Exhibit 99.1


                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                         UNITED STATES BANKRUPTCY COURT
                             DISTRICT OF NEW JERSEY

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IN RE:                                    )     Chapter 11
                                          )
CONGOLEUM CORPORATION,                    )
CONGOLEUM SALES, INC., and                )     Case No. 03-51524 (KCF)
CONGOLEUM FISCAL, INC.,                   )
                  Debtors.                )     Jointly Administered
                                          )
------------------------------------------

        ELEVENTH MODIFIED JOINT PLAN OF REORGANIZATION UNDER CHAPTER 11
          OF THE BANKRUPTCY CODE OF CONGOLEUM CORPORATION, ET AL., AND
         THE ASBESTOS CLAIMANTS' COMMITTEE, DATED AS OF OCTOBER 23, 2006


THIS PLAN PROVIDES, AMONG OTHER THINGS, FOR THE ISSUANCE OF INJUNCTIONS UNDER
SECTIONS 105 AND 524(g) OF THE BANKRUPTCY CODE THAT RESULT IN THE CHANNELING OF
ALL ASBESTOS-RELATED LIABILITIES OF CONGOLEUM CORPORATION AND THE PROTECTED
PARTIES SET FORTH HEREIN INTO A TRUST AS MORE FULLY DESCRIBED HEREIN.

PILLSBURY WINTHROP SHAW PITTMAN LLP            OKIN, HOLLANDER & DELUCA, LLP
1540 Broadway                                  Parker Plaza
New York, NY 10036-4039                        400 Kelby Street
                                               Fort Lee, New Jersey 07024
Richard L. Epling
Robin L. Spear                                 Paul S. Hollander
Kerry A. Brennan                               James J. DeLuca

Attorneys for Congoleum Corporation, et al.

CAPLIN & DRYSDALE, CHTD.
One Thomas Circle, N.W.
Washington D.C. 20005

Peter Van N. Lockwood
Ronald Reinsel

Attorneys for the Asbestos Claimants' Committee


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                  INTRODUCTION

                                    ARTICLE I

          DEFINITIONS, RULES OF INTERPRETATION, AND COMPUTATION OF TIME

   1.1  SCOPE OF DEFINITIONS...................................................1
   1.2  DEFINITIONS............................................................1
   1.3  RULES OF INTERPRETATION:  APPLICATION OF DEFINITIONS, RULES OF
        CONSTRUCTION, AND COMPUTATION OF TIME.................................24
   1.4  EXHIBITS AND SCHEDULES................................................24

                ARTICLE II COMPROMISES AND SETTLEMENTS OF CLAIMS

   2.1  PROPOSED SETTLEMENT BETWEEN THE DEBTORS AND QUALIFIED PRE-PETITION
        SETTLEMENT CLAIMANTS..................................................24
   2.2  PROPOSED SETTLEMENT BETWEEN THE DEBTORS AND THE QUALIFIED PARTICIPATING
        CLAIMANTS.............................................................26

                                   ARTICLE III

                     CLASSIFICATION OF CLAIMS AND INTERESTS

   3.1  GENERALLY.............................................................27
   3.2  UNCLASSIFIED CLAIMS...................................................27
   3.3  CLASSES...............................................................27

                                   ARTICLE IV

                           TREATMENT OF ADMINISTRATIVE
                         CLAIMS AND PRIORITY TAX CLAIMS

   4.1  ADMINISTRATIVE CLAIMS.................................................29
   4.2  PRIORITY TAX CLAIMS...................................................29
   4.3  SUBSTANTIAL CONTRIBUTION CLAIMS.......................................29

                                    ARTICLE V

                  TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS

   5.1  CLAIMS AND INTERESTS..................................................29
   5.2  RESERVATION OF RIGHTS REGARDING CLAIMS................................35


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                                   ARTICLE VI

                           IMPLEMENTATION OF THE PLAN

   6.1  THE PLAN TRUST AND THE GHR/KENESIS LITIGATION TRUST...................35
   6.2  INTERCOMPANY SETTLEMENT...............................................41
   6.3  CERTIFICATE OF INCORPORATION AND BYLAWS...............................41
   6.4  MANAGEMENT OF THE REORGANIZED DEBTORS.................................41
   6.5  AMENDED CREDIT AGREEMENT..............................................41
   6.6  TRANSFER TAXES........................................................42
   6.7  SECTION 346 INJUNCTION................................................42
   6.8  EFFECTUATING DOCUMENTS AND FURTHER TRANSACTIONS.......................42
   6.9  CORPORATE ACTION......................................................42
   6.10 TRANSFER LIMITATIONS UNDER SECTION 382(1)(5) OF THE IRC...............42
   6.11 ESCROWED $5 MILLION...................................................43
   6.12 CERTAIN MERGERS.......................................................43

                                   ARTICLE VII

            PROVISIONS GOVERNING DISTRIBUTIONS WITH RESPECT TO CLAIMS
                      OTHER THAN PLAN TRUST ASBESTOS CLAIMS

   7.1  PLAN DISTRIBUTIONS....................................................43
   7.2  DELIVERY OF DISTRIBUTIONS.............................................43
   7.3  WITHHOLDING OF TAXES..................................................44
   7.4  UNCLAIMED PROPERTY....................................................44

                                  ARTICLE VIII

                          RESOLUTION OF DISPUTED CLAIMS

   8.1  DISALLOWANCE OF IMPROPERLY FILED CLAIMS...............................44
   8.2  PROSECUTION OF OBJECTIONS TO CLAIMS...................................44
   8.3  NO DISTRIBUTIONS PENDING ALLOWANCE....................................45
   8.4  DISTRIBUTIONS AFTER ALLOWANCE.........................................45

                                   ARTICLE IX

                        TREATMENT OF EXECUTORY CONTRACTS,
                        UNEXPIRED LEASES AND SETTLEMENTS

   9.1  ASSUMPTION OF UNEXPIRED LEASES AND EXECUTORY CONTRACTS................45
   9.2  DAMAGES UPON REJECTION................................................46
   9.3  EXECUTORY AND OTHER SETTLEMENTS.......................................46
   9.4  INSURANCE AGREEMENTS..................................................46
   9.5  COMPENSATION AND BENEFITS PROGRAMS....................................47
   9.6  RETIREE BENEFITS......................................................47
   9.7  INDEMNIFICATION OF DIRECTORS, OFFICER AND EMPLOYEES...................47


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                                    ARTICLE X

                       ACCEPTANCE OR REJECTION OF THE PLAN

   10.1 CLASSES ENTITLED TO VOTE..............................................48
   10.2 ACCEPTANCE BY IMPAIRED CLASSES OF CLAIMS..............................48
   10.3 ACCEPTANCE BY IMPAIRED CLASS OF INTERESTS.............................48
   10.4 ACCEPTANCE PURSUANT TO SECTION 524(G) OF THE BANKRUPTCY CODE..........48
   10.5 PRESUMED ACCEPTANCE OF PLAN...........................................48
   10.6 RESERVATION OF RIGHTS.................................................48

                                   ARTICLE XI

                  CONDITIONS TO CONFIRMATION AND EFFECTIVENESS

   11.1 CONDITIONS TO CONFIRMATION............................................48
   11.2 CONDITIONS TO EFFECTIVENESS...........................................51
   11.3 WAIVER OF CONDITIONS..................................................52

                                   ARTICLE XII

                       INJUNCTIONS, RELEASES AND DISCHARGE

   12.1 DISCHARGE.............................................................53
   12.2 RELEASE OF REPRESENTATIVES OF THE DEBTORS.............................53
   12.3 EXCULPATION...........................................................54
   12.4 RELEASES BY HOLDERS OF CLAIMS.........................................54
   12.5 DISCHARGE INJUNCTION..................................................55
   12.6 ASBESTOS CHANNELING INJUNCTION........................................55
   12.7 RESERVATION OF RIGHTS.................................................56
   12.8 RIGHTS AGAINST NON-DEBTORS UNDER SECURITIES LAWS......................57
   12.9 RIGHTS AGAINST DEBTORS UNDER ENVIRONMENTAL LAWS.......................57
   12.10 DISALLOWED CLAIMS AND DISALLOWED INTERESTS...........................57
   12.11 ANTI-SUIT INJUNCTION.................................................57
   12.12 INSURANCE NEUTRALITY.................................................58

                                  ARTICLE XIII

                      MATTERS INCIDENT TO PLAN CONFIRMATION

   13.1 TERM OF CERTAIN INJUNCTIONS AND AUTOMATIC STAY........................59
   13.2 NO SUCCESSOR LIABILITY................................................59
   13.3 REVESTING.............................................................60
   13.4 VESTING AND ENFORCEMENT OF CAUSES OF ACTION...........................60
   13.5 PLAN TRUST BANKRUPTCY CAUSES OF ACTION................................60
   13.6 BANKRUPTCY CAUSES OF ACTION...........................................61


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                                   ARTICLE XIV

                                  MISCELLANEOUS

   14.1 JURISDICTION..........................................................61
   14.2 GENERAL RETENTION.....................................................61
   14.3 SPECIFIC PURPOSES.....................................................61
   14.4 PAYMENT OF STATUTORY FEES.............................................63
   14.5 THE ASBESTOS CLAIMANTS' COMMITTEE, THE FUTURES REPRESENTATIVE
        AND THE BONDHOLDERS' COMMITTEE........................................63
   14.6 REVOCATION OF PLAN....................................................64
   14.7 MODIFICATION OF PLAN..................................................64
   14.8 MODIFICATION OF PAYMENT TERMS.........................................64
   14.9 ENTIRE AGREEMENT......................................................64
   14.10 HEADINGS.............................................................65
   14.11 PROFESSIONAL FEE CLAIMS..............................................65
   14.12 RECORDABLE ORDER.....................................................65
   14.13 GOVERNING LAW........................................................65
   14.14 NO ADMISSION.........................................................65
   14.15 CONSENT TO JURISDICTION..............................................65
   14.16 SETOFFS..............................................................65
   14.17 SUCCESSORS AND ASSIGNS...............................................66
   14.18 NON-DEBTOR WAIVER OF RIGHTS..........................................66
   14.19 FURTHER AUTHORIZATIONS...............................................66
   14.20 NOTICES..............................................................66
   14.21 DUTY TO COOPERATE....................................................67


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                                  INTRODUCTION

      Congoleum Corporation, Congoleum Sales, Inc. and Congoleum Fiscal, Inc.,
the Debtors (as defined herein) in these Reorganization Cases (as defined
herein) along with the Asbestos Claimants' Committee (as defined herein) hereby
propose this joint plan of reorganization pursuant to the provisions of Chapter
11 of the United States Bankruptcy Code. Reference is made to the Disclosure
Statement (as defined herein) distributed contemporaneously herewith for a
discussion of the history, businesses, properties, results of operations,
projections for future operations of the Debtors and risks associated with the
Plan.

      All holders of Claims and Interests (each as defined herein) entitled to
vote on the Plan are encouraged to read the Plan and Disclosure Statement in
their entirety before voting to accept or reject the Plan. Subject to certain
restrictions and requirements set forth in section 1127 of the Bankruptcy Code,
Bankruptcy Rule 3019 (as defined herein), and Section 14.7 of the Plan, the
Debtors and the Asbestos Claimants' Committee reserve the right to alter, amend,
modify, revoke or withdraw the Plan prior to its substantial consummation.

                                   ARTICLE I

          DEFINITIONS, RULES OF INTERPRETATION, AND COMPUTATION OF TIME

      1.1 Scope of Definitions. All capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in Article I of the Plan. Any
term used in the Plan that is not defined herein, but is defined in the
Bankruptcy Code or the Bankruptcy Rules, shall have the meaning ascribed to that
term in the Bankruptcy Code or the Bankruptcy Rules.

      1.2 Definitions.

      "ABI" means American Biltrite Inc., a Delaware corporation, and any
successor or assign thereto whether presently existing or which may arise in the
future.

      "ABI Asbestos Claim" means any Asbestos Claim that may be asserted by ABI
now or in the future other than an ABI Asbestos Indemnity Claim.

      "ABI Asbestos Indemnity Claim" means any ABI Asbestos Personal Injury
Indemnity Claim or ABI Asbestos Property Damage Indemnity Claim.

      "ABI Asbestos Personal Injury Indemnity Claim" means any asbestos personal
injury indemnification Claim or Demand that may be asserted by ABI against
Congoleum at any time under the Joint Venture Agreement.

      "ABI Asbestos Property Damage Indemnity Claim" means any asbestos related
property damage indemnification Claim or Demand that may be asserted by ABI
against Congoleum at any time under the Joint Venture Agreement.

      "ABI Claim" means any Claim or Demand at any time that may be asserted by
ABI at any time against any Debtor, including without limitation ABI Asbestos
Claims.


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "ABI Contribution" means $250,000 in Cash to be delivered to the Plan
Trust by and on behalf of ABI on the Effective Date pursuant to Section 6.2 of
the Plan.

      "ABI Entities" means (i) ABI; (ii) ABI's respective present, direct and
indirect, parents, subsidiaries and affiliates; (iii) the respective past and
future, direct and indirect, parents, subsidiaries and affiliates of the Persons
described in (i) and/or (ii) hereinabove only to the extent that such Persons
have the power to give the releases set forth in any Asbestos Insurance
Settlement Agreement on behalf of the Persons described in this (iii); (iv) the
respective past, present and future, direct and indirect, associated
corporations and/or entities of the Persons described in (i) through (iii)
hereinabove, inclusive, but only in their capacity as such and only to the
extent that any of the Persons described in (i) and/or (ii) hereinabove have the
power to give the releases set forth in any Asbestos Insurance Settlement
Agreement on behalf of the Persons described in this (iv); (v) the direct and
indirect predecessors, successors and assigns of each of the foregoing Persons
described in (i) through (iv) hereinabove, inclusive, except, in the case of
predecessors, only to the extent that any of the Persons described in (i)
through (iv) hereinabove, inclusive, have the power to give the releases set
forth in any Asbestos Insurance Settlement Agreement on behalf of such
predecessors; and (vi) the respective officers, directors, employees,
shareholders, agents, principals, attorneys and representatives of the Persons
described in (i) through (v) hereinabove, inclusive, but only when acting in
their capacity as such and only to the extent any of the Persons described in
(i) through (v) hereinabove, inclusive, have the power to give the releases set
forth in any Asbestos Insurance Settlement Agreement on behalf of the Persons
described in this (vi). Any Person who meets the definition set forth
hereinabove shall be individually referred to as an "ABI Entity." As used in
this definition of "ABI Entities" only, the definition of "Persons" includes
"Governmental Units."

      "ABI Parties" means any current or former officers, directors and
employees of ABI, in their capacity as such.

      "Additional Bondholder Recovery" means the $5 million in Cash in the
aggregate paid to the holders of the Senior Note Claims (as a Class) on the
terms and subject to the conditions contained in the Plan, including without
limitation Section 6.11.

      "Additional Indemnitees" has the meaning set forth in Section 2.1(c)(xiv)
of the Plan Trust Agreement.

      "Administrative Claim" means any Claim for the payment of an
Administrative Expense. The term "Administrative Claim" shall not include
Asbestos Claims.

      "Administrative Expense" means (a) any cost or expense of administration
of the Reorganization Cases under section 503(b) of the Bankruptcy Code
including, but not limited to (1) any actual and necessary post-petition cost or
expense of preserving the Estates or operating the Debtors' assets and
businesses, (2) any payment to be made under the Plan to cure a default on an
assumed executory contract or unexpired lease, (3) any post-petition cost,
indebtedness or contractual obligation duly and validly incurred or assumed by
the Debtors in the ordinary course of business, (4) the outstanding fees and
expenses of the Indenture Trustee incurred in accordance with Section 6.6 of the
Indenture relating to the Senior Notes, including the reasonable fees and
expenses of counsel to the Indenture Trustee, and (5) compensation or
reimbursement of expenses of professionals to the extent allowed by the
Bankruptcy Court under section 327, 328, 330(a), 331, 503(b) or 1103 of the
Bankruptcy Code, including, without limitation, the Futures Representative and
its Representatives and (b) any fee or charge assessed against the Estates under
28 U.S.C. ss. 1930.


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Affiliate" shall have the meaning ascribed to such term in section 101(2)
of the Bankruptcy Code.

      "AIG Contingencies and Conditions" means the conditions precedent and/or
contingencies to consummation of that certain Asbestos Insurance Settlement
Agreement with certain AIG companies approved by the Bankruptcy Court by order
dated July 18, 2005 and any non-material amendments or modifications thereto or
any other settlement with such AIG companies that is materially similar to such
Asbestos Insurance Settlement Agreement.

      "Allocation Proceeding" has the meaning set forth in Section 5.1(f) of the
Plan.

      "Allowed" means:

            (a) With respect to the Claims Handling Fee, the amount certified by
the Collateral Trustee pursuant to Section 6.1(k);

            (b) With respect to an Administrative Claim:

                  (i) such amount that represents a Claim of a professional
person employed under sections 327, 328, 524(g)(4)(B)(i) or 1103 of the
Bankruptcy Code who is required to apply to the Bankruptcy Court for the
allowance of compensation and reimbursement of expenses pursuant to section 330
of the Bankruptcy Code, to the extent such Claim is allowed by a Final Order of
the Bankruptcy Court under sections 330 or 331 of the Bankruptcy Code;

                  (ii) such amount that represents the reasonable fees and
expenses of the Indenture Trustee and its counsel that were otherwise incurred
in accordance with the terms of the Indenture and are outstanding on the
Effective Date, without application to the Bankruptcy Court; provided, however,
that if there is a dispute regarding the reasonableness of such fees and
expenses or whether such fees and expenses were incurred in accordance with the
Indenture, the Bankruptcy Court shall resolve such dispute; and

                  (iii) other than with respect to a Claim described in clauses
(b)(i) and (b)(ii) of this definition, such amount that represents an actual or
necessary expense of preserving the Estates or operating the business of any of
the Debtors, any such Claim to the extent that it constitutes an Allowed
Administrative Claim, or if such Claim is a Disputed Claim, any such Claim to
the extent it is allowed in whole or in part by a Final Order of the Bankruptcy
Court and only to the extent that such allowed portion is deemed, pursuant to a
Final Order of the Bankruptcy Court, to constitute a cost or expense of
administration under section 503 or 1114 of the Bankruptcy Code;

            (c) With respect to an Asbestos Property Damage Claim that is filed
prior to the expiration of the Asbestos Property Damage Claim Bar Date, such
amount as is liquidated and allowed by the Bankruptcy Court; and


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (d) With respect to any Claim other than a Plan Trust Asbestos
Claim, an Asbestos Property Damage Claim or an Administrative Claim, such Claim
or any portion thereof (i) that has been allowed in whole or in part by a Final
Order of the Bankruptcy Court; (ii) that has been expressly allowed in the Plan;
(iii) as to which, on or before the Effective Date, (A) no Proof of Claim has
been filed with the Bankruptcy Court and (B) the Claim is listed in the
Schedules (as they may be amended) and not listed as disputed, contingent, or
unliquidated; or (iv) for which a Proof of Claim in a liquidated amount has been
timely filed with the Bankruptcy Court pursuant to the Bankruptcy Code, any
Final Order of the Bankruptcy Court, or other applicable bankruptcy law, and as
to which either (A) no objection to its allowance has been filed within the
periods of limitation fixed by the Plan, the Bankruptcy Code, or any order of
the Bankruptcy Court, or (B) any objection to its allowance has been settled or
withdrawn, or has been denied by a Final Order.

      "Allowed Amount" means the sum at which a Claim is Allowed.

      "Amended Credit Agreement" means the amended credit agreement which may be
entered into on the Effective Date by Reorganized Congoleum, as borrower, and
Wachovia, as lender, which shall provide for a revolving credit loan on terms
and conditions mutually satisfactory and acceptable to Reorganized Congoleum and
Wachovia; provided, however, that such Amended Credit Agreement shall be on
terms similar to the Existing Credit Agreement (except that the Amended Credit
Agreement may be modified to provide for a lien on or security interest in real
estate and any other collateral securing the New Senior Notes).

      "Anti-Suit Injunction" means the injunction described in Section 12.11 of
the Plan.

      "Asbestos Channeling Injunction" means the injunction described in Section
12.6 of the Plan.

      "Asbestos Claimant" means the holder of an Asbestos Personal Injury Claim.

      "Asbestos Claimants' Committee" means the official committee of the
representatives of holders of present unsecured Asbestos Personal Injury Claims,
solely in its capacity as such, which committee as of the date hereof consists
of the following representatives of the holders of present unsecured Asbestos
Personal Injury Claims: Perry Weitz, Esquire, Joseph Rice, Esquire, Steven
Kazan, Esquire, Russell Budd, Esquire and Robert Taylor, II, Esquire.

      "Asbestos Claims" means, collectively, Plan Trust Asbestos Claims and ABI
Asbestos Claims.

      "Asbestos Expenses" means all costs, taxes and expenses of or imposed on
the Plan Trust Assets, the Collateral Trust or the Plan Trust attributable or
allocable to Plan Trust Asbestos Claims, including, but not limited to: trustee
compensation; employee compensation; compensation to and indemnification of the
Futures Representative and the TAC and their respective Representatives;
insurance premiums; legal, accounting and other professional fees and expenses;
overhead; and disbursements, but excluding payments to holders of Plan Trust
Asbestos Claims on account of such Plan Trust Asbestos Claims; provided,
however, that Asbestos Expenses shall not include any costs or expenses incurred
or indemnification for relief granted in connection with the Avoidance Actions.


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Asbestos In-Place Insurance Coverage" means any insurance coverage, not
reduced to Cash settlement proceeds, available for the payment or reimbursement
of liability, indemnity or defense costs arising from or related to Asbestos
Claims or Demands or Plan Trust Expenses under any Asbestos Insurance Policy or
any Asbestos Insurance Settlement Agreement.

      "Asbestos Insurance Action" means any claim, cause of action, or right of
any Debtor against any Asbestos Insurance Company, including without limitation,
the Coverage Litigation, arising from or related to: (a) any such Asbestos
Insurance Company's failure to provide or pay under Asbestos In-Place Insurance
Coverage, (b) the refusal of any Asbestos Insurance Company to compromise and
settle any Asbestos Claim under or pursuant to any Asbestos Insurance Policy, or
(c) the interpretation or enforcement of the terms of any Asbestos Insurance
Policy with respect to any Asbestos Claim.

      "Asbestos Insurance Action Recoveries" means (a) Cash derived from and
paid pursuant to Asbestos Insurance Settlement Agreements, (b) the right to
receive proceeds of Asbestos In-Place Insurance Coverage, and (c) the right to
receive the proceeds or benefits of any Asbestos Insurance Action.

      "Asbestos Insurance Assignment" means the transfer, grant and assignment
of the Asbestos Insurance Rights to the Plan Trust described in Article VI of
the Plan, which will be effectuated pursuant to the Insurance Assignment
Agreement.

      "Asbestos Insurance Company" means any insurance company, insurance
broker, guaranty association, liquidator, rehabilitator or any other Entity with
demonstrated or potential liability to any of the Debtors, the Reorganized
Debtors, the Collateral Trust or the Plan Trust under or related to an Asbestos
Insurance Policy.

      "Asbestos Insurance Policy" means any insurance policy issued to or for
the benefit of any of the Debtors (except for any insurance policy issued to
ABI, American Biltrite International Inc., or any of their predecessors) in
effect at any time on or before the Effective Date that may afford any of the
Debtors indemnity or insurance coverage, upon which any claim has been or may be
made with respect to any Asbestos Claim.

      "Asbestos Insurance Rights" means any and all rights, titles, privileges,
interests, claims, demands or entitlements to any proceeds, payments, initial or
supplemental dividends, scheme payments, supplemental scheme payments, causes of
action and choses in action related to Asbestos In-Place Insurance Coverage,
whether now existing or hereafter arising, accrued or unaccrued, liquidated or
unliquidated, matured or unmatured, disputed or undisputed, fixed or contingent,
including but not limited to:

                  (i) any and all rights to pursue or receive payments with
respect to Asbestos Claims under any Asbestos In-Place Insurance Coverage,
whether for liability, defense or otherwise;

                  (ii) any and all rights to pursue or receive payments related
to any Asbestos In-Place Insurance Coverage that was entered into by any
domestic or foreign insolvent insurance company, whether in receivership,
liquidation, rehabilitation, run-off, scheme of arrangement or any other form of
proceeding;


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                  (iii) any and all rights to pursue or receive payments related
to any Asbestos In-Place Insurance Coverage from any state insurance guaranty
association in connection with any state insurance guaranty association statute;
provided, however, that Asbestos Insurance Rights shall not include any rights
or obligations under any insurance policy or settlement agreement to which the
Debtors are a party insofar as such insurance policy or settlement agreement
relates to Workers' Compensation Claims; and

                  (iv) any and all rights to pursue any Causes of Action
against, or to receive payments related to any Asbestos In-Place Insurance
Coverage from, any Asbestos Insurance Company.

      "Asbestos Insurance Settlement Agreement" means any settlement agreement
between or among any of the Debtors and a Settling Asbestos Insurance Company
relating to any Asbestos Claim or Asbestos Insurance Action.

      "Asbestos Insurer Coverage Defenses" means all defenses at law or in
equity that an Asbestos Insurance Company may have under any Asbestos Insurance
Policy or applicable law to provide Asbestos In-Place Insurance Coverage to or
for Asbestos Personal Injury Claims or Plan Trust Expenses that have been
channeled to or assumed by or incurred by the Plan Trust pursuant to the Plan;
provided, however, that in the event that it is finally determined in the
Bankruptcy Court that the Bankruptcy Code authorizes the Asbestos Insurance
Assignment by preempting any terms of any Asbestos Insurance Policy or
provisions of applicable non-bankruptcy law that otherwise might prohibit the
Asbestos Insurance Assignment, "Asbestos Insurer Coverage Defenses" shall not
include any defense that the Asbestos Insurance Assignment is prohibited by any
Asbestos Insurance Policy or applicable non-bankruptcy law.

      "Asbestos Personal Injury Claim" means (a) any Congoleum Derivative
Action; (b) any claim, demand or lawsuit (including, but not limited to, any
Claim or Demand), whenever and wherever arising or asserted against any of the
Debtors or their respective present or former officers, directors or employees
in their capacities as such and (c) any debt, obligation or liability (whether
or not reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, bonded, secured or
unsecured), whenever and wherever arising or asserted, of the Debtors or their
respective present or former officers, directors or employees in their
capacities as such (including, but not limited to, all thereof in the nature of
or sounding in tort, contract, warranty, or any other theory of law, equity or
admiralty); in either case (b) or (c) for, based on or arising by reason of,
directly or indirectly, physical, emotional, bodily or other personal injury,
sickness, disease, death or damages based on the foregoing (including, but not
limited to, any claim or demand for compensatory damages, loss of consortium,
proximate, consequential, general, special or punitive damages, reimbursement,
indemnity, warranty, contribution or subrogation) whether or not diagnosable or
manifested before the Confirmation of the Plan or the close of the
Reorganization Cases, (x) caused or allegedly caused, in whole or part, directly
or indirectly: (i) by exposure to asbestos or asbestos-containing products
manufactured, supplied, distributed, handled, fabricated, stored, sold,
installed, or removed by any Debtor and/or any of its Affiliates; (ii) by
services, actions, or operations provided, completed or taken by any Debtor
and/or any of its Affiliates in connection with asbestos or asbestos-containing
products or (y) caused or allegedly caused by asbestos for which any Debtor or
its predecessors, are otherwise liable under any applicable law including, but
not limited to, Indirect Asbestos Claims and Asbestos Expenses, provided that
Asbestos Personal Injury Claim shall not include Workers' Compensation Claims,
ABI Asbestos Claims or Asbestos Property Damage Claims.


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Asbestos Personal Injury Claim Sub-Account" means that portion of the
Plan Trust Assets to be made available for payment of Plan Trust Asbestos Claims
(and related Plan Trust Expenses) other than Allowed Asbestos Property Damage
Claims.

      "Asbestos Property Damage Claim" means any Claim or remedy or liability
for damage to property (whether or not such Claim, remedy or liability is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured, and
whether or not the facts of or legal bases therefor are known or unknown, under
any theory of law, equity, admiralty or otherwise), for which the Debtors are
alleged to be or may be responsible by judgment, order or settlement and that
(1) arises from or relates to any building or other real property in which
asbestos was or is, or asbestos-containing products were or are, alleged to have
been installed prior to the Petition Date; and (2) seeks monetary or other
relief for injury to, destruction, loss of use, diminution in value, and/or
asbestos-related repair or maintenance of such property or for the cost of
inspection, encapsulation, decontamination, containment, removal, or other
abatement of the asbestos or asbestos-containing products installed or allegedly
installed in such property. Asbestos Property Damage Claim also includes any
such Claims, remedies or liabilities as described immediately above that seek
(a) compensatory damages (such as proximate, consequential, general and special
damages) and punitive damages; and/or (b) reimbursement, indemnification,
subrogation and/or contribution, including, without limitation, any Asbestos
Property Damage Contribution Claim. Notwithstanding the foregoing, Asbestos
Property Damage Claim does not include any ABI Asbestos Claim or Asbestos
Personal Injury Claim.

      "Asbestos Property Damage Claim Bar Date" means May 3, 2004, the date
designated by the Bankruptcy Court as the last date for filing Proofs of Claim
on account of an Asbestos Property Damage Claim against the Debtors.

      "Asbestos Property Damage Claim Sub-Account" means that portion of the
Plan Trust Assets, consisting solely of the Asbestos Property Damage Insurance
Rights, to be made available for payment of Allowed Asbestos Property Damage
Claims.

      "Asbestos Property Damage Claimant" means the holder of an Asbestos
Property Damage Claim.

      "Asbestos Property Damage Contribution Claim" means any Claim or remedy or
liability for damage to property asserted against the Debtors (whether or not
such Claim, remedy or liability is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, and whether or not the facts of or legal
bases therefor are known or unknown, under any theory of law, equity, admiralty
or otherwise) that is: (1) held by any Entity or assignee or transferee thereof
(other than a director or officer entitled to indemnification pursuant to
Section 9.7 of the Plan) which has been, is, or may be a defendant in an action
alleging damage to property that (i) arises from or relates to any building or
other real property in which asbestos was or is, or asbestos-containing products
were or are, alleged to have been installed prior to the Petition Date, and (ii)
seeks monetary or other relief for injury to, destruction, loss of use,
diminution in value, and/or asbestos-related repair or maintenance of such
property or for the cost of inspection, encapsulation, decontamination,
containment, removal, or other abatement of the asbestos or asbestos-containing
products installed or allegedly installed in such property; and (2) on account
of alleged liability by the Debtors for reimbursement, indemnification,
subrogation, or contribution of any portion of any damages such Entity (or
assignee or transferee thereof) has paid or may pay to the plaintiff in such
action. Notwithstanding anything herein to the contrary, Asbestos Property
Damage Contribution Claim does not include any ABI Asbestos Claims.


                                        7
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Asbestos Property Damage Insurance Rights" means all rights arising under
all insurance policies, issued to or for the benefit of any of the Debtors
(except for any insurance policy issued to ABI, American Biltrite International
Inc., or any of their predecessors) that may afford any of the Debtors indemnity
or insurance coverage solely for Asbestos Property Damage Claims, which policies
are set forth on Exhibit "A." The foregoing includes, but is not limited to,
rights under insurance policies, rights under settlement agreements made with
respect to such insurance policies, rights against the estates of insolvent
insurers that issued such policies or entered into such settlements, and rights
against state insurance guaranty associations arising out of any such insurance
policies issued by insolvent insurers.

      "Asbestos Settlement Documents" means the Security Agreement, Collateral
Trust Agreement and Claimant Agreement, collectively.

      "Avoidance Actions" means, collectively, the Omnibus Avoidance Action and
the Sealed Avoidance Action.

      "Bankruptcy Causes of Action" means all Causes of Action other than Plan
Trust Bankruptcy Causes of Action arising under the Bankruptcy Code, including
any avoidance or recovery actions under sections 544, 545, 547, 548, 549, 550,
551 and/or 553 of the Bankruptcy Code, or under any similar state statutes,
which seek recovery of or with respect to any payment by, or transfer of any
interest in property of, any of the Debtors made in respect of any claim, cause
of action or other matter.

      "Bankruptcy Code" means title 11 of the United States Code, 11 U.S.C.
ss.ss. 101, et seq., as in effect on the Petition Date, together with all
amendments and modifications thereto that were subsequently made applicable to
the Reorganization Cases.

      "Bankruptcy Court" means the United States Bankruptcy Court having
jurisdiction over the Reorganization Cases or the District Court exercising
bankruptcy jurisdiction.

      "Bankruptcy Professional" means any Person (a) employed pursuant to an
order of the Bankruptcy Court in accordance with section 327 or 1103 of the
Bankruptcy Code and to be compensated for services pursuant to sections 327,
328, 329, 330 and/or 331 of the Bankruptcy Code, or (b) who applies to the
Bankruptcy Court for compensation and reimbursement of expenses pursuant to
section 503(b) of the Bankruptcy Code.

      "Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure and the
local rules of the Bankruptcy Court, as in effect on the Petition Date, together
with all amendments and modifications thereto that were subsequently made
applicable to the Reorganization Cases.


                                        8
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Bar Dates" means the date(s), if any, designated by the Bankruptcy Court
as the last date(s) for filing Proofs of Claim against the Debtors.

      "Bondholders' Committee" means the official committee of the
representatives of holders of Senior Notes appointed in these Reorganization
Cases on January 27, 2006, solely in its capacity as such.

      "Business Day" means any day other than a Saturday, Sunday or a legal
holiday (as such term is defined in Bankruptcy Rule 9006(a)) on which commercial
banks are open for business in New York, New York.

      "Cash" means lawful currency of the United States of America and its
equivalents.

      "Causes of Action" means, without limitation, any and all rights,
remedies, claims, causes of action, liabilities, obligations, suits, debts, sums
of money, damages, judgments, and demands whatsoever, whether known or unknown,
in law, equity, or otherwise which may be brought by or on behalf of the Debtors
and/or the Estates, arising under any provision of the Bankruptcy Code or other
applicable law.

      "Claim" means a claim against the Debtors (or any of them), whether or not
asserted, as defined in section 101(5) of the Bankruptcy Code, and further shall
include, but is not limited to, Asbestos Claims.

      "Claimant Agreement" means that certain Settlement Agreement Between
Congoleum and Various Asbestos Claimants, as amended by the first amendment
thereto, entered into by Congoleum and certain Asbestos Claimants, through their
counsel, prior to the Petition Date, as the same may be further amended from
time to time in accordance with its terms. The Claimant Agreement and the first
amendment thereto are attached to the Disclosure Statement as Exhibit "E."

      "Claimants' Counsel" or "Claimants' Representative" means Joseph F. Rice,
Esquire and Perry Weitz, Esquire, collectively, in their capacity under the
Claimant Agreement as the representatives of certain holders of Asbestos
Personal Injury Claims.

      "Claims Handling Fee" shall have the meaning ascribed to such term in the
Collateral Trust Agreement.

      "Claims Reviewer" shall have the meaning ascribed to such term in the
Collateral Trust Agreement.

      "Class" means a category of Claims or Interests, as classified in Article
III of the Plan pursuant to section 1122(a)(1) of the Bankruptcy Code.

      "Class 2 Settlement" means the settlement agreement with the Qualified
Pre-Petition Settlement Claimants encompassing, inter alia, the compromise and
settlement contained in Section 2.1 of the Plan and the treatment afforded to
the Qualified Pre-Petition Settlement Claimants in Section 5.1(b) of the Plan.


                                        9
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Class 3 and 11 Settlement" means the settlement agreement with the
Qualified Participating Claimants encompassing, inter alia, the compromise and
settlement contained in Section 2.2 of the Plan and the treatment afforded to
the Qualified Participating Claimants in Section 5.1(c) of the Plan.

      "Collateral Trust" means the Collateral Trust established pursuant to the
Collateral Trust Agreement, the Security Agreement and the Claimant Agreement.

      "Collateral Trust Agreement" means that certain irrevocable trust
agreement entered into by Congoleum and Arthur J. Pergament and Wilmington Trust
Company, as amended by the first amendment thereto, and any further
modifications or amendments thereto. The Collateral Trust Agreement and the
first amendment thereto are attached to the Plan as Exhibit "B."

      "Collateral Trustee" means the Trustee as defined and named in the
Collateral Trust Agreement.

      "Confirmation" means the approval of the Plan by the Bankruptcy Court
pursuant to section 1129 and other applicable sections of the Bankruptcy Code.

      "Confirmation Date" means the date on which the Confirmation Order is
entered on the docket of the Bankruptcy Court.

      "Confirmation Hearing" means the hearing(s) which will be held before the
Bankruptcy Court and the District Court, as appropriate, in which the Debtors
will seek Confirmation of the Plan.

      "Confirmation Order" means the order of the Bankruptcy Court confirming
the Plan pursuant to section 1129 and other applicable sections of the
Bankruptcy Code.

      "Congoleum" means Congoleum Corporation, a Delaware corporation.

      "Congoleum Derivative Action" means (a) any claim, demand or lawsuit
whenever and wherever arising or asserted against any of ABI or the ABI Entities
and (b) any debt, obligation or liability (whether or not reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, bonded, secured or unsecured), whenever or
wherever arising or asserted, against any of ABI or the ABI Entities; in either
case (a) or (b) for, based on, derivative of, arising out of, or caused or
allegedly caused, in whole or in part, directly or indirectly: (i) by exposure
to asbestos or asbestos-containing products manufactured, supplied, distributed,
handled, fabricated, stored, sold, installed, or removed by any Debtor; (ii) by
services, actions, or operations provided, completed or taken by any Debtor in
connection with asbestos or asbestos containing products or (iii) by asbestos
for which any Debtor or its predecessors are otherwise liable under any
applicable law, in either case (a) or (b) including, but not limited to, any
claim, demand or lawsuit for or based on the corporate relationship between the
Debtors and ABI, including, but not limited to, allegations of piercing the
corporate veil, shareholder liability, interlocking directorships, or any
similar allegations or otherwise.


                                       10
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Congoleum Interests" means, collectively, all equity interests in
Congoleum outstanding immediately prior to the Effective Date including, without
limitation, (a) shares of Class A common stock, par value $0.01 per share, and
Class B Common Stock, par value $0.01 per share, of Congoleum and (b) any
options, warrants, conversion rights, rights of first refusal, or other rights,
contractual or otherwise, to acquire or receive any stock or other equity
ownership interests in Congoleum.

      "Coverage Costs" means all reasonable costs, including reasonable
attorneys' fees, actually incurred by the Debtors and/or their Representatives
on their behalf, on or after January 1, 2003, to prosecute the Coverage
Litigation and any other Asbestos Insurance Actions and to pursue the Asbestos
Insurance Action Recoveries.

      "Coverage Litigation" means (i) that certain civil action pending in the
Superior Court of New Jersey, docket number MID-L-8908-01, as such action exists
after giving effect to the Order entered therein on October 30, 2003 that
dismissed, without prejudice, certain claims including Environmental Claims, as
referenced in such Order; and (ii) any other action which seeks to determine the
extent of insurance coverage for defense of and liability for Asbestos Claims
and related issues.

      "Debtor" means each of Congoleum, Congoleum Sales, Inc. and Congoleum
Fiscal, Inc., as debtors-in-possession in the Reorganization Cases, and
"Debtors" means all of them collectively, and when the context so requires, as
post-Confirmation entities reorganized hereunder.

      "Demand" means a demand for payment against any of the Debtors within the
meaning of section 524(g)(5) of the Bankruptcy Code, but excludes any demand in
respect of an Asbestos Property Damage Claim or an ABI Asbestos Claim.

      "Direct Action" means any cause of action or right to bring a cause of
action possessed by an Asbestos Claimant against an Asbestos Insurance Company
on account of such Asbestos Claimant's Plan Trust Asbestos Claim, whether
arising by contract or under the laws of any jurisdiction.

      "Disallowed" means a Claim or Interest, as the case may be, that is
disallowed by the Plan, a Final Order of the Bankruptcy Court, or that is
disallowed pursuant to the TDP.

      "Disbursing Agent" means the Reorganized Debtors or any Person selected by
the Reorganized Debtors to hold and distribute the consideration to be
distributed to the holders of Allowed Claims (other than Plan Trust Asbestos
Claims and Senior Note Claims) under the Plan.

      "Discharge Injunction" means the injunction described in Section 12.5 of
the Plan.

      "Disclosure Statement" means the Disclosure Statement with respect to the
Plan, including all exhibits, appendices, schedules and annexes attached
thereto, as submitted by the Debtors pursuant to section 1125 of the Bankruptcy
Code, as such Disclosure Statement may be further amended, supplemented or
modified from time to time.


                                       11
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Disputed Claim" means any Claim that has not been allowed by a Final
Order as to which (a) a Proof of Claim has been filed with the Bankruptcy Court,
and (b) an objection has been or may be timely filed or deemed filed under
applicable law and any such objection has not been (i) withdrawn, (ii) overruled
or denied by a Final Order or (iii) granted by a Final Order. For purposes of
the Plan, a Claim that has not been Allowed by a Final Order shall be considered
a Disputed Claim, whether or not an objection has been or may be timely filed,
if (A) the amount of the Claim specified in the Proof of Claim exceeds the
amount of any corresponding Claim listed in the Schedules, (B) the
classification of the Claim specified in the Proof of Claim differs from the
classification of any corresponding Claim listed in the Schedules, (C) any
corresponding Claim has been listed in the Schedules as disputed, contingent or
unliquidated, (D) no corresponding Claim has been listed in the Schedules or (E)
such Claim is reflected as unliquidated or contingent in the Proof of Claim
filed in respect thereof.

      "Distribution Date" means, when used with respect to an Allowed Claim
(other than a Plan Trust Asbestos Claim or the Additional Bondholder Recovery),
the date which is as soon as reasonably practicable after the latest of: (a) the
Effective Date; (b) the first Business Day of the next calendar month following
the date on which the Claim becomes an Allowed Claim; or (c) the first Business
Day of the next calendar month upon which the Claim matures and becomes due and
payable according to its own terms, unless the Claim becomes Allowed within
fifteen (15) Business Days before the first Business Day of the next calendar
quarter, in which case Distribution Date shall be the first Business Day of the
next succeeding calendar quarter.

      "District Court" means the United States District Court for the judicial
district having jurisdiction over the matter in question.

      "Effective Date" means the first Business Day after the Confirmation Date
immediately following the first day upon which all of the conditions to
occurrence of the Effective Date specified in Section 11.2 of the Plan have been
satisfied or waived pursuant to Section 11.3 of the Plan.

      "Entity" means any Person, estate, trust, Governmental Unit or the United
States Trustee.

      "Environmental Laws" means (a) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C.ss.ss.9601, et seq., (b) the Resource
Conservation and Recovery Act, as amended by the Hazardous and Solid Waste
Amendment of 1984, 42 U.S.C.ss.ss.6901, et seq., (c) the Clean Air Act, 42
U.S.C.ss.ss.7401, et seq., (d) the Clean Water Act of 1977, 33 U.S.C.ss.ss.1251,
et seq., (e) the Toxic Substances Control Act, 15 U.S.C.ss.ss.2601, et seq., (f)
all statutes or laws issued or promulgated by any Governmental Unit, as they may
be amended from time to time, relating to environmental contamination or
pollution, air pollution, water pollution, noise control and/or the handling,
discharge, existence, release, disposal or recovery of on-site or off-site
hazardous, toxic or dangerous wastes, substances, chemicals or materials, and
(g) the ordinances, rules, regulations, orders, notices of violation, requests,
demands and requirements issued or promulgated by any Governmental Unit in
connection with such statutes or laws.

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.


                                       12
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Estate(s)" means, individually, the estate of each Debtor in the
Reorganization Cases and, collectively, the estates of all Debtors in the
Reorganization Cases, created pursuant to section 541 of the Bankruptcy Code.

      "Existing Credit Agreement" means the Loan and Security Agreement between
Congoleum, as borrower, and Wachovia, as lender, dated as of December 10, 2001,
as amended by Amendment No. 1 to Loan and Security Agreement, dated September
19, 2002, by and between Wachovia and Congoleum, and Amendment No. 2 to Loan and
Security Agreement, dated as of February 27, 2003, by and between Wachovia and
Congoleum, and as otherwise amended, restated, modified and/or supplemented as
of the Petition Date and any related documents.

      "Existing Subsidiary Guaranty" means the Limited Guaranty, dated as of
February 27, 2003, executed by Congoleum Fiscal, Inc. and Congoleum Sales, Inc.,
as amended, restated, modified or supplemented as of the Petition Date.

      "Final Order" means an order or judgment of the Bankruptcy Court, or other
court of competent jurisdiction, the implementation, operation or effect of
which has not been stayed and as to which order (or any revision, modification
or amendment thereon) the time to appeal or seek review, rehearing or writ of
certiorari has expired and as to which no appeal or petition for review,
reconsideration, rehearing or certiorari has been taken and is pending.

      "Financing Order" shall have the meaning ascribed to such term in Section
5.1(d).

      "First Indicated Date" means the 90th Trading Day after the first
anniversary of the Effective Date.

      "Forbearance" means agreement, conditioned upon the occurrence of the
Effective Date, to refrain from exercising: (i) the right to enforce or exercise
any status or right as a secured party, including any rights in the Collateral
described in the Security Agreement; (ii) the right to enforce or exercise any
assignment or collateral assignment of insurance or insurance proceeds; (iii)
the right to any priority of payment arising from or related to (i) or (ii)
hereinabove; and (iv) the right to enforce or exercise any right to payment,
claim or cause of action granted or arising under the Claimant Agreement, any
Pre-Petition Settlement Agreement, the Collateral Trust Agreement, the Security
Agreement or any other agreement related thereto or contemplated thereby,
including the Class 3 and 11 Settlement.

      "Futures Representative" means the Person appointed by the Bankruptcy
Court to represent the rights and interests of the Unknown Asbestos Claimants,
who shall be R. Scott Williams, Esquire, or such other individual appointed by
the Bankruptcy Court, pursuant to section 524(g) of the Bankruptcy Code.

      "General Unsecured Claim" means an Unsecured Claim other than an Asbestos
Claim, ABI Claim, Workers' Compensation Claim or a Senior Note Claim.

      "GHR/Kenesis Actions" means (a) any right, process, proceeding or action
to recover funds or property on account of that certain Order of the Bankruptcy
Court Granting Cross-Motion for Disgorgement of Fees Paid to Gilbert, Heintz &
Randolph LLP, dated March 27, 2006, as Amended by Order, dated March 31, 2006;
and (b) any other Causes of Action, including for malpractice, against Gilbert,
Heintz & Randolph LLP or The Kenesis Group LLC.


                                       13
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "GHR/Kenesis Litigation Trust" means the trust to be established pursuant
to Section 6.1(o) of the Plan as of the Effective Date pursuant to the
GHR/Kenesis Litigation Trust Agreement.

      "GHR/Kenesis Litigation Trust Agreement" means that certain GHR/Kenesis
Litigation Trust Agreement, effective as of the Effective Date, substantially in
the form annexed hereto as Exhibit "I," as it may be modified from time to time
in accordance with the terms thereof.

      "GHR/Kenesis Litigation Trustee" means the Person appointed pursuant to
Section 6.1(o) of the Plan for the purpose of acting as Trustee of the
GHR/Kenesis Litigation Trust in accordance with the terms and conditions
contained in the Plan, the GHR/Kenesis Litigation Trust Agreement and the
Confirmation Order.

      "Governmental Unit" means any domestic, foreign, provincial, federal,
state, local or municipal (a) government, or (b) governmental agency,
commission, department, bureau, ministry or other governmental entity.

      "Impaired" means when used with reference to a Claim or Interest, a Claim
or Interest that is impaired within the meaning of section 1124 of the
Bankruptcy Code.

      "Indenture" means the Indenture by and between Congoleum Corporation, as
Issuer, and First Union National Bank, as Trustee, dated as of August 3, 1998,
as supplemented and amended from time to time, relating to the Senior Notes.

      "Indenture Trustee" means HSBC Bank USA, N.A., as successor to First Union
National Bank, not individually but as indenture trustee under the Indenture,
and its successors and assigns.

      "Indirect Asbestos Claim" means (i) any Claim based on a right of
contribution, reimbursement, subrogation, or indemnity (as those terms are
defined by the non-bankruptcy law of any relevant jurisdiction) arising out of
or based on an Asbestos Personal Injury Claim, another Indirect Asbestos Claim
or an Unknown Asbestos Claim, (ii) any other derivative or indirect Claim of any
kind whatsoever, whether in the nature of or sounding in contract, tort,
warranty or any other theory of law, equity or admiralty, by reason of an
Asbestos Personal Injury Claim, another Indirect Asbestos Claim or an Unknown
Asbestos Claim (including, without limitation, any Claim (A) for attorneys' fees
arising or incurred in connection with any Asbestos Personal Injury Claim,
another Indirect Direct Asbestos Claim, an Unknown Asbestos Claim or an Asbestos
Insurance Action or (B) arising out of or based on the rejection of any
executory contract related to or involving asbestos), and (iii) any Claim
arising out of Asbestos Insurance Policies or settlement agreements related
thereto, in each case other than ABI Asbestos Claims or Asbestos Property Damage
Claims.

      "Injunctions" means the Discharge Injunction, the Asbestos Channeling
Injunction, the Anti-Suit Injunction and any other injunctions entered by Order
of the Bankruptcy Court or the District Court in the Reorganization Cases
(including but not limited to any injunction contained in any Final Order
approving any Asbestos Insurance Settlement Agreement).


                                       14
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Insurance Assignment Agreement" means the insurance assignment agreement
referenced in Section 6.1(c) of the Plan and substantially in the form attached
as Exhibit "C" to the Plan.

      "Intercompany Agreements" means the: (i) Personal Services Agreement dated
as of March 11, 1993, by and between ABI and Congoleum and all amendments
thereto; (ii) Business Relations Agreement, dated as of March 11, 1993, by and
between ABI and Congoleum and all amendments thereto; (iii) Stockholders
Agreement, dated as of March 11, 1993, by and among Hillside Industries
Incorporated, ABI, Congoleum Holdings Incorporated and Congoleum and all
amendments thereto; and (iv) Tax Sharing Agreement, dated as of November 1,
1996, by and between ABI and Congoleum.

      "Interest" means any equity interest in the Debtors existing immediately
prior to the Effective Date, including without limitation, the Congoleum
Interests and the Subsidiary Interests.

      "IRC" means the Internal Revenue Code of 1986, as amended.

      "Joint Venture Agreement" means that Joint Venture Agreement, dated as of
December 16, 1992, by and among American Biltrite Inc., Resilient Holdings
Incorporated, Congoleum, Hillside Industries Incorporated and Hillside Capital
Incorporated, as amended by the Closing Agreement, dated as of March 11, 1993,
by and among the same parties.

      "Lender Secured Claim" means any Claim of Wachovia arising under or
relating to the Existing Credit Agreement, the Existing Subsidiary Guaranty and
any related documents.

      "Lien" means, with respect to any asset or property, any properly
perfected and unavoidable mortgage, lien, pledge, charge, security interest,
encumbrance or other security device of any kind pertaining to or affecting such
asset or property.

      "New Class A Common Stock" means the 3,800,000 shares of Congoleum Class A
common stock, par value $.01 per share, to be issued by Reorganized Congoleum to
the Plan Trust on the Effective Date if the holders of the Senior Note Claims
vote to accept the Plan, and any additional shares of Congoleum Class A common
stock, par value $0.1 per share, required to be issued in accordance with the
anti-dilution provisions set forth on Exhibit "E" to the Plan if the holders of
the Senior Note Claims vote to accept the Plan.

      "New Convertible Security" means the convertible promissory note to be
issued by Reorganized Congoleum and contributed to the Plan Trust on the
Effective Date in satisfaction of section 524(g) of the Bankruptcy Code if the
holders of the Senior Note Claims vote to accept the Plan, in the form attached
hereto as Exhibit J.

      "New Indenture" means the Indenture by and between Congoleum Corporation,
as Issuer, and [Bank], as Trustee, dated as of the Effective Date relating to
the New Senior Notes substantially in the form attached as Exhibit "H" to the
Plan.


                                       15
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "New Senior Notes" means the $100 million aggregate principal amount of
10% Senior Notes due August 2011 to be issued to the holders of the Senior Notes
by Reorganized Congoleum on the Effective Date and guaranteed by any Restricted
Subsidiaries (as that term is defined in the New Indenture) if the holders of
the Senior Note Claims (as a Class) vote to accept the Plan. Interest on the New
Senior Notes will be payable semi-annually at the rate of 10% per annum. The New
Senior Notes will be secured by a lien on or security interest in all of the
Reorganized Debtors' assets (subject to the limitations contained in the New
Indenture and excluding the GHR/Kenesis Actions and any Causes of Action against
any Bankruptcy Professionals), which security interest shall be subordinate in
priority only to the security for the Amended Credit Agreement or any other
working capital exit facility, provided that such Amended Credit Agreement or
other working capital exit facility shall be on terms similar to the Existing
Credit Agreement (except that the Amended Credit Agreement or other working
capital exit facility may be modified to provide for a lien on or security
interest in real estate and any other collateral securing the New Senior Notes).
The liens and security interests securing the New Senior Notes shall not be pari
passu with any other liens or security interests. The New Senior Notes shall be
contractually senior in priority and right of payment to the Plan Trust Note and
the New Convertible Security; provided, however, that in the absence of a
default under the New Indenture, payments due under the Plan Trust Note and the
New Convertible Security will be made in the ordinary course in accordance with
their respective contractual terms. The New Senior Notes shall be in the form
set forth in the New Indenture.

      "Non-Compensatory Damages" means any and all damages awarded by a court of
competent jurisdiction that are penal in nature, including, without limitation,
punitive, punitory, exemplary, vindictive, imaginary or presumptive damages.

      "Not Previously Determined Unsecured Asbestos Personal Injury Claim" means
any Asbestos Personal Injury Claim other than a Secured Asbestos Claim or
Previously Determined Unsecured Asbestos Personal Injury Claim, and includes,
but is not limited to, any Unknown Asbestos Claim.

      "Omnibus Avoidance Action" means that certain Adversary Proceeding No.
05-06245 (KCF), which was filed in the Bankruptcy Court on behalf of the Debtors
on December 3, 2005, as amended by the filing of a first amended complaint on
December 30, 2005 and as it may be further amended.
      "Other Secured Claim" means a Secured Claim arising prior to the Petition
Date against any of the Debtors other than a Lender Secured Claim or a Secured
Asbestos Claim.

      "Participating Claimant" means a holder of an Asbestos Personal Injury
Claim designated as a Participating Asbestos Claimant pursuant to the Claimant
Agreement.

      "Pension Plans" means, collectively, that certain Congoleum Corporation
Hourly Retirement Plan, that certain Congoleum Corporation Retirement Plan for
Salaried Employees and that certain Congoleum Corporation Plant 2 Retirement
Plan, in each case as the same may be amended from time to time.

      "Person" means any person, individual, partnership, corporation, limited
liability company, joint venture company, association or other entity or being
of whatever kind, whether or not operating or existing for profit, including,
but not limited to, any "person" as such term is defined in section 101(41) of
the Bankruptcy Code, but excluding any Governmental Unit.


                                       16
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Petition Date" means December 31, 2003, the date on which the Debtors
filed their petitions for relief commencing the Reorganization Cases.

      "Plan" means this Plan of Reorganization under Chapter 11 of the
Bankruptcy Code and all exhibits and schedules annexed hereto or referenced
herein, and any amendments or modifications thereto made in accordance with the
Bankruptcy Code.

