
<PAGE>
                                                              [Draft -- 1/25/94]
                              Bowater Incorporated
                            (a Delaware corporation)
                                     Depositary Shares
                           Representing a One-Fourth
                             Interest in a Share of
                       % Series C Cumulative Preferred Stock,
                             par value $1 per share
                               PURCHASE AGREEMENT
                                                             February     , 1994
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
      Incorporated
Salomon Brothers Inc
Kidder, Peabody & Co. Incorporated
Prudential Securities Incorporated
Smith Barney Shearson Inc.
      as Representatives of the several Underwriters
      c/o Merrill Lynch & Co.
            Merrill Lynch, Pierce, Fenner & Smith
                  Incorporated
            North Tower
            World Financial Center
            New York, New York 10281-1209
Dear Sirs:
                  Bowater Incorporated, a Delaware corporation (the Company),
confirms its agreement with you and each of the other Underwriters named in
Schedule A hereto (collectively, the Underwriters, which term shall also include
any underwriter substituted as hereinafter provided in Section 10) for whom you
are acting as representatives (the Representatives), with respect to the sale by
the Company and the purchase by the Underwriters, acting severally and not
jointly, of the respective numbers of Depositary Shares (the Depositary Shares),
each representing a one-fourth interest in a share of the Company's % Series C
Cumulative Preferred Stock, par value $1 per share, (the Series C Preferred
Stock) set forth in said Schedule A and with respect to the grant by the Company
to the Underwriters, acting severally and not jointly, of the option described
in Section 2(b) hereof to purchase up to [                ] additional
 
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                                                                               2
Depositary Shares to cover over-allotments, in each case except as may otherwise
be provided in the Pricing Agreement, as hereinafter defined. The aforesaid
Depositary Shares (the Initial Shares) and all or any part of the [      ]
Depositary Shares subject to the option described in Section 2(b) hereof (the
Option Shares) are collectively hereinafter called the Shares.
                  The shares of the Series C Preferred Stock are to be deposited
by or on behalf of the several Underwriters against delivery of Depositary
Receipts (Depositary Receipts) to be issued under a Deposit Agreement (the
Deposit Agreement) dated as of February     , 1994 among the Company, Trust
Company Bank, as Depositary (the Depositary), and the holders from time to time
of Depositary Receipts issued thereunder. The Depositary Receipts issued upon
such deposit or deposits of the shares of the Series C Preferred Stock will
evidence the Initial Shares and, if the option described in Section 2(b) hereof
is exercised, the Option Shares.
                  Prior to the purchase and public offering of the Shares by the
several Underwriters, the Company and the Representatives, acting on behalf of
the several Underwriters, shall enter into an agreement substantially in the
form of Exhibit A hereto (the Pricing Agreement). The Pricing Agreement may take
the form of an exchange of any standard form of written telecommunication
between the Company and the Representatives and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Shares will
be governed by this Agreement, as supplemented by the Pricing Agreement. From
and after the date of the execution and delivery of the Pricing Agreement, this
Agreement shall be deemed to incorporate the Pricing Agreement.
                  The Company has filed with the Securities and Exchange
Commission (the Commission) a registration statement on Form S-3 (No. 33-51571)
and related preliminary prospectuses for the registration of the Shares under
the Securities Act of 1933, as amended (the 1933 Act), has filed such amendments
thereto, if any, and such amended preliminary prospectuses as may have been
required to the date hereof, and will file such additional amendments thereto
and such amended prospectuses as may hereafter be required. Such registration
statement (as amended, if applicable) and the prospectus constituting a part
thereof (including in each case all documents, if any, incorporated or deemed to
be incorporated by reference therein and the information, if any, deemed to be
part thereof pursuant to Rule 430A(b) of the rules and regulations of the
Commission under the 1933 Act (the 1933 Act Regulations)), as from time to time
amended or supplemented pursuant to the 1933 Act, the Securities Exchange Act of
1934, as amended (the 1934 Act) or otherwise,
 
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                                                                               3
are hereinafter referred to as the Registration Statement and the Prospectus,
respectively, except that if any revised prospectus shall be provided to the
Underwriters by the Company for use in connection with the offering of the
Shares that differs from the Prospectus on file at the Commission at the time
the Registration Statement becomes effective (whether or not such revised
prospectus is required to be filed by the Company pursuant to Rule 424(b) of the
1933 Act Regulations), the term Prospectus shall refer to such revised
prospectus from and after the time it is first provided to the Underwriters. All
references in this Agreement to financial statements and schedules and other
information that is contained,included or statedin the Registration Statement or
the Prospectus (and all other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
that is or is deemed to be incorporated by reference in the Registration
Statement or the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement or the
Prospectus shall be deemed to mean and include the filing of any document under
the 1934 Act that is or is deemed to be incorporated by reference in the
Registration Statement or the Prospectus, as the case may be.
                  The Company understands that the Underwriters propose to make
a public offering of the Shares as soon as the Representatives deem advisable
after the Registration Statement becomes effective and the Pricing Agreement has
been executed and delivered. All parties to this Agreement will exercise good
faith in the performance of their obligations under this Agreement.
                  SECTION 1. Representations and Warranties. (a) The Company
represents and warrants to each Underwriter as of the date hereof and as of the
date of the Pricing Agreement (such latter date being hereinafter referred to as
the Representation Date) as follows:
                  (i) The Company has been duly incorporated and each of the
Company and each active subsidiary of the Company is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required and the failure to so qualify would have a material adverse effect on
the business, operations or financial condition of the Company; all of the
issued and outstanding capital stock of each such subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is owned by
the Company, directly or through subsidiaries,
 
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                                                                               4
free and clear of any security interest, mortgage, pledge, lien, or encumbrance
(except as disclosed to the contrary in the Prospectus).
                  (ii) At the time the Registration Statement becomes effective,
the Registration Statement will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading.
The Prospectus, at the Representation Date (unless the term Prospectus refers to
a prospectus that has been provided to the Underwriters by the Company for use
in connection with the offering of the Shares that differs from the Prospectus
on file at the Commission at the time the Registration Statement becomes
effective, in which case at the time it is first provided to the Underwriters
for such use) and at Closing Time referred to in Section 2 hereof, will not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information furnished to the Company in
writing by any Underwriter through the Representatives set forth in the last
paragraph of the cover page, the first paragraph of page 2, and under the
heading Underwriting in the Registration Statement or Prospectus.
                  (iii) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement or the Prospectus, at the time they
were filed or amended, as the case may be, or hereafter are filed with the
Commission, complied or when so filed will comply, as the case may be, in all
material respects with the requirements of the 1934 Act and the rules and
regulations of the Commission under the 1934 Act (the 1934 Act Regulations),
and, when read together with the other information in the Prospectus at the time
the Registration Statement and any amendments thereto become effective, will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
                  (iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the
 
