<PAGE>
                                                                   Exhibit 10(9)
 
                              K&M ASSOCIATES L.P.


                         AMENDED AND RESTATED AGREEMENT

                                       OF

                              LIMITED PARTNERSHIP
<PAGE>
 
                               TABLE OF CONTENTS

1.  Definitions.............................................................   6

2.  Organization............................................................  12
            2.1  Formation..................................................  12
            2.2  Name.......................................................  12
            2.3  Certificate................................................  12

3.  Principal Place of Business.............................................  13

4.  Business................................................................  13

5.  Term....................................................................  13

6.  Partners, Capital Contributions and Status..............................  13

7.  Management Fee of General Partners......................................  13

8.  Allocations and Distributions...........................................  14
            8.1  Profits....................................................  14
            8.2  Losses.....................................................  14
            8.3  Other Allocation Rules.....................................  15
            8.4  Distributions..............................................  16
            8.5  Guaranteed Payments........................................  17
            8.6  Withholding................................................  18
            8.7  Other Distributions........................................  18
 
9.  Duties and Powers of and Restrictions Upon
      the General Partners..................................................  19
            9.1  Duties.....................................................  19
            9.2  Powers.....................................................  19
            9.3  Certain Limitations upon the Power of
                 the General Partners.......................................  19
            9.4  Admission of Partners......................................  20
            9.5  Other Activities of the General Partners...................  20

10. Duties, Powers, Restriction and Other Matters
      Relating to the Limited Partners and Special
      Limited Partners......................................................  20
            10.1  Repayment of Capital Contributions........................  20
            10.2  No Priorities of Limited Partners.........................  20
            10.3  Limited Liability of Limited Partners.....................  21
            10.4  Role of Limited Partners..................................  21
            10.5  Employment of Limited Partners............................  21
            10.6  Removal or Death of Limited Partner.......................  21
            10.7  Non-Compete; Confidentiality..............................  23
            10.8  Sale, Transfer and Assignment of 
                    Interest by Limited Partners............................  25

                                       i
<PAGE>
 
            10.9  Power of Attorney and Authorization.......................  26
            10.10 Amendment to Certificate..................................  27
11.  Books of Account; Accounting and Reports...............................  27
            11.1  Book of Account...........................................  27
            11.2  Accounting and Reports....................................  28

12.  Management Expenses....................................................  29

13.  General Partner Withdrawal.............................................  29

14.  Termination............................................................  31
            14.1  Termination of the Partnership............................  31
            14.2  Winding up of the Partnership.............................  31
            14.3  Purchase by General Partners in
                    Liquidation.............................................  32
            14.4  Allocation of and Liability for
                    Negative Balances Upon Termination......................  32
            14.5  Final Payment.............................................  32

15.  Sale, Transfer and Assignment of Interest by
       General Partners.....................................................  33

16.  Exculpation, Indemnification and Contribution..........................  34
            16.1  Exculpation...............................................  34
            16.2  Indemnification...........................................  34
            16.3  Contribution..............................................  35

17.  Miscellaneous..........................................................  36
            17.1  Amendment.................................................  36
            17.2  Notices...................................................  36
            17.3  Section Headings..........................................  37
            17.4  Severability..............................................  37
            17.5  Right to Rely upon the Authority of
                    General Partners........................................  37
            17.6  Law of Rhode Island.......................................  37
            17.7  Counterpart Execution.....................................  37
            17.8  Parties in Interest.......................................  38
            17.9  Variation of Pronouns.....................................  38
            17.10 Litigation................................................  38

Schedule A
Schedule B
Schedule C
Schedule D

                                      ii
<PAGE>
 
                        AMENDED AND RESTATED AGREEMENT

                                       OF

                              LIMITED PARTNERSHIP

                                       OF

                              K&M ASSOCIATES L.P.


          This AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of K&M
Associates L.P., a Rhode Island limited partnership (the "Partnership"), is made
as of April 1, 1995 by and among AIMPAR, INC., a New York corporation ("AIM"),
as sole general partner, and those persons listed on Schedule A hereto as
limited partners.

          WHEREAS, the General Partner and the Limited Partners desire to amend
and restate, as of immediately prior to the opening of business on April 1,
1995, the Limited Partnership Agreement of K&M Associates L.P., dated as of
April 1, 1985 (as amended and restated by this Agreement, the "Partnership
Agreement"), to provide for, among other matters:  the withdrawal of certain
Limited Partners pursuant to Transfer Agreements, the transfer of all or certain
portions of the Interests of certain Limited Partners to Ocean State Jewelry,
Inc. pursuant to a Transfer Agreement, the withdrawal of Wilbur A. Cowett
Incorporated, a New York corporation ("Cowett"), as a General Partner and its
re-admission as a Limited Partner, the creation of a new class of Limited
Partners designated as Special Limited Partners,  the admission of Arthur I.
Maier Limited, a New York corporation,
<PAGE>
 
as a new Limited Partner and Special Limited Partner, the revised terms under
which Profits and Losses are allocated and distributed, the revised compensation
to be paid to the General Partner for its management of the Partnership's
business and the restatement of Capital Accounts, Capital Contributions and
Profits Interests of the Partners as of immediately prior to the opening of
business on April 1, 1995; and

          WHEREAS, each of Bruce S. Maier, Nancy E. Maier, Richard C. Maier,
Margaret F. Cowett, Anne F. Cowett and Frederick D. Cowett concurrently herewith
are assigning their respective entire Interests as Limited Partners in the
Partnership to Ocean State Jewelry, Inc. pursuant to a Purchase Agreement, are
withdrawing as Limited Partners effective as of the close of business on March
31, 1995, and shall each be entitled to receive from Ocean State Jewelry, Inc.,
pursuant to a Purchase Agreement, the amount and form of consideration set
forth opposite such withdrawing Partner's name on Schedule A thereto which
includes, among other things, an amount equal to such Partner's Capital Account
as of the date of such withdrawal, subject to the provisions of Section 8
hereof; and

          WHEREAS, Gerald I. Fleischman is withdrawing as a Limited Partner
effective as of the close of business on March 31, 1995 and Ocean State Jewelry,
Inc. shall succeed to his Interest in the Partnership; and

          WHEREAS, effective as of March 31, 1995, AIM irrevocably has
allocatedassigned the aggregate nine and three-quarters

                                       2
<PAGE>
 
percent (9 3/4%) share of Profits Interest defined as the "Float" in that
Limited Partnership Agreement of the Partnership dated as of April 1, 1985, as
amended through amendment No. 4, equally among Bruce, Nancy and Richard Maier,
each of whom was a Limited Partner on March 31, 1995; and

          WHEREAS, in connection with this Agreement and the transactions
contemplated hereby, Cowett has withdrawn as a General Partner and has been re-
admitted immediately thereafter as a Limited Partner, each pursuant to a letter
of consent by AIM effective as of immediately prior to the effectiveness of this
Agreement; and

