<SUBMISSION>
<ACCESSION-NUMBER>0000950144-00-013683
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>8
<PERIOD>20000930
<FILING-DATE>20001114
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>BOWATER INC
<CIK>0000743368
<ASSIGNED-SIC>2621
<IRS-NUMBER>620721803
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-08712
<FILM-NUMBER>763262
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>55 EAST CAMPERDOWN WAY
<STREET2>P O BOX 1028
<CITY>GREENVILLE
<STATE>SC
<ZIP>29601
<PHONE>8642717733
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>55 EAST CAMPERDOWN WAY
<STREET2>P O BOX 1028
<CITY>GREENVILLE
<STATE>SC
<ZIP>29601
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>g65151e10-q.txt
<DESCRIPTION>BOWATER INCORPORATED
<TEXT>

<PAGE>   1

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

(Mark One)

 [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended SEPTEMBER 30, 2000

                                       OR

 [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from                to

Commission file number              1-8712

                              BOWATER INCORPORATED
             (Exact name of registrant as specified in its charter)

            Delaware                            62-0721803
(State or other jurisdiction of              (I.R.S. Employer
incorporation or organization)              Identification No.)

           55 East Camperdown Way, P.O. Box 1028, Greenville, SC 29602
               (Address of principal executive offices) (Zip Code)

                                 (864) 271-7733
              (Registrant's telephone number, including area code)

             (Former name, former address and former fiscal year, if
                          changed since last report.)

   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

   Indicate the number of shares outstanding (and held by non-affiliates) of
each of the issuer's classes of common stock, as of November 3, 2000.

          Class                                  Outstanding at November 3, 2000
-----------------------------                    -------------------------------
Common Stock, $1.00 Par Value                            50,100,102 Shares


<PAGE>   2

                              BOWATER INCORPORATED

                                    I N D E X


<TABLE>
<CAPTION>
                                                                                        Page
                                                                                       Number
                                                                                       ------
<S>                                                                                    <C>

  PART I   FINANCIAL INFORMATION

         Item 1.  Financial Statements:

                  Consolidated Balance Sheet at September 30, 2000,
                  and December 31, 1999                                                  3

                  Consolidated Statement of Operations for the Three and Nine
                  Months Ended September 30, 2000, and
                  September 30, 1999                                                     4

                  Consolidated Statement of Capital Accounts
                  for the Nine Months Ended September 30, 2000                           5

                  Consolidated Statement of Cash Flows for the
                  Nine Months Ended September 30, 2000, and
                  September 30, 1999                                                     6

                  Notes to Consolidated Financial Statements                          7-12

         Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations                      13-20

         Item 3.  Quantitative and Qualitative Disclosures About Market Risk            20


  PART II   OTHER INFORMATION

         Item 1.  Legal Proceedings                                                     21

         Item 6.  Exhibits and Reports on Form 8-K                                      21


SIGNATURES                                                                              22
</TABLE>

                                       2
<PAGE>   3

                      BOWATER INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                     (UNAUDITED, IN MILLIONS OF US DOLLARS)


<TABLE>
<CAPTION>
                                                                 September 30,     December 31,
                                                                      2000             1999
                                                                 -------------     ------------
<S>                                                                <C>              <C>
                            ASSETS
Current assets:
  Cash and cash equivalents                                        $   21.8         $   24.7
  Marketable securities                                                 0.4              2.1
  Accounts receivable, net                                            399.2            314.3
  Inventories                                                         161.5            145.4
  Other current assets                                                 46.8             46.0
                                                                   --------         --------
    Total current assets                                              629.7            532.5
                                                                   --------         --------

Timber and timberlands (Note 2)                                       271.5            283.2
Fixed assets, net (Note 2 and 3)                                    2,939.1          2,581.3
Notes receivable                                                      145.9            146.0
Goodwill                                                              852.4            870.6
Other assets                                                          152.5            138.6
                                                                   --------         --------
                                                                   $4,991.1         $4,552.2
                                                                   ========         ========
                    LIABILITIES AND CAPITAL
Current liabilities:
  Current installments of long-term debt (Note 4)                  $    3.8         $   35.5
  Short-term bank debt                                                488.7             15.0
  Accounts payable and accrued liabilities (Note 5 and 12)            316.4            336.4
  Income taxes payable                                                  8.7               --
  Dividends payable                                                    10.3             10.9
                                                                   --------         --------
    Total current liabilities                                         827.9            397.8
                                                                   --------         --------

Long-term debt, net of current installments                         1,450.3          1,454.6
Other long-term liabilities (Notes 5)                                 345.3            326.1
Deferred income taxes                                                 510.1            481.4
Minority interests in subsidiaries (Note 6)                           116.4            121.5

Commitments and contingencies (Note 7)

Shareholders' equity:
   Common stock                                                        61.7             60.8
   Exchangeable shares (Note 4)                                        67.3            105.4
   Additional paid-in capital                                       1,357.3          1,315.4
   Retained earnings                                                  761.5            691.8
   Accumulated other comprehensive income (loss) (Note 13)            (19.6)           (18.3)
   Loan to ESOT                                                          --             (0.7)
   Treasury stock, at cost (Note 8)                                  (487.1)          (383.6)
                                                                   --------         --------
    Total shareholders' equity                                      1,741.1          1,770.8
                                                                   --------         --------
                                                                   $4,991.1         $4,552.2
                                                                   ========         ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       3
<PAGE>   4

                      BOWATER INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
         (UNAUDITED, IN MILLIONS OF US DOLLARS EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                                   Three Months Ended                 Nine Months Ended
                                                              -----------------------------   -------------------------------
                                                              September 30,   September 30,   September 30,     September 30,
                                                                   2000            1999            2000              1999
                                                              -------------   -------------   -------------     -------------
<S>                                                             <C>             <C>             <C>               <C>
Sales                                                           $   671.8       $   555.7       $ 1,842.4         $ 1,748.8
Distribution costs                                                   43.8            44.7           127.2             139.1
                                                                ---------       ---------       ---------         ---------
    Net sales                                                       628.0           511.0         1,715.2           1,609.7
Cost of sales                                                       402.3           404.3         1,150.5           1,245.1
Depreciation, amortization and cost of timber harvested              74.7            75.0           217.0             226.8
Impairment of asset (Note 3)                                           --              --              --              92.0
Selling and administrative expense                                   32.5            28.6            86.8              73.7
Net (gain) loss on sale of assets (Note 2)                           (0.1)           55.3            (3.4)           (198.4)
                                                                ---------       ---------       ---------         ---------
    Operating income (loss)                                         118.6           (52.2)          264.3             170.5

Other expense (income):
  Interest income                                                    (4.0)           (1.9)          (11.7)             (3.7)
  Interest expense, net of capitalized interest                      36.1            31.3            98.8              94.3
  Other, net (Note 9)                                                 2.3            (0.4)            8.1             (28.6)
                                                                ---------       ---------       ---------         ---------
                                                                     34.4            29.0            95.2              62.0
                                                                ---------       ---------       ---------         ---------

Income (loss) before income taxes and minority interests             84.2           (81.2)          169.1             108.5

Provision for income taxes                                           31.8           (24.7)           65.9              50.3
Minority interests in net income (loss) of subsidiaries               2.4            (3.1)            2.3              (0.1)
                                                                ---------       ---------       ---------         ---------

Net income (loss)                                                    50.0           (53.4)          100.9              58.3

Other comprehensive income (loss), net of tax:
  Foreign currency translation adjustments                           (0.4)           (0.5)           (1.3)              2.2
  Minimum pension liability adjustments, net of taxes                  --             8.7              --               8.7
                                                                ---------       ---------       ---------         ---------

Comprehensive income (loss)                                     $    49.6       $   (45.2)      $    99.6         $    69.2
                                                                =========       =========       =========         =========

Basic earnings (loss) per common share (Note 10):               $    0.97       $   (0.98)      $    1.92         $    1.05
                                                                =========       =========       =========         =========


Diluted earnings (loss) per common share (Note 10):             $    0.96       $   (0.98)      $    1.90         $    1.04
                                                                =========       =========       =========         =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>   5

                      BOWATER INCORPORATED AND SUBSIDIARIES
                   CONSOLIDATED STATEMENT OF CAPITAL ACCOUNTS
                  For The Nine Months Ended September 30, 2000
         (Unaudited, in millions of US dollars except per share amounts)

<TABLE>
<CAPTION>
                                                                                               Accumulated
                                                                      Additional                  Other
                                               Common   Exchangeable    Paid-in    Retained    Comprehensive  Loan to   Treasury
                                                Stock      Shares       Capital     Earnings   Income (Loss)   ESOT      Stock
                                               ------   ------------  ----------    --------   -------------  -------   --------
<S>                                           <C>        <C>          <C>           <C>          <C>         <C>        <C>
Balance at December 31, 1999                  $   60.8   $  105.4     $1,315.4      $  691.8     $  (18.3)   $   (0.7)  $ (383.6)

Net income                                          --         --           --         100.9           --          --         --

Retractions of exchangeable shares                 0.8      (38.1)        37.3            --           --          --         --

Dividends ($0.60 per share)                         --         --           --         (31.2)          --          --         --

Stock options exercised                            0.1         --          2.4            --           --          --         --

Tax benefit on exercise of stock options            --         --          0.9            --           --          --         --

Reduction in loan to ESOT                           --         --           --            --           --         0.7         --

Stock option compensation                           --         --          1.3            --           --          --         --

Purchase of common stock (Note 8)                   --         --           --            --           --          --     (103.7)

Treasury stock used for dividend
     reinvestment plans                             --         --           --            --           --          --        0.2

Foreign currency translation                        --         --           --            --         (1.3)         --         --
                                              --------   --------     --------      --------     --------    --------   --------

Balance at September 30, 2000                 $   61.7   $   67.3     $1,357.3      $  761.5     $  (19.6)   $     --   $ (487.1)
                                              ========   ========     ========      ========     ========    ========   ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       5
<PAGE>   6

                      BOWATER INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                     (Unaudited, in millions of US Dollars)

<TABLE>
<CAPTION>
                                                                               Nine Months Ended
                                                                         ----------------------------
                                                                         September 30,  September 30,
                                                                             2000           1999
                                                                         -------------  -------------
<S>                                                                         <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                  $100.9         $ 58.3
Adjustments to reconcile net income to net cash
  provided by operating activities:
Depreciation, amortization and cost of timber harvested                      217.0          226.8
Deferred income taxes                                                         31.4           41.7
Minority interests                                                             2.3           (0.1)
Net gain on sale of assets (Note 2)                                           (3.4)        (198.4)
Writedown of asset due to impairment (Note 3)                                   --           92.0
Change in working capital:
  Accounts receivable, net                                                   (72.3)          36.2
  Inventories                                                                 (7.7)          (1.0)
  Accounts payable and accrued liabilities                                    (8.5)         (91.4)
  Income taxes                                                                11.5          (62.8)
Other, net                                                                     2.3            3.7
                                                                            ------         ------
          Net cash from operating activities                                 273.5          105.0
                                                                            ------         ------

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Newsprint South, Inc., net of cash acquired (Note 15)        (379.6)            --
Cash invested in fixed assets, timber and timberlands                       (164.5)        (154.8)
Purchase of assets previously leased                                         (24.2)            --
Disposition of fixed assets, timber and timberlands (Note 2 and 3)             5.9          469.2
Cash paid on maturity of hedging contracts (Note 12)                         (20.2)         (29.3)
Cash invested in marketable securities                                       (50.7)          (8.2)
Cash from maturities of marketable securities                                 52.4            8.7
                                                                            ------         ------
          Net cash from (used for) investing activities                     (580.9)         285.6
                                                                            ------         ------

CASH FLOWS FROM  FINANCING ACTIVITIES:
Proceeds from short-term borrowings                                          749.9          269.1
Payments of short-term borrowings                                           (276.3)        (479.1)
Cash dividends, including minority interests (Note 6)                        (38.0)         (42.4)
Purchase of common stock (Note 8)                                           (103.7)         (75.3)
Redemption of Convertible Subordinated Debentures (Note 4)                      --          (65.9)
Proceeds from long-term borrowings                                             0.4           32.3
Payments of long-term borrowings (Note 4)                                    (30.9)          (4.3)
Redemption of Series C Preferred Stock (Note 4)                                 --          (26.4)
Stock options exercised                                                        2.4           10.2
Other                                                                          0.7            1.5
                                                                            ------         ------
          Net cash from (used for) financing activities                      304.5         (380.3)
                                                                            ------         ------

Net increase (decrease) in cash and cash equivalents                          (2.9)          10.3

Cash and cash equivalents at beginning of year                                24.7           58.3
                                                                            ------         ------
Cash and cash equivalents at end of period                                  $ 21.8         $ 68.6
                                                                            ======         ======

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
  Interest, net of capitalized interest of $2.0 and $4.1                    $ 90.6         $ 85.0
  Income taxes                                                              $ 21.4         $ 58.7

Noncash investing and financing activity:
  Conversion of 7.50% Convertible Unsecured
  Subordinated Debentures into
  Exchangeable Shares (Note 4)                                              $   --         $ 66.2
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       6
<PAGE>   7

                      BOWATER INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   The accompanying consolidated financial statements include the accounts of
     Bowater Incorporated and Subsidiaries (Bowater) as of September 30, 2000.
     The consolidated balance sheets, statements of operations, capital accounts
     and cash flows are unaudited. In the opinion of our management, however,
     all adjustments (consisting of normal recurring adjustments) necessary for
     fair presentation of the interim financial statements have been made. The
     results of the interim period ended September 30, 2000, are not necessarily
     indicative of the results to be expected for the full year.

2.   During the first nine months of 2000, Bowater sold fixed assets resulting
     in a pre-tax gain of $3.4 million, or $0.04 per diluted share, after tax.
     In the first nine months of 1999, we sold a sawmill and approximately 1.6
     million acres of timberlands, resulting in a pre-tax gain of $253.7
     million, or $2.80 per diluted share, after tax. In August 1999, we
     completed the sale of Great Northern Paper, Inc. (GNP), resulting in a
     pre-tax loss of $55.3 million, or $0.68 per diluted share, after tax.

     As a part of the 1999 timberland sales, approximately $56.0 million of
     proceeds were received in the form of a long-term note. Bowater monetized
     the note through a qualified special purpose subsidiary during the second
     quarter of 1999. The cash of $51.0 million from the monetization is
     included in "Disposition of fixed assets, timber, and timberlands" in the
     September 30, 1999, Consolidated Statement of Cash Flows.

3.   During the second quarter of 1999, Bowater signed an agreement with Inexcon
     Maine, Inc. for the purchase of GNP. This agreement prompted a
     re-evaluation of the assets at GNP in accordance with Statement of
     Financial Accounting Standards No. 121, "Accounting for the Impairment of
     Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." As a
     result, we recorded a pre-tax impairment charge of $92.0 million, or $1.02
     per diluted share. In August 1999, Bowater completed the sale of its GNP
     subsidiary to Inexcon Maine, Inc. for $250.0 million. The proceeds from the
     sale consisted of cash of $108.0 million (net of expenses), a note
     receivable of $10.0 million, and the assumption of $130.0 million of
     liabilities. In addition to the note receivable, Bowater guaranteed payment
     for certain operating costs to one of GNP's suppliers. At the request of
     the buyer and other creditors, the note payment was deferred from August to
     December 2000. The buyer's ability to fulfill its obligation on the note
     and the guarantee to its supplier will be impacted by the buyer's ability
     to refinance its short-term credit facility.

4.   In January 2000, Bowater repurchased a portion of its 9.25% Debentures due
     2002. The cash price paid was $20.8 million, including premium and accrued
     interest. In February 1999, we redeemed all of our outstanding 7.50%
     Convertible Unsecured Subordinated Debentures due 2004. In connection with
     the redemption, we paid cash of approximately $65.9 million, and Bowater
     Canada Inc. issued 1,359,620 exchangeable shares. Also in February 1999, we
     redeemed all of the remaining shares of our 8.40% Series C Cumulative
     Preferred Stock for $26.6 million, including accrued dividends.

5.   In connection with the acquisition of Avenor during the third quarter of
     1998, Bowater recorded merger-related liabilities. In the third and fourth
     quarter of 1998, we recorded liabilities relating to the closure of our
     Gold River pulp mill and the sale of our Dryden white paper mill, both of
     which were acquired as part of the Avenor acquisition. During the first
     nine months of 2000, we made payments against the reserves of $4.9 million
     and netted $2.8 million of our asset impairment reserve against the related
     assets of the Gold River pulp mill. In addition, we increased the reserves
     by $2.1 million to reflect revised estimates of our environmental
     liability.

     As of September 30, 2000, the remaining accrual for the above items is
     $19.5 million. Of this remaining accrual, $8.6 million is included in
     "Accounts payable and accrued liabilities" and $10.9 million is included in
     "Other long-term liabilities" in the Consolidated Balance Sheet. As of
     September 30, 2000, the cash requirements related to these liabilities are
     expected to be $5.1 million during the balance of 2000 and $14.4 million
     related to environmental and other matters in 2001 and beyond.



                                       7
<PAGE>   8

                      BOWATER INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The following table summarizes the activity of the liabilities described
above:


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                                           Write-offs
                                               &
                                           Payments
                               Balance      Against      Reclass     Increase      Foreign    Balance
     (In millions)             12/31/99     Reserve    Adjustments    Reserve     Exchange    9/30/00
-----------------------------------------------------------------------------------------------------
<S>                             <C>          <C>          <C>          <C>         <C>          <C>
Employee
    termination costs           $ 3.3        $(1.9)       $ 0.4        $  --       $(0.2)       $ 1.6
Facility closures                 3.9         (0.3)          --           --        (0.1)         3.5
Asset impairments
    /disposals                    3.6         (0.7)        (2.8)          --        (0.1)          --
Environmental                    15.2         (2.0)        (0.4)         2.1        (0.5)        14.4
-----------------------------------------------------------------------------------------------------
Totals                          $26.0        $(4.9)       $(2.8)       $ 2.1       $(0.9)       $19.5
-----------------------------------------------------------------------------------------------------
</TABLE>

6.   During the first nine months of 2000, the Board of Directors of Calhoun
     Newsprint Company (CNC) declared dividends totaling $12.5 million. As a
     result, $6.1 million was paid to the minority shareholder. In the first
     nine months of 1999, the Board of Directors of CNC declared dividends
     totaling $17.5 million, resulting in a payment of $8.6 million to the
     minority shareholder.

