Exhibit 10.5



 





EXHIBIT 10.5









October 12, 2007




Mr. William G. Harvey

1 Rugosa Way

Greer, SC 29650




Re: Offer letter




Dear Bill,



We are pleased to offer you the position of Senior Vice-President and Chief Financial Officer, in
the new AbitibiBowater, Inc. The following are details as agreed upon on this date:




Location:



For the time being, you may maintain an office in the Greenville, South Carolina area and you
will continue to be an employee of Bowater Incorporated, as well as AbitibiBowater. During
this interim time, you will be paid by Bowater Incorporated. However, you will be required
eventually to relocate to the head office located in Montreal. The effective relocation date
will be discussed and determined in the year 2008.




Effective Date:



The effective date is the closing of the merger (“Closing Date”). This offer is contingent on
the conclusion of the merger, and subject to approval of the Human Resources and Compensation
Committee (“HRCC”) of the new company of various compensation items.




Compensation:



Your annual base salary, effective the date of the merger, will be US$425,000. You will be
eligible to participate in a short-term incentive plan with a target level of 70% of your base
salary.



We will request that the HRCC approve base compensation and incentive targets for the new
executive team and approve several compensation redesigns.



We expect to terminate the current 2007 Annual Incentive Plan on the Closing Date and to pay
the resulting bonus as soon as practicable. We will substitute a new plan for the remainder of
2007 and all of 2008, emphasizing the achievement of synergies.



Additionally, for executives at your level, we will request an equity award tied to synergy
achievement. We anticipate continuing annual equity grants of similar value as you currently
receive and a target level of ownership of common shares may be required. Previous equity
awards will roll-over into the new company and will be paid according to the initial payout
schedule.






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You will also be eligible for a perquisite allowance of US$12,000 per year and an additional
benefit value of up to US$5,000 for US tax preparation.




Others:





	 	(1)	 	You will participate in the company’s (or any affiliate’s) pension and benefit plans.
	 
	 	(2)	 	Following the merger, the new company intends to harmonize certain benefits offered to
salaried employees, including senior executives, which may lead to changes in the current
benefits. You will be informed about any changes at the appropriate time.
	 
	 	(3)	 	Subject to the approval of the new HRCC, you will be covered by an employment
agreement (substantially in the form attached as Exhibit A) and a new Change in Control
agreement.
	 
	 	(4)	 	In addition, you will be eligible for the company’s international relocation policy to
assist you with your move to Montreal. In order to facilitate the process, we have assigned
Paula Ferreira to facilitate and coordinate all aspects of your relocation. Please feel
free to contact her at your earliest convenience at (514) 954-2988 or
ferreirap@bowater.com. The relocation benefits will include a lump sum of $133,279
as a housing and cost of living offset, which will be payable only when you begin the
relocation process and will be subject to Canadian taxes. This payment includes an amount
attributable to the higher Canadian tax rate. In addition, considering your special
circumstance, the company will provide an education allowance for a period of three years,
up to a maximum of $15,000/per child per year. Please refer to the enclosed policy for more
details.




We are excited about the prospects of the combination of the two companies and look forward to
having you joining us on the leadership team. It will be a challenge.



Please acknowledge receipt of this offer letter and agreement with its terms by signing the two
originals and returning one copy to Jim Wright.




	 	 	 	 	 
	 	Sincerely,

 	 
	 	/s/ Jim T. Wright
 	 
	 	Jim T. Wright 	 
	 	Senior Vice President — Human Resources 	 
	 


I accept this offer:




	 	 	 	 	 	 	 
	/s/ William G. Harvey

	 	 	 	Oct 29, 2007	 	 
	 
	 	 	 	 	 	 
	William G. Harvey

	 	 	 	Date
	 	 








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EXHIBIT A




EMPLOYMENT AGREEMENT




     THIS
AGREEMENT, is made as of this day of            2007, by and between ABITIBIBOWATER INC., a
Delaware corporation having a mailing address of (the “Corporation”), and William G. Harvey, 1 Rugosa Way, Greer, SC 29681 (the “Executive”).



     WHEREAS, the Corporation desires to employ the Executive as Senior Vice President and
Chief Financial Officer of the Corporation; and



     WHEREAS, the Executive is desirous of serving the Corporation in such capacity;



     NOW, THEREFORE, the parties hereto agree to enter into an Employment Agreement as
follows:



     1. Employment. During the term of this Agreement, the Corporation agrees to employ
the Executive and the Executive agrees to be in the employ of the Corporation, in accordance with
and subject to the provisions of this Agreement.



     2. Term.




	 	(a)	 	Subject to the provisions of subparagraphs (b) and (c) of
this Section 2, the term of this Agreement shall begin on the date hereof and
shall continue thereafter until terminated by either party by written notice
given to the other party at least thirty (30) days prior to the effective date
of any such termination. The effective date of the termination shall be the
date stated in such notice, provided that if the Corporation specifies an
effective date that is more than thirty (30) days following the date of such
notice, the Executive may, upon thirty (30) days’ written notice to the
Corporation, accelerate the effective date of such termination.
	 