          WHEREAS, Susan Maier has assigned a portion of her Interest (excluding
therefrom any distribution of Profits and Loses for the Fiscal Year ended March
31, 1995 attributable thereto as provided in Section 8 hereof) as a Limited
Partner to Arthur I. Maier together with her share of any Profits and Losses for
the Fiscal Year ended March 31, 1995 through the date of such assignment, to the
extent attributable to such assigned Interest, and Arthur I. Maier in turn has
transferred such assigned Interest, Profits and Losses to Arthur I. Maier
Limited, a New York corporation, which is being admitted as a Limited Partner
and a Special Limited Partner pursuant to this Agreement; and

          WHEREAS, each of Donald J. Fulford, Susan Maier, Patti Ann Ross and
Edythe J. Wagner, Inc. is assigning to Ocean State Jewelry, Inc., pursuant to a
Purchase Agreement dated as of March 31, 1995, a portion of such Partner's
remaining Interest as a

                                       3
<PAGE>
 
Limited Partner and shall be entitled to receive from Ocean State Jewelry, Inc.,
pursuant such Purchase Agreement, the amount and form of consideration set
forth opposite such withdrawing Partner's name on Schedule A thereto which
includes, among other things, an amount equal to such Partner's Capital Account
as of the date of such assignment, subject to the provisions of Section 8
hereof, to the extent attributable to their respective assigned Interests; and

          WHEREAS, each of the continuing Limited Partners set forth on Schedule
A hereto (except for Ocean State Jewelry, Inc. and Cowett) is entering into an
Option Agreement pursuant to and in accordance with the terms and subject to the
conditions thereof such Partners have agreed to grant to Ocean State Jewelry,
Inc. an option to buy, and Ocean State Jewelry, Inc. has granted to such
Partners an option to sell to it, their respective entire remaining Interests as
Limited Partners (and Interests as Special Limited Partners, if any); such
Partners have agreed to withdraw as Limited Partners (and as Special Limited
Partners, if applicable) as of their respective Closings, if any, under the
Option Agreement (as defined therein); and each of such Partners shall be
entitled to receive from Ocean State Jewelry, Inc., upon any such Closing and
pursuant to the Option Agreement, the applicable consideration set forth therein
for such Partner's Interest so sold; and

          WHEREAS, in connection with the restatement of Capital Accounts,
Capital Contributions and Profits Interests of the

                                       4
<PAGE>
 
Partners pursuant hereto, the Partnership has distributed to certain Partners as
of March 31, 1995 the amounts set forth opposite their respective names on
Schedule C attached hereto, representing the aggregate amount of such Partners'
Capital Accounts as of the Fiscal Year ended March 31, 1995 in excess of their
respective Capital Accounts as restated herein; and

          WHEREAS, in connection with the restatement of Capital Accounts,
Capital Contributions and Profits Interests of the Partners pursuant hereto, the
Partnership shall distribute to the Partners existing immediately prior to the
execution hereof their respective shares of any Profits and Losses for the
Fiscal Year ended March 31, 1995 as soon as practicable, but in no event later
than June 30, 1995; and

          WHEREAS, American Biltrite Inc., a Delaware corporation, is lending as
of May 4, 1995 an aggregate of $7,300,000 to the Partnership in exchange for a
note of the Partnership bearing interest thereon computed on the basis of a 360-
day year of 30-day months at a rate of one percent (1%) over the base lending
rate charged by The First National Bank of Boston (or such other commercial
banking institution as may be designated by AIM) as of the last day of each
month from May 4, 1995 until the date of payment and will be acquiring from
Wilbur A. Cowett Incorporated a subordinated note in the principal amount of
$700,000 as of the effective time of the merger of Wilbur A. Cowett Incorporated
with Zirconia Acquisition Co., Inc.; and

                                       5
<PAGE>
 
          WHEREAS, Arthur I. Maier Limited and Bruce S. Maier concurrently
herewith are entering into Non-Compete Agreements (unless otherwise noted, all
of the foregoing capitalized terms having such meanings as defined below);

          NOW, THEREFORE, the General Partner and the Limited Partners hereby
agree that the Partnership Agreement in its entirety is superseded, amended and
restated as follows as of immediately prior to the opening of business on April
1, 1995:

          1.  Definitions.  When used herein, the following terms shall have the
              -----------                                                       
meanings set forth below:

              1.1  "Act" means the Rhode Island Uniform Limited Partnership
Act, as amended.

              1.2  "Agreement" means this Agreement of Limited Partnership and
all Schedules thereto, as it may be modified, amended or restated from time to 
time.

              1.3  "Capital Account" means, with respect to any Partner, the 
Capital Account (and not any portion of the Special Account, if any) maintained
for such Partner in accordance with the following provisions:

              (a)  To each Partner's Capital Account there shall be credited 
such Partner's Capital Contributions, such Partner's allocable share of Profits
and any additional items in the nature of income or gain which are specially
allocated pursuant to Section 8 hereof.

              (b)  To each Partner's Capital Account there shall be debited the
amount of cash distributed to such Partner pursu-

                                       6
<PAGE>
 
ant to any provision of this Agreement, such Partner's allocable share of Losses
and any additional items in the nature of expenses or losses which are specially
allocated pursuant to Section 8 hereof.

          (c)  In the event all or a portion of an Interest in the Partnership
is transferred in accordance with the terms and provisions of this Agreement,
the transferee shall succeed to the Capital Account of the transferor to the
extent attributable to the transferred Interest.

          1.4  "Capital Contributions" means, with respect to any Partner, the
sum of (i) the amount in his Capital Account as of immediately prior to the
opening of business on April 1, 1995, as reflected on the books of the
Partnership and as set forth on Schedule B hereto and (ii) the amount of any
money subsequently contributed to the Partnership by such Partner.  Capital
Contributions to the Partnership made pursuant to clause (ii) of the immediately
preceding sentence) shall be made only in cash.

          1.5  "Code" means the Internal Revenue Code of 1986, as amended from
time to time (or any corresponding provisions of succeeding law).

          1.6  "Fiscal Year" means the Partnership's fiscal year which ended,
with respect to the Fiscal Year immediately prior to the execution of this
Agreement, on March 31, 1995 and which shall end, with respect to each Fiscal
Year hereafter, on December 31 of each year.

                                       7
<PAGE>
 
          1.7  "General Partner" means any Person who (i) is referred to as such
in the first paragraph of this Agreement or has become a General Partner
pursuant to the terms of this Agreement, and (ii) has not ceased to be a General
Partner pursuant to the terms of this Agreement.  "General Partners" means all
such Persons.

          1.8  "Interest" means an ownership interest in the Partnership,
including any and all benefits to which the holder of such an Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement.

          1.9  "Limited Partner" means any Person (i) whose name is set forth as
a Limited Partner or a Special Limited Partner on Schedule A hereto or who has
become a Limited Partner or a Special Limited Partner pursuant to the terms of
this Agreement and (ii) who holds an Interest.  "Limited Partners" means all
such Persons.

          1.10  "Partners" means all General Partners and all Limited Partners
(including Special Limited Partners), where no distinction is required by the
context in which the term is used herein.  "Partner" means any one of the
Partners.