7.   Bowater is involved in various legal proceedings relating to contracts,
     commercial disputes, taxes, environmental issues, employment and workers'
     compensation claims, and other matters. We periodically review the status
     of these proceedings with both inside and outside counsel. Our management
     believes that the ultimate disposition of these matters will not have a
     material adverse effect on our operations or our financial condition taken
     as a whole.

8.   During the third quarter of 2000, Bowater purchased 235,000 shares of its
     common stock for $11.5 million under a 5.5 million share stock repurchase
     program authorized in May 1999. On a year-to-date basis, we purchased 2.1
     million shares for $103.7 million. The total for this program is now 3.2
     million shares at a cost of $155.5 million. During the first nine months of
     1999, we purchased 1.8 million shares of common stock for $75.3 million.

9.   "Other, net" in the Consolidated Statement of Operations includes the
     following:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
                                      THREE MONTHS ENDED           NINE MONTHS ENDED
                                 ----------------------------------------------------------
                                 September 30, September 30,  September 30,   September 30,
     (In millions)                   2000          1999           2000            1999
-------------------------------------------------------------------------------------------
<S>                                 <C>           <C>           <C>            <C>
Foreign exchange (gain) loss        $ 2.2         $(3.3)        $ 7.5          $(32.5)
Miscellaneous items                   0.1           2.9           0.6             3.9
-------------------------------------------------------------------------------------------
                                    $ 2.3         $(0.4)        $ 8.1          $(28.6)
-------------------------------------------------------------------------------------------
</TABLE>


                                       8
<PAGE>   9

                      BOWATER INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


10.  The calculation of basic and diluted earnings (loss) per share is as
     follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                                                 THREE MONTHS ENDED             NINE MONTHS ENDED
                                           -------------------------------------------------------------
                                           September 30,  September 30,  September 30,  September 30,
(In millions, except per share amounts)        2000            1999          2000            1999
--------------------------------------------------------------------------------------------------------
<S>                                           <C>           <C>            <C>            <C>

Basic Computation:

Net income (loss)                             $  50.0       $ (53.4)       $ 100.9        $  58.3
Less:
    Series C Preferred Stock
        dividends                                  --            --             --           (0.1)
    Deferred issuance costs associated
        with Series C Preferred Stock              --            --             --           (1.0)

                                           -------------------------------------------------------------
Basic income (loss) available to
        common shareholders                   $  50.0       $ (53.4)       $ 100.9        $  57.2
                                           -------------------------------------------------------------

Basic weighted average shares
        outstanding                              51.6          54.3           52.6           54.3
                                           -------------------------------------------------------------

Basic earnings (loss) per common share        $  0.97       $ (0.98)       $  1.92        $  1.05
                                           -------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
                                              THREE MONTHS ENDED             NINE MONTHS ENDED
                                        -----------------------------------------------------------
                                        September 30,  September 30,  September 30,  September 30,
(In millions, except per share amounts)     2000            1999          2000           1999
---------------------------------------------------------------------------------------------------
<S>                                       <C>           <C>            <C>            <C>

Diluted Computation:

Diluted income (loss) available to
     common shareholders                  $  50.0       $ (53.4)       $ 100.9        $  57.2
                                        -----------------------------------------------------------

Basic weighted average shares
     outstanding                             51.6          54.3           52.6           54.3

Effect of dilutive securities:
     Options                                  0.5            -- (a)        0.5            0.9
                                        -----------------------------------------------------------

Diluted weighted average shares
     outstanding                             52.1          54.3           53.1           55.2
                                        -----------------------------------------------------------

Diluted earnings (loss) per common
     share                                $  0.96       $ (0.98)       $  1.90        $  1.04
                                        -----------------------------------------------------------
---------------------------------------------------------------------------------------------------
</TABLE>


(a)  Due to the loss incurred for this period, the effect of dilutive securities
     was excluded to prevent antidilution.


                                       9
<PAGE>   10

                      BOWATER INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


11.  Segment Information:

     Bowater is organized into four divisions, three of which are: the Newsprint
     Division, the Coated Paper Division and the Forest Products Division.

     *    The Newsprint Division is responsible for the manufacturing operations
          of eight sites in the United States, Canada and South Korea. It is
          also responsible for the worldwide marketing of newsprint and uncoated
          groundwood specialties.

     *    The Coated Paper Division manufactures coated groundwood paper,
          newsprint, market pulp and uncoated groundwood specialties at one
          manufacturing site and operates a coating facility, both in the United
          States. This Division is responsible for the worldwide marketing and
          sales of coated groundwood paper.

     *    The Forest Products Division operates three sawmills and manages 1.8
          million acres of owned and leased timberlands in the United States and
          Canada, as well as 14.2 million acres of Crown-owned land in Canada on
          which we have cutting rights. This Division sells wood fiber to the
          Newsprint Division and Coated Paper Division, as well as markets and
          sells timber and lumber to third parties in North America.

     The Pulp Division has marketing and sales responsibility for all of our
     market pulp sales; however, the financial results from these sales are
     included in the Newsprint Division and the Coated Paper Division, depending
     upon which site manufactures the product. Accordingly, no results are
     reported for the Pulp Division.

     The following tables summarize information about segment profit and loss
     and segment assets for the three months and the nine months ended September
     30, 2000 and 1999 and at September 30, 2000 and 1999, respectively:

(Unaudited, in millions)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                       Coated       Forest
       THREE MONTHS ENDED               Newsprint       Paper      Products    Special  Corporate &
       SEPTEMBER 30, 2000               Division      Division     Division     Items   Eliminations   Total
-------------------------------------------------------------------------------------------------------------
<S>                                     <C>           <C>         <C>         <C>       <C>          <C>
Net sales-including internal sales      $  456.9      $  149.6    $  107.3    $     --  $     --     $  713.8
Elimination of intersegment sales             --            --          --          --     (85.8)       (85.8)
-------------------------------------------------------------------------------------------------------------
Net sales - external customers             456.9         149.6       107.3          --     (85.8)       628.0
-------------------------------------------------------------------------------------------------------------
Segment income (loss)                       94.4          39.4         0.6         0.1     (15.9)       118.6
-------------------------------------------------------------------------------------------------------------
Total assets at 9/30/00                 $3,565.7      $  518.8    $  514.1    $     --  $  392.5     $4,991.1
-------------------------------------------------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                                      Coated         Forest
        THREE MONTHS ENDED              Newsprint      Paper        Products     Special   Corporate &
        SEPTEMBER 30, 1999              Division      Division      Division      Items    Eliminations    Total
-----------------------------------------------------------------------------------------------------------------
<S>                                      <C>            <C>         <C>         <C>         <C>          <C>
Net sales-including internal sales       $  363.9       $  114.4    $  116.4    $     --    $     --     $  594.7
Elimination of intersegment sales              --             --          --          --       (83.7)       (83.7)
-----------------------------------------------------------------------------------------------------------------
Net sales - external customers              363.9          114.4       116.4          --       (83.7)       511.0
-----------------------------------------------------------------------------------------------------------------
Segment income (loss)                        (0.5)          10.3        10.6       (55.3)      (17.3)       (52.2)
-----------------------------------------------------------------------------------------------------------------
Total assets at 9/30/99                  $3,062.4       $  482.8    $  449.6    $     --    $  598.2     $4,593.0
-----------------------------------------------------------------------------------------------------------------
</TABLE>



                                       10
<PAGE>   11

                      BOWATER INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                      Coated       Forest
        NINE MONTHS ENDED              Newsprint       Paper      Products    Special  Corporate &
       SEPTEMBER 30, 2000              Division      Division     Division     Items   Eliminations    Total
-------------------------------------------------------------------------------------------------------------
<S>                                     <C>           <C>         <C>         <C>       <C>          <C>
Net sales-including internal sales      $1,225.1      $  420.1    $  327.6    $     --  $     --     $1,972.8
Elimination of intersegment sales             --            --          --          --    (257.6)      (257.6)
-------------------------------------------------------------------------------------------------------------
Net sales - external customers           1,225.1         420.1       327.6          --    (257.6)     1,715.2
-------------------------------------------------------------------------------------------------------------
Segment income (loss)                      196.6         101.7        18.4         3.4     (55.8)       264.3
-------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                      Coated        Forest
        NINE MONTHS ENDED              Newsprint       Paper       Products   Special   Corporate &
       SEPTEMBER 30, 1999               Division      Division     Division    Items    Eliminations    Total
---------------------------------------------------------------------------------------------------------------
<S>                                     <C>           <C>         <C>         <C>         <C>          <C>
Net sales-including internal sales      $1,163.3      $  336.3    $  378.4    $     --    $    2.3     $1,880.3
Elimination of intersegment sales             --            --          --          --      (270.6)      (270.6)
---------------------------------------------------------------------------------------------------------------
Net sales - external customers           1,163.3         336.3       378.4          --      (268.3)     1,609.7
---------------------------------------------------------------------------------------------------------------
Segment income (loss)                       38.0          42.4        32.4       106.4       (48.7)       170.5
---------------------------------------------------------------------------------------------------------------
</TABLE>

     During the first quarter of 2000, Bowater changed its segment disclosure to
     report special items separately. Our management now reviews reports that
     present these items separately from the normal operations of the divisions.
     For the three months ended September 30, 1999, the special item related to
     a pre-tax loss on the sale of GNP of $55.3 million. For the first nine
     months of 2000, the special item related to a pre-tax gain on the sale of
     fixed assets of $3.4 million. For the first nine months of 1999, the
     special item related to a pre-tax gain on the sale of timberlands and a
     sawmill of $253.7 million, a pre-tax impairment charge of $92.0 million and
     a pre-tax loss on the sale of GNP of $55.3 million.

     In the first quarter of 2000, we changed our presentation of intersegment
     sales, presenting each division's net sales on a gross basis and including
     the elimination of intersegment sales in "Corporate & Eliminations". Also
     in the first quarter of 2000, we changed our asset allocations relating to
     the Avenor acquisition between the Newsprint and Forest Products Divisions
     and Corporate. These changes are also reflected in the tables above.

     The following table shows GNP's net sales and operating loss included in
     the Newsprint and Forest Products Divisions results for the three and nine
     months ended September 30,1999:

<TABLE>
<CAPTION>
               -------------------------------------------------------------
                                  THREE MONTHS ENDED       NINE MONTHS ENDED
               (in millions)      SEPTEMBER 30, 1999      SEPTEMBER 30, 1999
               -------------------------------------------------------------
<S>                                          <C>                   <C>
               Net sales -
                including internal
                sales                        $   46.6              $  234.9
               -------------------------------------------------------------
               Operating loss                $   (4.9)             $  (11.4)
               -------------------------------------------------------------
</TABLE>

     The line entitled "Segment income (loss)" in the preceding tables is equal
     to "Operating income (loss)" as presented in our Consolidated Statement of
     Operations. In addition, none of the income/loss items following "Operating
     income (loss)" in our Consolidated Statement of Operations are allocated to
     our segments, since they are reviewed separately by Bowater's management.
     These items include, but are not limited to, interest revenue and expense,
     income tax expense or benefit, and minority interests in net income (loss)
     of subsidiaries.



                                       11
<PAGE>   12

                      BOWATER INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


12.  Using Canadian dollar forward and range forward contracts, Bowater hedges
     against the risk of a rising Canadian dollar. At September 30, 2000, we had
     $306.5 million of Canadian dollar contracts. Information regarding the
     carrying value, fair market value, and range of exchange rates of the
     contracts is summarized in the table below:

<TABLE>
<CAPTION>
     ----------------------------------------------------------------------------------------------
     (In millions)                                         Liability
     -----------------------------    Notional      -------------------------       Range Of
     Foreign Currency Exchange       Amount of      Carrying         Fair        US$/Canadian$
     Agreements                     Derivatives      Amount      Market Value    Exchange Rates
     ---------------------------------------------------------------------------------------------
<S>                                 <C>          <C>            <C>                 <C>
     Buy Currency:
     ---------------------------------------------------------------------------------------------
         Canadian dollar
     ---------------------------------------------------------------------------------------------
               Due in 2000          $     103.5  $     6.0      $      6.0          .7491 - .6877
     ---------------------------------------------------------------------------------------------
               Due in 2001                203.0        5.4             5.4          .7339 - .6630
     ---------------------------------------------------------------------------------------------
                    Total           $     306.5  $    11.4      $     11.4
     ---------------------------------------------------------------------------------------------
</TABLE>


13.  In the Consolidated Balance Sheet as of September 30, 2000, the line
     entitled "Accumulated other comprehensive income (loss)" includes $(19.5)
     million for pension plan additional minimum liabilities, $(7.7) million for
     foreign currency translation, and $7.6 million for taxes.

14.  Certain prior-year amounts in the financial statements and the notes have
     been reclassified to conform to the 2000 presentation.

15.  On August 1, 2000, Bowater completed the acquisition of the Newsprint
     South, Inc. paper mill, located in Grenada, Mississippi (Grenada). The
     purchase price was $384.0 million in cash and the assumption of $8.9
     million in debt. On the day of acquisition, the Grenada operations held
     cash equivalents of $4.4 million, resulting in a net cash outflow of $379.6
     million. The acquisition is being accounted for under the purchase method
     of accounting. The consolidated financial statements include the operations
     and cash flows of the Grenada operation for the period August 1, 2000, to
     September 30, 2000, and the assets and liabilities as of September 30,
     2000. The preliminary allocation of the excess purchase price over
     historical assets of the Grenada operations was made to fixed assets.

     The following unaudited pro forma consolidated financial results assume the
     acquisition had occurred on January 1 of the following years:


                    ------------------------------------------------------------
                                                          NINE MONTH ENDED
                                                           SEPTEMBER 30,
                                                    ----------------------------
                    (In millions)                       2000          1999
                    ------------------------------------------------------------
                    Net sales                       $   1,786.3     $1,697.8
                    ------------------------------------------------------------
                    Net income                            101.0         48.7
                    ------------------------------------------------------------
                    Diluted earnings per share      $      1.90     $   0.86
                    ------------------------------------------------------------


16.  In October 2000, Bowater announced that it signed a preliminary Letter of
     Intent with Sepoong Corporation and its major creditor, Chohung Bank, to
     acquire the Sepoong paper mill located in Kunsan, South Korea, for $201.0
     million. The acquisition is subject to the negotiation of a definitive
     agreement, the approval of creditors of Sepoong, due diligence and
     regulatory approval.


                                       12
<PAGE>   13

                      BOWATER INCORPORATED AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                                  ORGANIZATION

Bowater is organized into four divisions: the Newsprint Division, the Coated
Paper Division, the Pulp Division and the Forest Products Division. Each
division, with the exception of the Pulp Division, is responsible for the sales
and marketing of distinct product lines and the operation of certain
manufacturing sites. The Pulp Division is primarily a marketing and distribution
division. Therefore, our financial results are collected, analyzed and reported
through the Newsprint, Coated Paper and Forest Products Divisions.

                         CAUTIONARY STATEMENT REGARDING
                           FORWARD-LOOKING INFORMATION

Statements in this report that are not reported financial results or other
historical information are "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. They include, for example,
statements about our business outlook, assessment of market conditions,
strategies, future plans, future sales, prices for our major products, inventory
levels, capital spending and tax rates. These forward-looking statements are not
guarantees of future performance. They are based on management's expectations
that involve a number of business risks and uncertainties, any of which could
cause actual results to differ materially from those expressed in or implied by
the forward-looking statements. The risks and uncertainties relating to the
forward-looking statements in this report include those described under the
caption "Cautionary Statement Regarding Forward-Looking Information" in
Bowater's annual report on Form 10-K for the year ended December 31, 1999, and
from time to time, in Bowater's other filings with the Securities and Exchange
Commission.

                              RESULTS OF OPERATIONS
                  THREE MONTHS ENDED SEPTEMBER 30, 2000, VERSUS
                               SEPTEMBER 30, 1999

For the third quarter of 2000, Bowater had operating income of $118.6 million,
compared to an operating loss of $52.2 million for the third quarter of 1999.
The operating loss for the third quarter of 1999 includes a pre-tax loss of
$55.3 million on the sale of Bowater's Great Northern Paper, Inc. subsidiary
(GNP). Operating income less "Net gain (loss) on sale of assets" increased
$115.4 million. Higher prices for newsprint, market pulp and coated groundwood
paper products account for this increase. Lower operating costs as a result of
less maintenance and market-related downtime were partially offset by higher
prices for recycled paper.

    Net income for the third quarter of 2000 was $50.0 million, or $0.96 per
diluted share, compared with a net loss of $53.4 million, or $0.98 per diluted
share, in the third quarter of 1999. Included in the net loss for the third
quarter of 1999 was a pre-tax loss on the sale of GNP of $55.3 million ($37.0
million after tax), or $0.68 per diluted share. Third quarter 2000 net sales
were $628.0 million, compared with $511.0 million for the third quarter of 1999
and $566.7 million for the second quarter of 2000.

    Presented below is a discussion of each significant product line followed by
a discussion of the results of each of the reported divisions. For the third
quarter of 1999, the net sales of GNP are included in the following product
lines: newsprint, coated groundwood paper, directory paper, uncoated groundwood
specialties, and lumber, timber and other wood products. We completed the sale
of GNP in August 1999.

                            PRODUCT LINE INFORMATION

 NET SALES BY PRODUCT
--------------------------------------------------------------
                                         THREE MONTHS ENDED
                                           SEPTEMBER 30,
                                    --------------------------
(Unaudited, in millions)                 2000           1999
--------------------------------------------------------------

Net sales:
   Newsprint                              $ 377.4      $ 298.0
   Coated groundwood                         89.1         77.0
   Directory paper                            -           21.2
   Market pulp                              150.6        111.9
   Uncoated groundwood specialties           33.0         14.6
   Lumber, timber and other wood
              products                      107.5        116.7
   Elimination of intersegment              (85.8)       (83.7)
   Distribution costs                       (43.8)       (44.7)
                                    --------------------------
              Total net sales            $  628.0      $ 511.0
--------------------------------------------------------------


Newsprint Bowater's average transaction price for newsprint was 19% higher in
the third quarter of 2000 compared to the third quarter of 1999. We implemented
price increases for domestic and overseas markets during the third quarter. We
also announced a newsprint price increase for some overseas markets during
October 2000. Our shipments increased 7% compared to the same period last year.
Newsprint market



                                       13
<PAGE>   14

                      BOWATER INCORPORATED AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


conditions continued to be strong in the third quarter of 2000. Total United
States demand and consumption of newsprint increased compared to the same
quarter last year. Newspaper advertising linage also increased over 1999. Both
North American mill inventories and United States customer inventories of
newsprint decreased at the end of September 2000, compared to the end of
September 1999.