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                                                                               5
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, that are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) except for regular
quarterly dividends, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
                  (v) The Company is in compliance with all of the provisions of
Section 517.075 of the Florida Statutes, and all rules and regulations
promulgated thereunder relating to issuers doing business in Cuba.
                  (b) Any certificate signed by any officer of the Company and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
                  SECTION 2. Sale and Delivery to Underwriters; Closing. (a) On
the basis of the representations and warranties herein contained and subject to
the terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, severally and not jointly, and each Underwriter, severally and not
jointly, agrees to purchase from the Company, at the price per share set forth
in the Pricing Agreement, the number of Initial Shares set forth in Schedule A
opposite the name of such Underwriter (except as otherwise provided in the
Pricing Agreement), plus any additional number of Initial Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof. If the Company elects to rely on Rule 430A, Schedule A may be
attached to the Pricing Agreement.
                  (1) If the Company has elected not to rely upon Rule 430A of
the 1933 Act Regulations, the initial public offering price and the purchase
price per share to be paid by the several Underwriters for the Shares have each
been determined and set forth in the Pricing Agreement, dated the date hereof,
and an amendment to the Registration Statement and the Prospectus will be filed
before the Registration Statement becomes effective.
                  (2) If the Company has elected to rely upon Rule 430A of the
1933 Act Regulations, the purchase price per share to be paid by the several
Underwriters for the Shares shall be an amount equal to the initial public
offering price, less an amount per share to be determined by agreement between
the Representatives and the Company. The initial public offering price per share
of the Shares shall be a fixed price to be determined by agreement
 
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                                                                               6
between the Representatives and the Company. The initial public offering price
and the purchase price, when so determined, shall be set forth in the Pricing
Agreement. In the event that such prices have not been agreed upon and the
Pricing Agreement has not been executed and delivered by all parties thereto by
the close of business on the fourth business day following the date of this
Agreement, this Agreement shall terminate forthwith, without liability of any
party to any other party, unless otherwise agreed to by the Company and the
Representatives. For purposes of this Agreement, the term business day means a
day on which the New York Stock Exchange is open for business.
                  (b) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to an additional [               ] Depositary Shares
at the price per share set forth in the Pricing Agreement. The option hereby
granted will expire 30 days after (i) the date the Registration Statement
becomes effective, if the Company has elected not to rely on Rule 430A under the
1933 Act Regulations, or (ii) the Representation Date, if the Company has
elected to rely upon Rule 430A under the 1933 Act Regulations, and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments that may be made in connection with the offering and
distribution of the Initial Shares upon notice by the Representatives to the
Company setting forth the number of Option Shares as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Shares. Any such time and date of delivery (a Date of
Delivery) shall be determined by the Representatives, but shall not be later
than seven full business days and not earlier than two full business days after
the exercise of said option, nor in any event prior to Closing Time, as
hereinafter defined, unless otherwise agreed by the Representatives and the
Company. If the option is exercised as to all or any portion of the Option
Shares, each of the Underwriters, acting severally and not jointly, will
purchase that proportion of the total number of Option Shares then being
purchased that the number of Initial Shares set forth in Schedule A opposite the
name of such Underwriter bears to the total number of Initial Shares (except as
otherwise provided in the Pricing Agreement), subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares.
                  (c) Payment of the purchase price for, and delivery of
certificates for, the Initial Shares shall be made at the offices of Cravath,
Swaine & Moore, New York, New York, or at such other place as shall be agreed
upon by the Representatives and the Company, at 10:00 A.M. on the fifth business
day (unless
 
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                                                                               7
postponed in accordance with the provisions of Section 10) following the date
the Registration Statement becomes effective (or, if the Company has elected to
rely upon Rule 430A of the 1933 Act Regulations, the fifth business day after
execution of the Pricing Agreement), or such other time not later than ten
business days after such date as shall be agreed upon by the Representatives and
the Company (such time and date of payment and delivery being herein called
Closing Time). In addition, in the event that any or all of the Option Shares
are purchased by the Underwriters, payment of the purchase price for, and
delivery of certificates for, such Option Shares shall be made at the above
mentioned offices of Cravath, Swaine & Moore, or at such other place as shall be
agreed upon by the Representatives and the Company, on each Date of Delivery as
specified in the notice from the Representatives to the Company. Payment shall
be made to the Company by certified or official bank check or checks drawn in
New York Clearing House funds or similar next day funds payable to the order of
the Company, against delivery to the Representatives for the respective accounts
of the Underwriters of certificates for the Initial Shares to be purchased by
them. Certificates for the Initial Shares and the Option Shares, if any, shall
be in such denominations and registered in such names as the Representatives may
request in writing at least three business days before Closing Time or the Date
of Delivery, as the case may be. It is understood that each Underwriter has
authorized the Representatives, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Initial Shares that it has
agreed to purchase. The Representatives, individually and not as representatives
of the Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Initial Shares or the Option Shares, if any, to be
purchased by any Underwriter whose check has not been received by Closing Time
or the Date of Delivery, as the case may be, but such payment shall not relieve
such Underwriter from its obligations hereunder. The certificates for the
Initial Shares and the Option Shares, if any, will be made available for
examination and packaging by the Representatives not later than 10:00 A.M. on
the last business day prior to Closing Time or Date of Delivery, as the case may
be.
                  SECTION 3. Covenants of the Company. The Company covenants
with each Underwriter as follows:
                (a) The Company will notify the Representatives immediately, and
       confirm the notice in writing, (i) of the effectiveness of the
       Registration Statement and any amendment thereto (including any
       post-effective amendment), (ii) of the receipt of any comments from the
       Commission, (iii) of any request by the Commission for any amendment to
       the Registration Statement or any amendment or
 
