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                                                                   EXHIBIT 10.2


                      MODIFICATION OF EMPLOYMENT AGREEMENT

         THIS AGREEMENT is made and entered into as of this 1st day of July,
2002, by and between Bowater Incorporated, a Delaware corporation having a
mailing address of 55 East Camperdown Way, Greenville, South Carolina 29602
(the "Corporation"), and Anthony H. Barash, of 1212 Shadow Way, Greenville, SC
29615 (the "Executive").

         WHEREAS, the Corporation now employs the Executive pursuant to an
Employment Agreement dated as of April 1, 1996, (the "Employment Agreement")
and a Change in Control Agreement dated as of February 26, 1999 (the "Change in
Control Agreement") as amended; and

         WHEREAS, the Executive and the Corporation wish to continue the
Executive's employment until a specified and agreed upon date, whereupon the
Executive will terminate his employment with the Corporation and be entitled to
receive certain benefits under the Supplemental Benefit Plan for Designated
Employees of Bowater Incorporated and Affiliated Companies as Amended and
Restated Effective November 1, 1995 (the "SERP") as further described below;

         NOW, THEREFORE, the parties hereto agree to the following:

1.       Change in Control. The Change in Control Agreement is hereby
terminated as of the date hereof.

2.       Employment Agreement. The Employment Agreement is hereby modified as
follows:

         (a)      Term. Section 2 of the Employment Agreement is amended in its
                  entirety to read as follows:

                  "2.      Term. The term of this Agreement will end on June
                           30, 2004, unless sooner terminated by the
                           Executive's death, except that Sections 6, 7, 9, 10,
                           11, 13, 14 and 15 shall continue in accordance with
                           their terms."

         (b)      Position and Duties. Section 3 of the Employment Agreement is
                  amended by adding the following at the end thereof:

                           "Throughout the term hereof, the Executive will have
                           the employment status of an exempt employee. The
                           Executive is relieved, as of June 30, 2002, of the
                           obligation to devote his full working time to the
                           performance of duties under this Agreement, but
                           shall, during the remaining term hereof, be an
                           employee of the Corporation notwithstanding
                           Executive's leave-of-absence status. During the term


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                           of this Agreement, the Executive shall be available
                           to provide advisory, consultative and similar
                           services with respect to the Corporation's Legal
                           Department, and such additional services as are
                           described in Sections 6.02(a) and 6.02(c) of the
                           SERP. In order to provide such services, the
                           Executive shall maintain his license to practice law
                           under Rule 405 of the South Carolina Bar Association
                           through June 30, 2004. The Corporation shall pay all
                           applicable license fees and mandatory continuing
                           legal education fees, up to $500 per year for 2003
                           and 2004, subject to the Corporation's receipt of
                           appropriate substantiation of such expenses."

         (c)      Compensation and Benefits. Section 5 of the Employment
                  Agreement is amended in its entirety to read as follows:

                  "5.      Compensation and Benefits.

                  (a)      Base Salary. The Corporation will pay to the
                           Executive a base salary at his annual rate as fixed
                           from time to time until June 30, 2002, and
                           thereafter at the annual rate of $335,000 , in
                           substantially equal monthly installments of
                           $27,916.67 on the Corporation's regular pay dates,
                           through June 30, 2004. All applicable taxes and
                           other authorized deductions will be deducted from
                           each paycheck. If the Executive should die prior to
                           June 30, 2004, any base salary amounts remaining
                           unpaid for such period will be paid to the
                           Executive's estate.

                  (b)      Bonus Plan. In addition to base salary, the
                           Executive will be entitled, upon taking leave of
                           absence status as provided in Section 3, to a
                           severance bonus equivalent payment of $431,732.50,
                           which is equal to 30/12 times the bonus amount paid
                           for calendar year 2001, to be paid on or about
                           August 31, 2002, and subject to all applicable
                           withholding requirements. This bonus is in lieu of
                           any bonus for which the Executive may be or may have
                           been eligible under the Corporation's 2002, 2003 or
                           2004 Annual Incentive Plans. The Executive will be
                           eligible to receive a prorated (i.e., 5/6) mandatory
                           and/or discretionary award, if any are paid, under
                           the 2000-2002 Long Term Incentive Plan based upon
                           thirty (30) months' of participation. Such award, if
                           any is due, will be paid at the time other plan
                           participants are paid. The Executive will not be
                           eligible to receive an award under any long term
                           incentive plan applicable to any period of time
                           after June 30, 2002.

                  (c)      Benefit Plans. From and after June 30, 2002, through
                           June 30, 2004, the Executive shall not be entitled
                           to coverage under the Corporation's disability or
                           business travel accident benefit plans


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                           but will be eligible to continue to participate in
                           the Corporation's various other benefit plans and
                           programs (subject to Section 3 below as to pension
                           benefits). The Executive will continue to be
                           responsible for all required employee contributions.
                           From and after July 1, 2004, the Executive will be
                           eligible to continue certain benefit coverages as
                           provided under the Consolidated Omnibus Budget
                           Reconciliation Act (COBRA). The value of the
                           Executive's "Bank Account" (as that term is defined
                           in the Corporation's Compensatory Benefits Plan) as
                           of June 30, 2004, shall be paid to the Executive in
                           a lump sum (subject to applicable deductions) on or
                           about July 31, 2004.

