
                        RECYCLE AGREEMENT


     AGREEMENT dated as of January 1, 1991, by and among BOWATER
INCORPORATED, a Delaware corporation (herein "Bowater"), ADVANCE
PUBLICATIONS, INC., a New York corporation (herein "Advance"),
and CALHOUN NEWSPRINT COMPANY, a Delaware corporation (herein
"Newsprint").
     WHEREAS, the parties hereto have executed a Restated
Agreement dated as of this date incorporating certain amendments
to an agreement entered into by and among them or their
predecessor corporations and/or predecessors in interest dated as
of October 19, 1966 (the "Restated Agreement"); and
     WHEREAS, Newsprint intends to build at its manufacturing
facility in Calhoun, Tennessee, a mill to supply recycled fiber
pulp to its newsprint paper machine and to sell additional
recycled fiber pulp to Bowater for Bowater's use with its four
newsprint paper machines at the Bowater pulp and paper mill in
Calhoun, Tennessee; and
     WHEREAS, Newsprint requests that Bowater supervise the
design and construction of such recycled fiber pulp mill on
behalf of Newsprint; and
     WHEREAS, Newsprint also requests that Bowater provide the
labor, supervision and management for the operation of the
recycled fiber pulp mill during the term of the Restated
Agreement;

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     NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements herein contained, the parties agree as
follows:
     1.   Construction.  Bowater agrees to supervise the design
and construction of a recycled fiber pulp mill (the "Recycle
Mill") on land to be sold at fair market value to Newsprint by
Bowater at its facility in Calhoun, Tennessee, which mill will
have a rated production capacity of three hundred tons per day of
recycled fiber pulp ("Recycle") . The currently projected startup
date for the Recycle Mill is December 1, 1991.
     2.    Financing. Newsprint will finance the construction of
the Recycle Mill using any tax-free financing available from the
State of Tennessee, available cash and funds generated by the
operations of Newsprint.  If additional funds are necessary,
Bowater agrees to loan the funds to Newsprint as interest bearing
debt in the same manner and on the same terms that apply to
Newsprint's loan of funds to Bowater.
     3.    Startup Costs.  Bowater and Newsprint shall be
responsible for all costs associated with the startup of the
Recycle Mill in proportion to the annual tonnage of Recycle
projected to be utilized in 1993 for the production of Recycle
Newsprint Paper (as defined below) for Bowater purchasers other
than those affiliated with Advance and for the production of
Recycle Newsprint Paper for purchasers affiliated with Advance,
i.e. fifty-seven percent (57%) and forty-three percent (43%),
respectively.

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     4.   Amendments to the Restated Agreement.  The parties
agree to amend the Restated Agreement in the following respects,
to be effective upon the commencement of the Recycle Mill's
production of commercially usable (as agreed by the parties)
Recycle:
     a.   Add to Clause 1.12 the words "a recycled fiber pulp
mill", after "newsprint machine,".
     b.   Add Clause 1.15 - "Recycle Mill" shall mean the
recycled fiber pulp mill owned by Newsprint and located at the
Plant.
          c.    Add to Clause 3.1.2 (i) -
               (a)  "Standard Newsprint Paper" shall mean
Newsprint Paper made entirely with virgin fiber pulp.
               (b)   "Recycle Newsprint Paper" shall mean
Newsprint Paper made with virgin fiber pulp and recycled fiber
pulp.
     d.    Insert in Clause 3.1.2(vi) at the end", as such
amounts may be reduced pursuant to Clause 3.7(iii)."
     e.    Substitute the following for Clause 3.1.3 (ii) -
Promptly following the close of each accounting quarter, the
price per ton (the "Adjusted Price") shall be determined for
Standard Newsprint Paper or Recycle Newsprint Paper, as           
appropriate, purchased during the preceding quarter in accordance
with the following procedures:
               Advance shall notify Bowater forty (40) days
following the close of each calendar quarter of the actual