          1.11  "Partnership" means the partnership formed pursuant to this
Agreement and the partnership continuing the business of this Partnership in the
event of dissolution as herein provided.

                                       8
<PAGE>
 
                 1.12  "Partnership Employee" means any Person whose name is set
forth as a Partnership Employee on Schedule A hereto.

                 1.13  "Person" means any individual, partnership, corporation,
trust or other entity.

                 1.14  "Profits" and "Losses" of the Partnership means, for each
taxable year of the Partnership, an amount equal to the Partnership's net
taxable income or loss for such year as determined for federal income tax
purposes in accordance with the accounting method and rules used by the
Partnership and in accordance with Code Section 703(a) (for such purpose, all
items of income, gain, loss, deduction or credit required to be separately
stated pursuant to Code Section 703(a)(1) being included in taxable income or
loss), subject to the following modifications:

             (a) any income of the Partnership that is exempt from federal 
income tax and not otherwise taken into account in computing Profits and Losses
shall be added to such taxable income or loss;

             (b) any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and not
otherwise taken into account, shall be subtracted from such taxable income or
loss;

                                       9
<PAGE>
 
          (c) with respect to Partnership property which has a book value
greater than or less than its adjusted tax basis, "Profits" and "Losses" of the
Partnership shall be determined by reference to the depreciation and
amortization deduction, if any, allowable with respect to such property as
computed for book purposes (and not for tax purposes) as reflected on Schedule D
attached hereto, by reference to such property's adjusted book value; and

          (d) any items of income, gain, loss, deduction and credit specially
allocated to the Partners pursuant to Section 8.3 of this Agreement shall not be
taken into account in computing Profits or Losses.

              1.15  "Profits Interest" means, with respect to a Partner, the
percentage set forth on Schedule A hereto for such Partner under the column
labelled Profits Interests.

              1.16  "Property" means all real and personal property acquired by 
the Partnership and any improvements thereto, and shall include both tangible
and intangible property.

              1.17  "Regulations" means the Income Tax Regulations promulgated 
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).

              1.18  "Special Account" means, with respect to any Special Limited
Partner, the memorandum account equal to the amount set forth under the heading
labelled "Special Account" opposite such Partner's name on Schedule B hereto.

                                       10
<PAGE>
 
          (a)  In the event all or a portion of a Special Limited Partnership
Interest is transferred in accordance with a Transfer Agreement, the Special
Limited Partnership Interest will terminate and the resulting Interest to which
the transferee shall succeed shall be a Limited Partnership Interest.  In the
event all or a portion of a Special Limited Partnership Interest is terminated
by operation of law, the transferee shall succeed to the Special Account of the
transferor (including any accrued Special Returns) to the extent attributable to
the transferred Interest.

          1.19  "Special Limited Partner" means any Person (i) who is designated
a special limited partner on Schedule A hereto or who becomes a Special Limited
Partner by operation of law and (ii) who holds an Interest.  "Special Limited
Partners" means all such Persons.

          1.20  "Special Return" means, a "guaranteed payment," as defined in
Section 707(c) of the Code, to each Special Limited Partner in an amount equal
to the product of (a) such Partner's Special Account and (b) a percentage which
is one percent (1%) over the base lending rate charged from time to time by The
First National Bank of Boston or such other commercial banking institution as
may be designated by AIM.  The computation and allocation, with respect to the
Special Accounts, of Special Returns shall be accrued daily and shall precede
any computation or allocation of any Profits and Losses hereunder.  Pursuant to
Section 8.5 hereof, Ocean State Jewelry, Inc. shall advance to

                                       11
<PAGE>
 
the Partnership in cash all amounts required to pay all Special Returns, which
advances shall bear no interest and be repayable upon the first to occur of (i)
the consummation of the sales of all Partnership Interests subject to any
Transfer Agreement and (ii) January 1, 1999.

          1.21  "Transfer Agreement" means any Purchase Agreement, Option
Agreement or Merger Agreement consented to by AIM and pursuant to which all or a
portion of the Interest of any Partner set forth on Schedule B is transferred to
any other Person.

     2.  Organization.
         ------------ 

          2.1  Formation.  The Partnership was formed as a limited partnership
               ---------                                                      
on April 1, 1985.  The predecessor general partnership, known as K&M Associates,
was formed on June 30, 1983.  The General and Limited Partners hereby agree to
continue the Partnership as a limited partnership pursuant to the Act upon the
terms and conditions set forth in this Agreement.

          2.2  Name.  The name of the Partnership is "K&M ASSOCIATES L.P."  The
               ----                                                            
business of the Partnership may be conducted under any name chosen by AIM, and
AIM may change the name of the Partnership from time to time.  In the event the
name of the Partnership is changed, AIM will advise the Limited Partners of the
new name of the Partnership.

          2.3  Certificate.  AIM shall, concurrently with the execution of the
               -----------                                                    
Agreement, cause to be filed any necessary amendment to the Certificate.

                                       12
<PAGE>
 
          3.  Principal Place of Business.  The Partnership may conduct its
              ---------------------------                                  
business in any jurisdiction in which it is qualified.  The principal office of
the Partnership shall be located at 425 Dexter Street, in the City of
Providence, State of Rhode Island or at such other location as AIM may
determine.  The Partnership may have such other offices as AIM from time to time
may determine.  The resident agent of the Partnership within the meaning of the
Act shall be Grafton H. Willey, III, an individual residing in the State of
Rhode Island, or such other individual residing in the State of Rhode Island as
AIM may determine.

          4.  Business.  The character of the business of the Partnership shall
              --------                                                         
be the sale, distribution and servicing of costume jewelry, sunglasses and other
related accessories and such other businesses and activities as AIM shall
determine.

          5.  Term.  The term for which the Partnership shall exist shall
              ----                                                       
continue until December 31, 2005, unless terminated sooner because of the
dissolution of the Partnership in accordance with the provisions of Section 14
hereof.

          6.  Partners, Capital Contributions and Status.  The names, addresses,
              ------------------------------------------                        
Capital Contributions, Profits Interests, Partner status and Partnership
Employee status of the Partners and Partnership Employees are set forth on
Schedules A and B hereto.

          7.  Management Fee of General Partners.  AIM (and any other General
              ----------------------------------                             
Partner, if any) shall receive as management fees (i.e., as "guaranteed
payments" within the meaning of Code

                                       13
<PAGE>
 
Section 707(c) and not as distributions) during each Fiscal Year the following
amounts:  (a) to AIM the amount of $55,000 and (b) to any General Partner the
cash value of reasonable compensation paid to any Person, including any employee
of an affiliate of such General Partner, who is employed by such General Partner
or affiliate thereof for the specific purpose and whose duties consist primarily
of participation in the business of the Partnership.  The foregoing management
fees of the General Partners shall be paid on a pro-rated monthly basis one
month in arrears.