      "Plan Documents" means the Plan, the Plan Trust Agreement, the TDP, the
New Convertible Security, the Plan Trust Note, the New Senior Notes, the Amended
Credit Agreement or any other working capital exit facility, the New Indenture,
the Pledge Agreement, the GHR/Kenesis Litigation Trust Agreement and the
Insurance Assignment Agreement, and all exhibits and schedules to any of the
foregoing.

      "Plan Supplement" means the compilation of documents, including any
exhibits to the Plan not included herewith, that the Debtors may file with the
Bankruptcy Court on or before the date that is five (5) Business Days prior to
the Confirmation Hearing.

      "Plan Trust" means the trust to be established pursuant to the Plan Trust
Agreement and Section 6.1(a) of the Plan as of any date between the Confirmation
Date and the Effective Date.

      "Plan Trust Agreement" means that certain Congoleum Plan Trust Agreement,
effective as of any date between the Confirmation Date and the Effective Date,
substantially in the form annexed hereto as Exhibit "D," as it may be modified
from time to time in accordance with the terms thereof.

      "Plan Trust Asbestos Claims" means, collectively, Asbestos Personal Injury
Claims, Unknown Asbestos Claims and Allowed Asbestos Property Damage Claims.

      "Plan Trust Assets" means the assets to be delivered to the Plan Trust
pursuant to the Plan Documents and shall include, without limitation, the
following assets and any income, profits, and proceeds derived therefrom: (a)
the New Class A Common Stock (including any shares of New Class A Common Stock
required to be issued by Reorganized Congoleum in accordance with Exhibit E to
the Plan) (if the holders of the Senior Note Claims (as a Class) vote to accept
the Plan); (b) the New Convertible Security (if the holders of the Senior Note
Claims (as a Class) vote to accept the Plan); (c) the Plan Trust Common Stock
(if the holders of the Senior Note Claims (as a Class) do not vote to accept the
Plan); (d) the Asbestos Insurance Rights; (e) the proceeds of the Asbestos
Insurance Settlement Agreements (subject to Section 6.11 of the Plan and except
for those certain proceeds of the Asbestos Insurance Settlement Agreement with
Liberty Mutual Insurance Company, which are dedicated pursuant to the Plan to
(i) reimburse the Debtors and/or Reorganized Congoleum for the Coverage Costs
and (ii) to fund the $600,000 initial contribution to the GHR/Kenesis Actions
Litigation Trust); (f) the proceeds of the Asbestos In-Place Insurance Coverage
(subject to Section 6.11 of the Plan); (g) the proceeds of the Asbestos
Insurance Actions (subject to Section 6.11 of the Plan); (h) all of the assets
held by the Collateral Trust as of the Effective Date; (i) the proceeds of the
Asbestos Insurance Action Recoveries (subject to Section 6.11 of the Plan); (j)
the ABI Contribution; (k) Plan Trust Bankruptcy Causes of Action including,


                                       17
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


without limitation, the Avoidance Actions, to the extent not already adjudicated
prior to the Effective Date and to the extent not compromised or settled under
the Plan; (l) other Causes of Action, other than Bankruptcy Causes of Action,
related to Plan Trust Asbestos Claims and Plan Trust Assets to the extent not
compromised or settled under the Plan, including, without limitation, the right
to void any Asbestos Claim of a Qualified Pre-Petition Settlement Claimant or of
a Qualified Participating Claimant whether because of failure to comply with the
requirements of any applicable settlement agreement (including, without
limitation, the Claimant Agreement) or because such Claim was not submitted in
good faith or otherwise and including the right to pursue such Causes of Action,
if any, in the name of any Debtor, if necessary; (m) the Plan Trust Note; (n)
the rights granted to the Plan Trust pursuant to the Insurance Assignment
Agreement; (o) the Pledge Agreement; and (p) the Asbestos Property Damage
Insurance Rights.

      "Plan Trust Bankruptcy Causes of Action" means all Causes of Action
arising under the Bankruptcy Code, including any avoidance or recovery actions
under sections 544, 545, 547, 548, 549, 550, 551 and 553 of the Bankruptcy Code,
or under any similar state statutes, which seek recovery of or with respect to
any payment by, or transfer of any interest in property of, any of the Debtors
(except for any payments made on account of indemnification or reimbursement
rights under the Joint Venture Agreement), which payment or transfer was made in
respect of any claim, cause of action or other matter which constitutes or
relates to a Plan Trust Asbestos Claim, or which would have constituted or
related to a Plan Trust Asbestos Claim had such payment or transfer not been
made.

      "Plan Trust Bylaws" means the bylaws as approved by the Plan Trustees, the
Trust Advisory Committee and the Futures Representative, effective as of the
effective date of the Plan Trust, as may be modified from time to time with the
consent and approval of the Plan Trustees, the Trust Advisory Committee and the
Futures Representative.

      "Plan Trust Common Stock" means the pro rata share of the common stock of
Reorganized Congoleum to be allocated, pursuant to the Confirmation Order, to
the Plan Trust in the event that the Senior Note Claims (as a Class) do not vote
to accept the Plan.

      "Plan Trust Disputed Claim" means any Asbestos Claim of a Participating
Claimant or a Pre-Petition Settlement Claimant who is either (a) a party to
either of the Avoidance Actions or (b) may be joined as a party to either of the
Avoidance Actions.

      "Plan Trust Documents" means the Plan Trust Agreement, the Plan Trust
Bylaws, the TDP and the other agreements, instruments and documents governing
the establishment, administration and operation of the Plan Trust, as amended or
modified from time to time in accordance with the Plan and such documents.

      "Plan Trust Expenses" means any of the Asbestos Expenses and any other
liabilities, costs or expenses of, or imposed upon, assumed by, or in respect of
the Trusts (except for payments to holders of Asbestos Claims on account of such
Asbestos Claims).

      "Plan Trust Note" means the promissory note due December 31, 2011 in the
form attached hereto as Exhibit K, which shall be issued by Reorganized
Congoleum to the Plan Trust as of the Effective Date with a principal amount in
an amount so as to provide Reorganized Congoleum with $18,000,000 of total


                                       18
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


liquidity, as of December 31, 2006, when combined with cash on hand and
available drawings under the Amended Credit Agreement or any other working
capital exit facility entered into by the Reorganized Debtors, provided that
such Amended Credit Agreement or other working capital facility is on terms
similar to the Existing Credit Agreement (except that the Amended Credit
Agreement or other working capital exit facility may be modified to provide for
a lien on or security interest in real estate and any other collateral securing
the New Senior Notes). If the Effective Date occurs after December 31, 2006, the
total liquidity required by Reorganized Congoleum and thus, the principal amount
of the Plan Trust Note, will be as mutually agreed by the Reorganized Debtors,
the Asbestos Claimants' Committee, the Futures Representative and the Claimants'
Representative, each acting in its sole discretion. The principal amount of Plan
Trust Note, which is subject to review and approval by the Asbestos Claimants'
Committee and Futures Representative, will not exceed $14,000,000; provided
however, that the Asbestos Claimants' Committee and the Futures Representative
may agree to increase such principal amount. Except for a lien on or security
interest in distributions from the GHR/Kenesis Litigation Trust (after payment
of fees and reimbursement of expenses of the GHR/Kenesis Litigation Trust) the
Plan Trust Note shall not be secured by any other liens, security interests or
collateral and the Plan Trust Note shall be contractually subordinate in
priority and right of payment to the New Senior Notes; provided, however, that
in the absence of a default under the New Indenture, payments due under the Plan
Trust Note shall be made in the ordinary course in accordance with its terms.

      "Plan Trustees" means the Persons appointed pursuant to Article VI of the
Plan and the Plan Trust Agreement for the purpose of acting as Trustee(s) of the
Plan Trust in accordance with the terms and conditions contained in the Plan,
the Plan Trust Agreement and the Confirmation Order.

      "Pledge Agreement" means that certain Pledge Agreement, effective as of
the Effective Date, substantially in the form annexed hereto as Exhibit "L," as
it may be amended from time to time in accordance with the terms thereof.

      "Postpetition Interest" means interest accruing on and after the Petition
Date on a Claim.

      "Pre-Petition Asbestos Claimants' Committee" means the unofficial
pre-petition committee of representatives of holders of present Asbestos
Personal Injury Claims, solely in its capacity as such, which committee
consisted of the following representatives of the holders of present Asbestos
Personal Injury Claims: Perry Weitz, Esquire, Joseph Rice, Esquire, Steven
Kazan, Esquire, Russell Budd, Esquire, Bryan Blevins, Esquire, John Cooney,
Esquire and Matt Bergmann, Esquire.

      "Pre-Petition Settlement Agreement" means a settlement agreement, other
than the Claimant Agreement, executed prior to the Petition Date to resolve an
Asbestos Personal Injury Claim under which some or all of the consideration due
has yet to be paid.

      "Pre-Petition Settlement Claimant" means a holder of an Asbestos Personal
Injury Claim who is a party to a Pre-Petition Settlement Agreement.


                                       19
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Previously Determined Unsecured Asbestos Personal Injury Claim" means the
unsecured portion of the liquidated claim of a Participating Claimant (as
described in the Claimant Agreement).

      "Priority Claim" means any Claim (other than an Administrative Claim or a
Priority Tax Claim) to the extent such Claim is entitled to a priority in
payment under section 507(a) of the Bankruptcy Code.

      "Priority Tax Claim" means any Claim to the extent that such Claim is
entitled to a priority in payment under section 507(a)(8) of the Bankruptcy
Code.

      "Professional Fee Claim" means a Claim of a professional retained in the
Reorganization Cases pursuant to sections 327, 328, 330, 331, 503(b) and 1103 of
the Bankruptcy Code, or otherwise, including (i) such Claims of the Futures
Representative and its professionals, for compensation or reimbursement of costs
and expenses relating to services rendered on and after the Petition Date and
prior to and including the Effective Date, and (ii) Claims under section
503(b)(3), (4) or (5) of the Bankruptcy Code.

      "Proof of Claim" means any proof of claim filed with the Bankruptcy Court
or its duly appointed claims agent with respect to the Debtors pursuant to
Bankruptcy Rule 3001 or 3002.

      "Pro Rata" means with reference to any distribution on account of any
Claim or Interest in any Class, the proportion that the amount of such Claim or
Interest bears to the aggregate amount of all Claims (including Disputed Claims
but excluding Disallowed Claims) or Interests (including disputed Interests, but
excluding Disallowed Interests) in such Class.

      "Protected Party" means any of the following parties:

            (a) the Released Parties;

            (b) any Entity that, pursuant to the Plan or after the Confirmation
Date, becomes a direct or indirect transferee of, or successor to, the Plan
Trust or the Reorganized Debtors;

            (c) ABI, the ABI Parties and Wachovia in its capacity as Lender
under the Existing Credit Agreement to the fullest extent permitted by section
524(g)(4) of the Bankruptcy Code;

            (d) the Persons designated on Exhibit "F" (as such Exhibit may be
amended on or before the Confirmation Date) as current distributors of the
product lines currently manufactured, sold or otherwise produced by Congoleum;
or

            (e) each Settling Asbestos Insurance Company.

      "Qualified Claimant" means any Pre-Petition Settlement Claimant or
Participating Claimant entitled to receive payment from the Collateral Trust
pursuant to the provisions of the Collateral Trust Agreement.


                                       20
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Qualified Participating Claimant" means any Participating Claimant who is
a Qualified Claimant.

      "Qualified Pre-Petition Settlement Claimant" means any Pre-Petition
Settlement Claimant who is a Qualified Claimant.

      "Reinstated" or "Reinstatement" means (a) leaving unaltered the legal,
equitable, and contractual rights to which a Claim or Interest entitles the
holder of such Claim or Interest so as to leave such Claim or Interest
Unimpaired or (b) notwithstanding any contractual provision or applicable law
that entitles the holder of such Claim or Interest to demand or receive
accelerated payment of such Claim or Interest after the occurrence of a default,
(i) curing any such default that occurred before or after the Petition Date,
other than a default of a kind specified in section 365(b)(2) of the Bankruptcy
Code; (ii) reinstating the maturity of such Claim or Interest as such maturity
existed before such default; and (iii) compensating the holder of such Claim or
Interest for any damages incurred as a result of any legal, equitable or
contractual rights to which such Claim or Interest entitles the holder of such
Claim or Interest.

      "Released Non-Debtor Parties" means (a) the Futures Representative and his
Representatives, (b) the Asbestos Claimants' Committee and its Representatives,
(c) the Bondholders' Committee and its Representatives, and (d) the Additional
Indemnitees.

      "Released Parties" means each of the Debtors, the Reorganized Debtors,
their respective Representatives and the Released Non-Debtor Parties.

      "Reorganization Cases" means the cases filed by the Debtors under Chapter
11 of the Bankruptcy Code.

      "Reorganized Congoleum" means reorganized Congoleum on and after the
Effective Date.

      "Reorganized Debtors" means the reorganized Debtors (or any successor
thereto) on and after the Effective Date.

      "Representatives" means, with respect to any Entity, the present and
former directors, officers, members, employees, trustees, accountants (including
independent certified public accountants), advisors, attorneys, consultants,
experts or other agents of that Entity, or any other professionals of that
Entity, in each case in their capacity as such; provided, however, that in no
event shall "Representatives" mean Gilbert Heintz & Randolph LLP or Kenesis
Group, LLP.

      "Reset Date" means, with respect to the New Convertible Security, either
(i) the First Indicated Date or (ii) the Second Indicated Date, as selected by
the Plan Trust, provided that, if the Plan Trust does not select the First
Indicated Date in the time period set forth in the New Convertible Security,
then the Reset Date shall be the Second Indicated Date.

      "Schedules" means the schedules, statements and lists filed by the Debtors
with the Bankruptcy Court pursuant to Bankruptcy Rule 1007, if such documents
are filed, as they have been and may be amended or supplemented from time to
time.


                                       21
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Sealed Avoidance Action" means that certain Adversary Proceeding No.
05-06461 (KCF), as it may be amended, which was filed under seal in the
Bankruptcy Court on behalf of the Debtors on December 29, 2005, against (a)
Arthur J. Pergament, in his capacity as Collateral Trustee; (b) Joseph F. Rice
and the law firm of Motley Rice LLC; (c) Perry Weitz and the law firm of Weitz &
Luxenberg, P.C.; and (d) all holders of Asbestos Personal Injury Claims in
Classes 2, 3 and 11 that are Pre-Petition Settlement Claimants or Participating
Claimants.

      "Second Indicated Date" means the 90th Trading Day after the second
anniversary of the Effective Date.

      "Secured Asbestos Claim" means: (a) an Asbestos Personal Injury Claim held
by a Qualified Claimant to the extent that such Asbestos Personal Injury Claim
is secured according to the provisions of the Collateral Trust Agreement; and
(b) the Claims Handling Fee.

      "Secured Claim" means any Claim that is (a) secured in whole or part, as
of the Petition Date, by a Lien which is valid, perfected and enforceable under
applicable law and is not subject to avoidance under the Bankruptcy Code or
applicable non-bankruptcy law, or (b) subject to setoff under section 553 of the
Bankruptcy Code, but, with respect to both (a) and (b) above, only to the extent
of the value, net of any senior lien, of the Estates' interest in the assets or
property securing any such Claim or the amount subject to setoff, as the case
may be.

      "Security Agreement" means that certain Superseding Security Agreement
entered into by Congoleum and the Collateral Trustee, dated June 11, 2003, as
the same may be amended from time to time.

      "Senior Note Claim" means any Claim of a holder of Senior Notes based upon
the Senior Notes.

      "Senior Notes" means the 8.625% Senior Notes Due 2008 issued by Congoleum
and outstanding as of the Petition Date.

      "Settling Asbestos Insurance Company" means any Asbestos Insurance Company
that has, before the conclusion of the Confirmation Hearing before the United
States Bankruptcy Court for the District of New Jersey, entered into an Asbestos
Insurance Settlement Agreement that is sufficiently comprehensive in the
determination of the Debtors to warrant treatment under section 524(g) of the
Bankruptcy Code, which determination by the Debtors will be indicated by the
inclusion of such Asbestos Insurance Company on a schedule of Settling Asbestos
Insurance Companies filed by the Debtors with such United States Bankruptcy
Court before the conclusion of the Confirmation Hearing before such United
States Bankruptcy Court and approved by such United States Bankruptcy Court.

      "Subsidiary Debtors" means, collectively, Congoleum Sales, Inc. and
Congoleum Fiscal, Inc.

      "Subsidiary Interests" means, collectively, the issued and outstanding
shares of stock of the Subsidiary Debtors as of the Petition Date and any
options, warrants or other contractual rights to acquire any shares of stock of
the Subsidiary Debtors as of the Petition Date.


                                       22
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Substantial Contribution Claim" shall have the meaning ascribed thereto
in Section 4.3 of the Plan.

      "TDP" means the trust distribution procedures for the Plan Trust,
substantially in the form attached as Exhibit "G" to the Plan, as it may be
modified from time to time in accordance with the terms of the TDP and the Plan
Trust Agreement.

      "Trading Day" means a day on which the principal national securities
exchange on which the shares of Reorganized Congoleum's common stock are listed
or admitted to trading is open for the transaction of business or, if the shares
of common stock are not listed or admitted to trading on any national securities
exchange, a Business Day.

      "Trust Advisory Committee" or "TAC" means a Trust Advisory Committee to be
formed to represent all holders of Asbestos Personal Injury Claims to advise the
Plan Trustees and to approve and consent to certain actions as specified herein
and in the Plan Trust Agreement, solely in its capacity as such.

      "Trusts" means the Plan Trust and the Collateral Trust, collectively.

      "United States Trustee" means the Office of the United States Trustee for
Region 3.

      "Unimpaired" means, with reference to a Claim or Interest, unimpaired
within the meaning of section 1124 of the Bankruptcy Code.

      "Unknown Asbestos Claim" means any Asbestos Personal Injury Claim that,
after the Confirmation Date, may be asserted in the future, so long as such
Asbestos Personal Injury Claim has not been previously asserted.

      "Unknown Asbestos Claimant" means any Person that, after the Confirmation
Date, may in the future assert an Unknown Asbestos Claim.

      "Unsecured Asbestos Personal Injury Claim" means any Asbestos Personal
Injury Claim other than a Secured Asbestos Claim. Unsecured Asbestos Personal
Injury Claims consist of Not Previously Determined Unsecured Asbestos Personal
Injury Claims and Previously Determined Unsecured Asbestos Personal Injury
Claims.

      "Unsecured Claim" means any Claim against any Debtor arising prior to the
Petition Date (regardless of whether such Claim is covered by insurance) to the
extent that such Claim is neither secured nor entitled to priority under the
Bankruptcy Code or by a Final Order of the Bankruptcy Court, including, but not
limited to: (a) any Claim arising from the rejection of an executory contract or
unexpired lease under section 365 of the Bankruptcy Code, and (b) any portion of
a Claim to the extent the value of the holder's interest in the applicable
Estate's interest in the property securing such Claim is less than the amount of
the Claim, or to the extent that the amount of the Claim subject to setoff is
less than the amount of the Claim, as determined pursuant to section 506(a) of
the Bankruptcy Code.

      "Voting Agent" means Logan & Company, Inc.

      "Wachovia" shall have the meaning ascribed to such term in Section 5.1(d).


                                       23
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "Workers' Compensation Claim" means any Claim (a) for benefits under a
state-mandated workers' compensation system, that a past, present, or future
employee of the Debtors and their predecessors is receiving, or may in the
future have a right to receive, and/or (b) for reimbursement brought by any
insurance company as a result of payments made to or for the benefit of such
employees and fees and expenses incurred under any insurance policies covering
such employee claims.

      1.3 Rules of Interpretation: Application of Definitions, Rules of
Construction, and Computation of Time. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
both the singular and the plural, and pronouns stated in the masculine,
feminine, or neuter gender shall include the masculine, feminine and neuter. For
purposes of the Plan: (a) any reference in the Plan to a contract, instrument,
release, indenture, or other agreement or document being in a particular form or
on particular terms and conditions means that the document shall be
substantially in that form or substantially on those terms and conditions; (b)
any reference in the Plan to an existing document or exhibit filed or to be
filed means the document or exhibit as it may have been or may be amended,
modified, or supplemented; (c) unless otherwise specified, all references in the
Plan to Sections, Schedules, and Exhibits are references to sections, schedules,
and exhibits of or to the Plan. Unless otherwise specified, the words "herein,"
"hereof," "hereto," "hereunder," and other words of similar meaning refer to the
Plan as a whole and not to any particular section, subsection, or clause
contained in the Plan. The rules of construction contained in section 102 of the
Bankruptcy Code shall apply to the construction of the Plan. The headings in the
Plan are for convenience of reference only and shall not expand, limit, or
otherwise affect the provisions of the Plan. Unless otherwise indicated herein,
all references to dollars are to United States dollars. Unless otherwise
expressly provided herein, in computing any period of time prescribed or allowed
by the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.

      1.4 Exhibits and Schedules. All exhibits and schedules are incorporated
into and are a part of the Plan as if set forth in full herein.

                                   ARTICLE II

                      COMPROMISES AND SETTLEMENTS OF CLAIMS

      2.1 Proposed Settlement Between the Debtors and Qualified Pre-Petition
Settlement Claimants. The Plan shall implement a compromise and settlement with
respect to the Asbestos Claims of the Qualified Pre-Petition Settlement
Claimants if the Class 2 Settlement is approved by the Bankruptcy Court.
Pursuant to Bankruptcy Rule 9019 and section 1123(b)(3) of the Bankruptcy Code
and consistent with section 1129 of the Bankruptcy Code, the Plan shall
constitute a motion for approval of, and the Confirmation Order may authorize
and constitute Bankruptcy Court approval of, the Class 2 Settlement.

            (a) On the Effective Date, pursuant to Bankruptcy Rule 9019 and
section 1123(b)(3) of the Bankruptcy Code, in full and final satisfaction of the
Secured Asbestos Claims of the Qualified Pre-Petition Settlement Claimants, and
for good and valuable consideration including the Qualified Pre-Petition
Settlement Claimants' agreement to the treatment specified in the Plan for the
Secured Asbestos Claims of the Qualified Pre-Petition Settlement Claimants and
the Claims and Interests asserted by other parties in interest, the Class 2
Settlement shall be effectuated in accordance with the following terms if the
Class 2 Settlement is approved by the Bankruptcy Court:


                                       24
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                  (i) Each Secured Asbestos Claim of a Qualified Pre-Petition
Settlement Claimant shall be deemed allowed by the Confirmation Order (except to
the extent that such Claim has been expunged) as undisputed, uncontingent and
liquidated in the reduced settlement amount of fifty percent (50%) of the amount
agreed under the respective Pre-Petition Settlement Agreement, which reduced
amount, without interest, shall be paid by the Plan Trust in accordance with the
TDP as soon after the Effective Date as possible.

                  (ii) Each Qualified Pre-Petition Settlement Claimant shall
release his, her or its rights, if any, to hold, exercise or enforce any lien,
security interest or payment priority under the respective Pre-Petition
Settlement Agreements and his, her or its rights, if any, to hold, exercise or
enforce any lien, security interest or payment priority under the Collateral
Trust Agreement and the Security Agreement in and to the Plan Trust Assets.

                  (iii) All Causes of Action pending against the Qualified
Pre-Petition Settlement Claimants, including the Avoidance Actions, shall be
dismissed with prejudice, as against the Qualified Pre-Petition Settlement
Claimants except for Causes of Action against any Qualified Pre-Petition
Settlement Claimant who asserts a right to hold, exercise or enforce any lien,
security interest or payment priority under any Pre-Petition Settlement
Agreement or any right to hold, exercise or enforce any lien, security interest
or payment priority under the Collateral Trust Agreement and the Security
Agreement in and to the Plan Trust Assets if it is determined that such Causes
of Action have not been resolved by the Plan, the Class 2 Settlement, the
Confirmation Order or otherwise (which excepted Causes of Action shall continue
and shall be transferred to the Plan Trust).

                  (iv) Other than rights to the treatment provided in Article V
of the Plan or as otherwise provided in the Plan or the Plan Documents, on and
after the Effective Date, each Qualified Pre-Petition Settlement Asbestos
Claimant shall be deemed to have unconditionally released the Reorganized
Debtors, the Released Non-Debtor Parties, the Pre-Petition Asbestos Claimants'
Committee, the Asbestos Claimants' Committee, the Collateral Trustee, the
Claimants' Representative and their current and former Representatives from any
and all Claims, obligations, rights, suits, damages, causes of action, remedies,
and liabilities whatsoever, whether known or unknown, foreseen or unforeseen,
existing or hereafter arising, in law, equity, or otherwise, that such Entity
would have been legally entitled to assert (whether individually or
collectively), based in whole or in part upon any act or omission, transaction,
agreement, event, or other occurrence taking place on or before the Effective
Date by the Debtors or the Reorganized Debtors, the Reorganization Cases, or the
negotiation, formulation, and preparation of the Plan, the Plan Documents or any
related agreements, instruments or other documents. For the avoidance of doubt,
in no event shall any such party be released in the case of the gross negligence
or willful misconduct of such party.

            (b) In the event that the Class 2 Settlement is not approved by a
Final Order of the Bankruptcy Court, agreement by the Qualified Pre-Petition
Settlement Claimants and the Debtors to the Class 2 Settlement shall not be
deemed an admission or used as evidence by any party, all Causes of Action
pending against the Qualified Pre-Petition Settlement Claimants and all defenses
thereto shall be fully reserved and transferred to the Plan Trust; and the
Bankruptcy Court shall determine the validity and priority of each such Class 2
Secured Asbestos Claim after the Effective Date.


                                       25
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      2.2 Proposed Settlement Between the Debtors and the Qualified
Participating Claimants. The Plan shall implement a compromise and settlement
with respect to the Asbestos Claims of the Qualified Participating Claimants if
the Class 3 and 11 Settlement is approved by the Bankruptcy Court. Pursuant to
Bankruptcy Rule 9019 and section 1123(b)(3) of the Bankruptcy Code and
consistent with section 1129 of the Bankruptcy Code, the Plan shall constitute a
motion for approval of, and the Confirmation Order may authorize and constitute
Bankruptcy Court approval of, the Class 3 and 11 Settlement.

            (a) On the Effective Date, pursuant to Bankruptcy Rule 9019 and
section 1123(b)(3) of the Bankruptcy Code, in full and final satisfaction of the
Asbestos Claims of the Qualified Participating Claimants, and for good and
valuable consideration including the Qualified Participating Claimants'
agreement to the treatment specified in the Plan for the Asbestos Claims of the
Qualified Participating Claimants and the Claims and Interests asserted by other
parties in interest, the Class 3 and 11 Settlement shall be effectuated in
accordance with the following terms if the Class 3 and 11 Settlement is approved
by the Bankruptcy Court:

                  (i) Each Asbestos Claim of a Qualified Participating Claimant
shall be deemed allowed by the Confirmation Order (except to the extent that
such Claim has been expunged) as undisputed, uncontingent and liquidated in the
total and maximum amount of $250, which amount shall be paid by the Plan Trust
pari passu with the "Other Asbestos Disease (Level 1 - Cash Discount Payment)"
Asbestos Claims in accordance with the TDP as soon after the Effective Date as
practicable; provided, however, that each Qualified Participating Claimant may
elect to forbear from exercising its right to such $250 amount and any and all
rights under the Claimant Agreement, the Collateral Trust Agreement and the
Security Agreement, in which case such forbearing Qualified Participating
Claimant shall receive the treatment afforded to Class 10 - Not Previously
Determined Unsecured Asbestos Personal Injury Claims.

                  (ii) Each Qualified Participating Claimant shall release his,
her or its rights, if any, to hold, exercise or enforce any lien, security
interest or payment priority under the Claimant Agreement and his, her or its
rights, if any, to hold, exercise or enforce any lien, security interest or
payment priority under the Collateral Trust Agreement and the Security Agreement
in and to the Plan Trust Assets.

                  (iii) All Causes of Action pending against the Qualified
Participating Claimants, including the Avoidance Actions, shall be dismissed
with prejudice, as against the Qualified Participating Claimants except for
Causes of Action against any Qualified Participating Claimant who asserts a
right to hold, exercise or enforce any lien, security interest or payment
priority under the Claimant Agreement or any right to hold, exercise or enforce
any lien, security interest or payment priority under the Collateral Trust
Agreement and the Security Agreement in and to the Plan Trust Assets if it is
determined that such Causes of Action have not been resolved by the Plan, the
Class 3 and 11 Settlement, the Confirmation Order or otherwise (which excepted
Causes of Action shall continue and shall be transferred to the Plan Trust).

                  (iv) Other than rights to the treatment provided in Article V
of the Plan or as otherwise provided in the Plan or the Plan Documents, on and
after the Effective Date, each Qualified Participating Claimant shall be deemed
to have unconditionally released the Reorganized Debtors, the Released
Non-Debtor Parties, the Pre-Petition Asbestos Claimants' Committee, the Asbestos
Claimants' Committee, the Collateral Trustee, the Claimants' Representative and
their current and former Representatives from any and all Claims, obligations,
rights, suits, damages, causes of action, remedies, and liabilities whatsoever,
whether known or unknown, foreseen or unforeseen, existing or hereafter arising,
in law, equity, or otherwise, that such Entity would have been legally entitled
to assert (whether individually or collectively), based in whole or in part upon
any act or omission, transaction, agreement, event, or other occurrence taking
place on or before the Effective Date by the Debtors or the Reorganized Debtors,
the Reorganization Cases, or the negotiation, formulation, and preparation of
the Plan, the Plan Documents or any related agreements, instruments or other
documents. For the avoidance of doubt, in no event shall any such party be
released in the case of the gross negligence or willful misconduct of such
party.


                                       26
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (b) In the event that the Class 3 and 11 Settlement is not approved
by a Final Order of the Bankruptcy Court, agreement by the Qualified
Participating Claimants and the Debtors to the Class 3 and 11 Settlement shall
not be deemed an admission or used as evidence by any party, all Causes of
Action pending against the Qualified Participating Claimants and all defenses
thereto shall be fully reserved and transferred to the Plan Trust; and the
Bankruptcy Court shall determine the validity and priority of each such Class 3
Secured Asbestos Claim and Class 11 Previously Determined Unsecured Asbestos
Personal Injury Claim after the Effective Date.

                                  ARTICLE III

                     CLASSIFICATION OF CLAIMS AND INTERESTS

      3.1 Generally. Pursuant to section 1122 of the Bankruptcy Code, set forth
below is a designation of Classes of Claims and Interests. A Claim or Interest
is classified in a particular Class only to the extent that the Claim or
Interest qualifies within the description of the Class and is classified in a
different Class to the extent the Claim or Interest qualifies within the
description of that different Class. Solely for voting purposes, Claims against
each Estate are classified as Claims against the Estates as a whole.

      3.2 Unclassified Claims. In accordance with section 1123(a)(1) of the
Bankruptcy Code, Administrative Claims, including Substantial Contribution
Claims, and Priority Tax Claims are not classified and are excluded from the
Classes set forth in Section 3.3 of the Plan. The treatment accorded
Administrative Claims, Substantial Contribution Claims and Priority Tax Claims
is set forth in Article IV of the Plan.

      3.3 Classes. In accordance with section 1122 of the Bankruptcy Code, the
following constitute the Classes of Claims against and Interests in the Debtors:

            (a) Class 1 - Priority Claims. Class 1 consists of all Priority
Claims. Class 1 is Unimpaired.

            (b) Class 2 - Secured Asbestos Claims of Qualified Pre-Petition
Settlement Claimants. Class 2 consists of all Secured Asbestos Claims of
Qualified Pre-Petition Settlement Claimants to the extent secured under the
terms of the Collateral Trust Agreement. Class 2 is Impaired.


                                       27
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (c) Class 3 - Secured Asbestos Claims of Qualified Participating
Claimants. Class 3 consists of all Secured Asbestos Claims of Qualified
Participating Claimants to the extent secured under the terms of the Collateral
Trust Agreement. Class 3 is Impaired.

            (d) Class 4 - Lender Secured Claims. Class 4 consists of the Lender
Secured Claims. Class 4 is Unimpaired.

            (e) Class 5 - Other Secured Claims. Class 5 consists of all Other
Secured Claims, each of which will be within a separate subclass, with each such
subclass to be deemed a separate Class for all purposes. Class 5 is (or these
subclasses are) Unimpaired.

            (f) Class 6 - Senior Note Claims. Class 6 consists of all Senior
Note Claims. Class 6 is Impaired.

            (g) Class 7 - General Unsecured Claims. Class 7 consists of all
General Unsecured Claims. Class 7 is Unimpaired.

            (h) Class 8 - Workers' Compensation Claims. Class 8 consists of all
Workers' Compensation Claims. Class 8 is Unimpaired.

            (i) Class 9 - ABI Claims. Class 9 consists of all ABI Claims. Class
9 is Impaired.

            (j) Class 10 - Not Previously Determined Unsecured Asbestos Personal
Injury Claims. Class 10 consists of all Not Previously Determined Unsecured
Asbestos Personal Injury Claims. Class 10 is Impaired.

            (k) Class 11 - Previously Determined Unsecured Asbestos Personal
Injury Claims. Class 11 consists of all Previously Determined Unsecured Asbestos
Personal Injury Claims. Class 11 is Impaired.

            (l) Class 12 - Asbestos Property Damage Claims. Class 12 consists of
all Asbestos Property Damage Claims. Class 12 is Impaired.

            (m) Class 13 - Congoleum Interests. Class 13 consists of all
Congoleum Interests. Class 13 is Impaired.

            (n) Class 14 - Subsidiary Interests. Class 14 consists of all
Subsidiary Interests. Class 14 is Unimpaired.


                                       28
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                                   ARTICLE IV

                           TREATMENT OF ADMINISTRATIVE
                         CLAIMS AND PRIORITY TAX CLAIMS

      4.1 Administrative Claims. On the Distribution Date, each holder of an
Allowed Administrative Claim, except as otherwise provided for herein, and
subject to the requirements of Section 14.11 of the Plan, shall receive, in full
satisfaction, settlement, release, extinguishment, and discharge of such Allowed
Administrative Claim, (a) Cash equal to the unpaid portion of such Allowed
Administrative Claim or (b) such different treatment as to which the applicable
Debtor and such holder shall have agreed upon in writing; provided, however,
that Allowed Administrative Claims representing (i) post-petition liabilities
incurred in the ordinary course of business by the Debtors and (ii)
post-petition contractual liabilities arising under loans or advances to the
Debtors, whether or not incurred in the ordinary course of business, shall be
paid by the Reorganized Debtors in accordance with the terms and conditions of
the particular transactions relating to such liabilities and any agreements
relating thereto.

      4.2 Priority Tax Claims. On the Distribution Date, each holder of an
Allowed Priority Tax Claim shall receive, in full satisfaction, settlement,
release, and discharge of and in exchange for such Allowed Priority Tax Claim,
(a) Cash equal to the unpaid portion of such Allowed Priority Tax Claim, (b)
such different treatment as to which the applicable Debtor and such holder shall
have agreed upon in writing, or (c) at the Reorganized Debtors' sole discretion,
deferred Cash payments having a value, as of the Effective Date, equal to such
Allowed Priority Tax Claim, over a period not exceeding six (6) years after the
date of assessment of such Allowed Priority Tax Claim.

      4.3 Substantial Contribution Claims. Any Entity who requests compensation
or expense reimbursement for making a substantial contribution in the
Reorganization Cases pursuant to sections 503(b)(3), (4) and (5) of the
Bankruptcy Code ("Substantial Contribution Claim") must file an application with
the clerk of the Bankruptcy Court on or before a date that is sixty (60) days
subsequent to the Effective Date and serve such application on counsel for the
Debtors, counsel for the Bondholders' Committee, counsel for the Futures
Representative and counsel for the Asbestos Claimants' Committee and on all
other parties as otherwise required by the Bankruptcy Court and the Bankruptcy
Code, or be forever barred from seeking such compensation or expense
reimbursement. All Allowed Substantial Contribution Claims shall be paid by the
Reorganized Debtors within sixty (60) days of allowance by the Bankruptcy Court.

                                   ARTICLE V

                  TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS

      5.1 Claims and Interests.

            (a) Class 1 - Priority Claims. On the Distribution Date, each holder
of an Allowed Priority Claim shall receive, in full satisfaction, settlement,
release, and discharge of and in exchange for such Allowed Priority Claim,
either (i) the Allowed Amount of its Priority Claim, in Cash, or (ii) such
different treatment as may be agreed to by such holder and the Reorganized
Debtors. Class 1 Claims are Unimpaired and the holders of Class 1 Claims are
deemed to have accepted the Plan and, accordingly, are not entitled to vote on
the Plan.


                                       29
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (b) Class 2 - Secured Asbestos Claims of Qualified Pre-Petition
Settlement Claimants. As of the Effective Date, all liability for all Secured
Asbestos Claims of Qualified Pre-Petition Settlement Claimants shall be assumed,
automatically and without further act or deed, by the Plan Trust and the
Reorganized Debtors shall have no liability therefor. Each such Qualified
Pre-Petition Settlement Claimant will, in respect of its Secured Asbestos Claim
(except to the extent that such Claim has been expunged), be paid by the Plan
Trust, in full satisfaction, settlement, release, and discharge of and in
exchange for such Claim, in Cash in accordance with the provisions of the Plan
Documents.

            Effective as of the Effective Date and subject to entry of a Final
Order of the Bankruptcy Court approving the Class 2 Settlement, each Qualified
Pre-Petition Settlement Claimant shall have irrevocably consented or be deemed
to have irrevocably consented to (i) release his, her or its rights, if any, to
hold, exercise or enforce any lien, security interest or payment priority under
the respective Pre-Petition Settlement Agreements and his, her or its rights, if
any, to hold, exercise or enforce any lien, security interest or payment
priority under the Collateral Trust Agreement and the Security Agreement in and
to Plan Trust Assets; and (ii) reduce the amount of its Secured Asbestos Claim
to 50% of the amount agreed under the respective Pre-Petition Settlement
Agreement, which reduced amount shall be paid by the Plan Trust in accordance
with the TDP as soon after the Effective Date as practicable. In exchange
therefor, all Causes of Action pending against the Qualified Pre-Petition
Settlement Claimants shall be dismissed with prejudice, as against the Qualified
Pre-Petition Settlement Claimants, except for Causes of Action against any
Qualified Pre-Petition Settlement Claimant who asserts a right to hold, exercise
or enforce any lien, security interest or payment priority under any
Pre-Petition Settlement Agreement or any right to hold, exercise or enforce any
lien, security interest or payment priority under the Collateral Trust Agreement
and the Security Agreement in and to the Plan Trust Assets if it is determined
that such Causes of Action have not been resolved by the Plan, the Class 2
Settlement, the Confirmation Order or otherwise (which excepted Causes of Action
shall continue and shall be transferred to the Plan Trust). In the event that
the Class 2 Settlement is not approved by a Final Order of the Bankruptcy Court,
agreement by the Qualified Pre-Petition Settlement Claimants and the Debtors to
the Class 2 Settlement shall not be deemed an admission or used as evidence by
any party, all Causes of Action pending against the Qualified Pre-Petition
Settlement Claimants and all defenses thereto shall be fully reserved and the
Bankruptcy Court shall determine and allow or disallow the amount and priority
of each such Class 2 Secured Asbestos Claim after the Effective Date.

            Class 2 is Impaired and holders of Class 2 Claims are entitled to
vote to accept or reject the Plan.

            (c) Class 3 - Secured Asbestos Claims of Qualified Participating
Claimants. As of the Effective Date, all liability for all Secured Asbestos
Claims of Qualified Participating Claimants shall be assumed, automatically and
without further act or deed, by the Plan Trust and the Reorganized Debtors shall
have no liability therefor. Each such Qualified Participating Claimant will, in
respect of its Secured Asbestos Claim (except to the extent that such Claim has
been expunged), be paid by the Plan Trust, in full satisfaction, settlement,
release, and discharge of and in exchange for such Claim, in Cash in accordance
with the provisions of the Plan Documents.


                                       30
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            Effective as of the Effective Date and subject to entry of a Final
Order of the Bankruptcy Court approving the Class 3 and 11 Settlement, each
Qualified Participating Claimant shall have irrevocably consented or be deemed
to have irrevocably consented to (i) release his, her or its rights, if any, to
hold, exercise or enforce any lien, security interest or payment priority under
the Claimant Agreement and his, her or its rights, if any, to hold, exercise or
enforce any lien, security interest or payment priority under the Collateral
Trust Agreement and the Security Agreement in and to the Plan Trust Assets; and
(ii) reduce the amount of its entire Asbestos Claim to the total and maximum
amount of $250, which amount shall be paid by the Plan Trust pari passu with the
"Other Asbestos Disease (Level 1 - Cash Discount Payment)" Asbestos Claims in
accordance with the TDP as soon after the Effective Date as practicable;
provided, however, that each such Qualified Participating Claimant may elect to
irrevocably consent to the Forbearance of his, her or its right to (x) such $250
amount and (y) any and all rights under the Claimant Agreement, the Collateral
Trust Agreement and the Security Agreement, in which case such forbearing
Qualified Participating Claimant shall receive the treatment afforded to Class
10 - Not Previously Determined Unsecured Asbestos Personal Injury Claims on
account of its Class 3 and Class 11 Asbestos Personal Injury Claim. In exchange
therefor, all Causes of Action pending against the Qualified Participating
Claimants shall be dismissed with prejudice, as against the Qualified
Participating Claimants, except for Causes of Action against any Qualified
Participating Claimant who asserts a right to hold, exercise or enforce any
lien, security interest or payment priority under the Claimant Agreement or any
right to hold, exercise or enforce any lien, security interest or payment
priority under the Collateral Trust Agreement and the Security Agreement in and
to the Plan Trust Assets if it is determined that such Causes of Action have not
been resolved by the Plan, the Class 3 and 11 Settlement, the Confirmation Order
or otherwise (which excepted Causes of Action shall continue and shall be
transferred to the Plan Trust). In the event that the Class 3 and 11 Settlement
is not approved by a Final Order of the Bankruptcy Court, agreement by the
Qualified Participating Claimants and the Debtors to the Class 3 and 11
Settlement shall not be deemed an admission or used as evidence by any party,
all Causes of Action pending against the Qualified Participating Claimants and
all defenses thereto shall be fully reserved and the Bankruptcy Court shall
determine and allow or disallow the amount and priority of each such Class 3
Secured Asbestos Claim after the Effective Date.

            Class 3 is Impaired and holders of Class 3 Claims are entitled to
vote to accept or reject the Plan.

            (d) Class 4 - Lender Secured Claims. On the Effective Date, the
Existing Credit Agreement, as ratified, amended and approved in accordance with
the Financing Order (as hereinafter defined), will be amended and restated in
accordance with the terms of the Amended Credit Agreement and the holder of the
Allowed Lender Secured Claim shall be entitled to all the rights and benefits
under the Amended Credit Agreement and related documents. The Amended Credit
Agreement will be on terms and conditions similar to the Existing Credit
Agreement (except that the Amended Credit Agreement may be modified to provide
for a lien on or security interest in real estate and any other collateral
securing the New Senior Notes) and mutually acceptable to the Debtors and
Wachovia Bank, National Association, successor by merger to Congress Financial


                                       31
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


Corporation ("Wachovia"). Alternatively, if, as of the Confirmation Hearing, the
Debtors and the holder of the Lender Secured Claim have not agreed upon the
terms of the Amended Credit Agreement, the Lender Secured Claim shall be paid in
full indefeasibly on the Effective Date or as soon thereafter as practicable and
Wachovia shall be released from any and all liabilities and causes of action in
accordance with the Final Order (1) Authorizing Debtors' Use of Cash Collateral,
(2) Authorizing Debtors to Obtain Post-Petition Financing, (3) Granting Senior
Liens and Priority Administrative Expense Status Pursuant to 11 U.S.C. ss.ss.105
and 364(c), (4) Modifying the Automatic Stay Pursuant to 11 U.S.C. ss.362, and
(5) Authorizing Debtors to Enter into Agreements with Congress Financial
Corporation [docket no. 435](the "Financing Order"). Nothing herein requires
that Wachovia permit the use of collateral, including cash collateral, or
finance the Debtors after Confirmation other than with Wachovia's prior written
consent. Class 4 is Unimpaired and the holder of the Class 4 Claim is deemed to
have accepted the Plan and, accordingly, is not required to vote on the Plan.
Notwithstanding anything to the contrary contained in the Plan, the Confirmation
Order, or otherwise, the Obligations under and as defined in the Existing Credit
Agreement (as the same has heretofore been or may hereafter be amended,
modified, ratified, restated, extended, renewed or replaced) and all the rights,
claims, liens and priorities and other protections provided to Wachovia shall
survive the Confirmation Date and continue in full force and effect in
accordance with the terms and conditions of the Financing Order and the Existing
Credit Agreement.

            (e) Class 5 - Other Secured Claims. Each holder of an Allowed Other
Secured Claim shall retain unaltered the legal, equitable and contractual rights
(including, but not limited to, any Liens that secure such Claim) to which such
Claim entitles such holder and such Allowed Other Secured Claim shall be
Reinstated on the Effective Date. Class 5 is Unimpaired and the holders of Class
5 Claims are deemed to have accepted the Plan and, accordingly, are not entitled
to vote on the Plan.

            (f) Class 6 - Senior Note Claims. On the Effective Date, provided
that the holders of the Senior Note Claims (as a Class) vote to accept the Plan
by the requisite number and amount required by the Bankruptcy Code, the Senior
Notes shall be cancelled and Reorganized Congoleum shall issue the New Senior
Notes. In the event that the AIG Contingencies and Conditions are satisfied, the
Additional Bondholder Recovery shall be immediately paid to holders of the
Senior Note Claims once the Plan Trust has received or obtained the lesser of
(i) $77.1 million in aggregate Cash and (ii) the aggregate amount in Cash of the
sum of (x) $5 million and (y) the Plan Trust's liability (including the amounts,
if any, held in reserve by the Plan Trust pursuant to Section 3.2 of the Plan
Trust Agreement) on account of the Asbestos Personal Injury Claims of Qualified
Claimants, Allowed Asbestos Property Damage Claims, the Plan Trust Note, Plan
Trust Expenses and the initial contribution of $600,000 to the GHR/Kenesis
Litigation Trust. The New Senior Notes shall be secured by a lien on or security
interest in all of the Reorganized Debtors' assets (subject to the limitations
contained in the New Indenture, and excluding the GHR/Kenesis Actions and any
Causes of Action against any Bankruptcy Professionals), which security shall be
subordinate in priority only to the security for the Amended Credit Agreement or
any other working capital exit facility entered into by the Reorganized Debtors,
provided that such Amended Credit Agreement or other working capital exit
facility contains terms similar to the Existing Credit Agreement (except that
the Amended Credit Agreement or other working capital exit facility may be
modified to provide for a lien on or security interest in real estate and any
other collateral securing the New Senior Notes). The liens securing the New
Senior Notes shall not be pari passu with any other liens or security interests.
The New Senior Notes shall be guaranteed by each of the Restricted Subsidiaries
(as that term is defined in the New Indenture). The New Senior Notes shall be
contractually senior in priority and right of payment to amounts due under the
New Convertible Security and the Plan Trust Note; provided, however, that in the
absence of a default under the New Indenture, payments due under the Plan Trust
Note and the New Convertible Security shall be made in the ordinary course in
accordance with their respective contractual terms.


                                       32
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            In the event that the holders of the Senior Note Claims (as a Class)
do not vote to accept the Plan and the treatment afforded hereinabove by the
requisite number and amount required by the Bankruptcy Code, then the Senior
Notes shall be cancelled and the Senior Note Claims shall receive their pro rata
share of the common stock of Reorganized Congoleum with the Plan Trust, as
determined by the Bankruptcy Court in the Confirmation Order (the "Allocation
Proceeding"). The initial hearing on any Allocation Proceeding shall not occur
until at least 45 days after the balloting report of the Voting Agent is filed
with the Bankruptcy Court.

            In no event shall any distribution to the holders of the Senior Note
Claims provided for herein be on account of any accrued and unpaid interest on
account of the Senior Notes nor shall the holders of the Senior Note Claims have
any right to any Asbestos Insurance Rights, Asbestos Insurance Action
Recoveries, the GHR/Kenesis Actions or any Causes of Action against any
Bankruptcy Professional.

            Class 6 is Impaired and holders of Class 6 Claims are entitled to
vote to accept or reject the Plan.

            (g) Class 7 - General Unsecured Claims. Each holder of an Allowed
General Unsecured Claim shall retain unaltered the legal, equitable and
contractual rights to which such Claim entitles such holder and such Allowed
General Unsecured Claim shall be Reinstated on the Effective Date. Class 7 is
Unimpaired and the holders of Class 7 Claims are deemed to have accepted the
Plan and, accordingly, are not entitled to vote on the Plan.

            (h) Class 8 - Workers' Compensation Claims. Each holder of an
Allowed Workers' Compensation Claim shall be paid in the ordinary course
pursuant to such rights that exist under any state workers' compensation system
or laws applicable to such Claims. Class 8 is Unimpaired and the holders of
Class 8 Claims are deemed to have accepted the Plan and, accordingly, are not
entitled to vote on the Plan.

            (i) Class 9 - ABI Claims. On the Effective Date, the ABI Claims
shall receive the following treatment:

                  (i) all ABI Asbestos Personal Injury Indemnity Claims, ABI
Asbestos Property Damage Indemnity Claims and ABI Asbestos Claims shall be
deemed Disallowed and expunged; and

                  (ii) all ABI Claims (other than ABI Asbestos Personal Injury
Indemnity Claims, ABI Asbestos Property Damage Indemnity Claims and ABI Asbestos
Claims) shall be Reinstated, and shall be payable by, and enforceable
obligations of, the Reorganized Debtors.


                                       33
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                  Class 9 is Impaired and the holder of the Class 9 Claims is
entitled to vote to accept or reject the Plan. Notwithstanding anything in the
Plan, the holder of the Class 9 Claims shall not be required to file a Proof of
Claim.

            (j) Class 10 - Not Previously Determined Unsecured Asbestos Personal
Injury Claims. As of the Effective Date, all liability for all Not Previously
Determined Unsecured Asbestos Personal Injury Claims as well as liability for
all future Demands and Unknown Asbestos Claims shall be assumed, automatically
and without further act or deed, by the Plan Trust and the Reorganized Debtors
shall have no liability therefor. Each Not Previously Determined Unsecured
Asbestos Personal Injury Claim, future Demand and Unknown Asbestos Claim shall
be determined, liquidated and treated pursuant to the Plan Trust Agreement and
the TDP. The TDP shall apply to all holders of Not Previously Determined
Unsecured Asbestos Personal Injury Claims, Unknown Asbestos Claims and Demands,
including any such holder who elects to resort to the legal system and obtains a
judgment for money damages. Class 10 is Impaired and holders of Class 10 Claims
are entitled to vote to accept or reject the Plan.

            (k) Class 11 - Previously Determined Unsecured Asbestos Personal
Injury Claims. As of the Effective Date, all liability for all Previously
Determined Unsecured Asbestos Personal Injury Claims shall be deemed satisfied
in their entirety and shall not receive any additional payment or consideration
under the Plan other than as provided in Section 5.1(c) of the Plan and the
Class 3 and 11 Settlement. Class 11 is Impaired and holders of Class 11 Claims
are entitled to vote to accept or reject the Plan.

            (l) Class 12 - Asbestos Property Damage Claims. As of the Effective
Date, all liability for all Allowed Asbestos Property Damage Claims shall be
assumed, automatically and without further act or deed, by the Plan Trust and
the Reorganized Debtors shall have no liability therefor. Each Allowed Asbestos
Property Damage Claim shall be paid solely from the Asbestos Property Damage
Claim Sub-Account on account of the unpaid Allowed Amount of such Claim pursuant
to the Plan Trust Agreement. After the assets in the Asbestos Property Damage
Claim Sub-Account have been exhausted, the Plan Trust shall have no further
liability or obligation for or in respect of any Asbestos Property Damage
Claims. All Asbestos Property Damage Claims as to which a Proof of Claim was not
filed prior to the expiration of the Asbestos Property Damage Claim Bar Date
shall be deemed Disallowed. Class 12 Claims are Impaired and the holders of
Class 12 Claims are entitled to vote to accept or reject the Plan.

            (m) Class 13 - Congoleum Interests. On the Effective Date, in the
event that the holders of the Senior Note Claims (Class 6) vote (as a Class) to
accept the Plan by the requisite number and amount required by the Bankruptcy
Code, the holders of the Congoleum Interests shall retain such Interests;
provided, however, on the Effective Date, the New Class A Common Stock and the
New Convertible Security, which shall be contributed to the Plan Trust, shall be
issued.

            In the event that the holders of the Senior Note Claims do not vote
(as a Class) to accept the Plan by the requisite number and amount required by
the Bankruptcy Code, the Congoleum Interests shall be cancelled, the holders of
the Congoleum Interests shall retain nothing on account of such Interests and
the common stock of Reorganized Congoleum shall be allocated between the Plan
Trust and the Senior Note Claims on a pro rata basis by the Bankruptcy Court in
the Confirmation Order. Class 13 is Impaired and the holders of Class 13
Congoleum Interests are entitled to vote to accept or reject the Plan.


                                       34
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (n) Class 14 - Subsidiary Interests. On the Effective Date, the
holder of the Subsidiary Interests shall retain such Subsidiary Interests. Class
14 is Unimpaired and the holder of Class 14 Subsidiary Interests is deemed to
have accepted the Plan, and accordingly, is not entitled to vote on the Plan.

      5.2 Reservation of Rights Regarding Claims. Except as otherwise explicitly
provided in the Plan, nothing shall affect the Debtors' or the Reorganized
Debtors' rights and defenses, both legal and equitable, with respect to any
Claims, including, but not limited to, all rights with respect to legal and
equitable defenses to alleged rights of setoff or recoupment. Except as
otherwise explicitly provided in the Plan, nothing shall affect any of the Plan
Trust's rights and defenses, both legal and equitable, with respect to any
Asbestos Claims, including, but not limited to, all rights with respect to legal
and equitable defenses to alleged rights of setoff or recoupment.

                                   ARTICLE VI

                           IMPLEMENTATION OF THE PLAN

      6.1 The Plan Trust and the GHR/Kenesis Litigation Trust.

            (a) Establishment and Purpose of the Plan Trust. On any date between
the Confirmation Date and the Effective Date, the Plan Trust shall be
established in accordance with the Plan Trust Agreement. The Plan Trust shall be
a "qualified settlement fund" within the meaning of section 468B of the IRC and
the Treasury Regulations promulgated thereunder. The purpose of the Plan Trust
shall be to, among other things: (i) pay all Plan Trust Asbestos Claims in
accordance with the Plan, the Plan Trust Agreement, the TDP and the Confirmation
Order; (ii) preserve, hold, manage, and maximize the Plan Trust Assets for use
in paying and satisfying Plan Trust Asbestos Claims in accordance with the Plan
Trust Agreement and the TDP; (iii) prosecute, settle and manage the disposition
of the Asbestos In-Place Insurance Coverage; and (iv) prosecute, settle, and
manage Asbestos Insurance Actions and Direct Actions.

