
AMENDMENTS
2.1 EXTENSION OF REVOLVING CREDIT TERMINATION DATE
The definition of the term "Revolving Credit Termination Date" in
section 1.01 of the Canadian Credit Agreement is amended as follows:
""Revolving Credit Termination Date" shall mean October 24,
2003, as such date may from time to time be extended as provided in
Section 2.09 hereof".
2.2 REFERENCES TO US CREDIT AGREEMENT
The definition of the term "US Revolving Term Credit
Agreement" in section 1.01 of the Canadian Credit Agreement is amended as
follows and the necessary consequential amendments are made throughout the
Canadian Credit Agreement:
""US Credit Agreement" shall mean Credit Agreement dated as of
May 22, 2002 among the Guarantor and each of the subsidiaries of the
Guarantor designated as "Subsidiary Borrowers" thereunder, as
borrowers, each of the lenders that is a signatory thereto and JPMorgan
Chase Bank, as administrative agent, as same may be amended,
supplemented or otherwise modified or replaced from time to time".
-3-
2.3 APPLICABLE MARGIN
The definition of the term "Applicable Margin" in section 1.01 of the
Canadian Credit Agreement is amended as follows:
""Applicable Margin" shall mean:
(a) with respect to US Base Rate Loans and Cdn Prime Rate
Loans, the rate for such Loans for each rating level period
set forth in the schedule below:
Rating US Base Rate Loans
------ and Cdn Prime Rate Loans
------------------------
Level I Period 0.000%
Level II Period 0.000%
Level III Period 0.000%
Level IV Period 0.150%
Level V Period 0.450%
(b) with respect to all other Loans, the rate for such Loans
for each rating level period set forth in the schedule below:
Rating Other Loans
------
Level I Period 0.400%
Level II Period 0.500%
Level III Period 0.950%
Level IV Period 1.150%
Level V Period 1.450%
Any change in the Applicable Margin for any Loan by reason of
a change in the Standard & Poor's Rating or the Xxxxx'x Rating shall
become effective on the date two Business Days after the announcement
or publication by the respective rating agencies of a change in such
rating or, in the absence of such announcement or publication, two
Business Days after the effective date of such changed rating. If no
Standard & Poor's Rating or no Xxxxx'x Rating is available, such rating
will be deemed to be in Level V. If the rating system of Xxxxx'x or
Standard & Poor's shall change, or if either such rating agency shall
cease to be in the business of rating corporate debt obligations, the
Borrower, the Guarantor and the Banks shall negotiate in good faith to
amend the provisions of this Agreement to reflect such changed rating
system or the unavailability of ratings from such rating agency and,
pending the effectiveness of any such amendment, the Applicable Margin
shall be determined by reference to the rating most recently in effect
prior to such change or cessation."
2.4 FACILITY FEES
Section 2.04(a) of the Canadian Credit Agreement is amended as follows:
-4-
"(a) The Borrower shall pay to the Administrative Agent for
the account of each Bank a facility fee on the amount of such Bank's
Commitment as then in effect, for the period from and including the
date of this Agreement to but not including the earlier of the date
such Commitment is terminated and the Revolving Credit Termination
Date, at a rate per annum equal to (i) 0.100% during any Level I
Period, (ii) 0.125% during any Level II Period, (iii) 0.175% during any
Level III Period, (iv) 0.225% during any Level IV Period and (v) 0.300%
during any Level V Period; provided that if such Bank continues to have
a Loan outstanding after such Bank's Commitment terminates, then such
facility fee shall continue to accrue on the daily aggregate principal
amount of Loans of such Bank from and including the date on which its
Commitment terminates to but excluding the date on which such Bank
ceases to have any Loans outstanding. Accrued facility fees shall be
payable on each Quarterly Date, on the Maturity Date and on the earlier
of the date the Commitments are terminated and the Revolving Credit
Termination Date. Any change in a facility fee by reason of a change in
the Standard & Poor's Rating or the Xxxxx'x Rating shall become
effective on the date two Business Days after the date of announcement
or publication by the respective rating agencies of a change in such
rating or, in the absence of such announcement or publication, on the
date two Business Days after the effective date of such changed
rating."
2.5 ALLIANCE FOREST PRODUCTS INC.
The definitions of the terms "Alliance," "Alliance Arrangement" and
"Alliance Arrangement Agreement" in Section 1.01 of the Canadian Credit
Agreement are deleted and the necessary consequential amendments are made
throughout the Canadian Credit Agreement.
2.6 BOWATER GROUP
The following definition is added at the appropriate place in section
1.01 of the Canadian Credit Agreement based on the alphabetical ordering of the
definitions in the section:
""Bowater Group" shall mean, collectively, the Guarantor and
each of its Subsidiaries other than any Receivables Entity and any
Subsidiary of any Receivables Entity."
2.7 CONSOLIDATED NET WORTH
The definition of the term "Consolidated Net Worth" in section 1.01 of
the Canadian Credit Agreement is amended as follows:
""Consolidated Net Worth" shall mean, as at any date, the sum,
for the Guarantor and its Consolidated Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP), of the
following:
(a) the amount of common stock, plus
-5-
(b) the amount of any Preferred Stock, plus
(c) the amount of additional paid-in capital and retained
earnings (or, in the case of an additional paid-in capital or
retained earnings deficit, minus the amount of such deficit),
plus
(d) equity adjustments from (i) foreign currency translations
(ii) minimum pension liability adjustments, (iii) unrealized
gain/(loss) on hedged transactions and (iv) any other items of
accumulated other comprehensive income (or deficit) (in each
case of the foregoing clauses (i) through (iv), in the case of
negative adjustments, minus the amount of such adjustments),
it being understood that such adjustments are to be
recharacterized in accordance with FASB Statement No. 130 as
accumulated other comprehensive income (or deficit), minus
(e) the unpaid principal amount of the loan (if any) to the
Guarantor's Employee Stock Ownership Plan (ESOP), minus
(f) the cost of treasury stock."
