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                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT


         THIS AGREEMENT, is made as of this 1st day of August, 1998, by and
between BOWATER INCORPORATED, a Delaware corporation having a mailing address of
55 East Camperdown Way, Greenville, South Carolina 29601 (the "Corporation"),
and William G. Harvey, 169 Main Road, Hudson, Quebec J0P 1H0 (the "Executive").

         WHEREAS, the Corporation desires to employ the Executive as Vice
President - Treasurer; 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 continue to employ the Executive, and the Executive agrees to continue 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), upon the occurrence of a Change
                  in Control as defined in the Change in Control Agreement of
                  even date herewith 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 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:



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                  (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 on his early or normal
                           retirement date.


         3. Position and Duties. Throughout the term hereof, the Executive shall
be employed as Vice President - Treasurer of Bowater Incorporated (Salary Grade
31), with the duties and responsibilities customarily attendant to that office,
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 in the City of Greenville, South Carolina or at such other
place as the Corporation shall designate from time to time, provided, however,
that if the Executive is transferred to another place of employment,
necessitating a change in his residence, the Executive shall be entitled to
financial assistance 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 the Executive a base
                  salary of $140,000 payable in substantially equal periodic
                  installments on the Corporation's regular payroll dates. The
                  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)      Bonus Plan. In addition to his base salary, the Executive
                  shall be entitled to receive an annual bonus under the
                  Corporation's bonus 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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         (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 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. 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.


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         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 twelve (12) months of the Executive's base salary on the effective date
of the termination, plus 1/12 of the amount of the last annual bonus paid to the
Executive under the Corporation's bonus plan 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 retirement plans, stock option or 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 of even date hereof 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.


         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.




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         12. Supersedure. This Agreement shall cancel and supersede all prior
agreements relating to employment between the Executive and the Corporation,
except the Change in Control Agreement.


         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.


         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/ Richard F. Frisch                           /s/ William G. Harvey
    ---------------------------------               ---------------------
        Richard F. Frisch                           William G. Harvey
Its: Vice President - Human Resources


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