                  (d)      Vacations. The Executive will be entitled to be paid
                           on July 31, 2002 for all unused vacation earned or
                           accrued as of June 30, 2002 (6 1/2 weeks), but will
                           no longer accrue vacation from and after June 30,
                           2002.

                  (e)      Perquisites. The Executive will no longer be
                           entitled to executive perquisites as of June 30,
                           2002, except for reimbursement for tax preparation
                           or financial planning services for calendar years
                           2001 and 2002, up to the maximum amounts allowed
                           under the Corporation's reimbursement policy. All
                           charitable contributions made by the Executive
                           through June 30, 2002, shall qualify under the
                           Corporation's Matching Gifts to Education or
                           Cultural Organizations. The Executive's charitable
                           contributions shall not qualify for such programs
                           after June 30, 2002.

         (d)      Severance Pay. Section 8 of the Employment Agreement is
                  amended in its entirety to read as follows:

                  "8.      Terminal Leave of Absence. The Executive will be on
                           a terminal paid leave of absence from July 1, 2002,
                           through June 30, 2004. This terminal paid leave of
                           absence is in lieu of any severance pay the
                           Executive would otherwise be entitled to. The
                           Executive's entitlement to benefits, or payments
                           under the Corporation's health, life insurance,
                           retirement, stock option, equity participation
                           rights, and savings (but not disability or business
                           travel accident insurance) plans, policies or
                           arrangements shall not, except as otherwise required
                           in the Modification of Employment Agreement dated as
                           of July 1, 2002, between the Executive and the
                           Corporation or by law or regulation, be affected by
                           the Executive's leave of absence status and shall
                           continue to be governed by the applicable provisions
                           of such plans as though the Executive had continued
                           to render services in the active employment of the
                           Corporation to the end of the term of this
                           Agreement."


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         (e)      Ratification. In all other respects, except as herein
                  provided, the Employment Agreement (specifically, without
                  limitation, Sections 6, 7, 9, 10, 11, 13, 14 and 15), is
                  hereby ratified and confirmed.

3.       Pension Benefits.

         (a)      The period of the terminal leave of absence is intended to be
                  included within the definition of "Years of Service" in the
                  SERP and of "Benefit Service" in the Bowater Incorporated
                  Retirement Plan (the "Qualified Plan") and the Bowater
                  Incorporated Benefit Equalization Plan (the "Equalization
                  Plan") and compensation paid under Section 5(a) of the
                  Employment Agreement as amended hereunder during the terminal
                  leave of absence is intended to be included within the
                  definition of "Compensation" in the SERP and in the Qualified
                  Plan and Equalization Plan.

         (b)      As of June 30, 2004, and assuming the Executive survives
                  until such date, and subject to the Executive signing and not
                  later revoking a Waiver and Release Agreement as further
                  described in Section 10, (i) the Executive shall be entitled
                  to receive credit under the SERP for an additional five (5)
                  "Years of Service" and (ii) his benefits under the SERP and
                  the Equalization Plan shall be payable as a deferred vested
                  benefit as of the first day of the month following his 64th
                  birthday. In accordance with the terms of such plans and
                  assuming a proper election is made, he shall be entitled to a
                  lump sum payment of his SERP and Equalization Plan benefits
                  as of such date, calculated using a seven (7) percent
                  interest rate and the mortality table defined in Internal
                  Revenue Code Section 417(e)(3)(A)(ii)(I). The Executive's
                  retirement benefits under the Qualified Plan shall be payable
                  as a deferred vested benefit as of the Executive's Normal
                  Retirement Date, as defined in such plan.

         (c)      Nothing contained in this section is intended to nor shall
                  alter any rights of the Executive's spouse under applicable
                  laws.

4.       Stock Options and EPRs. From and after June 30, 2002, the Executive
will not be eligible to receive any stock option or equity participation right
awards. A list of the Executive's stock option and equity participation right
awards is attached as Exhibit I. The terminal leave of absence will not
interrupt or terminate employment for purposes of determining the Executive's
continued eligibility to become vested in, and to exercise, options awarded
pursuant to the Corporation's stock option and equity participation rights
plans In accordance with the applicable stock option and equity participation
right plans, the expiration date for the Executive's stock option and equity
rights participation awards shall be September 30, 2004, except for the
Executive's equity participation right award granted on April 1, 1996 (the
"1996 EPR Award"), which shall have an expiration date of June 30, 2004. In the
event of the Executive's death prior to such dates, different


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expiration dates shall apply in accordance with the terms of the applicable
plans; i.e., two years from the date of death for all awards except for the
1996 EPR Award, and one year from the date of death for the 1996 EPR Award.