2.8 CONSOLIDATED SUBSIDIARY
The definition of the term "Consolidated Subsidiary" in section 1.01 of
the Canadian Credit Agreement is amended as follows:
""Consolidated Subsidiary" shall mean, for any Person, each
Subsidiary of such Person (whether now existing or hereafter created or
acquired) the financial statements of which shall be (or should have
been) consolidated with the financial statements of such Person in
accordance with GAAP, excluding in any event any Receivables Entity and
any QSPE."
2.9 DEFINITIONS OF EQUITY, SUBORDINATED DEBT AND NET WORTH
The definitions of the terms "Equity," "Subordinated Debt" and "Net
Worth," respectively, in section 1.01 of the Canadian Credit Agreement are
deleted.
2.10 INDEBTEDNESS
The definition of the term "Indebtedness" in section 1.01 of the
Canadian Credit Agreement is amended as follows:
""Indebtedness" shall mean, for any Person: (i) obligations
created, issued or incurred by such Person for borrowed money (whether
by loan, the issuance and sale of debt securities or the sale of
Property to another Person subject to an understanding or agreement,
contingent or otherwise, to repurchase such Property from such Person);
(ii) obligations of such Person to pay the deferred purchase or
acquisition price of Property or services, other than trade accounts
payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary
-6-
course of business, so long as such trade accounts payable are payable
within 90 days of the date the respective goods are delivered or the
respective services are rendered; (iii) Indebtedness of others secured
by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (iv)
obligations (contingent or otherwise) of such Person in respect of
letters of credit or similar instruments issued or accepted by banks
and other financial institutions for account of such Person; (v)
Capital Lease Obligations of such Person; and (vi) Indebtedness of
others Guaranteed by such Person; and (vii) any obligation of such
Person in respect of transactions commonly referred to in commercial
settings as an "accounts receivable securitization."
2.11 MATERIAL INDEBTEDNESS
The definition of the term "Material Indebtedness" in section 1.01 of
the Canadian Credit Agreement is amended as follows:
""Material Indebtedness" shall mean Indebtedness (other than
the Loans), or obligations in respect of one or more Interest Rate
Protection Agreements, of the Guarantor and its Subsidiaries (other
than a QSPE) in an aggregate principal amount exceeding US$50,000,000.
For purposes of determining Material Indebtedness, the "principal
amount" of the obligations of any Person in respect of any Interest
Rate Protection Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting requirements) that such Person
would be required to pay if such Interest Rate Protection Agreement
were terminated at such time."
2.12 MINORITY INTEREST
The following definition is added at the appropriate place in section
1.01 of the Canadian Credit Agreement based on the alphabetical ordering of the
definitions in the section:
""Minority Interests" shall mean, as at any date, the amount
of minority interests of the Guarantor and its Consolidated
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP)."
2.13 PERMITTED SECURITIZATION
The following definition is added at the appropriate place in section
1.01 of the Canadian Credit Agreement based on the alphabetical ordering of the
definitions in the section:
""Permitted Securitization" shall mean any transaction or
series of transactions that may be entered into by any member of the
Bowater Group and/or a Receivables Entity of a type that is commonly
referred to in commercial settings as an "accounts receivable
securitization" and that involves the sale, conveyance or other
transfer (whether through a sale of stock, membership interests or
assets), the grant of a security interest in, the issuance of
securities backed by, or any similar transaction involving
-7-
accounts receivables (whether now existing or arising in the future) of
any member of the Bowater Group and/or a Receivables Entity, and any
Related Accounts Receivable Assets; provided that a transaction shall
only be considered to be a Permitted Securitization to the extent (and
up to the extent) that, after giving effect to the proposed
transaction, the aggregate outstanding face amount of the Indebtedness
(excluding any Indebtedness incurred pursuant to any subordinated note
issued by the Receivables Entity to the member of the Bowater Group who
originated the accounts receivable as a portion of the purchase price
therefor (herein referred to as "Excluded Indebtedness")), together
with the Indebtedness (excluding the Excluded Indebtedness) of all
other Receivables Entities shall not exceed US$200,000,000.
In each Permitted Securitization, (i) the respective
Receivables Entity shall be permitted to sell, convey or otherwise
transfer, or grant a security interest in, (x) any right, title and
interest of such Receivables Entity against the originator (and any
intermediate transferee) of accounts receivable pursuant to which such
receivables are sold, conveyed or otherwise transferred to such
Receivables Entity and (y) any right, title and interest of the
Receivables Entity in respect of any Standard Securitization
Undertakings, (ii) there shall be no recourse under such securitization
to any member of the Bowater Group other than pursuant to Standard
Securitization Undertakings and (iii) the Administrative Agent shall
receive a certificate of an officer of the Guarantor that the terms of
such securitization are in compliance with the terms of this
Agreement."
2.14 QUALIFIED SPECIAL PURPOSE ENTITY
The following definition is added at the appropriate place in section
1.01 of the Canadian Credit Agreement based on the alphabetical ordering of the
definitions in the section:
""QSPE" shall mean each Subsidiary of the Guarantor identified
as a qualified special purpose entity on Schedule II, provided that
(a) either (x) no portion of the Indebtedness or any other
obligations (contingent or otherwise) of such Subsidiary (i)
is Guaranteed by any member of the Bowater Group, (ii) is
recourse to or obligates any member of the Bowater Group in
any way other than pursuant to Standard Securitization
Undertakings or (iii) subjects any Property of any member of
the Bowater Group, directly or indirectly, contingently or
otherwise, to the satisfaction thereof (other than, in the
case of this clause (iii), pursuant to Standard Securitization
Undertakings) or (y) if any portion of the Indebtedness of
such Subsidiary is Guaranteed by any member of the Bowater
Group, such Indebtedness is listed on Schedule I,
-8-
(b) with which no member of the Bowater Group has any material
contract, agreement, arrangement or understanding other than
on terms no less favorable to any member of the Bowater Group
than those that might be obtained at the time from Persons
that are not Affiliates of any member of the Bowater Group,
and
(c) to which no member of the Bowater Group has any obligation
to maintain or preserve such entity's financial condition or
cause such entity to achieve certain levels of operating
results."