Coated Groundwood Bowater's average transaction price for coated groundwood
paper in the third quarter of 2000 increased 19% compared to the third quarter
of 1999. Our coated groundwood shipments were slightly lower, comparing the same
periods, due primarily to the sale of GNP in August, but partially offset by
increasing shipments from our Benton Harbor coating facility, acquired in July
1999. End use markets continued to show strength, with magazine advertising
pages and catalog mailings (measured by standard A mail weight) increasing over
the third quarter of 1999. Inventories at United States coated groundwood mills
at the end of September 2000 were higher than the year ago period, although
remaining at low to moderate levels.

Market Pulp Bowater's average transaction price for market pulp in the third
quarter of 2000 was 31% higher than in the third quarter of 1999 and 4% higher
than in the second quarter of 2000. We implemented a price increase of $30 per
metric ton, effective July 2000. Our market pulp shipments were 3% higher than
in the year ago period. Our market pulp inventories, at a 15 day supply, were 9%
lower compared to the end of the third quarter of 1999. NORSCAN (United States,
Canada, Finland, Norway and Sweden) shipments were slightly lower than the year
ago period. NORSCAN producer inventories increased during the quarter to 1.37
million metric tons, but were 49,000 metric tons below year ago levels. In
October 2000, Bowater announced plans to reduce its market pulp production by
25,000 metric tons during the fourth quarter of 2000.

Lumber Bowater's average transaction price for lumber products in the third
quarter of 2000 declined 26% compared to the third quarter of 1999. Prices
continued to decline from their peak in the third quarter of 1999. Shipments
increased 9% over the same period in 1999. Housing starts on a seasonally
adjusted rate were down 8% in August 2000 compared with August 1999.

Timber Bowater's average transaction price for timber increased 3% from third
quarter 1999 levels. Our shipments of timber products were down 37% in the third
quarter compared to the same period in 1999. The decline in sales volume is
mainly attributable to the sale of timberlands in the U.S. Southeast and the
sale of timberlands associated with GNP in Maine. Timber markets weakened in the
Southeast during the third quarter as a result of downtime taken by end users.

                             DIVISIONAL PERFORMANCE

For the third quarter of 1999, the net sales and operating income (loss) for the
GNP mill and woodlands operations are included in the Newsprint or Forest
Products Divisions, depending upon the product. Bowater completed the sale of
GNP in August 1999.

NET SALES BY DIVISION
------------------------------------------------------------
                                      THREE MONTHS ENDED
                                        SEPTEMBER 30,
                                   -------------------------
(In millions)                         2000         1999
------------------------------------------------------------
DIVISION: (1)
Newsprint                             $ 456.9       $ 363.9
Coated Paper                            149.6         114.4
Forest Products                         107.3         116.4
Corporate & eliminations                (85.8)        (83.7)
                                   -------------------------
    Total net sales                   $ 628.0       $ 511.0
------------------------------------------------------------

OPERATING INCOME (LOSS) BY DIVISION
------------------------------------------------------------
                                     THREE MONTHS ENDED
                                        SEPTEMBER 30,
                                  --------------------------
(In millions)                        2000         1999
------------------------------------------------------------
DIVISION: (1)
Newsprint                             $  94.4        $(0.5)
Coated Paper                             39.4         10.3
Forest Products                           0.6         10.6
Special items                             0.1        (55.3)
Corporate & eliminations                (15.9)       (17.3)
                                  --------------------------
    Total operating income (loss)     $ 118.6       $(52.2)
------------------------------------------------------------

(1) Financial results for the production and sale of market pulp are included in
    the Newsprint Division or the Coated Paper Division, depending upon the
    product. The Pulp Division is responsible for the marketing and distribution
    of the product and its administrative expenses are included in "Corporate &
    eliminations."

Newsprint Division: Net sales for the Division increased 26%, from $363.9
million for the third quarter of 1999 to $456.9 million for the third quarter



                                       14
<PAGE>   15

                      BOWATER INCORPORATED AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


of 2000. This increase is primarily the result of higher average transaction
prices for newsprint and market pulp and the inclusion of Newsprint South,
Inc.(Grenada operations), purchased in August 2000. This increase was partially
offset by the sale of GNP in August 1999. See the previous discussion of product
line results.

    Operating income for the third quarter of 2000 increased $94.9 million
compared with an operating loss of $0.5 million for the third quarter of 1999.
Higher prices for newsprint and market pulp account for the majority of this
increase. Operating costs for the division decreased due to less maintenance and
market-related downtime, partially offset by higher prices for recycled paper.

Coated Paper Division: Net sales for the Division increased $35.2 million, from
$114.4 million for the third quarter of 1999 to $149.6 million for the third
quarter of 2000, due to higher average transaction prices for newsprint, market
pulp and coated groundwood paper. The inclusion of the Benton Harbor coating
facility, purchased in July 1999, also contributed to this increase. See the
previous discussion of product line results.

    Operating income increased $29.1 million from $10.3 million for the third
quarter of 1999 to $39.4 million for the third quarter of 2000. This increase
was primarily the result of higher prices for market pulp and coated groundwood
paper. Operating costs for the division were slightly lower than the third
quarter of 1999.

    In November 2000, Bowater announced plans to grow its coated paper product
line. This is being accomplished by converting the newsprint machine at our
Catawba facility to lightweight coated paper. This project will remove
approximately 260,000 short tons of newsprint and replace it with 330,000 short
tons of coated paper, which has significantly higher margins than newsprint. The
project is scheduled for completion in mid-2002, and the new coated paper
production will be introduced into the market in stages by the end of 2004,
depending on market conditions. We are also constructing two additional Nuway
converting plants, one in the mid-South region and one in the mid-Atlantic
region, which are expected to be completed by the end of 2002. These plants will
produce approximately 200,000 short tons of coated paper, converting
approximately 160,000 short tons of our newsprint to higher margin products. The
capital spending will be approximately $182 million over the next two years.

Forest Products Division: Net sales for the Division decreased 8%, from $116.4
million for the third quarter of 1999 to $107.3 million for the third quarter of
2000, primarily the result of lower lumber transaction prices and lower timber
shipments resulting from the sale of timberlands in 1999. See the previous
discussion of product line results.

    Operating income for the Division decreased $10.0 million for the third
quarter of 2000 compared to the third quarter of 1999, due to lower lumber
transaction prices and lower timber shipments. Operating costs for the division
were higher due to a casualty loss for pine-beetle damage to woodlands, offset
partially by lower fertilization and site preparation expenses during the third
quarter of 2000.

    Due to the unusually warm and dry weather conditions, the risk of additional
pine-beetle damage continues to exist. However, the Division is unable to
determine if this will have a material impact on its operation.

Special Items: During the third quarter of 2000, Bowater sold fixed assets
resulting in a pre-tax gain of $0.1 million. During the third quarter of 1999,
we completed the sale of GNP, resulting in a pre-tax loss of $55.3 million.

Corporate & Eliminations: The elimination of intersegment sales increased $2.1
million, comparing the third quarter of 2000 to the third quarter of 1999.
Comparing the third quarter of 2000 to the third quarter of 1999, corporate
expenses decreased $1.4 million.

INTEREST AND OTHER INCOME AND EXPENSES

Interest expense for the third quarter 2000 increased $4.8 million over the same
period in 1999. This increase was attributable to higher borrowing on our credit
facility due to the acquisition of the Grenada operations in August 2000.
Comparing the same periods, interest income increased $2.1 million due to
interest on notes received in consideration for timberland sales in the fourth
quarter of 1999.

     In the third quarter of 2000, Bowater recorded a foreign exchange loss of
$2.2 million versus a foreign exchange gain of $3.3 million during the third
quarter of 1999. The majority of our exchange gain(loss) amounts result from the
effect of the change in currency exchange rates during the respective quarters
on our Canadian dollar hedging program.

    Bowater's effective tax rate for the third quarter of 2000 was 37.8% on
pre-tax income and for the same



                                       15
<PAGE>   16

                      BOWATER INCORPORATED AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


period in 1999, 30.4% on a pre-tax loss. These rates reflect the
non-deductibility of the amortization of goodwill.

                  NINE MONTHS ENDED SEPTEMBER 30, 2000, VERSUS
                               SEPTEMBER 30, 1999

For the first nine months of 2000, Bowater had operating income of $264.3
million compared to operating income of $170.5 million for the first nine months
of 1999. During the first nine months of 2000, we recognized a pre-tax gain of
$3.4 million on the sale of fixed assets. In the first nine months of 1999, we
recorded a pre-tax impairment charge of $92.0 million, reducing the book value
of assets at our GNP operations. Also included in the operating income for the
first nine months of 1999 was a pre-tax gain of $253.7 million for the sale of
timberlands and a pre-tax loss on sale of GNP of $55.3 million. Excluding the
impairment charge and the net gain on sale of assets, operating income was
$196.8 million higher than the first nine months of 1999. Higher transaction
prices for all of our major products accounted for the majority of this
increase. This increase was partially offset by higher operating costs due to
higher prices for recycled paper and higher Canadian dollar exchange rates.

                            PRODUCT LINE INFORMATION

NET SALES BY PRODUCT
--------------------------------------------------------------
                                        NINE MONTHS ENDED
                                          SEPTEMBER 30,
                                     -------------------------

(Unaudited, in millions)                2000         1999
--------------------------------------------------------------

Net sales:
   Newsprint                          $ 1,012.1      $ 956.2
   Coated groundwood                      246.7        235.1
   Directory paper                          -           89.4
   Market pulp                            434.0        315.3
   Uncoated groundwood specialties         79.2         44.5
   Lumber, timber and other wood
              products                    328.0        378.9
   Elimination of intersegment sales     (257.6)      (270.6)
   Distribution costs                    (127.2)      (139.1)
                                     -------------------------
              Total net sales          $ 1,715.2    $1,609.7
--------------------------------------------------------------

Newsprint Bowater's average transaction price for newsprint increased 8% for the
first nine months of 2000 compared to the same period last year. We implemented
price increases for our domestic and export markets during the first nine months
of 2000. We also announced a newsprint price increase for some overseas markets
during October 2000. Our shipments declined slightly. Total United States demand
and consumption of newsprint increased in the first nine months of 2000 when
compared to the same period of 1999. Both North American mill inventories and
customer inventories of newsprint declined, comparing the end of September 2000
levels to the levels at the end of September 1999.

Coated Groundwood Bowater's average transaction price for coated groundwood
paper for the first nine months of 2000 increased 15% compared to the first nine
months of 1999. We implemented a price increase for our coated groundwood papers
in April 2000. Our shipments were 9% lower compared to shipments in the same
period a year ago. The lower shipments were due to the sale of GNP in August
1999, partially offset by additional tonnage from the acquisition of the Benton
Harbor coating facility in July 1999. For the industry, United States coated
groundwood paper shipments were higher compared to the first nine months of
1999. Coated groundwood paper inventory held by the United States mills at the
end of September 2000 increased when compared to the end of September 1999.

Market Pulp Bowater's average transaction price for market pulp for the first
nine months of 2000 increased 34% compared to the first nine months of 1999. We
implemented a $30 per metric ton price increase in July, the third price
increase of 2000. Our shipments of market pulp increased 3% over the year ago
period. NORSCAN (United States, Canada, Finland, Norway and Sweden) market pulp
shipments increased compared to the first nine months of 1999. NORSCAN producer
pulp inventories ended the third quarter at 1.37 million metric tons, or a 24
day supply. In October 2000, Bowater announced plans to reduce its market pulp
production by 25,000 metric tons during the fourth quarter of 2000.

Lumber, Bowater's average transaction price for lumber for the first nine months
of 2000 decreased 14% compared to the same period in 1999. Our shipments of
lumber were down 2% compared to the year-ago period as a result of the sale of a
sawmill in March 1999, offset by higher shipments from the three remaining
sawmills.



                                       16
<PAGE>   17

                      BOWATER INCORPORATED AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Timber Bowater's average transaction price for timber decreased 4% from the
year-ago period, primarily the result of a change in mix as a result of
timberland sales in Maine. Our shipments of timber decreased 27% in the first
nine months of 2000 compared to the first nine months of 1999. The decline in
sales volume is attributable to the sale of timberlands in the U.S. Southeast
and the sale of timberlands associated with GNP in Maine. During 1999, we sold
over 2 million acres of timberlands.

                             DIVISIONAL PERFORMANCE

NET SALES BY DIVISION:
----------------------------------------------------------
                                    NINE MONTHS ENDED
                                      SEPTEMBER 30,
                                 -------------------------
(In millions of US dollars)        2000          1999
----------------------------------------------------------
DIVISION: (1)
Newsprint                         $ 1,225.1      $1,163.3
Coated Paper                          420.1         336.3
Forest Products                       327.6         378.4
Corporate & eliminations             (257.6)       (268.3)
                                 -------------------------
    Total net sales               $ 1,715.2      $1,609.7
----------------------------------------------------------

OPERATING INCOME/(LOSS) BY DIVISION:
----------------------------------------------------------
                                    NINE MONTHS ENDED
                                      SEPTEMBER 30,
                                 -------------------------
(In millions of US dollars)         2000         1999
----------------------------------------------------------
DIVISION: (1)
Newsprint                           $ 196.6       $  38.0
Coated Paper                          101.7          42.4
Forest Products                        18.4          32.4
Special items                           3.4         106.4
Corporate & eliminations              (55.8)        (48.7)
                                 -------------------------
    Total operating income          $ 264.3       $ 170.5
----------------------------------------------------------


(1) Financial results for the production and sale of market pulp are included in
    the Newsprint Division or the Coated Paper Division, depending upon the
    product. The Pulp Division is responsible for the marketing and distribution
    of the product and its administrative expense are included in "Corporate &
    eliminations."

Newsprint Division: Net sales for the Division increased $61.8 million, from
$1,163.3 million for the first nine months of 1999 to $1,225.1 million for the
first nine months of 2000. This increase is due to higher average transaction
prices for newsprint, market pulp and uncoated groundwood specialties and the
inclusion of Newsprint South, Inc. The sale of GNP in August 1999 partially
offset this increase. See the previous discussion of product line results.

    Operating income increased $158.6 million, from $38.0 million for the first
nine months of 1999 to $196.6 million for the first nine months of 2000. This
increase was due to higher transaction prices for newsprint, market pulp and
uncoated groundwood specialties. Operating costs for the division increased due
to higher prices for recycle paper and higher Canadian exchange rates, mainly
offset by lower costs resulting from the sale of GNP, a high cost mill.

Coated Paper Division: Net sales for the Division increased $83.8 million, from
$336.3 million for the first nine months of 1999 to $420.1 million for the first
nine months of 2000, due to higher average prices for newsprint, market pulp and
coated groundwood paper, and increased shipments due to the acquisition of the
Benton Harbor coating facility in July 1999. See the previous discussion of
product line results.

    Operating income for the Division increased $59.3 million, from $42.4
million for the first nine months of 1999 to $101.7 million for the first nine
months of 2000. This increase was primarily the result of higher transaction
prices for newsprint, market pulp and coated groundwood paper, partially offset
by higher operating costs due to the increased production of specialty grades.

Forest Products Division: Net sales for the Division decreased 13%, from $378.4
million for the first nine months of 1999 to $327.6 million for first nine
months of 2000, primarily a result of lower lumber transaction prices and lower
timber shipments resulting from the sale of timberlands in 1999. See the
previous discussion of product line results.

    Operating income for the Division decreased $14.0 million for the first nine
months of 2000 compared to the first nine months of 1999, primarily the result
of lower lumber prices and shipments and lower timber shipments. Operating costs
for the division increased due to a casualty loss for pine-beetle damage to
woodlands.

    Due to the unusually warm and dry weather conditions, the risk of additional
pine-beetle damage continues to exist. However, the Division is unable to
determine if this will have a material impact on its operation.


                                       17
<PAGE>   18

                      BOWATER INCORPORATED AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Special Items: During the first nine months of 2000, Bowater sold fixed assets
resulting in a pre-tax gain of $3.4 million. During the first nine months of
1999, we sold approximately 1.6 million acres of timberland in the state of
Maine and the Pinkham Lumber Company for a pre-tax gain of $253.7 million. We
also recognized an impairment charge of $92.0 million in the first nine months
of 1999, reducing the book value of our assets at GNP. In August 1999, we
completed the sale of GNP, resulting in a pre-tax loss of $55.3 million.

Corporate & Eliminations: The elimination of intersegment sales decreased $10.7
million, comparing the first nine months of 2000 to the first nine months of
1999. Decreased sales volume between the divisions account for the majority of
this decrease. Comparing the first nine months of 2000 to the first nine months
of 1999, expenses increased $7.1 million due to higher benefit costs and
professional fees.

                     INTEREST AND OTHER INCOME AND EXPENSES

Interest expense for the first nine months of 2000 increased $4.5 million due to
a higher average debt balance in 2000 compared to the same period last year.
Comparing the same periods, interest income increased $8.0 million due to
interest on notes received in consideration for timberland sales in the fourth
quarter of 1999. Also in the first nine months of 2000, Bowater recorded a $7.5
million foreign exchange loss compared to a $32.5 million gain in the prior year
period. The majority of our exchange gain (loss) amounts result from the effect
of the change in currency exchange rates during the respective periods on our
Canadian dollar hedging program.

     Bowater's effective tax rate for the first nine months of 2000 was 39.0%
versus 46.4% in the prior year period. The lower tax rate in 2000 is due to the
effect of the non-deductibility of the amortization of goodwill on a higher
level of pretax income.

                         LIQUIDITY AND CAPITAL RESOURCES

Bowater's cash and cash equivalents decreased to $21.8 million at September 30,
2000, from $24.7 million at December 31, 1999. We generated cash from operations
of $273.5 million, used $580.9 million of cash for investing activities, and
generated $304.5 million of cash from financing activities. Aside from cash flow
from operations, capital expenditures, and changes in investments and short-term
borrowings, we had other significant cash transactions since December 31, 1999.
These transactions include: net cash of $379.6 million for the purchase of the
Grenada operations; net payments on our long-term borrowings of $30.5 million
and purchases of our common stock requiring cash of $103.7 million.