5.       Nondisclosure and Confidentiality Obligations.

         (a)      The Executive agrees not to take any actions or make any
                  statements to the public, future employers, business
                  associates, clients, customers, the media, current, former or
                  future employees, or any other third party whatsoever that
                  reflect negatively on the Corporation, its officers,
                  directors or employees, and not to express any opinions
                  concerning the Corporation, its affiliates, officers,
                  directors, shareholders, employees and/or its operations that
                  shall reflect negatively upon same. Further, the Executive
                  confirms his agreement to comply with the provisions of
                  Section 6 of the Employment Agreement and Section 6.02(d) of
                  the SERP indefinitely.

         (b)      Furthermore, the terms of the Employment Agreement and this
                  Modification are confidential and the Executive and the
                  Corporation agree not to disclose them to any entity,
                  organization or person, including any employee or former
                  employee of the Corporation, except that (i) the Executive
                  may disclose them to his spouse and her attorney or
                  accountant, his attorney or accountant, or as necessary to
                  enforce his rights hereunder, or as required by law, and (ii)
                  the Corporation may disclose them to the employees of the
                  Corporation or its advisors who have a need to know such
                  terms in order to implement the Modification Agreement or
                  make any necessary regulatory filings.

         (c)      Upon service on either party, or any one acting in his
                  behalf, of an order or other legal process requiring him to
                  divulge information prohibited from disclosure hereunder or
                  under the Employment Agreement, such party shall immediately
                  inform the other party of such service and the nature of any
                  testimony or information sought to be provided pursuant to
                  such order or process.

6.       Relocation. If the Executive relocates his primary residence prior to
June 30, 2003, he shall be entitled to the benefits provided under the
Corporation's relocation policy as in effect on the date of such relocation.

7.       Office Equipment and Property of the Corporation. The Executive shall
be entitled to keep his Palm Pilot and laptop computer; provided however, that
all the Corporation's proprietary or confidential information shall be removed
by June 30, 2002, and all software licensed to the Corporation, shall be
removed by December 31, 2002 and, if the Corporation so requests, the Executive
will make said devices available to the Corporation's technical staff to effect
or to confirm such removal. All other property of the Corporation such as
documents, files, portable telephones and credit cards, must be


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returned to the Corporation, and all outstanding credit card balances repaid,
by June 30, 2002. Except as otherwise provided in this Agreement, the Executive
shall submit all business expense reimbursement requests no later than July 31,
2002.

8.       Resignations. The Executive shall resign from all offices or positions
in which he presently serves on behalf of the Corporation by no later than June
30, 2002.

9.       Availability in Certain Circumstances. The Executive agrees to make
himself reasonably available to the Corporation in connection with any pending
or future governmental or regulatory investigation, civil or administrative
proceeding or arbitration, subject to any privileges the Executive may have and
to his other personal and business commitments. The Corporation will reimburse
the Executive for all reasonable costs and expenses incurred by him in
connection with any such investigation, proceeding or arbitration.

10.      Effectiveness Contingent Upon Release. This Modification shall not be
effective unless and until the Executive has executed a certain Waiver and
Release Agreement (the "Release Agreement") in the form attached as Exhibit II,
and the seven-day revocation period provided for therein has expired. If the
Corporation shall believe in good faith that the Executive has breached the
terms of the Release Agreement, this Modification or the Employment Agreement
(specifically Sections 6, 7 and 15) and the Executive fails to cure such breach
within thirty (30) days after notice of such breach is given to the Executive,
then, upon written notice from the Corporation, this Modification Agreement
shall immediately become null and void, and be deemed canceled and the
Corporation shall be entitled to recover from the Executive all amounts
previously paid to him hereunder (except $500). The Executive shall also be
required to sign and not later revoke a Release Agreement on June 30, 2004,
substantially in the form attached hereto as Exhibit II, in order for him to be
entitled to (i) the additional five (5) "Years of Service" credit under the
SERP, and (ii) the early payment of his SERP and Equalization benefits. If the
Executive shall fail to sign the Release Agreement or shall sign but later
revoke the Release Agreement, the Executive shall not be entitled to the
additional five (5) "Years of Service" and shall only be entitled to the
payment of his SERP and Equalization benefits as of his Normal Retirement Date.

11.      HRCC Approval. The effectiveness of this Modification is contingent
upon the approval of the Human Resources and Compensation Committee ("HRCC") of
the Corporation's Board of Directors. The HRCC's next meeting is currently
scheduled for July 31, 2002. If such approval is not obtained, this
Modification and the Release Agreement (assuming it has been signed and not
later revoked by the Executive) shall be deemed null and void and the
Employment Agreement shall continue in full force and effect in accordance with
its terms.


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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/ Anthony H. Barash
   -------------------------------------        -------------------------------
Name:   Arnold M. Nemirow                            Anthony H. Barash
     -----------------------------------
Title:  Chairman, President and                 Date signed:  June 21, 2002
        --------------------------------
        Chief Executive Officer
        --------------------------------
Date signed:  June 21, 2002


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