2.15 RECEIVABLE FILE
The following definition is added at the appropriate place in section
1.01 of the Canadian Credit Agreement based on the alphabetical ordering of the
definitions in the section:
""Receivable File" shall mean, with respect to any account
receivable, (i) the Contract (as such term is defined in "Related
Accounts Receivable Assets" in this Section) giving rise to such
receivable and other evidences of such receivable including tapes,
discs, punch cards and related property and rights and (ii) each UCC
financing statement related thereto, if any."
2.16 RECEIVABLES ENTITY
The following definition is added at the appropriate place in section
1.01 of the Canadian Credit Agreement based on the alphabetical ordering of the
definitions in the section:
""Receivables Entity" shall mean a direct or indirect
Subsidiary of the Guarantor (or another Person in which any member of
the Bowater Group may make an Investment) to which any member of the
Bowater Group sells, conveys or otherwise transfers (whether directly
or indirectly) accounts receivable and Related Accounts Receivable
Assets and/or one or more financial instruments arising from the sale
(whether through the sale of stock, membership interests or assets) of
accounts receivable and Related Accounts Receivable Assets, which
engages in no material activities other than in connection with the
financing of such assets and which is designated by the Guarantor (as
provided below) as a Receivables Entity,
(a) no portion of the Indebtedness or any other obligations
(contingent or otherwise) of which (i) is Guaranteed by any
member of the Bowater Group, (ii) is recourse to or obligates
any member of the Bowater Group in any way other than pursuant
to Standard Securitization Undertakings or (iii) subjects any
Property of any member of the Bowater Group, directly or
indirectly, contingently or otherwise, to the satisfaction
thereof, other than such accounts receivable and Related
Accounts Receivable Assets sold, conveyed or otherwise
transferred into the applicable Permitted Securitization and
other than pursuant to Standard Securitization Undertakings,
-9-
(b) with which no member of the Bowater Group has any material
contract, agreement, arrangement or understanding other than
on terms no less favorable to any member of the Bowater Group
than those that might be obtained at the time from Persons
that are not Affiliates of any member of the Bowater Group,
other than fees payable in the ordinary course of business in
connection with servicing receivables, and
(c) to which no member of the Bowater Group has any obligation
to maintain or preserve such entity's financial condition or
cause such entity to achieve certain levels of operating
results.
Any such designation by the Guarantor shall be evidenced to
the Administrative Agent by filing with the Administrative Agent an
officer's certificate of the Guarantor certifying, to the best of such
officer's knowledge and belief after consulting with counsel, that such
designation complied with the foregoing conditions."
2.17 RELATED ACCOUNTS RECEIVABLE ASSETS
The following definition is added at the appropriate place in section
1.01 of the Canadian Credit Agreement based on the alphabetical ordering of the
definitions in the section:
""Related Accounts Receivable Assets" shall mean, with respect
to any account receivable, (a) all right, title and interest, but none
of the obligations, of the applicable originator, in the goods
(including returned goods), if any, relating to the sale which gave
rise to such receivable (the "Originator"), (b) all right, title and
interest, but none of the obligations, of such Originator, in, to and
under other Liens and property subject to Liens from time to time
purporting to secure payment of such receivable, whether pursuant to
the Contract related to such receivable or otherwise, (c) all Uniform
Commercial Code financing statements or similar instruments covering
any collateral securing payment of such receivable, (d) all guaranties,
indemnities, insurance and other agreements (including the related
Receivable File) or arrangement and other collateral of whatever
character from time to time supporting or securing payment of such
receivable, whether pursuant to the Contract relating to such
receivable or otherwise relating to such receivable, (e) all proceeds
of such receivable and all right, title and interest, if any, of such
Originator in any lockbox, any lockbox account or any deposit or
concentration account into which collections of such receivable are
deposited and (f) all other instruments and all rights under the
documents in the Receivables File relating to such receivable and all
rights (but not obligations) relating to such receivable.
For purposes hereof, "Contract" means, with respect to any
accounts receivable, either (i) a written agreement between an
Originator and a Person obligated with respect to such receivable, or
(ii) an invoice issued by the Originator to a Person obligated with
respect to such receivable, in either of the
-10-
foregoing cases, pursuant to which such Person is obligated to pay for
goods, merchandise and/or services."
2.18 STANDARD SECURITIZATION UNDERTAKINGS
The following definition is added at the appropriate place in section
1.01 of the Canadian Credit Agreement based on the alphabetical ordering of the
definitions in the section:
""Standard Securitization Undertakings" shall mean,
collectively, (i) customary arms-length servicing obligations (together
with any related performance guarantees), (ii) obligations (together
with any related performance guarantees) to refund the purchase price
or grant purchase price credits for dilutive events or
misrepresentation (in each case unrelated to the collectibility of
receivables or creditworthiness of the associated account debtors),
(iii) representations, warranties, covenants and indemnities (together
with any related performance guarantees) of a type that are reasonably
customary in accounts receivable securitizations (or, in the case of a
QSPE, the transactions described in Schedule II) and (iv) in the case
of a QSPE, a guarantee by members of the Bowater Group of any
make-whole premium (but not any principal or interest) on Indebtedness
of the QSPE."
2.19 TOTAL CAPITAL
The definition of the term "Total Capital" in section 1.01 of the
Canadian Credit Agreement is amended as follows:
""Total Capital" shall mean, at any time, Consolidated Net
Worth plus Total Debt plus Minority Interest."