CASH FROM OPERATING ACTIVITIES:

During the first nine months of 2000, Bowater's operations generated $273.5
million of cash compared to $105.0 million of cash during the first nine months
of 1999, an increase of $168.5 million. Higher operating income (excluding net
gain on sale of assets and impairment of asset charge) and lower working capital
needs accounted for the increase in 2000. The 2000 operating cash flows include
the activity of the newly acquired Grenada operations for the period August 1,
2000, to September 30, 2000.

CASH FROM INVESTING ACTIVITIES:

Cash used for investing activities in the first nine months of 2000 totaled
$580.9 million, compared with proceeds of $285.6 million during the first nine
months of 1999. In August 2000, Bowater acquired the Grenada operations
requiring a net cash outlay of $379.6 million.

    In the first nine months of 2000, capital expenditures were $33.9 million
higher than the previous year due to the construction of a recovery boiler at
our Thunder Bay mill and the purchase of equipment previously leased at our
Gatineau mill. We expect our total capital expenditures for 2000 to approximate
$250 million.

     Bowater anticipates spending approximately $150 to $200 million over the
next five years to comply with the new U.S. air quality standards and effluent
guidelines, with the majority of this capital expected to be spent at our
Catawba facility. In July 2000, the Board of Directors approved the expanded
project at Catawba (described in our Annual Report on Form 10K for the year
ended December 31, 1999) to include additional capital for the modernization of
a major portion of its kraft mill. This expanded project will allow the mill to
comply with the new regulations, as well as improve its overall operating
efficiencies. The cost estimate for the expanded project is $175 million and is
included in the above estimate of approximately $150 to $200 million. Spending
for this will take place during the period 2001 to 2003.

    In November 2000, Bowater announced plans to convert the newsprint
production at its Catawba



                                       18
<PAGE>   19

                      BOWATER INCORPORATED AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


facility to coated groundwood papers and to construct two additional Nuway
sites, which will convert newsprint to coated groundwood grades. Capital
spending for these projects will be approximately $182 million over the next two
years.

     In the first nine months of 2000, Bowater paid $20.2 million on the
maturity of Canadian dollar hedging contracts versus $29.3 million in the first
nine months of last year. We also received net proceeds from the maturity of
marketable securities of $1.7 million in the first nine months of 2000, compared
with net proceeds of $0.5 million in 1999.

      During the first nine months of 1999, Bowater completed the sale of GNP.
We received net cash proceeds of $108.0 million and a note receivable of $10.0
million, and we assumed certain liabilities. In addition to the note receivable,
Bowater guaranteed payment for certain operating costs to one of GNP's
suppliers. At the request of the buyer and other creditors, the note payment was
deferred from August to December 2000. The buyer's ability to fulfill its
obligation on the note and the guarantee to its supplier will be impacted by the
buyer's ability to refinance its short-term credit facility.

   Also during 1999, we completed the sale of 1.6 million acres of Maine
timberlands resulting in net cash proceeds of $356.0 million. Our Forest
Products Division periodically reviews timberland holdings and sells timberlands
considered to be non-strategic.

CASH FROM FINANCING ACTIVITIES:

Cash generated from financing activities was $304.5 million for the first nine
months of 2000 compared with $380.3 million used during the first nine months of
1999. During the first nine months of 2000, Bowater borrowed $473.6 million (net
of repayments of $276.3 million) from its short-term credit facilities. In July
2000, we increased the amount of our 364-day credit facility from $150 million
to $750 million, while retaining our $350 million, five-year facility. In the
first nine months of 1999, we made net payments on our short-term credit
facilities of $210.0 million. Also in the first nine months of 2000, we
repurchased a portion of our 9.25% Debentures due 2002 for $20.8 million. Other
payments on our long-term borrowings were $10.1 million for a total of $30.9
million.

   In the first nine months of 1999, we made payments of $4.3 million on our
long-term borrowings, paid $65.9 million for the redemption of our 7.50%
Convertible Unsecured Subordinated Debentures, and paid $26.4 million for the
redemption of our remaining 8.40% Series C Preferred Stock. In addition to the
cash payment for the redemption of the convertible debentures, Bowater Canada
Inc. issued 1.4 million exchangeable shares. Also during the third quarter of
1999, we received cash proceeds of $32.3 million (before fees and expenses) from
revenue bonds issued by the Industrial Development Board of the County of
McMinn, Tennessee, in conjunction with the modernization of its Calhoun,
Tennessee, newsprint facility.

     Cash dividends paid in the first nine months of 2000 decreased $4.4 million
from the prior year period primarily due to lower dividend payments to the
minority shareholder of Calhoun Newsprint Company.

    During 1999, the Board of Directors authorized a new stock repurchase
program allowing us to buy back up to 5.5 million shares of our outstanding
common stock. During the first nine months of 2000, we purchased 2.1 million
shares at a cost of $103.7 million. Since the beginning of the program, we
purchased 3.2 million shares at a total cost of $155.5 million. In the first
nine months of 1999, we purchased 1.8 million shares at a cost of $75.3 million.

    We continually consider various options for the use of our cash, including
internal capital investments, share repurchases, investments to grow our
businesses and additional debt reductions.

                                  ACQUISITIONS

In August 2000, Bowater completed the acquisition of the Newsprint South, Inc.
paper mill, located in Grenada, Mississippi, for a cash purchase price of $384.0
million and the assumption of $8.9 million in debt. The mill has an annual
production capacity of approximately 250,000 metric tons of newsprint. Built in
1989, the mill has one of the lowest operating costs of any newsprint mill in
the United States. We accounted for the acquisition under the purchase method of
accounting.

    In October 2000, Bowater announced that it signed a preliminary Letter of
Intent with Sepoong Corporation and its major creditor, Chohung Bank, to acquire
the Sepoong paper mill located in Kunsan, South Korea, for $201.0 million. The
mill has approximately 265,000 metric tons of recycled newsprint capacity. The
acquisition is subject to the negotiation of a definitive agreement, the
approval of creditors and shareholders of Sepoong, due diligence and regulatory
approval.


                                       19
<PAGE>   20

                      BOWATER INCORPORATED AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


                              ACCOUNTING STANDARDS

    In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," as amended (the "Standard"). This Standard requires a
public company to recognize all derivatives as either assets or liabilities in
the Statement of Financial Position and measure those instruments at fair value.
Bowater is required to adopt this Standard on January 1, 2001. Our preliminary
assessment is that the adoption of the Standard will allow us to utilize hedge
accounting treatment on our Canadian dollar forward contracts. This will reduce
the amount of exchange rate volatility in our Statement of Operations. During
the fourth quarter of 2000, we will be finalizing our analysis and documentation
related to the adoption of the Standard.
    In addition, Bowater adopted the Securities and Exchange Commission's Staff
Accounting Bulletin No. 101 (the SAB) regarding revenue recognition on October
1, 2000. Upon adoption of the SAB, there was no impact to our results of
operations and financial condition.

ITEM 3. MARKET RISK

Bowater's market risk disclosure included in its 1999 Form 10-K, Part II, Item
7A, is still applicable as of September 30, 2000. We have updated the disclosure
concerning our Canadian dollar forward and range forward contracts, which is
included in Footnote 12 in this Form 10-Q.



                                       20
<PAGE>   21

                      BOWATER INCORPORATED AND SUBSIDIARIES

                                     PART II

                                OTHER INFORMATION

Item 1.  Legal Proceedings

         Bowater is involved in various legal proceedings relating to contracts,
commercial disputes, taxes, environmental issues, employment and workers'
compensation claims and other matters. Bowater believes that the ultimate
disposition of these matters will not have a material adverse effect on its
operations or financial condition taken as a whole.

         The Antitrust Division of the United States Department of Justice has
informed Bowater that it is conducting a review of possible anti-competitive
practices in the North American newsprint industry. Bowater is aware that the
Division has served grand jury subpoenas on employees of various newsprint
manufacturers. Certain present and former employees of Bowater and certain
former employees of Avenor Inc., which was acquired by Bowater in 1998, have
appeared before the grand jury. Bowater is not aware of the identity of any
targets of the review, nor has Bowater been advised that it or any of its
present or former employees are a target of the review.

         Item 6.  Exhibits and Reports on Form 8-K.

          (a)  Exhibits (numbered in accordance with Item 601 of Regulation
               S-K):

         Exhibit No.    Description
         -----------    -----------
               10.1     Amendment No. 2 dated as of April 10, 2000, to the
                        Five-Year Credit Agreement dated as of June 24, 1998,
                        between Bowater Incorporated, The Chase Manhattan Bank,
                        as Administrative Agent, and the lenders signatory
                        thereto.

               10.2     Amendment No. 1 dated as of April 10, 2000, to the
                        Amended and Restated 364-Day Credit Agreement dated as
                        of June 23, 1999, between Bowater Incorporated, The
                        Chase Manhattan Bank, as Administrative Agent, and the
                        lenders signatory thereto.

               10.3     Second Amended and Restated 364-Day Credit Agreement
                        dated as of June 21, 2000, to the Amended and Restated
                        364-Day Credit Agreement dated as of June 23, 1999,
                        between Bowater Incorporated, The Chase Manhattan Bank,
                        as Administrative Agent, and the lenders signatory
                        thereto.

               10.4     Amendment No. 1 dated as of July 31, 2000, to the Second
                        Amended and Restated 364-Day Credit Agreement dated as
                        of June 21, 2000, between Bowater Incorporated, The
                        Chase Manhattan Bank, as Administrative Agent, and the
                        lenders signatory thereto.

               10.5     Amended and Restated Change in Control Agreement
                        executed as of June 9, 2000, by and between Bowater
                        Incorporated and each of Anthony H. Barash, James H.
                        Dorton, E. Patrick Duffy, Arthur D. Fuller, Jerry R.
                        Gilmore, Richard K. Hamilton, William G. Harvey, Steven
                        G. Lanzl, David G. Maffucci, Robert A. Moran, Arnold M.
                        Nemirow, R. Donald Newman, Michael F. Nocito, Wendy C.
                        Shiba, David J. Steuart and James T. Wright.

               10.6     First Amendment to the Bowater Incorporated Retirement
                        Plan for Outside Directors, executed on September 13,
                        2000.

               27.1     Financial Data Schedule (electronic filing only).

         (b)      Reports on Form 8-K:

                  None.

                                       21
<PAGE>   22

                      BOWATER INCORPORATED AND SUBSIDIARIES

                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                               BOWATER INCORPORATED

                                               By  /s/  David G. Maffucci
                                                   ----------------------
                                                   David G. Maffucci
                                                   Senior Vice President and
                                                   Chief Financial Officer



                                               By  /s/  Michael F. Nocito
                                                   ----------------------
                                                   Michael F. Nocito
                                                   Vice President and Controller





Dated:   November 14, 2000



                                       22
<PAGE>   23

                                INDEX TO EXHIBITS



         Exhibit No.    Description
         -----------    -----------

             10.1       Amendment No. 2 dated as of April 10, 2000, to the
                        Five-Year Credit Agreement dated as of June 24, 1998,
                        between Bowater Incorporated, The Chase Manhattan Bank,
                        as Administrative Agent, and the lenders signatory
                        thereto.

             10.2       Amendment No. 1 dated as of April 10, 2000, to the
                        Amended and Restated 364-Day Credit Agreement dated as
                        of June 23, 1999, between Bowater Incorporated, The
                        Chase Manhattan Bank, as Administrative Agent, and the
                        lenders signatory thereto.

             10.3       Second Amended and Restated 364-Day Credit Agreement
                        dated as of June 21, 2000, to the Amended and Restated
                        364-Day Credit Agreement dated as of June 23, 1999,
                        between Bowater Incorporated, The Chase Manhattan Bank,
                        as Administrative Agent, and the lenders signatory
                        thereto.

             10.4       Amendment No. 1 dated as of July 31, 2000, to the Second
                        Amended and Restated 364-Day Credit Agreement dated as
                        of June 21, 2000, between Bowater Incorporated, The
                        Chase Manhattan Bank, as Administrative Agent, and the
                        lenders signatory thereto.

             10.5       Amended and Restated Change in Control Agreement
                        executed as of June 9, 2000, by and between Bowater
                        Incorporated and each of Anthony H. Barash, James H.
                        Dorton, E. Patrick Duffy, Arthur D. Fuller, Jerry R.
                        Gilmore, Richard K. Hamilton, William G. Harvey, Steven
                        G. Lanzl, David G. Maffucci, Robert A. Moran, Arnold M.
                        Nemirow, R. Donald Newman, Michael F. Nocito, Wendy C.
                        Shiba, David J. Steuart and James T. Wright.

             10.6       First Amendment to the Bowater Incorporated Retirement
                        Plan for Outside Directors, executed on September 13,
                        2000.

             27.1       Financial Data Schedule (electronic filing only).


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>g65151ex10-1.txt
<DESCRIPTION>AMENDMENT #2/5-YEAR CREDIT AGREEMENT
<TEXT>

<PAGE>   1

                                                                    EXHIBIT 10.1

                                                                  CONFORMED COPY

                                 AMENDMENT NO. 2

                  AMENDMENT NO. 2 dated as of April 10, 2000 (this "Amendment"),
to the Five-Year Credit Agreement dated as of June 24, 1998 (as amended,
modified and in effect on the date hereof, the "Credit Agreement"), among
BOWATER INCORPORATED (the "Company"), the Subsidiary Borrowers from time to time
party thereto, the Banks and THE CHASE MANHATTAN BANK, as Administrative Agent
(the "Administrative Agent").

                  The Company desires to modify certain provisions of the Credit
Agreement, and the Banks are willing to make such modifications on the terms and
conditions of this Amendment below. Accordingly, in consideration of the
foregoing premises and the mutual agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                  Section 1. Definitions. Except as otherwise defined in this
Amendment, terms defined in the Credit Agreement are used herein as defined
therein.

                  Section 2. Amendments. Subject to the execution and delivery
hereof by each Borrower, the Banks constituting the Majority Banks and the
Administrative Agent, with effect as of the date hereof, the parties hereby
agree that the Credit Agreement shall be amended as follows:

                  (a) The following definition shall be added to Section 1.01 of
         the Credit Agreement in the appropriate alphabetical location:

                           "Ponderay" shall mean Ponderay Newsprint Company, a
                  partnership existing under the laws of the State of
                  Washington.

                  (b) Section 9.09 of the Credit Agreement shall be amended by
         (i) inserting a comma in lieu of the word "and" immediately preceding
         clause (y) therein, and (ii) inserting the following new clause (z)
         immediately after said clause (y):

                           "and (z) the Company and its Subsidiaries may enter
                  into any of the transactions described in this Section 9.09
                  with Ponderay, so long as, in the case of any Guarantee by the
                  Company of the Indebtedness of Ponderay, the ratio, expressed
                  as a percentage, of such Indebtedness that is Guaranteed by
                  the Company to the aggregate outstanding principal amount of
                  all Indebtedness of Ponderay shall not exceed the ownership
                  percentage of the Company in Ponderay held through the
                  Company's Wholly-Owned Subsidiary, Lake Superior Forest
                  Products Inc., a corporation existing under the laws of the
                  State of Delaware".

                  Section 3. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and effect, and each
reference to the Credit Agreement in the


<PAGE>   2
                                      -2-


Credit Agreement, as amended hereby, shall be a reference to the Credit
Agreement as amended hereby and as the same may be further amended, supplemented
and otherwise modified and in effect from time to time. This Amendment may be
executed in any number of counterparts, each of which shall be identical and all
of which, when taken together, shall constitute one and the same instrument.
This Amendment shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. This Amendment shall be
governed by, and construed in accordance with, the law of the State of New York.

<PAGE>   3
                                      -3-


                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the day and year first above
written.

                                     COMPANY

                                      BOWATER INCORPORATED


Witness:   /s/ Duane A. Owens         By: /s/ William G. Harvey
           ------------------             --------------------------------------
   Name:       Duane A. Owens             Name: William G. Harvey
                                          Title: Vice President and Treasurer


                                      THE CHASE MANHATTAN BANK,
                                        individually and as Administrative Agent



                                      By: /s/ Gary L. Spevack
                                          --------------------------------------
                                          Name: Gary L. Spevack
                                          Title: Vice President

                                      THE BANK OF NEW YORK


                                      By: /s/ David C. Siegel
                                          --------------------------------------
                                          Name: David C. Siegel
                                          Title: Vice President

                                      BANK OF AMERICA, N.A.


                                      By: /s/ Michael W. Colon
                                          --------------------------------------
                                          Name: Michael W. Colon
                                          Title: Vice President

                                      ABN AMRO BANK


                                      By: /s/ Robert W. Casey, Jr.
                                          --------------------------------------
                                          Name: Robert W. Casey, Jr.
                                          Title: Group Vice President

                                      By: /s/ Christopher M. Plumb
                                          --------------------------------------
                                          Name: Christopher M. Plumb
                                          Title: Vice President


<PAGE>   4
                                      -4-


                                       FIRST UNION NATIONAL BANK


                                        By: /s/ J. Andrew Phelps
                                            ------------------------------------
                                            Name: J. Andrew Phelps
                                            Title: Vice President

                                        MORGAN GUARANTY TRUST
                                          COMPANY OF NEW YORK


                                        By: /s/ Dennis Wilczek
                                            ------------------------------------
                                            Name: Dennis Wilczek
                                            Title: Associate

                                        NATIONAL BANK OF CANADA

                                        By: /s/ Agostino (Auggie) Marchetti
                                            ------------------------------------
                                            Name: Agostino (Auggie) Marchetti
                                            Title:   Assistant Vice President
                                                     Cross Border Finance Group

                                        By: /s/ Yvon LaPlante
                                            ------------------------------------
                                            Name:  Yvon LaPlante
                                            Title:  Vice President and Manager
                                                    Cross Border Finance Group


                                        WESTDEUTSCHE LANDESBANK
                                           GIROZENTRALE, NEW YORK BRANCH

                                        By: /s/ Lucie L. Guernsey
                                            ------------------------------------
                                            Name:  Lucie L. Guernsey
                                            Title:  Managing Director

                                        By: /s/ Walter T. Duffy III
                                            ------------------------------------
                                            Name:  Walter T. Duffy III
                                            Title:  Vice President

                                        TORONTO DOMINION (TEXAS), INC.


                                        By: /s/ Shelia M. Conley
                                            ------------------------------------
                                            Name:  Shelia M. Conley
                                            Title:    Vice President


<PAGE>   5
                                      -5-


                                           WACHOVIA BANK, N.A.