            (b) Funding and Receipt of Plan Trust Assets. On the Effective Date,
Reorganized Congoleum shall issue the New Class A Common Stock (including any
shares of New Class A Common Stock required to be issued by Reorganized
Congoleum in accordance with Exhibit E to the Plan), the Plan Trust Note and the
New Convertible Security (in the event that the Senior Note Claims (as a Class)
vote to accept the Plan) or the Plan Trust Common Stock (in the event that the
Senior Note Claims (as a Class) do not vote to accept the Plan) to be issued to
the Plan Trust in accordance with the Plan. Reorganized Congoleum shall issue
any additional shares of New Class A Common Stock required to be issued in
accordance with Exhibit E to the Plan and shall otherwise comply with Exhibit E
to the Plan for so long as Exhibit E is applicable (but only in the event that
the Senior Note Claims (as a Class) vote to accept the Plan). Reorganized
Congoleum's obligations to the Plan Trust on account of the Plan Trust Note and
the New Convertible Security shall be secured only by a pledge of Reorganized


                                       35
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


Congoleum's interest in all proceeds of the GHR/Kenesis Actions (after payment
of fees and reimbursement of expenses of the GHR/Kenesis Litigation Trust) and
all such proceeds shall be used by Reorganized Congoleum as follows: (i) first,
to pay principal and accrued interest under the Plan Trust Note until such time
as the Plan Trust Note has been paid in full; (ii) second, to pay principal and
accrued interest under the New Convertible Security until such time as the New
Convertible Security has been paid in full or is no longer outstanding;
provided, however, that the New Convertible Security shall not be satisfied in
full or retired before the Reset Date and any proceeds of the GHR/Kenesis
Actions that are received by the Plan Trust on account of the New Convertible
Security prior to the Reset Date shall be held by the Plan Trust in an
interest-bearing account and applied to amounts outstanding under the New
Convertible Security immediately after the Reset Date; and (iii) thereafter, the
GHR/Kenesis Litigation Trust shall distribute any remaining or further proceeds
to Reorganized Congoleum. All Plan Trust Assets shall be transferred to, vested
in, and assumed by, the Plan Trust free and clear of all Claims, Liens and
encumbrances; provided, however, that to the extent that certain Plan Trust
Assets, because of their nature or because they will accrue subsequent to the
Effective Date, cannot be transferred to, vested in, and assumed by the Plan
Trust on the Effective Date, such Plan Trust Assets shall be transferred to,
vested in, and assumed by the Plan Trust free and clear of Claims, Liens and
encumbrances, as soon as practicable after the Effective Date. On the Effective
Date, ABI shall deliver the ABI Contribution to the Plan Trust by wire transfer
of immediately available funds.

            (c) Insurance Assignment Agreement. On the Effective Date, the
Debtors shall deliver the Insurance Assignment Agreement attached hereto as
Exhibit "C." Such agreement shall be valid, binding and enforceable. The
Insurance Assignment Agreement shall transfer claims and rights set forth
   therein as Debtors may have, subject to any and all Asbestos Insurer Coverage
Defenses.

            (d) Creation of Asbestos Property Damage Claim Sub-Account. On the
Effective Date, the Plan Trust shall cause the Asbestos Property Damage
Insurance Rights and any proceeds thereof, including $1.2 million from the
proceeds of that certain settlement agreement between the Debtors and Liberty
Mutual Insurance Company approved by the Bankruptcy Court by order dated July
30, 2004, to be held in the Asbestos Property Damage Claim Sub-Account. In
accordance with the terms of the Plan Trust Agreement, the Plan Trustees shall
be permitted to transfer monies from the Asbestos Property Damage Claim
Sub-Account to the Asbestos Personal Injury Claim Sub-Account, from time to
time, to the extent that the funds in the Asbestos Property Damage Claim
Sub-Account exceed the aggregate amount of all unpaid Asbestos Property Damage
Claims that have been filed prior to the Asbestos Property Damage Claim Bar
Date, and a reasonable reserve for Plan Trust Expenses and indemnification costs
or expenses, in either case, related to Asbestos Property Damage Claims.

            (e) Transfer of Assets and Dissolution of the Collateral Trust. On
the Effective Date, pursuant to the terms of the Collateral Trust Agreement, all
of the Collateral Trust's right, title and interest in and to any assets or
properties then held by the Collateral Trust shall automatically be transferred
and assigned to, and vest in, the Plan Trust, free and clear of all Claims,
Liens and encumbrances, and all rights with respect to such assets and
properties shall be enforceable by the Plan Trust.


                                       36
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (f) Assumption of Liabilities by the Plan Trust. On the Effective
Date, all liabilities, obligations and responsibilities relating to all Plan
Trust Asbestos Claims and Asbestos Expenses shall be transferred to the Plan
Trust as set forth herein and the Plan Trustees, on behalf of the Plan Trust,
shall expressly assume all liability for all Plan Trust Asbestos Claims, Demands
and Asbestos Expenses as set forth herein, subject to the provisions of the Plan
Trust Agreement. With the exception of the liabilities identified hereinabove in
this Section 6.1(f), in no event shall the Plan Trust assume any of the
liabilities, obligations or responsibilities of the Debtors or the Reorganized
Debtors.

            (g) Discharge of Liabilities to Holders of Asbestos Claims. Except
as provided in the Plan and the Confirmation Order, the transfer to, vesting in,
and assumption by the Plan Trust of the Plan Trust Assets as contemplated by the
Plan shall, among other things, discharge the Debtors and the Reorganized
Debtors from and in respect of all Plan Trust Asbestos Claims.

            (h) TDP. From and after the Effective Date, the Plan Trust shall pay
the Plan Trust Asbestos Claims in accordance with the Plan Trust Agreement, the
TDP and, if approved by Final Order of the Bankruptcy Court, the Class 2
Settlement and the Class 3 and 11 Settlement. The Plan Trustees shall have the
power to administer, amend, supplement or modify the TDP in accordance with the
terms thereof.

            (i) Payment of Allowed Asbestos Property Damage Claims. From and
after the Effective Date, the Plan Trust shall cause the payment of Allowed
Asbestos Property Damage Claims from the Asbestos Property Damage Claim
Sub-Account in accordance with the Plan Trust Agreement, provided, however that
once the assets in the Asbestos Property Damage Claim Sub-Account have been
exhausted, the Plan Trust shall have no further liability or obligation for or
in respect of any Asbestos Property Damage Claims.

            (j) Excess Plan Trust Assets. To the extent there are any Plan Trust
Assets remaining after the payment in full of all Plan Trust Asbestos Claims and
all Plan Trust Expenses (or provision has been made therefor) in accordance with
the Plan Trust Agreement and the TDP, such excess Plan Trust Assets shall be
transferred to a tax-exempt organization qualified under section 501(c)(3) of
the IRC, which charity is to be determined by the Plan Trustees; provided,
however, that such charitable purpose, if practicable, shall be related to the
treatment of, research on or the relief of suffering of individuals suffering
from asbestos-related lung disorders.

            (k) Plan Trust Expenses. The Plan Trust shall pay all Plan Trust
Expenses from the Plan Trust Assets in accordance with the Plan Trust Agreement.
Neither the Debtors, the Reorganized Debtors, ABI nor their Affiliates shall
have any obligation to pay any Plan Trust Expenses. Notwithstanding any
provision herein to the contrary, on the Effective Date, (i) the Collateral
Trustee shall provide the Plan Trust with a certification setting forth the
amount of Asbestos Expenses incurred by or on behalf of, or imposed on, the
Collateral Trust, or otherwise payable by the Collateral Trust, in each case
prior to the Effective Date and all appropriate invoices and other backup
regarding such Asbestos Expenses, including without limitation, amounts which
may be due to the Claims Reviewer (or to Congoleum to reimburse it for amounts
it paid to the Claims Reviewer) for services performed prior to the Effective
Date and (ii) the Plan Trust shall only assume Asbestos Expenses from periods
prior to the Effective Date if and to the extent set forth on such
certification. The Plan Trustees, each member of the TAC, the Futures
Representative and the Representatives of each of the foregoing will have a lien
upon the Plan Trust Assets which will be prior to any lien thereon, and the Plan
Trust will grant a security interest in the Plan Trust Assets, all proceeds
thereof and all accounts into which such proceeds or the Plan Trust Assets are
deposited or maintained to secure payment of amounts payable to them as
compensation or indemnification.


                                       37
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (l) Appointment of the Initial Plan Trustees. Prior to the
Confirmation Hearing, the Debtors, with the approval of the Futures
Representative and the Asbestos Claimants' Committee, shall nominate the initial
Plan Trustees. Effective as of the Effective Date, the Bankruptcy Court shall
appoint the initial Plan Trustees to serve as Plan Trustees in accordance with
the Plan Trust Agreement. For purposes of performing his or her duties and
fulfilling his or her obligations under the Plan Trust Agreement, the TDP and
the Plan, the Plan Trustees shall be deemed to be a party in interest within the
meaning of section 1109(b) of the Bankruptcy Code. The Plan Trustees shall be
the "administrator" of the Plan Trust as that term is used in Treas. Reg.
Section 1.468B-2(k)(3).

            (m) The Futures Representative. On and after the Effective Date, the
Futures Representative shall continue to serve as the Futures Representative
pursuant to the terms of the Plan Trust Agreement and shall have the functions
and rights provided in the Plan Trust Documents.

            (n) Appointment of Trust Advisory Committee Members. The Asbestos
Claimants' Committee shall designate the initial members of the TAC. Effective
as of the Effective Date, the Bankruptcy Court shall appoint the initial members
of the TAC (and thereupon the TAC shall be formed) to serve as members of the
TAC in accordance with the Plan Trust Agreement.

            (o) Establishment and Purpose of the GHR/Kenesis Litigation Trust.
On the Effective Date, the GHR/Kenesis Litigation Trust shall be established in
accordance with the GHR/Kenesis Litigation Trust Agreement for the benefit of
Reorganized Congoleum. Effective as of the Effective Date, the Reorganized
Debtors shall assign to the GHR/Kenesis Litigation Trust without further act or
deed (i) the GHR/Kenesis Actions and (ii) proceeds realized from the prosecution
of the GHR/Kenesis Actions in accordance with section 1123(b)(3)(B) of the
Bankruptcy Code. Pursuant to this Section 6.1(o), the Reorganized Debtors grant,
assign, transfer, convey and deliver to the GHR/Kenesis Litigation Trustee, on
behalf of and for the benefit of the Reorganized Debtors, control of all of the
Debtors' right, title and interest in the GHR/Kenesis Actions and the proceeds
of such Actions. The GHR/Kenesis Litigation Trust shall be funded on the
Effective Date with $600,000 from the proceeds of that certain Asbestos
Insurance Settlement Agreement with Liberty Mutual Insurance Company to provide
for payment of the fees and expenses of the GHR/Kenesis Litigation Trustee. As
soon as practicable after the Effective Date, the Bondholders' Committee shall
provide to the GHR/Kenesis Litigation Trustee all discovery obtained by the
Bondholders' Committee in connection with the GHR/Kenesis Actions and any
relevant work product related thereto. The reasonable fees and expenses of the
Bondholders' Committee incurred in connection with producing such information to
the GHR/Kenesis Litigation Trustee shall be paid by the GHR/Kenesis Litigation
Trust within ten (10) days of the receipt of an invoice for such reasonable fees
and expenses. The GHR/Kenesis Litigation Trustee shall be nominated by the
Debtors, with the consent of the Asbestos Claimants' Committee and the Futures
Representative, no later than fifteen (15) days prior to the commencement of the


                                       38
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


Confirmation Hearing and the appointment of the GHR/Kenesis Litigation Trustee
shall be subject to approval by the Bankruptcy Court. The purpose of the
GHR/Kenesis Litigation Trust shall be to, among other things (i) pursue the
collection of amounts owed to the Debtors' Estates on account of the GHR/Kenesis
Actions for the benefit of Reorganized Congoleum; (ii) investigate, pursue,
prosecute, settle, manage and resolve, as appropriate, the GHR/Kenesis Actions
for the benefit of Reorganized Congoleum; and (iii) remit to the Plan Trust, on
behalf of Reorganized Congoleum, all proceeds of the GHR/Kenesis Actions (after
payment of fees and reimbursement for expenses of the GHR/Kenesis Litigation
Trust) as security for Reorganized Congoleum's obligations to the Plan Trust on
account of the New Convertible Security and the Plan Trust Note and shall be
used by Reorganized Congoleum as follows: (x) first, to pay principal and
accrued interest under the Plan Trust Note until such time as the Plan Trust
Note has been paid in full; (y) second, to pay principal and accrued interest
under the New Convertible Security until such time as the New Convertible
Security has been paid in full or is no longer outstanding; provided, however,
that the New Convertible Security shall not be satisfied in full or retired
before the Reset Date and any proceeds of the GHR/Kenesis Actions that are
received by the Plan Trust on account of the New Convertible Security prior to
the Reset Date shall be held by the Plan Trust in an interest bearing account
and applied to amounts outstanding under the New Convertible Security
immediately after the Reset Date; and (z) thereafter, the GHR/Litigation Trust
shall distribute any remaining or further proceeds to Reorganized Congoleum.
Notwithstanding anything in the Plan or the Plan Documents to the contrary, in
the event that the GHR/Kenesis Actions are finally resolved in their entirety as
determined by the Debtors, the Asbestos Claimants' Committee, the Bondholder'
Committee and the Futures Representative, each acting in its sole discretion,
the GHR/Kenesis Litigation Trust shall not be established; provided, however,
that any proceeds of the GHR/Kenesis Actions shall be distributed in accordance
with the Pledge Agreement and this Section 6.1(o) by Reorganized Congoleum.

            (p) Institution and Maintenance of Legal and Other Proceedings. As
of the Effective Date, the Plan Trust shall be empowered to initiate, prosecute,
defend, and resolve all legal actions and other proceedings related to any
asset, liability, or responsibility of the Plan Trust including, without
limitation, the Avoidance Actions, to the extent not adjudicated, compromised or
settled prior to the Effective Date. Further, as of the Effective Date, the
GHR/Kenesis Litigation Trust shall be empowered to initiate, prosecute, defend,
and resolve all legal actions and other proceedings related to the GHR/Kenesis
Actions, to the extent not adjudicated, compromised or settled prior to the
Effective Date. The Plan Trust and the GHR/Kenesis Litigation Trust, as
applicable, shall be empowered to initiate, prosecute, defend, and resolve all
such actions in the name of the Debtors and/or the Reorganized Debtors if deemed
necessary or appropriate by the Plan Trustees or the GHR/Kenesis Litigation
Trustee; provided, however, that any compromise or settlement of any GHR/Kenesis
Action or the Avoidance Actions shall be subject to approval by the Bankruptcy
Court. Except as otherwise provided by law or agreement, the Plan Trust shall be
responsible for the payment of all damages, awards, judgments, settlements,
expenses, costs, fees, and other charges incurred subsequent to Confirmation
arising from or associated with any legal action or other proceeding brought
pursuant to this Section 6.1(p) and shall pay or reimburse all deductibles,
retrospective premium adjustments, or other charges which may arise from the
receipt of insurance proceeds by the Plan Trust. Without in any way limiting the
foregoing and subject to any Asbestos Insurer Coverage Defenses, the Plan Trust
shall be empowered to elect to (or not to), initiate, prosecute, defend, settle,
and resolve all Plan Trust Bankruptcy Causes of Action, Asbestos Insurance
Actions and Direct Actions, and to maintain, administer, preserve, or pursue the
Asbestos-In-Place Insurance Coverage, the Asbestos Insurance Action Recoveries,
Asbestos Insurance Rights and the Asbestos Insurance Policies.


                                       39
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (q) Preservation of Insurance Claims. The discharge and release of
the Debtors and Released Non-Debtor Parties from all Claims as provided herein,
and the injunctive protection provided to the Debtors, Reorganized Debtors,
Released Non-Debtor Parties and Released Parties with respect to Demands as
provided herein, shall neither diminish nor impair the enforceability of any of
the Asbestos Insurance Policies by any Entity except (i) to the extent that any
such Asbestos Insurance Company is also a Settling Asbestos Insurance Company or
(ii) that all Asbestos Insurer Coverage Defenses are preserved.

            (r) Indemnification by the Plan Trust. As and to the extent provided
in the Plan Trust Agreement, the Plan Trust (and to the extent specified in
Section 4.6(c) of the Plan Trust Agreement, the Reorganized Debtors) shall
indemnify and hold harmless each of the Debtors, the Reorganized Debtors, the
Pre-Petition Asbestos Claimants' Committee, the Asbestos Claimants' Committee,
the Plan Trustees, the Claimants' Representative, the Collateral Trustee, any
officer and employee of the Plan Trust, the Futures Representative, each member
of the TAC and, with respect to each of the foregoing, their respective past,
present and future Representatives.

            (s) Coverage Costs. Notwithstanding anything in the Plan to the
contrary, Coverage Costs shall be paid to the Reorganized Debtors in accordance
with the terms of that certain settlement agreement with Liberty Mutual
Insurance Company, which was approved by the Bankruptcy Court by an Order dated
June 29, 2004.

            (t) Plan Trust Note. On the Effective Date, the Plan Trust shall
provide a loan to Reorganized Congoleum in the principal amount of the Plan
Trust Note, with the proceeds to be used only for Reorganized Congoleum's
working capital and general corporate purposes, and Reorganized Congoleum shall
issue the Plan Trust Note to the Plan Trust. The Plan Trust Note shall be in all
respects pari passu in priority and right of payment with the New Convertible
Security; provided, however, that pursuant to the Pledge Agreement and the
GHR/Kenesis Litigation Trust Agreement any proceeds of the GHR/Kenesis Actions
shall be pledged to the Plan Trust by Reorganized Congoleum to secure
Reorganized Congoleum's obligations to the Plan Trust on account of the New
Convertible Security and Plan Trust Note and shall be used to reduce Reorganized
Congoleum's obligations to the Plan Trust as follows: (i) first, to pay
principal and accrued interest under the Plan Trust Note until such time as the
Plan Trust Note has been paid in full; (ii) second, to pay principal and accrued
interest under the New Convertible Security until such time as the New
Convertible Security has been paid in full or is no longer outstanding;
provided, however, that the New Convertible Security shall not be satisfied in
full or retired before the Reset Date and any proceeds of the GHR/Kenesis
Actions that are received by the Plan Trust on account of the New Convertible
Security prior to the Reset Date shall be held by the Plan Trust in an interest
bearing account and applied to amounts outstanding under the New Convertible
Security immediately after the Reset Date; and (iii) thereafter, the
GHR/Litigation Trust shall distribute any remaining or further proceeds to
Reorganized Congoleum. The Plan Trust shall not have liens on or security
interests in any assets of the Reorganized Debtors other than the GHR/Kenesis
Actions, the proceeds thereof and earnings thereon. The Plan Trust Note shall be
contractually subordinate in priority and right of payment to the New Senior
Notes; provided, however, that in the absence of a default under the New
Indenture, payments due under the Plan Trust Note shall be made in the ordinary
course in accordance with its terms.


                                       40
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      6.2 Intercompany Settlement. In consideration of the treatment set forth
in Section 5.1(i) with respect to the ABI Claims, the ABI Contribution, and for
other good and valuable consideration, (a) on the Effective Date, Reorganized
Congoleum, with the consent of ABI, shall assume and cure its defaults, if any,
under each of the Intercompany Agreements, pursuant to Section 9.1(d) of the
Plan; (b) on the Effective Date, Reorganized Congoleum shall assume the Joint
Venture Agreement, pursuant to Section 9.1(c) of the Plan; and (c) ABI and the
ABI Parties shall be entitled to the protections of the Asbestos Channeling
Injunction provided for in Section 12.6 of the Plan to the extent that any of
ABI and the ABI Parties is, within the meaning of section 524(g)(4)(A)(ii) of
the Bankruptcy Code, alleged to be directly or indirectly liable for the conduct
of, Claims against, or Demands on the Debtors to the extent such alleged
liability of ABI or any of the ABI Parties arises by reason of its (I) ownership
of a financial interest in any Debtor, a past or present affiliate of any
Debtor, or a predecessor in interest of any Debtor, (II) involvement in the
management of any Debtor or a predecessor in interest of any Debtor, or service
as an officer, director or employee of any Debtor or a related party, or (III)
involvement in a transaction changing the corporate structure, or in a loan or
other financial transaction affecting the financial condition, of any Debtor or
a related party, including but not limited to - - (aa) involvement in providing
financing (debt or equity), or advice to an entity involved in such transaction,
or (bb) acquiring or selling a financial interest in an entity as part of such a
transaction. For purposes of this paragraph, the term "related party" shall have
the meaning ascribed to such term in section 524(g)(4)(A)(iii) of the Bankruptcy
Code.

      6.3 Certificate of Incorporation and Bylaws. The certificates of
incorporation and bylaws of each Debtor shall, as of the Effective Date, be
amended to the extent necessary to comply with section 1123(a)(6) of the
Bankruptcy Code.

      6.4 Management of the Reorganized Debtors. On and after the Effective
Date, the business and affairs of the Reorganized Debtors will be managed by the
respective boards of directors of the Reorganized Debtors. The existing senior
officers and directors of the Debtors shall continue to serve in their same
respective capacities after the Effective Date for the Reorganized Debtors. The
Reorganized Debtors shall continue to maintain independent directors in
accordance with the listing requirements of the American Stock Exchange and
applicable law, which directors shall, from the Effective Date and continuing
until Reorganized Congoleum's obligations to the Plan Trust are fulfilled, also
have no financial interest, past or present, in ABI or its affiliates or any
business owned and controlled by Richard, Roger or William Marcus. In addition,
during such period, any transaction between the Reorganized Debtors and any
affiliate, insider or subsidiary of Reorganized Congoleum shall be approved by a
standing committee of such independent directors.

      6.5 Amended Credit Agreement. On the Effective Date, the Amended Credit
Agreement or such other working capital exit facility entered into by the
Reorganized Debtors, which Amended Credit Agreement or other working capital
exit facility shall contain terms similar to the Existing Credit Agreement
(except that the Amended Credit Agreement or other working capital exit facility
may be modified to provide for a lien on or security interest in real estate and
any other collateral securing the New Senior Notes), together with a new
promissory note evidencing the obligation of Reorganized Congoleum thereunder,
and all other documents, instruments and agreements to be entered into,
delivered or confirmed thereunder on the Effective Date, shall become effective.
The new promissory note issued pursuant to the Amended Credit Agreement, if
applicable, and all obligations under the Amended Credit Agreement, if
applicable, and related documents shall be repaid as set forth in the Amended
Credit Agreement, if applicable.


                                       41
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      6.6 Transfer Taxes. The issuance, transfer, or exchange of any of the
securities. issued under, or the transfer of any other assets or property
pursuant to or in connection with the Plan or the making or delivery of an
instrument of transfer under or in connection with the Plan shall not, pursuant
to section 1146 of the Bankruptcy Code, be taxed under any law imposing a stamp
tax, transfer tax or other similar tax.

      6.7 Section 346 Injunction. In accordance with section 346 of the
Bankruptcy Code for the purposes of any state or local law imposing a tax,
income will not be realized by the Estates, the Debtors or the Reorganized
Debtors by reason of the forgiveness or discharge of indebtedness resulting from
the consummation of the Plan. As a result, each state or local taxing authority
is permanently enjoined and restrained, after the Confirmation Date, from
commencing, continuing or taking any act to impose, collect or recover in any
manner any tax against the Debtors or the Reorganized Debtors arising by reason
of the forgiveness or discharge of indebtedness under the Plan.

      6.8 Effectuating Documents and Further Transactions. The Chief Executive
Officer, President, Chief Financial Officer or any Vice President of any Debtor
shall be authorized to execute, deliver, file or record such contracts,
instruments, releases, indentures, and other agreements or documents and take or
direct such actions as may be necessary or appropriate to effectuate and further
evidence the terms and conditions of the Plan. The Secretary or any Assistant
Secretary of any Debtor shall be authorized to certify or attest to any of the
foregoing actions.

      6.9 Corporate Action. All matters provided for under the Plan involving
the corporate structure of the Debtors or the Reorganized Debtors, or any
corporate action to be taken by, or required of the Debtors or the Reorganized
Debtors shall be deemed to have occurred and be effective as provided herein,
and shall be authorized and approved in all respects without any requirement for
further action by the stockholders or directors of any of such entities.

      6.10 Transfer Limitations under Section 382(1)(5) of the IRC. If
Reorganized Congoleum is eligible for and avails itself of the exception
described in Section 382(1)(5) of the IRC, Reorganized Congoleum's equity
interests, from and after the Effective Date, will be subject to such
restrictions that, in the determination of Reorganized Congoleum, are necessary
to ensure that Reorganized Congoleum will not experience another "ownership
change" as defined in Section 382(g) of the IRC within the period described in
Section 382(1)(5)(D) of the IRC; provided, however, that no such restrictions
shall restrict or otherwise affect the rights of the Plan Trust under the New
Convertible Security.


                                       42
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      6.11 Escrowed $5 Million. In order to satisfy the Additional Bondholder
Recovery, the Reorganized Debtors shall receive or retain in escrow $5 million
of Asbestos Insurance Action Recoveries on and following the Effective Date
until the following conditions shall have been satisfied: (i) the AIG
Contingencies and Conditions shall have been satisfied; and (ii) the Plan Trust
has received or obtained the lesser of (x) $77.1 million in aggregate Cash and
(y) the aggregate amount in Cash of the sum of (a) $5 million and (b) the Plan
Trust's liability (including the amounts, if any, held in reserve by the Plan
Trust pursuant to Section 3.2 of the Plan Trust Agreement) on account of the
Asbestos Personal Injury Claims of Qualified Claimants, Allowed Asbestos
Property Damage Claims, the Plan Trust Note, Plan Trust Expenses and the initial
contribution of $600,000 to the GHR/Kenesis Litigation Trust. Upon satisfaction
of the foregoing conditions, the Reorganized Debtors shall immediately pay the
$5 million of escrowed Cash to the Indenture Trustee for distribution to holders
of Senior Note Claims. If the AIG Contingencies and Conditions shall not have
been satisfied, then the Reorganized Debtors shall pay the $5 million of
escrowed Cash to the Plan Trust.

      6.12 Certain Mergers. On the Effective Date, the Subsidiary Debtors shall
merge with and into Congoleum, with Reorganized Congoleum as the surviving
corporation.

                                  ARTICLE VII

            PROVISIONS GOVERNING DISTRIBUTIONS WITH RESPECT TO CLAIMS
                      OTHER THAN PLAN TRUST ASBESTOS CLAIMS

      7.1 Plan Distributions. The Disbursing Agent shall make all distributions
required under the Plan (other than distributions to holders of Plan Trust
Asbestos Claims and Senior Note Claims). Distributions shall be made on the
Distribution Date (unless otherwise provided herein or ordered by the Bankruptcy
Court) with respect to all Claims except for Plan Trust Asbestos Claims.
Distributions to be made on the Distribution Date shall be deemed actually made
on the Distribution Date if made either (a) on the Distribution Date or (b) as
soon as practicable thereafter. With respect to Plan Trust Asbestos Claims,
distributions to holders of Plan Trust Asbestos Claims shall be made in
accordance with the Plan Trust Agreement and/or the TDP, as applicable. With
respect to Senior Note Claims, distributions will be made by the Indenture
Trustee, whose reasonable fees and expenses in connection with such
distributions shall be paid by Reorganized Congoleum.

      7.2 Delivery of Distributions. Distributions to holders of Allowed Claims
other than Asbestos Claims shall be made by the Disbursing Agent or the
Indenture Trustee, as applicable, (a) at the holder's last known address, or (b)
at the address in any written notice of address change delivered to the
Disbursing Agent or the Plan Trustees, as applicable. If any holder's
distribution is returned as undeliverable, no further distributions to such
holder shall be made, unless and until the Disbursing Agent is notified of such
holder's then current address, at which time all missed distributions shall be
made to such holder without interest. Amounts in respect of undeliverable
distributions made through the Disbursing Agent shall be returned to the
appropriate Reorganized Debtor until such distributions are claimed or become
unclaimed property pursuant to Section 7.4 of the Plan. With respect to Plan
Trust Asbestos Claims, distributions to the holders of Plan Trust Asbestos
Claims shall be made in accordance with the Plan Trust Agreement and/or the TDP,
as applicable. With respect to Senior Note Claims, distributions to holders of
Senior Note Claims shall be made in accordance with the Indenture.


                                       43
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      7.3 Withholding of Taxes. The Disbursing Agent shall withhold from any
assets or property distributed under the Plan any assets or property that must
be withheld pursuant to applicable law.

      7.4 Unclaimed Property. Any Cash, assets and other property to be
distributed on account of any Claim other than a Plan Trust Asbestos Claim under
the Plan that remain unclaimed (including by an Entity's failure to negotiate a
check issued to such Entity) or otherwise not deliverable to the Entity entitled
thereto before the later of (a) one year after the date of distribution or (b)
120 calendar days after an order allowing such Entity's Claim becomes a Final
Order, shall become vested in, and shall be transferred and delivered to, the
Reorganized Debtors. In such event, such Entity's Claim shall no longer be
deemed to be Allowed and such Entity shall be deemed to have waived its rights
to such payments or distributions under the Plan pursuant to section 1143 of the
Bankruptcy Code and shall have no further Claim in respect of such distribution
and shall not participate in any further distributions under the Plan with
respect to such Claim.

                                  ARTICLE VIII

                          RESOLUTION OF DISPUTED CLAIMS

      8.1 Disallowance of Improperly Filed Claims. Subject to section 502(j) of
the Bankruptcy Code and Bankruptcy Rules 3008 and 9006, any Administrative
Claim, Asbestos Property Damage Claim or Claim (other than Asbestos Personal
Injury Claims and ABI Claims) for which the filing of a Proof of Claim,
application or motion with the Bankruptcy Court is required under the terms of
the Bankruptcy Code, the Bankruptcy Rules, any order of the Bankruptcy Court
(including one providing a Bar Date) or the Plan shall be Disallowed if and, to
the extent that such Proof of Claim (or other filing) is not timely and properly
made.

      8.2 Prosecution of Objections to Claims. Unless otherwise ordered by the
Bankruptcy Court after notice and a hearing, after the Effective Date the
Reorganized Debtors shall have the exclusive right to make and file objections
to Proofs of Claims, other than Proofs of Claims in respect of Asbestos Personal
Injury Claims, Unknown Asbestos Claims, Professional Fee Claims and ABI Asbestos
Claims, at any time on or before ninety (90) days after the later of (i) the
Effective Date or (ii) the date on which such Claim was filed with the
Bankruptcy Court unless no Proof of Claim is required to be filed pursuant to
Bankruptcy Rule 3002, the Plan or any order of the Bankruptcy Court; provided,
however, that (x) this deadline may be extended by the Bankruptcy Court on
motion by the Debtors or the Reorganized Debtors, as applicable, and (y) neither
the Debtors, the Reorganized Debtors nor any other Person may file an objection
to any (1) Claim that was Allowed by a Final Order entered during the
Reorganization Cases, or (2) Claim Allowed by the Plan. In addition, unless
otherwise ordered by the Bankruptcy Court after notice and a hearing, after the
Effective Date the Reorganized Debtors, subject to Sections 14.5 and 14.11 of
the Plan, shall have the exclusive right to make and file objections to
Administrative Claims and to amend the Schedules or to object to any Claim
specified on the Schedules, at any time on or before sixty (60) days after the
later of (i) the Effective Date or (ii) the date on which such Claim was filed
with the Bankruptcy Court unless no Proof of Claim is required to be filed
pursuant to Bankruptcy Rule 3002, the Plan or any order of the Bankruptcy Court;
provided, however, that (x) this deadline may be extended by the Bankruptcy
Court on motion by the Debtors or the Reorganized Debtors, as applicable, (y)
neither the Debtors, the Reorganized Debtors nor any other Person may file an


                                       44
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


objection to any (1) Claim that was Allowed by a Final Order entered during the
Reorganization Cases, or (2) Claim Allowed by the Plan, and (z) with respect to
any Administrative Claim referred to in sub-clause (a)(4) of the definition of
Administrative Expense, no objection may be filed with respect to any such
Administrative Expense other than with respect to the reasonableness of such
Administrative Expense or whether such Administrative Expense was incurred in
accordance with Section 6.6 of the Indenture. Without prejudice to the right of
any Asbestos Insurance Company to assert any Asbestos Insurer Coverage Defenses,
after the Effective Date, only the Plan Trustees shall have the authority to
contest Asbestos Personal Injury Claims, Unknown Asbestos Claims and Asbestos
Property Damage Claims and litigate to judgment, settle or withdraw such
objections and each Asbestos Personal Injury Claim, Unknown Asbestos Claim and
Asbestos Property Damage Claim, whether or not a Proof of Claim was filed with
the Bankruptcy Court, shall be satisfied exclusively in accordance with the Plan
Trust Documents.

      8.3 No Distributions Pending Allowance. Notwithstanding any other
provision hereof, if a Claim or any portion of a Claim is a Disputed Claim, no
payment or distribution shall be made on account of such Disputed Claim, unless
and until such Disputed Claim becomes an Allowed Claim.

      8.4 Distributions After Allowance. Payments and distributions to each
holder of a Claim that is Disputed, or that is not Allowed, to the extent that
such Claim ultimately becomes Allowed, shall be made in accordance with the
provisions hereof governing the Class of Claims in which such Claim is
classified. As soon as practicable after the date that the order or judgment of
the Bankruptcy Court allowing any Disputed Claim (other than a disputed Asbestos
Claim) becomes a Final Order, the Reorganized Debtors shall distribute to the
holder of such Claim any payment or property that would have been distributed to
such holder if the Claim had been Allowed as of the Effective Date (or such
other date on which such distribution would have been made).

                                   ARTICLE IX

                        TREATMENT OF EXECUTORY CONTRACTS,
                        UNEXPIRED LEASES AND SETTLEMENTS

      9.1 Assumption of Unexpired Leases and Executory Contracts.

            (a) Assumption. Except for any unexpired lease or executory contract
that the Debtors reject or designate as being subject to rejection on or before
the Effective Date, and except for the Joint Venture Agreement, as of the
Effective Date, all executory contracts and unexpired leases not previously
assumed by the Debtors pursuant to section 365 of the Bankruptcy Code shall be
deemed to have been assumed by the Debtors, subject to Section 6.2, and the Plan
shall constitute a motion to assume such executory contracts and unexpired
leases. Subject to the occurrence of the Effective Date, entry of the
Confirmation Order by the Bankruptcy Court shall constitute approval of such
assumptions pursuant to section 365(a) of the Bankruptcy Code and a finding by
the Bankruptcy Court that each such assumption is in the best interests of the
Debtors, the Estates and all parties in interest in the Reorganization Cases.
With respect to each such executory contract or unexpired lease assumed by the
Debtors, unless otherwise determined by the Bankruptcy Court pursuant to a Final
Order or agreed to by the parties thereto on or before the Effective Date, any
defaults of the Debtors with respect to such assumed executory contracts or
leases existing as of the Effective Date shall be cured in the ordinary course
of the Reorganized Debtors' business promptly after any such default becomes
known to the Debtors and, if disputed, established pursuant to applicable law by
the Bankruptcy Court, and the assumed executory contracts or leases shall be
binding upon and enforceable upon the parties thereto, subject to any rights and
defenses existing thereunder. Subject to the occurrence of the Effective Date,
upon payment of such cure amount all defaults of the Debtors existing as of the
Confirmation Date with respect to such executory contract or unexpired lease
shall be deemed cured.


                                       45
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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (b) Rejection. Notwithstanding subpart (a) of this Section 9.1, the
Debtors may reject those executory contracts and unexpired leases listed on an
exhibit to be provided to the Bankruptcy Court in advance of the Confirmation
Hearing (as such list may be amended or supplemented up to and including the
Confirmation Date).

            (c) Assumption of Joint Venture Agreement. On the Effective Date,
the Joint Venture Agreement shall be deemed to have been assumed by Reorganized
Congoleum, the obligations of Reorganized Congoleum to ABI thereunder shall be
subject to the provisions set forth in the Plan, and Reorganized Congoleum shall
have no ongoing indemnification obligations thereunder in respect of any future
ABI Asbestos Indemnity Claims.

            (d) Assumption of Intercompany Agreements. On the Effective Date,
the Intercompany Agreements shall be deemed to have been assumed by Reorganized
Congoleum.

      9.2 Damages Upon Rejection. The Bankruptcy Court shall determine the
dollar amount, if any, of the Claim of any Entity seeking damages by reason of
the rejection of any executory contract or unexpired lease; provided, however,
that such Entity must file a Proof of Claim with the Bankruptcy Court on or
before thirty (30) calendar days following the later of the Confirmation Date or
the date of rejection of the executory contract or unexpired lease. To the
extent that any such Claim is Allowed by the Bankruptcy Court by Final Order,
such Claim shall become, and shall be treated for all purposes under the Plan
as, a Class 7 General Unsecured Claim, and the holder thereof shall receive
distributions as a holder of an Allowed Claim in such Class pursuant to the
Plan. The Debtors shall notify those Entities that may assert a Claim for
damages from the rejection of an executory contract or unexpired lease of this
bar date for filing a Proof of Claim in connection therewith.

      9.3 Executory and Other Settlements. Prior to the Effective Date, the
Debtors may seek Bankruptcy Court approval of additional settlements with
holders of Asbestos Claims. The Plan Trust, or the Reorganized Debtors, as may
be appropriate, shall make payments in accordance with the terms of any
settlement under the terms of this Section 9.3 and a Final Order approving such
settlement and the Plan Trust Agreement and/or the TDP, as applicable, with
respect to the Plan Trust Asbestos Claims.

      9.4 Insurance Agreements. Except to the extent expressly set forth in any
Asbestos Insurance Settlement Agreement, nothing contained in the Plan or any
negotiations leading up to the Plan, including this Section 9.4, shall
constitute a waiver of: (i) any claim, right, or cause of action that any of the
Debtors or the Plan Trust, as applicable, may have against any insurer,
including under any insurance agreement; or (ii) any Asbestos Insurer Coverage
Defenses that any Asbestos Insurance Company may have against the Debtors or the
Plan Trust. The discharge and release provisions contained in the Plan shall
neither diminish nor impair the duties or obligations of any Debtor or any other
Entity under any Asbestos Insurance Policy or agreement relating thereto, nor
shall the discharge and release provisions contained in the Plan diminish nor
impair the duties, obligations or the Asbestos Insurer Coverage Defenses of any
Asbestos Insurance Company under any Asbestos Insurance Policy or agreement
relating thereto.


                                       46
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      9.5 Compensation and Benefits Programs.

            (a) Unless otherwise agreed to by the affected parties or modified
by order of the Bankruptcy Court, all of the Debtors' obligations under
employment and severance policies, and all compensation and benefit plan,
policies, and programs shall be treated as though they are executory contracts
that are deemed assumed under the Plan.

            (b) As of the Effective Date, the Pension Plans shall be deemed to
have been assumed by Reorganized Congoleum. Reorganized Congoleum shall continue
the Pension Plans, satisfy the minimum funding standards pursuant to 26 U.S.C.
ss. 412 and 29 U.S.C. ss. 1082, and administer the Pension Plans in accordance
with their terms and the provisions of ERISA. Furthermore, nothing in the Plan
shall be construed as discharging, releasing or relieving the Debtors or any
Reorganized Debtor, or any party, in any capacity, from any liability imposed
under any law or regulatory provision with respect to the Pension Plans or the
Pension Benefit Guaranty Corporation ("PBGC"). The PBGC and the Pension Plans
shall not be enjoined or precluded from enforcing such liability as a result of
any provision of the Plan or the Confirmation Order. Notwithstanding anything in
this Section 9.5, the Plan Trust shall not assume any of the liabilities,
obligations, or responsibilities of the Debtors or the Reorganized Debtors with
respect to the Pension Plans or the PBGC.

      9.6 Retiree Benefits. Notwithstanding any other provisions of the Plan
(other than the last sentence of this Section 9.6), any payments that are due to
any individual for the purpose of providing or reimbursing payments for retired
employees and their spouses and dependents for medical, surgical, or hospital
care benefits, or benefits in the event of sickness, accident, disability, or
death under any plan, fund, or program (through the purchase of insurance or
otherwise) maintained or established in whole or in part by the Debtors prior to
the Petition Date shall be continued for the duration of the period, if any,
that the Debtors have obligated themselves to provide such benefits.
Notwithstanding the foregoing, no employee or retired employee (nor their
spouses or dependents and beneficiaries) of the Debtors or the Reorganized
Debtors shall be entitled to assert any Asbestos Claim against the Debtors or
the Reorganized Debtors.

      9.7 Indemnification of Directors, Officer and Employees. The obligations
of the Debtors to indemnify any Person serving at any time on or prior to the
Effective Date as one of their directors, officers or employees by reason of
such Person's service in such capacity, or as a director, officer or employee of
any other corporation or legal entity, to the extent provided in the Debtors'
constituent documents, or by a written agreement with the Debtors, or pursuant
to applicable general corporation law, each as applicable, shall be deemed and
treated as executory contracts that are assumed by the Reorganized Debtors
pursuant to the Plan and section 365 of the Bankruptcy Code as of the Effective
Date. Accordingly, such indemnification obligations shall be treated as General
Unsecured Claims and shall survive Unimpaired and unaffected by entry of the
Confirmation Order, irrespective of whether such indemnification is owed for an
act or event occurring before or after the Petition Date.


                                       47
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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                                    ARTICLE X

                       ACCEPTANCE OR REJECTION OF THE PLAN

      10.1 Classes Entitled to Vote. The holders of Claims or Interests in each
Impaired Class of Claims or Interests, i.e., Classes 2, 3, 6, 9, 10, 11, 12 and
13, whose Claims or Interests are Allowed or temporarily allowed for voting
purposes, are entitled to vote to accept or reject the Plan.

      10.2 Acceptance by Impaired Classes of Claims. Pursuant to section 1126(c)
of the Bankruptcy Code, an Impaired Class of Claims shall have accepted the Plan
if (a) the holders of at least two-thirds in dollar amount of the claims
actually voting in such Class (other than Claims held by any holder designated
pursuant to section 1126(e) of the Bankruptcy Code) have voted to accept the
Plan and (b) more than one-half in number of such claims actually voting in such
Class (other than Claims held by any holder designated pursuant to section
1126(e) of the Bankruptcy Code) have voted to accept the Plan.

      10.3 Acceptance by Impaired Class of Interests. Pursuant to section
1126(d) of the Bankruptcy Code, an Impaired Class of Interests shall have
accepted the Plan if the holders of at least two-thirds in amount of the Allowed
Interests actually voting in such Class (other than Interests held by any holder
designated pursuant to section 1126(e) of the Bankruptcy Code) have voted to
accept the Plan.

      10.4 Acceptance Pursuant to Section 524(g) of the Bankruptcy Code. The
Plan shall have been voted upon favorably as required by section
524(g)(2)(B)(ii)(IV)(bb) of the Bankruptcy Code.

      10.5 Presumed Acceptance of Plan. Classes 1, 4, 5, 7, 8 and 14 are
Unimpaired. Under section 1126(f) of the Bankruptcy Code, the holders of Claims
and Interests in such Classes are conclusively presumed to have voted to accept
the Plan.

      10.6 Reservation of Rights. In the event that any Impaired Class fails to
accept the Plan by the requisite numbers and amounts required by the Bankruptcy
Code, the Debtors reserve the right to seek confirmation of the Plan by means of
the fair and equitable power contained in section 1129(b) of the Bankruptcy
Code.

                                   ARTICLE XI

                  CONDITIONS TO CONFIRMATION AND EFFECTIVENESS

      11.1 Conditions to Confirmation. Confirmation of the Plan shall not occur
unless each of the following conditions has been satisfied or waived in
accordance with Section 11.3 below. These conditions to Confirmation, which are
designed, among other things, to ensure that the Injunctions, releases, and
discharges set forth in Article XII shall be effective, binding and enforceable,
are as follows:


                                       48
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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (a) The Bankruptcy Court shall have made specific findings and
determinations, among others, in substantially the following form:

                  (i) The Discharge Injunction and the Asbestos Channeling
Injunction are to be implemented in connection with the Plan and the Plan Trust;

                  (ii) As of the Petition Date, Congoleum has been named as a
defendant in personal injury, wrongful death or property damage actions seeking
recovery for damages allegedly caused by the presence of, or exposure to,
asbestos or asbestos-containing products;

                  (iii) The Plan Trust, upon the Effective Date, shall assume
the liabilities of the Debtors with respect to Plan Trust Asbestos Claims and
Demands;

                  (iv) The Plan Trust is to be funded in part by securities of
Reorganized Congoleum in the form of the New Class A Common Stock and the New
Convertible Security and constitutes an obligation of Reorganized Congoleum to
make future payments to the Plan Trust;

                  (v) In the event that the holders of the Senior Note Claims
(Class 6) vote (as a Class) to accept the Plan, the Plan Trust, on the Effective
Date, will hold the New Class A Common Stock and the New Convertible Security,
and if certain contingencies occur, the Plan Trust will be entitled to redeem or
convert the New Convertible Security, and, in accordance with the terms of the
New Convertible Security, own a majority of the voting shares of the common
stock of Reorganized Congoleum;

                  (vi) In the event that the holders of the Senior Note Claims
(as a Class) do not vote to accept the Plan, then the common stock of
Reorganized Congoleum shall be allocated between the Plan Trust and the Senior
Note Claims on a pro rata basis, as provided in the Confirmation Order;

                  (vii) The Plan Trust is to use its assets and income to pay
Plan Trust Asbestos Claims and Plan Trust Expenses;

                  (viii) Congoleum is likely to be subject to substantial future
Demands for payment arising out of the same or similar conduct or events that
gave rise to the Plan Trust Asbestos Claims, which are addressed by the Asbestos
Channeling Injunction;

                  (ix) The actual amounts, numbers and timing of future Demands
cannot be determined;

                  (x) Pursuit of Demands outside the procedures prescribed by
the Plan and the TDP is likely to threaten the Plan's purpose to deal equitably
with Plan Trust Asbestos Claims and future Demands;

                  (xi) The Plan establishes separate Classes of Asbestos
Personal Injury Claims that are to be addressed by the Plan Trust and at least
seventy-five percent (75%) of the Asbestos Claimants voting in such Classes have
accepted the Plan;


                                       49
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                  (xii) Pursuant to court orders or otherwise, the Plan Trust
shall operate through mechanisms such as structured, periodic or supplemental
payments, Pro Rata distributions, matrices or periodic review of estimates of
the numbers and values of Asbestos Personal Injury Claims or other comparable
mechanisms, that provide reasonable assurance that the Plan Trust shall value,
and be in a financial position to pay, Asbestos Personal Injury Claims and
Demands therefor in substantially the same manner;

                  (xiii) The Futures Representative was appointed by the
Bankruptcy Court as part of the proceedings leading to the issuance of the
Discharge Injunction and the Asbestos Channeling Injunction for the purpose of,
among other things, protecting the rights of persons that might subsequently
assert Demands of the kind that are addressed in the Discharge Injunction and
the Asbestos Channeling Injunction and transferred to the Plan Trust;

                  (xiv) In light of the benefits provided, or to be provided, to
the Plan Trust on behalf of each Protected Party, the Asbestos Channeling
Injunction is fair and equitable with respect to the persons that might
subsequently assert Demands against any Protected Party;

                  (xv) The Plan otherwise complies with section 524(g) of the
Bankruptcy Code;

                  (xvi) Congoleum's contributions to the Plan Trust and ABI's
contribution of the ABI Contribution to the Plan Trust provided for herein,
together with the Asbestos Insurance Assignment, constitute substantial assets
of the Plan Trust and the reorganization;

                  (xvii) The duties and obligations of the insurers that issued
policies and their successors and assigns, or, with respect to any insolvent
insurers, their liquidators and/or the state insurance guaranty funds that bear
responsibility with respect to such rights under such policies which constitute
the Asbestos Insurance Rights and Asbestos Property Damage Insurance Rights are
not eliminated or diminished by the transfer pursuant to the Plan of the
Debtors' rights in the Asbestos Insurance Rights and Asbestos Property Damage
Insurance Rights pursuant to the Insurance Assignment Agreement;

                  (xviii) The Settling Asbestos Insurance Companies are entitled
to the benefits of the Asbestos Channeling Injunction with respect to Plan Trust
Asbestos Claims;

                  (xix) After Confirmation, each Asbestos Insurance Settlement
Agreement of a Settling Asbestos Insurance Company and each Final Order of the
Bankruptcy Court approving such Settlement Agreements shall be binding upon and
inure to the benefit of the Plan Trust and the Plan Trustees, and each of the
foregoing shall become fully bound by all of the terms and conditions of each
such Asbestos Insurance Settlement Agreement without need for further act or
documentation of any kind;

                  (xx) After Confirmation, none of the Debtors, ABI, the Futures
Representative, the Plan Trustees, the Asbestos Claimants' Committee, and the
Claimants' Representative shall seek to terminate, reduce or limit the scope of
the Asbestos Channeling Injunction or any other injunction contained in the Plan
that inures to the benefit of any Settling Asbestos Insurance Company or ABI;


                                       50
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                  (xxi) At least 95% in amount of the allowed and valid votes
with respect to the Plan for each of Classes 2 and 3 shall have accepted the
Plan;

                  (xxii) The merger of the Subsidiary Debtors with and into
Congoleum, with Reorganized Congoleum as the surviving corporation, is
authorized; and

                  (xxiii) The Plan Trust is a "qualified settlement fund"
pursuant to Section 468(B) of the IRC and the regulations issued pursuant
thereto.

            (b) Confirmation Order. The Bankruptcy Court shall have made such
findings and determinations regarding the Plan as shall enable the entry of the
Confirmation Order and any other order entered in conjunction therewith, each of
which shall be in form and substance acceptable to the Debtors, the Asbestos
Claimants' Committee, the Futures Representative, the Bondholders' Committee and
ABI and, insofar as such findings and determinations affect the Financing Order
or the rights of Wachovia thereunder, Wachovia.

      11.2 Conditions to Effectiveness. Notwithstanding any other provision of
the Plan or the Confirmation Order, the Effective Date of the Plan shall not
occur unless and until each of the following conditions has been satisfied or
waived in accordance with Section 11.3 below:

            (a) Confirmation Order. The Confirmation Order shall have been
entered by the Bankruptcy Court and affirmed by the District Court or entered by
the District Court and the Confirmation Order and any order of the District
Court shall be in form and substance acceptable to the Debtors, the Asbestos
Claimants' Committee, the Futures Representative, the Bondholders' Committee and
ABI and the Confirmation Order (and affirming order of the District Court) shall
have become a Final Order; provided, however, that the Effective Date may occur
at a point in time when the Confirmation Order is not a Final Order at the
option of the Debtors, with the written consent of ABI, unless the effectiveness
of the Confirmation Order has been stayed, reversed or vacated. The Effective
Date may occur, again at the option of the Debtors, with the written consent of
ABI, on the first Business Day immediately following the expiration or other
termination of any stay of effectiveness of the Confirmation Order.

            (b) Injunctions. The Discharge Injunction, the Asbestos Channeling
Injunction and the Anti-Suit Injunction shall be in full force and effect.

            (c) Amended Credit Agreement. The Amended Credit Agreement or such
other working capital exit facility entered into by the Reorganized Debtors
which Amended Credit Agreement or other working capital exit facility shall
contain terms similar to the Existing Credit Agreement (except that the Amended
Credit Agreement or other working capital exit facility may be modified to
provide for a lien on or security interest in real estate and any other
collateral securing the New Senior Notes), and all documents to be executed in
connection with the Amended Credit Agreement or such other exit facility, in
form and substance reasonably satisfactory to the Debtors, shall not restrict
Reorganized Congoleum's obligations to make scheduled payments on the New Senior
Notes, the Plan Trust Note and the New Convertible Security except as may be
provided in the New Indenture, the Plan Trust Note and the New Convertible
Security, and shall have been executed and delivered and all conditions
precedent to effectiveness thereof shall have been satisfied or waived by the
parties thereto.


                                       51
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (d) Plan Documents. The Plan Documents necessary or appropriate to
implement the Plan (which shall include without limitation, the New Convertible
Security, the Plan Trust Note, the New Senior Notes, the Pledge Agreement, the
Amended Credit Agreement or any other working capital exit facility, the Plan
Trust Documents and the Insurance Assignment Agreement) shall have been
executed, delivered and, where applicable, filed with the appropriate
governmental authorities; all conditions precedent to the effectiveness of each
of such Plan Documents shall have been satisfied or waived by the respective
parties thereto; and the Plan Documents shall be in full force and effect. The
Plan Documents shall be acceptable to the Bondholders' Committee, the Asbestos
Claimants' Committee, the Futures Representative and the Debtors.

            (e) New Senior Notes. The New Indenture shall have been executed and
authorized and the New Senior Notes shall have been delivered in accordance with
the New Indenture and shall constitute valid senior secured indebtedness of the
Reorganized Debtors.

            (f) Other Assurances. The Debtors shall have obtained either (i) a
private letter ruling from the Internal Revenue Service establishing that the
Plan Trust is a "qualified settlement fund" pursuant to Section 468(B) of the
IRC and the regulations issued pursuant thereto, or (ii) other decisions,
opinions or assurances regarding certain tax consequences of the Plan,
satisfactory to the Debtors, the Reorganized Debtors, the Futures Representative
and the Asbestos Claimants' Committee.

            (g) Other Approvals, Documents and Actions. All authorizations,
consents and regulatory approvals required, if any, in connection with the
consummation of the Plan shall have been obtained, and all actions, documents,
and agreements necessary to implement the Plan shall have been effected or
executed.

            (h) Insurance Settlement Protocol. The Debtors shall have obtained
the consent of the Asbestos Claimants' Committee and the Futures Representative
prior to reaching a compromise or settlement of any Asbestos Insurance Policy on
or after August 4, 2006.

      11.3 Waiver of Conditions. Each of the conditions set forth in Sections
11.1 and 11.2 above may be waived in whole or in part by the Debtors, with the
written consent of ABI and, solely with respect to Section 11.2(f) above, the
Asbestos Claimants' Committee and the Futures Representative and, solely with
respect to Sections 11.1(a)(xxi), 11.1(b), the first sentence of 11.2(a) and
11.2(d) above, the Claimants' Representative, the Asbestos Claimants' Committee
and the Futures Representative, each in its sole discretion, and, solely with
respect to Sections 11.1(b) and 11.2(c), (d) and (e) above, the Bondholders'
Committee, in its sole discretion, without any notice to other parties in
interest or the Bankruptcy Court and without a hearing. The failure of the
Debtors to exercise any of the foregoing rights shall not be deemed a waiver of
any other rights, and each such right shall be deemed an ongoing right that may
be asserted at any time.


                                       52
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                                  ARTICLE XII

                       INJUNCTIONS, RELEASES AND DISCHARGE

      12.1 Discharge.

            (a) Except as specifically provided in the Plan, the Plan Documents
or in the Confirmation Order, as of the Effective Date, Confirmation shall
discharge the Debtors and the Reorganized Debtors pursuant to section
1141(d)(1)(A) of the Bankruptcy Code from any and all Claims of any nature
whatsoever and Demands including, without limitation, any Claims, demands and
liabilities that arose before Confirmation, and all debts of the kind specified
in section 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether or not (a) a
Proof of Claim based on such Claim was filed or deemed filed under section 501
of the Bankruptcy Code, or such Claim was listed on the Schedules of the
Debtors, (b) such Claim is or was Allowed under section 502 of the Bankruptcy
Code, or (c) the holder of such Claim has voted on or accepted the Plan. Except
as specifically provided in the Plan or Plan Documents, the rights that are
provided in the Plan as of the Effective Date shall be in exchange for and in
complete satisfaction, settlement and discharge of all Claims (including without
limitation Asbestos Claims) or Demands against, Liens on, and interests in the
Debtors or the Reorganized Debtors or any of their assets or properties.
Notwithstanding anything herein to the contrary, nothing in this Section 12.1
shall affect the right of any Asbestos Insurance Company to assert any Asbestos
Insurer Coverage Defenses.