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Newhouse Group Price paid during the prior accounting quarter for
Newsprint Paper Purchases of Standard Newsprint Paper or Recycle
Newsprint Paper, as appropriate.  As soon as practical after the
end of each calendar year, Advance will forward, in support of
the notification, a certification by its certified public
accountants that the Newhouse Group Price for Standard Newsprint
Paper and Recycle Newsprint Paper has been prepared in accordance
with Clause 3.1.3 of this Agreement.
     f.   Substitute the following for the first three sentences
of Clause 3.1.3 (iii) - If the Adjusted Price for either Standard
Newsprint Paper or Recycle Newsprint Paper, or both, differs from
the anticipated Newhouse Group Price paid during the prior
accounting quarter, then a price adjustment payment shall be
made.  If any Standard Newsprint Paper or Recycle Newsprint
Paper, or both, was purchased under this Agreement for less than
the Adjusted Price for such Newsprint Paper, then Advance shall
pay to Bowater the amount of such deficiency.  If any Standard
Newsprint Paper or Recycle Newsprint Paper, or both, was
purchased under this Agreement for more than the Adjusted Price
for such Newsprint Paper, then Bowater shall pay to Advance the
amount of such excess.
     g.   Substitute the following for the first three sentences
of Clause 3.1.3 (iv) - If the certified Adjusted Price for either
Standard Newsprint Paper or Recycle Newsprint Paper, or both,
differs from the Adjusted Price for such Newsprint Paper in any
of the accounting quarters for that Fiscal Year, then a further


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price adjustment shall be made.  If any Standard Newsprint Paper
or Recycle Newsprint Paper, or both, was purchased under this
Agreement for less than the certified Adjusted Price for such
Newsprint Paper, then Advance shall pay to Bowater the amount of
such deficiency.  If any Standard Newsprint Paper or Recycle
Newsprint Paper, or both, was purchased under this Agreement for
more than the certified Adjusted Price for such Newsprint Paper,
then Bowater shall pay to Advance the amount of such excess.
     h.    Add at the end of the last paragraph of Clause 3.3 -
provided, however, that if the switch to attain maximum mill net
would deprive Advance of Recycle Newsprint Paper, then the
objective of maximizing mill net will be sacrificed to meet
Advance's requirements for Recycle Newsprint Paper.
          i.    Add Clause 3.7 - Recycle Content.
               (i)   Until the year 2000, forty-nine percent
(49%) of the Contract Tonnage each year shall be Recycle
Newsprint Paper that will contain forty percent (40%) Recycle
("40% Recycle Paper").  The remaining fifty-one percent (51%) of
the Contract Tonnage may be all Standard Newsprint Paper until
the year 2000 and may, at Bowater's discretion, be produced for
Advance either at the Plant or at one of Bowater's other wholly
or partially owned mills, provided such Newsprint Paper satisfies
Advance's quality and delivery requirements.
               (ii) It is the intention of the parties, and the
parties will use their best efforts to provide, that commencing
January 1, 2000, all the Contract Tonnage shall be 40% Recycle


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Paper.  Bowater and Advance agree to negotiate in good faith for
appropriate modification of those intentions if prior to the year
2000 significant changes in legislation or other state or federal
requirements relating to Recycle Newsprint Paper should occur,
adverse conditions in the newsprint or old newsprint paper
markets should develop or environmental regulations or other
relevant considerations should arise which would make the
fulfillment of the intention of the parties uneconomic or
impossible.
               (iii)     In the event the parties cannot agree
that a modification of the intentions referred to in Clause 3.7
(ii), above, is appropriate and Bowater elects, by giving Advance
written notice no later than October 1, 1997, to provide Advance,
as of January 1, 2000, with 40% Recycle Paper in a specified
amount less than all (but at least forty-nine percent) of the
Contract Tonnage, then Advance shall have the right, in its sole
discretion and by giving Bowater written notice no later than
January 1, 1998, to be relieved from any and all obligations to
purchase any of the Contract Tonnage from Bowater that is not 40%
Recycled Paper, on and after January 1, 2000.  During the first 
year following Advance's notice, Advance's obligations under
Clause 3.1.3(i) shall be reduced by an amount
equal to one-third of the total tonnage to be reduced.  During
the second year following Advance's notice, Advance's obligations
under Clause 3.1.3(i) shall be reduced by an amount equal to two-
thirds of the total tonnage to be reduced. On and after January