2.20 TOTAL DEBT
The definition of the term "Total Debt" in section 1.01 of the Canadian
Credit Agreement is amended as follows:
""Total Debt" shall mean, at any time, the sum (without
duplication) of (a) the aggregate outstanding principal amount of all
Indebtedness of the Guarantor and its Consolidated Subsidiaries at such
time determined on a consolidated basis (without duplication) in
accordance with GAAP to the extent required to be reflected on a
balance sheet of the Guarantor and its Subsidiaries prepared in
accordance with GAAP plus (b) the aggregate outstanding principal
amount of all Indebtedness of all Receivables Entities at such time
determined in accordance with GAAP; provided that the term "Total Debt"
shall (1) include any preferred stock that does not qualify as
Preferred Stock, 2) exclude Indebtedness in respect of commercial
documentary letters of credit and (3) exclude any increase or decrease
in the Indebtedness of the Guarantor and its Consolidated Subsidiaries
caused by any revaluation of the "debt balances" acquired in connection
with the Guarantor's purchase of Newsprint South Inc. and the
Borrower."
-11-
2.21 REPRESENTATION AND WARRANTY WITH RESPECT TO SUBSIDIARIES
Section 8.11 of the Canadian Credit Agreement is amended as follows:
"8.11 Subsidiaries, Etc. Set forth in Schedule II hereto is a
complete and correct list, as of o, of all of the Subsidiaries of the
Guarantor (other than inactive Subsidiaries awaiting dissolution),
together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership
interests in such Subsidiary and (iii) the nature of the ownership
interests held by each such Person and the percentage of ownership of
such Subsidiary represented by such ownership interests. Except as
disclosed in Schedule II hereto, (x) each of the Guarantor and its
Subsidiaries owns, free and clear of Liens, and has the unencumbered
right to vote, all outstanding ownership interests in each Person shown
to be held by it in said Schedule II hereto, (y) all of the issued and
outstanding capital stock of each such Person organized as a
corporation is validly issued, fully paid and nonassessable and (z)
there are no outstanding Equity Rights with respect to such Person.
Except as set forth on Schedule V, none of the Subsidiaries of
the Guarantor, is, on the date hereof, subject to any indenture,
agreement, instrument or other arrangement of the type described in
Section 9.12."
2.22 COVENANT WITH RESPECT TO EXISTENCE, ETC.
Section 9.03(a) of the Credit Agreement is amended as follows:
"(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises (provided
that nothing in this Section 9.03 shall prohibit any
transaction expressly permitted under Section 9.05 hereof or
any transaction by a Receivables Entity or a QSPE);"
2.23 COVENANT WITH RESPECT TO PROHIBITION OF FUNDAMENTAL CHANGES
Section 9.05 of the Canadian Credit Agreement is amended as follows:
"9.05 Prohibition of Fundamental Changes. Each of the Borrower
and the Guarantor will not, nor will it permit any of its Subsidiaries
to, enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution). Each of the Borrower and the Guarantor
will not, nor will it permit any of its Subsidiaries (other than any
QSPE, as to which this Section shall not be applicable) to, convey,
sell, lease, transfer or otherwise dispose of, in one transaction or a
series of transactions, all or a substantial part of its business or
Property, whether now owned or hereafter acquired (including
receivables and leasehold interests, but excluding any inventory or
other Property sold or disposed of in the ordinary course of business
-12-
and on ordinary business terms). Notwithstanding the foregoing
provisions of this Section 9.05:
(a) any Subsidiary of the Guarantor, other than the Borrower,
may be merged, amalgamated or consolidated with or into: (i)
the Guarantor, if the Guarantor shall be the continuing or
surviving corporation, (ii) the Borrower, if the Borrower
shall be the continuing or surviving corporation, or (iii)
another Subsidiary (other than a QSPE) of the Guarantor other
than the Borrower; provided that if any such transaction shall
be between a Subsidiary and a Wholly Owned Subsidiary, the
Wholly Owned Subsidiary (or in the case of an amalgamation, a
new Wholly Owned Subsidiary formed thereby) shall be the
continuing or surviving corporation;
(b) any Subsidiary of the Guarantor other than the Borrower
may sell, lease, transfer or otherwise dispose of any or all
of its Property (upon voluntary liquidation or otherwise) to
the Guarantor or to the Borrower or any other Wholly Owned
Subsidiary of the Guarantor (other than a QSPE);
(c) the Guarantor or any Subsidiary of the Guarantor other
than the Borrower may merge or consolidate (and any such
Subsidiary may amalgamate) with any other Person (other than a
QSPE) if (i) in the case of a merger or consolidation of the
Guarantor, the Guarantor is the surviving corporation and, in
any other case, the surviving corporation is a Wholly Owned
Subsidiary of the Guarantor and (ii) after giving effect
thereto no Default would exist;
(d) any Wholly Owned Subsidiary of the Guarantor other than
the Borrower may be dissolved or liquidated, so long as any
assets of such Wholly Owned Subsidiary (after settlement of
all claims against such Wholly Owned Subsidiary) shall be
transferred in such dissolution or liquidation to the
Guarantor or to the Borrower or any other Wholly Owned
Subsidiary of the Guarantor (other than a QSPE);
(e) the Guarantor and/or any Subsidiary of the Guarantor may
enter into any Permitted Securitization; and
(f) in addition to the dispositions permitted pursuant to
clauses (b) through (d) of this Section 9.05, the Guarantor
and/or any Subsidiary of the Guarantor other than the Borrower
may sell or otherwise dispose of Property (including by merger
or consolidation) if, after giving effect to any such sale or
disposition, the book value of such Property, together with
the aggregate book value of the Property so sold or disposed
of since December 31, 2001 does not exceed 20% of Total Assets
at the date of (and before giving effect to) such sale or
disposition, provided that in any event the dispositions set
forth in Schedule IV hereto shall be permitted
-13-
and shall not to be included in the calculation of aggregate
dispositions otherwise permitted under the foregoing
provisions of this clause (f)."