            (b) Notwithstanding any other provision of the Plan to the contrary,
Confirmation shall not discharge any pre-Petition Date or post-Petition Date,
pre-Confirmation Date liability that may be due from any of the Debtors to the
Internal Revenue Service as currently set forth in that certain Proof of Claim
filed by the Internal Revenue Service in the alleged amounts of $6,608,626.01
and $8,760,686.95 and that certain Administrative Expense Claim in the alleged
amount of $4,002,431.97. Should any pre-Petition Date or post-Petition Date,
pre-Confirmation Date tax liabilities be determined by the Internal Revenue
Service to be due from any of the Debtors for any of the tax periods reflected
by such Proof of Claim or Administrative Expense Claim, such liabilities shall
be determined administratively or in a judicial forum in the manner in which
such liabilities would have been resolved had these Reorganization Cases not
been commenced. Any resulting liabilities determined pursuant to a Final Order
or other final determination shall be paid as if these Reorganization Cases had
not been commenced.

      12.2 Release of Representatives of the Debtors. To the extent permitted by
law applicable to cases under the Bankruptcy Code in the judicial district in
which the Bankruptcy Court is located, except as otherwise specifically provided
in the Plan and the Plan Documents, for good and valuable consideration, the
receipt and sufficiency of which is acknowledged in the Plan, all current and
former Representatives of the Debtors, on and after the Effective Date, are
released from any and all Claims, obligations, rights, suits, damages, causes of
action, remedies and liabilities whatsoever, whether known or unknown, foreseen
or unforeseen, existing or hereafter arising, in law, equity or otherwise, that
any Entity would have been legally entitled to assert in its own right (whether
individually or collectively) or on behalf of the holder of any Claim or
Interest or other Entity, based in whole or in part, upon any act or omission,
transaction, agreement, event, or other occurrence taking place on or before the
Effective Date, for claims or liabilities resulting from their services as
officers or directors of the Debtors or to the extent such claims or liabilities
relate to the business, operations or management of the Debtors prior to the
Effective Date or to their conduct as professionals or advisors to any of the
Debtors. For the avoidance of doubt, in no event shall any such Representative
be released in the case of the gross negligence or willful misconduct of such
Representative.


                                       53
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      12.3 Exculpation. To the extent permitted by law applicable to cases under
the Bankruptcy Code in the judicial district in which the Bankruptcy Court is
located, as of the Effective Date, (a) each of the Reorganized Debtors, the
Debtors, the Futures Representative, the Pre-Petition Asbestos Claimants'
Committee, the Asbestos Claimants' Committee, the Bondholders' Committee, the
Claimants' Representative, the Collateral Trustee, the Plan Trustees, ABI and
any of their respective Representatives (i) shall not have or incur any
liability to any Entity for any act or omission in connection with or arising
out of the negotiation of the Plan or any Plan Document, negotiation of the
settlement provided in the Collateral Trust, negotiation of the settlement
provided in the Claimant Agreement, the pursuit of confirmation of the Plan, the
consummation of the Plan, the Collateral Trust Agreement, the Claimant
Agreement, the Security Agreement, the administration of the Plan or the
property to be distributed under the Plan or the Class 2 and Class 3 and 11
Settlements, provided, however, that this exculpation provision shall not apply
to Asbestos Insurer Coverage Defenses; and (ii) in all respects shall be
entitled to rely upon the advice of counsel with respect to their duties and
responsibilities under the Plan and the other Plan Documents, provided, however,
that in no event shall the Pre-Petition Asbestos Claimants' Committee be
exculpated from liability under this Section 12.3 for any relief granted or any
costs or expenses incurred in connection with the Avoidance Actions and in no
event shall this Section 12.3 exculpate any party from liability for any claim
asserted in the Avoidance Actions; and (b) the Claimants' Representative shall
not have or incur any liability to any Entity in connection with or arising out
of the receipt of a two million dollars ($2,000,000) advance from the Debtors
prior to the Petition Date on account of the Claimants' Representatives' fees
and expenses. For the avoidance of doubt, in no event shall any such party be
exculpated from liability under this Section 12.3 in the case of the gross
negligence or willful misconduct of such party.

      12.4 Releases by Holders of Claims. To the extent permitted by law
applicable to cases under the Bankruptcy Code in the judicial district in which
the Bankruptcy Court is located, other than rights to the treatment provided in
Article V of the Plan or as otherwise provided in the Plan or the Plan Documents
herein, on and after the Effective Date, each holder of a Claim who has accepted
the Plan shall be deemed to have unconditionally released the Released
Non-Debtor Parties, the Pre-Petition Asbestos Claimants' Committee, the
Claimants' Representative, the Collateral Trustee, the Asbestos Claimants'
Committee, the Bondholders' Committee and their current and former
Representatives from any and all Claims, obligations, rights, suits, damages,
causes of action, remedies, and liabilities whatsoever, whether known or
unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity,
or otherwise, that such Entity would have been legally entitled to assert
(whether individually or collectively), based in whole or in part upon any act
or omission, transaction, agreement, event, or other occurrence taking place on
or before the Effective Date by the Debtors or the Reorganized Debtors, the
Reorganization Cases, or the negotiation, formulation, and preparation of the
Plan, the Plan Documents or any related agreements, instruments or other
documents, provided, however, that in no event shall the Pre-Petition Asbestos
Claimants' Committee be released from liability for any relief granted or any
costs or expenses incurred in connection with the Avoidance Actions and in no
event shall this Section 12.4 release any party from liability for any claim
asserted in the Avoidance Actions.


                                       54
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      In addition, pursuant to this Section 12.4 and the Confirmation Order,
which may include release(s) for the benefit of any Settling Asbestos Insurance
Company consistent with the terms of this Section 12.4 and the terms of the
relevant Asbestos Insurance Settlement Agreement, any holder of a Plan Trust
Asbestos Claim that receives a payment from the Plan Trust shall be deemed to
have unconditionally released the Plan Trust and each Settling Insurance Company
from any and all Claims, obligations, rights, suits, damages, causes of action,
remedies, and liabilities whatsoever, whether known or unknown, foreseen or
unforeseen, existing or hereafter arising, in law, equity, or otherwise, arising
from, relating to, or involving the manufacture, sale, distribution,
installation, formulation, marketing, transport, handling or any other activity
involving any asbestos containing products of Congoleum and any of Congoleum
entities identified in the Confirmation Order, which may incorporate the terms
of one or more Asbestos Insurance Settlement Agreement, or their premises to the
extent such Claim arises from, relates to or involves exposure to asbestos,
including without limitation, any operation claims, contribution claims, direct
action claims, and insurance coverage claims. For the avoidance of doubt, in no
event shall any such party be released under this Section 12.4 in the case of
the gross negligence or willful misconduct of such party.

      12.5 Discharge Injunction. Except as specifically provided in the Plan
Documents to the contrary, the satisfaction, release, and discharge set forth in
Section 12.1 shall also operate as an injunction, pursuant to sections 105,
524(g) and 1141 of the Bankruptcy Code, prohibiting and enjoining the
commencement or continuation of any action, the employment of process or any act
to collect, recover from, or offset (a) any Claim or Demand against or Interest
in the Debtors, the Reorganized Debtors, the Collateral Trust, or the Plan Trust
by any Entity and (b) any cause of action, whether known or unknown, against the
Released Parties based on such Claim or Interest described in subpart (a) of
this Section 12.5.

      12.6 Asbestos Channeling Injunction. The sole recourse of the holder of a
Plan Trust Asbestos Claim or Demand on account of such Claim or Demand or of a
Person that had or could have asserted an Asbestos Claim or Demand shall be to
the Plan Trust pursuant to the provisions of the Asbestos Channeling Injunction,
the Plan, the Plan Trust Agreement and the TDP, and such holder shall have no
right whatsoever at any time to assert its Plan Trust Asbestos Claim or Demand
against the Debtors, Reorganized Debtors, any other Protected Party, or any
property or interest in property of the Debtors, the Reorganized Debtors, or any
other Protected Party. Without limiting the foregoing, from and after the
Effective Date, the Asbestos Channeling Injunction shall apply to all present
and future holders of Plan Trust Asbestos Claims and Demands, and all such
holders shall be permanently and forever stayed, restrained, and enjoined from
taking any of the following actions for the purpose of, directly or indirectly,
collecting, recovering, or receiving payment of, on, or with respect to any Plan
Trust Asbestos Claims and Demands, other than from the Plan Trust in accordance
with the Asbestos Channeling Injunction and pursuant to the Plan, the Plan Trust
Agreement and the TDP:

            (a) commencing, conducting, or continuing in any manner, directly or
indirectly, any suit, action, or other proceeding (including a judicial,
arbitration, administrative, or other proceeding) in any forum against or
affecting any Protected Party or any property or interests in property of any
Protected Party;


                                       55
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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (b) enforcing, levying, attaching (including any prejudgment
attachment), collecting, or otherwise recovering by any means or in any manner,
whether directly or indirectly, any judgment, award, decree, or other order
against any Protected Party or any property or interests in property of any
Protected Party;

            (c) creating, perfecting, or otherwise enforcing in any manner,
directly or indirectly, any encumbrance against any Protected Party, or any
property or interests in property of any Protected Party;

            (d) setting off, seeking reimbursement of, contribution from, or
subrogation against, or otherwise recouping in any manner, directly or
indirectly, any amount against any liability owed to any Protected Party or any
property or interests in property of any Protected Party; and

            (e) proceeding in any manner in any place with regard to any matter
that is subject to resolution pursuant to the Plan Trust, except in conformity
and compliance with the Plan, the Plan Trust Agreement and the TDP.

      Any right, claim or cause of action that an Asbestos Insurance Company may
have been entitled to assert against a Settling Asbestos Insurance Company based
on or relating to Asbestos Claims shall be channeled to and become a right,
claim or cause of action as an offset claim against the Plan Trust and not
against the Settling Asbestos Insurance Company in question and all persons,
including any Asbestos Insurance Company, shall be enjoined from asserting any
such right, claim or cause of action against a Settling Asbestos Insurance
Company.

      Except as otherwise expressly provided in the Plan, nothing contained in
the Plan shall constitute or be deemed a waiver of any claim, right or cause of
action that the Debtors, the Reorganized Debtors, or the Plan Trust may have
against any Entity in connection with or arising out of or related to an
Asbestos Claim; provided, however, none of the Debtors, the Reorganized Debtors,
the Plan Trust or any of their respective successors or assigns may assert
against ABI or any ABI Entity any claim, right or cause of action arising out of
or related to any Asbestos Claim. Notwithstanding any other provision in the
Plan to the contrary, nothing in the Plan shall be understood to channel,
prevent, impair or limit in any way enforcement against the Debtors, the
Reorganized Debtors, or any other Protected Party of any rights provided in
connection with any Workers' Compensation Claim.

      12.7 Reservation of Rights. Notwithstanding any other provision of the
Plan to the contrary, the satisfaction, release and discharge, and the
Injunctions set forth in Article XII, shall not serve to satisfy, discharge,
release, or enjoin (a) claims by the Plan Trust, the Reorganized Debtors, ABI,
and their Affiliates, or any other Entity, as the case may be, against (i) the
Plan Trust for payment of Plan Trust Asbestos Claims in accordance with the
Plan, the Plan Trust Agreement and the TDP, as applicable, (ii) the Plan Trust
for the payment of Plan Trust Expenses, or (iii) the Reorganized Debtors, the
Plan Trust, or any other Entity, to enforce the provisions of Section 6.2 or any
provision of the Plan or another Plan Document, or (b) the rights of any
Asbestos Insurance Company to assert any claim, debt, obligation, cause of
action or liability for payment against any other Asbestos Insurance Company
that is not a Settling Asbestos Insurance Company.


                                       56
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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      12.8 Rights Against Non-Debtors under Securities Laws. Notwithstanding any
language to the contrary contained in the Disclosure Statement, Plan, and/or
Confirmation Order, no provision shall release any non-Debtor, including any
current and/or former officer and/or director of the Debtors and/or any
non-Debtor included in the Released Non-Debtor Parties, from liability to the
United States Securities and Exchange Commission, in connection with any legal
action or claim brought by such governmental unit against such Person(s).

      12.9 Rights Against Debtors Under Environmental Laws. Environmental rights
and Claims of Governmental Units under applicable Environmental Laws shall
survive the Reorganization Cases, shall not be discharged, impaired or adversely
affected by the Plan and the Reorganization Cases and shall be determined in the
manner and by the administrative or judicial tribunals in which such rights or
Claims would have been resolved or adjudicated if the Reorganization Cases had
not been commenced. Governmental Units need not file any Proofs of Claim under
Environmental Laws in the Reorganization Cases in order to preserve Claims under
Environmental Laws. Nothing in the Confirmation Order or Plan shall be construed
as releasing or relieving any Entity of any liability under any Environmental
Law.

      12.10 Disallowed Claims and Disallowed Interests. On and after the
Effective Date, the Debtors shall be fully and finally discharged from any
liability or obligation on a Disallowed Claim or a Disallowed Interest and any
order creating a Disallowed Claim or a Disallowed Interest that is not a Final
Order as of the Effective Date solely because of an Entity's right to move for
reconsideration of such order pursuant to section 502 of the Bankruptcy Code or
Bankruptcy Rule 3008 will nevertheless become and be deemed to be a Final Order
on the Effective Date. The Confirmation Order, except as otherwise provided
herein, or unless the Bankruptcy Court orders otherwise, shall constitute an
order: (a) disallowing all Claims (other than Plan Trust Asbestos Claims that
have not been previously expunged by Final Order of the Bankruptcy Court or
withdrawn) and Interests to the extent such Claims and Interests are not
allowable under any provision of section 502 of the Bankruptcy Code, including,
but not limited to, time-barred Claims, and Claims for unmatured interest, and
(b) disallowing or subordinating, as the case may be, any Claims, or portions of
Claims, for penalties or Non-Compensatory Damages.

      12.11 Anti-Suit Injunction. With respect to any Settling Asbestos
Insurance Company, this Section 12.11 and the Confirmation Order, which may
include anti-suit injunction(s) for the benefit of any Settling Asbestos
Insurance Company consistent with the terms of this Section 12.11 and the terms
of the relevant Asbestos Insurance Settlement Agreement, shall operate as an
injunction, pursuant to section 105(a) of the Bankruptcy Code, permanently and
forever prohibiting and enjoining the commencement, conduct or continuation of
any action or cause of action, whether known or unknown, the employment of
process or any act to collect, recover from or offset any non-asbestos claim,
Claim or demand against any Settling Asbestos Insurance Company arising out of,
relating to, or in connection with an Asbestos Insurance Policy or any other
insurance policy or rights under such other insurance policy issued to or
insuring the relationship of the relevant Settling Asbestos Insurance Companies
with, the relevant Congoleum entities that are insureds under such policies, but
such injunction pursuant to section 105(a) of the Bankruptcy Code shall not
affect or modify the rights of Persons insured under policies of insurance
except to the extent released in an Asbestos Insurance Settlement Agreement.


                                       57
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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      12.12 Insurance Neutrality.

            (a) Nothing in the Plan, the Plan Documents, the Confirmation Order,
or any finding of fact and/or conclusion of law with respect to the Confirmation
of the Plan or any order or opinion entered on appeal of the Confirmation Order,
shall limit the right of any Asbestos Insurance Company to assert any Asbestos
Insurer Coverage Defense.

            (b) The Plan, the Plan Documents and the Confirmation Order shall be
binding on the Debtors, the Reorganized Debtors, the Plan Trust and the
beneficiaries of the Plan Trust. The obligations, if any, of the Plan Trust to
pay holders of Asbestos Personal Injury Claims and Demands shall be determined
pursuant to the Plan and the Plan Documents. None of (I) the Bankruptcy Court's
approval of the Plan or the Plan Documents, (II) the Confirmation Order or any
finding and conclusions entered with respect to Confirmation, nor (III) any
estimation or valuation of Asbestos Personal Injury Claims, either individually
or in the aggregate (including, without limitation, any agreement as to the
valuation of Asbestos Personal Injury Claims) in the Bankruptcy Case shall, with
respect to any Asbestos Insurance Company (including on the basis of the
decisions in UNR Industries, Inc. v. Continental Casualty Co., 942 F.2d 1101
(7th Cir. 1991) or Fuller-Austin Insulation Co. v. Fireman's Fund Inc., et al.,
Case No. BC 116 835, 2002 WL 31005090 (Cal. Superior Ct. August 6, 2002)),
constitute a trial or hearing on the merits or an adjudication or judgment; or
accelerate the obligations, if any, of any Asbestos Insurance Company under its
Asbestos Insurance Policies; or be used as evidence in any forum to prove:

            (i) that any of the Debtors, the Plan Trust, or any Asbestos
      Insurance Company is liable for, or otherwise obligated to pay with
      respect to, any individual Asbestos Personal Injury Claim or Demand;

            (ii) that the procedures established by the Plan, including the
      Trust Distribution Procedures, for evaluating and paying Asbestos Personal
      Injury Claims and Demands are reasonable;

            (iii) that the procedures established by the Plan, including the
      Trust Distribution Procedures, for evaluating and paying Asbestos Personal
      Injury Claims and Demands are consistent with any procedures that were
      used to evaluate or settle Asbestos Personal Injury Claims against the
      Debtors before the Petition Date;

            (iv) that the settlement of, or the value assigned to, any
      individual Asbestos Person Injury Claim pursuant to the Asbestos Personal
      Injury Trust Distribution Procedures was reasonable and/or otherwise
      appropriate;

            (v) that any of the Asbestos Insurance Companies participated in
      and/or consented to the negotiation of the Plan or any of the Plan
      Documents;

            (vi) that any of the Debtors or the Plan Trust has suffered an
      insured loss with respect to any Asbestos Personal Injury Claim or Demand;
      or


                                       58
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (vii) as to (A) the liability of the Debtors or the Plan Trust for
      Asbestos Personal Injury Claims or Demands, whether such Claims or Demands
      are considered individually or on an aggregate basis; or (B) the value of
      such Asbestos Personal Injury Claims or Demands, individually or in the
      aggregate.

            (c) Nothing in the Plan or the Plan Documents shall affect or limit,
or be construed as affecting or limiting, the protection afforded to any
Settling Asbestos Insurance Company by the Injunctions under the Plan.

            (d) Nothing in this Section 12.12 is intended or shall be construed
to preclude otherwise applicable principles of res judicata or collateral
estoppel from being applied against any Asbestos Insurance Company with respect
to any issue that is actually litigated by such Asbestos Insurance Company as
part of its objections, if any, to Confirmation of the Plan or as part of any
contested matter or adversary proceeding filed by such Asbestos Insurance
Company in conjunction with or related to Confirmation of the Plan.

            (e) Nothing in the Plan, the Plan Documents, the Confirmation Order,
or any finding of fact and/or conclusion of law with respect to the Confirmation
or consummation of the Plan shall limit the right, if any, of (i) any Asbestos
Insurance Company, in any Asbestos Insurance Action, to assert any Asbestos
Insurance Coverage Defense, including by presenting evidence and/or argument
with respect to any of the matters specified in clauses (i) through (vii) of
this Section 12.12 or (ii) any other party in any such Asbestos Insurance Action
to assert any appropriate position. Except as provided in Section 12.12(d)
above, none of the matters specified in clauses (i) through (vii) of this
Section 12.12 shall have any res judicata or collateral estoppel effect against
any Asbestos Insurance Company.

                                  ARTICLE XIII

                      MATTERS INCIDENT TO PLAN CONFIRMATION

      13.1 Term of Certain Injunctions and Automatic Stay.

            (a) All of the injunctions and/or automatic stays provided for in or
in connection with the Reorganization Cases, whether pursuant to section 105,
362, 524(g), or any other provision of the Bankruptcy Code or other applicable
law, in existence immediately prior to Confirmation shall remain in full force
and effect until the Injunctions become effective, and thereafter if so provided
by the Plan, the Confirmation Order, or by their own terms. In addition, on and
after Confirmation, the Debtors may seek such further orders as they may deem
necessary to preserve the status quo during the time between Confirmation and
the Effective Date.

            (b) Each of the Injunctions shall become effective on the Effective
Date and shall continue in effect at all times thereafter. Notwithstanding
anything to the contrary contained in the Plan, all actions in the nature of
those to be enjoined by the Injunctions shall be enjoined during the period
between the Confirmation Date and the Effective Date.

      13.2 No Successor Liability. Except as otherwise expressly provided in the
Plan, the Debtors, the Reorganized Debtors, ABI, their Affiliates, Asbestos
Claimants' Committee, the Bondholders' Committee, the Pre-Petition Asbestos
Claimants' Committee, the Plan Trust and the Futures Representative do not,
pursuant to the Plan or otherwise, assume, agree to perform, pay, or indemnify
creditors or otherwise have any responsibilities for any liabilities or
obligations of the Debtors relating to or arising out of the operations of or
assets of the Debtors, whether arising prior to, on, or after the Confirmation
Date. Neither the Debtors, the Reorganized Debtors, ABI, their Affiliates, nor
the Plan Trust is, or shall be, a successor to the Debtors by reason of any
theory of law or equity, and none shall have any successor or transferee
liability of any kind or character, except that the Reorganized Debtors and the
Plan Trust shall assume the obligations specified in the Plan Documents and the
Confirmation Order.


                                       59
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      13.3 Revesting. Except as otherwise expressly provided in the Plan, on the
Effective Date, each Reorganized Debtor shall be vested with all of the assets
and property of its former Estate, free and clear of all Claims, Liens, charges
and other interests of holders of Claims or Interests, and may operate its
business free of any restrictions imposed by the Bankruptcy Code or by the
Bankruptcy Court.

      13.4 Vesting and Enforcement of Causes of Action. Pursuant to section
1123(b)(3)(B) of the Bankruptcy Code, except as otherwise provided in the Plan,
the Reorganized Debtors shall be vested with and have the right to enforce
against any Entity any and all of the Debtors' Causes of Action other than
Causes of Action related to Plan Trust Asbestos Claims and Plan Trust Assets
(including the right to pursue such claims, if any, in the name of any Debtor if
necessary), with the proceeds of the recovery of any such actions to be property
of the Reorganized Debtors; provided, however, that nothing herein shall alter,
amend, or modify the injunctions (including the Injunctions), releases, or
discharges provided herein. Pursuant to section 1123(b)(3)(B) of the Bankruptcy
Code, except as otherwise provided in the Plan, the Plan Trust shall be vested
with and have the right to enforce against any Entity any and all of the
Debtors' Causes of Action relating to any Plan Trust Asbestos Claims or any Plan
Trust Assets, including, without limitation, the right to void any Asbestos
Claim of a Qualified Pre-Petition Settlement Claimant or of a Qualified
Participating Claimant whether because of failure to comply with the
requirements of any applicable settlement agreement (including the Claimant
Agreement) or because such Claim was not submitted in good faith or otherwise
and including the right to pursue such claims, if any, in the name of any
Debtor, if necessary; and for this purpose the Plan Trust shall be designated as
a representative of the Estates, with the proceeds of the recovery of any such
actions to be property of the Plan Trust; provided, however, that nothing herein
shall alter, amend, or modify the injunctions (including the Injunctions),
releases, or discharges provided herein.

      13.5 Plan Trust Bankruptcy Causes of Action. On the Effective Date, the
Debtors shall assign to the Plan Trust all Plan Trust Bankruptcy Causes of
Action; provided, however, that any Plan Trust Bankruptcy Cause of Action,
including counts VII and XVI of the Omnibus Avoidance Action, arising from the
advance of two million dollars ($2,000,000) to the Claimants' Representative
prior to the Petition Date on account of the Claimants' Representatives' fees
and expenses, shall not be assigned to the Plan Trust and shall be
unconditionally released by the Debtors and their Estates in accordance with
Section 12.3 of the Plan. All such Plan Trust Bankruptcy Causes of Action shall
constitute part of the Plan Trust Assets, and shall be transferred to and vested
in the Plan Trust as of the Effective Date, free and clear of all Claims, Liens
and encumbrances of every nature. The Plan Trust shall be deemed the appointed
representative of the Debtors' estates to, and may, enforce, pursue, litigate,
abandon, compromise and settle any such Plan Trust Bankruptcy Cause of Action,
as it deems appropriate.


                                       60
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      13.6 Bankruptcy Causes of Action. On the Effective Date, all Bankruptcy
Causes of Action shall be preserved for enforcement solely by the Reorganized
Debtors; provided, however, that the Reorganized Debtors shall not retain any
such Bankruptcy Causes of Action against any parties indemnified by the Plan
Trust pursuant to Section 4.6 of the Plan Trust Agreement.

                                   ARTICLE XIV

                                  MISCELLANEOUS

      14.1 Jurisdiction. Until the Reorganization Cases are closed, the
Bankruptcy Court shall retain the fullest and most extensive jurisdiction
permissible, including that necessary to ensure that the purposes and intent of
the Plan are carried out. Except as otherwise provided in the Plan, the
Bankruptcy Court shall retain jurisdiction to hear and determine all Claims
against and Interests in the Debtors, and to adjudicate and enforce all other
causes of action which may exist on behalf of the Debtors. Nothing contained
herein shall prevent the Debtors, the Reorganized Debtors, or the Plan Trust
from taking such action as may be necessary in the enforcement of any cause of
action which the Debtors have or may have and which may not have been enforced
or prosecuted by the Debtors, which cause of action shall survive Confirmation
of the Plan and shall not be affected thereby except as specifically provided
herein. Nothing contained herein concerning the retention of jurisdiction by the
Bankruptcy Court shall be deemed to be a retention of exclusive jurisdiction
with respect to any Asbestos Insurance Action; rather any court other than the
Bankruptcy Court which has jurisdiction over an Asbestos Insurance Action shall
have the continuing right to exercise such jurisdiction.

      14.2 General Retention. Following the Confirmation of the Plan, the
administration of the Reorganization Cases will continue at least until the
completion of the transfers contemplated to be accomplished on the Effective
Date. Moreover, the Plan Trust shall be subject to the continuing jurisdiction
of the Bankruptcy Court to the extent required by the requirements of section
468B of the IRC and the regulations issued pursuant thereto. The Bankruptcy
Court shall also retain jurisdiction for the purpose of classification of any
Claim and the re-examination of Claims that have been Allowed for purposes of
voting, and the determination of such objections as may be filed with the
Bankruptcy Court with respect to any Claim. The failure by the Debtors to object
to, or examine, any Claim for the purposes of voting, shall not be deemed a
waiver of the right of the Debtors, the Reorganized Debtors, or the Plan Trust,
as the case may be, to object to or re-examine such Claim in whole or in part.

      14.3 Specific Purposes. In addition to the foregoing, the Bankruptcy Court
shall retain jurisdiction for the following specific purposes after
Confirmation:

            (a) to modify the Plan after Confirmation, pursuant to the
provisions of the Bankruptcy Code and the Bankruptcy Rules;

            (b) to correct any defect, cure any omission, reconcile any
inconsistency, or make any other necessary changes or modifications in or to the
Plan, the Plan Documents or the Confirmation Order as may be necessary to carry
out the purposes and intent of the Plan, including the adjustment of the date(s)
of performance under the Plan Documents in the event that the Effective Date
does not occur as provided herein so that the intended effect of the Plan may be
substantially realized thereby;


                                       61
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (c) to assure the performance by the Disbursing Agent, the Indenture
Trustee and the Plan Trustees of their respective obligations to make
distributions under the Plan;

            (d) to enforce and interpret the terms and conditions of the Plan
Documents;

            (e) to enter such orders or judgments, including, but not limited
to, injunctions as are necessary to (i) enforce the title, rights, and powers of
the Debtors, the Reorganized Debtors, the Plan Trust, ABI, the Futures
Representative and the Trust Advisory Committee or (ii) enable holders of Claims
to pursue their rights against any Entity that may be liable therefor pursuant
to applicable law or otherwise, including, but not limited to, Bankruptcy Court
orders;

            (f) to hear and determine any motions or contested matters involving
taxes, tax refunds, tax attributes, tax benefits, tax proceedings, and similar
or related matters with respect to the Debtors, the Reorganized Debtors, or the
Plan Trust relating to tax periods or portions thereof ending on or before the
Effective Date, arising on account of transactions contemplated by the Plan
Documents, or relating to the period of administration of the Reorganization
Cases;

            (g) to hear and determine all applications for compensation of
professionals and reimbursement of expenses under sections 330, 331, or 503(b)
of the Bankruptcy Code;

            (h) to hear and determine any causes of action arising during the
period from the Petition Date through the Effective Date;

            (i) to hear and determine any claim, causes of action, dispute or
other matter in any way related to the Plan Documents or the transactions
contemplated thereby, against the Debtors, the Reorganized Debtors, ABI, the ABI
Parties, the Trust Advisory Committee, the Plan Trust, the Collateral Trust, the
Plan Trustees, the Collateral Trustee or the Futures Representative and each of
their respective Representatives;

            (j) to hear and determine any and all motions pending as of
Confirmation for the rejection, assumption, or assignment of executory contracts
or unexpired leases and the allowance of any Claim resulting therefrom;

            (k) to hear and determine such other matters and for such other
purposes as may be provided in the Confirmation Order;

            (l) to consider and act on the compromise and settlement of any
Claim against or Interest in the Debtors or their Estates;

            (m) to hear and determine all questions and disputes regarding title
to the assets of the Debtors, their Estates, the Reorganized Debtors or the Plan
Trust;


                                       62
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (n) to hear and determine any other matters related hereto,
including the implementation and enforcement of all orders entered by the
Bankruptcy Court in these Reorganization Cases;

            (o) to retain continuing jurisdiction with regard to the Plan Trust
sufficient to satisfy the requirements of the Treasury Regulations promulgated
under section 468B of the IRC (including Treas. Reg. Section 1.468B-1(c)(1));

            (p) to hear and determine any and all applications brought by the
Plan Trustees to amend, modify, alter, waive, or repeal any provision of the
Plan Trust Agreement or the TDP;

            (q) to enter such orders as are necessary to implement and enforce
the Injunctions and the other injunctions described herein, including, without
limitation, orders extending the protections afforded by section 524(g)(4) of
the Bankruptcy Code to the Protected Parties, including without limitation, ABI,
the ABI Parties and the Settling Asbestos Insurance Companies; and

            (r) to hear and determine any motions or contested matters involving
or related to the GHR/Kenesis Actions or the GHR/Kenesis Litigation Trust.

      Notwithstanding anything to the contrary in this Section 14.3, (i) the
allowance of Plan Trust Asbestos Claims (other than Asbestos Property Damage
Claims) and the forum in which such allowance will be determined, shall be
governed by and made in accordance with the Plan Trust Agreement and the Trust
Distribution Procedures and (ii) the Bankruptcy Court will have concurrent
rather than exclusive jurisdiction with respect to disputes relating to rights
under insurance policies included in the Plan Trust Assets.

      14.4 Payment of Statutory Fees. All fees payable pursuant to section 1930
of title 28 of the United States Code, as determined by the Bankruptcy Court at
the Confirmation Hearing, shall be paid by the Debtors on or before the
Effective Date and thereafter by the Reorganized Debtors as due until the
Reorganization Cases are closed, converted or dismissed.

      14.5 The Asbestos Claimants' Committee, the Futures Representative and the
Bondholders' Committee. The Asbestos Claimants' Committee shall continue in
existence until the Effective Date, with the Debtors to pay the reasonable fees
and expenses of the Asbestos Claimants' Committee and the Futures Representative
through that date as well, in accordance with any fee and expense procedures
promulgated during the Reorganization Cases. After the Effective Date, the
Futures Representative shall (a) continue in existence and the rights, duties
and responsibilities of the Futures Representative shall be as set forth in the
Plan Trust Documents and (b) have the right to prosecute and/or object to
applications for Professional Fee Claims. The Representatives retained by the
Futures Representative during the Reorganization Cases shall, as of the
Effective Date, be released and discharged of and from all further authority,
duties, responsibilities and obligations related to, or arising from, the
Reorganization Cases. On the Effective Date, the Bondholders' Committee shall be
dissolved except for the purposes of: (a) prosecuting any appeal or request for
reconsideration or stay pending appeal of the Confirmation Order; (b) pending
adversary proceedings; (c) enforcing the Additional Bondholder Recovery, if
applicable; and (d) prosecuting and/or objecting to Professional Fee claims, and
the members, attorneys, accountants, and other professionals thereof shall be
released and discharged of and from all further authority, duties,
responsibilities, liabilities, and obligations related to, or arising from, the
Reorganization Cases. On the Effective Date, the Trust Advisory Committee will
assume those powers, duties, and responsibilities as provided in the Plan Trust
Agreement.


                                       63
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      14.6 Revocation of Plan. The Debtors reserve the right to revoke and
withdraw the Plan before the entry of the Confirmation Order. If the Debtors
revoke or withdraw the Plan, or if Confirmation does not occur, then, with
respect to all parties in interest, the Plan shall be deemed null and void and
nothing contained herein shall be deemed to constitute a waiver or release of
any Claims by or against the Debtors or any other Entity or to prejudice in any
manner the rights of the Debtors or such Entity in any further proceedings
involving the Debtors.

      14.7 Modification of Plan. The Debtors, with the written consent of ABI,
may propose amendments to or modifications of any of the Plan Documents under
section 1127 of the Bankruptcy Code at any time prior to the Confirmation Date.
After Confirmation, the Debtors, with the written consent of the Futures
Representative, the Plan Trustees, the Bondholders' Committee and ABI, may
remedy any defects or omissions or reconcile any inconsistencies in the Plan or
the Confirmation Order or any other order entered for the purpose of
implementing the Plan in such manner as may be necessary to carry out the
purposes and intent of the Plan, provided, however, that none of the Debtors,
ABI, the Futures Representative, the Plan Trustees, the Asbestos Claimants'
Committee, the Bondholders' Committee and the Claimants' Representative shall
seek to terminate, reduce or limit the scope of the Asbestos Channeling
Injunction or any other injunction contained in the Plan that inures to the
benefit of any Settling Asbestos Insurance Company. Anything in the Plan or in
any Plan Document to the contrary notwithstanding, following Confirmation but
prior to the Effective Date, the Plan Documents shall not be modified,
supplemented, changed or amended in any material respect except with the written
consent of ABI (to the extent that any such modification, supplement, change, or
amendment impairs or affects the rights of ABI, or the Affiliates under the
Plan), the Futures Representative, the Bondholders' Committee (to the extent
that any such modification, supplement, change or amendment impairs or affects
the rights of holders of Senior Note Claims) and the Debtors. Unless otherwise
provided in the Confirmation Order or other order of a court of competent
jurisdiction in the event of a conflict between the terms or provisions of the
Plan and the Plan Trust Documents, the terms of the Plan shall control;
provided, however, the New Indenture shall control any conflict involving the
New Senior Notes.

      14.8 Modification of Payment Terms. The Reorganized Debtors reserve the
right to modify the treatment of any Allowed Claim (other than a Plan Trust
Asbestos Claim), as provided in section 1123(a)(4) of the Bankruptcy Code, at
any time after the Effective Date upon the consent of the holder of such Allowed
Claim, and solely with respect to any Allowed ABI Claim, with the additional
consent of the Futures Representative and the Plan Trustees.

      14.9 Entire Agreement. The Plan Documents and the Plan Trust Documents set
forth the entire agreement and undertakings relating to the subject matter
thereof and supersede all prior discussions and documents. No Entity shall be
bound by any terms, conditions, definitions, warranties, understandings, or
representations with respect to the subject matter hereof, other than as
expressly provided for herein or as may hereafter be agreed to by the parties in
writing.


                                       64
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      14.10 Headings. Headings are utilized in the Plan for convenience and
reference only and shall not constitute a part of the Plan for any other
purpose.

      14.11 Professional Fee Claims. All final requests for payment of
Professional Fee Claims must be filed and served on the Reorganized Debtors and
their counsel no later than 60 days after the Effective Date, unless otherwise
ordered by the Bankruptcy Court. Objections to any application of such
Bankruptcy Professionals or other Entities for compensation or reimbursement of
expenses must be filed and served on the respective applicant and its counsel no
later than the first Business Day following 30 days (or such other period as may
be allowed by order of the Bankruptcy Court) after the date on which the
applicable application for compensation or reimbursement was received. The
Reorganized Debtors may pay the reasonable charges that they incur on and after
the Effective Date for Bankruptcy Professionals' fees, disbursements, expenses
or related support services without application to the Bankruptcy Court. The
Reorganized Debtors shall pay the reasonable fees and expenses of the
Bondholders' Committee after the Effective Date in connection with the purposes
set forth in Section 14.5 of this Plan, without application to the Bankruptcy
Court.

      14.12 Recordable Order. Upon Confirmation of the Plan, the Confirmation
Order shall be deemed to be in recordable form, and shall be accepted by any
recording officer for filing and recording purposes without further or
additional orders, certifications, or other supporting documents.

      14.13 Governing Law. Except to the extent that federal law (including, but
not limited to, the Bankruptcy Code and the Bankruptcy Rules) is applicable or
where the Plan provides otherwise, the rights and obligations arising under the
Plan shall be governed by, and construed and enforced in accordance with, the
laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof that would require application of any other law.

      14.14 No Admission. Nothing contained in the Plan or in the Disclosure
Statement shall be deemed as an admission by the Debtors, with respect to any
matter set forth herein or therein, including, without limitation, liability on
any Claim or the propriety of any Claims classification.

      14.15 Consent to Jurisdiction. Upon default under the Plan or any Plan
Documents, the Debtors, the Reorganized Debtors, the Affiliates, ABI, the Plan
Trust, the Trust Advisory Committee, the Futures Representative, and the Plan
Trustees consent to the jurisdiction of the Bankruptcy Court, or any successor
thereto, and agree that it shall be the preferred forum for all proceedings
relating to such default.

      14.16 Setoffs. Subject to the limitations provided in section 553 of the
Bankruptcy Code, the Debtors or the Plan Trust, as applicable, may, but shall
not be required to, setoff against any Claim and the-payments or other
distributions to be made pursuant to the Plan in respect of such Claim, claims
of any nature whatsoever the Debtors may have against the holder of such Claim,
but neither the failure to do so nor the allowance of any Claim hereunder shall
constitute a waiver or release by the Debtors of any such claim that the Debtors
may have against such holder; provided that Reorganized Congoleum may not offset
any obligations under the New Convertible Security, the Plan Trust Note or the
New Class A Common Stock (including any shares of New Class A Common Stock
required to be issued by Reorganized Congoleum in accordance with Exhibit E to
the Plan) against any claim that Reorganized Congoleum may have against the Plan
Trust.


                                       65
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      14.17 Successors and Assigns. The rights, duties, and obligations of any
Entity named or referred to in the Plan shall be binding upon, and shall inure
to the benefit of, the successors and assigns of such Entity.

      14.18 Non-Debtor Waiver of Rights. Non-Debtor parties shall have the right
to voluntarily waive any rights, benefits or protections that are afforded to
them under the provisions of the Plan or any order issued in furtherance of the
Plan, and such waiver shall supersede such rights, benefits or protections. Any
such waiver shall only be effective if such party expressly and specifically
waives in writing one or more of such rights, benefits or protections.

      14.19 Further Authorizations. The Debtors, the Reorganized Debtors, the
Plan Trust, ABI and the Futures Representative, if and to the extent necessary,
may seek with notice to the others such orders, judgments, injunctions, and
rulings that any of them deem necessary to further carry out the intentions and
purposes of, and give full effect to the provisions of, the Plan.

      14.20 Notices. All notices, requests, elections, or demands in connection
with the Plan shall be in writing and shall be mailed by registered or certified
mail, return receipt requested, to:

If to the Debtors:

Pillsbury Winthrop Shaw Pittman LLP
1540 Broadway
New York, NY 10033-4039
Attn: Richard L. Epling
      Robin L. Spear
      Kerry A. Brennan

Okin, Hollander & DeLuca, LLP
Parker Plaza
400 Kelby Street
Fort Lee, NJ 07024
Attn: Paul S. Hollander
      James J. DeLuca

If to the Futures Representative:

R. Scott Williams, Esquire
Haskell Slaughter Young & Rediker, L.L.C.
2001 Park Place North, Suite 1400
Birmingham, AL 35203

      and


                                       66
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


Orrick, Herrington & Sutcliffe LLP
3050 K Street, N.W.
Washington, DC 20007
Attn: Roger Frankel
      Richard Wyron
      Jonathon Guy

If to the Asbestos Claimants' Committee:

Caplin & Drysdale, Chtd.
One Thomas Circle, N.W.
Washington, D.C. 20005
Attn: Peter Van N. Lockwood
      Ronald Reinsel

If to the Bondholders' Committee:

Akin Gump Strauss Hauer & Feld LLP
590 Madison Avenue
New York, NY 10022
Attn: Michael S. Stamer

Akin Gump Strauss Hauer & Feld LLP
1333 New Hampshire Avenue, N.W.
Washington D.C. 20036
Attn: James R. Savin

If to the Claimants' Representative:

Stutzman, Bromberg, Esserman & Plifka
2323 Bryan Street, Suite 2200
Dallas, TX  75201
Attn: Sander Esserman

      14.21 Duty to Cooperate. Notwithstanding anything herein to the contrary,
nothing in the Plan, the Plan Documents or the Confirmation Order shall relieve
(by way of injunction or otherwise) any of the Debtors or Reorganized Debtors or
any other Entity which is or claims to be an insured or entitled to indemnity
under an Asbestos Insurance Policy from any duty to cooperate that may be
required by any such insurance policy under applicable law with respect to the
defense and/or settlement of any Claim for which coverage is sought under such
Asbestos Insurance Policy. To the extent that any entity incurs costs in
satisfying such duty to cooperate with respect to Asbestos Personal Injury
Claims, the Plan Trust shall reimburse such entity for all such reasonable
out-of-pocket expenses.


                                       67
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                               CONGOLEUM CORPORATION

                               By: s/HOWARD N. FEIST III
                                   --------------------------------
                               Name: Howard N. Feist III
                               Title: Chief Financial Officer and Secretary


                               CONGOLEUM SALES, INC.


                               By: s/HOWARD N. FEIST III
                                   --------------------------------
                               Name: Howard N. Feist III
                               Title: Vice President, Treasurer and Secretary


                               CONGOLEUM FISCAL, INC.


                               By: s/HOWARD N. FEIST III
                                   --------------------------------
                               Name: Howard N. Feist III
                               Title: Vice President, Treasurer and Secretary


                               THE ASBESTOS CLAIMANTS' COMMITTEE


                               By: s/RONALD REINSEL
                                   --------------------------------
                               Name: Ronald Reinsel
                               Title: Counsel to Asbestos Claimants' Committee

<PAGE>

                                                           EXHIBIT A TO THE PLAN


                              Congoleum Corporation
                 Schedule of Property Damage Insurance Policies

         -------------------------------------------------------------
         Effective Date         Company        Policy Number
         -------------------------------------------------------------
         01/01/55-01/01/56      Liberty        LB-24-914417-55
         -------------------------------------------------------------
         01/01/56-01/01/57      Liberty        LP-24-692115-56
         -------------------------------------------------------------
         01/01/57-01/01/58      Liberty        LP-6032-900078-37
         -------------------------------------------------------------
         01/01/58-01/01/59      Liberty        LP-6032-900078-38
         -------------------------------------------------------------
         01/01/59-01/01/60      Liberty        LP-6032-900078-39
         -------------------------------------------------------------
         01/01/60-01/01/61      Liberty        LP-632-004138-040-93
         -------------------------------------------------------------
         01/01/61-01/01/62      Liberty        LP-632-0041 38-041-93
         -------------------------------------------------------------
         01/01/62-01/01/63      Liberty        LP-632-0041 38-042-93
         -------------------------------------------------------------
         01/01/63-01/01/64      Liberty        LP-632-0041 38-043-93
         -------------------------------------------------------------
         01/01/64-01/01/65      Liberty        LP-632-0041 38-044-93
         -------------------------------------------------------------
         01/01/65-01/01/66      Liberty        LP-632-0041 38-045-93
         -------------------------------------------------------------
         01/01/66-01/01/67      Liberty        LP-632-0041 38-046-93
         -------------------------------------------------------------
         01/01/67-01/01/68      Liberty        LG1-632-0041 38-047-9
         -------------------------------------------------------------
         01/01/68-01/01/69      Liberty        LG1-632-0041 38-048-9
         -------------------------------------------------------------
         01/01/69-01/01/70      Liberty        LG1-632-0041 38-049-9
         -------------------------------------------------------------
         01/01/70-01/01/71      Liberty        LGI-632-0041 38-040-9
         -------------------------------------------------------------
         01/01/71-01/01/72      Liberty        LG1-632-0041 38-041-9
         -------------------------------------------------------------
         01/01/72-01/01/73      Liberty        LG1-632-0041 38-042-9
         -------------------------------------------------------------
         01/01/75-03/01/76      Wausau         0526-00-084282
         -------------------------------------------------------------

<PAGE>

                                                           EXHIBIT B TO THE PLAN


                              Exhibit B to the Plan
                          "Collateral Trust Agreement"


<PAGE>

                                                           EXHIBIT B TO THE PLAN


                           COLLATERAL TRUST AGREEMENT

      This irrevocable trust agreement (the "Collateral Trust Agreement") is
entered into by and between Congoleum Corporation, a Delaware Corporation
("Congoleum"), Arthur J. Pergament, solely in his capacity as the Collateral
Trustee hereunder (the "Collateral Trustee"), and Wilmington Trust Company, a
Delaware banking corporation, solely in its capacity as Delaware Trustee
hereunder ("Delaware Trustee") (the Collateral Trustee and Delaware Trustee are
sometimes referred to herein as "Trustee" or collectively as the "Trustees")
(Congoleum and the Trustees collectively, the "Parties").

                                    RECITALS

      WHEREAS, numerous individuals have asserted asbestos-related bodily injury
claims against Congoleum (each an "Asbestos Claimant" and collectively, the
"Asbestos Claimants"), each alleging exposure to an asbestos-containing product
manufactured, sold, or distributed by Congoleum or for which Congoleum otherwise
may have legal liability (the "Asbestos Claims"), and it is anticipated that
additional asbestos-related bodily injury claims will continue to be asserted
against Congoleum (collectively, the "Asbestos Actions"); and

      WHEREAS, Congoleum and certain Asbestos Claimants, contemporaneously
herewith, are executing a settlement agreement, titled Settlement Agreement
Between Congoleum Corporation and Various Asbestos Claimants (the "Claimant
Agreement"); and

      WHEREAS, Congoleum entered into settlement agreements prior to the
Claimant Agreement to resolve certain Asbestos Claims, under which some or all
of the consideration has yet to be paid (the "Pre-Existing Settlement
Agreements"); and

      WHEREAS, Congoleum may enter into additional settlement agreements to
resolve certain Asbestos Claims that are scheduled for trial prior to the
commencement of an anticipated chapter 11 reorganization case for Congoleum in
an aggregate amount not to exceed $15,000,000.00 (the "Trial-Listed Settlement
Agreements"); and


                                        2
<PAGE>

                                                           EXHIBIT B TO THE PLAN


      WHEREAS, Congoleum, contemporaneously herewith, is executing an agreement
titled Security Agreement ("Security Agreement"), granting to the Collateral
Trust (as defined below) a present and continuing security interest in certain
insurance proceeds; and

      WHEREAS, Congoleum, to the extent permissible under applicable law,
intends that the Collateral Trust be characterized as a Qualified Settlement
Fund pursuant to Section 468B of the Internal Revenue Code of 1986, as amended,
and the Treasury regulations promulgated thereunder ("QSF"); and

      WHEREAS, Congoleum has asked the Trustees to act as the Collateral Trustee
and the Delaware Trustee, as applicable, and the Trustees have agreed to accept
this appointment under the terms hereof; and

      WHEREAS, the Parties desire to enter into this Collateral Trust Agreement
to confirm their agreements with respect to (i) the establishment, maintenance,
investment and disbursement of the Trust Assets (as defined below); and (ii)
certain other matters relating to the foregoing, as hereafter provided.

      NOW, THEREFORE, the Parties hereby agree as follows:

                                    AGREEMENT

I.    Establishment of THE Collateral Trust

      A. Creation and Name. The Parties hereby create a trust known as the
"Congoleum Collateral Trust," which is the "Collateral Trust" provided for and
referred to in the Claimant Agreement. The Collateral Trustee may transact the
business and affairs of the Collateral Trust in the name "Congoleum Collateral
Trust."


                                        3
<PAGE>

                                                           EXHIBIT B TO THE PLAN


      B. Purpose. The purpose of the Collateral Trust is: (i) to hold security
interests in the Collateral (as defined in the Security Agreement); (ii) to
receive Insurance Proceeds (as defined in the Security Agreement); and (3) to
pay amounts owed by Congoleum to various parties to Pre-Existing Settlement
Agreements, Trial-Listed Settlement Agreements, and Claimant Agreement, and
otherwise to meet the purposes and requirements stated in those agreements.

II.   Payment of Claims and Collateral Trust Administration

      A. Qualified Claims. Subject to the terms and conditions herein and in the
Claimant Agreement, the following persons and entities shall be entitled to
receive payment from the Collateral Trust in the following amounts:

            1. An Asbestos Claimant as to which Congoleum notifies the
      Collateral Trustee in writing that such Asbestos Claimant who entered into
      a Pre-Existing Settlement Agreement or a Trial-Listed Settlement Agreement
      with Congoleum has satisfied the requirements to qualify for payment under
      the terms of the applicable Pre-Existing Settlement Agreement or
      Trial-Listed Settlement Agreement (an Asbestos Claimant who has qualified
      under either a Pre-Existing Settlement Agreement or a Trial-Listed
      Settlement Agreement shall be referred to herein as a "Qualified First
      Priority Claimant"). Such Qualified First Priority Claimant shall be paid
      the applicable amount specified in the notice of satisfaction of the
      requirements for payment provided by Congoleum to the Trustee (the "First
      Priority Settlement Amount"). First Priority Settlement Amounts shall be
      paid in the order in which such Asbestos Claimants become Qualified First
      Priority Claimants. Each Qualified First Priority Claimant's First
      Priority Settlement Amount shall be fully secured, and shall be reduced by
      the amount of all payments received by the Qualified First Priority
      Claimant from Congoleum, the Collateral Trust, or any successor trust.


                                        4
<PAGE>

                                                           EXHIBIT B TO THE PLAN


            2. An Asbestos Claimant as to which the Claims Reviewer (as defined
      below) notifies the Trustee in writing that an Asbestos Claimant has
      satisfied the requirements to qualify as a Participating Asbestos Claimant
      (as defined in the Claimant Agreement). Such Participating Asbestos
      Claimant shall have a secured claim (the "Asbestos Claimant's Secured
      Claim") equal to seventy-five percent (75%) of the Participating Asbestos
      Claimant's Settlement Amount (as defined in the Claimant Agreement). Each
      Asbestos Claimant's Secured Claim shall be reduced by the amount of all
      payments received by the Participating Asbestos Claimant from the
      Collateral Trust or any successor trust.

            3. A claims-handling entity ("Claims Reviewer") as designated by
      Congoleum with the consent of Claimants' Counsel (as defined in the
      Claimant Agreement) shall be paid its fees and costs as agreed (the
      "Claims Handling Fee"). Congoleum shall be reimbursed by the Collateral
      Trust for all or part of the Claims Handling Fee paid by Congoleum.

      B. Payment of Qualified Claims. The Collateral Trustee shall make payments
from the Trust Assets (as defined below) from time to time to the extent that
the Collateral Trustee believes it is prudent in light of the funds available
for distribution, the requirements of II.B.6 and II.F. below, and other factors,
as follows:

            1. The Collateral Trustee shall pay the Settlement Amounts owed to
      the Qualified First Priority Claimants in the order in which the Qualified
      First Priority Claimants become Qualified First Priority Claimants based
      upon notice from Congoleum.


                                        5
<PAGE>

                                                           EXHIBIT B TO THE PLAN


            2. Following the payment in full of the Qualified First Priority
      Claimants, the Collateral Trustee shall pay to the Claims Reviewer and/or
      reimburse Congoleum for the Claims Handling Fee that has been paid by
      Congoleum to the Claims Reviewer.

            3. Following the payment in full of the Claims Handling Fee, the
      Collateral Trustee shall pay subsequent distributions up to $200 million
      in total distributions to Participating Asbestos Claimants on a pro-rata
      basis in accordance with Section II.C in an amount not to exceed each
      Participating Asbestos Claimants' Secured Claim.

            4. Following the payment of distributions aggregating $200 million
      to participating Asbestos Claimants, the Collateral Trustee shall pay all
      subsequent distributions as follows:

                  a.    Fifty percent (50%) to Participating Asbestos Claimants
                        on a pro-rata basis in accordance with Section II.C in
                        an amount not to exceed each Participating Asbestos
                        Claimants' Secured Claim; and

                  b.    The remainder to a reserve account, which the Collateral
                        Trustee shall maintain and hold until it is distributed
                        pursuant to Section II.B.5 (the "Reserve").

            5. Upon or as soon as practicable after the establishment by
      Congoleum of a trust qualified as a QSF pursuant to a confirmed plan of
      reorganization in a case commenced by Congoleum as a debtor under chapter
      11 of title 11 U.S.C., that preserves the rights of the beneficiaries
      hereunder and provides for the transfer of the Trust Assets, including the
      Reserve to a plan trust (the "Plan Trust"), the Collateral Trustee shall
      release the security interests granted by the Security Agreement and pay
      any remaining Trust Assets to the Plan Trust in accordance with the plan
      of reorganization. If no Plan Trust is established on or before the later
      of (a) three (3) years from the date of this Collateral Trust Agreement or
      (b) such time as all Participating Asbestos Claimants' Secured Claims are
      paid in full, the Collateral Trustee transfer any remaining Trust Assets,
      including the Reserve, to Congoleum.


                                        6
<PAGE>

                                                           EXHIBIT B TO THE PLAN


            6. Notwithstanding anything in this Collateral Trust Agreement to
      the contrary, from time to time the Collateral Trustee shall deduct from
      the Trust Assets and shall pay (a) such amounts as are reasonably
      necessary to pay Administrative Expenses (as defined below), and (b) any
      and all attorneys' fees or other professional fees, and related expenses
      and disbursements, incurred by or on behalf of Congoleum or any Congoleum
      successor in connection with the pursuit by Congoleum or any Congoleum
      successor of Congoleum's insurance coverage.

      C. Pro-Rata Distributions to Participating Asbestos Claimants. All
distributions from the Collateral Trust to Participating Asbestos Claimants
shall be allocated to individual Participating Asbestos Claimants by multiplying
the aggregate amount of the distribution to be made by a fraction, the numerator
of which is the unpaid amount of the Participating Asbestos Claimant's Secured
Claim and the denominator of which is the total of all remaining unpaid
Participating Asbestos Claimants' Secured Claims.

      D.    Trust Assets.

            1. In furtherance of the purposes of the Collateral Trust, the
      Collateral Trustee, on behalf of the Collateral Trust, shall receive and
      accept from Congoleum, or directly from Congoleum's liability insurers,
      Insurance Proceeds and other assets, if any, as designated in the Claimant
      Agreement (the "Trust Assets"). To the extent that the Collateral Trustee
      receives payments or other assets that are not properly Trust Assets, the
      Collateral Trustee shall promptly thereafter notify Congoleum and shall
      remit such payments or forward such assets to or as directed by Congoleum
      no later than five (5) business days after the receipt of such payments or
      assets. Interest and other investment income accrued on the Trust Assets
      shall become part of the Trust Assets.