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1, 2000, Advance's obligations under Clause 3.1.3 (i) shall be
reduced by an amount equal to the total tonnage to be reduced.
     Should Bowater fail to give Advance the notice provided for
above, then commencing January 1, 2000, all Newsprint Paper sold 
to Advance by Bowater under this Agreement shall be 40% Recycle
Paper.
     j.   Add Clause 3.8 - Second Recycle Mill.  In the event
that Newsprint and/or Bowater does not have adequate production
capacity, excluding the capacity of the Recycle Mill, to provide
the additional fifty-one percent of 40% Recycle Paper as
contemplated by the first sentence of Clause 3.7 (ii), then the
parties agree that Newsprint will finance, construct and own a
second recycle mill to be operational by January 1, 2000, subject
to any renegotiation as provided in Clause 3.7 (ii), above.
     k.   Add Clause 4.9 - Pulp Content.  All Newsprint Paper and
other grades produced on Southern's and Newsprint's paper
machines will contain TMP (as defined below) and/or Groundwood
and/or Kraft Pulp and/or recycled fiber pulp ("Recycle") and such
other pulps as the parties may agree.  The proportion of each
pulp actually used to make paper on each machine will be
determined by Southern using its best judgment on how to operate
Newsprint's and Southern's paper machines to their maximum
efficiency, consistent with the quality and other requirements of
Advance and Southern's customers, provided, however, that
Southern's best judgment is subject to the limitations set forth
in Clause 3.7 with respect to the Newsprint Paper purchased by


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Advance.
     1.   Renumber Clause 5.2 ("Charges for TMP") of the Restated
Agreement as Clause 5.3 and substitute the following language for
this Clause: 5.3 Charges for TMP and Recycle.  On a monthly basis
Newsprint will charge Southern for the cost of the TMP and
Recycle sold to and used by Southern in the production of its
finished product.  The tons of each furnish supplied to Southern
by Newsprint will be determined by apportioning the total
furnish, such total furnish having been calculated based upon
finished production plus sewer losses, between the various types
of furnish, using the percentage of each type of furnish as
calculated from the weighted average meter measurements.
               m. Add a new Clause 5.2
           5.2.1     Recycle.  Newsprint agrees to sell and supply
Recycle to Southern and Southern agrees to buy and accept Recycle
from Newsprint.  The quantity of Recycle to be sold to Southern
by Newsprint shall be the full output of the Recycle Mill less
the quantities used by the Plant.  Recycle shall be defined as
having a brightness of 55-68 points G.E. and shall have been
produced from old newsprint and old magazine waste or from such
other waste material as agreed from time to time by the parties.
           5.2.2   The Recycle to be supplied by Newsprint will
be of a quality suitable for use in the manufacture of standard
or specialty Newsprint Paper.  The Recycle will be delivered to
Southern at the point where the Recycle enters each pipeline
connected directly to each Southern paper machine furnish

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delivery system from the common Recycle header, at which point
title shall pass to Southern and any loss occurring at or after
that point will be for Southern's account.  The Recycle delivered
to Southern will be at an appropriate consistency as agreed from
time to time by the parties.
          5.2.3     For purposes of measuring the percentage of
Recycle in the furnish mix being used on Southern's paper
machines, the Recycle delivered by Newsprint to Southern will be
measured by means of a magnetic flow meter and a consistency
meter installed by Newsprint at its expense, and located at such
point in the delivery system as Newsprint may designate.  The
meters will be calibrated at least Monthly by Southern or by an
independent instrument firm agreed upon by the parties.
          5.2.4     Accurate cost and pulp production records
will be maintained by Southern on behalf of Newsprint showing
total Recycle production; the quantities used by Southern to
produce its finished product, as calculated in accordance with
Clause 5.3; the total cost of Recycle production; and the
proportions of such costs charged to Southern, together with such
other information and data as may be required to accomplish the
purposes hereof.
          5.2.5      Southern will pay Newsprint the Cost to
Newsprint of the Recycle used by Southern.  The Cost to Newsprint
shall be determined by multiplying the number of tons of Recycle
used by Southern by the average cost per ton of Recycle incurred
by Newsprint in producing and processing Recycle (including both