2.24 COVENANT WITH RESPECT TO LIENS
Section 9.06 of the Canadian Credit Agreement is amended by deleting
paragraph (k), adding the following paragraphs after paragraph (i) and by
re-numbering the subsequent paragraphs accordingly:
"(j) customary Liens on the purchased Property under a
Permitted Securitization or Liens resulting from the
characterization of the sale of such purchased Property as
secured Indebtedness;
(k) Liens on any Property owned by any QSPE;"
2.25 COVENANT WITH RESPECT TO CONSOLIDATED NET WORTH
Section 9.07 of the Canadian Credit Agreement is amended as follows:
"9.07 Consolidated Net Worth. The Guarantor will not permit
Consolidated Net Worth at any time to be less than (a) US$1,620,000,000
plus (b) 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 clause (b) of this Section 9.07, be deemed to be zero."
2.26 COVENANT WITH RESPECT TO TRANSACTIONS WITH AFFILIATES:
Section 9.09 of the Canadian Credit Agreement is amended as follows:
"9.09 Transactions with Affiliates. Except as expressly
permitted by this Agreement, each of the Borrower and the Guarantor
will not, nor will it permit any of its Subsidiaries to, directly or
indirectly: (a) make any Investment in an Affiliate; (b) transfer,
sell, lease, assign or otherwise dispose of any Property to an
Affiliate; (c) merge into or consolidate with or purchase or acquire
Property from an Affiliate; or (d) enter into any other transaction
directly or indirectly with or for the benefit of an Affiliate
(including, without limitation, guarantees and assumptions of
obligations of an Affiliate); provided that (1) any Affiliate who is an
individual may serve as a director, officer or employee of the
Borrower, the Guarantor or any of their respective Subsidiaries and
receive reasonable compensation for his or her services in such
capacity, (2) the Borrower, the Guarantor and their respective
Subsidiaries may enter into transactions (other than extensions of
credit to an Affiliate) so long as the monetary or business
consideration arising therefrom would be substantially as advantageous
to the Borrower, the Guarantor and their respective Subsidiaries as the
monetary or
-14-
business consideration which would obtain in a comparable transaction
with a Person not an Affiliate and (3) the Guarantor and its
Subsidiaries other than the Borrower may enter into any of the
transactions described in this Section 9.09 with Ponderay, so long as,
in the case of any Guarantee of the Indebtedness of Ponderay, the
ratio, expressed as a percentage, of such Indebtedness that is
Guaranteed to the aggregate outstanding principal amount of all
Indebtedness of Ponderay shall not exceed the ownership percentage of
the Guarantor in Ponderay held through the Guarantor's Wholly Owned
Subsidiary, Lake Superior Forest Products Inc., a corporation existing
under the laws of the State of Delaware, and (4) the Borrower, the
Guarantor and their respective Subsidiaries may extend credit to any
Affiliate in an aggregate principal amount as to all Affiliates not
exceeding US$30,000,000, so long as the monetary or business
consideration arising from each such extension of credit would be
substantially as advantageous to the Borrower, the Guarantor and their
respective Subsidiaries as the monetary or business consideration which
it would obtain in a comparable transaction with a Person not an
Affiliate. Notwithstanding the foregoing, the Borrower, the Guarantor
and any of their respective Subsidiaries may enter into transactions
with Receivables Entities pursuant to Permitted Securitizations."
2.27 COVENANT WITH RESPECT TO INDEBTEDNESS
Section 9.11 of the Canadian Credit Agreement is amended by (i)
replacing paragraph (a) with the following paragraph (a); (ii) deleting
paragraph (g); (iii) adding the following paragraphs after paragraph (e); and
(iv) re-numbering the subsequent paragraphs accordingly:
"(a) Indebtedness of the Borrower or other Subsidiaries of the
Guarantor existing on the date hereof and (to the extent
exceeding the minimum threshold requirements set forth in
Section 8.09(a)) set forth in Part A of Schedule I any
assumption or Guarantee thereof by any other Subsidiary of the
Guarantor and any extensions, renewals, and replacements
thereof, so long as (i) the weighted average life of the
maturity of the maturity of such Indebtedness as so extended,
renewed or refinanced, taken as a whole, is not shorter than
such weighted average life prior to such extension, renewal or
refinancing and (ii) any terms of subordination set forth in
such Indebtedness are not adversely affected thereby in any
material respect;
(f) Indebtedness under any Permitted Securitization;
(g) Indebtedness of any QSPE;"
2.28 COVENANT WITH RESPECT TO RESTRICTIVE AGREEMENTS
Section 9.12 of the Canadian Credit Agreement is amended as follows:
-15-
"9.12 Restrictive Agreements. Each of the Borrower and the
Guarantor will not, and will not permit any of its Subsidiaries (other
than the QSPE's and Receivables Entities) to, directly or indirectly,
enter into, incur or permit to exist any agreement or other arrangement
that prohibits, restricts or imposes any condition upon the ability of
any of their respective Subsidiaries to pay dividends or other
distributions with respect to any shares of its capital stock or to
make or repay loans or advances to the Borrower, the Guarantor or any
other Subsidiary or to Guarantee Indebtedness of the Borrower, the
Guarantor or any other Subsidiary; provided that the foregoing shall
not apply to (x) restrictions and conditions imposed by law or by this
Agreement, (y) restrictions and conditions existing on the date hereof
identified on Schedule V (but shall apply to any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition) and (z) customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder."
2.29 COVENANT WITH RESPECT TO LINES OF BUSINESS
Section 9.13 of the Canadian Credit Agreement is amended as follows:
"9.13 Limitation on Lines of Business. Neither the Borrower
nor the Guarantor will enter into any business, either directly or
through any Subsidiary, to any substantial extent other than those
businesses in which the Borrower, the Guarantor and their respective
Subsidiaries are engaged on the date of this Agreement and, in each
case, activities directly related thereto or ancillary, complementary
or reasonably related thereto as reasonably determined by the Borrower
or the Guarantor in their respective sole judgments, including
Permitted Securitizations."