                                        7
<PAGE>

                                                           EXHIBIT B TO THE PLAN


            2. So long as the Collateral Trust exists, the Collateral Trustee
      shall, from time to time, invest and reinvest the Trust Assets in
      accordance with the investment guidelines attached hereto as Appendix A
      (the "Investment Guidelines"). The Collateral Trustee shall have the right
      to liquidate any investment held, in order to provide funds necessary to
      make distributions of the Trust Assets pursuant to this Collateral Trust
      Agreement. Absent gross negligence or willful misappropriation, the
      Collateral Trustee shall not have any liability for any loss sustained as
      a result of any investment made pursuant to this Collateral Trust
      Agreement or as a result of any liquidation of any investment prior to its
      maturity. The Collateral Trustee shall have the power to exercise all
      rights with respect to the Collateral Trust's investments consistent with
      the Collateral Trustee's fiduciary duties to the Collateral Trust and in
      accordance with the Investment Guidelines.

      E.    Grant of Security Interest.

            1. Subject to the Claimant Agreement and the Security Agreement, the
      Collateral Trust shall have security interests in the Collateral (as
      defined in the Claimant Agreement and the Security Agreement). The
      Collateral Trustee shall have the power and authority to enforce the
      Collateral Trust's interest in the Collateral in accordance with the
      Collateral Trust Agreement, the Security Agreement, the Claimant
      Agreement, and applicable law.


                                        8
<PAGE>

                                                           EXHIBIT B TO THE PLAN


            2. Within ten (10) days following Congoleum's grant of the security
      interest, the Collateral Trustee shall take any and all actions that are
      necessary to establish and protect the security interest in the
      Collateral, including the filing of one or more UCC-1 financing
      statements. Congoleum agrees to execute and deliver promptly such
      financing statements and other documents, and do such other things, as the
      Collateral Trustee shall reasonably request, to effectuate the Collateral
      Trustee's actions hereunder, within three (3) business days of the
      Execution Date.

      F.    Administrative Expenses.

            1. The Collateral Trustee shall have the power to appoint such
      officers and hire such employees and engage such legal, financial,
      accounting, investment, auditing, forecasting and other professionals,
      service providers or consultants as the business of the Collateral Trust
      reasonably requires, and to delegate to such persons such powers and
      authorities as the fiduciary duties of the Collateral Trustee permits and
      as the Collateral Trustee deems necessary in order to carry out the terms
      of this Collateral Trust Agreement. The Collateral Trustee shall serve
      copies of statements and invoices for fees and expenses of the Collateral
      Trustee, prior to the payment of any such statements or invoices, upon the
      parties listed (the "Notice Parties"), and in the manner set out, in
      Section IV.F. Such statements or invoices may be paid by the Collateral
      Trustee unless, within ten (10) days after such service, any of the Notice
      Parties serves upon the Collateral Trustee and the other Notice Parties
      its objection to payment of all or part of such statement or invoice. The
      portion(s) of any statement or invoice with respect to which an objection
      is served may not be paid until the objection thereto is settled or is
      resolved in accordance with Section IV.L of this Collateral Trust
      Agreement.


                                        9
<PAGE>

                                                           EXHIBIT B TO THE PLAN


            2. The Collateral Trustee shall periodically estimate the funds that
      shall be necessary to pay administrative expenses incurred or expected to
      be incurred pursuant to the execution of the Collateral Trustee's duties
      ("Administrative Expenses"). Such Administrative Expenses shall include,
      without limitation, reasonable compensation of the Trustees and any and
      all Collateral Trust employees, payment of the reasonable fees of all
      professionals and consultants reasonably engaged by the Collateral Trust,
      and the reasonable expenses of operating and administering the Collateral
      Trust. Pursuant to Section II.B.6 of this Collateral Trust Agreement, the
      Collateral Trustee shall, from time to time, set aside from the Trust
      Assets amounts sufficient to pay the estimated Administrative Expenses
      ("Administrative Funds") and shall not use Administrative Funds for any
      other purpose, except as otherwise required by this Collateral Trust
      Agreement. In the event that the Administrative Funds are insufficient to
      pay all Administrative Expenses in full, the Collateral Trustee shall pay
      any unpaid Administrative Expenses from Trust Assets.

III.  The TrusteeS

      A.    Appointment of the Trustees.

            1. There shall be one (1) Collateral Trustee. The initial Collateral
      Trustee shall be Arthur J. Pergament.

            2. So long as required by the Delaware Act, there shall be one (1)
      Delaware Trustee who or which shall be (i) a natural person who is a
      resident of the State of Delaware or (ii) if not a natural person, an
      entity which has its principal place of business in the State of Delaware
      and otherwise meets the requirements of applicable law. The initial
      Delaware Trustee shall be Wilmington Trust Company.


                                       10
<PAGE>

                                                           EXHIBIT B TO THE PLAN


            3. In the event of a vacancy in the position of either Trustee
      pursuant to Section III.B hereto or otherwise, the vacancy shall be filled
      by agreement of Congoleum and Claimants' Counsel or by order of a court of
      competent jurisdiction. Immediately upon the appointment of such a
      successor Trustee, all rights, titles, duties, powers and authority of the
      predecessor Trustee shall be vested in, and undertaken by, the successor
      Trustee without any further act. No successor Trustee shall be liable
      personally for any act or omission of his or her predecessor Trustee.

      B.    Term of Service.

            1. Each Trustee shall serve until the earlier of (a) his or her
      resignation pursuant to Section III.B.2 hereto, (b) his or her removal
      pursuant to Section III.B.3 hereto, or (c) the termination of the
      Collateral Trust pursuant to Section IV.C hereto.

            2. Each Trustee may resign at any time by written notice to
      Congoleum and the Claimants' Counsel. Such notice shall specify a date
      when such resignation shall take effect, which shall not be less than
      ninety (90) days after the date such notice is given, absent the written
      consent of Congoleum to an earlier date.

            3. Each Trustee may be removed with or without cause at any time by
      written notice signed by Congoleum and Claimants' Counsel. Upon any such
      removal, such removed Trustee shall be entitled to any reimbursement and
      indemnification set forth in this Collateral Trust Agreement which remains
      due and owing at the time of such removal. Such removal shall be effective
      when a successor Trustee is appointed pursuant to Section III.A.3 above
      and the successor Trustee has accepted the appointment in writing.


                                       11
<PAGE>

                                                           EXHIBIT B TO THE PLAN


      C. Duties and Powers of the Collateral Trustee. The Collateral Trustee is
and shall act as a fiduciary to the Collateral Trust in accordance with the
provisions of this Collateral Trust Agreement. The Collateral Trustee at all
times shall administer the Collateral Trust and the Trust Assets to provide
reasonable assurance that the Collateral Trust shall be in a financial position
to maximize payment of all Qualified Claims. Subject to the limitations set
forth in this Collateral Trust Agreement, the Collateral Trustee shall have the
power to take any and all reasonable actions that, in the Collateral Trustee's
judgment, are necessary or proper to fulfill the purposes of the Collateral
Trust, including, without limitation, each power expressly granted in this
Collateral Trust Agreement and any power reasonably incidental thereto.

      D. Liability of the Trustees. Each Trustee shall not be liable to the
Collateral Trust, to any Asbestos Claimant, or to any other person except for
such Trustee's own breach of trust committed in bad faith, or for gross
negligence or willful misappropriation.

      E. Tax Duties of the Collateral Trustee. The Collateral Trustee shall
cause a Federal Employer Identification Number ("FEIN") for the Collateral Trust
to be obtained and shall cause the annual income tax returns to be filed on the
basis of a December 31 year end. The Collateral Trustee shall take all steps
necessary to ensure that all tax obligations of the Collateral Trust are
satisfied and all tax obligations imposed upon the Collateral Trust are paid. To
the extent necessary to satisfy this objective, the Collateral Trustee is hereby
authorized, among other things, to (i) obtain a tax identification number for
the Collateral Trust, (ii) communicate with the Internal Revenue Service and
state and local taxing authorities on behalf of the Collateral Trust, (iii) make
payment of taxes on behalf of the Collateral Trust (which taxes will be paid out
of the Trust Assets), (iv) file all applicable tax returns for the Collateral
Trust to the extent permissible under applicable law, and (v) withhold taxes on
payments made pursuant to this Collateral Trust Agreement as required by
applicable law. To the extent permissible under applicable law, the Collateral
Trustee shall jointly with Congoleum prepare and file a "relation-back election"
under Treasury Regulation ss. 1.468B-1(j)(2)(ii), and shall otherwise cooperate
with Congoleum in its efforts to cause the Collateral Trust to qualify as a QSF
for federal income tax purposes.


                                       12
<PAGE>

                                                           EXHIBIT B TO THE PLAN


      F. Compensation and Expenses of the Collateral Trustee. The Collateral
Trustee shall receive compensation from the Collateral Trust for his or her
service as Collateral Trustee in the amount of $195.00 per hour devoted to
Collateral Trust business. The hourly rate of compensation payable to the
Collateral Trustee hereunder shall be subject to adjustment periodically, with
the consent of Claimants' Counsel (as defined in the Claimant Agreement) and
Congoleum. The Collateral Trust shall reimburse the Collateral Trustee for all
reasonable out-of-pocket costs and expenses incurred by the Collateral Trustee
in connection with the performance of his or her duties hereunder.

      G. Reporting Duties of the Collateral Trustee. The Collateral Trustee
shall submit to Congoleum and to Claimants' Counsel periodic reports as such
parties shall reasonably request. Congoleum or Claimants' Counsel shall have the
right to conduct from time to time a financial audit of the Collateral Trust at
such party's own expense.

      H. Power to Act on Behalf of the Collateral Trust. The Collateral Trustee
shall have the power to act on behalf of the Collateral Trust, including,
without limitation, the power to:

            1. initiate any judicial, administrative, arbitrative or other
      proceeding only with the consent of Claimant's Counsel, as representatives
      of the beneficiaries of the Trust, provided that if Claimant's Counsel
      withholds such consent, the Collateral Trustee may seek such consent from
      a court of competent jurisdiction;

                                       13
<PAGE>

                                                           EXHIBIT B TO THE PLAN


            2. be sued and participate, as a party or otherwise, in any
      judicial, administrative, arbitrative or other proceeding;

            3. execute and deliver such instruments as the Collateral Trustee
      considers proper in administering the Collateral Trust; and

            4. enter into such arrangements with third parties as is deemed by
      the Collateral Trustee to be necessary in carrying out the purposes of the
      Collateral Trust, provided such arrangements do not conflict with any
      other provision of this Collateral Trust Agreement or the Claimant
      Agreement.

      I. Delaware Trustee. Notwithstanding any other provision of this
Collateral Trust Agreement, the Delaware Trustee shall not be entitled to
exercise any powers, nor shall the Delaware Trustee have any of the duties or
responsibilities of the Collateral Trustee described in this Collateral Trust
Agreement. The Delaware Trustee shall be a Trustee for the sole and limited
purpose of fulfilling the requirements of Section 3807 of chapter 38 of Title 12
of the Delaware Code, 12 Del. C.ss.ss.3801 et seq. (the "Delaware Act").

      J. Compensation and Expenses of the Delaware Trustee. The Delaware Trustee
shall receive compensation from the Trust for its service as Delaware Trustee at
the rates detailed in a mutually acceptable fee agreement. The fee agreement may
be modified with the prior written consent of the Claimants' Counsel and
Congoleum. The Trust shall reimburse the Delaware Trustee as a part of the
Administrative Expenses for all reasonable out-of-pocket costs and expenses
incurred by the Delaware Trustee in connection with the performance of its
duties hereunder, at the rates detailed in the fee agreement. To the extent that
Congoleum pays any fees or costs to the Delaware Trustee on behalf of the Trust,
the Trust shall promptly reimburse Congoleum for the fees and costs so paid as
monies are available in the Trust.


                                       14
<PAGE>

                                                           EXHIBIT B TO THE PLAN


IV. General Provisions

      A. Irrevocability. The Collateral Trust is irrevocable.

      B. Effective Date. This Collateral Trust Agreement shall be effective on
the date on which both Parties have signed and delivered the Collateral Trust
Agreement.

      C. Termination. The Collateral Trust shall terminate upon the earliest of:
(i) the payment in full of all of the Participating Asbestos Claimant's Secured
Claims and the distribution of all Trust Assets pursuant to the terms of this
Collateral Trust Agreement; (ii) the distribution of all Trust Assets pursuant
to the terms of this Collateral Trust Agreement and the Trustee's determination
that no further steps to recover any assets subject to the Security Interest are
commercially reasonable; (iii) the transfer of the Trust Assets to the Plan
Trust pursuant to the terms of this Collateral Trust Agreement; or (iv) the
payment of the Trust Assets to Congoleum pursuant to the terms of Section
II.B.5.

      D. Amendments. The Trustee, with the unanimous consent of Congoleum and
Claimants' Counsel, may modify and amend this Collateral Trust Agreement. Any
modification made pursuant to this Section IV.D must be made in writing.

      E. Incorporation by Reference. All terms and conditions contained in the
Claimant Agreement shall be incorporated in this Agreement by reference.
Capitalized terms not otherwise defined herein shall have the meanings accorded
to them in the Claimant Agreement.

      F. Notices. All notices hereunder shall be in writing and shall be deemed
to have been sufficiently given or served for all purposes (if mailed) three (3)
calendar days after being deposited, postage prepaid, in the United States Mail,
registered or certified mail, or (if delivered by express courier) one (1)
business day after being delivered to such courier, or (if delivered in person
or via facsimile with faxed confirmation) the same day as delivery if delivered
on a business day before 4:30 p.m. EST or EDT (as applicable) or if not so
delivered, on the next succeeding business day, except with respect to notices
issued to the Collateral Trustee, such notices shall be deemed received on the
date actually received by the Collateral Trustee. Notice to the Claimants'
Counsel shall be deemed notice to each Asbestos Claimant. Notices shall be
addressed as follows:


                                       15
<PAGE>

                                                           EXHIBIT B TO THE PLAN


Congoleum:

Roger Marcus
Congoleum Corporation
3500 Quakerbridge Road
P.O. Box 3127
Mercerville, New Jersey  08616
(609) 584-3000 - Telephone No.
(609) 584-3655 - Facsimile No.

With copies to:

Bette Orr, Esq.
Gilbert, Heintz & Randolph. LLP
1100 New York Avenue
7th Floor
Washington, DC 20005
(202) 772-2200 - Telephone No.
(202) 772-3333 - Facsimile No.

Norman L. Pernick, Esq.
Saul Ewing LLP
222 Delaware Avenue
Suite 1200
Wilmington, DE 19899
(302) 421-6800 - Telephone No.
(302) 421-6813 - Facsimile No.

Mark Chehi, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
P.O. Box 636
Wilmington, DE 19899
(302) 651-3000 - Telephone No.
(302) 651-3001 - Facsimile No.


                                       16
<PAGE>

                                                           EXHIBIT B TO THE PLAN


Collateral Trustee:

Arthur Pergament
Pergament Advisors
950 Third Avenue, 3rd Floor
New York, NY  10022
(212) 754-7913
(212) 994-6229

Delaware Trustee:

James J. McGinley
Vice President and Sales Manager
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890

Claimants' Counsel:

Perry Weitz, Esq.
Weitz & Luxenberg
180 Maiden Lane
New York, NY  10038
(212) 558-5500 - Telephone No.
(212) 344-5461 - Facsimile No.

Joseph F. Rice, Esq.
28 Bridgeside Boulevard
P.O. Box 1792
Mt. Pleasant, SC  29464
(843) 216-9000 - Telephone No.
(843) 216-9290 - Facsimile No.

      G. Successors and Assigns. This Collateral Trust Agreement shall be
binding upon the Parties and their respective successors and assigns.

      H. Entire Agreement. This Collateral Trust Agreement contains the complete
and entire understanding of the Parties with respect to the subject matter
hereof, and no changes shall be recognized as valid unless they are made in
writing and signed by the parties as required by Section IV.D hereto.


                                       17
<PAGE>

                                                           EXHIBIT B TO THE PLAN


      I. Headings. The headings used in this Collateral Trust Agreement are
included for convenience only and neither constitute a portion of this
Collateral Trust Agreement nor in any manner affect the construction of the
provisions of this Collateral Trust Agreement.

      J. Invalidity; Illegality. The invalidity, illegality, or unenforceability
of any provision of this Collateral Trust Agreement pursuant to a judicial or
tribunal decree shall not affect the validity or enforceability of any other
provision of this Collateral Trust Agreement, all of which shall remain in full
force and effect.

      K. Governing Law. The Collateral Trust Agreement shall in all respects be
governed by, and construed in accordance with, the laws of the State of Delaware
(excluding conflict of law rules), including all matters of construction,
validity and performance; provided, however, that there shall not be applicable
to the Collateral Trust, the Trustees or this Collateral Trust Agreement, any
provisions of the laws (statutory or common) of the State of Delaware, other
than the Delaware Act, pertaining to trusts that relate to or regulate, in a
manner inconsistent with the terms hereof (i) the filing with any court or
governmental body or agency of trustee accounts or schedule of trustee fees and
charges, (ii) affirmative requirements to post bonds for trustees, officers,
agents, or employees of a trust, (iii) the necessity for obtaining court or
other governmental approval concerning the acquisition holding or disposition of
real personal property, (iv) fees or other sums payable to trustees, officers,
agents, or employees of a trust, (v) the allocation of receipts and expenditures
to income and principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding or investing trust assets, or
(vii) the establishment of fiduciary or other standards or responsibilities or
limitations on the acts or powers of trustees.


                                       18
<PAGE>

                                                           EXHIBIT B TO THE PLAN


      L. Dispute Resolution. Any dispute arising out of or relating to this
contract including the breach, termination or validity thereof shall be settled
by arbitration in accordance with the CPR Rules for Non-Administered Arbitration
in effect on the date of this Collateral Trust Agreement, by a sole arbitrator
who shall be drawn from the CPR judicial list of distinguished neutrals. The
arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. ss.ss.
1-16, and judgment upon the award rendered by the arbitrator may be entered by
any court having jurisdiction thereof. The place of arbitration shall be
Wilmington, Delaware. The arbitrator is not empowered to award damages in excess
of compensatory damages and each party expressly waives and foregoes any right
to punitive, exemplary or similar damages unless a statute requires that
compensatory damages be increased in specified manner. The statute of
limitations of the State of Delaware applicable to the commencement of a lawsuit
shall apply to the commencement of arbitration hereunder.

      M. Counterparts. This Collateral Trust Agreement may be executed in any
number of counterparts. Each of such counterparts for all purposes shall be
deemed to be an original, and all such counterparts together shall constitute
but one and the same Agreement.


                                       19
<PAGE>

                                                           EXHIBIT B TO THE PLAN


      IN WITNESS WHEREOF, the parties have caused this Collateral Trust
Agreement to be duly executed this 16th day of April 2003.

                                   CONGOLEUM CORPORATION


                                   By  /s/ Howard N. Feist III
                                       ----------------------------------
                                       Howard N. Feist III
                                       Chief Financial Officer


                                   COLLATERAL TRUSTEE


                                   By  /s/ Arthur J. Pergament
                                       ----------------------------------
                                       Arthur J. Pergament


                                   DELAWARE TRUSTEE


                                   By  /s/ Janet H. Havrilla
                                       ----------------------------------
                                       Janet H. Havrilla
                                       Financial Services Officer
                                       Wilmington Trust Company


                                       20
<PAGE>

                                                           EXHIBIT B TO THE PLAN


APPENDIX A

                             INVESTMENT GUIDELINES

1.    United States-Direct Obligations (e.g., Treasury Bills, Notes and Bonds).
      Any United States direct obligation that has a maturity of not more than 2
      years from the date of purchase.

2.    Government Agencies and Instrumentalities-Direct or Indirect Obligations
      (e.g., notes issued by the Federal Home Loan Bank and Federal National
      Mortgage Association). Any government agency or instrumentality direct or
      indirect obligation that has a maturity of not more than 2 years from the
      date of purchase.

3.    Commercial Paper. Any commercial paper note of a foreign or domestic
      corporation that has a maturity of not more than six months and that is
      rated no lower than A-1 by S&P or P-1 by Moody's.

4.    Medium Term Notes. Any promissory note of a domestic corporation that has
      a maturity of not more than 2 years from the date of purchase and that is
      rated no lower than A by S&P or Moody's.

5.    Bank Securities. Any foreign or domestic banker's acceptance, certificate
      of deposit, time deposit or note that has a maturity of not more than 1
      year from the date of purchase and that is rated no lower than A by
      Moody's or S&P.

6.    Municipal Securities. Any issue that includes direct or indirect
      obligations of any state, county, city or other qualifying entity. A
      short-term issue may be rated no lower than MIG 1 or SP-1; a long-term
      issue may be rated no lower than A by S&P or Moody's. Issues must have a
      maturity or redemption option of not more than 2 years from the date of
      purchase.

7.    Money Market Fund. Any money market fund that has minimum net assets of
      $500 million and an average portfolio maturity of not more than 180 days.

8.    Other (e.g., U.S. dollar asset-backed securities, private placements, U.S.
      dollar obligations of foreign governments, supra-national organizations
      and domestic and foreign corporations). Any other investment that has a
      maturity of not less than 1 year from the date of purchase and that is
      rated no lower than A by Moody's or S&P.


                                       21
<PAGE>

                                                           EXHIBIT B TO THE PLAN


                  FIRST AMENDMENT TO COLLATERAL TRUST AGREEMENT

      This first amendment to the Collateral Trust Agreement ("Amendment to the
Collateral Trust Agreement") is entered into by and among Congoleum Corporation,
a Delaware Corporation ("Congoleum"), Arthur J. Pergament, solely in his
capacity as the Collateral Trustee hereunder (the "Collateral Trustee") and
Wilmington Trust Company, a Delaware banking corporation, solely in its capacity
as Delaware Trustee (the "Delaware Trustee") (Congoleum, the Collateral Trustee,
and the Delaware Trustee, collectively, the "Parties"), with the consent of
Claimants' Counsel, as designated in the Settlement Agreement Between Congoleum
Corporation And Various Asbestos Claimants.

                                    RECITALS

      WHEREAS Congoleum, the Collateral Trustee and the Delaware Trustee entered
into the Collateral Trust Agreement pursuant to which a statutory trust under
the Delaware Statutory Trust Act was created on April 17, 2003; and

      WHEREAS, Congoleum and various Asbestos Claimants executed a settlement
agreement dated April 10, 2003, titled Settlement Agreement Between Congoleum
Corporation and Various Asbestos Claimants (the "Claimant Agreement"); and

      WHEREAS, Congoleum and various Asbestos Claimants contemporaneously
herewith are executing that certain first amendment to the Claimant Agreement
(the "Amendment to the Claimant Agreement"); and

      WHEREAS, on or about April 11, 2003 and April 17, 2003, respectively,
Congoleum executed agreements titled "Security Agreement" and "Second Security
Agreement" (collectively, the "Security Agreements") granting to the Collateral
Trust a present and continuing security interest in certain insurance proceeds;
and


<PAGE>

                                                           EXHIBIT B TO THE PLAN


      WHEREAS, Congoleum and the Collateral Trustee contemporaneously herewith
have terminated the Security Agreements by the means of the Termination
Agreement and entered into a subsequent security agreement ("Superceding
Security Agreement"); and

      WHEREAS, the Parties desire to enter into this Amendment to the Collateral
Trust Agreement to confirm their agreement with respect to (i) the termination
of the Security Agreements; (ii) the execution of the Superceding Security
Agreement, (iii) certain technical corrections to the Collateral Trust
Agreement; and (iv) certain other matters relating to the foregoing, as
hereafter provided; and

      WHEREAS, Section IV.D. of the Collateral Trust Agreement authorizes the
Trustee, with the unanimous consent of Congoleum and Claimants' Counsel to
modify and amend the Collateral Trust Agreement.

      NOW, THEREFORE, the Parties hereby agree that the Collateral Trust
Agreement shall be amended as follows:

                                    AGREEMENT

1. The paragraph below shall be added to the Claimant Agreement as Section I.C:

      C. Nontransferability of Beneficial Interests. The beneficial interests in
      the Collateral Trust are not transferable or assignable, except as may be
      provided under operation of law or after the death of an Asbestos Claimant
      pursuant to a will or the law applicable to decedent's estates. The
      beneficial interests in the Collateral Trust shall not be evidenced by a
      separate certificate. Nothing in this paragraph I.C shall in any way
      restrict the ability of the Collateral Trust to transfer the Trust Assets
      to any trust established pursuant to a plan of reorganization for
      Congoleum under chapter 11 of the United States Bankruptcy Code.


                                        2
<PAGE>

                                                           EXHIBIT B TO THE PLAN


2. Sections II.E.1 and 2 of the Collateral Trust Agreement shall be replaced in
their entirety with:

      E. Enforcement of Security Interest.

      The Collateral Trustee shall have the power and authority to enforce the
      Collateral Trust's interest in the Collateral in accordance with the
      Superceding Security Agreement and applicable law.

3. Sections IV.C and IV.D of the Collateral Trust Agreement shall be replaced in
their entirety with:

      C. Termination. The Collateral Trust shall terminate upon the earliest of:
      (i) the payment in full of all of the Participating Asbestos Claimant's
      Secured Claims and the distribution of all Trust Assets pursuant to the
      terms of this Collateral Trust Agreement; (ii) the distribution of all
      Trust Assets pursuant to the terms of this Collateral Trust Agreement and
      the Collateral Trustee's determination that no further steps to recover
      any assets subject to the Security Interest are commercially reasonable;
      (iii) the transfer of the Trust Assets to the Plan Trust pursuant to the
      terms of this Collateral Trust Agreement; (iv) the payment of the Trust
      Assets to Congoleum pursuant to the terms of Section II.B.5; or (v) the
      expiration of any Perpetuities Period applicable to the Collateral Trust,
      provided that, to the extent permitted by applicable law, Congoleum
      directs that the Rule Against Perpetuities shall not apply to the
      Collateral Trust and that the Collateral Trust shall not be limited by a
      Perpetuities Period. "Perpetuities Period" shall mean the period (if any)
      defined by any applicable rule against perpetuities (the "Applicable
      Rule") within which interests in the Collateral Trust must vest in order
      to be valid when created. The Perpetuities Period includes any period in
      gross permitted by the Applicable Rule, such as twenty-one (21) years. If
      the Perpetuities Period is defined with reference to a given date or the


                                        3
<PAGE>

                                                           EXHIBIT B TO THE PLAN


      death of the last survivor of a class of individuals living on a given
      date (the "Measuring Lives"), the date shall be the date prescribed by the
      Applicable Rule and the Measuring Lives shall be the members of the class
      of persons living on that date who are authorized to receive any payment
      from the Collateral Trust prior to its termination. If the Applicable Rule
      applies differently to different kinds of Trust Assets, a direction to
      terminate the Collateral Trust upon the expiration of the Perpetuities
      Period shall be applied separately to the different kinds of property. If
      Trust Assets transferred to the Collateral Trustee at different times have
      different Perpetuities Periods, a direction to terminate the Collateral
      Trust upon the expiration of the Perpetuities Period shall be applied
      separately to the different Trust Assets, provided that (i) Trust Assets
      for which no sufficient record exists to determine the date of transfer
      shall be deemed for this purpose to have been transferred on the earliest
      possible date, and (ii) an insurance policy or the proceeds of an
      insurance policy shall be deemed transferred on the date the policy is
      acquired by the Collateral Trust regardless of the dates on which premiums
      are subsequently paid. If the Collateral Trust suspends the power of
      alienation or permits accumulations within the meaning of any Applicable
      Rule limiting the period for such suspension or accumulations then this
      provision shall apply to such suspension or accumulations as if they were
      non-vested interests. Upon the termination of the Collateral Trust
      pursuant to the application of any Perpetuities Period, the Collateral
      Trustee shall pay the remaining principal to Congoleum.

      D. Amendments. The Collateral Trustee, with the unanimous consent of
      Congoleum and Claimants' Counsel, may modify and amend this Collateral
      Trust Agreement. Any modification made pursuant to this Section IV.D must
      be made in writing. The ability of the Collateral Trustee, Congoleum and
      Claimants' Counsel to amend this Collateral Trust Agreement in accordance
      with this Section IV.D shall not be restricted by any third party not a
      party hereto, including without limitation any Asbestos Claimant.
      Notwithstanding the foregoing or any other provision of this Collateral
      Trust Agreement, no modification or amendment to this Collateral Trust
      Agreement shall be effective to alter the rights or duties of the Delaware
      Trustee unless consented to in writing by the Delaware Trustee.


                                        4
<PAGE>

                                                           EXHIBIT B TO THE PLAN


4. Other than expressly provided for herein, the terms of the Collateral Trust
Agreement shall remain in full force and effect.

5. The Collateral Trust Agreement and this Amendment to the Collateral Trust
Agreement (collectively, the "Agreements") constitute a single integrated
written contract expressing the entire agreement among the parties hereto with
respect to the subject matter hereof. The Agreements supercede any prior
understandings and agreements between or among the parties with respect to the
subject matter of the Agreements. Any statements, promises or inducements,
whether made by any party or any agents of any party, that are not contained in
the Agreements shall not be valid or binding. The failure or invalidation of any
provision of the Agreements shall not in any way affect the validity or
performance of any party pursuant to any other provision of the Agreements.

6. References in the Claimant Agreement, the Superceding Security Agreement and
the Collateral Trust Agreement to the "Collateral Trust Agreement" shall be
deemed references to the Agreements.

7. This Amendment to the Collateral Trust Agreement may be executed in any
number of counterparts. Each of such counterparts for all purposes shall be
deemed to be an original, and all such counterparts together shall constitute
but one and the same Amendment to the Collateral Trust Agreement.


                                        5
<PAGE>

                                                           EXHIBIT B TO THE PLAN


      IN WITNESS WHEREOF, the Parties have caused this Amendment to the
Collateral Trust Agreement to be duly executed this 6th day of June 2003.

                                    CONGOLEUM CORPORATION

                                    By /s/ Howard N. Feist III
                                       ------------------------------------
                                           Howard N. Feist III
                                           Chief Financial Officer


                                    COLLATERAL TRUSTEE

                                    By /s/ Arthur J. Pergament
                                       ------------------------------------
                                           Arthur J. Pergament


                                    Delaware TRUSTEE

                                    By /s/ Ronney Perkins
                                       ------------------------------------
                                           Ronney Perkins
                                           Assistant Vice President
                                           Wilmington Trust Company

CONSENT:

      By their signatures below, Claimants' Counsel, as designated in the
Settlement Agreement Between Congoleum Corporation And Various Asbestos
Claimants, indicate their consent to the execution of this Amendment to the
Collateral Trust Agreement.

                                    /s/ Perry Weitz
                                    ---------------
                                          Perry Weitz, Esq.

                                    /s/ Joseph F. Rice
                                    ------------------
                                          Joseph F. Rice, Esq.


                                       6
<PAGE>

                                                           EXHIBIT C TO THE PLAN


                              Exhibit C to the Plan

                      ASBESTOS INSURANCE RIGHTS ASSIGNMENT
                                   AGREEMENT



                                        1
<PAGE>

                                                           EXHIBIT C TO THE PLAN


                 ASBESTOS INSURANCE RIGHTS ASSIGNMENT AGREEMENT


      This ASBESTOS INSURANCE RIGHTS ASSIGNMENT AGREEMENT (this "Agreement") is
made as of [               ], 2006 by and among Congoleum Corporation, Congoleum
Sales, Inc. and Congoleum Fiscal, Inc. (collectively, the "Insurance
Contributors") and the Plan Trust. Capitalized terms used herein without
definition shall have the meanings given to such terms in the Eleventh Modified
Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code of
Congoleum Corporation, et al. (as amended, modified or supplemented from time to
time in accordance with the terms thereof, the "Plan").

      WHEREAS, to protect themselves from certain risks resulting from their
businesses, the Insurance Contributors purchased liability insurance policies;

      WHEREAS, numerous individuals, business organizations, and other persons
have asserted asbestos-related personal injury claims against Congoleum and
certain affiliated entities;

      WHEREAS, on December 31, 2003, Congoleum and certain affiliated entities
filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy
Code in the United States Bankruptcy Court for the District of New Jersey;

      WHEREAS, the Plan was confirmed on  [                ], and has become
effective;

      WHEREAS, the Plan provides that the Insurance Contributors will assign the
Asbestos Insurance Rights to the Plan Trust;

      WHEREAS, the Insurance Contributors wish to implement the terms of the
Plan; and

      WHEREAS, the Insurance Contributors are receiving good and valuable
consideration in exchange for the transfers, grants, assignments, and promises
made in this Agreement, including the releases and indemnification described in
the Plan and related documents, the receipt and sufficiency of which is
acknowledged and agreed;

      NOW, THEREFORE, subject to and on the terms and conditions herein set
forth, the Insurance Contributors and the Plan Trust hereby agree as follows:

I.    ASSIGNMENT TO THE PLAN TRUST

      A. Effective upon the Effective Date, the Insurance Contributors hereby
irrevocably transfer and assign to the Plan Trust any and all of their Asbestos
Insurance Rights and all rights and claims asserted in the pending Coverage
Litigation (including without limitation cash and other proceeds of all such
rights and claims received by any Insurance Contributor and/or any Debtor during
the pendency of the Reorganization Cases), free and clear of all Claims, Liens
and encumbrances, provided, however, that such transfer and assignment of the
Asbestos Insurance Rights shall be subject to the terms of the Plan and the Plan
Trust Agreement.

      B. The Plan Trust and the Insurance Contributors intend that the Asbestos
Insurance Assignment be made to the maximum extent permitted under applicable
law.

      C. The Asbestos Insurance Assignment is not an assignment of any insurance
policy.


                                        2
<PAGE>

                                                           EXHIBIT C TO THE PLAN


      D. Upon request by the Plan Trust and at the cost of the Plan Trust (as
provided in Section II herein), an Insurance Contributor or Reorganized Debtor,
as applicable, shall (i), provided that the Plan Trust provides reasonable
evidence of its ability to promptly pay all costs incurred in such effort, use
its best efforts to pursue any of the Asbestos Insurance Rights for the benefit
of and to the fullest extent required by the Plan Trust, and (ii) immediately
transfer any amounts recovered under or on account of any of the Asbestos
Insurance Rights to the Plan Trust; provided, however, that while any such
amounts are held by or under the control of an Insurance Contributor or
Reorganized Debtor, such amounts (and any interest earned thereon) shall be
segregated and held in trust for the benefit of the Plan Trust.

II.   COOPERATION

      A. To the fullest extent permitted by applicable law, the Insurance
Contributors and/or Reorganized Debtors, as the case may be, shall provide the
Plan Trust with such cooperation as the Plan Trust may reasonably request in
connection with the pursuit by the Plan Trust of the Asbestos Insurance Rights.
Such cooperation shall include, but not be limited to, making their books,
records, employees, agents and professionals available to the Plan Trust. The
Plan Trust shall reimburse the Insurance Contributors and/or Reorganized
Debtors, as the case may be, for their reasonable out-of-pocket costs and
expenses (including reasonable attorneys' and consultants' fees) incurred (i) in
connection with providing the cooperation described in the preceding sentences,
and (ii) in connection with the pursuit of Asbestos Insurance Rights as provided
in Section I.D. above. Such reimbursement shall be paid promptly following
request for reimbursement accompanied by appropriate documentation.

      B. Notwithstanding anything in the Plan Documents to the contrary, the
Insurance Contributors and/or Reorganized Debtors, as the case may be, as part
of every settlement with any one or more London Market insurer(s) (including
Equitas), hereby agree that the Plan Trust, in its sole discretion, may
effectuate a complete policy buy-back of any policies subscribed by any one or
more London Market insurer(s) (following which the Insurance Contributors and/or
Reorganized Debtors shall retain no coverage with respect to such insurer(s)).
The Insurance Contributors and/or Reorganized Debtors, as the case may be,
hereby waive their rights to any proceeds of all such settlements, and all
proceeds of each such settlement (other than as reimbursement in accordance with
the Collateral Trust Agreement and the Plan Documents of Coverage Costs and/or
the Claims Handling Fee) shall be held for the benefit of Asbestos Claimants in
accordance with the Plan Documents.

      C. The Insurance Contributors and/or Reorganized Debtors, as the case may
be, upon request of the Plan Trustee, shall evaluate additional requests for
complete policy commutations. To the extent that additional complete policy
commutations do not materially impair the Insurance Contributors' and/or
Reorganized Debtors', as the case may be, ongoing need for insurance coverage
for potential non-asbestos liabilities and such additional releases are
reasonably necessary to permit the realization of asbestos-related insurance
settlements, the Insurance Contributors and/or Reorganized Debtors, as the case
may be, will cooperate with the Plan Trustee to provide additional policy
commutations. Such additional policy commutations may be conditioned upon a
reasonable allocation of policy proceeds or other provisions to protect
Congoleum from potential non-asbestos liabilities as may be agreed between the
Insurance Contributors and/or Reorganized Debtors, as the case may be, and the
Plan Trustee.

      D. The Insurance Contributors and/or Reorganized Debtors, as the case may
be, agree that their collection or use, if any, of proceeds of any Asbestos
Insurance Policy, to the extent permitted under the Plan Documents, (i) will not
reduce any aggregate, per occurrence or other policy limit of any Asbestos
Insurance Policy that is or could potentially be applicable to Asbestos Claims,
and (ii) will not in any way interfere with the Plan Trust's exercise of any
Asbestos Insurance Rights.


                                       3
<PAGE>

                                                           EXHIBIT C TO THE PLAN


III.  MISCELLANEOUS

      A. Binding Effect, Assignment, Third Party Beneficiaries. This Agreement
shall be binding on each of the parties hereto and their respective successors
and assigns. This Agreement is not intended, and shall not be construed, deemed
or interpreted, to confer on any person or entity not a party hereto any rights
or remedies hereunder.

      B. Entire Agreement; Amendment; Waivers. This Agreement, the Plan and the
other Plan Documents shall constitute the entire agreement and understanding
among the parties to this Agreement with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written, among
the parties hereto relating to the subject matter of this Agreement. This
Agreement may not be amended or modified, and no provision hereof may be waived,
except by an agreement in writing signed by the party against whom enforcement
of any such amendment, modification or waiver is sought.

      C. Governing Law. This Agreement and the rights and obligations of the
parties hereto under this Agreement shall be governed by and construed and
enforced in accordance with the substantive laws of the State of Delaware,
without regard to any conflicts of law provisions thereof that would result in
the application of the laws of any other jurisdiction.

      D. Counterparts. This Agreement may be executed in multiple counterparts,
each of which will be an original, but all of which together will constitute one
and the same agreement.

                            [SIGNATURE PAGE FOLLOWS]


                                        4
<PAGE>

                                                           EXHIBIT C TO THE PLAN


      IN WITNESS WHEREOF, the parties hereto have caused this Asbestos Insurance
Rights Assignment Agreement to be duly executed by their respective duly
authorized representatives as of the date first above written.

                                    CONGOLEUM CORPORATION


                                    By:  ______________________
                                    Its: ______________________

                                    CONGOLEUM SALES, INC.


                                    By:  ______________________
                                    Its: ______________________

                                    CONGOLEUM FISCAL, INC.


                                    By:  ______________________
                                    Its: ______________________

                                    CONGOLEUM PLAN TRUST


                                    By:      _____________________
                                    Trustee: _____________________

                                    By:      _____________________
                                    Trustee: _____________________

                                    By:      _____________________
                                    Trustee: _____________________



                                        5
<PAGE>

                                                           EXHIBIT D TO THE PLAN


                              Exhibit D to the Plan
                        "Congoleum Plan Trust Agreement"


<PAGE>

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                         CONGOLEUM PLAN TRUST AGREEMENT

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

SECTION 1 AGREEMENT OF TRUST...................................................2

   1.1   Creation and Name.....................................................2

   1.2   Purpose...............................................................2

   1.3   Transfer of Assets....................................................2

   1.4   Acceptance of Assets and Assumption of Liabilities....................3

SECTION 2 POWERS AND TRUST ADMINISTRATION......................................4

   2.1   Powers................................................................4

   2.2   General Administration................................................6

   2.3   Claims Administration.................................................9

SECTION 3 ACCOUNTS, INVESTMENTS, AND PAYMENTS..................................9

   3.1   Accounts..............................................................9

   3.2   Plan Trust Disputed Claims Reserve...................................10

   3.3   Investments..........................................................11

   3.4   Source of Payments...................................................12

   3.5   Payments of Allowed Asbestos Property Damage Claims..................12

   3.6   Payment of Plan Trust Expenses.......................................13

   3.7   Indemnification Payments.............................................13

SECTION 4 PLAN TRUSTEES AND DELAWARE TRUSTEE..................................14

   4.1   Number...............................................................14

   4.2   Term of Service......................................................14

   4.3   Appointment of Successor Plan Trustees...............................15

   4.4   Liability of Plan Trustees, Delaware Trustee, Officers and
         Employees........................................................... 15

   4.5   Compensation and Expenses of Plan Trustees...........................15

   4.6   Indemnification of Plan Trustees, Additional Indemnitees,
         Claimants' Representative and Collateral Trustee.....................16

   4.7   Plan Trustees' Lien..................................................18

   4.8   Plan Trustees' Employment of Experts; Delaware Trustee's
         Employment of Counsel................................................18

   4.9   Plan Trustees' Independence..........................................18


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   4.10  Bond.................................................................19

   4.11  Delaware Trustee.....................................................19

SECTION 5 PLAN TRUST ADVISORY COMMITTEE.......................................20

   5.1   Members..............................................................20

   5.2   Duties...............................................................20

   5.3   Consent of TAC With Respect to Avoidance Actions, etc................20

   5.4   Term of Office.......................................................20

   5.5   Appointment of Successor.............................................21

   5.6   TAC's Employment of Professionals....................................21

   5.7   Compensation and Expenses of the TAC.................................22

   5.8   Procedures for Consultation With and Obtaining the Consent of
         the TAC..............................................................22

   5.9   Copies to the TAC....................................................23

SECTION 6 THE FUTURES REPRESENTATIVE..........................................23

   6.1   Duties...............................................................23

   6.2   Term of Office.......................................................23

   6.3   Appointment of Successor.............................................24

   6.4   Futures Representative's Employment of Professionals.................24

   6.5   Compensation and Expenses of the Futures Representative..............25

   6.6   Procedures for Consultation with and Obtaining the Consent of the
         Futures Representative...............................................25

   6.7   Copies to Futures Representative.....................................26

SECTION 7 GENERAL PROVISIONS..................................................26

   7.1   Irrevocability.......................................................26

   7.2   Dissolution..........................................................26

   7.3   Amendments...........................................................27

   7.4   Meetings.............................................................28

   7.5   Severability.........................................................28

   7.6   Notices..............................................................28

   7.7   Successors and Assigns...............................................30

   7.8   Limitation on Claim Interests for Securities Laws Purposes...........30

   7.9   Entire Agreement; No Waiver..........................................30

   7.10  Headings.............................................................30

   7.11  Governing Law........................................................30


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   7.12  Settlor Representative and Cooperation...............................31

   7.13  Dispute Resolution...................................................31

   7.14  Enforcement and Administration.......................................31

   7.15  Effectiveness........................................................31

   7.16  Counterpart Signatures...............................................31


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                         CONGOLEUM PLAN TRUST AGREEMENT

      This Congoleum Plan Trust Agreement (this "Plan Trust Agreement"), dated
the date set forth on the signature page hereof and effective as of
[           ], is entered into by Congoleum Corporation, Congoleum Sales, Inc.,
and Congoleum Fiscal, Inc. (collectively referred to as the "Debtors,"
"Congoleum," or the "Settlors"), the debtors and debtors-in-possession in Case
No. 03-51524 in the United States Bankruptcy Court for the District of New
Jersey; the Futures Representative; the Asbestos Claimants Committee ("ACC");
the Plan Trustees, the Delaware Trustee and the members of the Trust Advisory
Committee ("TAC") identified on the signature page hereof and appointed at
Confirmation pursuant to the confirmed Joint Plan of Reorganization Under
Chapter 11 of the Bankruptcy Code of Congoleum Corporation, et al., and the
Asbestos Claimants' Committee dated as of October 23, 2006 (the "Plan"), as such
Plan may be amended, modified or supplemented from time to time. All capitalized
terms not otherwise defined herein shall have their respective meanings as set
forth in the Plan, and such definitions are incorporated herein by reference.
All capitalized terms not defined herein or defined in the Plan, but defined in
the Bankruptcy Code or Bankruptcy Rules, shall have the meanings ascribed to
them by the Bankruptcy Code and Bankruptcy Rules, and such definitions are
incorporated herein by reference.

      WHEREAS, at the time of the entry of the order for relief in the Chapter
11 case, Congoleum was named as a defendant in actions seeking recovery for
damages allegedly caused by the presence of or exposure to asbestos or
asbestos-containing products for which Congoleum, its predecessors, successors
and assigns have legal liability ("Plan Trust Asbestos Claims" as defined in the
Plan); and

      WHEREAS, Congoleum has reorganized under the provisions of Chapter 11 of
the Bankruptcy Code in a case pending in the United States Bankruptcy Court for
the District of New Jersey, known as In re Congoleum Corporation et al., Case
No. 03-51524; and

      WHEREAS, the Plan has been confirmed by the Bankruptcy Court; and

      WHEREAS, the Plan provides, inter alia, for the creation of the Plan
Trust; and

      WHEREAS, pursuant to the Plan, the Plan Trust is to use its assets and
income to satisfy all Plan Trust Asbestos Claims; and

      WHEREAS, it is the intent of Congoleum, the Plan Trustees, the ACC, the
TAC, and the Futures Representative that the Plan Trust be administered,
maintained, and operated at all times through mechanisms that provide reasonable
assurance that the Plan Trust will satisfy all Plan Trust Asbestos Claims
pursuant to this Plan Trust Agreement and the TDP that is attached hereto as
Exhibit A in substantially the same manner, and in strict compliance with the
terms of this Plan Trust Agreement; and

      WHEREAS, pursuant to the Plan, the Plan Trust is intended to qualify as a
"qualified settlement fund" within the meaning of section 1.468B-1 et seq. of
the Treasury Regulations promulgated under section 468B of the Internal Revenue
Code ("IRC"); and


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      WHEREAS, the Bankruptcy Court has determined that the Plan Trust and the
Plan satisfy all the prerequisites for an injunction pursuant to section 524(g)
of the Bankruptcy Code, and such injunction has been entered in connection with
the Confirmation Order;

      NOW, THEREFORE, it is hereby agreed as follows:

                                   SECTION 1

                               AGREEMENT OF TRUST

      1.1 Creation and Name. The Debtors as Settlors hereby create a trust known
as the "Congoleum Plan Trust," which is the Plan Trust provided for and referred
to in the Plan. The Plan Trustees may transact the business and affairs of the
Plan Trust in the name of the Plan Trust.

      It is the intention of the parties hereto that the trust created hereby
constitutes a statutory trust under Chapter 38 of title 12 of the Delaware Code,
12 Del. C. ss. 3801 et seq. (the "Act") and that this document, together with
the by-laws described herein, constitute the governing instruments of the Plan
Trust. The Plan Trustees and the Delaware Trustee are hereby authorized and
directed to execute and file a Certificate of Trust with the Delaware Secretary
of State in the form attached hereto as Exhibit B.

      1.2 Purpose. The purpose of the Plan Trust is to assume the liabilities of
Congoleum, its predecessors and successors in interest, for all Plan Trust
Asbestos Claims, and to use the Plan Trust's assets and income to pay the
holders of all Plan Trust Asbestos Claims in accordance with this Plan Trust
Agreement and the TDP in such a way that such holders of Plan Trust Asbestos
Claims are treated fairly, equitably and reasonably in light of the limited
assets available to satisfy such claims, and to otherwise comply in all respects
with the requirements of a trust set forth in section 524(g)(2)(B) of the
Bankruptcy Code. All Plan Trust Asbestos Claims (other than the Asbestos
Property Damage Claims) shall be determined, liquidated, and paid pursuant to
this Plan Trust Agreement and the TDP. Asbestos Property Damage Claims shall be
determined pursuant to the Plan and paid, if Allowed, pursuant to this Plan
Trust Agreement. In addition, the Plan Trust shall prosecute, settle and manage
the disposition of the Asbestos In-Place Insurance Coverage and prosecute,
settle and manage Asbestos Insurance Actions and Direct Actions.

      1.3 Transfer of Assets. Pursuant to the Plan, the Plan Trust Assets have
been transferred and assigned to the Plan Trust to settle and discharge all Plan
Trust Asbestos Claims. Any insurance proceeds subject to the Security Agreement
and/or the Collateral Trust Agreement are transferred and assigned to and
assumed by the Plan Trust subject to any lien and/or security interests
reflected in such agreements, in the event that such Agreements are found valid,
enforceable and unavoidable by a final nonappealable order of a court of
competent jurisdiction, or by a settlement agreement approved by the Bankruptcy
Court. Pursuant to the Plan, Reorganized Congoleum and others may also transfer
and assign additional assets to the Plan Trust from time to time. In all events,
such assets will be transferred to the Plan Trust free and clear of any liens or
other claims by Congoleum, Reorganized Congoleum, any creditor, or other entity.
Congoleum, Reorganized Congoleum, and any other transferors shall also execute
and deliver such documents to the Plan Trust as the Plan Trustees reasonably
request to transfer and assign the Plan Trust Assets to the Plan Trust.


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      1.4 Acceptance of Assets and Assumption of Liabilities.

      (a) In furtherance of the purposes of the Plan Trust, the Plan Trustees,
on behalf of the Plan Trust, hereby expressly accept the transfer and assignment
to the Plan Trust of the Plan Trust Assets in the time and manner as
contemplated in the Plan Documents.

      (b) In furtherance of the purposes of the Plan Trust, the Plan Trustees,
on behalf of the Plan Trust, expressly assume all liabilities, obligations and
responsibilities relating to all Plan Trust Asbestos Claims and Asbestos
Expenses. Except as otherwise provided in this Plan Trust Agreement and the TDP,
the Plan Trust shall have all defenses, cross-claims, offsets, and recoupments,
as well as rights of indemnification, contribution, subrogation, and similar
rights, regarding such claims that Congoleum or Reorganized Congoleum has or
would have had under applicable law. Regardless of the foregoing, however, a
claimant must meet otherwise applicable federal, state and foreign statutes of
limitations and repose, except that a claimant may establish that such statutes
were tolled by operation of law or as provided in the TDP.

      (c) No provision herein or in the TDP shall be construed to mandate
distributions on any claims or other actions that would contravene the Plan
Trust's compliance with the requirements of a qualified settlement fund within
the meaning of section 1.468B-1 et seq. of the Treasury Regulations promulgated
under section 468B of the IRC.

      (d) The Plan Trust shall indemnify, defend and hold harmless each of the
Debtors, the Reorganized Debtors and their past, present and future
Representatives for any expenses, costs and fees (including reasonable
attorneys' fees and costs, but excluding any such expenses, costs and fees
incurred prior to the Effective Date), judgments, settlements or other
liabilities arising from or incurred in connection with, any Plan Trust Asbestos
Claim, including but not limited to indemnification or contribution for Plan
Trust Asbestos Claims prosecuted against the Reorganized Debtors after the
Effective Date but excluding (i) any amounts paid prior to or on the Effective
Date by the Debtors or their past or present Representatives and (ii) any
amounts paid or incurred by any Reorganized Debtor or its Representatives,
whether before or after the Effective Date, in connection with defending,
objecting to, or otherwise related to any proceedings to determine whether an
Asbestos Property Damage Claim is or should be Allowed. Notwithstanding anything
in this Section 1.4 to the contrary, the Plan Trust shall reimburse and pay
promptly the Reorganized Debtors, from the proceeds of the Asbestos Insurance
Action Recoveries, for the Claims Handling Fee and, to the extent provided under
the terms of the Asbestos Insurance Settlement Agreement with Liberty Mutual
Insurance Company, for the Coverage Costs, to the extent such Claims Handling
Fee and Coverage Costs have not been reimbursed or paid to the Debtors or
Reorganized Debtors, as applicable, from Asbestos Insurance Action Recoveries
received on or after the Petition Date.

      (e) Nothing in this Plan Trust Agreement shall be construed in any way to
limit the scope, enforceability, or effectiveness of the Injunctions issued in
connection with the Plan or the Plan Trust's assumption of all liability for
Plan Trust Asbestos Claims, subject to the provisions of Section 1.4(b) above.


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                                   SECTION 2

                         POWERS AND TRUST ADMINISTRATION

      2.1 Powers.

      (a) The Plan Trustees are and shall act as the fiduciaries to the Plan
Trust in accordance with the provisions of this Plan Trust Agreement and the
Plan. The Plan Trustees shall, at all times, administer the Plan Trust and the
Plan Trust Assets in accordance with the purposes set forth in Section 1.2
above. Subject to the limitations set forth in this Plan Trust Agreement, the
Plan Trustees shall have the power to take any and all actions that, in the
judgment of the Plan Trustees, are necessary or proper to fulfill the purposes
of the Plan Trust, including, without limitation, each power expressly granted
in this Section 2.1, any power reasonably incidental thereto, and any trust
power now or hereafter permitted under the laws of the State of New Jersey.

      (b) Except as required by applicable law or otherwise specified herein,
the Plan Trustees need not obtain the order or approval of any court in the
exercise of any power or discretion conferred hereunder.

