EXHIBIT 10.1**EMPLOYMENT AGREEMENT**     **THIS AGREEMENT,**is made this 4th day of April, 2006, by and between **BOWATERINCORPORATED,**a Delaware corporation having a mailing address of 55 East Camperdown Way,Greenville, South Carolina 29601 (the “Corporation”), and David J. Paterson (the “Executive”).     **WHEREAS,**the Corporation desires to employ the Executive as President and Chief Executive Officerand a member of the board of directors of the Corporation (the “Board”); and     **WHEREAS,**the Executive is desirous of serving the Corporation in such capacity;     NOW, THEREFORE, the parties hereto agree as follows:     1. Employment. The Corporation agrees to employ the Executive, and the Executive agrees tobe employed by the Corporation, effective the Effective Date, in accordance with and subject to theprovisions of this Agreement.     2. Term. (a) Subject to the provisions of subparagraphs (b) and (c) of this Section 2, theterm of the Executive’s employment shall begin on May l, 2006 (“Effective Date”) and shall continuethereafter until terminated by either party by written notice given to the other party at leastninety (90) days prior to the effective date of any such termination. The effective date of thetermination shall be the date stated in such notice, provided that if the Corporation or Executivespecifies an effective date that is more than ninety (90) days following the date of such notice,the Executive or the Corporation, as the case may be, may, upon ninety (90) days’ written notice tothe Corporation or the Executive, as the case may be, accelerate the effective date of suchtermination.          (b) The parties shall enter into a Change in Control Agreement effective the Effective Date, inthe form previously provided to the Executive (“Change in Control Agreement”). NotwithstandingSection 2(a), upon the occurrence of a Change in Control, as defined in the Change in ControlAgreement, for purposes of the Change in Control Agreement, the term of the Executive’s employmentshall continue until terminated, but in any event, for a period of not less than three (3) yearsfollowing the date of the Change in Control, unless such termination shall be at the Executive’selection for other than “Good Reason” as that term is defined in the Change in Control Agreement.          (c) Notwithstanding Section 2(a), the term of the Executive’s employment shall end upon:
 

 
               (i) the death of the Executive;               (ii) the inability of the Executive to perform his duties properly, whether by reason ofill-health, injury or other similar cause, for a period of one hundred and eighty (180) consecutivedays or for periods totaling one hundred and eighty (180) days occurring within any twelve (12)consecutive calendar months; or               (iii) the Executive’s retirement on his early or normal retirement date in accordance with theCorporation’s tax-qualified retirement plan in which the Executive participates.     3. Position and Duties. (a) Throughout the term of the Executive’s employment, theExecutive shall be employed as President and Chief Executive Officer, with the duties andresponsibilities customarily attendant to that office, provided that the Executive shall undertakesuch other and further assignments and responsibilities of at least comparable status as the Boardmay direct. The Executive shall diligently and faithfully devote his full working time and bestefforts to the performance of the services under this Agreement and to the furtherance of the bestinterests of the Corporation. The Executive shall report to the Board.          (b) Other Activities. During the term of the Executive’s employment, the Executive shallnot engage in any other business activities, as an employee, director, consultant or in any othercapacity, whether or not he receives any compensation therefor, without the prior written consentof the Board; provided that the Executive may serve on up to two corporate boards (other than theBoard) with the approval of the Board, which approval shall not be unreasonably withheld.Notwithstanding the foregoing provisions of this subsection (b), it shall not be a violation ofthis Agreement for the Executive to serve on civic or charitable boards or committees to the extentthat such service does not interfere with his duties under this Agreement.     4. Place of Employment. The Executive will be employed at the Corporation’s offices in theCity of Greenville, South Carolina or at such other place as the Corporation shall designate fromtime to time, provided, however, that if the Executive is so transferred to another place ofemployment, necessitating a change in his residence, the Executive shall be entitled to financialassistance in accordance with the terms of the Corporation’s relocation policy then in effect.     5. Compensation and Benefits. (a) Base Salary. The Corporation shall pay to theExecutive an annual base salary of $825,000 (“Base Salary”) payable in substantially equal periodicinstallments on the Corporation’s regular payroll dates. The Base Salary shall be reviewed at leastannually and from time to time may be
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increased (or reduced, if such reduction is effected pursuant to across-the-board salary reductionssimilarly affecting all management personnel of the Corporation).          (b) Annual Incentive Plan. In addition to Base Salary, the Executive shall be eligible toreceive an annual bonus under the Corporation’s annual incentive plan in effect from time to timedetermined by Board in the manner, at the time, and within the criteria set forth by the Board inplan. The Executive shall be eligible under such plan for a target bonus of not less than 68% ofBase Salary (“Target Bonus”), subject to reduction by the Board if such reduction is effectedpursuant to across-the-board bonus reductions similarly affecting all management personnel of theCorporation, with a maximum eligible payout under such plan of 200% of the Target Bonus (“MaximumBonus”). Notwithstanding the foregoing, the Executive will be paid, with respect to calendar year2006 (payable in January of 2007), not less than 100% of such Target Bonus, prorated to reflect thepercentage of the year 2006 that the Executive was actually employed by the Corporation.          (c) Long Term Incentive. The Executive shall be entitled to participate in theCorporation’s long term incentive and stock-based incentive compensation plans beginning in 2007 ona basis commensurate with his position.          (d) Initial Equity Grant. The Corporation shall grant Executive an award of an option topurchase 250,000 shares of the Corporation’s common stock having an exercise price equal to thefair market value of the common stock at the close of business on the Effective Date, a ten (10)year exercise term and vesting as to 83,333 shares on each of the first and second anniversariesand as to 83,334 shares on the third anniversary of the Effective Date. The initial stock optiongrant will be subject to further terms and conditions as set forth in the award document effectiveas of the Effective Date. The Corporation shall also grant to the Executive an award of 50,000shares of restricted stock units (“Stock Grant”) effective as of May 10, 2006. The Stock Grantshall provide (i) that the award shall vest in full on the first anniversary of the grant date,(ii) the right to dividends on all such shares declared and paid to other shareholders shall beaccrued during the vesting period and paid to the Executive upon vesting, (iii) upon vesting, theCorporation shall satisfy the Executive’s tax liability for the Stock Grant by withholding suchnumber of shares from the Stock Grant as have an aggregate fair market value (as calculated in theplan under which the Stock Grant is made), provided, however, that such shares may be used tosatisfy not more than the Corporation’s minimum statutory withholding obligation (based on minimumstatutory withholding rates for Federal and state tax purposes, including payroll taxes, that areapplicable to such supplemental taxable income), and shall remit such amount as withholding tax tothe applicable taxing authorities, and (iv) the Stock Grant shall fully vest upon an involuntarytermination of the Executive’s employment without Cause or a voluntary termination for Good Reason(each term as defined below).
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          (e) Deferred Compensation. The Corporation shall enroll the Executive in its newRetirement Savings Plan effective as of January 1, 2007, in accordance with the summary of planterms previously provided to the Executive. The plan provides for an annual Corporationcontribution of 20.5%, if the Executive contributes 5%, each as a percentage of the sum of theExecutive’s Base Salary and annual bonus (referred to in Section 5(b), above) paid to Executiveeach calendar year. In lieu of any deferred plan participation or payment to which Executiveotherwise may be entitled by reason of his employment by the Corporation in 2006, the Executiveshall be entitled to a contribution in respect of 2006 on the foregoing basis (including his 5%elective deferral), but based on the Base Salary paid in 2006 and the 2006 bonus paid in January of2007, all of which shall be credited as nonqualified deferred compensation under the RetirementSavings Plan as of January 1, 2007. The Executive shall be vested in this benefit upon the thirdanniversary of the Effective Date, and shall be entitled to a lump sum payment of a pro rataportion of this benefit in the event prior to the third anniversary of the Effective Date of aninvoluntary termination without Cause or a termination by the Executive for Good Reason, other thanwith respect to the 4.5% portion of the Corporation contribution (i.e., 21.95% of the totalCorporation contribution) that shall remain subject in all events to three-year vesting.          (f) Benefit Plans. The Corporation shall make contributions on the Executive’s behalf tothe various benefit plans and programs of the Corporation in which the Executive is eligible toparticipate in accordance with the provisions thereof as in effect from time to time.          (g) Vacations. The Executive shall be entitled to five weeks of annual paid vacation, andotherwise in keeping with the Corporation’s policy as in effect from time to time.          (h) Expenses. The Corporation shall reimburse the Executive for all reasonable expensesproperly incurred, and appropriately documented, by the Executive in connection with the businessof the Corporation.          (i) Perquisites. The Corporation shall make available to the Executive all perquisites towhich he is entitled by virtue of his position.          (j) Legal Expenses. The Executive shall be entitled to reimbursement of reasonable legalfees and expenses incurred in the negotiation and documentation of this Agreement promptly uponexecution hereof up to a maximum amount of $30,000.          (k) Relocation. The Executive shall be entitled to full relocation benefits in accordancewith the Corporation’s relocation program for its senior executives.
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     6. Nondisclosure. During and after the term of the Executive’s employment, the Executiveshall not without the written consent of the Board, except in the discharge of his duties hereunderand in furtherance of the business of the Corporation or any of its subsidiaries and affiliates,disclose or use directly or indirectly, any of the trade secrets or other confidential informationor proprietary data of the Corporation or its subsidiaries or affiliates; provided, however, thatconfidential information shall not include any information known generally to the public (otherthan as a result of unauthorized disclosure by the Executive) or any information of a type nototherwise considered confidential by persons engaged in the same or similar businesses.     7. Noncompetition. (a) Executive represents and warrants that he is not subject to andwill not bring any material that is subject to any