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the Recycle used by Newsprint and the Recycle used by Southern)
to the point of separation of Recycle for Newsprint and Recycle
for Southern and adding to such average cost the Cost to
Newsprint of any chemicals and other supplies or materials used
in further processing Recycle for Southern to the point of
delivery to Southern.  The average cost of Recycle to Newsprint
will be determined by dividing the total costs incurred by
Newsprint in producing and processing all Recycle (for both
Newsprint and Southern) up to the point in the manufacturing
process where the Recycle for Southern is physically separated
from Newsprint's Recycle, by the total number of tons of Recycle
processed to that point.  "Ton" as used in this Clause 5.2 shall
mean 2,000 pounds air dry weight.
     n.  Renumber Clause 5.3 ("Insufficient Supply  by 
     Newsprint") of the Restated Agreement as Clause 5.5.
     o.  Add a new Clause 5.4.
          5.4.1      IDLE CAPACITY.  The parties recognize and
understand that the operation of the Recycle Mill may result in
the underutilization of the productive capacity of the TMP Mill
and the Groundwood mill.  Therefore, the Fixed Costs (as defined
below) relating to the idle capacity of the TMP Mill and
Groundwood mill resulting from the operation of the Recycle Mill
will be allocated to Newsprint in the same ratio as the use of
Recycle by Newsprint bears to the total use of Recycle by
Newsprint and Southern and will be allocated to Southern in the
same ratio as the use of Recycle by Southern bears to the total


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use of Recycle by Newsprint and Southern.
          5.4.2      The proportion of Fixed Costs to be
allocated shall be determined using a fraction, the numerator of
which is the difference between the average daily TMP production
and/or Groundwood production (as the case may be) for the twelve
Months immediately preceding the startup of the Recycle Mill and
the average daily production of the TMP Mill and/or Groundwood
mill (if both, calculated individually) for the Month and the
denominator of which is the average daily TMP production and/or
Groundwood production (as the case may be) for the twelve Months
immediately preceding the startup of the Recycle Mill, such
startup date having been agreed by the parties.
          5.4.3     For purposes of this Clause 5.4, "Fixed
Costs" shall mean those costs incurred during each Month at the
TMP Mill and the Groundwood mill which are not directly related
to, or which do not vary in accordance with, the quantity of TMP
or Groundwood being produced.  Costs to be considered as Fixed
Costs shall include, but not be limited to, Labor Costs, repair,
insurance, property taxes, depreciation, and base load utilities.
     p.    Add to Clause 6.1 the words "and the Recycle Mill)"
after the words "(including the TMP Mill".  Add to Clause 6.1.1
the words ",the Recycle Mill (and any warehousing facilities for
the storage of waste paper)" after the words "the TMP Mill".
      q.   Add Clause 6.1.10 - Supervision of Recycle Mill
operations (including any warehousing facilities for the storage
of waste paper).


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     r.    Add to Clause 6.2.1 the words "and the Recycle Mill,
including any warehousing facilities for the storage of waste
paper)" after the words "(including the TMP Mill".
     s.    Add Clause 6.2.10 - Supervision of Recycle Mill- The
Cost to Southern of general Supervision in connection with the
Recycle Mill (including the waste paper warehousing facilities)
will be apportioned and charged to Newsprint based upon a
management determined percentage of time required for direct
Supervision of that operation.  Any Supervision, including
Overhead, that is dedicated solely to Newsprints Recycle Mill
operations, will be charged entirely to Newsprint.
     t.    Add to Clause 8.5.2 the words "or the Recycle Mill, or
both," after all references to "the TMP Mill".
     5.   Public Disclosure.  The parties agree that any public
announcement of the transactions contemplated by this Agreement
shall be made only after consultation with the other.
          IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first above written.

                                   BOWATER INCORPORATED

                                   By /s/ Robert C. Lancaster     
                                   Its


                                   ADVANCE PUBLICATIONS, INC.

                                   By /s/ Richard Diamond         
                                   Its


                                   CALHOUN NEWSPRINT COMPANY

                                   By /s/ Mark Newhouse           
                                   Its