      (c) Without limiting the generality of Section 2.1(a) above, and except as
limited below, the Plan Trustees shall have the power to:

            (i) receive and hold the Plan Trust Assets, vote the New Class A
      Common Stock (and any Plan Trust Common Stock), and exercise all rights
      with respect to, and sell, any securities issued by Reorganized Congoleum
      that are included in the Plan Trust Assets, subject to any restrictions
      set forth in the Amended and Restated Certificate of Incorporation of
      Reorganized Congoleum;

            (ii) invest the monies held from time to time by the Plan Trust;

            (iii) sell, transfer, or exchange any or all of the Plan Trust
      Assets at such prices and upon such terms as the Plan Trustees may
      consider proper, consistent with the other terms of this Plan Trust
      Agreement;

            (iv) enter into leasing and financing agreements with third parties
      to the extent such agreements are reasonably necessary to permit the Plan
      Trust to operate;

            (v) pay liabilities and expenses of the Plan Trust, including, but
      not limited to, Plan Trust Expenses;

            (vi) establish such funds, reserves and accounts within the Plan
      Trust estate, as deemed by the Plan Trustees to be useful in carrying out
      the purposes of the Plan Trust;

            (vii) sue and be sued and participate, as a party or otherwise, in
      any judicial, administrative, arbitrative, or other proceeding;


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            (viii) establish, supervise and administer the Plan Trust in
      accordance with the TDP and the terms thereof;

            (ix) appoint such officers and hire such employees and engage such
      legal, financial, accounting, investment, auditing and forecasting, and
      other consultants and agents as the business of the Plan Trust requires,
      and delegate to such persons such powers and authorities as the fiduciary
      duties of the Plan Trustees permit and as the Plan Trustees, in their
      discretion, deem advisable or necessary in order to carry out the terms of
      the Plan Trust;

            (x) pay employees, legal, financial, accounting, investment,
      auditing, and forecasting, and other consultants, advisors, and agents,
      including those engaged by the Plan Trust in connection with its
      alternative dispute resolution activities, reasonable compensation;

            (xi) compensate the Plan Trustees, the TAC members, the Delaware
      Trustee and the Futures Representative as provided below, and their
      employees, legal, financial, accounting, investment and other advisors,
      consultants, independent contractors, and agents, and reimburse the Plan
      Trustees, the TAC members, the Delaware Trustee and the Futures
      Representative all reasonable out-of-pocket costs and expenses incurred by
      such persons in connection with the performance of their duties hereunder;

            (xii) execute and deliver such instruments as the Plan Trustees
      consider proper in administering the Plan Trust;

            (xiii) enter into such other arrangements with third parties as are
      deemed by the Plan Trustees to be useful in carrying out the purposes of
      the Plan Trust, provided such arrangements do not conflict with any other
      provision of this Plan Trust Agreement;

            (xiv) in accordance with Section 4.6 below, defend, indemnify and
      hold harmless (and purchase insurance indemnifying) (A) the Plan Trustees
      and (B) the TAC, the Futures Representative, Collateral Trustee, the
      officers and employees of the Plan Trust, and any agents, advisors and
      consultants of the Plan Trust, the TAC, the Collateral Trustee or the
      Futures Representative (the "Additional Indemnitees"), to the fullest
      extent that a corporation or statutory trust organized under the law of
      the Plan Trust's situs is from time to time entitled to indemnify and/or
      insure its directors, trustees, officers, employees, agents, and
      representatives;

            (xv) indemnify the Entities to be indemnified in accordance with
      Section 1.4 and Section 4.6 and purchase insurance or make other such
      arrangements for the Plan Trust and those Entities for whom the Plan Trust
      has an indemnification obligation hereunder;

            (xvi) delegate any or all of the authority herein conferred with
      respect to the investment of all or any portion of the Plan Trust Assets
      to any one or more reputable individuals or recognized institutional
      investment advisors or investment managers without liability for any
      action taken or omission made because of any such delegation, except as
      provided in Section 4.4 below;


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            (xvii) consult with Reorganized Congoleum, the TAC and the Futures
      Representative at such times and with respect to such issues relating to
      the conduct of the Plan Trust as the Plan Trustees may consider necessary,
      appropriate or desirable; and

            (xviii) make, pursue (by litigation or otherwise), collect,
      compromise or settle, in the name of the Plan Trust or the name of
      Reorganized Congoleum, any claim, right, action, or cause of action
      included in the Plan Trust Assets, including, but not limited to, the Plan
      Trust Bankruptcy Causes of Action to the extent not already adjudicated
      prior to the Effective Date and to the extent not compromised or settled
      under the Plan; other Causes of Action, other than Bankruptcy Causes of
      Action, related to Plan Trust Asbestos Claims and Plan Trust Assets to the
      extent not compromised or settled under the Plan; and insurance
      recoveries, before any court of competent jurisdiction; provided that
      settlement of actions before the Bankruptcy Court require the approval of
      the Bankruptcy Court after notice to Reorganized Congoleum.

      (d) The Plan Trustees shall not have the power to guarantee any debt of
other persons.

      (e) The Plan Trustees shall give the TAC, the Futures Representative and
Reorganized Congoleum prompt notice of any act performed or taken pursuant to
Sections 2.1(c)(i), (iii), (vii), or (xv) above, and any act proposed to be
performed or taken pursuant to Section 2.2(f) below.

      2.2 General Administration.

      (a) The Plan Trustees shall adopt, with the consent of the TAC and the
Futures Representative, and act in accordance with the Plan Trust Bylaws. To the
extent not inconsistent with the terms of this Plan Trust Agreement, the Plan
Trust Bylaws shall govern the affairs of the Plan Trust. In the event of an
inconsistency between the Plan Trust Bylaws and this Plan Trust Agreement, this
Plan Trust Agreement shall govern.

      (b) The Plan Trustees shall (i) timely file such income tax and other
returns and statements and shall timely pay all taxes required to be paid, (ii)
comply with all withholding obligations, as required under the applicable
provisions of the IRC and of any state law and the regulations promulgated
thereunder, (iii) meet without limitation all requirements necessary to qualify
and maintain qualification of the Plan Trust as a qualified settlement fund
within the meaning of section 1.468B-1 et seq. of the Treasury Regulations
promulgated under section 468B of the IRC, and (iv) take no action that could
cause the Plan Trust to fail to qualify as a qualified settlement fund within
the meaning of section 1.468B-1 et seq. of the Treasury Regulations promulgated
under section 468B of the IRC.

      (c) The Plan Trustees shall timely account to the Bankruptcy Court,
regardless of whether the Reorganization Cases are closed, as follows:

            (i) The Plan Trustees shall cause to be prepared and filed with the
      Bankruptcy Court, as soon as available, and in any event within one
      hundred and twenty (120) days following the end of each fiscal year, an
      annual report containing financial statements of the Plan Trust
      (including, without limitation, a balance sheet of the Plan Trust as of
      the end of such fiscal year and a statement of operations for such fiscal
      year) audited by a firm of independent certified public accountants
      selected by the Plan Trustees and accompanied by an opinion of such firm
      as to the fairness of the financial statements' presentation of the cash
      and investments available for the payment of claims and as to the
      conformity of the financial statements with generally accepted accounting
      principles. The Plan Trustees shall provide a copy of such report to the
      TAC, the Futures Representative, and Reorganized Congoleum when such
      report is so filed with the Bankruptcy Court.


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            (ii) Simultaneously with delivery of each set of financial
      statements referred to in Section 2.2(c)(i) above, the Plan Trustees shall
      cause to be prepared and filed with the Bankruptcy Court a report
      containing a summary regarding the number and type of Plan Trust Asbestos
      Claims disposed of, and the amount paid in respect of such Plan Trust
      Asbestos Claims, during the period covered by the financial statements.
      The Plan Trustees shall provide a copy of such report to the TAC, the
      Futures Representative and Reorganized Congoleum when such report is
      filed.

            (iii) All materials required to be filed with the Bankruptcy Court
      by this Section 2.2(c) shall be available for inspection by the public in
      accordance with procedures established by the Bankruptcy Court and shall
      be filed with the Office of the United States Trustee for the District of
      New Jersey.

      (d) The Plan Trustees shall cause to be prepared as soon as practicable
prior to the commencement of each fiscal year a budget and cash flow projections
covering such fiscal year and the succeeding four fiscal years. The budget and
cash flow projections shall include determining the Maximum Annual Payment
pursuant to Section 2.5 of the TDP, and the Claims Payment Ratio pursuant to
Section 2.6 of the TDP. The Plan Trustees shall provide a copy of the budget and
cash flow projections to the TAC and the Futures Representative.

      (e) The Plan Trustees shall consult with the TAC and the Futures
Representative (i) on the general implementation and administration of the Plan
Trust; (ii) on the general implementation and administration of the TDP; and
(iii) on such other matters as may be required under this Plan Trust Agreement
and the TDP.

      (f) The Plan Trustees shall be required to obtain the consent of the TAC
and the Futures Representative pursuant to the Consent Process set forth in
Section 5.8(b) and 6.6(b) below, in addition to any other instances elsewhere
enumerated, in order:

            (i) to determine and thereafter redetermine the Payment Percentage
      described in Section 2.4 of the TDP as provided in Section 5.2 of the TDP;

            (ii) to change the Claims Payment Ratio described in Section 2.6 of
      the TDP in the event that the requirements for such a change as set forth
      in said provision have been met;

            (iii) to change the Disease Levels, Scheduled Values and/or
      Medical/Exposure Criteria set forth in Section 6.2(a)(3) of the TDP,
      and/or the Average Values and/or Maximum Values set forth in Section
      6.2(b)(3) of the TDP;


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            (iv) to establish and/or to change the Claims Materials to be
      provided holders of Plan Trust Asbestos Claims under Section 7.1 of the
      TDP;

            (v) to require that claimants provide additional kinds of medical
      and/or exposure evidence pursuant to Sections 6.6(b) and 8.1 of the TDP;

            (vi) to adopt or thereafter change the form of release to be
      provided pursuant to Section 8.8 of the TDP;

            (vii) amend any provision of the TDP in accordance with the terms
      thereof;

            (viii) to adopt the Plan Trust Bylaws in accordance with Section
      2.2, above, or thereafter to amend the Plan Trust Bylaws in accordance
      with the terms thereof;

            (ix) to terminate the Plan Trust pursuant to Section 7.2 below;

            (x) to settle the liability of any insurer under any insurance
      policy or legal action related thereto;

            (xi) subject to Section 5.3 below, to settle either of the Avoidance
      Actions or any other legal action relating to the validity, enforceability
      or voidability of any Plan Trust Disputed Claim;

            (xii) to change the compensation and/or per diem of the members of
      the TAC, the Futures Representative or Plan Trustees, other than to
      reflect cost-of-living increases or changes approved by the Bankruptcy
      Court as otherwise provided herein;

            (xiii) to take structural or other actions to minimize any tax on
      the Plan Trust Assets;

            (xiv) to vote the stock of any Reorganized Debtor for purposes of
      appointing members of the Board of Directors of such Reorganized Debtor;

            (xv) to acquire an interest in or to merge any asbestos claims
      resolution organization formed by the Plan Trust with another asbestos
      claims resolution organization that is not specifically created by this
      Plan Trust Agreement or the TDP, or to contract with another asbestos
      claims resolution organization or other entity that is not specifically
      created by this Plan Trust Agreement or the TDP, or permit any other party
      to join in any asbestos claims resolution organization that is formed by
      the Plan Trust pursuant to this Plan Trust Agreement or the TDP; provided
      that such merger, acquisition, contract or joinder shall not (a) subject
      Reorganized Congoleum, or any successors in interest thereto, to any risk
      of having any Plan Trust Asbestos Claim asserted against it or them, or
      (b) otherwise jeopardize the validity or enforceability of the section
      524(g) injunction; and provided further that the terms of such merger will
      require the surviving organization to make decisions about the
      allowability and value of claims in accordance with Section 2.1 of the TDP
      which requires that such decisions be based on the provisions of the TDP;


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            (xvi) to sell, pledge, transfer or otherwise dispose of any
      securities issued by any Reorganized Debtor subject to any restrictions
      imposed by the Plan;

            (xvii) to settle any Plan Trust Bankruptcy Causes of Action; or

            (xviii) to determine whether the Reset Date shall occur on the First
      Indicated Date or the Second Indicated Date.

      (g) The Plan Trustees shall meet with the TAC and the Futures
Representative no less often than quarterly during the first two years following
the Effective Date and thereafter at least two times per year. The Plan Trustees
shall meet in the interim with the TAC and the Futures Representative when so
requested by either at mutually convenient times and locations.

      (h) The Plan Trustees, upon notice from the Futures Representative or the
TAC requesting consideration of one or more issues, shall at their next regular
meeting, if practicable in view of pending business, or, if appropriate, at a
specially called meeting, place on their agenda and consider such issues.

      (i) Periodically, but not less often than once a year, the Plan Trustees
shall make available to the Futures Representative, the TAC and any holder (or
the personal representative or attorney of such holder) of a Plan Trust Asbestos
Claim on file with the Plan Trust that has not been paid in accordance with, or
finally rejected pursuant to, the TDP the number of claims by disease levels
that have been resolved both by individual review and by arbitration, as well as
by trial, indicating the amounts of the awards and the averages of the awards by
jurisdiction pursuant to Section 8.10 of the TDP.

      2.3 Claims Administration. The Plan Trustees shall promptly proceed to
implement the TDP.

                                   SECTION 3

                       ACCOUNTS, INVESTMENTS, AND PAYMENTS

      3.1 Accounts.

      (a) The Plan Trustees may, from time to time, create such accounts and
reserves within the Plan Trust estate as they may deem necessary, prudent, or
useful in order to provide for the payment of Plan Trust Expenses and payment of
Plan Trust Asbestos Claims in accordance with the TDP and may, with respect to
any such account or reserve, restrict the use of monies therein. In addition,
the Plan Trustees shall establish, as soon as practicable after the Effective
Date, two separate and distinct accounts (maintained in separate banking and/or
other accounts including accounts established by book entry) to be designated
the "Asbestos Personal Injury Claim Sub-Account" and the "Asbestos Property
Damage Claim Sub-Account," and none of the assets held in the Asbestos Personal
Injury Claim Sub-Account or the Asbestos Property Damage Claim Sub-Account shall
be commingled with assets held by the Plan Trust in any other account. In
addition, separate books and records shall be kept with respect to each of the
Asbestos Personal Injury Claim Sub-Account and the Asbestos Property Damage
Claim Sub-Account.


                                        9
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                                                           EXHIBIT D TO THE PLAN


      (b) All Plan Trust Assets and other property held by or received by the
Plan Trust (other than the Asbestos Property Damage Insurance Rights and all
proceeds thereof and earnings thereon), and all proceeds thereof and earnings
thereon, shall be held solely in the Asbestos Personal Injury Claim Sub-Account
and shall be used to pay Plan Trust Asbestos Claims that are Asbestos Personal
Injury Claims ("Plan Trust PI Asbestos Claims"), as well as Plan Trust Expenses
and indemnification costs or expenses, in either case related to Plan Trust PI
Asbestos Claims.

      (c) All amounts received by the Plan Trust in respect of the Asbestos
Property Damage Insurance Rights, and all proceeds thereof and earnings thereon,
shall be held solely in the Asbestos Property Damage Claim Sub-Account and shall
be used to pay Allowed Asbestos Property Damage Claims, as well as Plan Trust
Expenses and indemnification costs or expenses, in either case related to
Asbestos Property Damage Claims. Notwithstanding the foregoing, the Plan
Trustees may transfer monies from the Asbestos Property Damage Claim Sub-Account
to the Asbestos Personal Injury Claim Sub-Account, from time to time, to the
extent that the funds in the Asbestos Property Damage Claim Sub-Account exceed
the aggregate face amount of all unpaid Asbestos Property Damage Claims filed
prior to the Asbestos Property Damage Claim Bar Date and a reasonable reserve
for Plan Trust Expenses and indemnification costs or expenses, in either case
related to Asbestos Property Damage Claims.

      3.2 Plan Trust Disputed Claims Reserve. Within six (6) months of the
Initial Claims Filing Date (as defined in the TDP), in the event that the Class
2 Settlement or the Class 3 and 11 Settlement is not approved by the Final Order
of the Bankruptcy Court, the Plan Trustees shall create a reserve of funds in
the Asbestos Personal Injury Claim Sub-Account for all Plan Trust Disputed
Claims held by holders of Plan Trust PI Asbestos Claims (the "Plan Trust
Disputed Claims Reserve"); provided, however, that such Plan Trust Disputed
Claim Reserve shall not exceed $23.25 million.

      In the event that any such Plan Trust Disputed Claims and/or any lien or
security interest with respect to such claims are determined by a final,
non-appealable order of the Bankruptcy Court, or by a final and binding
settlement agreement approved by the Bankruptcy Court, to be valid, enforceable
and unavoidable, such claims shall be entitled to treatment by the Plan Trust in
accordance with the liquidated amount of such claims and any valid lien or
security interest therefor, and shall be paid by the Plan Trust from the funds
in the Plan Trust Disputed Claims Reserve.

      In the event that any such Plan Trust Disputed Claims are determined by a
final, non-appealable order of the Bankruptcy Court, or by a final and binding
settlement agreement approved by the Bankruptcy Court, to be valid, enforceable
and unavoidable, but any lien or security interest with respect to such claims
is found to be invalid, unenforceable and avoidable, an amount equal to the
Payment Percentage times the liquidated amount of such claims shall be paid by
the Plan Trust from the Plan Trust Disputed Claims Reserve. Any additional funds
in the Plan Trust Disputed Claims Reserve attributable to such claims shall be
deposited in the Asbestos Personal Injury Claim Sub-Account and made available
for distribution by the Plan Trust in accordance with the terms of this Plan
Trust Agreement and the TDP.


                                       10
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      In the event that any such Plan Trust Disputed Claims are determined by a
final, non-appealable order of the Bankruptcy Court, or by a final and binding
settlement agreement approved by the Bankruptcy Court, to be to be invalid,
unenforceable or void, any funds in the Plan Trust Disputed Claims Reserve
attributable to such claims shall be deposited in the Asbestos Personal Injury
Claim Sub-Account and made available for distribution by the Plan Trust in
accordance with the terms of this Plan Trust Agreement and the TDP. The holders
of such Plan Trust Disputed Claims may file their claims with the Plan Trust for
determination and treatment under the TDP in a manner consistent with such
settlement or order.

      3.3 Investments. Investment of monies held in the Plan Trust shall be
administered in the manner in which individuals of ordinary prudence,
discretion, and judgment would act in the management of their own affairs,
subject to the following limitations and provisions:

      (a) The Plan Trust shall not acquire, directly or indirectly, equity in
any entity (other than Reorganized Congoleum or any successor to Reorganized
Congoleum) or business enterprise if, immediately following such acquisition,
the Plan Trust would hold more than 5% of the equity in such entity or business
enterprise. The Plan Trust shall not hold, directly or indirectly, more than 10%
of the equity in any entity (other than Reorganized Congoleum or any successor
to Reorganized Congoleum) or business enterprise.

      (b) Excluding any securities issued by the Debtors or Reorganized
Congoleum, the Plan Trust shall not acquire or hold any long-term debt
securities unless (i) such securities are Plan Trust Assets under the Plan, (ii)
such securities are rated "Baa" or higher by Moody's, "BBB" or higher by
Standard & Poor's ("S&P's"), or have been given an equivalent investment grade
rating by another nationally recognized statistical rating agency, or (iii) have
been issued or fully guaranteed as to principal and interest by the United
States of America or any agency or instrumentality thereof.

      (c) The Plan Trust shall not acquire or hold for longer than ninety (90)
days any commercial paper unless such commercial paper is rated "Prime 1" or
higher by Moody's or "A 1" or higher by S&P's, or has been given an equivalent
rating by another nationally recognized statistical rating agency.

      (d) Excluding any securities issued by the Debtors or Reorganized
Congoleum, or transferred to the Plan Trust in accordance with the provisions of
the Plan, the Plan Trust shall not acquire or hold any common or preferred stock
or convertible securities unless such stock or securities are rated "A" or
higher by Moody's or "A" or higher by S&P's, or have been given an equivalent
investment grade rating by another nationally recognized statistical rating
agency.

      (e) The Plan Trust shall not acquire any debt securities or other
instruments issued by any entity (other than debt securities or other
instruments issued or fully guaranteed as to principal and interest by the
United States of America or any agency or instrumentality thereof and other than
debt securities or other instruments of Reorganized Congoleum or any successor
to Reorganized Congoleum) if, following such acquisition, the aggregate market
value of all debt securities and instruments issued by such entity held by the
Plan Trust would exceed 2% of the aggregate value of the Plan Trust's assets.
The Plan Trust shall not hold any debt securities or other instruments issued by
any entity (other than debt securities or other instruments issued or fully
guaranteed as to principal and interest by the United States of America or any
agency or instrumentality thereof and other than debt securities or other
instruments of Reorganized Congoleum or any successor to Reorganized Congoleum)
to the extent that the aggregate market value of all securities and instruments
issued by such entity held by the Plan Trust would exceed 5% of the aggregate
value of the Plan Trust's assets.


                                       11
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      (f) The Plan Trust shall not acquire or hold any certificates of deposit
unless all publicly held, long-term debt securities, if any, of the financial
institution issuing the certificate of deposit and the holding company, if any,
of which such financial institution is a subsidiary, meet the standards set
forth in Section 3.3(b) above.

      (g) The Plan Trust may acquire and hold any securities or instruments
issued by Reorganized Congoleum or any successor to Reorganized Congoleum, or
obtained as proceeds of litigation or otherwise to resolve disputes, without
regard to the limitations set forth in Subsections (a)-(f) above.

      (h) The Plan Trust shall not acquire or hold any repurchase obligations
unless, in the opinion of the Plan Trustees, they are adequately collateralized.

      (i) The Plan Trust shall not acquire or hold any options.

      3.4 Source of Payments. All Plan Trust expenses and payments and all
liabilities with respect to claims shall be payable solely by the Plan Trustees
out of the Plan Trust Assets. Neither Congoleum, Reorganized Congoleum, their
subsidiaries, any successor in interest, the present or former directors,
officers, employees or agents of Congoleum, Reorganized Congoleum, nor the Plan
Trustees, the TAC or Futures Representative, or any of their officers, agents,
advisors, or employees shall be liable for the payment of any Plan Trust
Asbestos Claim, Plan Trust Expense or any other liability of the Plan Trust.

      3.5 Payments of Allowed Asbestos Property Damage Claims.

      (a) All Asbestos Property Damage Claims filed before the Asbestos Property
Damage Claim Bar Date shall be Allowed or Disallowed by a Final Order (whether
such Final Order resolves a contested matter or adversary proceeding, approves a
compromise or settlement or otherwise). The Plan Trust shall only be obligated
to pay Asbestos Property Damage Claims that (i) were filed prior to the Asbestos
Property Damage Claim Bar Date and (ii) have been Allowed (and the Plan Trust
shall only be obligated to pay such Asbestos Property Damage Claims to the
extent so Allowed) by a Final Order. The Plan Trust shall not make any
distributions with respect to Allowed Asbestos Property Damage Claims until all
Asbestos Property Damage Claims have been Allowed or Disallowed by Final Order.
Any Asbestos Property Damage Claims filed after the Asbestos Property Damage
Claim Bar Date shall, pursuant to the terms of the Plan, be automatically
Disallowed, with no further action of any Entity.

      (b) Payments to holders of Allowed Asbestos Property Damage Claims shall
be made solely from the Asbestos Property Damage Claim Sub-Account.

      (c) Subject to the terms and conditions of Section 3.5(d), with respect to
any distribution in respect of Allowed Asbestos Property Damage Claims, each
holder of an Allowed Asbestos Property Damage Claim shall be paid a pro rata
portion of such holder's Allowed Asbestos Property Damage Claim determined by
multiplying the aggregate amount of the distribution to be made by a fraction,
the numerator of which is the amount of such holder's Allowed Asbestos Property
Damage Claim and the denominator of which is the total of all Allowed Asbestos
Property Damage Claims until the assets in the Asbestos Property Damage Claim
Sub-Account are exhausted; provided that the aggregate of all distributions made
hereunder to a holder of an Allowed Asbestos Property Damage Claim shall not
exceed the Allowed Amount of such holder's Allowed Asbestos Property Damage
Claim; and provided further that once all of the assets in the Asbestos Property
Damage Claim Sub-Account have been exhausted, the Plan Trust shall have no
further obligation or liability in respect of Allowed Asbestos Property Damage
Claims.


                                       12
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      (d) The Plan Trustees shall determine the timing and the appropriate
method for making payments in respect of Allowed Asbestos Property Damage
Claims, subject to the requirements and general principles of this Plan Trust
Agreement and the Plan. Methods for making payments in respect of Allowed
Asbestos Personal Damage Claims may include payment on an installment basis. In
the event that the Plan Trust faces periods of limited liquidity in the Asbestos
Property Damage Claim Sub-Account, the Plan Trustees may defer, delay, limit, or
suspend altogether, payments or a portion thereof in respect of Allowed Asbestos
Property Damage Claims.

      3.6 Payment of Plan Trust Expenses.

      (a) All Plan Trust Expenses and all liabilities of the Plan Trust with
respect to all Asbestos Personal Injury Claims and Plan Trust Assets and
proceeds thereof and earnings thereon (other than that the Asbestos Property
Damage Insurance Rights and proceeds thereof and earnings thereon), shall be
payable by the Plan Trust solely out of the Asbestos Personal Injury Claim
Sub-Account. All Plan Trust Expenses and all liabilities with respect to
Asbestos Property Damage Claims (and the Asbestos Property Damage Insurance
Rights and proceeds thereof and earnings thereon) shall be payable by the Plan
Trust solely out of the Asbestos Property Damage Claim Sub-Account. If Plan
Trust Expenses and liabilities relate to more than one of the categories
described in the preceding sentences, such Plan Trust Expenses and liabilities
shall be satisfied from one or more of the accounts as determined by the Plan
Trustees in their sole discretion. Notwithstanding any other provision of this
Plan Trust Agreement or the Plan, the Plan Trust shall have no further liability
or obligation for or in respect of Plan Trust Expenses or other liabilities
relating to Asbestos Property Damage Claims once all of the assets in the
Asbestos Property Damage Claim Sub-Account have been exhausted.

      (b) Notwithstanding anything in this Plan Trust Agreement or the TDP to
the contrary, the Plan Trustees shall deduct from the Plan Trust's assets and
shall pay such amounts as are required to pay the Plan Trust Expenses after
receipt by the Plan Trustees of evidence satisfactory to them of the applicable
Plan Trust Expense and provided that the Plan Trustees do not contest the amount
of such Plan Trust Expense.

      3.7 Indemnification Payments. Any claim for indemnification from the Plan
Trust and all costs and expenses associated therewith shall be satisfied as
follows:


                                       13
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      (a) If an indemnification claim relates solely to or arises solely in
connection with an Asbestos Personal Injury Claim, such claim shall be satisfied
solely from assets held in the Asbestos Personal Injury Claim Sub-Account;

      (b) If an indemnification claim relates solely to or arises solely in
connection with an Asbestos Property Damage Claim, such claim shall be satisfied
solely from assets held in the Asbestos Property Damage Claim Sub-Account;

      (c) If an indemnification claim relates to or arises in connection with
both Asbestos Personal Injury Claims and Asbestos Property Damage Claims, or if
such indemnification claim does not clearly relate to or arise in connection
with Asbestos Personal Injury Claims or Asbestos Property Damage Claims, such
claim shall be satisfied from assets held in the Asbestos Personal Injury Claim
Sub-Account and the Asbestos Property Damage Claim Sub-Account in such relative
proportion as the Plan Trustees determine in their sole discretion.

Notwithstanding any other provision of this Plan Trust Agreement or the Plan,
the Plan Trust shall have no further liability or obligation for or in respect
of indemnification relating to or arising from Asbestos Property Damage Claims
and all costs and expenses associated therewith once all of the assets in the
Asbestos Property Damage Claim Sub-Account have been exhausted.

                                   SECTION 4

                       PLAN TRUSTEES AND DELAWARE TRUSTEE

      4.1 Number. In addition to the Delaware Trustee appointed pursuant to
Section 4.11 hereof, there shall be three (3) Plan Trustees who shall be
initially those persons named on the signature page hereof, namely Honorable
Richard S. Cohen (retired), Stephen M. Snyder and [ ].

      4.2 Term of Service.

      (a) The initial Plan Trustees named pursuant to Section 4.1 above shall
serve staggered terms of three (3), four (4) and five (5) years, respectively,
as indicated on the signature page hereof. Thereafter each term of service shall
be five (5) years. The initial Plan Trustees shall serve from the Effective Date
until the earlier of (i) the end of his or her term, (ii) his or her death,
(iii) his or her resignation pursuant to Section 4.2(b) below, (iv) his or her
removal pursuant to Section 4.2(c) below, or (v) the termination of the Plan
Trust pursuant to Section 7.2 below.

      (b) A Plan Trustee may resign at any time by written notice to the
remaining Plan Trustees, the TAC and the Futures Representative. Such notice
shall specify a date when such resignation shall take place, which shall not be
less than ninety (90) days after the date such notice is given, where
practicable.

      (c) A Plan Trustee may be removed by unanimous vote of the remaining Plan
Trustees in the event that he or she becomes unable to discharge his or her
duties hereunder due to accident or physical or mental deterioration, or for
other good cause. Good cause shall be deemed to include, without limitation, any
substantial failure to comply with the general administration provisions of
Section 2.2 above, a consistent pattern of neglect and failure to perform or
participate in performing the duties of the Plan Trustees hereunder, or repeated
non-attendance at scheduled meetings. Such removal shall require the approval of
the Bankruptcy Court and shall take effect at such time as the Bankruptcy Court
shall determine.


                                       14
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      4.3 Appointment of Successor Plan Trustees.

      (a) In the event of a vacancy in the position of a Plan Trustee, whether
by term expiration, resignation or removal, the remaining Plan Trustees shall
consult with the TAC and the Futures Representative concerning appointment of a
successor Plan Trustee. The vacancy shall be filled by the unanimous vote of the
remaining Plan Trustees unless a majority of the TAC or the Futures
Representative vetoes the appointment. In the event that the remaining Plan
Trustees cannot agree on a successor Plan Trustee, or a majority of the TAC or
the Futures Representative vetoes the appointment of a successor Plan Trustee,
the Bankruptcy Court shall make the appointment. Nothing shall prevent the
reappointment of a Plan Trustee for an additional term or terms.

      (b) Immediately upon the appointment of any successor Plan Trustee, all
rights, titles, duties, powers and authority of the predecessor Plan Trustee
hereunder shall be vested in, and undertaken by, the successor Plan Trustee
without any further act. No successor Plan Trustee shall be liable personally
for any act or omission of his or her predecessor Plan Trustees.

      (c) Each successor Plan Trustee shall serve until the earlier of (i) the
end of a full term of five (5) years if the predecessor Plan Trustee completed
his or her term, (ii) the end of the remainder of the term of the Plan Trustee
whom he or she is replacing if said predecessor Plan Trustee did not complete
said term, (iii) his or her death, (iv) his or her resignation pursuant to
Section 4.2(b) above, (v) his or her removal pursuant to Section 4.2(c) above,
or (vi) the termination of the Plan Trust pursuant to Section 7.2 below.

      4.4 Liability of Plan Trustees, Delaware Trustee, Officers and Employees.
The Plan Trustees, the Delaware Trustee, and the individuals identified as
Additional Indemnitees in Section 2.1(c)(xiv) above shall not be liable to the
Plan Trust, to any individual holding a Plan Trust Asbestos Claim, or to any
other person, except for such individual's own breach of trust committed in bad
faith or willful misappropriation. In addition, the Plan Trustees, the Delaware
Trustee and the Additional Indemnitees shall not be liable for any act or
omission of any other Plan Trustee, the Delaware Trustee or Additional
Indemnitee unless such person acted with bad faith in the selection or retention
of such other Plan Trustee, the Delaware Trustee or Additional Indemnitee.

      4.5 Compensation and Expenses of Plan Trustees.

      (a) The Plan Trustees shall receive compensation in accordance with
Section 3.6 above, from the Plan Trust for their services as Plan Trustees in
the amount of $60,000.00 per annum, plus a per diem allowance for meetings or
other Plan Trust business performed in the amount of $1,500.00. For purposes of
Section 7.4 below, the Plan Trustees shall determine the scope and duration of
activities that constitute a meeting and, if the Plan Trustees elect to provide
for payment for activities of less than a full day's duration, may provide for
partial payment of per diem amounts on a proportional basis for activities of
less than a full day's duration. The per annum and per diem compensation payable
to the Plan Trustees hereunder shall be reviewed every three (3) years and
appropriately adjusted for changes in the cost of living with the consent of the
TAC and the Futures Representative. Any other changes in compensation of the
Plan Trustees shall be made subject to the approval of the Bankruptcy Court. The
Delaware Trustee shall be paid such compensation as is agreed pursuant to a
separate fee agreement.


                                       15
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      (b) The Plan Trust will promptly reimburse the Plan Trustees in accordance
with Section 3.6 above, for all reasonable out-of-pocket costs and expenses
incurred by the Plan Trustees in connection with the performance of their duties
hereunder following submission of appropriate documentation evidencing payment
of such costs or expenses.

      (c) The Plan Trust shall include a description of the amounts paid under
this Section 4.5 in the accounts to be filed with the Bankruptcy Court and
provided to the TAC, the Futures Representative, and Reorganized Congoleum
pursuant to Section 2.2(c)(i).

      4.6 Indemnification of Plan Trustees, Additional Indemnitees, Claimants'
Representative and Collateral Trustee.

      (a) The Plan Trust shall indemnify and defend the Plan Trustees, the
members of the TAC and the Futures Representative in the performance of their
duties hereunder to the fullest extent that a statutory trust organized under
the laws of the state of Delaware is from time to time entitled to indemnify and
defend such persons against any and all liabilities, expenses, claims, damages
or losses incurred by them in the performance of their duties hereunder or in
connection with activities undertaken by them prior to the Effective Date in
connection with the formation, establishment, or funding of the Plan Trust. The
Plan Trust shall indemnify any of the Additional Indemnitees in the performance
of their duties hereunder to the fullest extent that a corporation or trust
organized under the laws of the Plan Trust's jurisdiction of organization is
from time to time entitled to indemnify and defend such persons against any and
all liabilities, expenses, claims, damages or losses incurred by them in the
performance of their duties hereunder or in connection with activities
undertaken by them prior to the Effective Date in connection with the formation,
establishment or funding of the Plan Trust. Notwithstanding the foregoing, the
Plan Trustees and the Additional Indemnitees shall not be indemnified or
defended in any way for any liability, expense, claim, damage, or loss for which
he, she or it is ultimately liable under Section 4.4 above.

      (b) Reasonable expenses, costs and fees (including attorneys' fees and
costs) incurred by or on behalf of a Plan Trustee or Additional Indemnitee in
connection with any action, suit, or proceeding, whether civil, administrative
or arbitrative, from which they are indemnified by the Plan Trust pursuant to
Section 4.6(a) above, shall be paid by the Plan Trust in advance of the final
disposition thereof upon receipt of an undertaking, by or on behalf of the Plan
Trustees or Additional Indemnitee, to repay such amount in the event that it
shall be determined ultimately by final order that such Plan Trustee or
Additional Indemnitee is not entitled to be indemnified by the Plan Trust.


                                       16
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      (c) Subject to the limitations set forth in this Section 4.6(c), the Plan
Trust and the Reorganized Debtors shall indemnify and hold harmless each of the
Claimants' Representative and the Collateral Trustee to the extent that such
Entity was or is a party, or is threatened to be made a party, to any threatened
or pending judicial, administrative or arbitrative action, suit or proceeding by
reason of any act or omission of such Entity with respect to the negotiation and
implementation of modifications to the Plan, the other Plan Documents and the
Collateral Trust Agreement contemplated by the Ninth, Tenth or Eleventh Modified
Joint Plan of Reorganization of the Debtors and made on or after May 30, 2006 to
the fullest extent that a trust or a corporation organized under the laws of the
State of Delaware is from time to time entitled to indemnify and defend its
officers, directors, trustees and employees, against any and all liabilities,
expenses (including reasonable attorneys' fees and expenses), claims, damages or
losses incurred by each such Entity in connection with or resulting from such
action, suit or proceeding. To the extent that the Claimants' Representative or
the Collateral Trustee seek indemnification under this Section 4.6(c), the
Reorganized Debtors shall be responsible to pay the first one million dollars
($1,000,000) of indemnifiable liabilities, expenses, claims, damages and losses
sought under this Section 4.6(c). Thereafter, the Reorganized Debtors and the
Plan Trust shall each be responsible, severally and not jointly, to pay on a
pari passu basis one half of up to four million dollars ($4,000,000) of any
additional liabilities, expenses, claims, damages and losses indemnifiable under
this Section 4.6(c), provided that the Reorganized Debtors' maximum obligation
under this Section 4.6(c) shall in no event exceed the aggregate sum of three
million dollars ($3,000,000). Thereafter, the Plan Trust shall be solely
responsible for any additional liabilities, expenses, claims, damages and losses
indemnifiable under this Section 4.6(c). If the Claimants' Representative or
Collateral Trustee seeks indemnification under this Section 4.6(c) (each, an
"Indemnified Party"), such Indemnified Party shall give the Reorganized Debtors
and the Plan Trust prompt written notice of the basis upon which such
Indemnified Party seeks indemnification under this Section 4.6(c) (an
"Indemnification Claim Notice"). In no event shall the Plan Trust or the
Reorganized Debtors be liable for any liabilities, expenses, claims, damages or
losses that result from a delay in providing the Indemnification Claim Notice.
Each Indemnification Claim Notice shall contain a description of the action,
suit or proceeding related to the claim for indemnification and each Indemnified
Party shall furnish promptly to the Plan Trust and the Reorganized Debtors
copies of all papers and official documents received by it in respect thereof.
At their option, the Reorganized Debtors may assume the defense of any action,
suit or proceeding upon which the Indemnified Parties intend to base a request
for indemnification by giving written notice to such Indemnified Party within
fourteen (14) days after the Reorganized Debtors' receipt of an Indemnification
Claim Notice. The assumption of the defense of such action, suit or proceeding
shall not be construed as an acknowledgement that the Reorganized Debtors or the
Plan Trust are liable to indemnify any Indemnified Party in respect thereof, nor
shall it constitute a waiver by the Reorganized Debtors or the Plan Trust of any
defense any of them may assert against any Indemnified Party's claim for
indemnification. In the event that it is ultimately determined that the
Reorganized Debtors and/or the Plan Trust are not obligated to indemnify, defend
or hold harmless any Indemnified Party in respect of any action, suit or
proceeding for which indemnification is sought under this Section 4.6(c), such
Indemnified Party shall reimburse the Reorganized Debtors for any and all costs
and expenses (including attorneys' fees and costs) incurred by the Reorganized
Debtors in defense of such action, suit or proceeding. Regardless of whether the
Reorganized Debtors choose to defend or prosecute any such action, suit or
proceeding, no Indemnified Party shall admit any liability with respect to, or
settle, compromise or discharge, any such action, suit or proceeding without the
prior written consent of the Reorganized Debtors and the Plan Trust, which
consent shall not be unreasonably withheld. The Reorganized Debtors and the Plan


                                       17
<PAGE>

                                                           EXHIBIT D TO THE PLAN


Trust shall not be liable for any settlement or disposition of a claim by any
Indemnified Party that is reached without the prior written consent of the
Reorganized Debtors and the Plan Trust. If the Reorganized Debtors choose to
defend or prosecute any action, suit or proceeding for which indemnification
shall be requested, (i) the Indemnified Parties shall reasonably cooperate in
the defense or prosecution thereof and (ii) the Reorganized Debtors shall keep
the Plan Trust reasonably informed of the status of, and issues in, the action,
suit or proceeding and shall consult with the Plan Trust in connection with the
defense or prosecution thereof (subject to any applicable privileges). In
addition, if the Reorganized Debtors choose to defend or prosecute any action,
suit or proceeding for which indemnification shall be requested, the Reorganized
Debtors shall not settle such action, suit or proceeding without the prior
written consent of the Plan Trust, which consent shall not be unreasonably
withheld.

      (d) The Plan Trustees may purchase and maintain reasonable amounts and
types of insurance on behalf of an individual who is or was a Plan Trustee,
Additional Indemnitee, Claimants' Representative or Collateral Trustee,
including against liability asserted against or incurred by such individual in
that capacity or arising from his or her status as a Plan Trustee, TAC member,
Futures Representative, Claimants' Representative, Collateral Trustee, officer,
employee, agent or other representative.

      4.7 Plan Trustees' Lien. The Plan Trustees, the Additional Indemnitees,
the Claimants' Representative and the Collateral Trustee shall have a first
priority lien upon the Plan Trust Assets to secure the payment of any amounts
payable to them pursuant to Section 4.6 above.

      4.8 Plan Trustees' Employment of Experts; Delaware Trustee's Employment of
Counsel.

      (a) The Plan Trustees may, but shall not be required to, retain and/or
consult with counsel, accountants, appraisers, auditors and forecasters, and
other parties ("Professionals") deemed by the Plan Trustees to be qualified as
experts on the matters submitted to them, and, in the absence of gross
negligence, the written opinion of or information provided by any such party
deemed by the Plan Trustees to be an expert on the particular matter on any
matters submitted to such party by the Plan Trustees shall be full and complete
authorization and protection in respect of any action taken or not taken by the
Plan Trustees hereunder in good faith and in accordance with the written opinion
of or information provided by any such party.

      (b) The Delaware Trustee shall be permitted to retain counsel only in such
circumstances as required in the exercise of its obligations hereunder and
compliance with the advice of such counsel shall be full and complete
authorization and protection for actions taken or not taken by the Delaware
Trustee in good faith in compliance with such advice.

      4.9 Plan Trustees' Independence. The Plan Trustees shall not, during the
term of their service, hold a financial interest in, act as attorney or agent
for, or serve as any other professional for Reorganized Congoleum.
Notwithstanding the foregoing, any Plan Trustee may serve, without any
additional compensation other than the per diem compensation to be paid by the
Plan Trust pursuant to Section 4.5(a) above, as a director of Reorganized
Congoleum. No Plan Trustee shall act as an attorney for any person who holds an
asbestos claim.


                                       18
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      4.10 Bond. The Plan Trustees and the Delaware Trustee shall not be
required to post any bond or other form of surety or security unless otherwise
ordered by the Bankruptcy Court.

      4.11 Delaware Trustee.

      (a) There shall at all times be a Delaware Trustee. The Delaware Trustee
shall either be (i) a natural person who is at least 21 years of age and a
resident of the State of Delaware or (ii) a legal entity that has its principal
place of business in the State of Delaware, otherwise meets the requirements of
applicable Delaware law and shall act through one or more persons authorized to
bind such entity. If at any time the Delaware Trustee shall cease to be eligible
in accordance with the provisions of this Section 4.11, it shall resign
immediately in the manner and with the effect hereinafter specified in Section
4.11(c) below. For the avoidance of doubt, the Delaware Trustee will only have
such rights and obligations as expressly provided by reference to the Delaware
Trustee hereunder.

      (b) The Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities, of the
Plan Trustees set forth herein. The Delaware Trustee shall be one of the
trustees of the Plan Trust for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Act and for taking such actions as are
required to be taken by a Delaware Trustee under the Act. The duties (including
fiduciary duties), liabilities and obligations of the Delaware Trustee shall be
limited to (i) accepting legal process served on the Plan Trust in the State of
Delaware and (ii) the execution of any certificates required to be filed with
the Secretary of State of the State of Delaware that the Delaware Trustee is
required to execute under Section 3811 of the Act and there shall be no other
duties (including fiduciary duties) or obligations, express or implied, at law
or in equity, of the Delaware Trustee.

      (c) The Delaware Trustee shall serve until such time as the Plan Trustees
remove the Delaware Trustee or the Delaware Trustee resigns and a successor
Delaware Trustee is appointed by the Plan Trustees in accordance with the terms
of Section 4.11(d) below. The Delaware Trustee may resign at any time upon the
giving of at least 60 days' advance written notice to the Plan Trustees;
provided, that such resignation shall not become effective unless and until a
successor Delaware Trustee shall have been appointed by the Plan Trustees in
accordance with Section 4.11(d) below. If the Plan Trustees do not act within
such 60-day period, the Delaware Trustee may apply to the Court of Chancery of
the State of Delaware for the appointment of a successor Delaware Trustee.

      (d) Upon the resignation or removal of the Delaware Trustee, the Plan
Trustees shall appoint a successor Delaware Trustee by delivering a written
instrument to the outgoing Delaware Trustee. Any successor Delaware Trustee must
satisfy the requirements of Section 3807 of the Act. Any resignation or removal
of the Delaware Trustee and appointment of a successor Delaware Trustee shall
not become effective until a written acceptance of appointment is delivered by
the successor Delaware Trustee to the outgoing Delaware Trustee and the Plan
Trustees and any fees and expenses due to the outgoing Delaware Trustee are
paid. Following compliance with the preceding sentence, the successor Delaware
Trustee shall become fully vested with all of the rights, powers, duties and
obligations of the outgoing Delaware Trustee under this Agreement, with like
effect as if originally named as Delaware Trustee, and the outgoing Delaware
Trustee shall be discharged of its duties and obligations under this Agreement.


                                       19
<PAGE>

                                                           EXHIBIT D TO THE PLAN


                                   SECTION 5

                          PLAN TRUST ADVISORY COMMITTEE

      5.1 Members. The TAC shall consist of five (5) members, who shall
initially be the persons named on the signature page hereof, namely Russell
Budd, Esq., Steven Kazan, Esq., Joseph Rice, Esq., Robert Taylor, Esq., and
Perry Weitz, Esq.

      5.2 Duties. The members of the TAC shall serve in a fiduciary capacity
representing all holders of present Plan Trust Asbestos Claims. Subject to
Section 5.3 below, the Plan Trustees must consult with the TAC on matters
identified in Section 2.2(e) above and in other provisions herein, and must
obtain the consent of the TAC on matters identified in Section 2.2(f) above.
Where provided in the TDP, certain other actions by the Plan Trustees are also
subject to the consent of the TAC.

      5.3 Consent of TAC With Respect to Avoidance Actions, etc. If the Plan
Trustees seek the consent of the TAC with respect to a matter identified in
Section 2.2(f)(ix) above, a TAC member who is a Claimants' Counsel, as defined
in the Claimant Agreement, or who is a member, employee or associate of a firm
of such Claimants' Counsel, shall not take part in the decision of the TAC as to
whether to grant such consent, or in any decision of the TAC regarding the
resolution of any dispute concerning such matter pursuant to Section 7.13 below.

      5.4 Term of Office.

      (a) The initial members of the TAC appointed in accordance with Section
5.1 above shall serve staggered terms of three-, four-, or five-year terms as
indicated on the signature page hereof. Thereafter, each term of service shall
be five (5) years. A member of the TAC shall serve until the earlier of (i) his
or her death, (ii) his or her resignation pursuant to Section 5.4(b) below,
(iii) his or her removal pursuant to Section 5.4(c) below, (iv) the end of his
or her term as provided above, or (v) the termination of the Plan Trust pursuant
to Section 7.2 below.

      (b) A member of the TAC may resign at any time by written notice to the
other members of the TAC, the Plan Trustees and the Futures Representative. Such
notice shall specify a date when such resignation shall take effect, which shall
not be less than ninety (90) days after the date such notice is given, where
practicable.

      (c) A member of the TAC may be removed in the event that he or she becomes
unable to discharge his or her duties hereunder due to accident, physical
deterioration, mental incompetence, or a consistent pattern of neglect and
failure to perform or to participate in performing the duties of such member
hereunder, such as repeated non-attendance at scheduled meetings, or for other
good cause. Such removal shall be made at the recommendation of the remaining
members of the TAC with the approval of the Bankruptcy Court.


                                      20
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      5.5 Appointment of Successor.

      (a) In the event of a vacancy caused by the resignation, expiration of the
term, or death of a TAC member, his or her successor shall be pre-selected by
the TAC member whose has resigned, is deceased or whose term has expired, or by
his or her law firm in the event that such member has not pre-selected a
successor. Nothing shall prevent a TAC member or his or her law firm from
pre-selecting that TAC member to succeed himself or herself at the expiration of
his or her term, and there shall be no limit on the number of terms that a TAC
member may serve. If neither the member nor the law firm exercises the right to
make such a selection, the successor shall be chosen by a majority vote of the
remaining TAC members. If a majority of the remaining members cannot agree, the
Bankruptcy Court shall appoint the successor. In the event of a vacancy caused
by the removal of a TAC member, the remaining members of the TAC by majority
vote shall name the successor. If the majority of the remaining members of the
TAC cannot reach agreement, the Bankruptcy Court shall appoint the successor.

      (b) Each successor TAC member shall serve until the earlier of (i) his or
her death, (ii) his or her resignation pursuant to Section 5.4(b) above, (iii)
his or her removal pursuant to Section 5.4(c) above, (iv) the expiration of his
or her term pursuant to Section 5.4(a) above, or (v) the termination of the Plan
Trust pursuant to Section 7.2 below.

      5.6 TAC's Employment of Professionals.

      (a) The TAC may, but is not required to, retain and/or consult
Professionals deemed by the TAC to be qualified as experts on matters submitted
to the TAC. The TAC and its Professionals shall at all times have complete
access to the Plan Trust's officers, employees and agents, as well as to the
Professionals retained by the Plan Trust, and shall also have complete access to
all information generated by them or otherwise available to the Plan Trust or
the Plan Trustees. In the absence of gross negligence, the written opinion of or
information provided by any Professional deemed by the TAC to be qualified as an
expert on the particular matter submitted to the TAC shall be full and complete
authorization and protection in support of any action taken or not taken by the
TAC in good faith and in accordance with the written opinion of or information
provided by the Professional.

      (b) The Plan Trust shall promptly reimburse, or pay directly if so
instructed, the TAC for all reasonable fees and costs associated with the TAC's
employment of legal counsel pursuant to this provision in connection with the
TAC's performance of its duties hereunder. The Plan Trust shall also promptly
reimburse, or pay directly if so instructed, the TAC for all reasonable fees and
costs associated with the TAC's employment of any other Professional pursuant to
this provision in connection with the TAC's performance of its duties hereunder;
provided, however, that (i) the TAC has first submitted to the Plan Trust a
written request for such reimbursement setting forth the reasons (A) why the TAC
desires to employ such Professional, and (B) why the TAC cannot rely on
Professionals retained by the Plan Trust to meet the needs of the TAC for such
expertise or advice, and (ii) the Plan Trust has approved the TAC's request for
reimbursement in writing. If the Plan Trust agrees to pay for the TAC
Professional, such reimbursement shall be treated as a Plan Trust Expense. If
the Plan Trust declines to pay for the TAC Professional, it must set forth its
reasons in writing. If the TAC still desires to employ such Professional at Plan
Trust expense, the TAC and/or the Plan Trustees shall resolve their dispute
pursuant to Section 7.13 below.


                                       21
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      5.7 Compensation and Expenses of the TAC. The members of the TAC shall
receive compensation from the Plan Trust for their services as TAC members in
the form of a reasonable hourly rate set by the Plan Trustees for attendance at
meetings or other conduct of Plan Trust business. The members of the TAC shall
also be reimbursed promptly for all reasonable out-of-pocket costs and expenses
incurred in connection with the performance of their duties hereunder. Such
reimbursement or direct payment shall be deemed a Plan Trust Expense. The Plan
Trust shall include a description of the amounts paid under this Section 5.7 in
the accounts to be filed with the Bankruptcy Court and provided to the Plan
Trustees, the Futures Representative, and Reorganized Congoleum pursuant to
Section 2.2(c)(i).

      5.8 Procedures for Consultation With and Obtaining the Consent of the TAC.

      (a) Consultation Process.

            (i) In the event the Plan Trustees are required to consult with the
      TAC pursuant to Section 2.2(e) above or on other matters as provided
      herein, the Plan Trustees shall provide the TAC with written advance
      notice of the matter under consideration, and with all relevant
      information concerning the matter as is reasonably practicable under the
      circumstances. The Plan Trustees shall also provide the TAC with such
      reasonable access to the Professionals and other experts retained by the
      Plan Trust and its staff (if any) as the TAC may reasonably request during
      the time that the Plan Trustees are considering such matter, and shall
      also provide the TAC the opportunity, at reasonable times and for
      reasonable periods of time, to discuss and comment on such matter with the
      Plan Trustees.

            (ii) The Plan Trustees shall take into consideration the time
      required for the TAC, if its members so wish, to engage and consult with
      its own independent financial or investment advisors as to such matter.

      (b) Consent Process.

            (i) In the event the Plan Trustees are required to obtain the
      consent of the TAC pursuant to Section 2.2(f) above, the Trustees shall
      provide the TAC with a written notice stating that their consent is being
      sought pursuant to that provision, describing in detail the nature and
      scope of the action the Plan Trustees propose to take, and explaining in
      detail the reasons why the Plan Trustees desire to take such action. The
      Plan Trustees shall provide the TAC as much relevant additional
      information concerning the proposed action as is reasonably practicable
      under the circumstances. The Plan Trustees shall also provide the TAC with
      such reasonable access to the Professionals and other experts retained by
      the Plan Trust and its staff (if any) as the TAC may reasonably request
      during the time that the Plan Trustees are considering such action, and
      shall also provide the TAC the opportunity, at reasonable times and for
      reasonable periods of time, to discuss and comment on such action with the
      Plan Trustees.


                                       22
<PAGE>

                                                           EXHIBIT D TO THE PLAN


            (ii) The TAC must consider in good faith and in a timely fashion any
      request for its consent by the Plan Trustees, and must in any event advise
      the Plan Trustees in writing of its consent or its objection to the
      proposed action within 30 days of receiving the original request for
      consent from the Plan Trustees. The TAC may not withhold its consent
      unreasonably. If the TAC decides to withhold its consent, it must explain
      in detail its objections to the proposed action. If the TAC does not
      advise the Plan Trustees in writing of its consent or its objections to
      the action within thirty (30) days of receiving notice regarding such
      request, the TAC's consent to the proposed actions shall be deemed to have
      been affirmatively granted.

            (iii) If, after following the procedures specified in this Section
      5.8(b), the TAC continues to object to the proposed action and to withhold
      its consent to the proposed action, the Plan Trustees and/or the TAC shall
      resolve their dispute pursuant to Section 7.13. However, the burden of
      proof with respect to the validity of the TAC's objection and withholding
      of its consent shall be on the TAC.

      5.9 Copies to the TAC. The Plan Trustees shall provide the TAC with copies
of all notices and other written information provided to the Futures
Representative pursuant to this Plan Trust Agreement.

                                   SECTION 6

                           THE FUTURES REPRESENTATIVE

      6.1 Duties. The initial Futures Representative shall be the individual
appointed by the Bankruptcy Court to serve in such capacity. He shall serve in a
fiduciary capacity, representing the interests of the holders of future Plan
Trust Asbestos Claims for the purpose of protecting the rights of such persons.
The Plan Trustees must consult with the Futures Representative on matters
identified in Section 2.2(e) above and on certain other matters provided herein,
and must obtain the consent of the Futures Representative on matters identified
in Section 2.2(f) above. Where provided in the TDP, certain other actions by the
Plan Trust or Plan Trustees are also subject to the consent of the Futures
Representative.

      6.2 Term of Office.

      (a) The Futures Representative shall serve until the earlier of (i) his or
her death, (ii) his or her resignation pursuant to Section 6.2(b) below, (iii)
his or her removal pursuant to Section 6.2(c) below, or (iv) the termination of
the Plan Trust pursuant to Section 7.2 below.

      (b) The Futures Representative may resign at any time by written notice to
the Plan Trustees. Such notice shall specify a date when such resignation shall
take effect, which shall not be less than ninety (90) days after the date such
notice is given, where practicable.

      (c) The Futures Representative may be removed by the Bankruptcy Court in
the event he or she becomes unable to discharge his or her duties hereunder due
to accident, physical deterioration, mental incompetence, or a consistent
pattern of neglect and failure to perform or to participate in performing the
duties hereunder, such as repeated non-attendance at scheduled meetings, or for
other good cause.


                                       23
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      6.3 Appointment of Successor. A vacancy caused by death or resignation
shall be filled with an individual nominated prior to the effective date of the
resignation or the death by the resigning or deceased Futures Representative,
and a vacancy caused by removal of the Futures Representative shall be filled
with an individual nominated by the Plan Trustees in consultation with the TAC,
subject to the approval of the Bankruptcy Court. In the event a majority of the
Plan Trustees cannot agree, or a nominee has not been pre-selected, the
successor shall be chosen by the Bankruptcy Court.

      6.4 Futures Representative's Employment of Professionals.

      (a) The Futures Representative may, but is not required to, retain and/or
consult Professionals deemed by the Futures Representative to be qualified as
experts on matters submitted to the Futures Representative. The Futures
Representative and his or her Professionals shall at all times have complete
access to the Plan Trust's officers, employees and agents, as well as to the
Professionals retained by the Plan Trust, and shall also have complete access to
all information generated by them or otherwise available to the Plan Trust or
the Plan Trustees. In the absence of gross negligence, the written opinion of or
information provided by any Professional deemed by the Futures Representative to
be qualified as an expert on the particular matter submitted to the Futures
Representative shall be full and complete authorization and protection in
support of any action taken, or not taken, by the Futures Representative in good
faith and in accordance with the written opinion of or information provided by
the Professional.

