AMERICAN BILTRITE INC.
                             1999 STOCK OPTION PLAN
                           FOR NON-EMPLOYEE DIRECTORS

Section 1.  General Purpose of Plan; Definitions.

            The name of this plan is the American Biltrite Inc. 1999 Stock
Option Plan for Non-Employee Directors (the "Plan"). The purpose of the Plan is
to enable the Company (as defined below) to compensate non-employee members of
the Board (as defined below) and to provide incentives to such members, which
incentives are linked directly to increases in stockholder value and will
therefore inure to the benefit of all stockholders of the Company.

            For purposes of the Plan, the following terms shall be defined as
set forth below:

            (a) "Board" means the Board of Directors of the Company.

            (b) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor thereto.

            (c) "Committee" means the Compensation Committee of the Board, or
any other committee the Board may subsequently appoint to administer the Plan.
The Committee shall be composed entirely of directors who meet the
qualifications referred to in Section 2 of the Plan. If at any time no Committee
shall be in office, then the functions of the Committee specified in the Plan
shall be exercised by the Board.

            (d) "Company" means American Biltrite Inc., a corporation organized
under the laws of the State of Delaware, or any successor corporation.

            (e) "Fair Market Value" shall mean, with respect to Stock or other
property, the fair market value of such Stock or other property determined by
such methods or procedures as shall be established from time to time by the
Committee. Unless otherwise determined by the Committee in good faith, the per
share Fair Market Value of Stock as of a particular date shall mean (i) the
closing sale price per share of Stock on the national securities exchange on
which the Stock is principally traded for the last preceding date
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on which there was a sale of such Stock on such exchange, or (ii) if the shares
of Stock are then traded in an over-the-counter market, the average of the
closing bid and asked prices for the shares of Stock in such over-the-counter
market for the last preceding date on which there was a sale of such Stock in
such market, or (iii) if the shares of Stock are not then listed on a national
securities exchange or traded in an over-the-counter market, such value as the
Committee, in its sole discretion, shall determine.

            (f) "Nonqualified Stock Option" means any Stock Option that is not
an "incentive stock option" within the meaning of Section 422 of the Code.

            (g) "Plan" has the meaning set forth in the first paragraph hereof.

            (h) "Securities Act" means the Securities Act of 1933, as amended.

            (i) "Stock" means the Company's presently authorized Common Stock,
par value $0.01 per share, except as this definition may be modified pursuant to
Section 3 hereunder to include shares which are substituted for, or represent
adjustments to, the Company's Common Stock, par value $0.01 per share, or other
Stock.

            (j) "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.

Section 2.  Administration.

            The Plan shall be administered by a Committee of not less than two
persons, who shall be appointed by the Board and who shall serve at the pleasure
of the Board.

Section 3.  Stock Subject to Plan; Substitutions and Adjustments

            The total number of shares of Stock reserved and available for
issuance under the Plan shall be 50,000. Such shares may consist, in whole or in
part, of authorized and unissued shares or treasury shares.

            In the event of any merger, reorganization, consolidation,
recapitaliza tion, Stock dividend or other change in corporate structure
affecting the Stock, a substi tution or adjustment shall be made in (a) the
aggregate number and kind of shares reserved and available for issuance under
the


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Plan and (b) the number and option price of shares subject to outstanding Stock
Options granted under the Plan as may be determined by the Committee, provided
that the number of shares subject to any award shall always be a whole number.

Section 4.  Eligibility.

            Each non-employee member of the Board shall receive Nonqualified
Stock Options in accordance with the provisions of Section 5.

Section 5.  Stock Options.

            (a) Stock Options shall be granted in the following manner:

                  i) On July 1, 1999, each non-employee member of the Board
shall be granted a Nonqualified Stock Option to purchase 1,000 shares of Stock;

                  ii) On each July 1 thereafter during the term of the Plan,
each non-employee member of the Board shall be granted a Nonqualified Stock
Option to purchase 500 shares of Stock; and

                  iii) Each new non-employee member of the Board who has not
previously been a non-employee member of the Board during the term of the Plan
shall be granted, on the date he or she is elected to the Board during the term
of the Plan, a Nonqualified Stock Option to purchase 1,000 shares of Stock.