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                                                                               8
       supplement to the Prospectus or for additional information, and (iv) of
       the issuance by the Commission of any stop order suspending the
       effectiveness of the Registration Statement or the initiation of any
       proceedings for that purpose. The Company will make every reasonable
       effort to prevent the issuance of any stop order and, if any stop order
       is issued, to obtain the lifting thereof at the earliest possible moment.
                (b) The Company will give the Representatives notice of its
       intention to file or prepare any amendment to the Registration Statement
       (including any post-effective amendment) or any amendment or supplement
       to the Prospectus (including any revised prospectus that the Company
       proposes for use by the Underwriters in connection with the offering of
       the Shares which differs from the prospectus on file at the Commission at
       the time the Registration Statement becomes effective, whether or not
       such revised prospectus is required to be filed pursuant to Rule 424(b)
       of the 1933 Act Regulations), whether pursuant to the 1933 Act, the 1934
       Act or otherwise, will furnish the Representatives with copies of any
       such amendment or supplement a reasonable amount of time prior to such
       proposed filing or use, as the case may be, and will not file any such
       amendment or supplement or use any such prospectus to which the
       Representatives or counsel for the Underwriters shall reasonably object.
                (c) The Company will deliver to the Representatives
       [               ] signed copies of the Registration Statement as
       originally filed and of each amendment thereto (including exhibits filed
       therewith or incorporated by reference therein and documents incorporated
       or deemed to be incorporated by reference therein, as requested) and will
       also deliver to the Representatives a conformed copy of the Registration
       Statement as originally filed and of each amendment thereto (without
       exhibits) for each of the Underwriters.
                (d) The Company will furnish to each Underwriter, from time to
       time during the period when the Prospectus is required to be delivered
       under the 1933 Act or the 1934 Act, such number of copies of the
       Prospectus (as amended or supplemented) as such Underwriter may
       reasonably request for the purposes contemplated by the 1933 Act or the
       1934 Act or the respective applicable rules and regulations of the
       Commission thereunder.
                (e) If any event shall occur or condition exist as a result of
       which it is necessary to amend or supplement the Prospectus in order that
       the Prospectus will not include an
 
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                                                                               9
       untrue statement of a material fact or omit to state any material fact
       necessary in order to make the statements therein not misleading in the
       light of the circumstances existing at the time the Prospectus is
       delivered to a purchaser, the Company will forthwith amend or supplement
       the Prospectus or make appropriate filings under the 1934 Act (in form
       and substance reasonably satisfactory to counsel for the Underwriters) so
       that, as so amended or supplemented, the Prospectus will not include an
       untrue statement of a material fact or omit to state a material fact
       necessary in order to make the statements therein, in the light of the
       circumstances existing at the time it is delivered to a purchaser, not
       misleading, and the Company will furnish to the Underwriters a reasonable
       number of copies of such amendment or supplement or 1934 Act filing.
                (f) The Company will endeavor, in cooperation with the
       Underwriters, to qualify the Shares for offering and sale under the
       applicable securities laws of such states and other jurisdictions of the
       United States as the Representatives may reasonably designate. In each
       jurisdiction in which the Shares have been so qualified, the Company,
       acting on advice of counsel, will file such statements and reports as may
       be required by the laws of such jurisdiction to continue such
       qualification in effect for a period of not less than one year from the
       effective date of the Registration Statement.
                (g) The Company will make generally available to its security
       holders as soon as practicable, but not later than 90 days after the
       close of the period covered thereby, an earnings statement (which need
       not be audited, but which shall be in form complying with the provisions
       of Rule 158 of the 1933 Act Regulations) covering a twelve month period
       beginning not later than the first day of the Company's fiscal quarter
       next following the effective date (as defined in said Rule 158) of the
       Registration Statement.
                (h) If, at the time that the Registration Statement becomes
       effective, any information shall have been omitted therefrom in reliance
       upon Rule 430A of the 1933 Act Regulations, then immediately following
       the execution of the Pricing Agreement, the Company will prepare, and
       file or transmit for filing with the Commission in accordance with such
       Rule 430A and Rule 424(b) of the 1933 Act Regulations, copies of the
       amended Prospectus, or, if required by such Rule 430A, a post-effective
       amendment to the Registration Statement (including amended Prospectuses),
       containing all information so omitted.
 
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                                                                              10
                (i) The Company, during the period when the Prospectus is
       required to be delivered under the 1933 Act or the 1934 Act, will file
       all documents required to be filed with the Commission pursuant to
       Sections 13, 14 or 15 of the 1934 Act within the time periods required by
       the 1934 Act and the 1934 Act Regulations.
                (j) The Company will use the net proceeds received by it from
       the sale of the Shares in the manner specified in the Prospectus under
       Use of Proceeds in all material respects.
                (k) The Company will not prior to the expiration of 90 days
       after the date of the Pricing Agreement, sell, offer to sell, grant any
       option for the sale of or otherwise dispose of any other shares of
       capital stock or securities convertible into or exchangeable for capital
       stock (other than (i) the Shares, (ii) the shares of Common Stock
       issuable upon conversion or redemption of the     % PRIDES, Series B
       Convertible Preferred Stock (the Series B Preferred Stock), being offered
       at approximately the same time as the Series C Preferred Stock, (ii) the
       Series B Preferred Stock, (iii) the Junior Participating Preferred Stock,
       Series A, and any shares of Common Stock pursuant to the Company's Rights
       Plan, and (iv) the shares of Common Stock or options for shares of Common
       Stock issued pursuant to or sold in connection with the Company's
       qualified employee benefit, dividend reinvestment, and stock option and
       stock purchase plans and shares of Common Stock issuable upon the
       conversion of securities or the exercise of stock options or warrants
       outstanding as of the date hereof) either directly or indirectly, without
       prior written consent of the Representatives.
                (l) The Company will use its best efforts to effect the listing
       of the Shares on the New York Stock Exchange.
                  SECTION 4. Payment of Expenses. The Company will pay all
expenses incident to the performance of its obligations under this Agreement,
including (i) the printing and filing of the Registration Statement as
originally filed and of each amendment thereto, (ii) the reproduction and
distribution of this Agreement and the Pricing Agreement, (iii) the preparation,
issuance and delivery of the certificates for the Shares to the Underwriters,
(iv) the fees and disbursements of the Company's counsel and accountants, (v)
the qualification of the Shares under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey, (vi) the printing and
delivery to the Underwriters of copies of the
 
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                                                                              11
Registration Statement as originally filed and of each amendment thereto, of
each preliminary prospectus, and of the Prospectus and any amendments or
supplements thereto, (vii) the reproduction and delivery to the Underwriters of
copies of the Blue Sky Survey, and (viii) the fees and expenses incurred in
connection with the listing of the Shares on the New York Stock Exchange.
                  If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 5 or Section 9(a)(i), the Company
shall reimburse the Underwriters for all of their reasonable out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Underwriters.
                  SECTION 5. Conditions of Underwriters' Obligations. The
obligations of the several Underwriters hereunder are subject to the accuracy of
the representations and warranties of the Company herein contained, to the
performance by the Company of its obligations hereunder, and to the following
further conditions:
                (a) The Registration Statement shall have become effective not
       later than 5:30 P.M. on the date hereof, or with the consent of the
       Representatives at a later time and date, not later, however, than 5:30
       P.M. on the first business day following the date hereof, or at such
       later time and date as may be approved by a majority in interest of the
       Underwriters; and at Closing Time no stop order suspending the
       effectiveness of the Registration Statement shall have been issued under
       the 1933 Act or proceedings therefor initiated or threatened by the
       Commission. If the Company has elected to rely upon Rule 430A of the 1933
       Act Regulations, the price of the Shares and any price-related
       information previously omitted from the effective Registration Statement
       pursuant to such Rule 430A shall have been transmitted to the Commission
       for filing pursuant to Rule 424(b) of the 1933 Act Regulations within the
       prescribed time period, and prior to Closing Time the Company shall have
       provided evidence satisfactory to the Representatives of such timely
       filing, or a post-effective amendment providing such information shall
       have been promptly filed and declared effective in accordance with the
       requirements of Rule 430A of the 1933 Act Regulations.
                (b) At Closing Time the Representatives shall have received:
                       (1) the favorable opinion, dated as of Closing Time of
              Wendy C. Shiba, Esq., Secretary and Assistant General Counsel for
              the Company, in form and substance
 