          8.  Allocations and Distributions.
              ----------------------------- 

              8.1  Profits.  After the special allocations set forth in Section 
                   -------
8.3 and clause (b) of the third sentence of Section 8.5 hereof have been given
effect, Profits (and each item thereof) for each Fiscal Year shall be allocated
among the Partners' Capital Accounts in the following order and priority:

                   8.1.1  First, to the Partners in proportion to and to the 
extent of the cumulative Losses allocated to them pursuant to Section 8.2 hereof
less any amounts previously allocated to them pursuant to this Section 8.1.1;
and

                   8.1.2  Thereafter, to the Partners in proportion to their
respective Profits Interests.

              8.2  Losses.  After the special allocations set forth in Section
                   ------
8.3 and clause (b) of the third sentence of Section 8.5 hereof have been given
effect, Losses (and each item thereof) for each Fiscal Year shall be allocated
among the Partners' Capital Accounts in the following order and priority:

                                       14
<PAGE>
 
               8.2.1  First, to each Partner in proportion to its respective 
Profits Interest until such Partner's Capital Account equals zero; and

               8.2.2  Thereafter, to the General Partner or General Partners, 
as the case may be, in proportion to their respective Profits Interests.

          8.3  Other Allocation Rules.
               ---------------------- 

          (a)  Except as otherwise provided in this Agreement, or as determined
by AIM with respect to items reflected on Schedule M of the Partnership's
Federal income tax return, all items of Partnership income, gain, loss,
deduction and any other allocations not otherwise provided for shall be divided
among the Partners in the same proportions as they share Profits or Losses, as
the case may be, for the year.

          (b)  The Partners are aware of the income tax consequences of the
allocations made by this Section 8 and hereby agree to be bound by the
provisions of this Section 8 in reporting their shares of Partnership income,
gain, loss, deduction and credit for income tax purposes.

          (c)  For purposes of determining the Profits, Losses or any other
items allocable to any period, Profits, Losses and any such other items shall be
determined on a daily, monthly, or other basis, as determined by AIM, using any
permissible method under the Code.

          (d)  If any Partner unexpectedly receives an adjustment, allocation or
distribution described in Regulations

                                       15
<PAGE>
 
section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and
gain shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate any deficit in its Capital Account (in excess of any
amounts that such Partner is obligated to restore to the Partnership) created by
such adjustment, allocation or distribution as soon as practicable.  This
Section 8.3(d) is intended to comply with the qualified income offset provision
in Regulations section 1.704-1(b)(2)(ii)(d), and shall be interpreted
consistently therewith.

          (e)  In accordance with Code Section 704(c) and the Treasury
Regulations thereunder, depreciation, amortization, gain and loss, as determined
for tax purposes, with respect to any Partnership Property whose book value
differs from its adjusted basis for federal income tax purposes, shall, for tax
purposes, be allocated among the Partners so as to take account of any variation
between the adjusted basis of such Partnership Property to the Partnership for
federal income tax purposes and its book value, in a manner determined by AIM.

          8.4  Distributions.  As soon as practicable after the end of each
               -------------                                               
Fiscal Year, but in no event later than 90 days following such Fiscal Year, the
Partnership shall distribute cash among the Partners in the following order and
priority:

               8.4.1  First, to each Partner an amount in cash to be determined
by AIM, in its sole discretion, but in any event to be not less than forty
percent (40%) of each Partner's share of taxable income attributable to the
Partnership for such

                                       16
<PAGE>
 
Fiscal Year; provided, however, that such distributions shall be in proportion
to the Partners' respective Profits Interests; and

               8.4.2  Thereafter, to the Partners in proportion to their 
respective Profits Interests in an amount to be determined by AIM, if any.

          Distributions for any Fiscal Year made pursuant to this Section 8.4
will be paid with interest thereon from December 31 of such Fiscal Year to the
date of payment computed on the basis of a 360-day year of 30-day months at a
rate of one percent (1%) over the base lending rate charged by The First
National Bank of Boston as of the last day of each month from December 31 of
such Fiscal Year until the date of payment.

          8.5  Guaranteed Payments.  As soon as practicable after the end of
               -------------------                                          
each Fiscal Year, but in no event later than 90 days following such Fiscal Year,
cash shall be paid to the Special Limited Partners in an amount equal to their
respective Special Returns accrued in such Fiscal Year.  Amounts paid pursuant
to this Section 8.5 are intended to constitute "guaranteed payments" within the
meaning of Section 707(c) of the Code and shall not be treated as distributions
for the purposes of computing the respective Capital Accounts of the Special
Limited Partners.  Ocean State Jewelry, Inc. (a) shall advance to the
Partnership in cash all amounts required to pay all Special Returns in
accordance with this Section 8.5 to the Special Limited Partners and (b)
notwithstanding Section 8.2 hereof, shall be specially allocated any item of
loss or deduction attributable to the

                                       17
<PAGE>
 
payment of a Special Return that is funded pursuant to an advance by Ocean State
Jewelry, Inc. or an affiliate thereof in accordance with the foregoing.  All
advances by Ocean State Jewelry, Inc. made in accordance with the foregoing
shall bear no interest and be repayable upon the first to occur of (i) the
consummation of the sales of all Partnership Interests subject to any Transfer
Agreement and (ii) January 1, 1999.

          8.6  Withholding.  The Partnership may withhold taxes from any
               -----------                                              
allocation or distribution to any Partner to the extent required by the Code or
any other applicable law.  For purposes of this Agreement, any taxes so withheld
by the Partnership shall be deemed to be a distribution or payment to such
Partner, to reduce the amount otherwise distributable or allocable to such
Partner pursuant to this Agreement and to reduce the Capital Account of such
Partner.

          8.7  Other Distributions.  Notwithstanding anything in this Section 8
               -------------------                                             
to the contrary, the Partnership shall distribute to the Partners existing
immediately prior to the execution hereof their respective shares of any Profits
and Losses for the Fiscal Year ended March 31, 1995 as soon as practicable, but
in no event later than June 30, 1995, together with interest thereon from April
1, 1995 to the date of payment computed on the basis of a 360-day year of 30-day
months at a rate of one percent (1%) over the base lending rate charged by The
First National Bank of Boston as of the last day of each month, from April 1,
1995 until the date of payment.

                                       18
<PAGE>
 
          In no event shall the Partnership distribute Property other than cash
to any Partner.

      9.  Duties and Powers of and Restrictions Upon the General Partners.
          --------------------------------------------------------------- 

          9.1  Duties.  AIM shall manage and control the Partnership, its
               ------                                                    
business and affairs, to the best of its ability and shall use all reasonable
efforts to carry out the business of the Partnership as set forth in Section 4
hereof.

          9.2  Powers.  The management and control of the Partnership and its
               ------                                                        
business and affairs shall rest exclusively with AIM.  AIM shall have all the
rights and powers which may be possessed by a general partner under the Act, and
such rights and powers as are otherwise conferred by law or are necessary,
advisable or convenient to the discharge of its duties under the Agreement and
to the management of the business and affairs of the Partnership.