            (b) Stock Options granted under the Plan shall be subject to the
terms and conditions set forth below.

                  i) The exercise price per share of Stock purchasable under
such Stock Options shall be 100% of the Fair Market Value of the Stock on the
date of grant.

                  ii) Such options shall be exercisable commencing on the date
which is 6 months after the date of grant by payment in full of the exercise
price in cash, certified or cashier's check or delivery of Stock certificates
endorsed in blank or accompanied by executed stock powers with signatures
guaranteed by a national bank or trust company or a member of a national
securities exchange. For these purposes, the Stock shall be valued at the Fair
Market Value on the date of exercise. Payment of the exercise price with
certificates evidencing shares of Stock as


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<PAGE>

provided above shall not increase the number of shares available for the grant
of Stock Options under the Plan.

                  iii) Each Stock Option shall cease to be exercisable on the
date that is ten years following the date of grant.

                  iv) The aggregate number of shares of Stock that may be
granted to any non-employee member of the Board pursuant to the Plan may not
exceed 50,000 shares.

                  v) No Stock Options shall be transferable by the recipient
otherwise than by will or by the laws of descent and distribution, and all Stock
Options shall be exercisable, during the recipient's lifetime, only by the
recipient or the recipi ent's guardian or legal representative.

            (c) Each recipient of a Stock Option shall enter into a stock option
agree ment with the Company, which agreement shall set forth, among other
things, the exercise price of the option, the term of the option and provisions
regarding exercisability of the option granted thereunder, which provisions
shall not be inconsis tent with the terms set forth herein.

Section 6.  Amendment and Termination.

            The Board may amend, alter, modify or discontinue the Plan at any
time, provided that the Board may not amend or alter the provisions of the Plan
relating to the amount, price and timing of awards more than once every six
months, other than to comport with changes in the Code, or the rules thereunder,
or the Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder.

Section 7.  Unfunded Status of Plan.

            The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a recipient by the
Company, nothing contained herein shall give any such recipient any rights that
are greater than those of a general creditor of the Company.

Section 8.  General Provisions.

            (a) The Plan and the rights of all persons claiming hereunder shall
be construed and determined in


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accordance with the laws of the State of Delaware without giving effect to the
choice of laws principles thereof.

            (b) The obligation of the Company to sell or deliver shares with
respect to Stock Options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appro priate by the Committee. Moreover,
each Stock Option is subject to the requirement that, if at any time the
Committee determines, in its absolute discretion, that the listing, registration
or qualification of shares issuable pursuant to a Stock Option is required by
any securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of a Stock Option, or the
issuance of shares thereunder, no Stock Options shall be granted or shares
issued, in whole or in part, unless such listing, registration, qualification,
consent or approval has been effected or obtained, free of any conditions, as
acceptable to the Committee. In the event that the issuance or disposition of
shares acquired pursuant to a Stock Option is not covered by a then current
registra tion statement under the Securities Act and is not otherwise exempt
from such registra tion, such shares shall be restricted against transfer to the
extent required by the Securities Act or regulations thereunder, and the
Committee may require the holder of a Stock Option receiving shares pursuant to
that Stock Option, as a condition precedent to receipt of such shares, to make
such representations as the Committee deems appropri ate, including without
limitation a representation to the Company in writing that the shares acquired
by such Stock Option holder are acquired for investment only and not with a view
to distribution.

            (b) Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of the
Plan shall not confer upon any member of the Board any right to continued
membership on such Board.

            (c) Each recipient of a Stock Option shall, no later than the date
as of which the value of a Stock Option first becomes includible in the gross
income of such recipient for federal income tax purposes, pay to the Company, or
make arrangements satisfactory to the Committee regarding


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payment of, any federal, state, or local taxes of any kind required by law to be
withheld with respect to the award. The obligations of the Company under the
Plan shall be conditional on such payment or arrangements and the Company shall,
to the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the recipient.

            (d) No member of the Board or the Committee, nor any officer or
employee of the Company acting on behalf of the Board or the Committee, shall be
personally liable for any action, determination, or interpretation taken or made
in good faith with respect to the Plan, and all members of the Board or the
Committee and each and any officer or employee of the Company acting on their
behalf shall, to the extent permitted by law, be fully indemnified and protected
by the Company in respect of any such action, determination or interpretation.

Section 9.  Effective Date of Plan.

            The Plan shall be effective on the date it is adopted by the Board.

Section 10. Term of Plan.

            No Stock Option shall be granted pursuant to the Plan on or after
the tenth anniversary of the effective date of the Plan, but Stock Options
previously granted may extend beyond that date.


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