AMERICAN BILTRITE INC.

                              K&M ASSOCIATES L.P.

                         THE SUBSIDIARIES PARTY HERETO





                              SECURITY AGREEMENT







                         Dated as of October 14, 2003







                   FLEET NATIONAL BANK, AS COLLATERAL AGENT







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                               TABLE OF CONTENTS



                                                                          Page



1. Reference to Credit Agreement and Note Purchase Agreement;

   Definitions; Certain Rules of  Construction..............................1

2. Actions by Collateral Agent..............................................3

3. Security.................................................................3

         3.1. Credit Security...............................................3

         3.2. Additional Credit Security....................................7

         3.3. Certain Covenants with Respect to Credit Security  ...........7

         3.4. Administration of Credit Security............................14

         3.5. Right to Realize upon Credit Security........................16

         3.6. Representations and Warranties...............................19

4. Successors and Assigns; Future Lenders..................................21

         4.1. Successors and Assigns.......................................21

5. Expenses; Indemnity.....................................................21

         5.1. Expenses.....................................................21

         5.2. General Indemnity............................................21

         5.3. Indemnity with Respect to Credit Security....................22

6. Continuing Agreement, Defeasance, Etc...................................22

         6.1. Continuing Agreement.........................................22

         6.2. Defeasance...................................................22

7. Notices.................................................................22

8. Venue; Service of Process...............................................23

9. WAIVER OF JURY TRIAL....................................................24

10.General.................................................................24







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                             AMERICAN BILRITE INC.

                             K&M ASSOCIATES, L.P.



                              SECURITY AGREEMENT







         This Agreement, dated as of October 14, 2003, is among American

Biltrite Inc., a Delaware corporation ("the "Company"), K&M Associates L.P., a

Rhode Island limited partnership ("K&M"; the Company and K&M being

collectively the "Borrowers" and each a "Borrower"), the Subsidiaries of the

Company from time to time party hereto and Fleet National Bank, as collateral

agent (the "Collateral Agent") for itself, the other Lenders under the Credit

Agreement (as defined below) and the Noteholders under the Note Purchase

Agreement (as defined below). The parties agree as follows:



1. Reference to Credit Agreement and Note Purchase Agreement;

Definitions; Certain Rules of Construction. Reference is made to (i) the

Credit Agreement dated as of the date hereof, as from time to time in effect

(the "Credit Agreement"), among the Borrowers, the Lenders and Fleet National

Bank in its capacity as administrative agent for the Lenders and (ii) the Note

Purchase and Private Shelf Agreement and Facility Guarantee dated as of August

28, 2001, as from time to time in effect (the "Note Purchase Agreement"),

among the Company, K&M and The Prudential Insurance Company of America

("Prudential"). Capitalized terms defined in the Credit Agreement and not

otherwise defined herein are used herein with the meanings so defined as of

the date hereof and whether or not such Credit Agreement has been amended or

terminated. Certain other capitalized terms are used in this Agreement as

specifically defined below in this Section 1. Except as the context otherwise

explicitly requires, (a) the capitalized term "Section" refers to sections of

this Agreement, (b) the capitalized term "Exhibit" refers to exhibits to this

Agreement, (c) references to a particular Section shall include all

subsections thereof, (d) the word "including" shall be construed as "including

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