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                                                                              12
              satisfactory to counsel for the Underwriters, to the effect that:
                              (i) the Company has been duly organized and is
                     validly existing and in good standing under the laws of the
                     State of Delaware with corporate power and authority to
                     own, lease and operate its properties and conduct its
                     business as described in the Prospectus;
                              (ii) to the best of her knowledge and information,
                     the Company is duly qualified as a foreign corporation to
                     transact business and is in good standing in each
                     jurisdiction in which such qualification is required and
                     the failure to so qualify would have a material adverse
                     effect on the business, operations or financial condition
                     of the Company taken as a whole;
                              (iii) the authorized, issued and outstanding
                     capital stock of the Company is in all material respects as
                     set forth in the Prospectus (except for subsequent
                     issuances, if any, pursuant to reservations, agreements,
                     employee benefit plans or the exercise of convertible
                     securities referred to in the Prospectus); the Shares have
                     been duly and validly authorized, and, when issued and
                     delivered to and paid for by the Underwriters pursuant to
                     this Agreement, will be fully paid and non-assessable; the
                     Series C Preferred Stock, Depositary Shares and Depositary
                     Receipts conform to the description thereof contained in
                     the Prospectus; the Depositary Shares have been duly
                     authorized for listing, subject to official notice of
                     issuance and, in the case of the Depositary Shares,
                     evidence of satisfactory distribution, on the New York
                     Stock Exchange; and the certificates for the Shares are in
                     valid and sufficient form under Delaware law;
                              (iv) the issuance of the Shares is not subject to
                     preemptive or other similar rights arising by operation of
                     law, under the Restated Certificate of Incorporation or
                     by-laws of the Company or, to the best of her knowledge and
                     information, otherwise;
                              (v) the Deposit Agreement has been duly
                     authorized, executed and delivered by the
 
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                                                                              13
                     Company, and, assuming due authorization, execution and
                     delivery thereof by the Depositary, constitutes a legal,
                     valid and binding instrument enforceable against the
                     Company in accordance with its terms (subject, as to
                     enforcement of remedies, to applicable bankruptcy,
                     reorganization, insolvency, fraudulent transfer, moratorium
                     or other laws affecting creditors' rights generally from
                     time to time in effect and to general principles of
                     equity); assuming payment of the purchase price by the
                     Underwriters, each Depositary Share represents a one-fourth
                     interest in a validly issued, outstanding, fully paid and
                     nonassessable share of Series C Preferred Stock; and the
                     Depositary Shares, when issued under the Deposit Agreement
                     in accordance with the provisions of the Deposit Agreement
                     will be validly issued, and, assuming due execution and
                     delivery of the Depositary Receipts by the Depositary
                     pursuant to the Deposit Agreement, the Depositary Receipts
                     will entitle the holders thereof to the benefits provided
                     therein and in the Deposit Agreement;
                              (vi) the Registration Statement has become
                     effective under the 1933 Act and to the best of her
                     knowledge no stop order suspending the effectiveness of the
                     Registration Statement has been issued and no proceeding
                     for that purpose has been instituted or threatened under
                     the 1933 Act;
                              (vii) the Registration Statement and the
                     Prospectus, and any amendment or supplement thereto, comply
                     as to form in all material respects with the requirements
                     of the 1933 Act and the 1933 Act Regulations;
                              (viii) to the best of her knowledge, there is no
                     pending or threatened, suit or proceeding before any court
                     or governmental agency, authority or body or any arbitrator
                     against or involving the Company or any of its
                     subsidiaries, of a character required to be disclosed in
                     the Registration Statement that is not adequately disclosed
                     in the Prospectus;
                              (ix) to the best of her knowledge and information,
                     there are no material contracts, indentures or other
                     instruments required to be described or referred to in the
                     Registration
 
<PAGE>
                                                                              14
                     Statement or to be filed as exhibits thereto other than
                     those described or referred to therein or filed or
                     incorporated by reference as exhibits thereto, and the
                     descriptions thereof or references thereto are correct in
                     all material respects;
                              (x) this Agreement and the Pricing Agreement have
                     been duly authorized, executed and delivered by the
                     Company; the performance of this Agreement or the Pricing
                     Agreement and the consummation of the transactions herein
                     contemplated and the issuance and sale of the Shares, will
                     not result in a breach or violation of any of the terms and
                     provisions of, or constitute a default under, or result in
                     the creation or imposition of any lien, charge or
                     encumbrance upon any property or assets of the Company or
                     any of its active subsidiaries pursuant to, any material
                     contract, indenture or other instrument to which the
                     Company or any of its active subsidiaries is a party or by
                     which it is bound or to which any of the property of the
                     Company or any of its active subsidiaries is subject, the
                     Company's Restated Certificate of Incorporation or by-laws,
                     or any order, rule or regulation known to such counsel of
                     any court or governmental agency or body having
                     jurisdiction over the Company or any of its properties; and
                     no consent, approval, authorization or order of, or filing
                     with any court or governmental agency or body is required
                     for the consummation of the transactions contemplated by
                     this Agreement or the Pricing Agreement, except such as
                     have been obtained under the 1933 Act and such as may be
                     required under state securities laws in connection with the
                     purchase and distribution of such Shares by the
                     Underwriters; provided that no opinion is called for with
                     respect to any such consent, approval, authorization or
                     order required to be obtained by any Underwriters.
                       In rendering such opinion, such counsel may rely on the
              opinion of Richards, Layton & Finger described in Section 5(b)(4)
              below as to the matters of Delaware law covered thereby.
                       (2) The favorable opinion, dated as of Closing Time, of
              Cravath, Swaine & Moore, counsel for the Underwriters, with
              respect to the issuance and sale of the Shares, the Registration
              Statement, the Prospectus
 