2.30 EVENTS OF DEFAULT
Paragraphs (f), (g), (h) and (i) of section 10 of the Canadian Credit
Agreement are amended as follows:
"(f) the Borrower, the Guarantor or any of their respective
Subsidiaries (other than any QSPE) shall admit in writing its inability
to, or be generally unable to, pay its debts as such debts become due;
or
(g) the Borrower, the Guarantor or any of their respective
Subsidiaries (other than any QSPE) shall (i) apply for or consent to
the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator of itself or of all or a
substantial part of its Property, (ii) make a general assignment for
the benefit of its creditors pursuant to the Bankruptcy and Insolvency
Act (Canada), (iii) commence a voluntary case under the US Bankruptcy
Code, (iv) file a petition or commence any proceedings (including a
notice of intention to make a proposal) seeking to take advantage of
any other law relating to
-16-
bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement or winding-up, or composition or readjustment of debts, (v)
fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under
the US Bankruptcy Code or any petition for a receiving order under the
Bankruptcy and Insolvency Act (Canada), (vi) take any corporate action
for the purpose of effecting any of the foregoing; or
(h) a proceeding or case shall be commenced, without the
application or consent of the Borrower, the Guarantor or any of their
respective Subsidiaries (other than any QSPE), in any court of
competent jurisdiction, seeking (i) the reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or
readjustment of the debts of the Borrower, the Guarantor or any of
their respective Subsidiaries, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator or the like of the Borrower,
the Guarantor or any of their respective Subsidiaries or of all or any
substantial part of their Property, or (iii) similar relief in respect
of the Borrower, the Guarantor or any of their respective Subsidiaries
under any law relating to bankruptcy, insolvency, reorganization,
arrangement, winding-up, or composition or adjustment of debts, and
such proceeding or case shall continue undismissed for a period of 60
or more days or (iv) an order, judgment or decree approving or ordering
any of the foregoing shall be entered against the Borrower, the
Guarantor or any of their respective Subsidiaries; or
(i) a final judgment or judgments for the payment of money in
excess of US$10,000,000 in the aggregate (exclusive of judgment amounts
fully covered by insurance where the insurer has admitted liability in
respect of such judgment) or in excess of US$50,000,000 in the
aggregate (regardless of insurance coverage) shall be rendered by one
or more courts, administrative tribunals or other bodies having
jurisdiction against the Borrower, the Guarantor or any of their
respective Subsidiaries (other than any QSPE) and the same shall not be
discharged (or provision shall not be made for such discharge), or a
stay of execution thereof shall not be procured, within 30 days from
the date of entry thereof and the Borrower, the Guarantor or the
relevant Subsidiary shall not, within said period of 30 days, or such
longer period during which execution of the same shall have been
stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or"
2.31 SCHEDULES
(a) Schedule 2.30 (a) to this Agreement replaces Schedule I to the
Canadian Credit Agreement.
(b) Schedule 2.30 (b) to this Agreement replaces Schedule II to the
Canadian Credit Agreement.
(c) Schedule 2.30 (c) to this Agreement replaces Schedule IV to the
Canadian Credit Agreement
-17-
(d) Schedule 2.30 (d) to this Agreement is added as Schedule V to the
Canadian Credit Agreement
ARTICLE 3
GENERAL
3.1 CONFIRMATION OF CREDIT AGREEMENT
The parties acknowledge and agree that, except as amended pursuant to
this First Amending Agreement, 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 extension of the Revolving Credit Termination
Date and the amendments provided for herein, the Borrower shall pay to each Bank
a fee in an amount equal to 7.5 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 federal laws of Canada applicable
therein.
[Signature Pages Follow]
-18-
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/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx
Vice President and Treasurer
BOWATER INCORPORATED,
as Guarantor
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxx
Senior Vice President and
Chief Financial Officer
[Signatures of the Agent and the Banks Follow]
-00-
XXX XXXX XX XXXX XXXXXX,
as Administrative Agent
By: /s/ Xxxxx Xxxxxxxx
---------------------------
Xxxxx Xxxxxxxx
Director
By: /s/ Xxxx Xxxxxx
---------------------------
Xxxx Xxxxxx
Associate Director
This is a counterpart signature page to the First Amending
Agreement dated as of October 18, 2002 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.
-00-
XXX XXXX XX XXXX XXXXXX,
as a Bank
By: /s/ Xxxxx Xxxxx
-----------------------------------
Xxxxx Xxxxx
Director, Paper and Forest Products
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Xxxx Xxxxxxxx
Associate Director
Paper and Forest Products
This is a counterpart signature page to the First Amending
Agreement dated as of October 18, 2002 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.
-00-
XXX XXXXXXX-XXXXXXXX BANK,
as a Bank
By: /s/ Oana Frumosu
-------------------------------
Oana Frumosu
Associate, Corporate Credit
By:
-------------------------------
This is a counterpart signature page to the First Amending
Agreement dated as of October 18, 2002 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.
-22-
CANADIAN IMPERIAL BANK OF COMMERCE,
as a Bank
By: /s/ Xxxx Xxxxxxxx
-----------------------------
Xxxx Xxxxxxxx
Executive Director
By: /s/ Xxxx Xxxxx
-----------------------------
Xxxx Xxxxx
Executive Director
This is a counterpart signature page to the First Amending
Agreement dated as of October 18, 2002 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.
-23-
BANK OF MONTREAL,
as a Bank
By: /s/ Xxxxx Xxxxx
--------------------------
Xxxxx Xxxxx
Director
By:
--------------------------
This is a counterpart signature page to the First Amending
Agreement dated as of October 18, 2002 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.
SCHEDULE 2.30 (a)
SCHEDULE I
Material Agreements and Liens
[See Section 8.09 and Section 9.06(a)]
Part A - Material Agreements
(US millions, unless otherwise noted)
Note: Intercompany indebtedness, which is consolidated to zero, is excluded from
this listing.