      (b) The Plan Trust shall promptly reimburse, or pay directly if so
instructed, the Futures Representative for all reasonable fees and costs
associated with the Futures Representative's employment of legal counsel
pursuant to this provision in connection with the Futures Representative's
performance of his or her duties hereunder. The Plan Trust shall also promptly
reimburse, or pay directly if so instructed, the Futures Representative for all
reasonable fees and costs associated with the Futures Representative's
employment of any other Professionals pursuant to this provision in connection
with the Futures Representative's performance of his or her duties hereunder;
provided, however, that (i) the Futures Representative has first submitted to
the Plan Trust a written request for such reimbursement setting forth the
reasons (A) why the Futures Representative desires to employ the Professional,
and (B) why the Futures Representative cannot rely on Professionals retained by
the Plan Trust to meet the needs of the Futures Representative for such
expertise or advice, and (ii) the Plan Trust has approved the Futures
Representative's request for reimbursement in writing. If the Plan Trust agrees
to pay for the Futures Representative's Professional, such reimbursement shall
be treated as a Plan Trust Expense. If the Plan Trust declines to pay for the
Futures Representative's Professional, it must set forth its reasons in writing.
If the Futures Representative still desires to employ the Professional at Plan
Trust expense, the Futures Representative and/or the Plan Trustees shall resolve
their dispute pursuant to Section 7.13 below.


                                       24
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      6.5 Compensation and Expenses of the Futures Representative. The Futures
Representative shall receive compensation from the Plan Trust in the form of
payment at the Futures Representative's normal hourly rate for services
performed. The Plan Trust will promptly reimburse the Futures Representative for
all reasonable out-of-pocket costs and expenses incurred by the Futures
Representative in connection with the performance of his or her duties
hereunder. Such reimbursement or direct payment shall be deemed a Plan Trust
Expense. The Plan Trust shall include a description of the amounts paid under
this Section 6.5 in the accounts to be filed with the Bankruptcy Court and
provided to the Plan Trustees, the Futures Representative, and Reorganized
Congoleum pursuant to Section 2.2(c)(i).

      6.6 Procedures for Consultation with and Obtaining the Consent of the
Futures Representative.

      (a) Consultation Process.

            (i) In the event the Plan Trustees are required to consult with the
      Futures Representative pursuant to Section 2.2(e) above or on any other
      matters specified herein, the Plan Trustees shall provide the Futures
      Representative with written advance notice of the matter under
      consideration, and with all relevant information concerning the matter as
      is reasonably practicable under the circumstances. The Plan Trustees shall
      also provide the Futures Representative with such reasonable access to
      Professionals and other experts retained by the Plan Trust and its staff
      (if any) as the Futures Representative may reasonably request during the
      time that the Plan Trustees are considering such matter, and shall also
      provide the Futures Representative the opportunity, at reasonable times
      and for reasonable periods of time, to discuss and comment on such matter
      with the Plan Trustees.

            (ii) The Plan Trustees shall take into consideration the time
      required for the Futures Representative, if he or she so wishes, to engage
      and consult with his or her own independent financial, actuarial or
      investment advisors as to such matter.

      (b) Consent Process.

            (i) In the event the Plan Trustees are required to obtain the
      consent of the Futures Representative pursuant to Section 2.2(f) above,
      the Plan Trustees shall provide the Futures Representative with a written
      notice stating that his or her consent is being sought pursuant to that
      provision, describing in detail the nature and scope of the action the
      Plan Trustees propose to take, and explaining in detail the reasons why
      the Plan Trustees desire to take such action. The Plan Trustees shall
      provide the Futures Representative as much relevant additional information
      concerning the proposed action as is reasonably practicable under the
      circumstances. The Plan Trustees shall also provide the Futures
      Representative with such reasonable access to the Professionals and other
      experts retained by the Plan Trust and its staff (if any) as the Futures
      Representative may reasonably request during the time that the Plan
      Trustees are considering such action, and shall also provide the Futures
      Representative the opportunity, at reasonable times and for reasonable
      periods of time, to discuss and comment on such action with the Plan
      Trustees.


                                       25
<PAGE>

                                                           EXHIBIT D TO THE PLAN


            (ii) The Futures Representative must consider in good faith and in a
      timely fashion any request for his or her consent by the Plan Trustees,
      and must in any event advise the Plan Trustees in writing of his or her
      consent or objection to the proposed action within thirty (30) days of
      receiving the original request for consent from the Plan Trustees. The
      Futures Representative may not withhold his or her consent unreasonably.
      If the Futures Representative decides to withhold consent, he or she must
      explain in detail his or her objections to the proposed action. If the
      Futures Representative does not advise the Plan Trustees in writing of his
      or her consent or objections to the proposed action within thirty (30)
      days of receiving the notice from the Plan Trustees regarding such
      consent, the Futures Representative's consent shall be deemed to have been
      affirmatively granted.

            (iii) If, after following the procedures specified in this Section
      6.6(b), the Futures Representative continues to object to the proposed
      action and to withhold its consent to the proposed action, the Plan
      Trustees and/or the Futures Representative shall resolve their dispute
      pursuant to Section 7.13. However, the burden of proof with respect to the
      validity of the Futures Representative's objection and withholding of his
      or her consent shall be on the Futures Representative.

      6.7 Copies to Futures Representative. The Plan Trustees shall provide the
Futures Representative with copies of all notices and other written information
provided to the TAC pursuant to this Plan Trust Agreement.

                                   SECTION 7

                               GENERAL PROVISIONS

      7.1 Irrevocability. The Plan Trust is irrevocable.

      7.2 Dissolution.

      (a) The term for which the Plan Trust is to exist shall commence on the
date of the filing of the Certificate of Trust and shall terminate pursuant to
the provisions of this Section 7.2.

      (b) The Plan Trust shall automatically dissolve on the date ninety (90)
days after the first to occur of the following events (the "Dissolution Date"):

            (i) the Plan Trustees decide to dissolve the Plan Trust because (A)
      they deem it unlikely that new asbestos claims will be filed against the
      Plan Trust, (B) all Plan Trust Asbestos Claims duly filed with the Plan
      Trust have been liquidated and paid to the extent provided in this Plan
      Trust Agreement and the TDP or have been disallowed by a final,
      non-appealable order, to the extent possible based upon the funds
      available through the Plan, and (C) twelve (12) consecutive months have
      elapsed during which no new asbestos claim has been filed with the Plan
      Trust; or

            (ii) if the Plan Trustees have procured and have in place
      irrevocable insurance policies and have established claims handling
      agreements and other necessary arrangements with suitable third parties
      adequate to discharge all expected remaining obligations and expenses of
      the Plan Trust in a manner consistent with this Plan Trust Agreement and
      the TDP, the date on which the Bankruptcy Court enters an order approving
      such insurance and other arrangements and such order becomes a final
      order; or


                                       26
<PAGE>

                                                           EXHIBIT D TO THE PLAN


            (iii) to the extent that any rule against perpetuities shall be
      deemed applicable to the Plan Trust, twenty-one (21) years less ninety-one
      (91) days pass after the death of the last survivor of all of the
      descendants of the late Joseph P. Kennedy, Sr., father of the late
      President John F. Kennedy, living on the date hereof.

      (c) On the Dissolution Date or as soon as reasonably practicable after the
wind-up of the Plan Trust's affairs by the Plan Trustees and payment of all the
Plan Trust's liabilities has been provided for (including, without limitation,
Plan Trust Expenses) as required by applicable law including Section 3808 of the
Act, all assets remaining in the Plan Trust estate shall be given to such
organization(s) exempt from federal income tax under section 501(c)(3) of the
Internal Revenue Code, which tax-exempt organization(s) shall be selected by the
Plan Trustees using their reasonable discretion; provided, however, that (i) if
practicable, the activities of the selected tax-exempt organization(s) shall be
related to the treatment of, research on, or the relief of suffering of
individuals suffering from asbestos related lung disorders, and (ii) the
tax-exempt organization(s) shall not bear any relationship to Reorganized
Congoleum within the meaning of section 468B(d)(3) of the Internal Revenue Code.
Notwithstanding any contrary provision of the Plan and related documents, this
Section 7.2(c) cannot be modified or amended.

      (d) Following the dissolution and distribution of the assets of the Plan
Trust, the Plan Trust shall terminate and the Plan Trustees, or any one of them,
shall execute and cause a Certificate of Cancellation of the Certificate of
Trust of the Plan Trust to be filed in accordance with the Act. Notwithstanding
anything to the contrary contained in this Agreement, the existence of the Plan
Trust as a separate legal entity shall continue until the filing of such
Certificate of Cancellation.

      7.3 Amendments. Except as otherwise provided herein, the Plan Trustees,
after consultation with the TAC and the Futures Representative, and subject to
the unanimous consent of the TAC and the Futures Representative, may modify or
amend this Plan Trust Agreement and the Plan Trust Bylaws. The Plan Trustees,
after consultation with the TAC and the Futures Representative, and subject to
the consent of the TAC and the Futures Representative, may modify or amend the
TDP; provided, however, that no amendment to the TDP shall be inconsistent with
the provisions limiting amendments to that document provided therein, and in
particular the provisions limiting amendment of the Claims Payment Ratio set
forth in Section 2.6 of the TDP and of the Payment Percentage set forth in
Section 4.2 of the TDP. Any modification or amendment made pursuant to this
Section must be done in writing. Notwithstanding anything contained in this Plan
Trust Agreement to the contrary, neither this Plan Trust Agreement, the Plan
Trust Bylaws, the TDP, nor any document annexed to the foregoing shall be
modified or amended in any way that could jeopardize, impair, or modify the
applicability of section 524(g) of the Bankruptcy Code, the efficacy or
enforceability of the injunction entered thereunder, or the Plan Trust's
qualified settlement fund status under section 468B of the Internal Revenue
Code.


                                       27
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      7.4 Meetings. The Plan Trustees, the TAC, and the Futures Representative
shall be deemed to have attended a meeting in the event such person participates
in a substantial portion of such meeting by conferring, in person or by
telephone conference call, on Plan Trust matters with the TAC, the Futures
Representative, or Plan Trustees, as applicable. The Plan Trustees, the TAC and
the Futures Representative shall have complete discretion to determine whether a
meeting, as described herein, occurred for purposes of Sections 4.5, 5.7, and
6.5 above.

      7.5 Severability. Should any provision in this Plan Trust Agreement be
determined to be unenforceable, such determination shall in no way limit or
affect the enforceability and operative effect of any and all other provisions
of this Plan Trust Agreement.

      7.6 Notices. Notices to persons asserting claims shall be given by first
class mail, postage prepaid, at the address of such person, or, where
applicable, such person's legal representative, in each case as provided on such
person's claim form submitted to the Plan Trust with respect to his or her Plan
Trust Asbestos Claim.

      (a) Any notices or other communications required or permitted hereunder to
the following parties shall be in writing and delivered at the addresses
designated below, or sent by electronic mail (email) or facsimile pursuant to
the instructions listed below, or mailed by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows, or to such other
address or addresses as may hereafter be furnished in writing to each of the
other parties listed below in compliance with the terms hereof.

      To the Plan Trust through the Plan Trustees:


      To the TAC:

            Russell Budd
            3102 Oak Lawn Avenue
            Suite 1100
            Dallas, TX  75219
            E-mail: rbudd@baronbudd.com

            Steven Kazan
            Kazan, McClain, Abrams, Fernandez, Lyons & Farrise
            171 Twelfth Street, Third Floor
            Oakland, California  94607
            Facsimile: 510-835-4913
            E-mail: skazan@kazanlaw.com

            Robert Taylor, II
            One Allen Center
            3400 Penthouse
            500 Dallas Street
            Houston Texas, 77002
            E-mail: rebadolezal@rgtaylorlaw.com


                                       28
<PAGE>

                                                           EXHIBIT D TO THE PLAN


            Joseph F. Rice
            Motley Rice LLC
            28 Bridgeside Blvd
            Post Office Box 1792
            Mt. Pleasant, SC  29465
            E-mail: jrice@motleyrice.com

            Perry Weitz
            Weitz & Luxenberg, P.C.
            180 Maiden Lane
            New York, New York  10038-4925
            Facsimile:  212-344-5461
            E-mail: pweitz@weitzlux.com

      To the Futures Representative:

            R. Scott Williams
            Haskell Slaughter Young & Rediker, LLC
            1400 Park Place Tower
            2001 Park Place North
            Birmingham, AL  35203
            Fax: (205) 324-1133

      To Debtors, Settlors, or Reorganized Debtors:

            Congoleum Corporation
            3500 Quakerbridge Road
            P.O. Box 3127
            Mercerville, NJ  08619-0127
            Attention: Roger Marcus
            Fax: 609-584-3685

            Congoleum Sales, Inc.
            c/o Congoleum Corporation
            3500 Quakerbridge Road
            P.O. Box 3127
            Mercerville, NJ  08619-0127
            Attention: Roger Marcus
            Fax: 609-584-3685

            Congoleum Fiscal, Inc.
            c/o Congoleum Corporation
            3500 Quakerbridge Road
            P.O. Box 3127
            Mercerville, NJ  08619-0127
            Attention: Roger Marcus
            Fax: 609-584-3685


                                       29
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      With a copy to (which copy shall not constitute notice):

            Richard L. Epling, Esq.
            Pillsbury Winthrop Shaw Pittman LLP
            1540 Broadway
            New York, NY  10036-4039
            Fax: 212-858-1500

      (b) All such notices and communications if mailed shall be effective when
physically delivered at the designated addresses or, if electronically
transmitted, when the communication is received at the designated addresses and
confirmed by the recipient by return transmission.

      7.7 Successors and Assigns. The provisions of this Plan Trust Agreement
shall be binding upon and inure to the benefit of Congoleum, the Plan Trust, the
Plan Trustees and Reorganized Congoleum, and their respective successors and
assigns, except that neither Congoleum, the Plan Trust, the Plan nor Reorganized
Congoleum may assign or otherwise transfer any of its, or their, rights or
obligations under this Plan Trust Agreement except, in the case of the Plan
Trust and the Plan Trustees, as contemplated by Section 2.1 above.

      7.8 Limitation on Claim Interests for Securities Laws Purposes. Plan Trust
Asbestos Claims, and any interests therein (a) shall not be assigned, conveyed,
hypothecated, pledged or otherwise transferred, voluntarily or involuntarily,
directly or indirectly, except by will or under the laws of descent and
distribution; (b) shall not be evidenced by a certificate or other instrument;
(c) shall not possess any voting rights; and (d) shall not be entitled to
receive any dividends or interest; provided, however, that clause (a) of this
Section 7.8 shall not apply to the holder of a claim that is subrogated to a
Plan Trust Asbestos Claim as a result of its satisfaction of such Plan Trust
Asbestos Claim.

      7.9 Entire Agreement; No Waiver. The entire agreement of the parties
relating to the subject matter of this Plan Trust Agreement is contained herein
and in the documents referred to herein, and this Plan Trust Agreement and such
documents supersede any prior oral or written agreements concerning the subject
matter hereof. No failure to exercise or delay in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any further
exercise thereof or of any other right, power or privilege. The rights and
remedies herein provided are cumulative and are not exclusive of rights under
law or in equity.

      7.10 Headings. The headings used in this Plan Trust Agreement are inserted
for convenience only and do not constitute a portion of this Plan Trust
Agreement, nor in any manner affect the construction of the provisions of this
Plan Trust Agreement.

      7.11 Governing Law. This Plan Trust Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without regard
to Delaware conflict of law principles.


                                       30
<PAGE>

                                                           EXHIBIT D TO THE PLAN


      7.12 Settlor Representative and Cooperation. Congoleum is hereby
irrevocably designated as the Settlor, and it is hereby authorized to take any
action required of the Settlor in connection with the Plan Trust Agreement.
Congoleum agrees to cooperate in implementing the goals and objectives of this
Plan Trust.

      7.13 Dispute Resolution. Any disputes that arise under this Plan Trust
Agreement or under the TDP shall be resolved by submission of the matter to an
alternative dispute resolution ("ADR") process mutually agreeable to the parties
involved. Should any party to the ADR process be dissatisfied with the decision
of the arbitrator(s), that party may apply to the Bankruptcy Court for a
judicial determination of the matter. In either case, if the dispute arose
pursuant to the consent provision set forth in Section 5.8(b) (in the case of
the TAC) or Section 6.6(b) (in the case of the Futures Representative), the
burden of proof shall be on the party or parties who withheld consent to show
that the objection was valid. Should the dispute not be resolved by ADR process
within thirty (30) days after submission, the parties are relieved of the
requirement to pursue ADR prior to application to the Bankruptcy Court.
Notwithstanding anything else herein contained, to the extent any provision of
this Plan Trust Agreement is inconsistent with any provision of the Plan or the
TDP, the Plan or the TDP shall control.

      7.14 Enforcement and Administration. The provisions of this Plan Trust
Agreement and the TDP attached hereto shall be enforced by the Bankruptcy Court
pursuant to the Plan. The parties hereby further acknowledge and agree that the
Bankruptcy Court shall have exclusive jurisdiction over the settlement of the
accounts of the Plan Trustees and over any disputes hereunder not resolved by
alternative dispute resolution in accordance with Section 7.13 above.

      7.15 Effectiveness. This Plan Trust Agreement shall not become effective
until it has been executed and delivered by all the parties hereto.

      7.16 Counterpart Signatures. This Plan Trust Agreement may be executed in
any number of counterparts, each of which shall constitute an original, but such
counterparts shall together constitute but one and the same instrument.

      IN WITNESS WHEREOF, the parties have executed this Plan Trust Agreement
this _____ day of ________________________, _______.


                              CONGOLEUM CORPORATION, SETTLOR, by


                              Name: ___________________________________

                              Title:___________________________________


                                       31
<PAGE>

                                                           EXHIBIT D TO THE PLAN


                              CONGOLEUM SALES, INC., SETTLOR, by


                              Name: ___________________________________

                              Title:___________________________________


                                       32
<PAGE>

                                                           EXHIBIT D TO THE PLAN


                        CONGOLEUM FISCAL, INC., SETTLOR, by


                        Name: _________________________________________

                        Title:_________________________________________


                        PLAN TRUSTEES


                        _______________________________________________
                        Name:
                        Expiration Date of Initial Term: Third Anniversary
                        of the date of this Agreement


                        _______________________________________________
                        Name:
                        Expiration Date of Initial Term: Fourth Anniversary
                        of the date of this Agreement


                        _______________________________________________
                        Name:
                        Expiration Date of Initial Term: Fifth Anniversary
                        of the date of this Agreement


                        ASBESTOS CLAIMANTS' COMMITTEE


                        _______________________________________________


                        TRUST ADVISORY COMMITTEE


                        _______________________________________________
                        Name:
                        Expiration Date of Initial Term: Third Anniversary
                        of the date of this Agreement


                                       33
<PAGE>

                                                           EXHIBIT D TO THE PLAN


                        _______________________________________________
                        Name:
                        Expiration Date of Initial Term:  Third Anniversary
                        of the date of this Agreement


                        _______________________________________________
                        Name:
                        Expiration Date of Initial Term:  Fourth Anniversary
                        of the date of this Agreement


                        _______________________________________________
                        Name:
                        Expiration Date of Initial Term:  Fourth Anniversary
                        of the date of this Agreement


                        _______________________________________________
                        Name:
                        Expiration Date of Initial Term:  Fifth Anniversary
                        of the date of this Agreement


                        FUTURES REPRESENTATIVE


                        _______________________________________________
                        R. Scott Williams, Esq.


                                       34
<PAGE>

                                                           EXHIBIT D TO THE PLAN


                                                                       EXHIBIT B

                              CERTIFICATE OF TRUST


                                    [TO COME]
<PAGE>

                              Exhibit E to the Plan
             "Anti-Dilution Provisions for New Class A Common Stock"


<PAGE>

                                                           EXHIBIT E TO THE PLAN


If at any time after the Effective Date (but subject to the last paragraph
hereof), Reorganized Congoleum shall issue (other than in an Excluded Issuance
(as defined below)) shares of Class A Common Stock (or rights, warrants or other
securities convertible into or exchangeable for shares of Class A Common Stock),
at a price per share (or having an exercise, conversion or exchange price per
share) less than the fair market value of the Class A Common Stock on the date
of issuance (a "Dilutive Issuance"), then Reorganized Congoleum shall issue
immediately following the close of trading on the tenth trading date (the
"Adjustment Date") following the date of such Dilutive Issuance (the "Dilutive
Issuance Closing Date") additional shares of Class A Common Stock to the Plan
Trust (the "Additional Shares") so that the fair market value on the Adjustment
Date of (1) the New Class A Common Stock issued pursuant to Section 6.1(b) of
this Plan on the Effective Date (the "Initial Shares") plus (2) the Additional
Shares equals the fair market value of the Initial Shares (plus any previously
issued Additional Shares) on the Dilutive Issuance Closing Date.

"Excluded Issuance" shall mean (1) issuances pursuant to Reorganized Congoleum's
stock option plans existing on the Effective Date (including any amendments
thereto after the Effective Date) or any future stock option or restricted plan
approved by the Board of Directors of Reorganized Congoleum; (2) issuances in a
public offering; (3) issuances to banks, equipment lessors or other financial
institutions, pursuant to a debt financing or equipment leasing approved by the
Board of Directors of Reorganized Congoleum; (4) issuances to suppliers or third
party service providers in connection with the provision of goods or services
approved by the Board of Directors of Reorganized Congoleum and consistent with
the past practices of Congoleum; and (5) issuances in connection with sponsored
research, collaboration, technology license, development, OEM, marketing or
other similar agreements or strategic partnerships approved by the Board of
Directors of Reorganized Congoleum and consistent with the past practices of
Congoleum.

"fair market value" shall be determined in good faith by the Board of Directors
of Reorganized Congoleum (which determination shall be conclusive); provided
that if the Class A Common Stock is traded on a securities exchange or the
Nasdaq stock market, "fair market value" shall be based on the average of the
closing prices of the Class A Common Stock thereon over the twenty trading days
(during which trades occur) ending one day prior to the date of determination,
it being understood that the Board of Directors shall apply an appropriate
discount for shares that are "restricted" pursuant to SEC rules and regulations.

After the Effective Date (but subject to the last paragraph hereof), Reorganized
Congoleum shall not authorize or issue (i) any shares of capital stock, other
than shares of Class A Common Stock, or (ii) any rights to acquire capital
stock, other than shares of Class A Common Stock, or (iii) any securities
convertible into or exchangeable for shares of capital stock, other than shares
of Class A Common Stock, without the prior written consent of the Plan Trust,
which shall not be unreasonably withheld.


                                        2
<PAGE>

                                                           EXHIBIT E TO THE PLAN


The provisions of this Exhibit E shall no longer be applicable at such time as
the Plan Trust first holds less than ten percent (10%) of the Class A Common
Stock of Reorganized Congoleum, it being understood that if the Plan Trust were
to acquire thereafter ten percent (10%) or more of such Class A Common Stock,
these provisions shall continue to no longer be applicable.


                                        3
<PAGE>

                              Exhibit F to the Plan
                       "Congoleum's Current Distributors"


<PAGE>

                                                           EXHIBIT F TO THE PLAN


                         Congoleum Current Distributors


Mohawk Industries, Inc.
Pacific American Lumber, Inc.
Albert F. Fitzgerald, Inc.
All Tile, Inc.
Bayard Sales, Corp.
Bishop Distributing
CMH Flooring Products, Inc.
Fargo Glass & Paint Company
Floor Covering, Inc.
Rosele Heck, Co.
Tri-State Wholesale Flooring, Inc.
LaSalle Bristol, LP
W.G. McMahon Canada, Ltd.
Omni Floorcoverings, Ltd. (Ontario)
Tapis Kraus Quebec


                                        2

<PAGE>

                                                           EXHIBIT G TO THE PLAN

                              Exhibit G to the Plan
                 "Congoleum Plan Trust Distribution Procedures"
<PAGE>

                                                           EXHIBIT G TO THE PLAN


                                 CONGOLEUM PLAN
                          TRUST DISTRIBUTION PROCEDURES

                                Table of Contents

                                                                            Page
                                                                            ----


                                    SECTION I

                                  INTRODUCTION

   1.1   Purpose.............................................................1
   1.2   Interpretation......................................................1

                                   SECTION II

                                    OVERVIEW

   2.1   Plan Trust Goals....................................................1
   2.2   Claims Liquidation Procedures.......................................2
   2.3   Settled Claims......................................................3
   2.4   Application of the Payment Percentage...............................3
   2.5   Plan Trust's Determination of the Maximum Annual Payment and Maximum
         Available Payment...................................................4
   2.6   Claims Payment Ratio................................................4
   2.7   Indirect Plan Trust Asbestos Claims.................................6

                                   SECTION III

           CLAIMS HANDLING FEE, PLAN TRUST EXPENSES AND COVERAGE COSTS


                                   SECTION IV

                               TDP ADMINISTRATION

   4.1   Plan Trust Advisory Committee and Futures Representative............6
   4.2   Consent and Consultation Procedures.................................7

                                    SECTION V

                     PAYMENT PERCENTAGE; PERIODIC ESTIMATES

   5.1   Uncertainty of Congoleum's Personal Injury Asbestos Liabilities.....7
   5.2   Computation of Payment Percentage...................................7
   5.3   Applicability of the Payment Percentage.............................8


                                       i
<PAGE>

                                                           EXHIBIT G TO THE PLAN


                                   SECTION VI

         RESOLUTION OF SETTLED CLAIMS AND PLAN TRUST PI ASBESTOS CLAIMS

   6.1   Ordering, Processing and Payment of Claims..........................9
   6.2   Resolution of Plan Trust PI Asbestos Claims........................12
   6.3   Categorizing Claims as Extraordinary and/or Exigent Hardship.......20
   6.4   Secondary Exposure Claims..........................................21
   6.5   Indirect Plan Trust Asbestos Claims................................21
   6.6   Evidentiary Requirements...........................................23
   6.7   Claims Audit Program...............................................25
   6.8   Second Disease (Malignancy) Claims.................................26
   6.9   Arbitration........................................................26
   6.10  Litigation.........................................................27

                                   SECTION VII

                                CLAIMS MATERIALS

   7.1   Claims Materials...................................................27
   7.2   Content of Claims Materials........................................28
   7.3   Withdrawal or Deferral of Claims...................................28
   7.4   Filing Requirements and Fees.......................................28
   7.5   Confidentiality of Claimants' Submissions..........................28

                                  SECTION VIII

              GENERAL GUIDELINES FOR LIQUIDATING AND PAYING CLAIMS

   8.1   Showing Required...................................................29
   8.2   Costs Considered...................................................29
   8.3   Discretion to Vary the Order and Amounts of Payments in
         Event of Limited Liquidity.........................................29
   8.4   Punitive Damages...................................................30
   8.5   Interest...........................................................30
   8.6   Suits in the Tort System...........................................31
   8.7   Payment of Judgments for Money Damages.............................31
   8.8   Releases...........................................................31
   8.9   Third-Party Services...............................................32
   8.10  Plan Trust Disclosure of Information...............................32

                                   SECTION IX

                                  MISCELLANEOUS

   9.1   Amendments.........................................................32
   9.2   Severability.......................................................32
   9.3   Governing Law......................................................32


                                       ii
<PAGE>

                                                           EXHIBIT G TO THE PLAN


      The Congoleum Plan Trust Distribution Procedures (this "TDP") contained
herein provide for resolving all asbestos-related personal injury and death
claims caused by exposure to products for which, Congoleum Corporation,
Congoleum Sales, Inc., and Congoleum Fiscal, Inc., (collectively referred to as
the "Debtors" or "Congoleum"), and their predecessors, successors, and assigns,
have legal responsibility as the result of the manufacture, distribution,
installation or use of Congoleum products containing asbestos or exposure to
asbestos or asbestos-containing products in a Congoleum facility, which consist
of Asbestos Personal Injury Claims and Unknown Asbestos Claims, as provided in
and required by the confirmed Joint Plan of Reorganization Under Chapter 11 of
the Bankruptcy Code for Congoleum Corporation, et al., (the "Plan") and the
Congoleum Plan Trust Agreement (the "Plan Trust Agreement"). The Plan and Plan
Trust Agreement establish the Congoleum Plan Trust ("Plan Trust"). The Plan
Trustees shall implement and administer this TDP in accordance with the Plan
Trust Agreement. Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in the Plan and the Plan Trust Agreement.

                                   SECTION I

                                  Introduction

      1.1 Purpose. This TDP has been adopted pursuant to the Plan Trust
Agreement. It is designed to (a) provide fair, equitable and substantially
similar treatment for all Asbestos Personal Injury Claims and Unknown Asbestos
Claims that may presently exist or may arise in the future and (b) pay or treat,
as applicable, the Asbestos Personal Injury Claims that have been settled
pursuant to the Plan under the Class 2 Settlement or the Class 3 and 11
Settlement (hereinafter for all purposes of this TDP defined as "Settled
Claims") in accordance with the Class 2 Settlement and Class 3 and 11
Settlement, as applicable, or, if the Class 2 Settlement or the Class 3 and 11
Settlement are not approved and the Asbestos Personal Injury Claims of Qualified
Claimants in Classes 2, 3 or 11, as applicable, are deemed Plan Trust Disputed
Claims, to treat such Plan Trust Disputed Claims as provided in a Final Order of
the Bankruptcy Court adjudicating such Claims.

      1.2 Interpretation. Except as may otherwise be provided below, nothing in
this TDP shall be deemed to create a substantive right for any claimant.

                                   SECTION II

                                    Overview

      2.1 Plan Trust Goals. The goal of the Plan Trust is to treat all claimants
equitably and in accordance with their legal rights. This TDP furthers that goal
by setting forth procedures for processing and paying Congoleum's share of the
unpaid portion of the liquidated value of Asbestos Personal Injury Claims (other
than the Settled Claims and Plan Trust Disputed Claims, which are addressed in
Sections 2.3 and 6.1(a)(1) below) and Unknown Asbestos Claims (hereinafter for
all purposes of this TDP defined as "Plan Trust PI Asbestos Claims") generally
on an impartial, first-in first-out ("FIFO") basis, with the intention of paying
all claimants over time as equivalent a share as possible of the value of their
claims based on historical values for substantially similar claims in the tort
<PAGE>

                                                           EXHIBIT G TO THE PLAN


system.(1) To this end, this TDP establishes a schedule of eight
asbestos-related diseases ("Disease Levels"), seven of which have presumptive
medical and exposure requirements ("Medical/Exposure Criteria") and specific
liquidated values ("Scheduled Values"), eight of which have caps on their
liquidated values ("Maximum Values"), and one of which has an anticipated
average value ("Average Value")(2). The Disease Levels, Medical/Exposure
Criteria, Scheduled Values, Average Value (Level VI) and Maximum Values, which
are set forth in Section 6.2 below, have all been selected and derived with the
intention of achieving a fair allocation of the Plan Trust funds as among
claimants suffering from different disease processes in light of the best
available information considering the settlement history of Congoleum and the
rights claimants would have in the tort system absent the bankruptcy.

      2.2 Claims Liquidation Procedures. Plan Trust PI Asbestos Claims shall be
processed based on their place in the FIFO Processing Queue to be established
pursuant to Section 6.1(a)(2) below. The Plan Trust shall take all reasonable
steps to resolve Plan Trust PI Asbestos Claims as efficiently and expeditiously
as possible at each stage of claims processing and arbitration, which steps may
include conducting settlement discussions with claimants' representatives with
respect to more than one claim at a time, provided that the claimants'
respective positions in the FIFO Processing Queue are maintained; and each claim
is individually evaluated pursuant to the valuation factors set forth in Section
6.2(b)(2) below. The Plan Trust shall also make every effort to resolve each
year at least that number of Plan Trust PI Asbestos Claims required to exhaust
the Maximum Annual Payment and the Maximum Available Payment for Category A and
Category B claims, as those terms are defined below.

      The Plan Trust shall liquidate all Plan Trust PI Asbestos Claims except
Foreign Claims (as defined below) that meet the presumptive Medical/Exposure
Criteria of Disease Levels I - V, VII and VIII under the Expedited Review
Process described in Section 6.2(a) below. Claims involving Disease Levels I -
V, VII and VIII that do not meet the presumptive Medical/Exposure Criteria for
the relevant Disease Level may undergo the Plan Trust's Individual Review
Process described in Section 6.2(b) below. In such a case, notwithstanding that
the claim does not meet the presumptive Medical/Exposure Criteria for the
relevant Disease Level, the Plan Trust can offer the claimant an amount up to
the Scheduled Value of that Disease Level if the Plan Trust is satisfied that
the claimant has presented a claim that would be cognizable and valid in the
tort system.

      Plan Trust PI Asbestos Claims involving Disease Levels IV - VIII tend to
raise more complex valuation issues than the Plan Trust PI Asbestos Claims in
Disease Levels I - III. Accordingly, claimants holding claims involving these
Disease Levels may in addition or alternatively seek to establish a liquidated
value for the claim that is greater than its Scheduled Value by electing the
Plan Trust's Individual Review Process. However, the liquidated value of a more
serious Disease Level IV, V, VII or VIII claim that undergoes the Individual
Review Process for valuation purposes may be determined to be less than its
Scheduled Value, and in any event shall not exceed the Maximum Value for the
relevant Disease Level set forth in Section 6.2(b)(3) below, unless the claim
qualifies as an Extraordinary Claim as defined in Section 6.3(a) below, in which
case its liquidated value cannot exceed the Maximum Value specified in that
provision for such claims. Level VI (Lung Cancer 2) claims and all Foreign
Claims may be liquidated only pursuant to the Plan Trust's Individual Review
Process.

----------
(1)   As used in this TDP, the phrase "in the tort system" shall include only
      claims asserted by way of litigation and not claims asserted against a
      trust established for the benefit of asbestos personal injury claimants
      pursuant to section 524(g) and/or section 105 of the Bankruptcy Code or
      any other applicable law (an "Asbestos Claim Trust").

(2)   Due to the Debtor's limited settlement history, no meaningful computation
      of average values could be performed regardings Disease Levels IV, V, VII
      and VIII.


                                        2
<PAGE>

                                                           EXHIBIT G TO THE PLAN


      Based upon Congoleum's claims settlement history in light of applicable
tort law, and current projections of present and future unliquidated claims, the
Scheduled Values and Maximum Values set forth in Section 6.2(b)(3) have been
established for each of the five more serious Disease Levels that are eligible
for Individual Review of their liquidated values, with the expectation that the
settlements in Level VI (Lung Cancer 2) resulting from the Individual Review
Process should result in the Average Value set forth in that provision.

      Subject to Section 2.3, below, regarding Settled Claims, all unresolved
disputes over a claimant's medical condition, exposure history and/or the
liquidated value of the claim shall be subject to binding or non-binding
arbitration as set forth in Section 6.9 below, at the election of the claimant,
under the ADR Procedures that are provided in Attachment A hereto. Plan Trust PI
Asbestos Claims that are the subject of a dispute with the Plan Trust that
cannot be resolved by non-binding arbitration may enter the tort system as
provided in Sections 6.10 and 8.6 below. However, if and when a claimant obtains
a judgment in the tort system, the judgment shall be payable (subject to the
Payment Percentage, Maximum Available Payment, and Claims Payment Ratio
provisions set forth below) as provided in Section 8.7 below.

      2.3 Settled Claims. Under the terms of the Plan, which incorporates the
Class 2 Settlement and the Class 3 and 11 Settlement, each Qualified Claimant
has settled his, her or its Asbestos Personal Injury Claim under the Plan and
shall have his, her or its claim processed and paid pursuant to Section
6.1(a)(1) below.

      In the event that the Class 2 Settlement or the Class 3 and 11 Settlement
is not approved by the Bankruptcy Court, the Plan Trust Disputed Claims of the
Qualified Claimants shall be treated as provided in a Final Order of the
Bankruptcy Court and, if applicable, shall be paid from the Plan Trust Disputed
Claims Reserve, in accordance with Section 3.2 of the Plan Trust Agreement.

      2.4 Application of the Payment Percentage. After the liquidated value of a
Plan Trust PI Asbestos Claim other than a claim involving Other Asbestos Disease
(Disease Level I - Cash Discount Payment), as defined in Section 6.2(a)(3)
below, is determined pursuant to the procedures set forth herein for Expedited
Review, Individual Review, arbitration, or litigation in the tort system, the
claimant shall ultimately receive a pro-rata share of that value based on a
Payment Percentage described in Section 5.2 below.

      After the Plan Trust is established, an initial Payment Percentage shall
be set pursuant to Section 5.2, below, by the Plan Trustees, the TAC and the
Futures Representative (who are described in Section 4.1, below). The initial
Payment Percentage shall be calculated based on the Scheduled and Maximum values
and Average Value (Level VI) set forth in Section 6.2(b)(3), below, with respect
to existing present claims and projected future claims involving Disease Levels
II - VIII.


                                        3
<PAGE>

                                                           EXHIBIT G TO THE PLAN


      The Payment Percentage may thereafter be adjusted upwards or downwards
from time to time by the Plan Trustees with the consent of the TAC and the
Futures Representative to reflect then-current estimates of the Plan Trust's
assets and its liabilities, as well as then-estimated value of then-pending and
future claims. Any adjustment to the initial Payment Percentage shall be made
only pursuant to Section 5.2 below. If the Payment Percentage is increased over
time, claimants whose claims were liquidated and paid in prior periods under the
TDP shall receive additional payments only as provided in Section 5.2 below.
Because there is uncertainty in the prediction of both the number and severity
of future Plan Trust PI Asbestos Claims, and the amount of the Plan Trust'
assets, no guarantee can be made of any Payment Percentage of a Plan Trust PI
Asbestos Claim's liquidated value.

      2.5 Plan Trust's Determination of the Maximum Annual Payment and Maximum
Available Payment. The Plan Trust shall estimate or model the amount of cash
flow anticipated to be necessary over its entire life to ensure that funds shall
be available to treat all present and future Congoleum claimants as similarly as
possible. In each year, the Plan Trust shall be empowered to pay out all of the
income earned during the year, together with a portion of its principal,
calculated so that the application of Plan Trust funds over its life shall
correspond with the needs created by the anticipated flow of claims (the
"Maximum Annual Payment"), taking into account the Payment Percentage provisions
set forth in Sections 2.4 above and 5.2 below. The Plan Trust's distributions to
all claimants for that year shall not exceed the Maximum Annual Payment
determined for that year.

      In distributing the Maximum Annual Payment, the Plan Trust shall, after
making reservation for any Plan Trust Disputed Claims, as provided for in
Section 3.2 of the Plan Trust Agreement, if applicable, and after reimbursing
the Reorganized Debtors for the Claims Handling Fee, as provided in Section
1.4(d) of the Plan Trust Agreement, first allocate the amount in question to the
Settled Claims The remaining portion of the Maximum Annual Payment (the "Maximum
Available Payment"), if any, shall then be allocated and used to satisfy all
other liquidated Plan Trust PI Asbestos Claims, subject to the Claims Payment
Ratio set forth in Section 2.6 below. In the event there are insufficient funds
in any year to pay the total number of outstanding Settled Claims, the available
funds allocated shall be paid to the maximum extent to claimants with Settled
Claims. Settled Claims for which there are insufficient funds to pay shall be
carried over to the next year.

      2.6 Claims Payment Ratio. Based upon Congoleum's claims settlement history
and analysis of present and future claims, a Claims Payment Ratio has been
determined which, as of the Effective Date, has been set at 75% for Category A
claims, which consist of Plan Trust PI Asbestos Claims involving severe
asbestosis and malignancies (Disease Levels IV - VIII) that were unliquidated as
of the Petition Date, and at 25% for Category B claims, which are Plan Trust PI
Asbestos Claims involving Other Asbestos Disease (Disease Level I - Cash
Discount Payment), non-malignant Asbestosis (Disease Level II) or Pleural
Disease (Disease Level III) that were similarly unliquidated as of the Petition
Date. However, the Claims Payment Ratio shall not apply to any Settled Claims
(other than Settled Claims held by Qualified Participating Claimants that have
elected to be treated as Plan Trust Asbestos PI Claims) or Plan Trust Disputed
Claims (unless so provided by a Final Order of the Bankruptcy Court).


                                        4
<PAGE>

                                                           EXHIBIT G TO THE PLAN


      In each year, after the determination of the Maximum Available Payment
described in Section 2.5 above, 75% of that amount shall be available to pay
Category A claims and 25% shall be available to pay Category B claims that have
been liquidated since the Petition Date. In the event there are insufficient
funds in any year to pay the liquidated claims within either or both of the
Categories, the available funds allocated to the particular Category shall be
paid to the maximum extent to claimants in that Category based on their place in
the FIFO Payment Queue described in Section 6.1(c) below, which shall be based
upon the date of claim liquidation. Claims for which there are insufficient
funds allocated to the relevant Category shall be carried over to the next year
where they shall be placed at the head of the FIFO Payment Queue. If there are
excess funds in either or both Categories, because there is an insufficient
amount of liquidated claims to exhaust the respective Maximum Available Payment
amount for that Category, then the excess funds for either or both Categories
shall be rolled over and remain dedicated to the respective Category to which
they were originally allocated.

      The 75%/25% Claims Payment Ratio and its rollover provision shall apply to
all Plan Trust Voting Claims except (i) Settled Claims (other than Settled
Claims held by Qualified Participating Claimants that have elected to be treated
as Plan Trust Asbestos PI Claims) and (ii) Plan Trust Disputed Claims (unless so
provided by a Final Order of the Bankruptcy Court). The term "Plan Trust Voting
Claims" includes (i) claims filed against Congoleum in the tort system prior to
the Petition Date of December 31, 2003, including the Claimant Agreement and any
other Pre-Petition Settlement Agreements; and all claims filed against another
defendant in the tort system prior to the Petition Date; provided, however, that
(1) either (a) the holder of a claim described in subsection (i) or (ii) above,
or his or her authorized agent, actually voted to accept or reject the Plan
pursuant to the voting procedures established by the Bankruptcy Court, unless
such holder certifies to the satisfaction of the Plan Trustees that he or she
was prevented from voting in this proceeding as a result of circumstances
resulting in a state of emergency affecting, as the case may be, the holder's
residence, principal place of business or legal representative's place of
business at which the holder or his or her legal representative receives notice
and/or maintains material records relating to his or her Plan Trust Voting Claim
or (b) the holder of a claim is deemed, pursuant to the Plan, to have agreed to
the Class 3 and 11 Settlement Agreement, as applicable; and provided further
that (2) the claim was subsequently filed with the Plan Trust pursuant to
Section 6.1 below by the Initial Claims Filing Date defined in Section 6.1(a)(2)
below. Thereafter, both the Claims Payment Ratio and its rollover provision
shall be continued absent circumstances, such as a significant change in law or
medicine, necessitating amendment to avoid a manifest injustice. However, the
accumulation, rollover and subsequent delay of claims resulting from the
application of the Claims Payment Ratio shall not, in and of itself, constitute
such circumstances. In addition, an increase in the numbers of Category B claims
beyond those predicted or expected shall not be considered as a factor in
deciding whether to reduce the percentage allocated to Category A claims.

      In considering whether to make any amendments to the Claims Payment Ratio
and/or its rollover provisions, the Plan Trustees shall consider the reasons for
which the Claims Payment Ratio and its rollover provisions were adopted, the
settlement history that gave rise to its calculation, and the foreseeability or
lack of foreseeability of the reasons why there would be any need to make an
amendment. In that regard, the Plan Trustees should keep in mind the interplay
between the Payment Percentage and the Claims Payment Ratio as it affects the
net cash actually paid to claimants.


                                        5
<PAGE>

                                                           EXHIBIT G TO THE PLAN


      In any event, no amendment to the Claims Payment Ratio to reduce the
percentage allocation to Category A claims may be made without the unanimous
consent of the TAC and the Futures Representative. The percentage allocated to
Category A claims shall be reviewed as soon as practicable after the first
anniversary of the date the Plan Trust first accepts for processing proof of
claims forms and the other materials required to file a claim with the Plan
Trust, and may be increased at any time thereafter, with the consent of the TAC
and the Futures Representative. In case of any amendments to the Claims Payment
Ratio, consents shall be governed by the consent process set forth in Sections
5.8(b) and 6.6(b) of the Plan Trust Agreement, however, failure to obtain
consent shall not be subject to the dispute resolution provisions of Section
7.13 thereof. The Plan Trustees, with the consent of the TAC and the Futures
Representative, may offer the option of a reduced Payment Percentage to holders
of claims in either Category A or Category B in return for prompter payment (the
"Reduced Payment Option").

      2.7 Indirect Plan Trust Asbestos Claims. As set forth in Section 6.5
below, Indirect Asbestos Claims, if any, shall be subject to the same
categorization, evaluation, and payment provisions of this TDP as all other Plan
Trust PI Asbestos Claims.

                                  SECTION III

               Claims Handling Fee, Plan Trust Expenses and Coverage Costs

      Notwithstanding any other provision contained in this TDP, (i) the holder
of the Claim for the Claims Handling Fee shall be paid as provided in the Plan
Trust Agreement; and (ii) distributions to Plan Trust PI Asbestos Claims shall
not be prior to the payment of or reserve for Plan Trust Expenses nor prior to
payment of or reimbursement for Coverage Costs in accordance with Section 1.4(d)
of the Plan Trust Agreement.

                                   SECTION IV

                               TDP Administration

      4.1 Plan Trust Advisory Committee and Futures Representative. Pursuant to
the Plan and the Plan Trust Agreement, the Plan Trustees shall initially consist
of three members, two of which shall be designated by the Asbestos Claimants'
Committee and one of which shall be designated by the Futures Representative. In
addition, pursuant to the Plan and the Plan Trust Agreement, the Plan Trust and
this TDP shall be administered by the Plan Trustees in consultation with the
TAC, which represents the interests of holders of present Plan Trust PI Asbestos
Claims, and the Futures Representative, who represents the interests of holders
of Plan Trust PI Asbestos Claims that shall be asserted in the future. The Plan
Trustees shall obtain the consent of the TAC and the Futures Representative on
any amendments to this TDP pursuant to Section 9.1 below, and on such other
matters as are otherwise required below and in Section 2.2(f) of the Plan Trust
Agreement. The Plan Trustees shall also consult with the TAC and the Futures


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                                                           EXHIBIT G TO THE PLAN


Representative on such matters as are provided below and in Section 2.2(e) of
the Plan Trust Agreement. The initial Plan Trustees, the initial members of the
TAC and the initial Futures Representative are identified in the Plan Trust
Agreement.

      4.2 Consent and Consultation Procedures. In those circumstances in which
consultation or consent is required, the Plan Trustees shall provide written
notice to the TAC and the Futures Representative of the specific amendment or
other action that is proposed. The Plan Trustees shall not implement such
amendment nor take such action unless and until the parties have engaged in the
Consultation Process described in Sections 5.8(a) and 6.6(a), or the Consent
Process described in Sections 5.8(b) and 6.6(b), of the Plan Trust Agreement,
respectively.

                                   SECTION V

                     Payment Percentage; Periodic Estimates

      5.1 Uncertainty of Congoleum's Personal Injury Asbestos Liabilities. As
discussed above, there is inherent uncertainty regarding Congoleum's total
asbestos-related tort liabilities, as well as the total value of the assets
available to the Plan Trust to pay Plan Trust PI Asbestos Claims. Consequently,
there is inherent uncertainty regarding the amounts that holders of Plan Trust
PI Asbestos Claims shall receive. To seek to ensure substantially equivalent
treatment of all present and future Plan Trust PI Asbestos Claims, the Plan
Trustees must determine from time to time the percentage of full liquidated
value that holders of present and future Plan Trust PI Asbestos Claims shall be
likely to receive, i.e., the "Payment Percentage" described in Section 2.4 above
and Section 5.2 below.

      5.2 Computation of Payment Percentage. As provided in Section 2.4 above,
an initial Payment Percentage shall be set by the Plan Trustees with the consent
of the TAC and the Futures Representative after the Plan Trust is established
and sufficient information is available concerning the expected assets and
liabilities of the Plan Trust over its lifetime.

      The Payment Percentage shall thereafter be subject to change pursuant to
the terms of this TDP and the Plan Trust Agreement if the Plan Trustees
determine that an adjustment is required. No less frequently than once every
three years, commencing with the first day of January occurring after the Plan
is consummated, the Plan Trustees shall reconsider the then applicable Payment
Percentage to assure that it is based on accurate, current information and may,
after such reconsideration, change the Payment Percentage if necessary with the
consent of the TAC and the Futures Representative. The Plan Trustees shall also
reconsider the then applicable Payment Percentage at shorter intervals if they
deem such reconsideration to be appropriate or if requested to do so by the TAC
or the Futures Representative.

      The Plan Trustees must base their determination of the Payment Percentage
on current estimates of the number, types, and values of present and future Plan
Trust PI Asbestos Claims, the value of the assets then available to the Plan
Trust for their payment, taking into account payment of the Settled Claims, the
Plan Trust Disputed Claims Reserve established under Section 3.2 of the Plan
Trust Agreement, if applicable, all anticipated administrative and legal
expenses, and any other material matters that are reasonably likely to affect
the sufficiency of funds to pay a comparable percentage of full value to all
holders of Plan Trust PI Asbestos Claims. When making these determinations, the


                                       7
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                                                           EXHIBIT G TO THE PLAN


Plan Trustees shall exercise common sense and flexibly evaluate all relevant
factors. The Payment Percentage applicable to Category A or Category B claims
may not be reduced to alleviate delays in payments of claims in the other
Category; both Categories of claims shall receive the same Payment Percentage,
but the payment may be deferred as needed, and a Reduced Payment Option may be
instituted as described in Section 2.6 above.

      The uncertainty surrounding the amount of the Plan Trust's future assets
is due in significant part to the fact that the estimates of those assets do not
take into account the possibility that the Plan Trust may receive substantial
additional funds from successful recoveries of insurance proceeds that have been
assigned to the Plan Trust with respect to which the coverage is presently in
dispute or the solvency of the carrier is in doubt. In addition, as provided in
Section 3.2 of the Plan Trust Agreement, in the event that the Class 2
Settlement or the Class 3 and 11 Settlement is not approved by the Bankruptcy
Court, the Plan Trust is required to establish a Plan Trust Disputed Claim
Reserve for Plan Trust Disputed Claims; provided that such Plan Trust Disputed
Claim Reserve shall not exceed $23.25 million. There is also uncertainty
surrounding the totality of the Plan Trust PI Asbestos Claims to be paid over
time as well as the extent to which changes in existing federal and/or state law
could affect the Plan Trust's liabilities under this TDP. If the Plan Trust
successfully resolves an insurance coverage dispute or otherwise receives a
substantial recovery of insurance proceeds, and/or if the value or volume of
Plan Trust PI Asbestos Claims actually filed with the Plan Trust is
significantly lower than originally estimated, and/or if the funds reserved for
Plan Trust Disputed Claims, if applicable, are available to the Plan Trust for
payment of other claims, the Plan Trust shall use those proceeds and/or claims
savings, as the case may be, first to maintain the Payment Percentage then in
effect.

      If the Plan Trustees, with the consent of the TAC and the Futures
Representative, determine to increase the Payment Percentage, including the
initial Payment Percentage applicable to Plan Trust Voting Claims, due to a
material change in the estimates of the Plan Trust's future assets and/or
liabilities, the Plan Trustees shall also make supplemental payments to all
claimants who previously liquidated their claims against the Plan Trust and
received payments based on a lower Payment Percentage. The amount of any such
supplemental payment shall be the liquidated value of the claim in question
times the newly adjusted Payment Percentage, less all amounts previously paid to
the claimant with respect to the claim, not including the portion of such
previously paid amounts that was attributable to interest.

      The Plan Trustees' obligation to make a supplemental payment to a claimant
shall be suspended in the event the payment in question would be less than
$100.00, and the amount of the suspended payment shall be added to the amount of
any prior supplemental payment/payments that was/were also suspended because
it/they would have been less than $100.00. However, the Plan Trustees shall pay
any such aggregate supplemental payments due the claimant at such time that the
total exceeds $100.00.

      5.3 Applicability of the Payment Percentage. No holder of a Plan Trust
Voting Claim, other than a Plan Trust Voting Claim for Settled Claims (other
than Settled Claims held by Qualified Participating Claimants that have elected
to be treated as Plan Trust Asbestos PI Claims) or Other Asbestos Disease
(Disease Level I - Cash Discount Payment) as defined in Section 6.2(a)(3) below,


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                                                           EXHIBIT G TO THE PLAN


shall receive a payment that exceeds the initial Payment Percentage times the
liquidated value of the claim. Except as otherwise provided in Section 6.1(c)
below for Plan Trust PI Asbestos Claims involving deceased or incompetent
claimants for which approval of the Plan Trust's offer by a court or through a
probate process is required, no holder of any other Plan Trust Asbestos Claim,
other than a Plan Trust Asbestos Claim for Other Asbestos Disease (Disease Level
I - Cash Discount Payment) or a Settled Claim (other than a Settled Claim held
by a Qualified Participating Claimant that has elected to be treated as a Plan
Trust Asbestos PI Claim), shall receive a payment that exceeds the liquidated
value of the claim times the Payment Percentage in effect at the time of
payment. Plan Trust PI Asbestos Claims involving Other Asbestos Disease (Disease
Level I - Cash Discount Payment) shall not be subject to the Payment Percentage,
but shall instead be paid the full amount of their Scheduled Value as set forth
in Section 6.2(a)(3) below.

      If a redetermination of the Payment Percentage has been proposed in
writing by the Plan Trustees to the TAC and the Futures Representative but has
not yet been adopted, the claimant shall receive the lower of the current
Payment Percentage or the proposed Payment Percentage. However, if the proposed
Payment Percentage was the lower amount but was not subsequently adopted, the
claimant shall thereafter receive the difference between the lower proposed
amount and the higher current amount. Conversely, if the proposed Payment
Percentage was the higher amount and was subsequently adopted, the claimant
shall thereafter receive the difference between the lower current amount and the
higher adopted amount.

                                   SECTION VI

         Resolution of Settled Claims and Plan Trust PI Asbestos Claims

      6.1 Ordering, Processing and Payment of Claims.

            (a)   Ordering of Claims.

                  (1)   Settled Claims.

                  As soon as reasonably practicable after the Effective Date and
prior to payment of Plan Trust PI Asbestos Claims, the Plan Trust shall pay the
Settled Claims, as provided below in this Section 6.1(a)(1), other than the
Settled Claims of Qualified Participating Claimants that have elected to
irrevocably consent to the Forbearance of his, her or its right to (a) the
payment provided for in this Section 6.1(a)(1) and (b) any and all rights under
the Claimant Agreement, the Collateral Trust Agreement and the Security
Agreement, in which case such forbearing Qualified Participating Claimant shall
receive the treatment afforded to Plan Trust PI Asbestos Claims as provided in
Section 6.1(a)(2) below.

      The Settled Claims of Qualified Pre-Petition Settlement Claimants (Plan
Class 2) shall be paid 50% of the specified amount agreed under the respective
Pre-Petition Settlement Agreement (less all amounts in respect thereof
previously received by the holder thereof from any Debtor or the Collateral
Trust) in full satisfaction of its Asbestos Personal Injury Claim. Such payments
shall be made out of the first proceeds of Asbestos Insurance Action Recoveries,
net of payment of or reserve for any Plan Trust Expenses and any payment of or
reimbursement for costs and reservation for the Plan Trust Disputed Claims


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                                                           EXHIBIT G TO THE PLAN


Reserve, if applicable, in accordance with Sections 3.6, 1.4(d) and 3.2,
respectively, of the Plan Trust Agreement prior to payment of all Plan Trust PI
Asbestos Claims but not prior to payment of or reimbursement for Coverage Costs
in accordance with Sections 3.6 and 1.4(d), respectively, of the Plan Trust
Agreement. The Settled Claims of Qualified Pre-Petition Settlement Claimants
shall be paid pari passu with the Settled Claims of Qualified Participating
Claimants (except for such Qualified Participating Claimants that have elected
to be treated as Plan Trust PI Asbestos Claims).