<PAGE>
                                                                              15
              and other related matters as the Representatives may reasonably
              require.
                       (3) In giving their opinions required by subsections
              (b)(1) and (b)(2), respectively, of this Section, Wendy C. Shiba,
              Esq. and Cravath, Swaine & Moore shall each additionally state
              that nothing has come to their attention that would lead them to
              believe that the Registration Statement (except for financial
              statements and schedules and other financial or statistical data
              included or incorporated by reference therein, as to which counsel
              need make no statement), at the time it became effective or at the
              Representation Date, contained an untrue statement of a material
              fact or omitted to state a material fact required to be stated
              therein or necessary to make the statements therein not misleading
              or that the Prospectus (except for financial statements and
              schedules and other financial or statistical data included or
              incorporated by reference therein, as to which counsel need make
              no statement), at the Representation Date (unless the term
              Prospectus refers to a prospectus which has been provided to the
              Underwriters by the Company for use in connection with the
              offering of the Shares which differs from the Prospectus on file
              at the Commission at the time the Registration Statement becomes
              effective, in which case at the time it is first provided to the
              Underwriters for such use) or at Closing Time, included or
              includes an untrue statement of a material fact or omitted or
              omits to state a material fact necessary in order to make the
              statements therein, in the light of the circumstances under which
              they were made, not misleading.
                       (4) The favorable opinion, dated as of or prior to
              Closing Time of Richards, Layton & Finger, special Delaware
              counsel for the Company, in form and substance satisfactory to
              counsel for the Underwriters, to the effect that the issuance and
              sale of the Series C Preferred Stock and the Depositary Shares (i)
              will not result in a breach or violation of the Company's Restated
              Certificate of Incorporation, the Certificate of Designations of
              the LIBOR Preferred Stock, Series A or the Certificate of
              Designation, Preferences and Rights of the Junior Participating
              Preferred Stock, Series A and (ii) will not require the consent or
              approval of the holders of the LIBOR Preferred Stock, Series A.
 
<PAGE>
                                                                              16
                       (5) The opinion, dated as of Closing Time of , counsel
              for the Depositary, to the effect that:
                              (i) The Deposit Agreement has been duly
                     authorized, executed and delivered by the Depositary and is
                     a valid and binding agreement of the Depositary; and
                              (ii) The Depositary Receipts have been duly
                     executed and delivered by the Depositary in accordance with
                     the provisions of the Deposit Agreement.
                (c) At Closing Time, there shall not have been, since the date
       hereof or since the respective dates as of which information is given in
       the Registration Statement and the Prospectus, any material adverse
       change in the condition, financial or otherwise, or in the earnings,
       business affairs or business prospects of the Company and its
       subsidiaries considered as one enterprise, whether or not arising in the
       ordinary course of business, and the Representatives shall have received
       a certificate of the Company signed by a Vice President or other officer
       and the principal financial or principal accounting officer or treasurer
       of the Company, dated as of Closing Time, to the effect that the signers
       of such certificate have carefully examined the Registration Statement,
       the Prospectus, any supplement to the Prospectus and this Agreement and
       that (i) there has been no such material adverse change, (ii) the
       representations and warranties in Section 1 are true and correct with the
       same force and effect as though expressly made at and as of Closing Time,
       (iii) the Company has complied with all agreements and satisfied all
       conditions on its part to be performed or satisfied under this Agreement
       at or prior to Closing Time, and (iv) to the best knowledge of the
       Company, no stop order suspending the effectiveness of the Registration
       Statement has been issued and no proceedings for that purpose have been
       initiated or threatened by the Commission.
                (d) At the time of the execution of this Agreement, the
       Representatives shall have received from KPMG Peat Marwick a letter dated
       such date, in form and substance satisfactory to the Representatives,
       confirming that they are independent accountants within the meaning of
       the 1933 Act and the 1934 Act and the respective applicable published
       rules and regulations thereunder and stating in effect that:
 
<PAGE>
                                                                              17
                       (i) in their opinion the audited consolidated financial
              statements and financial statement schedules included or
              incorporated in the Registration Statement and the Prospectus and
              reported on by them comply as to form in all material respects
              with the applicable accounting requirements of the 1933 Act and
              the 1934 Act and the related published rules and regulations;
                       (ii) on the basis of a reading of the latest unaudited
              consolidated financial statements made available by the Company;
              carrying out certain specified procedures (but not an audit in
              accordance with generally accepted auditing standards) which would
              not necessarily reveal matters of significance with respect to the
              comments set forth in such letter; a reading of the minutes of the
              meetings of the stockholders, directors and the executive and
              audit committees of the Company and the subsidiaries; and
              inquiries of certain officials of the company who have
              responsibility for financial and accounting matters of the Company
              and its subsidiaries as to transactions and events subsequent to
              December 31, 1992, nothing came to their attention which caused
              them to believe that:
                              (1) the amounts in the unaudited Selected
                     Financial and Operating Data, if any, included in the
                     Registration Statement and the Prospectus do not agree with
                     the corresponding amounts in the audited consolidated
                     financial statements, unaudited consolidated financial
                     statements or analyses prepared by the Company from which
                     such amounts were derived; or
                              (2) any unaudited consolidated financial
                     statements included or incorporated in the Registration
                     Statement and the Prospectus do not comply as to form in
                     all material respects with applicable accounting
                     requirements and with the published rules and regulations
                     of the Commission with respect to financial statements
                     included or incorporated in quarterly reports on Form 10-Q
                     under the 1934 Act; and said unaudited consolidated
                     financial statements are not in conformity with generally
                     accepted accounting principles applied on a basis
                     substantially consistent with that of the audited
                     consolidated financial statements included or incorporated
                     in the Registration Statement and the Prospectus; or
 
<PAGE>
                                                                              18
                              (3) with respect to the period from the date of
                     the most recent consolidated financial statements (other
                     than any capsule information), audited or unaudited,
                     included or incorporated in the Registration Statement and
                     the Prospectus to the date of the most recent unaudited
                     consolidated financial statements prepared by the Company,
                     there were any changes in the consolidated long-term debt
                     of the Company or capital stock of the Company or decreases
                     in the consolidated stockholders' equity of the Company as
                     compared with the amounts shown on the most recent
                     consolidated balance sheet included or incorporated in the
                     Registration Statement and the Prospectus, or for the
                     period from the date of the most recent consolidated
                     financial statements included or incorporated in the
                     Registration Statement and the Prospectus to such date
                     there were any decreases, as compared with the
                     corresponding period in the preceding year, in consolidated
                     income before income taxes or in total or per share amounts
                     of consolidated net income of the Company, except in all
                     instances for changes or decreases set forth in such
                     letter, in which case the letter shall be accompanied by an
                     explanation by the Company as to the significance thereof
                     unless said explanation is not deemed necessary by the
                     Representatives; or
                              (4) based solely upon discussions with management
                     of the Company, and subject to such further limitations as
                     may be required in the circumstances, (A) with respect to
                     the period subsequent to the date of the most recent
                     unaudited consolidated financial statements prepared by the
                     Company, there were any changes, at a specified date not
                     more than five business days prior to the date of the
                     letter, in the consolidated long-term debt of the Company
                     or capital stock of the Company or decreases in the
                     consolidated stockholders' equity of the Company as
                     compared with the amounts shown on the most recent
                     consolidated balance sheet included or incorporated in the
                     Registration Statement and Prospectus, or (B) for the
                     period from the date of the most recent consolidated
                     financial statements included or incorporated in the
                     Registration Statement and the Prospectus to such specified
                     date there were any decreases, as compared with the
                     corresponding period in the
 