                                           By: /s/ Donald E. Sellers, Jr.
                                               ---------------------------------
                                               Name:  Donald E. Sellers, Jr.
                                               Title:  Vice President

                                           THE BANK OF NOVA SCOTIA


                                           By: /s/ William E. Zarrett
                                               ---------------------------------
                                               Name:  William E. Zarrett
                                               Title:  Managing Director

                                           SUNTRUST BANK, NASHVILLE, N.A.


                                           By: /s/ R. Michael Dunlap
                                               ---------------------------------
                                               Name:  R. Michael Dunlap
                                               Title:  Managing Director

                                           BANK OF MONTREAL


                                           By: /s/ Amy K. Dumser
                                               ---------------------------------
                                               Name:  Amy K. Dumser
                                               Title:  Managing Director

                                           UNION BANK OF CALIFORNIA, N.A.


                                           By: /s/ Henry G. Montgomery
                                               ---------------------------------
                                               Name:  Henry G. Montgomery
                                               Title:  Vice President



<PAGE>   6
                                      -6-


                                           DG BANK, DEUTSCHE
                                              GENOSSENSCHAFTSBANK, AG
                                              CAYMAN ISLANDS BRANCH

                                           By: /s/ J. W. Somers
                                               ---------------------------------
                                               Name:  J. W. Somers
                                               Title:  Senior Vice President

                                           By: /s/ Kurt A. Morris
                                               ---------------------------------
                                               Name:  Kurt A. Morris
                                               Title:  Vice President


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>g65151ex10-2.txt
<DESCRIPTION>AMENDMENT #1/AMENDED & RESTATED 364-DAY CREDIT
<TEXT>

<PAGE>   1

                                                                    EXHIBIT 10.2

                                                                  CONFORMED COPY
                                 AMENDMENT NO. 1

                  AMENDMENT NO. 1 dated as of April 10, 2000 (this "Amendment"),
to the Amended and Restated 364-Day Credit Agreement dated as of June 23, 1999
(as amended, modified and in effect on the date hereof, the "Credit Agreement"),
among BOWATER INCORPORATED (the "Company"), the Subsidiary Borrowers from time
to time party thereto, the Banks and THE CHASE MANHATTAN BANK, as Administrative
Agent (the "Administrative Agent").

                  The Company desires to modify certain provisions of the Credit
Agreement, and the Banks are willing to make such modifications on the terms and
conditions of this Amendment below. Accordingly, in consideration of the
foregoing premises and the mutual agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                  Section 1. Definitions. Except as otherwise defined in this
Amendment, terms defined in the Credit Agreement are used herein as defined
therein.

                  Section 2. Amendments. Subject to the execution and delivery
hereof by each Borrower, the Banks constituting the Majority Banks and the
Administrative Agent, with effect as of the date hereof, the parties hereby
agree that the Credit Agreement shall be amended as follows:

                  (a) The following definition shall be added to Section 1.01 of
         the Credit Agreement in the appropriate alphabetical location:

                           "Ponderay" shall mean Ponderay Newsprint Company, a
                  partnership existing under the laws of the State of
                  Washington.

                  (b) Section 9.09 of the Credit Agreement shall be amended by
         (i) inserting a comma in lieu of the word "and" immediately preceding
         clause (y) therein, and (ii) inserting the following new clause (z)
         immediately after said clause (y):

                           "and (z) the Company and its Subsidiaries may enter
                  into any of the transactions described in this Section 9.09
                  with Ponderay, so long as, in the case of any Guarantee by the
                  Company of the Indebtedness of Ponderay, the ratio, expressed
                  as a percentage, of such Indebtedness that is Guaranteed by
                  the Company to the aggregate outstanding principal amount of
                  all Indebtedness of Ponderay shall not exceed the ownership
                  percentage of the Company in Ponderay held through the
                  Company's Wholly-Owned Subsidiary, Lake Superior Forest
                  Products Inc., a corporation existing under the laws of the
                  State of Delaware".

                  Section 3. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and effect, and each
reference to the Credit Agreement in the Credit Agreement, as amended hereby,
shall be a reference to the Credit Agreement as amended


<PAGE>   2
                                      -2-


hereby and as the same may be further amended, supplemented and otherwise
modified and in effect from time to time. This Amendment may be executed in any
number of counterparts, each of which shall be identical and all of which, when
taken together, shall constitute one and the same instrument. This Amendment
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. This Amendment shall be governed by, and
construed in accordance with, the law of the State of New York.

<PAGE>   3
                                      -3-


                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the day and year first above
written.

                                     COMPANY

                                      BOWATER INCORPORATED


Witness:   /s/ Duane A. Owens         By: /s/ William G. Harvey
           ------------------             --------------------------------------
   Name:       Duane A. Owens             Name: William G. Harvey
                                          Title: Vice President and Treasurer


                                      THE CHASE MANHATTAN BANK,
                                        individually and as Administrative Agent



                                      By: /s/ Gary L. Spevack
                                          --------------------------------------
                                          Name: Gary L. Spevack
                                          Title: Vice President

                                      THE BANK OF NEW YORK


                                      By: /s/ David C. Siegel
                                          --------------------------------------
                                          Name: David C. Siegel
                                          Title: Vice President

                                      BANK OF AMERICA, N.A.


                                      By: /s/ Michael W. Colon
                                          --------------------------------------
                                          Name: Michael W. Colon
                                          Title: Vice President


                                      FIRST UNION NATIONAL BANK


                                       By: /s/ J. Andrew Phelps
                                           ------------------------------------
                                           Name: J. Andrew Phelps
                                           Title: Vice President


<PAGE>   4
                                      -4-


                                        MORGAN GUARANTY TRUST
                                          COMPANY OF NEW YORK


                                        By: /s/ Dennis Wilczek
                                            ------------------------------------
                                            Name: Dennis Wilczek
                                            Title: Associate


                                        WESTDEUTSCHE LANDESBANK
                                           GIROZENTRALE, NEW YORK BRANCH

                                        By: /s/ Lucie L. Guernsey
                                            ------------------------------------
                                            Name:  Lucie L. Guernsey
                                            Title:  Managing Director

                                        By: /s/ Walter T. Duffy III
                                            ------------------------------------
                                            Name:  Walter T. Duffy III
                                            Title:  Vice President

                                        TORONTO DOMINION (TEXAS), INC.


                                        By: /s/ Shelia M. Conley
                                            ------------------------------------
                                            Name:  Shelia M. Conley
                                            Title:  Vice President


                                        WACHOVIA BANK, N.A.


                                        By: /s/ Donald E. Sellers, Jr.
                                            ---------------------------------
                                            Name:  Donald E. Sellers, Jr.
                                            Title:  Vice President

                                        THE BANK OF NOVA SCOTIA


                                        By: /s/ William E. Zarrett
                                            ---------------------------------
                                            Name:  William E. Zarrett
                                            Title:  Managing Director


<PAGE>   5
                                      -5-


                                           SUNTRUST BANK, NASHVILLE, N.A.


                                           By: /s/ R. Michael Dunlap
                                               ---------------------------------
                                               Name:  R. Michael Dunlap
                                               Title:  Managing Director

                                           BANK OF MONTREAL


                                           By: /s/ Amy K. Dumser
                                               ---------------------------------
                                               Name:  Amy K. Dumser
                                               Title:  Managing Director


                                           DG BANK, DEUTSCHE
                                              GENOSSENSCHAFTSBANK, AG
                                              CAYMAN ISLANDS BRANCH

                                           By: /s/ J. W. Somers
                                               ---------------------------------
                                               Name:  J. W. Somers
                                               Title:  Senior Vice President

                                           By: /s/ Kurt A. Morris
                                               ---------------------------------
                                               Name:  Kurt A. Morris
                                               Title:  Vice President


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>g65151ex10-3.txt
<DESCRIPTION>2ND AMENDED & RESTATED 364-DAY CREDIT AGREEMENT
<TEXT>

<PAGE>   1

                                                                    EXHIBIT 10.3

                                                                  CONFORMED COPY


              SECOND AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT

                  SECOND AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT (this
"Agreement") dated as of June 21, 2000 between BOWATER INCORPORATED, a
corporation duly organized and validly existing under the laws of the State of
Delaware (the "Company"); each of the Subsidiaries of the Company from time to
time designated as "Subsidiary Borrowers" hereunder pursuant to Section 7.02(a)
of the Existing Credit Agreement as defined below (each, a "Subsidiary Borrower"
and, together with the Company, the "Borrowers"); each of the lenders that is a
signatory hereto identified under the caption "BANKS" on the signature pages
hereto or that, pursuant to Section 12.06(b) of the Existing Credit Agreement,
shall become a "Bank" hereunder (individually, a "Bank" and, collectively, the
"Banks"); and THE CHASE MANHATTAN BANK, as administrative agent for the Banks
(in such capacity, together with its successors in such capacity, the
"Administrative Agent").


                              W I T N E S S E T H:

                  WHEREAS, the Company, the Subsidiary Borrowers, the Banks, and
the Administrative Agent are party to an Amended and Restated 364-Day Credit
Agreement dated as of June 23, 1999 (as heretofore amended and modified by
Amendment No. 1 to said Credit Agreement dated as of April 10, 2000, the
"Existing Credit Agreement"), providing for the making of loans by the Banks to
the Borrowers in an aggregate original principal amount up to $150,000,000; and

                  WHEREAS, the parties hereto desire to amend in certain
respects and to restate in its entirety the Existing Credit Agreement;

                  NOW, THEREFORE, the parties hereto agree to amend the Existing
Credit Agreement as set forth in Section 2 hereof and to restate the Existing
Credit Agreement to read in its entirety as set forth in the Existing Credit
Agreement (which Existing Credit Agreement is incorporated herein by this
reference), as amended by the amendments set forth in Section 2 hereof:

                  Section 1. Definitions. Capitalized terms used but not
otherwise defined herein have the meanings given them in the Existing Credit
Agreement.

                  Section 2. Amendments. Subject to the satisfaction of the
conditions specified in Section 3 hereof, the Existing Credit Agreement shall be
amended as follows:

                  2.01. General. Each reference to the "Agreement" or to the
         "Existing Credit Agreement" and words of similar import in the Existing
         Credit Agreement, as amended and restated hereby, and in the promissory
         notes (provided for in Section 2.08(d) of the Existing Credit
         Agreement) shall be a reference to the Existing Credit Agreement as


<PAGE>   2
                                      -2-


         amended and restated hereby and as the same may be further amended,
         supplemented and otherwise modified and in effect from time to time.

                  2.02. Definitions. Section 1.01 of the Existing Credit
         Agreement shall be amended by adding and amending and restating the
         following definitions (to the extent already included in said Section
         1.01), as follows:

                           "Second Amendment and Restatement" shall mean the
                  Second Amended and Restated 364-Day Credit Agreement dated as
                  of June 21, 2000 between the Company, the Subsidiary
                  Borrowers, the Banks and the Administrative Agent.

                           "Commitment" shall mean, for each Bank, the
                  obligation of such Bank to make Syndicated Loans in an
                  aggregate amount at any one time outstanding up to but not
                  exceeding (a) in the case of a Bank that is a party to the
                  Second Amendment and Restatement on the date thereof, the
                  amount set opposite the name of such Bank on Schedule I hereto
                  under the caption "Commitment" or (b) in the case of any other
                  Bank, the aggregate amount of the Commitments of other Banks
                  acquired by it pursuant to Section 12.06 hereof (in each case,
                  as the same may be reduced from time to time pursuant to
                  Section 2.04 hereof or increased or reduced pursuant to said
                  Section 12.06(b)).

                           "Revolving Credit Termination Date" shall mean June
                  20, 2001, as such date may from time to time be extended as
                  provided in Section 2.10 of the Existing Credit Agreement.

                  2.03. Section 8.02. Section 8.02 is amended by (i) re-heading
         said Section 8.02 "Financial Conditions.", (ii) deleting the
         sub-heading "(a) Financial Statements." in clause (a) of said Section
         8.02 and (iii) deleting clause (b) of said Section 8.02 in its
         entirety.

                  Section 3. Conditions. The amendment and restatement of the
Existing Credit Agreement contemplated hereby shall become effective as of June
21, 2000 (the "Restatement Effective Date") upon the satisfaction prior to such
date of each of the following conditions to effectiveness (including, without
limitation, that each document to be received by the Administrative Agent shall
be in form and substance satisfactory to the Administrative Agent):

                  3.01. Execution. The Administrative Agent (or its counsel)
         shall have received from each party hereto either (a) a counterpart of
         this Agreement signed on behalf of such party or (b) written evidence
         satisfactory to the Administrative Agent (which may include telecopy
         transmission of a signed signature page of this Agreement) that such
         party has signed a counterpart of this Agreement.

                  3.02. Opinion. The Administrative Agent shall have received a
         favorable written opinion (addressed to the Administrative Agent and
         the Banks and dated the Restatement Effective Date) of Wendy C. Shiba,
         Esq., Vice President, Secretary and Assistant General Counsel of the
         Company, substantially in the form of Exhibit B to the Existing Credit


<PAGE>   3
                                      -3-


         Agreement (with appropriate modifications to reflect the amendment and
         restatement thereof contemplated hereby). The Company hereby requests
         such counsel to deliver such opinion.

                  3.03. Certificate as to Incumbency. The Administrative Agent
         shall have received a certificate of the Secretary or an Assistant
         Secretary of the Company in respect of each of the officers (a) who are
         authorized to sign this Agreement on the Company's behalf and (b) who
         will, until replaced by another officer or officers duly authorized for
         that purpose, act as its representative for the purposes of signing
         documents and giving notices and other communications in connection
         with this Agreement, the promissory notes and the transactions
         contemplated hereby.

                  3.04. Certificate of Authorized Officer. The Administrative
         Agent shall have received a certificate of a duly authorized financial
         officer of the Company, dated the Restatement Effective Date, stating
         that (a) no Default has occurred and is continuing as of such date, and
         (b) the representations and warranties contained in Section 8 of the
         Existing Credit Agreement, as amended and restated hereby, are true and
         complete on and as of such date with the same force and effect as if
         made on and as of such date (or, if any such representation or warranty
         is expressly stated to have been made as of a specific date, as of such
         specific date).

                  3.05. Fees and Expenses. The Administrative Agent shall have
         received all fees and other amounts due and payable on or prior to the
         Restatement Effective Date, including (i) for the account of the Banks,
         an up-front fee in an amount equal to 0.03% of each Bank's Commitment
         and (ii) to the extent invoiced, including reimbursement or payment of
         all out-of-pocket expenses required to be reimbursed or paid by the
         Company hereunder.

The Administrative Agent shall notify the Company and the Banks of the
occurrence of the Restatement Effective Date, and such notice shall be
conclusive and binding.

                  Section 4. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be identical and all of which, when
taken together, shall constitute one and the same instrument, and any of the
parties hereto may execute this Agreement by signing any such counterpart.

                  Section 5. Expenses. Without limiting its obligations under
Section 12.03 of the Existing Credit Agreement, the Company agrees to pay, on
demand, all reasonable out-of-pocket expenses incurred by the Administrative
Agent and its affiliates, including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent as documented in
reasonable detail, in connection with the preparation and administration of this
Agreement and the transactions contemplated hereby.

                  Section 6. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.


<PAGE>   4
                                      -4-


                  Section 7. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the law of the State of New York.

<PAGE>   5
                                      -5-


                  IN WITNESS WHEREOF, the parties hereto have caused this Second
Amended and Restated 364-Day Credit Agreement to be duly executed as of the date
first above written.

                                     COMPANY

                                        BOWATER INCORPORATED


                                        By: /s/ David G. Maffucci
                                            ------------------------------------
                                            Name: David G. Maffucci
                                            Title: Senior Vice President and
                                                   Chief Financial Officer


                                        By: /s/ William G. Harvey
                                            ------------------------------------
                                            Name: William G. Harvey
                                            Title: Vice President and Treasurer


                                     ADMINISTRATIVE AGENT

                                        THE CHASE MANHATTAN BANK,
                                          as Administrative Agent


                                        By: /s/ Gary L. Spevack
                                            ------------------------------------
                                            Name: Gary L. Spevack
                                            Title: Vice President


                                     BANKS

                                        THE CHASE MANHATTAN BANK


                                        By: /s/ Gary L. Spevack
                                            ------------------------------------
                                            Name: Gary L. Spevack
                                            Title: Vice President


                                        THE BANK OF NEW YORK


                                        By: /s/ David C. Siegel
                                            ------------------------------------
                                            Name: David C. Siegel
                                            Title: Vice President


<PAGE>   6
                                      -6-


                                        BANK OF AMERICA, N.A.


                                        By: /s/ Michael L. Short
                                            ------------------------------------
                                            Name: Michael L. Short
                                            Title: Managing Director


                                        FIRST UNION NATIONAL BANK


                                        By: /s/ J. Andrew Phelps
                                            ------------------------------------
                                            Name: J. Andrew Phelps
                                            Title: Vice President


                                        TORONTO DOMINION (TEXAS), INC.


                                        By: /s/ Carolyn R. Faeth
                                            ------------------------------------
                                            Name: Carolyn R. Faeth
                                            Title: Vice President

                                        WACHOVIA BANK, N.A.


                                        By: /s/ Donald E. Sellers, Jr.
                                            ------------------------------------
                                            Name: Donald E. Sellers, Jr.
                                            Title: Vice President


                                        MORGAN GUARANTY TRUST
                                          COMPANY OF NEW YORK


                                        By: /s/ Dennis Wilczek
                                            ------------------------------------
                                            Name: Dennis Wilczek
                                            Title: Associate



<PAGE>   7
                                      -7-


                                        THE BANK OF NOVA SCOTIA


                                        By: /s/ W.J. Brown
                                            ------------------------------------
                                            Name: W.J. Brown
                                            Title: Vice President


                                        SUNTRUST BANK, NASHVILLE, N.A.


                                        By: /s/ Nathan Bickford
                                            ------------------------------------
                                            Name: Nathan Bickford
                                            Title: Assistant Vice President


                                        WESTDEUTSCHE LANDESBANK
                                           GIROZENTRALE, NEW YORK BRANCH


                                        By: /s/ Cynthia M. Niesen
                                            ------------------------------------
                                            Name: Cynthia M. Niesen
                                            Title: Managing Director


                                        By: /s/ Walter T. Duffy III
                                            ------------------------------------
                                            Name: Walter T. Duffy III
                                            Title: Associate Director


                                        BANK OF MONTREAL



                                        By: /s/ Amy K. Dumser
                                            ------------------------------------
                                            Name: Amy K. Dumser
                                            Title: Director

<PAGE>   8
                                      -8-


                                        DG BANK, DEUTSCHE
                                           GENOSSENSCHAFTSBANK, AG
                                           CAYMAN ISLANDS BRANCH


                                        By: /s/ J.W. Somers
                                            ------------------------------------
                                            Name: J.W. Somers
                                            Title: Senior Vice President


                                        By: /s/ Gary P. Franke
                                            ------------------------------------
                                            Name: Gary P. Franke
                                            Title: Vice President

                                        ABN AMRO BANK N.V.