	 	(b)	 	Notwithstanding Section 2(a), the term of this
Agreement shall end upon:






	 	(i)	 	the death of the Executive;
	 
	 	(ii)	 	the inability of the Executive to perform
his duties properly, whether by reason of ill-health, accident or
other cause, for a





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	 	 	 	period of one hundred and eighty (180) consecutive days or for
periods totaling one hundred and eighty (180) days occurring within
any twelve (12) consecutive calendar months; or
	 
	 	(iii)	 	the Executive’s retirement.





     3. Position and Duties. Throughout the term hereof, the Executive shall be employed as
Senior Vice President and Chief Financial Officer of the Corporation, with the duties and
responsibilities customarily attendant to that office and which the executive fulfilled as the
Chief Financial Office of Bowater Incorporated, provided that the Executive shall undertake such
other and further assignments and responsibilities of at least comparable status as the Board of
Directors may direct. The Executive shall diligently and faithfully devote his full working time
and best efforts to the performance of the services under this Agreement and to the furtherance of
the best interests of the Corporation.



     4. Place of Employment. The Executive will be employed at the Corporation’s offices
located in Greenville, South Carolina (prior to relocation) or Montreal, Quebec, Canada, or at such
other place as the Corporation shall designate from time to time.



     5. Compensation and Benefits.




	 	(a)	 	Base Salary. The Corporation shall pay to the Executive
a base salary of U.S.$425,000 payable in substantially equal periodic
installments on the Corporation’s regular payroll dates. The Executive’s base
salary shall be reviewed by the Board of Directors and from time to time may be
increased (or reduced, if such reduction is effected pursuant to
across-the-board salary reductions similarly affecting all management personnel
of the Corporation).
	 
	 	(b)	 	Incentive Plans.






	 	(i)	 	Annual Incentive Plan. In addition
to his base salary, the Executive shall be eligible to receive an
annual incentive award with a target level of 70% of base salary under
the Corporation’s annual incentive plan in effect from time to time
determined in the manner, at the time, and in the amounts set forth
under such plan.





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	 	(ii)	 	Stock-Based Incentive Compensation. Subject to the
approval of the Board of Directors, the Executive shall be eligible
for an annual award under a stock-based incentive program, as
modified from time to time, and for so long as such program
continues.






	 	(c)	 	Benefit Plans. The Corporation shall make contributions
on the Executive’s behalf to the various benefit plans and programs of the
Corporation in which the Executive is eligible to participate in accordance
with the provisions thereof as in effect
from time to time.
	 
	 	(d)	 	Vacations. The Executive shall be entitled to paid
vacation in keeping with the Corporate policy as in effect from time to time,
to be taken at such time or times as may be approved by the Corporation.
	 
	 	(e)	 	Expenses. The Corporation shall reimburse the Executive
for all reasonable expenses properly incurred, and appropriately documented, by
the Executive in connection with the business of the Corporation.
	 
	 	(f)	 	Perquisites. The Corporation shall make available to
the Executive all perquisites to which he is entitled by virtue of his
position.





     6. Nondisclosure. During and after the term of this Agreement, the Executive shall
not, without the written consent of the Board of Directors of the Corporation, disclose or use
directly or indirectly (except in the course of employment hereunder and in furtherance of the
business of the Corporation or any of its subsidiaries and affiliates) any of the trade secrets or
other confidential information or proprietary data of the Corporation or its subsidiaries or
affiliates; provided, however, that confidential information shall not include any information
known generally to the public (other than as a result of unauthorized disclosure by the Executive)
or any information of a type
not otherwise considered confidential by persons engaged in the same or similar businesses.



     7. Noncompetition. During the term of this Agreement and for a period of one (1) year
after the date the Executive’s employment terminates, the Executive shall not, without the prior
approval of the Board of Directors of the Corporation or its delegate, in the same or a similar
capacity engage in or invest in, or aid or assist anyone else in the conduct of any business (other
than the businesses of the Corporation and its subsidiaries and affiliates) which directly competes
with the business of the Corporation and its




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subsidiaries and affiliates as conducted during the term hereof. If any court of competent
jurisdiction shall determine that any of the provisions of this Section 7 shall not be enforceable
because of the duration or scope thereof, the parties hereto agree that said court shall have the
power to reduce the duration and scope of such provision to the extent necessary to make it
enforceable and this Agreement in its reduced form shall be valid and enforceable to the extent
permitted by law. The Executive acknowledges that the Corporation’s remedy at law for a breach by
the Executive of the provisions of this Section 7 will be inadequate. Accordingly, in the event of
the breach or threatened breach by the Executive of this Section 7, the Corporation shall be
entitled to injunctive relief in addition to any other remedy it may have. To the extent that the
Executive is subject to any other noncompete obligations that are more restrictive than those
described above, such more restrictive obligations will apply.