          9.3  Certain Limitations upon the Power of the General Partners.  AIM
               ----------------------------------------------------------      
(and all other General Partners, if any), without the amendment of the
Agreement, shall not:

                 (a)  Do any act in contravention of this Agreement;

                 (b)  Do any act which would make it impossible to carry on the
ordinary business of the Partnership; or

          (c)  Possess Partnership Property or assign their rights in specific
Partnership Property for other than a Partnership purpose.

                                       19
<PAGE>
 
          9.4  Admission of Partners.  At any time, and at its sole discretion,
               ---------------------                                           
AIM shall have the power to admit any Person to the Partnership as a Limited
Partner or a General Partner.

          9.5  Other Activities of the General Partners.  Notwithstanding any
               ----------------------------------------                      
provision of this Agreement to the contrary, each General Partner, and any
affiliate of such General Partner (with its consent), may be engaged in such
other activities and be employed by, consultant to, or receive compensation from
any person or entity other than the Partnership to the extent permitted by
applicable law.

     10.  Duties, Powers, Restriction and Other Matters Relating to the
          -------------------------------------------------------------
Limited Partners and Special Limited Partners.
--------------------------------------------- 

          10.1  Repayment of Capital Contributions.  No Limited Partner shall
                ----------------------------------                           
voluntarily withdraw from the Partnership or withdraw any amount in such
Partner's Capital Account without the consent of AIM.  Notwithstanding the
foregoing, after March 31, 1995, any Limited Partner who is a party to a
Transfer Agreement may withdraw from the Partnership.  Upon any such withdrawal,
the terms and provisions of the second and third paragraphs of Section 10.6
hereof shall apply to such withdrawal as if fully set forth in this Section
10.1.

          10.2  No Priorities of Limited Partners.  No Limited Partner shall
                ---------------------------------                           
have the right to demand or receive Property other than cash in respect of
amounts in such Partner's Capital Account.  No Limited Partner shall have
priority over any other Limited Partner as to Profits, Losses or distributions.

                                       20
<PAGE>
 
Notwithstanding the foregoing, the Special Limited Partners are entitled to
"guaranteed payments" made pursuant to Section 8.5 hereof.

          10.3  Limited Liability of Limited Partners.  A Limited Partner shall
                -------------------------------------                          
not be bound by, or personally liable for, the expenses, liabilities or
obligations of the Partnership.

          10.4  Role of Limited Partners.  No Limited Partner, as such, shall
                ------------------------                                     
take any part in or interfere with the management, conduct or control of the
business or affairs of the Partnership or have any right or authority to act for
or by the Partnership.

          10.5  Employment of Limited Partners.  Notwithstanding any other
                ------------------------------                            
provision of this Agreement, any Limited Partner may be employed by the
Partnership, a General Partner or any affiliate of a General Partner and may
receive salary from the Partnership, a General Partner or any affiliate of a
General Partner.

          10.6  Removal or Death of Limited Partner.  On December 31, 1995, or
                -----------------------------------                           
on the last day of any Fiscal Year thereafter, AIM, in its sole discretion, may,
on no less than sixty (60) days advance notice, cause the Partnership to
effectuate the withdrawal of any Limited Partner from the Partnership.  In
addition, after March 31, 1995, AIM, in its sole discretion, may cause the
Partnership to effectuate the withdrawal from the Partnership of any Limited
Partner who is a party to a Transfer Agreement upon the occurrence at any time
thereafter of any "Ac-

                                       21
<PAGE>
 
celeration Event" with respect to such Partner, if any (as may be defined in
such Partner's Transfer Agreement), as of the end of the Fiscal Year elected as
the basis for the calculation of the Exercise Price (as defined therein) in
accordance with the terms and provisions of such Partner's Transfer Agreement.

          Upon any of such withdrawals described in the immediately preceding
paragraph, (a) the transferee shall pay to such withdrawing Partner the amount
and form of consideration as provided in such Transfer Agreement in accordance
with the terms and provisions thereof and (b) the Partnership shall distribute
to such withdrawing Partner an amount equal to the sum of (i) such Partner's
share of any Profits and Losses and Special Returns, if any, in each case for
the Fiscal Year in which such withdrawal is deemed to have occurred.  The
payments described in clauses (a) and (b) of the first sentence of this
paragraph shall be made in accordance with the terms and provisions of such
Transfer Agreement, but in no event later than 90 days following the Fiscal Year
in which notice of such withdrawal is given in accordance with this Section 10.6
or notice of exercise is given in accordance with such Partner's Transfer
Agreement, as the case may be, and such payments shall constitute a complete
return to such withdrawing Partner of its Interests in the Partnership and a
complete distribution of its shares in all Partnership Property.  Any Transfer
Agreement, as in effect from time to time, may vary the obligations of the
Partnership or any transferee

                                       22
<PAGE>
 
hereunder with respect to any Limited Partner who is a party thereto.

          Notwithstanding the foregoing, (i) the Partnership shall not be
obligated under this Section 10.6 to make any payments of cash representing any
amounts previously distributed by the Partnership to the withdrawing Partner
pursuant to any other provision of this Agreement and (ii) if the Partnership's
Property is re-valued on the Partnership's books at an amount in excess of the
aggregate value of the Capital Accounts as set forth on Schedule B hereto, such
excess shall be excluded from the calculation of Capital Accounts for all
purposes of this Section 10.6 and any Transfer Agreement.

          10.7  Non-Compete; Confidentiality.  Except to the extent permitted by
                ----------------------------                                    
the written consent of AIM (which consent may be given in AIM's sole discretion
to the extent permitted by law), each Limited Partner, and any affiliate
thereof, agrees that he or it will not, directly or indirectly, during the
period he is a Partner and for one year thereafter, (a) in any state in which
the Partnership is then conducting business activities, directly or indirectly,
(i) engage, for his or its own account, in any business competitive with (A) the
business of the Partnership (other than any business which is owned or
controlled by American Biltrite Inc. or any subsidiary thereof) as such business
has been conducted by the Partnership at the time such Limited Partner withdraws
as a Limited Partner (or during the one year period prior thereto) and so long
as the Partnership contin-

                                       23
<PAGE>
 
ues to conduct such business during the one year period following the withdrawal
of such Limited Partner from the Partnership or (B) the costume jewelry,
sunglasses and other related accessories businesses (other than any business
which is owned or controlled by American Biltrite Inc. or any subsidiary
thereof); (ii) enter the employ of, or render any services to, any person
engaged in such competitive business; or (iii) become interested in any such
capacity, including, without limitation, as a partner, shareholder, officer,
director, principal, agent, trustee or consultant or (b) in any state in which
American Biltrite Inc. or any subsidiary thereof is then conducting business
activities, directly or indirectly, (i) engage for his or its own account in any
business competitive with the costume jewelry, sunglasses and other related
accessories businesses of American Biltrite Inc. or any subsidiary thereof
(other than any business which is owned or controlled by the Partnership); (ii)
enter the employ of, or render any services to, any person engaged in such
competitive business; or (iii) become interested in any such capacity,
including, without limitation, as a partner, shareholder, officer, director,
principal, agent, trustee or consultant; provided in each case, however, a
Limited Partner or affiliate thereof may own, directly or indirectly, solely as
an investment, securities of any Person traded on any national securities
exchange if the Limited Partner or affiliate is not a controlling person of, or
a member of a group which controls, such Person and does not,

                                       24
<PAGE>
 
directly or indirectly, own five percent (5%) or more of any class of securities
of such Person.