<PAGE>
                                                                              19
                     previous year, in consolidated income before income taxes
                     or in total or per share amounts of consolidated net income
                     of the Company, except in all instances for changes or
                     decreases set forth in such letter, in which case the
                     letter shall be accompanied by an explanation by the
                     Company as to the significance thereof unless said
                     explanation is not deemed necessary by the Representatives;
                     or
                              (5) the amounts included in any unaudited capsule
                     information included or incorporated in the Registration
                     Statement and the Prospectus do not agree with the amounts
                     set forth in the unaudited consolidated financial
                     statements for the same periods or were not determined on a
                     basis substantially consistent with that of the
                     corresponding amounts in the audited consolidated financial
                     statements included or incorporated in the Registration
                     Statement and the Prospectus;
                       (iii) they have performed certain other specified
              procedures as a result of which they determined that certain
              information of an accounting, financial or statistical nature
              (which is limited to accounting, financial or statistical
              information derived from the general accounting records of the
              Company and its subsidiaries) set forth in the Registration
              Statement and the Prospectus and in Exhibit 12.1 to the
              Registration Statement, including the information set forth under
              the captions Capitalization, Market Price of Common Stock,
              Selected Financial and Operating Data, Recent Developments and
              Management's Discussion and Analysis of Financial Condition and
              Results of Operations in the Registration Statement and the
              Prospectus, the information included or incorporated in Items 1,
              6, 7 and 11 of the Company's Annual Report on Form 10-K,
              incorporated in the Registration Statement and the Prospectus and
              the information included in the Management's Discussion and
              Analysis of Financial Condition and Results of Operations included
              or incorporated in the Company's Quarterly Reports on Form 10-Q,
              incorporated in the Registration Statement and the Prospectus (if
              any), agrees with the accounting records of the Company and its
              subsidiaries, excluding any questions of legal interpretation.
 
<PAGE>
                                                                              20
                  References to the Prospectus in this paragraph (d) include any
supplement thereto at the date of the letter.
                (e) At Closing Time, the Representatives shall have received
       from KPMG Peat Marwick a letter, dated as of Closing Time, to the effect
       that they reaffirm the statements made in the letter furnished pursuant
       to subsection (d) of this Section, except that the specified date
       referred to shall be a date not more than five days prior to Closing
       Time, and, if the Company has elected to rely on Rule 430A of the 1933
       Act Regulations, to the further effect that they have carried out
       procedures as specified in clauses (ii) and (iii) of subsection (d) of
       this Section with respect to certain amounts, percentages and financial
       information deemed to be a part of the Registration Statement pursuant to
       Rule 430A(b).
                (f) At Closing Time, the Shares shall have been approved for
       listing on the New York Stock Exchange upon notice of issuance.
                (g) At Closing Time and at each Date of Delivery, if any,
       counsel for the Underwriters shall have been furnished with such
       documents and opinions as they may reasonably require for the purpose of
       enabling them to pass upon the issuance and sale of the Shares as
       contemplated in this Agreement, the Pricing Agreement and related
       proceedings, or in order to evidence the accuracy of any of the
       representations or warranties, or the fulfillment of any of the
       agreements or conditions herein contained; and all proceedings taken by
       the Company in connection with the issuance and sale of the Shares as
       herein contemplated shall be satisfactory in form and substance to the
       Representatives and counsel for the Underwriters.
                (h) At Closing Time, the Company shall have furnished to the
       Representatives a letter from [names of about five (number to depend on
       size of holdings) shareholders who are officers or directors] addressed
       to the Representatives, in which each such person agrees not to offer,
       sell or contract to sell, or otherwise dispose of, directly or
       indirectly, or announce an offering of, any shares of Common Stock
       beneficially owned by such person or any securities convertible into, or
       exchangeable for, shares of Common Stock for a period of 90 days
       following the Closing Time without the prior written consent of the
       Representatives, other than shares of Common Stock disposed of as bona
       fide gifts.
 
<PAGE>
                                                                              21
                (i) Subsequent to the time of the execution of this Agreement,
       there shall not have been any decrease in the rating of any of the
       Company's debt or equity securities by any nationally recognized
       statistical rating organization (as defined for purposes of Rule 436(g)
       under the 1933 Act) or any notice given by such organization of any
       intended or potential decrease in any such rating or of a possible change
       in any such rating that does not indicate the direction of the possible
       change.
                (j) In the event the Underwriters exercise their option provided
       in Section 2(b) hereof to purchase all or any portion of the Option
       Shares, the representations and warranties of the Company contained
       herein and the statements in any certificates furnished by the Company
       hereunder shall be true and correct as of each Date of Delivery, and the
       Underwriters shall have received:
                       (1) A certificate, dated such Date of Delivery, of the
              Company by a Vice President or other officer and the principal
              financial or principal accounting officer or treasurer in their
              capacities as such, confirming that the certificate delivered at
              Closing Time pursuant to Section 5(c) hereof remains true and
              correct as of such Date of Delivery.
                       (2) The favorable opinion of Wendy C. Shiba, Esq., in
              form and substance reasonably satisfactory to counsel for the
              Underwriters, dated such Date of Delivery, relating to the Option
              Shares and otherwise to the same effect as the opinions required
              by Section 5(b)(1) hereof.
                       (3) The favorable opinion of Cravath, Swaine & Moore,
              counsel for the Underwriters, dated such Date of Delivery,
              relating to the Option Shares and otherwise to the same effect as
              the opinion required by Section 5(b)(2) hereof.
                       (4) The opinion of                , counsel to the
              Depositary, dated such Date of Delivery, to the same effect as the
              opinion required by Section 5(b)(5) hereof.
                       (5) A letter from KPMG Peat Marwick, in form and
              substance satisfactory to the Representatives and dated such Date
              of Delivery, substantially the same in scope and substance as the
              letter furnished to the Representatives pursuant to Section 5(e)
              hereof, except that the specified date in the letter
 