     8. Severance
Pay. (a) If the Executive’s employment hereunder is involuntarily
terminated for any reason other than those set forth in Section 2(e) hereof including for “Good
Reason” as defined below, then the Corporation shall pay the Executive severance pay in an amount
equal to twenty-four (24) months of the Executive’s base salary on the effective date of the
termination, plus 1/12 of the amount of the last bonus paid to the Executive under the
Corporation’s annual incentive plan as applicable to the Executive, for each month in the period
beginning on January 1 of the year in which the date of the termination occurs and ending on the
date of the termination and for each months’ base salary to which the Executive is entitled under
this Section 8.



     (b) The Executive shall have the right to terminate this Agreement for “Good Reason” and
receive the severance pay described above. In addition, if the Executive exercises the right to
terminate for Good Reason as defined in Section 8(d)(vi), he shall be entitled to (i) the full
benefits of the Corporation’s relocation policy as in effect on such date if he relocates within
six (6) months following the termination of his employment and (ii) he shall not be required to
re-pay any amounts paid to him under the relocation policy in connection with his move to Montreal
or awarded to him as a bonus in connection with his pre-merger activities.



     (c) For purposes of this Agreement, the term for “Cause” shall mean because of gross
negligence or willful misconduct by the Executive either in the course of his employment hereunder
or which has a material adverse effect on the Corporation or the Executive’s ability to perform
adequately and effectively his duties hereunder.



     (d) For purposes of this Agreement, the term for “Good Reason” shall mean: (i) a reduction by
the Corporation in the Executive’s Base Salary or target bonus unless such reduction is effected
pursuant to across-the-board salary or bonus reductions similarly affecting all management
personnel of the Corporation, (ii) a material diminution in the Executive’s titles, duties or
responsibilities, (iii) a change in Executive’s reporting lines such that he no longer reports to
the Chairman of the Board (unless his reporting line is changed so that he reports to the Chief
Executive Officer), (iv) an unconsented relocation of Executive’s principal place of work to a
location more than thirty (30) miles from the




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initial locations referred to in Section 4, (v) the failure of a successor to expressly assume this
Agreement, or (vi) for a period of twenty-four months following the effective date of this
Agreement, for failure to provide an acceptable work environment as determined in the Executive’s
sole discretion; provided, that for a termination for Good Reason under Clauses (i), (ii),
(iii), or (v), the Executive shall have provided the Corporation with written notice, and the
Corporation shall fail to cure the basis for Good Reason within twenty (20) days of such notice.




     (e) The severance pay shall be paid in a lump sum as soon as administratively feasible
following the executive’s effective date of termination, but in no event shall payment be made
later than March 15 following the calendar year of the Executive’s termination from employment,
unless otherwise required by Internal Revenue Code Section 409A or guidance issued thereunder. The
severance pay shall be in lieu of all other compensation or payments of any kind relating to the
termination of the Executive’s employment hereunder; provided that the Executive’s entitlement to
compensation or payments under the Corporation’s (or any affiliate’s) retirement plans, stock-based
incentive plans, savings plans, or bonus plans attributable to service rendered prior to the
effective date of the termination shall not be affected by this clause and shall continue to be
governed by the applicable provisions of such plans; and further provided that in lieu hereof, at
his election, the Executive shall be entitled to the benefits of the Change in Control Agreement
between the Corporation and the Executive, if termination occurs in a manner and at a time when
such Change in Control Agreement is applicable



     9. Notices. Any notices required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been given when delivered or mailed, by registered or
certified mail, return receipt requested to the respective addresses of the parties set forth
above, or to such other address as any party hereto shall designate to the other party in writing
pursuant to the terms of this Section 9.



     10. Severability. The provisions of this Agreement are severable, and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of any other provision.



     11. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the substantive laws of the State of Delaware.



     12. Supersedure. This Agreement shall cancel and supersede all prior agreements
relating to employment between the Executive and the Corporation or its predecessor.



     13. Waiver of Breach. The waiver by a party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any prior or subsequent breach by any
of the parties hereto.



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     14. Binding
Effect. The terms of this Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Corporation and the heirs, executors,
administrators and successors of the Executive, but this Agreement may not be assigned by the
Executive.



     IN WITNESS WHEREOF, the Corporation and the Executive have executed this Agreement as of the
day and year first above written.



	 	 	 	 	 	 	 	 	 
	ABITIBIBOWATER INC.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By

	 	/s/ James T. Wright	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	James T. Wright
	 	 	 	William G. Harvey	 	 
	 

	 	Sr. Vice President — Human Resources
	 	 	 	 	 	 
	Date Signed:                                         	 	 	 	Date Signed:                                         	 	 








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