          Each Limited Partner and affiliate thereof further agrees that during
the term of this Agreement, he or it will not, directly or indirectly, make use
of, or divulge to any person, firm, corporation, entity or business
organization, and he or it shall use his or all reasonable efforts to prevent
the publication or disclosure of, any confidential or proprietary information
concerning the business, accounts or finances of, or any of the methods of doing
business used by the Partnership or of the dealings, transactions or affairs of
the Partnership or any of its customers which have or which may have come to his
or its knowledge as a Limited Partner or affiliate thereof.

          10.8  Sale, Transfer and Assignment of Interest by Limited Partners.
                -------------------------------------------------------------  
A Limited Partner (including any Special Limited Partner) may not sell, assign,
encumber or otherwise transfer his, her or its Interest in the Partnership or in
this Agreement, except by operation of law; provided, however, that a Limited
Partner (including any Special Limited Partner) shall be permitted to sell,
assign, encumber or otherwise transfer his, her or its Interest in the
Partnership with the prior approval of AIM upon such terms and conditions as AIM
in its sole and absolute discretion shall deem appropriate.  Upon any such
transfer, AIM is hereby authorized and directed, in the name and on behalf of
each of the Partners, to take any and all actions and sign, execute, certify,
acknowledge, file and record any and all agree-

                                       25
<PAGE>
 
ments, instruments or documents as may be necessary or advisable to reflect the
transfer of the Interest of a Limited Partner (including any Special Limited
Partner) in the Partnership pursuant to the provisions of this Section 10.8,
including, without limitation and notwithstanding any other provision of this
Agreement, any amendment of this Agreement.

          10.9  Power of Attorney and Authorization.  Each Limited Partner
                -----------------------------------                       
(including each Special Limited Partner) hereby makes, constitutes and appoints
AIM with full power of substitution and resubstitution, his true and lawful
attorney for him and in his name, place and stead and for his use and benefit,
to sign, execute, certify, acknowledge, file and record the Certificate, to
sign, execute, certify, acknowledge, file and record all instruments amending or
cancelling the Certificate, as the same may hereafter be amended, that may be
appropriate, and to sign, execute, certify, acknowledge, file and record such
other agreements, instruments or documents as may be necessary or advisable (a)
to reflect the exercise by any General Partner of any of the powers granted to
it under the Agreement, including the power to amend the Agreement and the
Certificate without the consent of any of the Limited Partners as provided in
Section 10.10 hereof; (b) to reflect the admission to the Partnership of any
additional Limited Partner (including any Special Limited Partner) or General
Partner or the withdrawal of any Limited Partner (including any Special Limited
Partner) or General Partner, in the manner prescribed in the Agreement; and (c)
to comply with the

                                       26
<PAGE>
 
laws of the State of Rhode Island or any other jurisdiction.  Each Limited
Partner (including each Special Limited Partner) authorizes such attorney-in-
fact to take any further action which such attorney-in-fact shall consider
necessary or advisable in connection with any of the foregoing, hereby giving
such attorney-in-fact full power and authority to do and perform each and every
act or thing whatsoever requisite or advisable to be done in and about the
foregoing as fully as such Limited Partner might or could do if personally
present, and hereby ratifying and confirming all such attorney-in-fact shall
lawfully do or cause to be done by virtue hereof.

          The power of attorney granted pursuant to this Section 10.9:  (a) is a
special power of attorney coupled with an interest and is irrevocable; and (b)
may be executed by such attorney-in-fact by listing all of the Limited Partners
(including any Special Limited Partner) executing any agreement, certificate,
instrument or document with the single signature of any such attorney-in-fact
acting as attorney-in-fact for all of them.

          10.10  Amendment to Certificate.  In the case of any amendment to add
                 ------------------------                                      
a Limited Partner (including any Special Limited Partner) or a General Partner,
the writing to amend the Certificate may be signed by AIM and shall also be
signed by the person to be added.

     11.  Books of Account; Accounting and Reports.
               ---------------------------------------- 

          11.1  Book of Account.  The Partnership's books and records and this
                ---------------                                               
Agreement shall be maintained at the princi-

                                       27
<PAGE>
 
pal office of the Partnership, and each General and Limited Partner shall have
access thereto at all reasonable times.  The Partnership shall maintain books
and records on the accrual basis, showing all costs, expenditures, receipts,
assets, liabilities, profits and losses and all other records necessary,
convenient or incidental to recording the Partnership's business and affairs and
sufficient to record the allocation of Profits, Losses, and distributions as
provided for herein; provided, however, that the books and records of the
Partnership may be otherwise maintained where AIM determines in its sole
discretion that an exception is necessary in fairness to the Partners.

          11.2  Accounting and Reports.  AIM, in its sole discretion, shall
                ----------------------                                     
select the independent public accountants for the Partnership.  As soon as
practicable after the end of each Fiscal Year, each General and Limited Partner
shall be furnished with a copy of the balance sheet of the Partnership as of the
last day of such Fiscal Year and a statement of income or loss of the
Partnership for such Fiscal Year, certified by the independent public
accountants for the Partnership selected by AIM.  The Partnership's accountant
shall also prepare and deliver a statement showing the amounts allocated against
the Capital Accounts and Special Accounts, if any, of such General or Limited
Partner pursuant to this Agreement during or in respect of such Fiscal Year, the
Partner's share of Profits and Losses and the Partner's Special Return, if any,
for such Fiscal Year, and any items of

                                       28
<PAGE>
 
income, gain, deduction, credit or loss allocated to it or him for purposes of
the Code, pursuant to this Agreement.

     12.  Management Expenses.  The Partnership shall provide for and bear
          -------------------                                             
the expense for the following "management expenses":  usual and necessary office
and clerical salaries benefits and services, rent, utility and other overhead
charges; expenses for travel and entertainment incurred in connection with the
business of the Partnership; insurance premiums and fees; telephone, facsimile
and similar services relating to the business of the Partnership and other
routine expenses incurred in connection with its affairs; the accounting fees,
costs and expenses of the Partnership, including, without limitation, the fees
and expenses of the annual audit of the Partnership, the preparation of the
annual and interim financial statements of the Partnership described in Section
11.2 hereof and the Federal and state tax returns of the Partnership the legal
fees, costs, and expenses of counsel for the Partnership in any litigation, and
the amount of any judgments or settlements paid in connection with such
litigation; all other legal fees, costs and expenses incident to the Partnership
and its management and business; fees incurred by the Partnership for special
advisory or consulting services; and all extraordinary fees, costs and expenses.