                                        By: /s/ Angela Reitz
                                            ------------------------------------
                                            Name: Angela Reitz
                                            Title: Vice President


                                        By: /s/ Laurie D. Flom
                                            ------------------------------------
                                            Name: Laurie D. Flom
                                            Title: Group Vice President


<PAGE>   9


                                                                      Schedule I


--------------------------------------------------------------------------------
                 BANK                                COMMITMENT
--------------------------------------------------------------------------------

The Chase Manhattan Bank                             16,000,000
--------------------------------------------------------------------------------

First Union National Bank                            14,500,000
--------------------------------------------------------------------------------

Bank of America, N.A.                                14,500,000
--------------------------------------------------------------------------------

The Bank of New York                                 14,500,000
--------------------------------------------------------------------------------

Wachovia Bank, N.A.                                  14,500,000
--------------------------------------------------------------------------------

Toronto Dominion (Texas), Inc.                       14,500,000
--------------------------------------------------------------------------------

SunTrust Bank, Nashville, N.A.                       11,500,000
--------------------------------------------------------------------------------

Morgan Guaranty Trust Company of New York            11,500,000
--------------------------------------------------------------------------------

The Bank of Nova Scotia                              11,500,000
--------------------------------------------------------------------------------

Bank of Montreal                                      6,750,000
--------------------------------------------------------------------------------

Westdeutsche Landesbank                               6,750,000
Girozentrale, New York Branch
--------------------------------------------------------------------------------

DG Bank, Deutsche Genossenschaftsbank,                6,750,000
AG, Cayman Islands Branch
--------------------------------------------------------------------------------

ABN AMRO Bank N.V.                                    6,750,000
--------------------------------------------------------------------------------


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>g65151ex10-4.txt
<DESCRIPTION>AMENDMENT #1/2ND AMENDED & RESTATED 364-DAY CREDIT
<TEXT>

<PAGE>   1

                                                                    EXHIBIT 10.4

                                                                  CONFORMED COPY


                                 AMENDMENT NO. 1

                  AMENDMENT NO. 1 dated as of July 31, 2000 (this "Amendment")
to the Second Amended and Restated 364-Day Credit Agreement (the "Credit
Agreement") dated as of June 21, 2000 between BOWATER INCORPORATED, a
corporation duly organized and validly existing under the laws of the State of
Delaware (the "Company"); each of the Subsidiaries of the Company from time to
time designated as "Subsidiary Borrowers" hereunder pursuant to Section 7.02(a)
of the Credit Agreement as defined below (each, a "Subsidiary Borrower" and,
together with the Company, the "Borrowers"); each of the lenders that is a
signatory hereto identified under the caption "BANKS" on the signature pages
hereto or that, pursuant to Section 12.06(b) of the Credit Agreement, shall
become a "Bank" hereunder (individually, a "Bank" and, collectively, the
"Banks"); and THE CHASE MANHATTAN BANK, as administrative agent for the Banks
(in such capacity, together with its successors in such capacity, the
"Administrative Agent").


                              W I T N E S S E T H:

                  WHEREAS, the Company, the Subsidiary Borrowers, the Banks, and
the Administrative Agent are party to the Credit Agreement which provides for
the making of loans by said Banks to the Borrowers in an aggregate original
principal amount up to $150,000,000; and

                  WHEREAS, the parties hereto desire to amend in certain
respects the Credit Agreement to increase the aggregate amount of the
Commitments under the Credit Agreement from $150,000,000 to $750,000,000 and to
amend the Credit Agreement in certain other respects.

                  NOW, THEREFORE, the parties hereto agree to amend the Credit
Agreement as set forth in Section 2 hereof:

                  Section 1. Definitions. Capitalized terms used but not
otherwise defined herein have the meanings given them in the Credit Agreement.

                  Section 2. Amendments. Subject to the satisfaction of the
conditions specified in Section 3 hereof, the Credit Agreement shall be amended
as follows:

                  2.01. Definitions. Section 1.01 of the Credit Agreement shall
be amended by adding and amending (to the extent already included in said
Section 1.01) the following definitions, as follows:

                  "Amendment No. 1" shall mean Amendment No. 1 to the Second
         Amendment and Restatement.


<PAGE>   2
                                      -2-


                  "Commitment" shall mean, for each Bank, the obligation of such
         Bank to make Syndicated Loans in an aggregate amount at any one time
         outstanding up to but not exceeding (a) in the case of a Bank that is a
         party to the Credit Agreement after giving effect to Amendment No. 1,
         the amount set opposite the name of such Bank on Schedule I to
         Amendment No. 1 under the caption "Commitment" or (b) in the case of
         any other Bank, the aggregate amount of the Commitments acquired by it
         pursuant to Section 12.06 hereof (in each case, as the same may be
         reduced from time to time pursuant to Section 2.04 hereof or increased
         or reduced pursuant to said Section 12.06(b)).

                  "Interest Period" shall mean:

                           (a) with respect to any Eurodollar Loan, each period
                  commencing on the date such Eurodollar Loan is made or
                  Converted from a Loan of another Type or the last day of the
                  next preceding Interest Period for such Loan and ending on the
                  numerically corresponding day in the first, second, third or
                  sixth calendar month thereafter, as the applicable Borrower
                  may select as provided in Section 4.05 hereof, except that
                  each Interest Period that commences on the last Business Day
                  of a calendar month (or on any day for which there is no
                  numerically corresponding day in the appropriate subsequent
                  calendar month) shall end on the last Business Day of the
                  appropriate subsequent calendar month;

                           (b) with respect to any Set Rate Loan, the period
                  commencing on the date such Set Rate Loan is made and ending
                  on any Business Day at least 7 and up to 360 days thereafter,
                  as the applicable Borrower may select as provided in Section
                  2.03(b) hereof; and

                           (c) with respect to any LIBOR Market Loan, the period
                  commencing on the date such LIBOR Market Loan is made and
                  ending on the numerically corresponding day in the first,
                  second, third or sixth calendar month thereafter, as the
                  applicable Borrower may select as provided in Section 2.03(b)
                  hereof, except that each Interest Period that commences on the
                  last Business Day of a calendar month (or any day for which
                  there is no numerically corresponding day in the appropriate
                  subsequent calendar month) shall end on the last Business Day
                  of the appropriate subsequent calendar month.

                           Notwithstanding the foregoing: (i) if any Interest
                  Period for any Eurodollar Loan (other than a Term Loan) or
                  Money Market Loan would otherwise end after the Revolving
                  Credit Termination Date, such Interest Period shall end on the
                  Revolving Credit Termination Date; (ii) each Interest Period
                  that would otherwise end on a day that is not a Business Day
                  shall end on the next succeeding Business Day (or, in the case
                  of an Interest Period for a Eurodollar Loan or a LIBOR Market
                  Loan, if such next succeeding Business Day falls in the next
                  succeeding calendar month, on the next preceding Business
                  Day); (iii) if an Interest Period in respect of a Term Loan
                  would otherwise commence before and end after the Maturity
                  Date, such Interest Period shall end on the Maturity Date;


<PAGE>   3
                                      -3-


                  and (iv) notwithstanding clause (i) above, no Interest Period
                  for any Loan (other than a Set Rate Loan) shall have a
                  duration of less than one month and, if the Interest Period
                  for any Eurodollar or LIBOR Market Loan would otherwise be a
                  shorter period, such Loan shall not be available hereunder for
                  such period.

                  "Maturity Date" shall have the meaning set forth in Section
         2.10(d) hereof.

                  "Syndicated Loans" shall mean the loans provided for by
         Section 2.01 hereof, which may be Base Rate Loans and/or Eurodollar
         Loans and shall include each Term Loan.

                  "Term Loan" shall have the meaning set forth in Section
         2.10(d) hereof.

                  2.02. Syndicated Loans. Section 2.01 of the Credit Agreement
shall be amended to read in its entirety as follows:

                   "2.01 Syndicated Loans. Each Bank severally agrees, on the
         terms and conditions of this Agreement, to make loans to the Borrowers
         in Dollars during the period from and including the Closing Date to but
         not including the Revolving Credit Termination Date in an aggregate
         principal amount at any one time outstanding up to but not exceeding
         the amount of the Commitment of such Bank as in effect from time to
         time. Subject to the terms and conditions of this Agreement, during
         such period the Borrowers may borrow, repay and reborrow the amount of
         the Commitments by means of Base Rate Loans and Eurodollar Loans and
         during such period and thereafter the Borrowers may Convert Loans of
         one Type into Loans of another Type (as provided in Section 2.09
         hereof) or Continue Loans of one Type as Loans of the same Type (as
         provided in Section 2.09 hereof); provided that (a) subject to Section
         2.10(d) hereof, the aggregate principal amount of all Syndicated Loans
         of all Borrowers, together with the aggregate principal amount of all
         Money Market Loans of all Borrowers, at any one time outstanding shall
         not exceed the aggregate amount of the Commitments; and (b) no more
         than fifteen different Interest Periods for both Syndicated Loans and
         Money Market Loans of all Borrowers may be outstanding at the same time
         (for which purpose Interest Periods described in different lettered
         clauses of the definition of the term "Interest Period" shall be deemed
         to be different Interest Periods even if they are coterminous)."

                  2.03. Facility Fee. Section 2.05(a) of the Credit Agreement
shall be amended to read in its entirety as follows:

                 "(a) The Company shall pay to the Administrative Agent for
         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 (a) 0.0600% during any Level I
         Period, (b) 0.0800% during any Level II Period, (c) 0.1000% during any
         Level III Period, (d) 0.1250% during any Level IV Period and (e)
         0.2000% 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


<PAGE>   4
                                      -4-


         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 fee 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 Moody's 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."

                  2.04. Utilization Fee. Section 2.05(b) of the Credit Agreement
shall be amended to read in its entirety as follows:

                  "(b) The Company shall pay to the Administrative Agent for
         account of each Bank a utilization fee at a rate per annum equal to
         0.25% on the aggregate outstanding principal amount of the Syndicated
         Loans made by such Bank hereunder for any period (during the period
         from and including June 23, 1999 to but not including the earlier of
         the date Commitments are terminated and the Revolving Credit
         Termination Date) that the aggregate principal outstanding amount of
         all Syndicated Loans hereunder exceeds 33% of the net amount of the
         Commitments after deducting the aggregate outstanding principal amount
         of all Money Market Loans hereunder at such time; provided however that
         if the aggregate principal amount of Syndicated Loans converted to Term
         Loans on the Revolving Credit Termination Date exceeds 33% of the net
         amount of the Commitments in effect on the Revolving Credit Termination
         Date (prior to the reduction of the Commitments to zero on such date)
         after deducting the aggregate outstanding principal amount of all Money
         Market Loans hereunder at such date, the Company shall pay to the
         Administrative Agent for the account of each Bank a utilization fee at
         a rate per annum equal to 0.25% on the aggregate outstanding principal
         amount of the Term Loans made by such Bank during the period from and
         including the Revolving Credit Termination Date to but excluding the
         date on which such Bank ceases to have any Term Loans outstanding.
         Accrued utilization fee 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."

                  2.05. Term-Out Option. Section 2.10 of the Credit Agreement
shall be amended by adding paragraph (d) thereto to read in its entirety as
follows:

                  "(d) Term-Out Option. If the Revolving Credit Termination Date
         shall not have been extended pursuant to Section 2.10(c) hereof, each
         Borrower may, by notice to the Administrative Agent not less than 10
         days prior to the Revolving Credit Termination Date convert all
         Syndicated Loans made to such Borrower that are outstanding on the
         Revolving Credit Termination Date to term loans (each, a "Term Loan"
         and collectively, the "Term Loans"). Each Term Loan shall bear
         interest, until the payment in full thereof, at the rates provided for
         in Section 3.02 and shall otherwise constitute a Syndicated Loan for
         all purposes of this Agreement. The relevant Borrower hereby
         unconditionally


<PAGE>   5
                                      -5-


         promises to pay to the Administrative Agent for account of the Banks
         the unpaid principal amount of the Term Loans made to such Borrower
         that are outstanding on the date that is one year after the Revolving
         Credit Termination Date (or, if such date is not a Business Day, the
         next preceding Business Day) (the "Maturity Date"). Anything in this
         Section 2.10(d) to the contrary notwithstanding, any such conversion
         shall be subject to the conditions precedent that: (i) no Default shall
         have occurred and be continuing on the Revolving Credit Termination
         Date and (ii) each of the representations and warranties made by the
         Company in Section 8 hereof, and by each Subsidiary Borrower in its
         respective Subsidiary Borrower Designation Letter, shall be true and
         complete on and as of such Revolving Credit Termination Date with the
         same force and effect as if made on and as of such date (or, if any
         such representation or warranty is expressly stated to have been made
         as of a specific date, as of such specific date). Each notice of
         conversion delivered by a Borrower in accordance with this Section
         2.10(d) shall constitute a certification by such Borrower to the effect
         set forth in the preceding sentence (both as of the date of such notice
         and, unless such Borrower, after delivery of such notice, otherwise
         notifies the Administrative Agent prior to the Revolving Credit
         Termination Date, as of such date)."

                  2.06. Repayments of Loans. Section 3.01(b) of the Credit
Agreement shall be amended to read in its entirety as follows:

                  "(b) Repayment of Syndicated Loans. Each Borrower hereby
         promises to pay to the Administrative Agent for account of each Bank
         the principal of such Bank's Syndicated Loans to such Borrower on the
         Revolving Credit Termination Date, provided that, to the extent a
         Borrower shall have elected to convert any portion of the outstanding
         Syndicated Loans into Term Loans pursuant to Section 2.10(d), such Term
         Loans shall mature (and such Borrower hereby unconditionally promises
         to pay to the Administrative Agent for the account of each Bank the
         then unpaid principal amount of each Term Loan) on the Maturity Date."

                  2.07. Compensation. Section 5.05(b) of the Credit Agreement
shall be amended to read in its entirety as follows:

                  "(b) any failure by such Borrower for any reason (including,
         without limitation, the failure of any of the conditions precedent
         specified in Section 7 hereof to be satisfied, or the failure of any of
         the conditions precedent to the conversion requested by such Borrower
         of Syndicated Loans to Term Loans pursuant to Section 2.10(d) hereof,
         to be satisfied) to borrow a Fixed Rate Loan or a Set Rate Loan (with
         respect to which, in the case of a Money Market Loan, such Borrower has
         accepted a Money Market Quote) from such Bank on the date for such
         borrowing specified in the relevant notice of borrowing given pursuant
         to Section 2.02 or 2.03(b) hereof or to effect a conversion pursuant to
         Section 2.10(d) hereof pursuant to a notice given pursuant to Section
         2.10(d) hereof; or"

                  Section 3. Conditions. This Amendment shall become effective
as of July 31, 2000 (the "Facility Increase Effective Date") upon the
satisfaction prior to such date of each of the following conditions to
effectiveness (including, without limitation, that each document to be


<PAGE>   6
                                      -6-


received by the Administrative Agent shall be in form and substance satisfactory
to the Administrative Agent):

                  3.01. Execution. The Administrative Agent (or its counsel)
         shall have received from each party hereto (including each Bank that is
         a party to the Credit Agreement) either (a) a counterpart of this
         Amendment signed on behalf of such party or (b) written evidence
         satisfactory to the Administrative Agent (which may include telecopy
         transmission of a signed signature page of this Amendment) that such
         party has signed a counterpart of this Amendment.

                  3.02. Opinion. The Administrative Agent shall have received a
         favorable written opinion (addressed to the Administrative Agent and
         the Banks and dated the Facility Increase Effective Date) of Wendy C.
         Shiba, Esq., Vice President, Secretary and Assistant General Counsel of
         the Company, substantially in the form of Exhibit A hereto. The Company
         hereby requests such counsel to deliver such opinion.

                  3.03. Certificate as to Incumbency. The Administrative Agent
         shall have received a certificate of the Secretary or an Assistant
         Secretary of the Company in respect of each of the officers (a) who are
         authorized to sign this Amendment on the Company's behalf and (b) who
         will, until replaced by another officer or officers duly authorized for
         that purpose, act as its representative for the purposes of signing
         documents and giving notices and other communications in connection
         with this Amendment, the promissory notes and the transactions
         contemplated hereby.

                  3.04. Certificate of Authorized Officer. The Administrative
         Agent shall have received a certificate of a duly authorized financial
         officer of the Company, dated the Facility Increase Effective Date,
         stating that (a) no Default has occurred and is continuing as of such
         date, and (b) the representations and warranties contained in Section 8
         of the Credit Agreement are true and complete on and as of such date
         with the same force and effect as if made on and as of such date (or,
         if any such representation or warranty is expressly stated to have been
         made as of a specific date, as of such specific date).

                  3.05. Fees and Expenses. The Administrative Agent shall have
         received all fees and other amounts due and payable on or prior to the
         Facility Increase Effective Date, including (i) for the account of each
         Bank that has delivered to the Administrative Agent prior to such date
         a commitment letter in which it commits to increase its Commitment as
         result of this Amendment by an amount of at least $65,000,000, an
         up-front fee in an amount equal to 0.15% of the increase in such Bank's
         final allocated Commitment, (ii) for the account of each Bank that has
         delivered to the Administrative Agent prior to such date a commitment
         letter in which it commits to increase its Commitment as result of this
         Amendment by an amount of less than $65,000,000, an up-front fee in an
         amount equal to 0.10% of the increase in such Bank's final allocated
         Commitment and (iii) to the extent invoiced, including reimbursement or
         payment of all reasonable out-of-pocket expenses required to be
         reimbursed or paid by the Company hereunder.


<PAGE>   7
                                      -7-


The Administrative Agent shall notify the Company and the Banks of the
occurrence of the Facility Increase Effective Date, and such notice shall be
conclusive and binding.

                  Section 4. Readjustment of Loans. On the Facility Increase
Effective Date, the Banks shall take such actions, and make such adjustments
among themselves, as shall be necessary so that their outstanding Syndicated
Loans are held under the Credit Agreement ratably in accordance with their
respective Commitments as set forth on Schedule I hereto under the caption
"Commitment".