<PAGE>
                                                                              22
              furnished pursuant to this Section 5(j)(5) shall be a date not
              more than five days prior to such Date of Delivery.
                  If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Representatives by notice to the Company at any time at or prior to
Closing Time, and such termination shall be without liability of any party to
any other party except as provided in Section 4, and provided further that
Sections 6, 7 and 13 hereof shall survive such termination.
                  SECTION 6. Indemnification. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act as
follows:
                (i) against any and all loss, liability, claim, damage and
       reasonable expense whatsoever, as incurred, arising out of any untrue
       statement or alleged untrue statement of a material fact contained in the
       Registration Statement (or any amendment thereto) including the
       information deemed to be part of the Registration Statement pursuant to
       Rule 430A(b) of the 1933 Act Regulations, if applicable, or the omission
       or alleged omission therefrom of a material fact required to be stated
       therein or necessary to make the statements therein not misleading or
       arising out of any untrue statement or alleged untrue statement of a
       material fact contained in the Prospectus (or any amendment or supplement
       thereto) or the omission or alleged omission therefrom of a material fact
       necessary in order to make the statements therein, in the light of the
       circumstances under which they were made, not misleading;
                (ii) against any and all loss, liability, claim, damage and
       reasonable expense whatsoever, as incurred, to the extent of the
       aggregate amount paid in settlement of any litigation, or any
       investigation or proceeding by any governmental agency or body, commenced
       or threatened, or of any claim whatsoever based upon any such untrue
       statement or omission, or any such alleged untrue statement or omission,
       if such settlement is effected with the written consent of the Company;
       and
                (iii) against any and all expense whatsoever, as incurred
       (including, subject to Section 6(c) hereof, the reasonable fees and
       disbursements of counsel chosen by the Representatives, if applicable
       thereunder), that is reasonably incurred in investigating, preparing or
       defending against any litigation, or any investigation or
 
<PAGE>
                                                                              23
       proceeding by any governmental agency or body, commenced or threatened,
       or any claim whatsoever based upon any such untrue statement or omission,
       or any such alleged untrue statement or omission, to the extent that any
       such expense is not paid under (i) or (ii) above; 
       
       provided, however, that
       this indemnity agreement shall not apply to any loss, liability, claim,
       damage or expense to the extent arising out of any untrue statement or
       omission or alleged untrue statement or omission made in reliance upon
       and in conformity with written information furnished to the Company by
       any Underwriter through the Representatives expressly for use in the
       Registration Statement (or any amendment thereto) or the Prospectus (or
       any amendment or supplement thereto); and provided further, that the
       foregoing indemnification with respect to any preliminary prospectus
       shall not inure to the benefit of the Underwriters, or any person
       controlling the Underwriters, with respect to losses, claims, liabilities
       or damages asserted by any person who purchased Shares from the
       Underwriters, if a copy of the Prospectus (as then amended or
       supplemented if the Company shall have furnished any amendments or
       supplements thereto) was not sent or given by or on behalf of the
       Underwriters to such person, if required by law so to have been
       delivered, at or prior to the written confirmation of the sale of such
       Shares to such person, and if the Prospectus (as so amended or
       supplemented) would have cured the defect giving rise to such loss,
       claim, damage or liability.
                (b) Each Underwriter agrees, severally and not jointly, to
       indemnify and hold harmless the Company, its directors, each of its
       officers who signed the Registration Statement, and each person, if any,
       who controls the Company within the meaning of Section 15 of the 1933
       Act, against any and all loss, liability, claim, damage and reasonable
       expense described in the indemnity contained in subsection (a) of this
       Section, as incurred, but only with respect to untrue statements or
       omissions, or alleged untrue statements or omissions, made in the
       Registration Statement (or any amendment thereto) or the Prospectus (or
       any amendment or supplement thereto) in reliance upon and in conformity
       with written information furnished to the Company by such Underwriter
       through the Representatives expressly for use in the Registration
       Statement (or any amendment thereto) or the Prospectus (or any amendment
       or supplement thereto). The Company acknowledges that the statements set
       forth in the last paragraph of the cover page, the first paragraph of
       page 2, and under the heading Underwriting in the Registration Statement
       (or any amendment thereto) or the Prospectus (or any amendment or
 
<PAGE>
                                                                              24
       supplement thereto) constitute the only information furnished in writing
       by or on behalf of the several Underwriters for use in the Registration
       Statement (or any amendment thereto) or the Prospectus (or any amendment
       or supplement thereto).
                (c) Each indemnified party shall give notice as promptly as
       reasonably practicable to each indemnifying party of any action commenced
       against it in respect of which indemnity may be sought hereunder, but
       failure so to notify an indemnifying party shall not relieve such
       indemnifying party from any liability which it may have otherwise than on
       account of this indemnity agreement. An indemnifying party may
       participate at its own expense in the defense of any such action. If it
       so elects within a reasonable time after receipt of such notice, an
       indemnifying party, jointly with any other indemnifying parties receiving
       such notice, may assume the defense of such action with counsel chosen by
       it and approved by the indemnified parties defendant in such action,
       which approval shall not be unreasonably withheld, unless such
       indemnified parties object to such assumption on the ground that there
       may be legal defenses available to them which are different from or in
       addition to those available to such indemnifying party. If an
       indemnifying party assumes the defense of such action, the indemnifying
       parties shall not be liable for any fees and expenses of counsel for the
       indemnified parties incurred thereafter in connection with such action.
       In no event shall the indemnifying parties be liable for fees and
       expenses of more than one counsel (in addition to any local counsel)
       separate from their own counsel for all indemnified parties in connection
       with any one action or separate but similar or related actions in the
       same jurisdiction arising out of the same general allegations or
       circumstances.
                  SECTION 7. Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnity agreement
provided for in Section 6 is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, the
Company and the Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company and one or more of the Underwriters,
as incurred, in such proportions that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount appearing
on the cover page of the Prospectus bears to the initial public offering price
appearing thereon and the Company is responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
 
<PAGE>
                                                                              25
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section, each person, if any, who controls a Underwriter within the
meaning of Section 15 of the 1933 Act shall have the same rights to contribution
as such Underwriter, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act shall have
the same rights to contribution as the Company.
                  SECTION 8. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement and the Pricing Agreement, or contained in certificates of
officers of the Company submitted pursuant hereto, shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or controlling person, or by or on behalf of the Company, and
shall survive delivery of the Shares to the Underwriters.
                  SECTION 9. Termination of Agreement. (a) The Representatives
may terminate this Agreement, by notice to the Company, at any time at or prior
to Closing Time (i) if there has been, since the date of this Agreement or since
the respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or any outbreak or
escalation of hostilities or other national or international calamity or crisis,
the effect of which is such as to make it, in the judgment of the
Representatives, impracticable or inadvisable to market the Shares or to enforce
contracts for the sale of the Shares, or (iii) if trading in the Common Stock
has been suspended by the Commission or the New York Stock Exchange, or if
trading generally on the New York Stock Exchange has been suspended, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by said Exchange or by order of the Commission or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either federal or New York State authorities.
                (b) If this Agreement is terminated pursuant to this Section,
       such termination shall be without liability of any party to any other
       party except as provided in Section 4, and provided further that Sections
       6, 7 and 13 hereof shall survive such termination.
 