     13.  General Partner Withdrawal.  So long as there is  at least one
          --------------------------                                    
General Partner remaining thereafter, a General Partner may voluntarily withdraw
from the Partnership or withdraw any portion of its Capital Account at any time
upon no less than

                                       29
<PAGE>
 
fifteen (15) days advance written notice to all other Partners.  In the event of
any withdrawal of a General Partner or any portion of its Capital Account from
the Partnership, the Partnership shall distribute to such Partner an amount
equal to the sum of (a) such Partner's Capital Account as of the end of the
Fiscal Year in which such withdrawal occurs prior to the allocation thereto of
any Profits and Losses for such Fiscal Year and (ii) the product of such
Partner's share of any Profits and Losses for such Fiscal Year and a fraction,
the numerator of which is equal to the number of days in such Fiscal Year prior
to the effective date of such withdrawal and the denominator of which is 365, in
each case to the extent attributable to the withdrawn portion of its Capital
Account, as soon as practicable thereafter, but in no event later than 90 days
following the Fiscal Year in which such withdrawal occurs.  If a General Partner
ceases to be a General Partner, its liability as a General Partner shall cease
as provided in the Act, except to the extent of any negative balance in its
Capital Account.  The amount of any such negative balance shall be paid promptly
to the Partnership.  After the withdrawal of a General Partner, the Partnership
shall promptly take all steps reasonably necessary under the Act to cause such
cessation of liability.  Notwithstanding the foregoing, a General Partner may
not voluntarily withdraw any portion of its Capital Account unless, after such
withdrawal, the Interest of any General Partner is at least 1% of each item of
Partnership income, gain, loss, deduction or credit.

                                       30
<PAGE>
 
     14.  Termination.
          ----------- 

          14.1  Termination of the Partnership.  The termination of the
                ------------------------------                         
Partnership pursuant to Section 5 or the election in writing to terminate the
Partnership at any time by all the General Partners shall terminate the
Partnership.  The dissolution, bankruptcy, insolvency, withdrawal or termination
and winding up of the affairs of the last remaining General Partner shall
terminate the Partnership.  The dissolution, bankruptcy, insolvency, withdrawal
or termination and winding up of the affairs of a General Partner (other than
the last remaining General Partner) or the death, bankruptcy, incapacity or
withdrawal of a Limited Partner shall not cause the termination of the
Partnership and thereafter the Partnership shall be continued by the remaining
General Partner or General Partners.

          14.2  Winding up of the Partnership.  Upon a termination of the
                -----------------------------                            
Partnership, AIM shall appoint one or more persons or entities, including a
General Partner, to take full account of the Partnership's assets and
liabilities, and all assets of the Partnership shall be liquidated.  This
liquidation shall be carried out as promptly as is consistent with obtaining the
fair market value of the Partnership's assets.  Thereupon, the proceeds of such
liquidation to the extent sufficient therefor, shall be applied and distributed
as follows:

                14.2.1  To the payment and discharge of all the Partnership's
debts and liabilities to persons other than

                                       31
<PAGE>
 
General Partners, including the establishment of any necessary reserves;

          14.2.2  To the payment and discharge of all of the Partnership debts
and liabilities to General Partners (other than in respect of their Interests);
and
          14.2.3  The balance, if any, to the Partners in accordance with the
positive balance in their respective Capital Accounts.

    14.3  Purchase by General Partners in Liquidation.  A General Partner
          -------------------------------------------                    
may purchase any assets of the Partnership which are sold in connection with the
liquidation of the Partnership.

    14.4  Allocation of and Liability for Negative Balances Upon
          ------------------------------------------------------
Termination.  In the event the Partnership is terminated, if any General
-----------                                                             
Partner's Capital Account has a deficit balance (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such termination occurs), such General Partner shall
contribute to the capital of the Partnership the amount necessary to restore
such deficit balance to zero.  No Limited Partner shall have any obligation to
make any contribution to the capital of the Partnership, except that each
Limited Partner shall be liable to the Partnership to the extent of his Capital
Account.

    14.5  Final Payment.  The distribution of funds to the General and
          -------------                                               
Limited Partners in accordance with this Section

                                       32
<PAGE>
 
14 shall constitute a complete return to the General and Limited Partners of
their respective Interests in the Partnership and a complete distribution of
their respective shares in all Partnership Property.  The contribution to the
Partnership of any deficiency in accordance with Section 14.4 hereof by a
General Partner shall constitute a complete satisfaction of any liability to the
Partnership under Section 14.4 hereof.

     15.  Sale, Transfer and Assignment of Interest by General Partners.  A
          -------------------------------------------------------------    
General Partner may not sell, assign, or transfer its interest in the
Partnership or in this Agreement without the prior written consent of all the
other General Partners, provided, however, that any General Partner may sell,
assign or transfer its Interest or any portion thereof to any other General
Partner without such consent.  Upon any such transfer, (x) the Partnership shall
distribute to such Partner an amount equal to the product of such Partner's
share of any Profits and Losses for the Fiscal Year in which such transfer
occurs, to the extent attributable to such transferred Interest, and a fraction,
the numerator of which is equal to the number of days in such Fiscal Year prior
to the effective date of such transfer and the denominator of which is 365, as
soon as practicable thereafter, but in no event later than 90 days following the
Fiscal Year in which such transfer occurs, and (y) AIM is hereby authorized and
directed, in the name and on behalf of each of the Partners, to take any and all
actions and sign, execute, certify, acknowledge, file and record any and all
agreements,

                                       33
<PAGE>
 
instruments or documents as may be necessary or advisable to reflect the
transfer of the Interest of such General Partner in the Partnership pursuant to
the provisions of this Section 15, including, without limitation and
notwithstanding any other provision of this Agreement, any amendment of this
Agreement.

     16.  Exculpation, Indemnification and Contribution.
          --------------------------------------------- 

          16.1  Exculpation.  The doing of any act or the failure to do any act
                -----------                                                    
by a General Partner or by officers, directors, employees or agents of the
Partnership or a General Partner, the effect of which may cause or result in
loss or damage to the Partnership, if done pursuant to advice of legal counsel
employed by the General Partner on behalf of the Partnership, or if done in good
faith to promote the best interests of the Partnership, shall not subject any
such person to any liability to the Partnership or the General Partners;
provided, however, that no such Person shall be exculpated from any grossly
negligent act or failure to do any act.

          16.2  Indemnification.  To the fullest extent permitted by law, the
                ---------------                                              
Partnership hereby agrees to indemnify the General Partners, the Limited
Partners and any Person who was a general or limited partner of the Partnership
prior to April 1, 1995, to save and hold each harmless, from and in respect of
all (i) fees, costs, and expenses incurred in connection with or resulting from
any claim, action, or demand against a General or Limited Partner or the
Partnership (including any claim, action or demand arising under common law or
statute), including attor-

                                       34
<PAGE>
 
neys' fees which arise out of or in any way relate to the Partnership, its
Properties, business or affairs, or, in the case of the Limited Partners, which
arise solely out of their Interests in the Partnership as Limited Partners, to
the extent of the value of their respective Interests in the Partnership, and
(ii) all such claims, actions and demands and any losses or damages resulting
therefrom (including all claims, actions and demands arising under common law or
statutes), including amounts paid in settlement or compromise of any such claim,
action or demand; provided that this indemnity shall not extend to (x) conduct
by a General Partner adjudged to be a breach of its duty to the Partnership or
(y) any loss or liability which arises out of an act or omission of a Limited
Partner.