                  Section 5. Counterparts. This Amendment may be executed in any
number of counterparts, each of which shall be identical and all of which, when
taken together, shall constitute one and the same instrument, and any of the
parties hereto may execute this Agreement by signing any such counterpart.

                  Section 6. Expenses. Without limiting its obligations under
Section 12.03 of the Credit Agreement, the Company agrees to pay, on demand, all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its
affiliates, including the reasonable fees, charges and disbursements of counsel
for the Administrative Agent as documented in reasonable detail, in connection
with the preparation and administration of this Amendment and the transactions
contemplated hereby.

                  Section 7. Binding Effect. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

                  Section 8. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the law of the State of New York.

<PAGE>   8
                                      -8-


                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above written.

                                 COMPANY

                                          BOWATER INCORPORATED


                                          By: /s/ David G. Maffucci
                                              ----------------------------------
                                              Title: Senior Vice President and
                                                     Chief Financial Officer


                                          By: /s/ William G. Harvey
                                              ----------------------------------
                                              Title: Vice President
                                                     and Treasurer


                                 ADMINISTRATIVE AGENT

                                          THE CHASE MANHATTAN BANK,
                                            as Administrative Agent


                                          By: /s/ Gary L. Spevack
                                              ----------------------------------
                                              Title: Vice President


                                 BANKS


                                          THE CHASE MANHATTAN BANK


                                          By: /s/ Gary L. Spevack
                                              ----------------------------------
                                              Title: Vice President


                                          THE BANK OF NEW YORK


                                          By: /s/ David C. Siegel
                                              ----------------------------------
                                              Title: Vice President


<PAGE>   9
                                      -9-


                                          BANK OF AMERICA, N.A.


                                          By: /s/ Kevin F. Sullivan
                                              ----------------------------------
                                              Title: Managing Director


                                          FIRST UNION NATIONAL BANK


                                          By: /s/ Sarah T. Warren
                                              ----------------------------------
                                              Title: Vice President


                                          TORONTO DOMINION (TEXAS), INC.


                                          By: /s/ Carolyn R. Faeth
                                              ----------------------------------
                                              Title: Vice President

                                          WACHOVIA BANK, N.A.


                                          By: /s/ Donald E. Sellers, Jr.
                                              ----------------------------------
                                              Title: Senior Vice President


                                          MORGAN GUARANTY TRUST
                                            COMPANY OF NEW YORK


                                          By: /s/ Lewis Reford
                                              ----------------------------------
                                              Title: Vice President


                                          THE BANK OF NOVA SCOTIA


                                          By: /s/ William E. Zarrett
                                              ----------------------------------
                                              Title: Managing Director


<PAGE>   10
                                      -10-


                                          SUNTRUST BANKS, INC.


                                          By: /s/ Nathan Bickford
                                              ----------------------------------
                                              Title: Assistant Vice President


                                          WESTDEUTSCHE LANDESBANK
                                             GIROZENTRALE, NEW YORK BRANCH


                                          By: /s/ Cynthia M. Niesen
                                              ----------------------------------
                                              Title: Managing Director


                                          By: /s/ Walter T. Duffy
                                              ----------------------------------
                                              Title: Associate Director


                                          BANK OF MONTREAL


                                          By: /s/ Amy K. Dumser
                                              ----------------------------------
                                              Title: Director


<PAGE>   11
                                      -11-


                                          DG BANK, DEUTSCHE
                                             GENOSSENSCHAFTSBANK, AG
                                             CAYMAN ISLANDS BRANCH


                                          By: /s/ J.W. Somers
                                              ----------------------------------
                                              Title: Senior Vice President


                                          By: /s/ Kurt A. Morris
                                              ----------------------------------
                                              Title: Vice President


                                          ABN AMRO BANK N.V.


                                          By: /s/ Thomas Comfort
                                              ----------------------------------
                                              Title: Group Vice President


                                          By: /s/ Carla S. Waggoner
                                              ----------------------------------
                                              Title: Assistant Vice President


<PAGE>   12

                                                                      Schedule I


                  BANK                                    COMMITMENT
                  ----                                    ----------

The Chase Manhattan Bank                                  $76,000,000

Bank of America, N.A.                                     $70,500,000

First Union National Bank                                 $66,500,000

The Bank of New York                                      $66,500,000

Wachovia Bank, N.A.                                       $66,500,000

Toronto Dominion (Texas), Inc.                            $66,500,000

SunTrust Banks, Inc.                                      $63,500,000

Morgan Guaranty Trust Company of New York
                                                          $63,500,000

The Bank of Nova Scotia                                   $63,500,000

Bank of Montreal                                          $46,750,000

Westdeutsche Landesbank
Girozentrale, New York Branch                             $46,750,000

ABN AMRO Bank N.V.                                        $46,750,000

DG Bank, Deutsche Genossenschaftsbank,
AG, Cayman Islands Branch                                 $ 6,750,000
                                                          -----------

         Total                                           $750,000,000
                                                         ============

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>6
<FILENAME>g65151ex10-5.txt
<DESCRIPTION>AMENDED & RESTATED CHANGE IN CONTROL AGREEMENT
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.5

                              AMENDED AND RESTATED
                           CHANGE IN CONTROL AGREEMENT


         THIS AGREEMENT, made as of the 9th day of June, 2000, by and between
Bowater Incorporated, a Delaware corporation having a mailing address of 55 East
Camperdown Way, P.O. Box 1028, Greenville, South Carolina 29602 (the
"Corporation"), and _________________ of ___________________ (the "Executive").

         WHEREAS, the Corporation and the Executive have previously entered into
a Change in Control Agreement for the purpose of reinforcing and encouraging the
continued attention and dedication of members of the Corporation's management,
including the Executive, to their assigned duties in the event of a Change in
Control or potential Change in Control of the Corporation; and

         WHEREAS, the Board of Directors of the Corporation (the "Board") has
determined that certain changes should be made to the Change in Control
Agreement to better achieve its objectives, and the Executive has agreed to such
changes;

         NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree to amend and restate the
previous Change in Control Agreement as follows:

1.       DEFINITIONS
         -----------

         The following terms shall have the meanings assigned to them below:

         (a)      "Accrued Compensation" shall mean all amounts earned or
                  accrued through the Termination Date but not paid as of the
                  Termination Date including (i) the Base Amount, (ii)
                  reimbursement for reasonable and necessary expenses incurred
                  by the Executive on behalf of the Corporation during the
                  period ending on the Termination Date, (iii) vacation pay, and
                  (iv) any bonus award with respect to the Corporation's fiscal
                  year ended prior to the Termination Date.

         (b)      "Acquiring Person" shall mean the Beneficial Owner, directly
                  or indirectly, of securities representing 20% or more of the
                  combined voting power of the Corporation's then outstanding
                  securities, not including (except as provided in clause (i) of
                  the next sentence) securities of such Beneficial Owner
                  acquired pursuant to an agreement allowing the acquisition of
                  up to and including 50% of such voting power approved by
                  two-thirds of the members of the Board who are Board members
                  before the Person becomes Beneficial Owner, directly or
                  indirectly, of securities representing 5% or more of the
                  combined voting power of the Corporation's then outstanding
                  securities. Notwithstanding the foregoing, (i) securities
                  acquired pursuant to an agreement described in the preceding
                  sentence will be included in determining whether a Beneficial
                  Owner is an


<PAGE>   2

                  Acquiring Person if, subsequent to the approved acquisition,
                  the Beneficial Owner acquires 5% or more of such voting power
                  other than pursuant to such an agreement so approved; and (ii)
                  a Person shall not be an Acquiring Person if such Person is
                  eligible to and files a Schedule 13G under the Exchange Act
                  with respect to such Person's status as a Beneficial Owner of
                  all securities of the Corporation of which the Person is a
                  Beneficial Owner.

         (c)      "Affiliate" and "Associate" shall have the respective meanings
                  ascribed to such terms in Rule 12b-2 of the General Rules and
                  Regulations under the Exchange Act, as in effect on the date
                  hereof.

         (d)      "Base Amount" shall mean the greater of (i) the Executive's
                  annual base salary at the rate in effect immediately prior to
                  the Change in Control and (ii) the Executive's annual base
                  salary at the rate in effect on the Termination Date.

         (e)      "Beneficial Owner" of securities shall mean (i) a Person who
                  beneficially owns such securities, directly or indirectly, or
                  (ii) a Person who has the right to acquire such securities
                  (whether such right is exercisable immediately or only with
                  the passage of time) pursuant to any agreement, arrangement or
                  understanding (whether or not in writing) or upon the exercise
                  of conversion rights, exchange rights, warrants, options or
                  otherwise.

         (f)      "Bonus Amount" shall mean an amount equal to the maximum
                  amount the Executive could have been paid under the
                  Corporation's annual or other short term cash incentive plans
                  in effect immediately prior to the Change in Control for the
                  fiscal year in which the Change in Control occurred or, if
                  higher, the maximum amount under such plans in effect at the
                  Termination Date based on the Executive's then base salary and
                  position.

         (g)      "Cause" shall mean and be limited to the Executive's gross
                  negligence, willful misconduct or conviction of a felony,
                  which has a demonstrable and material adverse effect upon the
                  Corporation; provided that if Cause exists by virtue of the
                  Executive's gross negligence or willful misconduct that is
                  capable of being cured, the Corporation shall give the
                  Executive written notice of the alleged negligence or
                  misconduct and if the Executive cures the negligence or
                  misconduct within thirty (30) days after receipt of the
                  notice, such Cause shall cease to exist and the Corporation
                  shall not terminate the Executive's employment therefor. The
                  Executive shall be deemed to have been terminated for Cause as
                  of the effective date stated in a Notice of Termination
                  delivered by the Corporation to the Executive, which shall not
                  be delivered before the end of the thirty (30) day period
                  described in the preceding sentence, if applicable. The Notice
                  of Termination must be accompanied by a certified copy of a
                  resolution duly adopted by the affirmative vote of not less
                  than three-quarters (3/4) of the membership of the Board after
                  reasonable notice to the Executive and an opportunity for the
                  Executive, with the Executive's counsel present, to be heard
                  before the Board, finding that, in the good faith opinion of
                  the Board, the


                                       2
<PAGE>   3

                  Executive was guilty of conduct constituting Cause hereunder
                  and setting forth in reasonable detail the facts and
                  circumstances claimed to provide the basis for the Executive's
                  termination.

         (h)      "Change in Control" shall be deemed to have occurred upon:

                  (i)      the date that any Person is or becomes an Acquiring
                           Person;

                  (ii)     the date that the Corporation's stockholders approve
                           a merger, consolidation or reorganization of the
                           Corporation with another corporation or other Person,
                           unless, immediately following such merger,
                           consolidation or reorganization, (A) at least 50% of
                           the combined voting power of the outstanding
                           securities of the resulting entity would be held in
                           the aggregate by the stockholders of the Corporation
                           as of the record date for such approval (provided
                           that securities held by any individual or entity that
                           is an Acquiring Person, or who would be an Acquiring
                           Person if 5% were substituted for 20% in the
                           definition of such term, shall not be counted as
                           securities held by the stockholders of the
                           Corporation, but shall be counted as outstanding
                           securities for purposes of this determination), or
                           (B) at least 50% of the board of directors or similar
                           body of the resulting entity are Continuing
                           Directors;

                  (iii)    the date the Corporation sells or otherwise transfers
                           all or substantially all of the Corporation's assets
                           to another corporation or other Person, unless,
                           immediately following such sale or transfer, (A) at
                           least 50% of the combined voting power of the
                           outstanding securities of the acquiring entity would
                           be held in the aggregate by the stockholders of the
                           Corporation as of the record date for such approval
                           (provided that securities held by any individual or
                           entity that is an Acquiring Person, or who would be
                           an Acquiring Person if 5% were substituted for 20% in
                           the definition of such term, shall not be counted as
                           securities held by the stockholders of the
                           Corporation, but shall be counted as outstanding
                           securities for purposes of this determination), or
                           (B) at least 50% of the board of directors or similar
                           body of the acquiring entity are Continuing
                           Directors; or

                  (iv)     the date on which less than 50% of the total
                           membership of the Board consists of Continuing
                           Directors.

         (i)      "Code" shall mean the United States Internal Revenue Code of
                  1986, amended.

         (j)      "Continuing Directors" shall mean any member of the Board who
                  (i) was a member of the Board immediately prior to the date of
                  the event that would constitute a Change in Control, and any
                  successor of a Continuing Director while such successor is a
                  member of the Board, (ii) who is not an Acquiring Person or



                                       3
<PAGE>   4

                  an Affiliate or Associate of an Acquiring Person and (iii) is
                  recommended or elected to succeed the Continuing Director by a
                  majority of the Continuing Directors.

         (k)      "Corporation" shall mean Bowater Incorporated; provided that,
                  if the Executive is employed by a subsidiary of the
                  Corporation, "Corporation" shall mean such subsidiary of the
                  Corporation for purposes of references to the Executive's
                  compensation and benefits, and the plans, programs and
                  arrangements pursuant to which compensation and benefits are
                  provided.

         (l)      "Disability" shall mean a physical or mental condition that is
                  defined as a disability in the Corporation's long term
                  disability insurance plan covering the Executive immediately
                  prior to the Change in Control.

         (m)      "Employer Match" shall mean an amount equal to the maximum
                  matching contribution the Corporation could have made
                  (regardless of actual circumstances) on the Executive's behalf
                  to the Corporation's Statutory and non-Statutory defined
                  contribution or savings plans for the fiscal year in which the
                  Change in Control occurred, or, if higher, the maximum
                  matching contribution the Corporation could have made for the
                  fiscal year in which the Executive's employment terminated.

         (n)      "Exchange Act" shall mean the United States Securities
                  Exchange Act of 1934, as amended.

         (o)      "Good Reason" shall mean:

                  (i)      a change in the Executive's status, title, position
                           or responsibilities (including in reporting line
                           relationships) that, in the Executive's reasonable
                           judgment, represents a substantial adverse change
                           from the Executive's status, title, position or
                           responsibilities as in effect at any time within 180
                           days preceding the date of a Change in Control or at
                           any time thereafter; the assignment to the Executive
                           of any duties or responsibilities that, in the
                           Executive's reasonable judgment, are inconsistent
                           with the Executive's status, title, position or
                           responsibilities as in effect at any time within 180
                           days preceding the date of a Change in Control or any
                           time thereafter; or any removal of the Executive from
                           or failure to reappoint or reelect the Executive to
                           any office or position held prior to the Change in
                           Control, except in connection with the termination of
                           the Executive's employment for Disability, Cause, as
                           a result of the Executive's death or by the Executive
                           other than for Good Reason;

                  (ii)     the failure by the Corporation to provide the
                           Executive with compensation and benefits, in the
                           aggregate, at least equal (in terms of benefit levels
                           and/or reward opportunities which opportunities will
                           be evaluated in light of the performance requirements
                           therefor) to those provided for under the


                                       4
<PAGE>   5

                           employee compensation and benefit plans, programs and
                           practices in which the Executive was participating at
                           any time within one-hundred eighty (180) days
                           preceding the date of a Change in Control or at any
                           time thereafter;

                  (iii)    the reduction of the Executive's salary as in effect
                           on the date of the Change in Control or any time
                           thereafter;

                  (iv)     a failure by the Corporation to obtain from any
                           Successor its assent to this Agreement contemplated
                           by Section 12 hereof; or

                  (v)      the relocation of the principal office at which the
                           Executive is to perform services on behalf of the
                           Corporation to a location more than thirty-five (35)
                           miles from its location immediately prior to the
                           Change in Control or a substantial increase in the
                           Executive's business travel obligations subsequent to
                           the Change in Control.

         (p)      "Notice of Termination" shall mean a notice sent by either the
                  Executive or the Corporation to the other party terminating
                  the Executive's employment as of a certain date and setting
                  forth the reasons therefor.

         (q)      "Person" shall mean any individual, corporation, partnership,
                  group, association or other "person" as such term is used in
                  Sections 13(d) and 14(d) of the Exchange Act.

         (r)      "Pro Rata Bonus" shall mean an amount equal to the Bonus
                  Amount multiplied by a fraction, the numerator of which is the
                  number of months and partial months through the Termination
                  Date and the denominator of which is twelve (12).

         (s)      "Statutory Plan" shall mean a retirement plan that is intended
                  to be qualified (for purposes of United States tax law) or
                  registered (for purposes of Canadian tax law), as the case may
                  be.

         (t)      "Successor" shall mean the direct or indirect successor by
                  purchase, merger, consolidation or otherwise, to all or
                  substantially all of the business and/or assets of the
                  Corporation.

         (u)      "Termination Date" shall mean (i) in the case of the
                  Executive's death, the date of death, (ii) in the case of a
                  termination by the Executive in accordance with Section 3, the
                  last day of employment as set forth in the Notice of
                  Termination given by the Executive, (iii) in the case of a
                  termination by the Corporation for Cause, a date not less than
                  thirty (30) days after receipt of the Notice of Termination by
                  the Executive, (iv) in the case of a termination by the
                  Corporation due to the Executive's Disability, the date not
                  less than thirty (30) days after receipt of the Notice of
                  Termination by the Executive, provided that the Executive
                  shall not have returned to the full-time performance of duties
                  within thirty (30) days after such receipt, and (v) in all
                  other cases, the date specified in the Notice


                                       5
<PAGE>   6

                  of Termination or if no Notice of Termination is sent, the
                  last day of the Executive's employment (an Executive receiving
                  periodic severance pay is no longer considered employed for
                  the purposes of this Agreement).

2.       TERM OF AGREEMENT
         -----------------

         This Agreement shall commence as of the date hereof and shall continue
         in effect until the date the Executive's employment is terminated (an
         Executive being paid periodic severance benefits is no longer
         considered employed for these purposes); provided, however, that if the
         Executive's employment is terminated following, or in anticipation of,
         a Change in Control, the term shall continue in effect until all
         payments and benefits have been made or provided to the Executive
         hereunder.

3.       EXECUTIVE'S RIGHT OF TERMINATION
         --------------------------------

         After a Change in Control and for thirty-six (36) months thereafter,
         the Executive shall have the right to terminate employment for Good
         Reason by sending a Notice of Termination to the Corporation setting
         forth in reasonable detail the facts and circumstances claimed to
         constitute Good Reason. In addition, on the first (1st) anniversary
         date of the Change in Control and for a period of thirty (30) days
         thereafter, the Executive shall have the unconditional right to
         terminate employment by giving written notice to the Corporation within
         such thirty (30) day period. If the Executive's employment is
         terminated in accordance with the provisions of this Section 3, the
         Executive shall be entitled to the compensation and benefits described
         in Section 4(b) below.

