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                                                                    EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT, is made as of this 24th day of September, 2001, by and
between BOWATER INCORPORATED, a Delaware corporation having a mailing address of
55 East Camperdown Way, Greenville, South Carolina 29601 (the "Corporation"),
Bowater Canada Forest Products Division ("Bowater Canada Division") a Canadian
corporation, and Pierre Monahan, 184 Deschamps Avenue, Repentigny (Quebec) J6A
2X9 (the "Executive").

         WHEREAS, the Corporation desires to employ the Executive as Vice
President of the Corporation and as President of Bowater Canada Division; and

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

         NOW, THEREFORE, the parties hereto agree as follows:


         1.       Employment. During the term of this Agreement, the Corporation
agrees to employ the Executive through Bowater Canada Division and the Executive
agrees to be in the employ of Bowater Canada Division, 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), upon the occurrence of
                           a Change in Control as defined in the Change in
                           Control Agreement between the Corporation and the
                           Executive (the "Change in Control Agreement"), the
                           term of this Agreement shall be deemed to continue
                           until terminated, but in any event, for a period of
                           not less


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                           than three (3) years following the date of the Change
                           in Control, unless such termination shall be at the
                           Executive's election for other than "Good Reason" as
                           that term is defined in the Change in Control
                           Agreement.

                  (c)      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
                                    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 as of the
                                    retirement date.

         3.       Position and Duties. Throughout the term hereof, the Executive
shall be employed as Vice President of the Corporation (subject to election by
the Board of Directors) and as President of Bowater Canada Division (Salary
Grade 36), with the responsibility for the operation of the paper mills in
Donnacona, Dolbeau, Gatineau and Dalhousie, as well as forestry, lumber sales
and manufacturing operations in Quebec and New Brunswick, 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. The Executive
shall report directly to the Chairman, President and Chief Executive Officer of
the Corporation.

         4.       Place of Employment. The Executive will be employed at the
offices of Bowater Canada Division in the Greater Montreal Metropolitan Area.

         5.       Compensation and Benefits.

                  (a)      Base Salary. The Corporation shall pay to the
                           Executive a base salary of C$472,000.00 payable in
                           substantially equal periodic installments on the
                           Corporation's regular payroll dates. The


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                           Executive's base salary shall be reviewed at least
                           annually 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 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. For the balance of
                                    2001, the Executive shall be entitled to a
                                    prorated incentive award based upon a target
                                    incentive of 55%. Starting in 2002, the
                                    target incentive will be determined by the
                                    Executive's Salary Grade Level (the target
                                    incentive for Salary Grade 36 is 50% for
                                    2002).

                           (ii)     LTIP. The Executive shall be eligible to
                                    participate in the Bowater Incorporated
                                    2000-2002 Long-Term Incentive Plan. The
                                    Executive's award, if any, shall be prorated
                                    based on his date of employment hereunder.

                           (iii)    Stock-Based Incentive Compensation. Subject
                                    to the approval of the Board of Directors,
                                    the Executive shall be awarded a stock
                                    option grant relating to 50,000 shares,
                                    subject to the terms and conditions of the
                                    Corporation's 2000 Stock Option Plan and the
                                    regular Non-Qualified Stock Option
                                    Agreement. Starting in the year 2002, the
                                    Executive shall be eligible for an annual
                                    award under a Bowater 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 Bowater Canada
                           Division in which the Executive is eligible to
                           participate in accordance with the provisions thereof
                           as in effect from time to time. For benefits
                           administration purposes, the Executive's past service
                           with Alliance Forest Products, Inc. ("AFP"), and its
                           predecessor shall be recognized.


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                  (d)      Retirement Benefits. The Executive's retirement
                           benefits shall be computed based upon the terms of
                           the AFP supplemental pension plan as in effect on the
                           date hereof.

                  (e)      Vacations. The Executive shall be entitled to paid
                           vacation (currently five weeks), 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.

                  (f)      Expenses. Bowater Canada Division shall reimburse the
                           Executive for all reasonable expenses properly
                           incurred, and appropriately documented, by the
                           Executive in connection with the business of the
                           Corporation.

                  (g)      Perquisites. Bowater Canada Division shall make
                           available to the Executive all perquisites to which
                           he is entitled by virtue of his position, including
                           an annual flexible perquisites budget totaling
                           $30,000 to pay for among other things, company rental
                           car costs, private club memberships, etc.

         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, within the territory of Canada and the United States,
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 subsidiaries and affiliates as
conducted during the term hereof in the fields of forest and timber management
or the sale of newsprint, pulp, coated and uncoated groundwood papers, forest,
lumber or


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related products. 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.

         8.       Severance Pay. If the Executive's employment hereunder is
involuntarily terminated for any reason other than those set forth in Section
2(c) hereof, then unless the Corporation shall have terminated the Executive for
"Cause", 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 Executive's target incentive under the
Corporation's annual incentive plan as of the date of termination 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, provided, however, that any amount paid to the Executive
by the Corporation for services rendered subsequent to the thirtieth (30th) day
following the communication to the Executive of notice of termination shall be
deducted from the severance pay otherwise due hereunder. Such payment shall be
made in a lump sum within ten (10) business days following the effective date of
the termination. 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 Bowater Canada Division's) retirement plans, stock
option or stock-based incentive plans, or savings 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. 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.


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         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 Province of Quebec.

         12.      Supersedure. This Agreement shall cancel and supersede all
prior agreements relating to employment between the Executive and the
Corporation, except for the terms outlined in the Corporation's letter offering
employment to the Executive dated July 13, 2001, to the extent such terms are
not included herein.

         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.

         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.

         15.      French/English Language. The present contract has been drafted
in the English language at the request of the parties and both parties are
agreeable that it be so. Les parties ont convenu que le present contrat soit
redige en langue anglaise et sont d'accord a ce sujet.


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

BOWATER INCORPORATED


By /s/ Arnold M. Nemirow                             /s/ Pierre Monahan
   -----------------------------------------         --------------------------
       Arnold M. Nemirow                                   Pierre Monahan
Chairman and Chief Executive Officer


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