          16.3  Contribution.  In order to provide for just and equitable
                ------------                                             
contribution in circumstances in which the indemnification provided for in
Section 16.2 hereof shall be unavailable, the General Partners shall contribute
to the aggregate losses, claims, damages, expenses and liabilities to which a
General Partner may be subject by reason of his activities as a General Partner
as contemplated by this Agreement in proportion to their respective Profits
Interests; provided, however, that no General Partner guilty of gross negligence
or breach of its duty to the Partnership shall be entitled to contribution from
any General Partner that was not guilty of such gross negligence or breach.

                                       35
<PAGE>
 
     17.  Miscellaneous.
          ------------- 

          17.1  Amendment.  This Agreement may only be amended by the written
                ---------                                                    
consent of the Partners representing in the aggregate not less than eighty-five
percent (85%) of the Profits Interests in the Partnership and in addition, with
respect to any amendment that would adversely affect the rights of the Special
Limited Partners hereunder, by the written consent of all the Special Limited
Partners.

          17.2  Notices.  Any notice, payment, demand or other communication
                -------                                                     
required or permitted to be given by any provision of this Agreement shall be
deemed to have been delivered and given for all purposes (i) if delivered
personally to the party or to an officer of the party to whom the same is
directed or (ii) whether or not the same is actually received, if sent by
registered or certified mail, return receipt requested, postage and charges
prepaid, addressed as follows:  if to the Partnership, P.O. Box 9567,
Providence, Rhode Island 02940-9567, Attention: Mr. Joseph Bingle; with a copy
to American Biltrite Inc., 57 River Street, Wellesley Hills, Massachusetts
02181, Attention: President; if to a General or Limited Partner, at such
Partner's address as set forth in Schedule A hereto, or to such other address as
such Partner may from time to time specify by written notice.  Notice shall be
deemed to be given as of the date delivered if delivered personally, or as of
the date on

                                       36
<PAGE>
 
which the same was deposited in a regularly maintained receptacle for the
deposit of United States mail, addressed and sent aforesaid.

          17.3  Section Headings.  Section and other headings contained in the
                ----------------                                              
Agreement are for reference purpose only and are in no way intended to describe,
interpret, or define and limit the scope, extent or intent of the Agreement or
any provisions hereof.

          17.4  Severability.  Each provision to this Agreement is intended to
                ------------                                                  
be severable.  If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not effect the validity
of the remainder of this Agreement.

          17.5  Right to Rely upon the Authority of General Partners.  No person
                ----------------------------------------------------            
dealing with a General Partner shall be required to determine its authority to
determine any fact or circumstance bearing upon the existence of its authority.

          17.6  Law of Rhode Island.  Rhode Island law shall govern the validity
                -------------------                                             
of this Agreement, the construction of its terms and the interpretations of the
rights and duties of the parties.

          17.7  Counterpart Execution.  This Agreement may be executed in any
                ---------------------                                        
number of counterparts with the same effect as if all parties hereto had signed
the same document.  All counterparts shall be construed together and shall
constitute one Agreement.

                                       37
<PAGE>
 
          17.8  Parties in Interest.  Each and every covenant, term, provision
                -------------------                                           
and agreement herein contained shall be binding upon and inure to the benefit of
the successors and assigns of the respective parties hereto.

          17.9  Variation of Pronouns.  All pronouns and variations thereof
                ---------------------                                      
shall be deemed to refer to masculine, feminine, or neuter, singular or plural,
as the identity of the Person or Persons may require.

          17.10  Litigation.  AIM shall prosecute and defend such actions at law
                 ----------                                                     
or in equity as it may deem necessary, in its sole discretion, to enforce or
protect the interest of the Partnership.  The Partnership and AIM shall respond
to any final decree, judgment or decision of any court, board or authority
having jurisdiction in the premises.  AIM shall satisfy any such judgment,
decree or decision first out of any insurance proceeds available therefor, next
out of the assets of the Partnership, and finally out of the assets of the
General Partners.  AIM shall notify the other General Partners, if any, and the
Limited Partners of any such actions, decrees, judgments or decisions.
                                  *    *    *

                                       38
<PAGE>
 
   IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first above written.

                               GENERAL PARTNER:

                                     AIMPAR, INC.


                                     By:/s/ Richard G. Marcus
                                        ------------------------------
                                        Name: Richard G. Marcus
                                        Title: Authorized Signatory


                               LIMITED PARTNERS:


                                     Arthur I. Maier Limited



                                     By:/s/ Arthur I. Maier
                                        ------------------------------
                                        Name:  Arthur I. Maier
                                        Title:   President



                                     ARTWIL Associates



                                     By:/s/ Arthur I. Maier
                                        ------------------------------
                                        Name:  Arthur I. Maier
                                        Title: Partner



                                     /s/ John A. Caito
                                     ---------------------------------
                                     John A. Caito



                                     /s/ Donald J. Fulford
                                     ---------------------------------
                                     Donald J. Fulford



                                     /s/ Susan Maier
                                     ---------------------------------
                                     Susan Maier


<PAGE>
 
                                     Ocean State Jewelry, Inc.



                                     By:/s/ Richard G. Marcus
                                        ------------------------------
                                        Name: Richard G. Marcus
                                        Title: President



                                     /s/ Patti Ann Ross
                                     ---------------------------------
                                     Patti Ann Ross



                                     Edythe J. Wagner, Inc.



                                     By:/s/ Edythe J. Wagner
                                        ------------------------------
                                        Name:  Edythe J. Wagner
                                        Title: President



                                     WILBUR A. COWETT INCORPORATED



                                     By:/s/ Wilbur A. Cowett
                                        ------------------------------
                                        Name: Wilbur A. Cowett
                                        Title: President



                               WITHDRAWING LIMITED PARTNERS:



                                     /s/ Bruce S. Maier
                                     ---------------------------------
                                     Bruce S. Maier



                                     /s/ Nancy E. Maier
                                     ---------------------------------
                                     Nancy E. Maier

                                       40
<PAGE>
 
                                     /s/ Richard C. Maier
                                     ----------------------------------
                                     Richard C. Maier


                                     /s/ Margaret F. Cowett
                                     ----------------------------------
                                     Margaret F. Cowett



                                     /s/ Wilbur A. Cowett
                                     ----------------------------------
                                     Anne F. Cowett,
                                     by Wilbur A. Cowett
                                     as attorney-in-fact



                                     /s/ Wilbur A. Cowett
                                     ----------------------------------
                                     Frederick D. Cowett,
                                     by Wilbur A. Cowett
                                     as attorney-in-fact

                                       41