BOWATER INCORPORATED
Public Bonds
9.0% Debentures due 8/1/09 $250.0
9.375% Debentures due 12/15/21 $200.0
9.5% Debentures due 10/15/12 $125.0
Tax Exempt Bonds
7.75% Solid Waste Recycling Facilities Revenue Bond due 10/1/22 $62.0
7.4% Solid Waste Recycling Facilities Revenue Bond due 12/1/22 $39.5
7.625% Solid Waste Recycling Facilities Revenue Bond due 3/1/16 $30.0
Variable Rate Solid Waste Recycling Facilities Revenue Bond due 6/1/29 $33.5
7.625% Solid Waste Recycling Facilities Revenue Bond due 3/1/06 $ 6.9
7.4% Solid Waste Recycling Facilities Revenue Bond due 1/1/10 $ 6.5
Letters of Credit
Supporting Various Insurance Programs $10.8
Supporting Variable Rate Solid Waste Recycling Facilities $34.8
Bank Agreements
$10 Million Cash Management uncommitted line of credit (as of 9/30/02) $ 0.0
$300 Million Term Loan (as of 9/30/02) $300.0
$500 Million Revolving Credit (as of 9/30/02) $111.0
Guarantees
In connection with Ponderay Newsprint Company $50.0
In connection with the monetization of a timberland note $12.8
-2-
In connection with a synthetic lease $52.3
In connection with a credit facility for Bowater Canadian Forest
Products Inc. $100.0
In connection with notes issued by Bowater Canada Finance Corp. $600.0
Synthetic Lease
Facility due April 30, 2006 $52.3
BOWATER CANADIAN FOREST PRODUCTS INC.
Public Bonds
10.85% Indenture due 11/30/14 C$125.0
10.25% Indenture due 1/15/03 $ 7.4
Private Placement Notes
10.625% Series A Note Agreement due 6/15/10 $98.0
10.5% Series B Note Agreement at various dates with a final maturity of 2010 $81.6
10.6% Series C Note Agreement due 1/15/11 $70.0
10.26% Series D Note Agreement with a final maturity of 2011 $19.8
Government Loans
0% Government of Quebec due 4/20/08 $ 9.2
Other miscellaneous non-interest bearing government notes due 2003 $ 0.3
Letters of Credit
Lumber Duty $ 2.5
Electricity Contract (to IMO for Thunder Bay) C$7.5
Supporting employment matters C$22.0
Bank Agreements
C$10 Million Cash Management line of credit (as of 9/30/02) C$7.6
C$5 Million Cash Management line of credit (as of 9/30/02) C$0.0
$100 Million Credit Facility (as of 9/30/02) $70.0
(The above letters of credit are under this facility)
BOWATER CANADA FINANCE CORPORATION
Public Notes
7.95% Notes due 2011 $600.0
BOWATER TRUST 2001-A
Synthetic Lease due 2006 $52.3
-3-
NEWSPRINT SOUTH INC.
UDAG Loan Agreement due 2010 with interest rates from 5-6.5% $ 7.3
BOWATER MARITIMES INC.
Partnership Debt
11% Subordinated debt due 2003 $ 3.7
QUALIFIED SPECIAL PURPOSE ENTITIES
Timber Note Holding, LLC
Loan Agreement due 2009 $45.1
Xxxxxxx Note Holdings AT LLC
Note Agreement due 2014 $64.1
Xxxxxxx Note Holdings TI LLC
Note Agreement due 2014 $61.6
Bowater Catawba Note Holdings I LLC
Note Agreement due 2016 $17.4
Bowater Catawba Note Holdings II LLC
Note Agreement due 2016 $86.8
Bowater Saluda Note Holdings LLC
Note Agreement due 2017 $89.2
Part B - Material Liens
(US millions, unless otherwise noted)
BOWATER INCORPORATED
Timber Note Monetizations $364.2
(secured by notes payable by the purchasers of various timberlands)
BOWATER TRUST 2001-A
Synthetic Lease $52.3
(secured by new facilities of Bowater Nuway Inc.)
SCHEDULE 2.30 (b)
SCHEDULE II
Subsidiaries
[See definition of "QSPE" in Section 1.01, and Section 4.14]
Subsidiary Jurisdiction of Incorporation
9068-9050 Quebec Inc. Quebec
Alliance Forest Products (2001) Inc. Canada
Bowater Alabama Inc. Alabama
Bowater America Inc. Delaware
Bowater Asia Pte Ltd Singapore
Bowater Baie-Trinite Inc. Quebec
Bowater Belledune Sawmill Inc. Canada
Bowater Canada Finance Corporation Nova Scotia
Bowater Canada Finance Limited Partnership New Brunswick
Bowater Canada Inc. (1) Canada
Bowater Canada Treasury Corp. Nova Scotia
Bowater Canadian Forest Products Inc. (1) Canada
Bowater Canadian Holdings Incorporated (1) Nova Scotia
Bowater Canadian Limited Canada
Bowater Europe Limited United Kingdom
Bowater Finance Company Inc. Delaware
Bowater Foreign Sales Corporation Barbados
Bowater Japan Limited Japan
Bowater Maritimes Inc. (2) New Brunswick
Bowater Mersey Paper Company Limited (3) Nova Scotia
Bowater Mississippi Holdings Inc. Delaware
Bowater Mississippi LLC Delaware
Bowater Newsprint South Inc. Delaware
Bowater Newsprint South LLC Delaware
Bowater Nuway Inc. Delaware
Bowater Nuway Mid-States Inc. Delaware
Bowater Pulp and Paper Canada Holdings LP New Brunswick
Bowater S. America Ltda. Brazil
Bowater South American Holdings Incorporated Delaware
Bowater U.S. Holdings Inc. Delaware
Bowater Ventures Inc. Delaware
Bowater Couturier Inc. New Brunswick
-2-
Bowater Xxxxxxxx Inc. Quebec
Bowater-Halla Paper Co., Ltd Korea
Bowater Mitis Inc. Quebec
Bowater Treated Wood Inc. Quebec
Xxxxxxx Newsprint Company (4) Delaware
Carolina Export Corporation Delaware
Cascapedia Booming Company Inc. (5) Quebec
Coosa Pines Golf Club, Incorporated Alabama
Lake Superior Construction Inc. Delaware
Lake Superior Forest Products Inc. Delaware
Lake Superior Holdings Inc. Delaware
Manifor Inc. Quebec
Rich Timber Holdings, LLC Delaware
9032-4286 Quebec Inc. (6) Quebec
Qualified Special Purpose Entities:
Xxxxxxx Note Holdings AT LLC Delaware
(subsidiary of Xxxxxxx Newsprint
Company, see Note 4)
Xxxxxxx Note Holdings TI LLC Delaware
(subsidiary of Xxxxxxx Newsprint
Company, see Note 4)
Bowater Catawba Note Holdings I LLC Delaware
Bowater Catawba Note Holdings II LLC Delaware
Bowater Saluda Note Holdings LLC Delaware
Timber Note Holding, LLC Delaware
Note: Except as otherwise indicated, each of the above entities is a
wholly owned direct or indirect subsidiary of the Company.