4.       COMPENSATION UPON CHANGE IN CONTROL FOLLOWED BY CERTAIN TERMINATIONS
         --------------------------------------------------------------------

         If the Executive's employment with the Corporation shall be terminated
         within thirty-six (36) months following a Change in Control, the
         Executive shall be entitled to the following compensation and benefits:

                  (a) If the Executive's employment is terminated (i) by the
         Corporation for Cause or Disability, (ii) by reason of the Executive's
         death or (iii) by the Executive other than in accordance with Section
         3, the Corporation shall pay to the Executive the Accrued Compensation
         and, if such termination is other than by the Corporation for Cause,
         the Pro Rata Bonus, computed as of the applicable Termination Date.

                  (b) If the Executive's employment with the Corporation shall
         be terminated (x) by the Corporation for any reason other than for
         Cause or Disability, or (y) by the Executive pursuant to the provisions
         of Section 3, the Executive shall be entitled to the following as of
         the applicable Termination Date:

                  (i)      the Accrued Compensation and the Pro-Rata Bonus;

                  (ii)     an amount equal to three (3) times the Base Amount;



                                       6
<PAGE>   7

                  (iii)    an amount equal to three (3) times the Bonus Amount;

                  (iv)     an amount equal to three (3) times the Employer
                           Match;

                  (v)      An amount equal to 30% of the Base Amount for certain
                           lost benefits;

                  (vi)     An amount equal to the present value of the
                           additional retirement benefits the Executive would
                           have earned under the Corporation's defined benefit
                           retirement plans (Statutory and non-Statutory) for
                           the three (3) years following the Termination Date,
                           computed assuming the following:

                           (A)      the Executive's salary continues at the Base
                                    Amount with a bonus or target bonus equal to
                                    the Bonus Amount;

                           (B)      the payment of the Executive's retirement
                                    benefits commences as of the later of (x)
                                    the Executive's age three (3) years after
                                    the Termination Date or (y) the earliest
                                    retirement age (without regard to service)
                                    allowed under the Statutory Plan applicable
                                    to the Executive;

                           (C)      all vesting requirements are waived;

                           (D)      mortality and interest rate assumptions
                                    applicable to the computation of lump sum
                                    values in the applicable Statutory Plan are
                                    used; and

                           (E)      the benefits are paid in the form of a
                                    single life annuity;

                  (vii)    As of the Executive's Termination Date, or, if later,
                           when the Executive attains age fifty (50), the
                           Executive (and the Executive's spouse or surviving
                           spouse and dependents) will be provided the retiree
                           health care and life insurance coverage provided by
                           the Corporation to executive retirees as of the date
                           of the Change in Control. If and to the extent that
                           the benefits described in this paragraph cannot be
                           provided under the Corporation's plans or programs
                           without the benefits provided thereunder being
                           taxable to the Executive, the Corporation shall
                           procure an insurance policy or policies on
                           substantially similar terms and conditions for the
                           Executive and the Executive's spouse or surviving
                           spouse and dependents, or if such policy or policies
                           cannot be obtained, shall provide a lump sum payment
                           equal to the value of the lost benefits; and

                  (viii)   The Corporation shall pay for or provide the
                           Executive either: (i) individual out-placement
                           assistance as offered by a member firm of the
                           Association of Out-Placement Consulting Firms, or
                           (ii) a cash payment of $20,000 in lieu of individual
                           outplacement services, as elected by the Executive at
                           any time within twelve (12) months after the
                           Executive's termination of employment.


                                       7
<PAGE>   8

5.       EXCISE TAX GROSS-UP
         -------------------

         If any payment or benefit made available to the Executive in connection
         with a Change in Control (including, without limitation, any payment
         made pursuant to any long-term incentive plans, stock option or equity
         participation right plans) or termination of the Executive's employment
         following a Change in Control (in either category, a "Change in Control
         Payment") is subject to the Excise Tax (as hereinafter defined), the
         Corporation shall pay to the Executive additional amounts (the "Gross
         Up Amounts") such that the total amount of all Change in Control
         Payments net of the Excise Tax shall equal the total amount of all
         Change in Control Payments to which the Executive would have been
         entitled if the Excise Tax had not been imposed. For purposes of this
         Section 5, the term "Excise Tax" shall mean the tax imposed by Section
         4999 of the Code and any similar tax that may hereafter be imposed.

         The Gross Up Amounts due to the Executive under this Section 5 shall be
         estimated by a nationally recognized firm of certified public
         accountants (other than the firm that audited the financial statements
         of the Corporation for the most recently preceding fiscal year)
         selected by the individual holding the position of Chief Financial
         Officer immediately before the Change in Control or such officer's
         designee, at any time that the Executive is to receive a Change in
         Control Payment. The Gross Up Amounts will be based upon the following
         assumptions:


         (a)      all Change in Control Payments shall be deemed to be
                  "parachute payments" within the meaning of Section
                  280(G)(b)(2) of the Code, and all "excess parachute payments"
                  shall be deemed to be subject to the Excise Tax except to the
                  extent that, in the opinion of the certified public
                  accountants charged with estimating the Gross Up Amounts for
                  the Executive under this Section 5, such Change in Control
                  Payments are not subject to the Excise Tax; and

         (b)      the Executive shall be deemed to pay federal, state and local
                  taxes at the highest marginal rate of taxation for the
                  applicable calendar year.

         The estimated Gross Up Amount due the Executive with respect to any
         Change in Control Payment pursuant to this Section 5 shall be paid to
         the Executive in a lump sum not later than thirty (30) business days
         after such Change in Control Payment is provided to the Executive. In
         the event that the Gross Up Amount is less than the amount actually due
         to the Executive under this Section 5, the amount of any such shortfall
         shall be paid to the Executive within ten (10) days after the existence
         of the shortfall is discovered. In the event the Gross Up Amount is
         more than the amount actually due the Executive under this Section 5,
         the Executive shall repay the amount of such overpayment to the
         Corporation within a reasonable time after the overpayment is
         discovered.


                                       8
<PAGE>   9

6.       LUMP SUM PENSION OPTION
         -----------------------

         If the Executive is entitled to the payments and benefits in Section
         4(b), then, in accordance with the election requirements described in
         Section 7, the Executive shall be entitled to elect a lump sum payment
         of the present value of any retirement benefits to which the Executive
         is entitled under any of the Corporation's non-Statutory retirement
         plans computed based upon the same assumptions listed in Section
         4(b)(vi) above, except 4(b)(vi)(A). The Corporation's non-Statutory
         retirement plans are hereby deemed amended as necessary to conform to
         the provisions of this Section 6. To the extent that a payment on
         account of the foregoing may not be made under a non-Statutory plan,
         the Corporation shall make such payment separately in lieu of payment
         under such plan.

7.       DEFERRAL OR LUMP SUM ELECTION
         -----------------------------

         During each December after the date of this Agreement (the "Election
         Period"), the Executive may, in writing, direct the Corporation to pay
         any amounts to which the Executive is entitled under Section 4(b) in
         equal annual installments not to exceed ten (10), with each installment
         including accrued interest at the Federal short-term rate (as set under
         Section 1274(d) of the Code as in effect at the time such installment
         is paid), with the first such installment payable within ten (10)
         business days of the Termination Date and each successive installment
         payable on the anniversary of the Termination Date (the "Deferred
         Payment Election"). During the Election Period, the Executive may also
         elect to be paid the amount described in Section 6 in a lump sum (the
         "Lump Sum Election"). Neither a Deferred Payment Election nor a Lump
         Sum Election, once made, can be revoked except during an Election
         Period. Notwithstanding the foregoing, however, no Deferred Payment
         Election or Lump Sum Election can be made or revoked by the Executive
         during an Election Period that occurs after a Change in Control or at a
         time when, in the judgment of the Corporation, a Change in Control may
         occur within sixty (60) days after such Election Period.

8.       NO MITIGATION REQUIRED
         ----------------------

         The Executive shall not be required to mitigate the amount of any
         payment provided for in this Agreement, nor shall any payment or
         benefit provided for in this Agreement be offset by any compensation
         earned by the Executive as the result of employment by another
         employer, by retirement benefits (provided that the foregoing shall not
         cause Section 6 to result in a duplication of benefits provided under
         any retirement plan), or be offset against any amount claimed to be
         owed by the Executive to the Corporation, or otherwise.

9.       INTEREST
         --------

         If any payment to the Executive required by this Agreement is not made
         within the time for such payment specified herein, the Corporation
         shall pay to the Executive interest on such payment at the legal rate
         payable from time to time upon judgments in the State of Delaware from
         the date such payment is payable under the terms hereof until paid.



                                       9
<PAGE>   10

10.      NON-COMPETE CANCELLATION
         ------------------------

         If the Executive is entitled to the payments and benefits described in
         Section 4(b), then any agreement by the Executive not to compete with
         the Corporation or its Affiliates after the Executive's Termination
         Date shall be null and void and any such agreement shall be deemed to
         be amended accordingly.

11.      EXECUTIVE'S EXPENSES
         --------------------

         The Corporation shall pay or reimburse the Executive for all costs,
         including reasonable attorney's, accountants' and actuary's fees and
         expenses, incurred by the Executive (i) to confirm the Executive's
         rights to and amounts of payments hereunder, (ii) to contest or dispute
         any termination of the Executive's employment following a Change in
         Control or seek to obtain or enforce any right or benefit provided by
         this Agreement in litigation or arbitration, or (iii) in connection
         with any audit by a taxing authority related to any payment or benefit
         hereunder, or any subsequent contest or litigation relating to the tax
         treatment of such payment or benefit. Upon demand therefor, the
         Corporation shall advance to the Executive any amount as to which the
         Executive reasonably believes he or she will be entitled pursuant to
         this Section 11 for costs that the Executive has incurred or will incur
         during the ninety (90) days following such demand.

12.      BINDING AGREEMENT
         -----------------

         This Agreement shall inure to the benefit of and be enforceable by the
         Executive, and the Executive's heirs, executors, administrators,
         successors and assigns. This Agreement shall be binding upon the
         Corporation, its Successors and assigns. The Corporation shall require
         any Successor to assume and agree to perform this Agreement in
         accordance with its terms. The Corporation shall obtain such assumption
         and agreement prior to the effectiveness of any such succession.

13.      NOTICE
         ------

         Any notices and all other communications provided for herein shall be
         in writing and shall be delivered personally or sent by facsimile
         transmission (with written confirmation sent at the same time), prepaid
         air courier or prepaid certified or registered mail. Any such notice
         shall be deemed to have been given (a) when received, if delivered in
         person, sent by facsimile transmission, or sent by prepaid air courier,
         or (b) three (3) business days following the mailing thereof, if mailed
         by prepaid certified or registered mail, return receipt requested,
         addressed to the respective addresses set forth on the first page of
         this Agreement or to such other address as either party may have
         furnished to the other in writing in accordance herewith, except that
         notices of change of address shall be effective only upon receipt. All
         notices to the Corporation shall be addressed to the attention of the
         Board with a copy to the General Counsel.


                                       10
<PAGE>   11

14.      SOLE SEVERANCE; OTHER BENEFITS
         ------------------------------

         If the Executive is paid the entitlements due under Section 4(b), such
         payments shall be in lieu of any other severance amounts to which the
         Executive may be entitled under any other severance arrangement,
         including under any employment agreement, severance pay plan, or
         applicable legislation entitling the Executive to severance benefits.
         However, the parties acknowledge that the benefits paid hereunder are
         only exclusive as to other severance payments and that the Executive
         may be entitled to other benefits or payments triggered by a Change in
         Control under certain other of the Corporation's benefit or
         compensation arrangements, including, without limitation, any long term
         incentive plans, stock option plans or equity participation rights
         plans. This Agreement supercedes any Change in Control Agreement
         previously in effect between the Executive and the Corporation.

15.      AMENDMENTS; WAIVERS
         -------------------

         No provision of this Agreement may be modified, waived or discharged
         except in a writing specifically referring to such provision and signed
         by the party against which enforcement of such modification, waiver or
         discharge is sought. No waiver by either party hereto of the breach of
         any condition or provision of this Agreement shall be deemed a waiver
         of any other condition or provision at the same or any other time.

16.      GOVERNING LAW
         -------------

         The validity, interpretation, construction and performance of this
         Agreement shall be governed by the substantive laws of the State of
         Delaware without regard to the choice of law provisions thereof.

17.      VALIDITY
         --------

         The invalidity or unenforceability of any provision of this Agreement
         shall not affect the validity or enforceability of any other provision
         of this Agreement, which shall remain in full force and effect.

18.      ARBITRATION
         -----------

         If the Executive so elects, any dispute or controversy arising under or
         in connection with this Agreement shall be settled exclusively by
         arbitration in Greenville, South Carolina, or at the Executive's
         election in the city nearest to the Executive's principal residence
         that has an office of the American Arbitration Association, by one
         arbitrator in accordance with the rules of the American Arbitration
         Association then in effect. Judgment may be entered on the arbitrator's
         award in any court having jurisdiction. The Corporation hereby waives
         its right to contest the personal jurisdiction or venue of any court,
         federal or state, in an action brought to enforce this Agreement or any
         award of an arbitrator hereunder which action is brought in the
         jurisdiction in which such arbitration



                                       11
<PAGE>   12

         was conducted, or, if no arbitration was elected, in which arbitration
         could have been conducted pursuant to this Section 18.


19.      COUNTERPARTS
         ------------

         This Agreement may be executed in one or more counterparts, each of
         which shall be deemed to be an original but all of which together will
         constitute one and the same instrument.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.


                                           BOWATER INCORPORATED


                                           By
                                              ----------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------


                                           -------------------------------------
                                           Name:
                                                --------------------------------


                                       12
<PAGE>   13


                            SCHEDULE TO EXHIBIT 10.5

                              AMENDED AND RESTATED
                           CHANGE IN CONTROL AGREEMENT


         NAME                                        DATE OF AGREEMENT

Anthony H. Barash                                       June 9, 2000
James H. Dorton                                         June 9, 2000
E. Patrick Duffy                                        June 9, 2000
Arthur D. Fuller                                        June 9, 2000
Jerry R. Gilmore                                        June 9, 2000
Richard K. Hamilton                                     June 9, 2000
William G. Harvey                                       June 9, 2000
Steven G. Lanzl                                         June 9, 2000
David G. Maffucci                                       June 9, 2000
Robert A. Moran                                         June 9, 2000
Arnold M. Nemirow                                       June 9, 2000
R. Donald Newman                                        June 9, 2000
Michael F. Nocito                                       June 9, 2000
Wendy C Shiba                                           June 9, 2000
David J. Steuart                                        June 9, 2000
James T. Wright                                         June 9, 2000


                                       13
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>7
<FILENAME>g65151ex10-6.txt
<DESCRIPTION>1ST AMENDMENT/RETIREMENT PLAN/OUTSIDE DIRECTORS
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.6

                                 FIRST AMENDMENT
                                     TO THE
                              BOWATER INCORPORATED
                      RETIREMENT PLAN FOR OUTSIDE DIRECTORS
                             AS AMENDED AND RESTATED
                                FEBRUARY 26, 1999

         WHEREAS, Bowater Incorporated, a Delaware corporation (the
"Corporation"), established the Bowater Incorporated Retirement Plan for Outside
Directors (the "Plan"); and

         WHEREAS, the Executive Committee of the Board of Directors of the
Corporation desires to amend and restate Section 2.02 of the Plan;

         NOW, THEREFORE, Section 2.02 of the Plan is hereby amended and
restated, effective June 9, 2000, as follows:

         "2.02    Change in Control. Any Participating Director who was a
                  Director immediately prior to a Change in Control of the
                  Company who is removed from or not renominated to his
                  directorship following such Change in Control shall (a) not be
                  required to meet the service requirement imposed by Section
                  2.01, (b) be eligible to retire early pursuant to Section 3.01
                  without the consent of the Company and without regard to his
                  attained age at the time of such retirement, and (c) be
                  entitled to a benefit calculated under Section 4.01 or 4.02,
                  whichever is applicable, as described in the next sentence
                  (but only in the event of a Change in Control). For purposes
                  of this calculation, years of Service in Continuous Service
                  shall be deemed to be ten (10) and Final Average Earnings
                  shall be based on Earnings that include (i) the amount of the
                  annual retainer in effect for the calendar year in which the
                  Change in Control occurs, plus (ii) all fees for attendance at
                  Board meetings and committee meetings recorded on the
                  quarterly statements of Board compensation for the four full
                  calendar quarters immediately preceding the date of the Change
                  in Control."

         IN WITNESS WHEREOF, Bowater Incorporated has caused this First
Amendment to be executed by a duly authorized member of the Executive Committee
of the Board of Directors as of this 9th day of June, 2000.

                                            BOWATER INCORPORATED

                                            Executive Committee of the Board
                                            of Directors

                                            By:      /s/ Arnold M. Nemirow
                                                     ---------------------------
                                                     Arnold M. Nemirow


                                            Date Signed:   September 13, 2000
                                                           ------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27.1
<SEQUENCE>8
<FILENAME>g65151ex27-1.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER> 1,000,000

<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-START>                             JAN-01-2000
<PERIOD-END>                               SEP-30-2000
<CASH>                                              22
<SECURITIES>                                         0
<RECEIVABLES>                                      399
<ALLOWANCES>                                         0
<INVENTORY>                                        162
<CURRENT-ASSETS>                                   630
<PP&E>                                           4,773
<DEPRECIATION>                                   1,854
<TOTAL-ASSETS>                                   4,991
<CURRENT-LIABILITIES>                              828
<BONDS>                                          1,450
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                            62
<OTHER-SE>                                       1,679
<TOTAL-LIABILITY-AND-EQUITY>                     4,991
<SALES>                                          1,715
<TOTAL-REVENUES>                                 1,715
<CGS>                                            1,151
<TOTAL-COSTS>                                    1,368
<OTHER-EXPENSES>                                     8
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                  99
<INCOME-PRETAX>                                    169
<INCOME-TAX>                                        66
<INCOME-CONTINUING>                                101
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                       101
<EPS-BASIC>                                       1.92
<EPS-DILUTED>                                     1.90


</TABLE>
</TEXT>
</DOCUMENT>
</SUBMISSION>
