AMERICAN BILTRITE INC.

                              K&M ASSOCIATES L.P.



                               CREDIT AGREEMENT



                                Amendment No. 1





         This Agreement, dated as of January 29, 2004 (this "Agreement"), is

among American Biltrite Inc., a Delaware corporation ("American Biltrite"),

K&M Associates L.P., a Rhode Island limited partnership ("K&M"; American

Biltrite and K&M being collectively but jointly and severally, the

"Borrower"), the Lenders under the Credit Agreement (as defined below) and

Fleet National Bank, as Agent for itself and such Lenders. The parties agree

as follows:



         1. Credit Agreement; Definitions. This Agreement amends the Credit

Agreement dated as of October 14, 2003 among the parties hereto (as in effect

prior to giving effect to this Agreement, the "Credit Agreement"). Terms

defined in the Credit Agreement as amended hereby (the "Amended Credit

Agreement") and not otherwise defined herein are used with the meaning so

defined.



         2. Amendment of Credit Agreement. Effective upon the date all the

conditions set forth in Section 4 hereof are satisfied or waived (the

"Amendment Date"), which conditions must be satisfied or waived no later than

the date provided therein, the Credit Agreement is amended as follows:



         2.1. Amendment of Recitals. The recitals to the Credit Agreement are

     amended in their entirety as follows:



               "Recitals: Pursuant to this Agreement, the Lenders are

               extending to the Borrower a $20,000,000 secured revolving

               credit facility, including a $5,000,000 sub-allotment for

               Letters of Credit. All the credit facilities mature on December

               31, 2004. The proceeds of these credit facilities may be used

               for general corporate purposes as provided herein."



         2.2. Amendments of Section 1. Section 1 of the Credit Agreement is

     amended as follows:



            (a) The definition of "Applicable Margin" is amended to read in

         its entirety as follows:



               "'Applicable Margin' means the amount in the table below set

               opposite the Reference Leverage Ratio for such date:



                      "Reference Leverage Ratio            Applicable Margin

                       ------------------------            -----------------

                              [} or =] 325%                    275 b.p.

                           [} or =] 300% { 325%                250 b.p.

                           [} or =] 250% { 300%                200 b.p.

                           [} or =] 201% { 250%                150 b.p.

                           [} or =] 101% { 200%                125 b.p.

                              [{ or =] 100%                    100 b.p.



               Changes in the Applicable Margin shall occur on the third

               Banking Day after quarterly financial statements have been

               furnished to the Agent in accordance with Sections 6.4.1 or

               6.4.2 from time to time. In the event that the financial

               statements required to be delivered pursuant to Section 6.4.1

               or 6.4.2, as applicable, are not delivered when due, then

               during the period from the third Banking Day following the date

               such financial statements were due until the third Banking Day

               following the date on which they are actually delivered, the

               Applicable Margin shall be the maximum amount set forth in the

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