<PAGE>
                                                                              26
                  SECTION 10. Default by One or More of the Underwriters. If one
or more of the Underwriters shall fail at Closing Time to purchase the Initial
Shares which it or they are obligated to purchase under this Agreement and the
Pricing Agreement (the Defaulted Shares), the Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Shares in such amounts as may be agreed upon and
upon the terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
                (a) if the number of Defaulted Shares does not exceed 10% of the
       Initial Shares, each of the non-defaulting Underwriters shall be
       obligated, severally and not jointly, to purchase the full amount thereof
       in the proportions that their respective underwriting obligations
       hereunder bear to the underwriting obligations of all non-defaulting
       Underwriters, or
                (b) if the number of Defaulted Shares exceeds 10% of the Initial
       Shares, this Agreement shall terminate without liability on the part of
       any nondefaulting Underwriter or the Company.
                  No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
                  In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company shall
have the right to postpone Closing Time for a period not exceeding seven days in
order to effect any changes deemed necessary or advisable in the Registration
Statement or Prospectus or in any other documents or arrangements.
                  SECTION 11. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed, personally delivered or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representatives in care of Merrill Lynch & Co., North Tower, World Financial
Center, New York, New York 10281-1201, Attention of [                        ];
notices to the Company shall be directed to it at 55 East Camperdown Way, Post
Office Box 1028, Greenville, South Carolina 29602, Attention of Treasurer, with
a copy to Corporate Secretary.
                  SECTION 12. Parties. This Agreement and the Pricing Agreement
shall each inure to the benefit of and be binding upon the Underwriters and the
Company and their respective successors.
 
<PAGE>
                                                                              27
Nothing expressed or mentioned in this Agreement or the Pricing Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their respective successors, heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or the
Pricing Agreement or any provision herein or therein contained. This Agreement
and the Pricing Agreement and all conditions and provisions hereof and thereof
are intended to be for the sole and exclusive benefit of the Underwriters and
the Company and their respective successors, and said controlling persons and
officers and directors and their respective successors, heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Shares from any Underwriter shall be deemed to be a successor by
reason merely of such purchase.
                  SECTION 13. Governing Law and Time. This Agreement and the
Pricing Agreement shall be governed by and construed in accordance with the laws
of the State of New York applicable to agreements made and to be performed in
said State. Specified times of day refer to New York City time.
 
<PAGE>
                                                                              28
                  If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its terms.
                                       Very truly yours,
                                       BOWATER INCORPORATED,
                                       By
                                         Name: David G. Maffucci
                                         Title: Vice President-
                                         Treasurer
CONFIRMED AND ACCEPTED,
      as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
      INCORPORATED
SALOMON BROTHERS INC
KIDDER, PEABODY & CO. INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY SHEARSON INC.
By MERRILL LYNCH & CO.
      Merrill Lynch, Pierce, Fenner & Smith
         Incorporated,
By
   Name:
   Title:
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
 
<PAGE>
                                                                              29
                                   SCHEDULE A
<TABLE>
<S>                                                                                         <C>
                                                                                            Number of
                                                                                             Initial
                               Number of Underwriter                                          Shares
Merrill Lynch, Pierce, Fenner & Smith
  Incorporated......................................................................
Salomon Brothers Inc................................................................
Kidder, Peabody & Co. Incorporated..................................................
Prudential Securities Incorporated..................................................
Smith Barney Shearson Inc...........................................................
Total...............................................................................
</TABLE>
 
<PAGE>
                                                                       EXHIBIT A
                              BOWATER INCORPORATED
                            (a Delaware Corporation)
                      [               ] Depositary Shares
                           Representing a One-Fourth
                             Interest in a Share of
                       % Series C Cumulative Preferred Stock,
                             par value $1 per share
                               PRICING AGREEMENT
                                                           February       , 1994
MERRILL LYNCH & Co.
Merrill Lynch, Pierce, Fenner & Smith
      Incorporated
SALOMON BROTHERS INC
KIDDER, PEABODY & CO. INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY SHEARSON INC.
      as Representatives of the several Underwriters
     named in the within-mentioned Purchase Agreement
     c/o Merrill Lynch & Co.
     Merrill Lynch, Pierce, Fenner & Smith
         Incorporated
         North Tower
         World Financial Center
         New York, New York 10281-1209
Dear Sirs:
                  Reference is made to the Purchase Agreement, dated February
      , 1994 (the Purchase Agreement), relating to the purchase by the several
Underwriters named in Schedule A thereto (the Underwriters), for whom Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon
Brothers Inc, Kidder, Peabody & Co. Incorporated, Prudential Securities
Incorporated, and Smith Barney Shearson Inc. are acting as representatives (the
Representatives), of the Depositary Shares (the Shares), representing a
one-fourth interest in the % Series C Cumulative Preferred Stock, of Bowater
Incorporated, a Delaware corporation (the Company).
 
<PAGE>
                                                                               2
                  Pursuant to Section 2 of the Purchase Agreement, the Company
agrees with each Underwriter as follows:
                1. The initial public offering price per share for the Shares,
       determined as provided in said Section 2, shall be $            .
                2. The purchase price per share for the Shares to be paid by the
       several Underwriters shall be $ being an amount equal to the initial
       public offering price set forth above less $ per share; provided that the
       purchase price per share for any Option Shares (as defined in the
       Purchase Agreement) purchased upon exercise of the over-allotment option
       described in Section 2(b) of the Purchase Agreement shall be reduced by
       an amount per share equal to any dividends per share declared by the
       Company and payable on the Initial Shares (as defined in the Purchase
       Agreement) but not payable on the Option Shares.
                3. The dividend rate on the Series C Cumulative Preferred Stock
       will be     %.
                4. Payment of the purchase price for, and delivery of
       certificates for, the Shares shall be at the office of Cravath, Swaine &
       Moore, New York, at 10:00 A.M. on the fifth business day after the
       execution of this Pricing Agreement.
 
<PAGE>
                                                                               3
                  If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its terms.
                                             Very truly yours,
                                             BOWATER INCORPORATED
                                             By
                                              Name:
                                              Title:
CONFIRMED AND ACCEPTED,
      as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
      INCORPORATED
SALOMON BROTHERS INC
KIDDER, PEABODY & CO. INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY SHEARSON INC.
By MERRILL LYNCH & CO.
    Merrill Lynch, Pierce, Fenner & Smith
    Incorporated
By
    Name:
    Title:
For themselves and as Representatives of the other Underwriters named in
Schedule A to the Purchase Agreement.

