
      PAGE 1
 
                                                            [Draft -- 1/25/94]
 
                             Bowater Incorporated
                           (a Delaware corporation)
 
                                   Depositary Shares
                          Representing a One-Fourth
                            Interest in a Share of
                  % PRIDES, Series B Convertible Preferred Stock,
                            par value $1 per share
 
                              PURCHASE AGREEMENT
 
                                                            February    , 1994
 
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
   Incorporated
Salomon Brothers 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      % PRIDES, Series B Convertible Preferred Stock, par value $1
per share (the Series B Preferred Stock), which Series B Preferred Stock is
convertible (upon conversion or redemption of the Series B Preferred Stock)
into shares of Common Stock, par value $1.00 per share, of the Company
(including the related rights (the Rights) issuable pursuant to the Rights
Agreement dated as of April 22, 1986, as amended, between the Company and The
Bank of
 
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                                                                             2
 
New York as successor Rights Agent to Morgan Guaranty Trust Company of New
York (the Rights Agreement), the Rights and the Common Stock being hereinafter
collectively referred to as the Common 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 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 B 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 B
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.
33-51569) 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
 
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                                                                             3
 
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, 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 stated in 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
 
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                                                                             4
 
       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, 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
 
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                                                                             5
 
       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 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
 
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                                                                             6
 
       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 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
 
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       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 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.
 
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                  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 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,
 
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                                                                             9
 
     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 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 and the shares of Common Stock
     issuable upon conversion or redemption of the Series B Preferred Stock
     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 and the
     shares of Common Stock issuable upon conversion or redemption of the
     Series B Preferred Stock 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.
 
      PAGE 10
 
                                                                            10
 
                       (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.
 
                       (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 including the shares of Common Stock
     issuable upon conversion or redemption of Series B Preferred Stock, (ii)
     the % Series C Cumulative Preferred Stock, being offered at approximately
     the same time as 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 and the shares of Common Stock issuable upon
     conversion or redemption of the Series B Preferred Stock on the New York
     Stock Exchange.
 
      PAGE 11
 
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                  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 and the shares of Common
Stock issuable upon conversion or redemption of the Series B Preferred Stock
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 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
and the shares of Common Stock issuable upon conversion or redemption of the
Series B Preferred Stock 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
 
      PAGE 12
 
                                                                            12
 
     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 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 B Preferred Stock, Depositary
              Shares and Depositary Receipts conform to the description
              thereof contained in the Prospectus; the Series B Preferred
              Stock is convertible into shares of Common Stock upon conversion
              or redemption of the Series B Preferred Stock in accordance with
              the terms of the Series B Preferred Stock; the shares of Common
              Stock initially issuable upon conversion or redemption of the
              Series B Preferred Stock
 
      PAGE 13
 
                                                                            13
 
              have been duly and validly authorized and reserved for issuance
              upon such conversion or redemption, and, when issued upon such
              conversion or redemption, will be validly issued, fully paid and
              non-assessable; such Common Stock conforms in all material
              respects to the description thereof contained in the Prospectus;
              the Depositary Shares and the shares of Common Stock issuable
              upon conversion or redemption of the Series B Preferred Stock
              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 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 B 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;
 
      PAGE 14
 
                                                                            14
 
                                (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 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 and the
              shares of Common Stock issuable upon conversion or redemption of
              the Series B Preferred Stock, 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
 
      PAGE 15
 
                                                                            15
 
              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 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 Prospectusrefers 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.
 
      PAGE 16
 
                                                                            16
 
                           (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 B 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.
 
                           (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
 
      PAGE 17
 
                                                                            17
 
     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:
 
                           (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
 
      PAGE 18
 
                                                                            18
 
              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
 
                                (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
 
      PAGE 19
 
                                                                            19
 
              date there were any decreases, as compared with the
              corresponding period in the 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 on 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
         Operationsincluded 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.
 
                  References to the Prospectus in this paragraph (d) include
any supplement thereto at the date of the letter.
 
      PAGE 20
 
                                                                            20
 
                       (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 and the shares of
     Common Stock issuable upon conversion or redemption of the Series B
     Preferred Stock 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 and the
     shares of Common Stock issuable upon conversion or redemption of the
     Series B Preferred Stock 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.
 
                       (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
 
      PAGE 21
 
                                                                            21
 
     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 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
 
      PAGE 22
 
                                                                            22
 
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 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
 
      PAGE 23
 
                                                                            23
 
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
     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
 
      PAGE 24
 
                                                                            24
 
     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 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.
 
      PAGE 25
 
                                                                            25
 
                  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.
 
                  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
 
      PAGE 26
 
                                                                            26
 
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. 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
 
      PAGE 27
 
                                                                            27
 
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.
 
                  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
 
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 28
 
                                                                            28
 
                                    SCHEDULE A
 
                                                                      Number of
                                                                        Initial
                                 Name of Underwriter                     Shares
 
    Merrill Lynch, Pierce, Fenner & Smith
       Incorporated............................................................
    Salomon Brothers Inc.......................................................
 
    Total......................................................................
 
      PAGE 1
 
                                                                     EXHIBIT A
 
                               BOWATER INCORPORATED
 
                             (a Delaware Corporation)
 
                       [               ] Depositary Shares
                            Representing a One-Fourth
                              Interest in a Share of
                   % PRIDES, Series B Convertible Preferred Stock,
                              par value $1 per share
 
                                PRICING AGREEMENT
 
                                                            February    , 1994
 
   MERRILL LYNCH & Co.
    Merrill Lynch, Pierce, Fenner & Smith
    Incorporated
    SALOMON BROTHERS 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, and Salomon
Brothers Inc are acting as representatives (the Representatives), of the
Depositary Shares (the Shares), representing a one-fourth interest in the    %
PRIDES, Series B Convertible Preferred Stock, of Bowater Incorporated, a
Delaware corporation (the Company).
 
                  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
 
      PAGE 2
 
                                                                             2
 
       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 PRIDES, Series B Convertible
       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
 
                                                                             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
 
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.