(1) 100% of the common stock of each of these corporations is
owned directly or indirectly by the Company. In addition, each of these
corporations has issued C$100,000 of preferred stock to the law firm of Fraser
Xxxxxx Casgrain and Bowater Canada Inc. has 1,686,406 outstanding Exchangeable
Shares (at May 8, 2002), which are exchangeable on a one-for-one basis into
shares of Bowater Incorporated Common Stock.
(2) 67% owned. The remaining interest is owned 25% by Oji
Paper Co., Ltd and 8% by Mitsui & Co., Ltd.
(3) 51% owned. The remaining interest is owned by The
Washington Post Company.
(4) Approximately 51% owned. The remaining interest is owned
by Herald Company, Inc.
-3-
(5) Approximately 50% owned. The remaining interests are owned
by Stone Consolidated(approximately 50%) and 1 share is owned by each of the six
directors.
(6) 50% owned. The remaining interest is owned by Cooperative
de travailleurs actionnaire xx xxxxxx et pepiniere Girardville.
SCHEDULE 2.30 (c)
SCHEDULE IV
Permitted Dispositions
[See Section 9.05(e)]
None.
SCHEDULE 2.30 (d)
SCHEDULE V
Restrictive Agreements
[See Section 9.12]
The Bowater Canada Inc. ("BCI") Exchangeable Shares contain
certain restrictions designed to assure the payment of dividends on the
Exchangeable Shares. Among other things, unless all dividends on the
Exchangeable Shares corresponding to dividends declared and paid to
date on the Bowater Incorporated Common Shares have been declared and
paid in full on the Exchangeable Shares, BCI shall not, without the
prior approval of the holders of the Exchangeable Shares, pay any
dividends on the BCI Common Shares or BCI Preferred Shares (or any
other shares ranking junior to the Exchangeable Shares), or redeem or
purchase or make any capital distribution in respect of such shares or
any other shares of BCI ranking equally with the Exchangeable Shares
with respect to the payment of dividends or any liquidation
distribution.
The Support Agreement between Bowater Incorporated, Bowater
Canadian Holdings Inc. ("BCHI") and BCI contains restrictions on the
payment of dividends and other restrictions that are designed to ensure
that the holders of the Bowater Canada Exchangeable Shares are treated
the same as the holders of Bowater Common stock.
The provisions attached to the Preferred Shares of each of
Bowater Canadian Forest Products Inc. ("BCFP"), BCI and BCHI contain
restrictions on the payment of dividends in that no dividends may be
paid on the respective common shares of those corporations (or other
shares ranking junior to the Preferred Shares) unless all dividends are
up-to-date on such Preferred Shares.
In addition the indentures, agreements, instruments or other
arrangements described below contain certain terms and/or conditions
that must be satisfied in the context of any payment of dividends or
other distribution of property or assets by BCFP with respect to any
shares of its capital stock, or any action taken by BCFP to make or
repay the Guarantor or any other Subsidiary or to Guarantee
Indebtedness of the Guarantor or any other Subsidiary, to ensure, in
each case, that any such payment, distribution or action taken by BCFP
does not (i) constitute a default under, or a breach or contravention
of, any provision of such indentures, agreements, instruments or other
arrangements, or (ii) result in a redemption, repurchase or similar
right being granted to or in favor of the holders of the debt
instruments issued pursuant to such indentures, agreements, instruments
or other arrangements which, if exercised, would require BCFP to
redeem, repurchase or otherwise acquire such debt instruments.
-2-
Trust Indenture dated as of December 12, 1989 between Canadian
Pacific Forest Products Limited (now BCFP) and Montreal Trust Company
in respect of the US$125,000,000 10.85% debentures due November 30,
2014.
Note Agreement dated as of June 1, 1990 by Canadian Pacific
Forest Products Limited (now BCFP) in respect of the US$98,000,000
10.625% Senior Notes, Series A, and the US$102,000,000 10.50% Senior
Notes, Series B, each due June 15, 2010.
Note Agreement dated as of November 1, 1990 by Canadian
Pacific Forest Products Limited (now BCFP) in respect of the
US$70,000,000 10.60% Senior Notes, Series C, and the US$22,000,000
10.26% Senior Notes, Series D, each due January 15, 2011.
US$75,000,000 10.25% Debentures due January 15, 2003 dated as
of January 13, 1993 issued by Canadian Pacific Forest Products Limited
(now BCFP) pursuant to a prospectus supplement dated January 13, 1993
to the prospectus of Canadian Pacific Forest Products Limited (now
BCFP) dated June 9, 1992.