      The Settled Claims of Qualified Participating Claimants (Plan Classes 3
and 11) shall be paid the total and maximum amount of $250 in full satisfaction
of its Asbestos Personal Injury Claim; provided, however, that each such
Qualified Participating Claimant may elect to irrevocably consent to the
Forbearance of his, her or its right to (x) such $250 amount and (y) any and all
rights under the Claimant Agreement, the Collateral Trust Agreement and the
Security Agreement, in which case such forbearing Qualified Participating
Claimant shall receive the treatment afforded to Plan Trust PI Asbestos Claims.
Such payments shall be made out of the first proceeds of Asbestos Insurance
Action Recoveries, net of payment of or reserve for any Plan Trust Expenses and
any payment of or reimbursement for Coverage Costs and reservation for the Plan
Trust Disputed Claims Reserve, if applicable, in accordance with Sections 3.2,
3.6 and 1.4(d) the Plan Trust Agreement, respectively, prior to payment of all
Plan Trust PI Asbestos Claims, but not prior to payment of or reserve for Plan
Trust Expenses nor prior to payment of or reimbursement for Coverage Costs in
accordance with Sections 3.6 and 1.4(d), respectively, of the Plan Trust
Agreement. The Settled Claims of Qualified Participating Claimants (except for
such Qualified Participating Claimants that have elected to be treated as Plan
Trust PI Asbestos Claims) shall be paid pari passu with the Settled Claims of
Qualified Pre-Petition Settlement Claimants.

      In the event that the Class 2 Settlement or the Class 3 and 11 Settlement
is not approved by the Bankruptcy Court, the Plan Trust Disputed Claims of the
Qualified Claimants shall be treated as provided in a Final Order of the
Bankruptcy Court and, if applicable, shall be paid from the Plan Trust Disputed
Claims Reserve in accordance with Section 3.2 of the Plan Trust Agreement.

                  (2)   Establishment of the FIFO Processing Queue.

                  After the payment of the Settled Claims, or reservation for
the Plan Trust Disputed Claims, as applicable, the Plan Trust shall order Plan
Trust PI Asbestos Claims that are sufficiently complete to be reviewed for
processing purposes on a FIFO basis except as otherwise provided herein (the
"FIFO Processing Queue"). For all claims filed on or before the date six months
after the date that the Plan Trust first makes available the proof of claim
forms and other claims materials required to file a claim with the Plan Trust
(the "Initial Claims Filing Date"), a claimant's position in the FIFO Processing
Queue shall be determined as of the earlier of (i) the date prior to December
 31, 2003 (the "Petition Date") (if any) that the specific claim was either
filed against Congoleum in the tort system or was actually submitted to
Congoleum pursuant to an administrative settlement agreement; (ii) the date
before the Petition Date that a claim was filed against another defendant in the
tort system if at the time the claim was subject to a tolling agreement or
applicable law; (iii) the date after the Petition Date (if any) but before the
Initial Claims Filing Date that the claim was filed against another defendant in
the tort system; (iv) the date after the Petition Date but before the Effective


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                                                           EXHIBIT G TO THE PLAN


Date that a proof of claim was filed against Congoleum in this Chapter 11
proceeding; or (v) the date a ballot was submitted on behalf of the claimant for
purposes of voting to accept or reject the Plan pursuant to the voting
procedures approved by the Bankruptcy Court.

      Following the Initial Claims Filing Date, the claimant's position in the
FIFO Processing Queue shall be determined by the date the claim is filed with
the Plan Trust. If any claims are filed on the same date, the claimant's
position in the FIFO Processing Queue shall be determined by the date of the
diagnosis of the asbestos-related disease. If any claims are filed and diagnosed
on the same date, the claimant's position in the FIFO Processing Queue shall be
determined by the claimant's date of birth, with older claimants given priority
over younger claimants.

      Qualified Participating Claimants that have elected to be treated as Plan
Trust PI Asbestos Claims shall be deemed to have been filed with the Plan Trust
on the Effective Date for purposes of the FIFO Processing Queue even if filed at
anytime thereafter. The FIFO Processing Queue and FIFO Payment Queue (as defined
in Section 6.1(c) below) do not apply to Plan Trust Disputed Claims, treatment
of which shall be determined by a Final Order of the Bankruptcy Court.

                  (3)   Effect of Statutes of Limitation and Repose.

                  All Plan Trust PI Asbestos Claims must meet either (i) for
claims first filed in the tort system against Congoleum prior to the Petition
Date, the applicable federal, state or foreign statute of limitation and repose
that was in effect at the time of the filing of the claim in the tort system, or
(ii) for claims not filed against Congoleum in the tort system prior to the
Petition Date, the applicable federal, state or foreign statute of limitation
that was in effect at the time of the filing with the Plan Trust. However, the
running of the relevant statute of limitation shall be tolled as of the earliest
of (A) the actual filing of the claim against Congoleum prior to the Petition
Date, whether in the tort system or by submission of the claim to Congoleum
pursuant to an administrative settlement agreement, including the Claimant
Agreement or any other disputed Pre-Petition Settlement Agreement; (B) the
filing of the claim against another defendant in the tort system prior to the
Petition Date if the claim was tolled against Congoleum at the time by a written
agreement with Congoleum; (C) the filing of a claim against another defendant in
the tort system after the Petition Date but prior to the Initial Claims Filing
Date; (D) the date after the Petition Date but before the Effective Date that a
proof of claim was filed against Congoleum in this Chapter 11 proceeding; (E)
the filing of the claim, or submitting a ballot on any Congoleum Plan, for
voting purposes in this Chapter 11 proceeding; or (F) the filing of a proof of
claim with the requisite supporting documentation with the Plan Trust after the
Initial Claims Filing Date.

      If a Plan Trust PI Asbestos Claim meets any of the tolling provisions
described in the preceding paragraph and the claim was not barred by the
applicable federal, state or foreign statute of limitation at the time of the
tolling event, it shall be treated as timely filed if it is actually filed with
the Plan Trust within three (3) years after the Initial Claims Filing Date;
provided, however, that if a Plan Trust Disputed Claim meets any of the tolling
provisions described in the preceding paragraph and the claim was not barred by
the applicable federal, state or foreign statute of limitation at the time of
the tolling event, it shall be treated as timely filed if it is actually filed


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                                                           EXHIBIT G TO THE PLAN


with the Plan Trust within six (6) months of a Final Order adjudicating such
Plan Trust Disputed Claim, and/or the liens or security interests with respect
to such claim, or within three (3) years after the Initial Claims Filing Date,
whichever occurs later. Plan Trust PI Asbestos Claims of electing Qualified
Participating Claimants shall be filed within three (3) years after the Initial
Claims Filing Date. In addition, for an asbestos-related disease that was first
diagnosed after the Petition Date, irrespective of the application of any
relevant federal, state or foreign statute of limitation or repose, any claims
may be filed with the Plan Trust within three (3) years after the date of
diagnosis or within three (3) years after the Initial Claims Filing Date,
whichever occurs later. However, the processing of any Plan Trust PI Asbestos
Claim by the Plan Trust may be deferred at the election of the claimant pursuant
to Section 7.3 below.

            (b) Processing of Claims. As a general practice, the Plan Trust
shall review its claims files on a regular basis and notify all claimants whose
claims are likely to come up in the FIFO Processing Queue in the near future.

            (c) Payment of Claims. Plan Trust PI Asbestos Claims that have been
liquidated by the Expedited Review Process as provided in Section 6.2(a) below,
by the Individual Review Process as provided in Section 6.2(b) below, by
arbitration as provided in Section 6.9 below, or by litigation in the tort
system provided in Section 6.10 below, shall be paid in FIFO order based on the
date their liquidation became final (the "FIFO Payment Queue"), all such
payments being subject to the applicable Payment Percentage, the Maximum
Available Payment, and the Claims Payment Ratio, except as otherwise provided
herein.

      Where the claimant is deceased or incompetent, and the settlement and
payment of his or her claim must be approved by a court of competent
jurisdiction or through a probate process prior to acceptance of the claim by
the claimant's representative, an offer made by the Plan Trust on the claim
shall remain open so long as proceedings before that court or in that probate
process remain pending, provided that the Plan Trust has been furnished with
evidence that the settlement offer has been submitted to such court or in the
probate process for approval. If the offer is ultimately approved by the court
or through the probate process and accepted by the claimant's representative,
the Plan Trust shall pay the claim in the amount so offered, multiplied by the
Payment Percentage in effect at the time the offer was first made.

      If any claims are liquidated on the same date, the claimant's position in
the FIFO Payment Queue shall be determined by the date of the diagnosis of the
claimant's asbestos-related disease. If any claims are liquidated on the same
date and the respective holders' asbestos-related diseases were diagnosed on the
same date, the position of those claims in the FIFO Payment Queue shall be
determined by the Plan Trust based on the dates of the claimants' birth, with
older claimants given priority over younger claimants.

      6.2 Resolution of Plan Trust PI Asbestos Claims

      Within six months after the establishment of the Plan Trust, the Plan
Trustees, with the consent of the TAC and the Futures Representative, shall
adopt procedures for reviewing and liquidating all Plan Trust PI Asbestos
Claims, which shall include deadlines for processing such claims. Such
procedures shall also require that claimants seeking resolution of Plan Trust PI
Asbestos Claims must first file a proof of claim form, together with the
required supporting documentation, in accordance with the provisions of Sections


                                       12
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                                                           EXHIBIT G TO THE PLAN


7.1 and 7.2 below. It is anticipated that the Plan Trust shall provide an
initial response to the claimant within six months of receiving the proof of
claim form.

      The proof of claim form shall require the claimant to assert his or her
claim for the highest Disease Level for which the claim qualifies at the time of
filing. Irrespective of the Disease Level alleged on the proof of claim form,
all claims shall be deemed to be a claim for the highest Disease Level for which
the claim qualifies at the time of filing, and all lower Disease Levels for
which the claim may also qualify at the time of filing or in the future shall be
treated as subsumed into the higher Disease Level for both processing and
payment purposes.

      Upon filing of a valid proof of claim form with the required supporting
documentation, the claimant shall be placed in the FIFO Processing Queue in
accordance with the ordering criteria described in Section 6.1(a)(2) above. The
Plan Trust shall provide the claimant with six-months notice of the date by
which it expects to reach the claim in the FIFO Processing Queue, following
which the claimant shall promptly (i) advise the Plan Trust whether the claim
should be liquidated under the Plan Trust's Expedited Review Process described
in Section 6.2(a) below or, in certain circumstances, under the Plan Trust's
Individual Review Process described in Section 6.2(b) below; (ii) provide the
Plan Trust with any additional medical and/or exposure evidence that was not
provided with the original claim submission; and (iii) advise the Plan Trust of
any change in the claimant's Disease Level. If a claimant fails to respond to
the Plan Trust's notice prior to the reaching of the claim in the FIFO
Processing Queue, the Plan Trust shall process and liquidate the claim under the
Expedited Review Process based upon the medical/exposure evidence previously
submitted by the claimant, although the claimant shall retain the right to
request Individual Review as described in Section 6.2(b) below.

            (a) Expedited Review Process.

                  (1) In General. The Plan Trust's Expedited Review Process is
designed primarily to provide an expeditious, efficient and consistent method
for liquidating all Plan Trust PI Asbestos Claims (except those involving Lung
Cancer 2 - Disease Level VI and all Foreign Claims (as defined below), which
shall only be liquidated pursuant to the Plan Trust's Individual Review
Process), where the claim can easily be verified by the Plan Trust as meeting
the presumptive Medical/Exposure Criteria for the relevant Disease Level.

      Thus, claims that undergo Expedited Review and meet the presumptive
Medical/Exposure Criteria for the relevant Disease Level shall be paid the
Scheduled Value for such Disease Level set forth in Section 6.2(a)(3) below.
However, except for claims involving Other Asbestos Disease (Disease Level I),
all claims liquidated by Expedited Review shall be subject to the applicable
Payment Percentage, the Maximum Available Payment, and the Claims Payment Ratio
limitations set forth above. Claimants holding claims that cannot be liquidated
by Expedited Review because they do not meet the presumptive Medical/Exposure
Criteria for the relevant Disease Level may elect the Plan Trust's Individual
Review Process set forth in Section 6.2(b) below.

      Further, the claimant's eligibility to receive the Scheduled Value for his
or her Plan Trust Asbestos Claim pursuant to the Expedited Review Process shall
be determined solely by reference to the Medical/Exposure Criteria set forth
below for each of the Disease Levels eligible for Expedited Review.


                                       13
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                                                           EXHIBIT G TO THE PLAN


                  (2) Claims Processing Under Expedited Review. All claimants
seeking liquidation of their claims pursuant to Expedited Review shall file the
Plan Trust's proof of claim form. As a proof of claim form is reached in the
FIFO Processing Queue, the Plan Trust shall determine whether the claim
described therein meets the Medical/Exposure Criteria for one of the seven
Disease Levels eligible for Expedited Review, and shall advise the claimant of
its determination. If a Disease Level is determined, the Plan Trust shall tender
to the claimant an offer of payment of the Scheduled Value for the relevant
Disease Level multiplied by the applicable Payment Percentage, together with a
form of release approved by the Plan Trust. If the claimant accepts the
Scheduled Value and returns the release properly executed, the claim shall be
placed in the FIFO Payment Queue, following which the Plan Trust shall disburse
payment subject to the limitations of the Maximum Available Payment and Claims
Payment Ratio, if any.

                  (3) Disease Levels, Scheduled Values and Medical/Exposure
Criteria. The eight Disease Levels covered by this TDP, together with the
Medical/Exposure Criteria for each and the Scheduled Values for the seven
Disease Levels eligible for Expedited Review, are set forth below. These Disease
Levels, Scheduled Values, and Medical/Exposure Criteria shall apply to all Plan
Trust Voting Claims filed with the Plan Trust on or before the Initial Claims
Filing Date provided in Section 6.1(a)(2) above for which the claimant elects
the Expedited Review Process. Thereafter, for purposes of administering the
Expedited Review Process and with the consent of the TAC and the Futures
Representative, the Plan Trustees may add to, change, or eliminate Disease
Levels, Scheduled Values, or Medical/Exposure Criteria; develop subcategories of
Disease Levels, Scheduled Values or Medical/Exposure Criteria; or determine that
a novel or exceptional asbestos personal injury claim is compensable even though
it does not meet the Medical/Exposure Criteria for any of the then current
Disease Levels.

Disease Level                Scheduled Value  Medical/Exposure Criteria
-------------                ---------------  -------------------------

Mesothelioma (Level VIII)       $120,000      Diagnosis(3) of mesothelioma; and
                                              (2) Congoleum Exposure prior to
                                              December 31, 1982, as defined in
                                              Section 6.6(b)(3).

Lung Cancer 1 (Level VII)        $40,000      (1) Diagnosis of a primary lung
                                              cancer plus evidence of an
                                              underlying Bilateral
                                              Asbestos-Related Nonmalignant
                                              Disease,(4) (2) six months
                                              Congoleum Exposure prior to

----------
(3)   The requirements for a diagnosis of an asbestos-related disease that may
      be compensated under the provisions of this TDP are set forth in Section
      6.6 below.

(4)   Evidence of "Bilateral Asbestos-Related Nonmalignant Disease," for
      purposes of meeting the criteria for establishing Disease Levels I, II,
      III, V and VII, means either (i) a chest X-ray read by a qualified B
      reader of 1/0 or higher on the ILO scale or (ii)(x) a chest X-ray read by
      a qualified B reader or other Qualified Physician, (y) a CT scan read by a
      Qualified Physician, or (z) pathology, in each case showing either
      bilateral interstitial fibrosis, bilateral pleural plaques, bilateral
      pleural thickening, or bilateral pleural calcification. Solely for claims


                                       14
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Disease Level                Scheduled Value  Medical/Exposure Criteria
-------------                ---------------  -------------------------

                                              December 31, 1982, (3)
                                              Significant Occupational
                                              Exposure(5) to asbestos, and (4)
                                              supporting medical documentation
                                              establishing asbestos exposure as
                                              a contributing factor in causing
                                              the lung cancer in question.

Lung Cancer 2 (Level VI)       Individual     (1) Diagnosis of a primary lung
                               Evaluation     cancer; (2) Congoleum Exposure
                                              prior to December 31, 1982, and
                                              (3) supporting medical
                                              documentation establishing
                                              asbestos exposure as a
                                              contributing factor in causing the
                                              lung cancer in question.

                                              Lung Cancer 2 (Level VI) claims
                                              are claims that do not meet the
                                              more stringent medical and/or
                                              exposure requirements of Lung
                                              Cancer 1 (Level VII) claims. All
                                              claims in this Disease Level shall
                                              be individually evaluated. The
                                              estimated likely average of the
                                              individual evaluation awards for
                                              this category is $15,000, with
                                              such awards capped at $24,000
                                              unless the claim qualifies for
                                              Extraordinary Claim treatment.

                                              Level VI claims that show no
                                              evidence of either an underlying
                                              Bilateral Asbestos-Related
                                              Non-malignant Disease or

----------
      filed against Congoleum or another asbestos defendant in the tort system
      prior to the Petition Date, if an ILO reading is not available, either (i)
      a chest X-ray or a CT scan read by a Qualified Physician, or (ii)
      pathology, in each case showing bilateral interstitial fibrosis, bilateral
      pleural plaques, bilateral pleural thickening, or bilateral pleural
      calcification consistent with or compatible with a diagnosis of
      asbestos-related disease, shall be evidence of a Bilateral
      Asbestos-Related Nonmalignant Disease for purposes of meeting the
      presumptive medical requirements of Disease Levels I, II, III, V and VII.
      Pathological proof of asbestosis may be based on the pathological grading
      system for asbestosis described in the Special Issue of the Archives of
      Pathology and Laboratory Medicine, "Asbestos-associated Diseases," Vol.
      106, No. 11, App. 3 (October 8, 1982). For all purposes of this TDP, a
      "Qualified Physician" is a physician whose is board-certified (or in the
      case of Canadian claims or Foreign Claims, a physician who is certified or
      qualified under comparable medical standards or criteria of the
      jurisdiction in question) in one or more relevant specialized fields of
      medicine such as pulmonology, radiology, internal medicine or occupational
      medicine; provided, however, subject to the provisions of Section
      6.6(a)(1)(A), that the requirement for board certification in this
      provision shall not apply to otherwise qualified physicians whose X-ray
      and/or CT scan readings are submitted for deceased holders of Plan Trust
      PI Asbestos Claims.

(5)   The term "Significant Occupational Exposure" is defined in Section
      6.6(b)(2) below.


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                                                           EXHIBIT G TO THE PLAN


Disease Level                Scheduled Value  Medical/Exposure Criteria
-------------                ---------------  -------------------------

                                              Significant Occupational Exposure
                                              may be individually evaluated,
                                              although it is not expected that
                                              such claims shall be treated as
                                              having any significant value,
                                              especially if the claimant is also
                                              a Smoker.(6) In any event, no
                                              presumption of validity shall be
                                              available for any claims in this
                                              category.

Other Cancer (Level V)           $12,000      (1) Diagnosis of a primary
                                              colo-rectal, laryngeal,
                                              esophageal, pharyngeal, or
                                              stomach cancer, plus evidence of
                                              an underlying Bilateral
                                              Asbestos-Related Nonmalignant
                                              Disease, (2) six months Congoleum
                                              Exposure prior to December 31,
                                              1982, (3) Significant
                                              Occupational Exposure to
                                              asbestos, and (4) supporting
                                              medical documentation
                                              establishing asbestos exposure as
                                              a contributing factor in causing
                                              the other cancer in question.

Severe Asbestosis (Level         $30,000      (1) Diagnosis of asbestosis with
IV)                                           ILO of 2/1 or greater, or
                                              asbestosis determined by
                                              pathological evidence of asbestos,
                                              plus (a) TLC less than 65%, or (b)
                                              FVC less than 65% and FEV1/FVC
                                              ratio greater than 65%, (2) six
                                              months Congoleum Exposure prior to
                                              December 31, 1982, (3) Significant
                                              Occupational Exposure to asbestos,
                                              and (4) supporting medical
                                              documentation establishing
                                              asbestos exposure as a
                                              contributing factor in causing the
                                              pulmonary disease in question.

----------
(6)   There is no distinction between Non-Smokers and Smokers for either Lung
      Cancer 1 (Level VII) or Lung Cancer 2 (Level VI), although a claimant who
      meets the more stringent requirements of Lung Cancer 1 (Level VII)
      (evidence of an underlying Bilateral Asbestos-Related Nonmalignant Disease
      plus Significant Occupational Exposure), and who is also a Non-Smoker, may
      wish to have his or her claim individually evaluated by the Plan Trust. In
      such a case, absent circumstances that would otherwise reduce the value of
      the claim, it is anticipated that the liquidated value of the claim might
      well exceed the $45,000 Scheduled Value for Lung Cancer 1 (Level VII)
      shown above. "Non-Smoker" means a claimant who either (a) never smoked or
      (b) has not smoked during any portion of the twelve (12) years immediately
      prior to the diagnosis of the lung cancer.


                                       16
<PAGE>

                                                           EXHIBIT G TO THE PLAN


Disease Level                Scheduled Value  Medical/Exposure Criteria
-------------                ---------------  -------------------------

Asbestosis/Pleural Disease       $3,600       (1) Diagnosis of Bilateral
(Level III)                                   Asbestos-Related Nonmalignant
                                              Disease, plus (a) TLC less than
                                              80%, or (b) FVC less than 80% and
                                              FEV1/FVC ratio greater than or
                                              equal to 65%, and (2) six months
                                              Congoleum Exposure prior to
                                              December 31, 1982, (3) Significant
                                              Occupational Exposure to asbestos,
                                              and (4) supporting medical
                                              documentation establishing
                                              asbestos exposure as a
                                              contributing factor in causing the
                                              pulmonary disease in question.

Asbestosis/Pleural Disease       $1,200       (1) Diagnosis of a Bilateral
(Level II)                                    Asbestos-Related Nonmalignant
                                              Disease, and (2) six months
                                              Congoleum Exposure prior to
                                              December 31, 1982, and (3) five
                                              years cumulative occupational
                                              exposure to asbestos.

Other Asbestos Disease            $250        (1) Diagnosis of a Bilateral
(Level I - Cash Discount                      Asbestos-Related Nonmalignant
Payment)                                      Disease or an asbestos-related
                                              malignancy other than
                                              mesothelioma, and (2) Congoleum
                                              Exposure prior to December 31,
                                              1982.

            (b) Individual Review Process.

                  (1) In General. Subject to the provisions set forth below, a
Congoleum claimant may elect to have his or her Plan Trust PI Asbestos Claim
reviewed for purposes of determining whether the claim would be compensable in
the tort system even though it does not meet the presumptive Medical/Exposure
Criteria for any of the Disease Levels set forth in Section 6.2(a)(3). In
addition or alternatively, a Congoleum claimant may elect to have a claim
undergo the Individual Review Process for purposes of determining whether the
liquidated value of a claim involving Disease Levels IV, V, VII or VIII exceeds
the Scheduled Value for the relevant Disease Level also set forth in said
provision. However, until such time as the Plan Trust has made an offer on a
claim pursuant to Individual Review, the claimant may change his or her
Individual Review election and have the claim liquidated pursuant to the Plan
Trust's Expedited Review Process. In the event of such a change in the
processing election, the claimant shall nevertheless retain his or her place in
the FIFO Processing Queue.

      The liquidated value of all Foreign Claims payable under this TDP shall be
established only under the Plan Trust's Individual Review Process. Because Plan
Trust PI Asbestos Claims of individuals exposed in Canada who were resident in


                                       17
<PAGE>

                                                           EXHIBIT G TO THE PLAN


Canada when such claims were filed were routinely litigated and resolved in the
courts of the United States, and because the resolution history of these claims
has been included in developing the Expedited Review Process, such claims shall
not be considered Foreign Claims hereunder and shall be eligible for liquidation
under the Expedited Review Process. Accordingly, a "Foreign Claim" is a Plan
Trust PI Asbestos Claim with respect to which the claimant's exposure to an
asbestos-containing product occurred outside of the United States and its
Territories and Possessions, and outside of the Provinces and Territories of
Canada.

      In reviewing such Foreign Claims, the Plan Trust shall take into account
all relevant procedural and substantive legal rules to which the claims would be
subject in the Claimant's Jurisdiction as defined in Section 6.2(b)(2) below.
The Plan Trust shall determine the liquidated value of Foreign Claims based on
historical settlements and verdicts in the Claimant's Jurisdiction as well as
the other valuation factors set forth in Section 6.2(b)(2) below.

      For purposes of the Individual Review Process for Foreign Claims, the Plan
Trustees, with the consent of the TAC and the Futures Representative, may
develop separate Medical/Exposure Criteria and standards, as well as separate
requirements for physician and other professional qualifications, which shall be
applicable to all Foreign Claims channeled to the Plan Trust; provided however,
that such criteria, standards or requirements shall not effectuate substantive
changes to the claims eligibility requirements under this TDP, but rather shall
be made only for the purpose of adapting those requirements to the particular
licensing provisions and/or medical customs or practices of the foreign country
in question.

      At such time as the Plan Trust has sufficient historical settlement,
verdict and other valuation data for claims from a particular foreign
jurisdiction, the Plan Trustees, with the consent of the TAC and the Futures
Representative, may also establish a separate valuation matrix for any such
Foreign Claims based on that data.

                        (A) Review of Medical/Exposure Criteria. The Plan
      Trust's Individual Review Process provides a claimant with an opportunity
      for individual consideration and evaluation of a Plan Trust PI Asbestos
      Claim that fails to meet the presumptive Medical/Exposure Criteria for
      Disease Levels I - V, VII or VIII. In such a case, the Plan Trust shall
      either deny the claim or, if the Plan Trust is satisfied that the claimant
      has presented a claim that would be cognizable and valid in the tort
      system, the Plan Trust can offer the claimant a liquidated value amount up
      to the Scheduled Value for that Disease Level.

                        (B) Review of Liquidated Value. Claimants holding claims
      in the five more serious Disease Levels IV - VIII shall also be eligible
      to seek Individual Review of the liquidated value of their claims, as well
      as of their medical exposure evidence. The Individual Review Process is
      intended to result in payments equal to the full liquidated value for each
      claim multiplied by the Payment Percentage; however, the liquidated value
      of any Plan Trust PI Asbestos Claim that undergoes Individual Review may
      be determined to be less than the Scheduled Value the claimant would have
      received under Expedited Review. Moreover, the liquidated value for a
      claim involving Disease Levels IV - VIII shall not exceed the Maximum
      Value for the relevant Disease Level set forth in Section 6.2(b)(3) below,
      unless the claim meets the requirements of an Extraordinary Claim


                                       18
<PAGE>

                                                           EXHIBIT G TO THE PLAN


      described in Section 6.3(a) below, in which case its liquidated value
      cannot exceed the Maximum Value set forth in that provision for such
      claims. Because the detailed examination and valuation process pursuant to
      Individual Review requires substantial time and effort, claimants electing
      to undergo the Individual Review Process may be paid the liquidated value
      of their Plan Trust PI Asbestos Claims later than would have been the case
      had the claimant elected the Expedited Review Process. Subject to the
      provisions of Section 6.7, the Plan Trust shall devote reasonable
      resources to the review of all claims to ensure that there is a reasonable
      balance maintained in reviewing all classes of claims.

                  (2) Valuation Factors to Be Considered in Individual Review.
The Plan Trust shall liquidate the value of each Plan Trust PI Asbestos Claim
that undergoes Individual Review based on the historic liquidated values of
other similarly situated claims in the tort system for the same Disease Level.
The Plan Trust shall thus take into consideration all of the factors that affect
the severity of damages and values within the tort system including, but not
limited to, (i) the degree to which the characteristics of a claim differ from
the presumptive Medical/Exposure Criteria for the Disease Level in question;
(ii) factors such as the claimant's age, disability, employment status,
disruption of household, family or recreational activities, dependencies,
special damages, and pain and suffering; (iii) evidence that the claimant's
damages were (or were not) caused by asbestos exposure, including exposure to an
asbestos-containing product or to conduct for which Congoleum has legal
responsibility prior to December 31, 1982 (for example, alternative causes, and
the strength of documentation of injuries); (iv) the industry of exposure; (v)
settlements and verdicts in the Claimant's Jurisdiction for similarly situated
claims; and (vi) settlements and verdict histories for the claimant's law firm
for similarly situated claims.

      For these purposes, the "Claimant's Jurisdiction" is the jurisdiction in
which the claim was filed (if at all) against Congoleum in the tort system prior
to the Petition Date. If the claim was not filed against Congoleum in the tort
system prior to the Petition Date, the claimant may elect as the Claimant's
Jurisdiction either (i) the jurisdiction in which the claimant resides at the
time of diagnosis or when the claim is filed with the Plan Trust; or (ii) a
jurisdiction in which the claimant experienced exposure to an
asbestos-containing product manufactured, produced or distributed by Congoleum
or in a Congoleum facility.

      With respect to the "Claimant's Jurisdiction" in the event a personal
representative or authorized agent makes a claim under this TDP for wrongful
death with respect to which the governing law of the Claimant's Jurisdiction
could only be the Alabama Wrongful Death Statute, the Claimant's Jurisdiction
for such claim shall be the State of New Jersey, and such claimant's damages
shall be determined pursuant to the statutory and common laws of the State of
New Jersey without regard to its choice of law principles. The choice of law
provision in Section 8.4 below applicable to any claim with respect to which,
but for this choice of law provision, the applicable law of the Claimant's
Jurisdiction pursuant to this Section 6.2(b)(2) is determined to be the Alabama
Wrongful Death Statute, shall only govern the rights between the Plan Trust and
the claimant, and, to the extent the Plan Trust seeks recovery from any entity
that provided insurance coverage to Congoleum, the Alabama Wrongful Death
Statute shall govern.


                                       19
<PAGE>

                                                           EXHIBIT G TO THE PLAN


                  (3) Scheduled, Average and Maximum Values. The Scheduled,
Average and Maximum Values for claims involving Disease Levels I - VIII are the
following:

Scheduled Disease           Scheduled Value   Average Value    Maximum Value
-----------------           ---------------   -------------    -------------

Mesothelioma (Level VIII)        $120,000                          $500,000

Lung Cancer 1 (Level VII)         $40,000                           $90,000

Lung Cancer 2 (Level VI)             None          $15,000          $24,000

Other Cancer (Level V)            $12,000                           $40,000

Severe Asbestosis (Level          $30,000                           $60,000
   IV)

Asbestosis/Pleural Disease         $3,600                            $3,600
  (Level III)

Asbestosis/Pleural Disease         $1,200                            $1,200
  (Level II)

Other Asbestos Disease --            $250                              $250
  Cash
  Discount Payment (Level
  I)

      These Scheduled Values, Average Value (Level VI) and Maximum Values shall
apply to all Plan Trust Voting Claims other than the Settled Claims filed with
the Plan Trust on or before the Initial Claims Filing Date as provided in
Section 6.1(a)(2) above. Thereafter, the Plan Trustees, with the consent of the
TAC and the Futures Representative pursuant to Sections 5.8(b) and 6.6(b) of the
Plan Trust Agreement, may change these valuation amounts for good cause and
consistent with other restrictions on the amendment power.

      6.3 Categorizing Claims as Extraordinary and/or Exigent Hardship.

            (a) Extraordinary Claims "Extraordinary Claim" means a Plan Trust PI
Asbestos Claim that otherwise satisfies the Medical Criteria for Disease Levels
IV -VIII, and that is held by a claimant whose exposure to asbestos (i) occurred
primarily as a result of working in a manufacturing facility of Congoleum during
a period in which Congoleum was manufacturing asbestos-containing products at
that facility, or (ii) was at least 75% the result of exposure to an
asbestos-containing product, and in either case there is little likelihood of a
substantial recovery elsewhere. All such Extraordinary Claims shall be presented
for Individual Review and, if valid, shall be entitled to an award of up to a
value of five (5) times the Scheduled Value set forth in Section 6.2(b)(3) for
claims qualifying for Disease Levels IV -V, VII and VIII, and five (5) times the
Average Value for claims in Disease Level VI, multiplied by the applicable
Payment Percentage.


                                       20
<PAGE>

                                                           EXHIBIT G TO THE PLAN


      Any dispute as to Extraordinary Claim status shall be submitted to a
special Extraordinary Claims Panel established by the Plan Trust with the
consent of the TAC and the Futures Representative. All decisions of the
Extraordinary Claims Panel shall be final and not subject to any further
administrative or judicial review. An Extraordinary Claim, following its
liquidation, shall be placed in the FIFO Payment Queue ahead of all other Plan
Trust PI Asbestos Claims except Disease Level I Claims and Exigent Hardship
Claims, which shall be paid first in that order in said Queue, based on its date
of liquidation, subject to the Maximum Available Payment and Claims Payment
Ratio described above.

            (b) Exigent Hardship Claims. At any time the Plan Trust may
liquidate and pay Plan Trust PI Asbestos Claims that qualify as Exigent Hardship
Claims as defined below. Such claims may be considered separately no matter what
the order of processing otherwise would have been under this TDP. An Exigent
Hardship Claim, following its liquidation, shall be placed first in the FIFO
Payment Queue ahead of all other liquidated Plan Trust PI Asbestos Claims except
Disease Level I Claims, subject to the Maximum Available Payment and Claims
Payment Ratio described above. A Plan Trust Asbestos Claim qualifies for payment
as an Exigent Hardship Claim if the claim meets the Medical/Exposure Criteria
for Severe Asbestosis (Disease Level IV) or an asbestos-related malignancy
(Disease Levels V-VIII), and the Plan Trust, in its sole discretion, determines
(i) that the claimant needs financial assistance on an immediate basis based on
the claimant's expenses and all sources of available income, and (ii) that there
is a causal connection between the claimant's dire financial condition and the
claimant's asbestos-related disease.

      6.4 Secondary Exposure Claims. If a claimant alleges an asbestos-related
disease resulting solely from exposure to an occupationally exposed person, such
as a family member, the claimant may seek Individual Review of his or her claim
pursuant to Section 6.2(b) above. In such a case, the claimant must establish
that the occupationally exposed person would have met the requirements of
Congoleum Exposure under this TDP that would have been applicable had that
person filed a direct claim against the Plan Trust. In addition, the claimant
with secondary exposure must establish that he or she is suffering from one of
the eight Disease Levels described in Section 6.2(a)(3) above or an
asbestos-related disease otherwise compensable under this TDP, that his or her
own exposure to the occupationally exposed person occurred within the same time
frame as the occupationally exposed person was exposed to an asbestos-containing
product manufactured, produced or distributed by Congoleum, or in a Congoleum
facility, and that such secondary exposure was a cause of the claimed disease.
All other liquidation and payment rights and limitations under this TDP shall be
applicable to such claims.

      6.5 Indirect Plan Trust Asbestos Claims. Indirect asbestos claims asserted
against the Plan Trust based upon theories of contribution or indemnification
under applicable law ("Indirect Asbestos Claims") shall be treated as
presumptively valid and paid by the Plan Trust subject to the applicable Payment
Percentage if (a) such claim satisfied the requirements of the bar date for such
claims established by the Bankruptcy Court, if applicable, and is not otherwise
disallowed by Section 502(e) of the Bankruptcy Code or subordinated under
Section 509(c) of the Bankruptcy Code, and (b) the holder of such claim (the
"Indirect Claimant") establishes to the satisfaction of the Plan Trustees that
(i) the Indirect Claimant has paid in full the liability and obligation of the
Plan Trust to the individual claimant to whom the Plan Trust would otherwise


                                       21
<PAGE>

                                                           EXHIBIT G TO THE PLAN


have had a liability or obligation under these Procedures (the "Direct
Claimant"), (ii) the Direct Claimant and the Indirect Claimant have forever and
fully released the Plan Trust from all liability to the Direct Claimant, and
(iii) the claim is not otherwise barred by a statute of limitation or repose or
by other applicable law. In no event shall any Indirect Claimant have any rights
against the Plan Trust superior to the rights of the related Direct Claimant
against the Plan Trust, including any rights with respect to the timing, amount
or manner of payment. In addition, no Indirect Claim may be liquidated and paid
in an amount that exceeds what the Indirect Claimant has actually paid the
related Direct Claimant.

      To establish a presumptively valid Indirect Asbestos Claim, the Indirect
Claimant's aggregate liability for the Direct Claimant's claim must also have
been fixed, liquidated and paid fully by the Indirect Claimant by settlement
(with an appropriate full release in favor of the Plan Trust) or a Final Order
(as defined in the Plan) provided that such claim is valid under the applicable
state law. In any case where the Indirect Claimant has satisfied the claim of a
Direct Claimant against the Plan Trust under applicable law by way of a
settlement, the Indirect Claimant shall obtain for the benefit of the Plan Trust
a release in form and substance satisfactory to the Plan Trustees.

      If an Indirect Claimant cannot meet the presumptive requirements set forth
above, including the requirement that the Indirect Claimant provide the Plan
Trust with a full release of the Direct Claimant's claim, the Indirect Claimant
may request that the Plan Trust review the Indirect Plan Trust Asbestos Claim
individually to determine whether the Indirect Claimant can establish under
applicable state law that the Indirect Claimant has paid all or a portion of a
liability or obligation that the Plan Trust had to the Direct Claimant as of the
Effective Date of this TDP. If the Indirect Claimant can show that it has paid
all or a portion of such a liability or obligation, the Plan Trust shall
reimburse the Indirect Claimant the amount of the liability or obligation so
paid, times the then applicable Payment Percentage. However, in no event shall
such reimbursement to the Indirect Claimant be greater than the amount to which
the Direct Claimant would have otherwise been entitled. Further, the liquidated
value of any Indirect Asbestos Claim paid by the Plan Trust to an Indirect
Claimant shall be treated as an offset to or reduction of the full liquidated
value of any Plan Trust PI Asbestos Claim that might be subsequently asserted by
the Direct Claimant against the Plan Trust.

      Any dispute between the Plan Trust and an Indirect Claimant over whether
the Indirect Claimant has a right to reimbursement for any amount paid to a
Direct Claimant shall be subject to the ADR procedures provided in Section 6.9
below and set forth in Attachment A hereto. If such dispute is not resolved by
said ADR procedures, the Indirect Claimant may litigate the dispute in the tort
system pursuant to Sections 6.10 and 8.6 below.

      The Plan Trustees may develop and approve a separate proof of claim form
for Indirect Asbestos Claims. Indirect Asbestos Claims that have not been
disallowed, discharged, or otherwise resolved by prior order of the Bankruptcy
Court shall be processed in accordance with procedures to be developed and
implemented by the Plan Trustees consistent with the provisions of this Section
6.5, which procedures (a) shall determine the validity, allowability and
enforceability of such claims; and (b) shall otherwise provide the same
liquidation and payment procedures and rights to the holders of such claims as
the Plan Trust would have afforded the holders of the underlying valid Plan
Trust PI Asbestos Claims. Nothing in this TDP is intended to preclude a trust to


                                       22
<PAGE>

                                                           EXHIBIT G TO THE PLAN


which asbestos-related liabilities are channeled from asserting an Indirect
Asbestos Claim against the Plan Trust subject to the requirements set forth
herein.

      6.6 Evidentiary Requirements.

            (a) Medical Evidence.

                  (1) In General. All diagnoses of a Disease Level shall be
accompanied by either (i) a statement by the physician providing the diagnosis
that at least 10 years have elapsed between the date of first exposure to
asbestos or asbestos-containing products and the diagnosis, or (ii) a history of
the claimant's exposure sufficient to establish a 10-year latency period. A
finding by a physician after the Petition Date that a claimant's disease is
"consistent with" or "compatible with" asbestosis alone shall not be treated by
the Plan Trust as a diagnosis.

                        (A) Disease Levels I - IV. Except for claims filed
      against Congoleum or any other asbestos defendant in the tort system prior
      to the Petition Date, all diagnoses of a non-malignant asbestos-related
      disease (Disease Levels I-IV) shall be based in the case of a claimant who
      was living at the time the claim was filed, upon a physical examination of
      the claimant by the physician providing the diagnosis of the
      asbestos-related disease. All living claimants must also provide (i) for
      Disease Levels I-III, evidence of Bilateral Asbestos-Related Nonmalignant
      Disease (as defined in Footnote 3 above); (ii) for Disease Level IV,(7) an
      ILO reading of 2/1 or greater or pathological evidence of asbestosis, and
      (iii) for Disease Levels III and IV, pulmonary function testing.(8)

      In the case of a claimant who was deceased at the time the claim was
filed, all diagnoses of a non-malignant asbestos-related disease (Disease Levels
I-IV) shall be based upon either (i) a physical examination of the claimant by
the physician providing the diagnosis of the asbestos-related disease; or (ii)
pathological evidence of the non-malignant asbestos-related disease; or (iii) in
the case of Disease Levels I-III, evidence of Bilateral Asbestos-Related
Nonmalignant Disease (as defined in Footnote 3 above), and for Disease Level IV,
either an ILO reading of 2/1 or greater or pathological evidence of asbestosis;
and (iv) for either Disease Level III or IV, pulmonary function testing.

----------
(7)   All diagnoses of Asbestosis/Pleural Disease (Disease Levels II and III)
      not based on pathology shall be presumed to be based on findings of
      bilateral asbestosis or pleural disease, and all diagnoses of Mesothelioma
      (Disease Level VIII) shall be presumed to be based on findings that the
      disease involves a malignancy. However, the Plan Trust may rebut such
      presumptions.
(8)   "Pulmonary Function Testing" or "PFT" shall mean testing that is in
      material compliance with the quality criteria established by the American
      Thoracic Society ("ATS") and is performed on equipment which is in
      material compliance with ATS standards for technical quality and
      calibration. PFT performed in a hospital accredited by the JCAHO, or
      performed, reviewed or supervised by a board certified pulmonologist or
      other Qualified Physician shall be presumed to comply with ATS standards,
      and the claimant may submit a summary report of the testing. If the PFT
      was not performed in an JCAHO-accredited hospital, or performed, reviewed
      or supervised by a board certified pulmonologist or other Qualified
      Physician, the claimant must submit the full report of the testing (as
      opposed to a summary report); provided however that if the PFT was
      conducted prior to the Effective Date of the Plan, and the full PFT report
      is not available, the claimant must submit a signed declaration in the
      form provided by the Plan Trust certifying that the PFT was conducted in
      material compliance with ATS standards.


                                       23
<PAGE>

                                                           EXHIBIT G TO THE PLAN


                        (B) Disease Levels V - VIII. All diagnoses of an
      asbestos-related malignancy (Disease Levels V - VIII) shall be based upon
      either (i) a physical examination of the claimant by the physician
      providing the diagnosis of the asbestos-related disease, or (ii) a
      diagnosis of such a malignant Disease Level by a board-certified
      pathologist.

                        (C) Exception to the Exception for Certain Pre-Petition
      Claims. If the holder of a Plan Trust Asbestos Claim that was filed
      against Congoleum or any other defendant in the tort system prior to the
      Petition Date has available a report of a diagnosing physician engaged by
      the holder or his or her law firm who conducted a physical examination of
      the holder as described in Section 6.6(a)(1)(A), or if the holder has
      filed such medical evidence with another asbestos-related personal injury
      settlement trust that requires such evidence without regard to whether the
      claimant or the law firm engaged the diagnosing physician, the holder
      shall provide such medical evidence to the Plan Trust notwithstanding the
      exception in Section 6.6(a)(1)(A).

                  (2) Credibility of Medical Evidence. Before making any payment
to a claimant, the Plan Trust must have reasonable confidence that the medical
evidence provided in support of the claim is competent medical evidence of an
asbestos-related injury, and consistent with recognized medical standards. The
Plan Trust may require the submission of X-rays, CT scans, detailed results of
pulmonary function tests, laboratory tests, tissue samples, results of medical
examination or reviews of other medical evidence, and will require that any
medical evidence submitted comply with recognized medical standards regarding
equipment, testing methods and procedures to assure that such evidence is
reliable.(9)

      Medical evidence (i) that is of a kind shown to have been received in
evidence by a state or federal judge at trial, or (ii) that is a diagnosis by a
physician shown to have previously qualified as a medical expert with respect to
the asbestos-related disease in question before a state or federal judge, is
presumptively reliable, although the Plan Trust may seek to rebut the
presumption. In the event that the Plan Trust reasonably determines that any
individual or entity has engaged in a pattern or practice of providing
unreliable medical evidence to the Plan Trust, to any other Asbestos Claims
Trusts, or in connection with any court proceedings, it shall decline to accept
evidence from such provider. In addition, claimants who otherwise meet the
requirements of this TDP for payment of a Plan Trust PI Asbestos Claim shall be
paid irrespective of the results in any litigation at any time between the
claimant and any other defendant in the tort system. However, any relevant
evidence submitted in a proceeding in the tort system, other than any findings
of fact, a verdict, or a judgment, involving another defendant may be introduced
by either the claimant or the Plan Trust in any Individual Review proceeding
conducted pursuant to Section 6.2(b) or any Extraordinary Claim proceeding
conducted pursuant to Section 6.3(a).

            (b) Exposure Evidence.

                  (1) In General. As set forth above in Section 6.2(a)(3), to
qualify for any Disease Level, the claimant must demonstrate a minimum exposure
to an asbestos-containing product manufactured, produced or distributed by
Congoleum,

----------
(9)   Provided, however, the provisions of footnote 7, supra, regarding PFT, are
      applicable.


                                       24
<PAGE>

                                                           EXHIBIT G TO THE PLAN


or to asbestos or asbestos-containing products in a Congoleum facility. Claims
based on conspiracy theories that involve no such Congoleum exposure are not
compensable under this TDP. To meet the presumptive exposure requirements of
Expedited Review set forth in Section 6.2(a)(3) above, the claimant must show
(i) for all Disease Levels, Congoleum Exposure as defined in Section 6.6(b)(3)
below prior to December 31, 1982; (ii) for Asbestosis/Pleural Disease (Disease
Level II), six months Congoleum Exposure prior to December 31, 1982, plus five
years cumulative occupational exposure to asbestos; and (iii) for
Asbestosis/Pleural Disease (Disease Level III), Severe Asbestosis (Disease Level
IV), Other Cancer (Disease Level V) or Lung Cancer 1 (Disease Level VII), the
claimant must show six months Congoleum Exposure prior to December 31, 1982,
plus Significant Occupational Exposure to asbestos.
 If the claimant cannot meet the relevant presumptive exposure requirements for
a Disease Level eligible for Expedited Review, the claimant may seek Individual
Review pursuant to Section 6.2(b) of his or her claim based on exposure to an
asbestos-containing product or to asbestos or asbestos-containing products in a
Congoleum facility.

                  (2) Significant Occupational Exposure. "Significant
Occupational Exposure" means employment for a cumulative period of at least five
years with a minimum of two years prior to December 31, 1982, in an industry and
an occupation in which the claimant (a) handled asbestos fibers on a regular
basis; (b) fabricated asbestos-containing products so that the claimant in the
fabrication process was exposed on a regular basis to asbestos fibers; (c)
altered, repaired or otherwise worked with an asbestos-containing product such
that the claimant was exposed on a regular basis to asbestos fibers; or (d) was
employed in an industry and occupation such that the claimant worked on a
regular basis in close proximity to the activities described in (a), (b) and/or
(c).

                  (3) Congoleum Exposure. The claimant must demonstrate
"Congoleum Exposure," which is defined as meaningful and credible exposure,
which occurred prior to December 31, 1982, to asbestos or asbestos-containing
products in a Congoleum facility, or to asbestos or asbestos-containing products
supplied, specified, manufactured, installed, maintained, or repaired by
Congoleum and/or any entity, including a Congoleum contracting unit, for which
Congoleum has legal responsibility (a "Congoleum Product"). The Plan Trust shall
consider meaningful and credible evidence, including an affidavit or sworn
statement of the claimant based on personal knowledge, an affidavit or sworn
statement of a co-worker, or the affidavit or sworn statement of a family member
in the case of a deceased claimant (providing the Plan Trust finds such evidence
reasonably reliable), invoices, employment, construction or similar records, or
other credible evidence. The Plan Trust can also require submission of other or
additional evidence of exposure when it deems such to be necessary. The Plan
Trust shall require other or additional evidence to demonstrate the nexus
between the exposure to a Congoleum Product and the claimant's asbestos-related
disease. The specific exposure information required by the Plan Trust to process
a claim under either Expedited or Individual Review shall be set forth on the
proof of claim form to be used by the Plan Trust. The Plan Trust can also
require submission of other or additional evidence of exposure when it deems
such to be necessary.

      6.7 Claims Audit Program. The Plan Trustees shall develop reasonable and
efficient methods for auditing the reliability of medical evidence, which may
include additional reading of X-rays, CT scans and verification of pulmonary


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                                                           EXHIBIT G TO THE PLAN


function tests, as well as the reliability of evidence of exposure to asbestos,
including exposure to asbestos-containing products manufactured, produced or
distributed by Congoleum prior to December 31, 1982. The Plan Trustees may
retain such persons or consultants as it deems reasonable and necessary to
perform the audit of medical and exposure evidence, subject to the consent of
the TAC and Futures Representative. In the event that the Plan Trust reasonably
determines that any individual or entity has engaged in a pattern or practice of
providing unreliable medical evidence to the Plan Trust, to any other Asbestos
Claims Trust, or in connection with any court proceeding, it shall decline to
accept evidence from such provider.

      Further, in the event that an audit reveals that fraudulent information
has been provided to the Plan Trust, the Plan Trust may penalize any claimant or
claimant's attorney by disallowing the Plan Trust PI Asbestos Claim or by other
means including, but not limited to, requiring the source of the fraudulent
information to pay the costs associated with the audit and any future audit or
audits, reordering the priority of payment of all affected claimants' Plan Trust
Asbestos Claims, raising the level of scrutiny of additional information
submitted from the same source or sources, refusing to accept additional
evidence from the same source or sources, seeking the prosecution of the
claimant or claimant's attorney for presenting a fraudulent claim in violation
of 18 U.S.C. ss.152, and seeking sanctions from the Bankruptcy Court.

      6.8 Second Disease (Malignancy) Claims. The holder of a Plan Trust PI
Asbestos Claim involving a non-malignant asbestos-related disease (Disease
Levels I through IV) may assert a new Plan Trust PI Asbestos Claim against the
Plan Trust for a malignant disease (Disease Levels V - VIII) that is
subsequently diagnosed. Any additional payments to which such claimant may be
entitled with respect to such malignant asbestos-related disease shall not be
reduced by the amount paid for the non-malignant asbestos-related disease,
provided that the malignant disease had not been diagnosed by the time the
claimant was paid with respect to the original claim involving the non-malignant
disease.

      6.9 Arbitration.

            (a) Establishment of ADR Procedures. The Plan Trustees, with the
consent of the TAC and the Futures Representative, shall institute binding and
non-binding arbitration procedures in accordance with the Alternative Dispute
Resolution ("ADR") Procedures included in Attachment A hereto for resolving
disputes concerning whether the Plan Trust's outright rejection or denial of a
claim was proper, or whether the claimant's medical condition or exposure
history meets the requirements of this TDP for purposes of categorizing a claim
involving Disease Levels I - VIII. Binding and non-binding arbitration shall
also be available for resolving disputes over the liquidated value of a claim
involving Disease Levels IV - VIII, as well as disputes over the validity of an
Indirect Asbestos Claim.

      In all arbitrations, the arbitrator shall consider the same medical and
exposure evidentiary requirements that are set forth in Section 6.6 above. In
the case of an arbitration involving the liquidated value of a claim involving
Disease Levels IV - VIII, the arbitrator shall consider the same valuation
factors that are set forth in Section 6.2(b)(2) above. With respect to all
claims eligible for arbitration, the claimant, but not the Plan Trust, may elect
either non-binding or binding arbitration. The ADR Procedures set forth in
Attachment A hereto may be modified by the Plan Trustees with the consent of the
TAC and the Futures Representative.


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            (b) Claims Eligible for Arbitration. In order to be eligible for
arbitration, the claimant must first complete the Individual Review Process with
respect to the disputed issue as well as either the Pro Bono Evaluation or the
Mediation processes set forth in the ADR Procedures. Individual Review shall be
treated as completed for these purposes when the claim has been individually
reviewed by the Plan Trust, the Plan Trust has made an offer on the claim, the
claimant has rejected the liquidated value resulting from the Individual Review,
and the claimant has notified the Plan Trust of the rejection in writing.
Individual Review shall also be treated as completed if the Plan Trust has
rejected the claim.

            (c) Limitations on and Payment of Arbitration Awards. In the case of
a non-Extraordinary Claim involving Disease Levels I - III, the arbitrator shall
not return an award in excess of the Scheduled Value for such claim. In the case
of a non-Extraordinary Claim involving Disease Levels IV - VIII, the arbitrator
shall not return an award in excess of the Maximum Value for the appropriate
Disease Level as set forth in Section 6.2(b)(3) above, and for an Extraordinary
Claim involving one of those Disease Levels, the arbitrator shall not return an
award greater than the maximum value for such a claim as set forth in Section
6.3 above. A claimant who submits to arbitration and who accepts the arbitral
award shall receive payments in the same manner as one who accepts the Plan
Trust's original valuation of the claim.

      6.10 Litigation. Claimants who elect non-binding arbitration and then
reject their arbitral awards retain the right to institute a lawsuit in the tort
system against the Plan Trust pursuant to Section 8.6 below. However, a claimant
shall be eligible for payment of a judgment for monetary damages obtained in the
tort system from the Plan Trust's available cash only as provided in Section 8.7
below.

                                  SECTION VII

                                Claims Materials

      7.1 Claims Materials. The Plan Trust shall prepare suitable and efficient
claims materials ("Claims Materials") for all Plan Trust PI Asbestos Claims, and
shall provide such Claims Materials upon a written request for such materials to
the Plan Trust. In addition, a separate claim form for Plan Trust PI Asbestos
Claims that constitute Indirect Asbestos Claims may be developed. The proof of
claim form to be submitted to the Plan Trust shall require the claimant to
assert the highest Disease Level for which the claim qualifies at the time of
filing. The proof of claim form shall also include a certification by the
claimant or his or her attorney sufficient to meet the requirements of Rule
11(b) of the Federal Rules of Civil Procedure. In developing its claim filing
procedures, the Plan Trust shall make every effort to provide claimants with the
opportunity to utilize currently available technology at their discretion,
including filing claims and supporting documentation over the internet and
electronically by disk or CD-rom. The initial proof of claim form(s) (and
subsequent changes thereto) shall be adopted by the Plan Trustees, with the
consent of the TAC and the Futures Representative.


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      7.2 Content of Claims Materials. The Claims Materials shall include a copy
of this TDP, such instructions as the Plan Trustees shall approve, and a
detailed proof of claim form. If feasible, the forms used by the Plan Trust to
obtain claims information shall be the same or substantially similar to those
used by other asbestos claims resolution organizations. Instead of collecting
some or all of the claims information from a claimant or the claimant's
attorney, the Plan Trust may also obtain such information from electronic data
bases maintained by any other asbestos claims resolution organization. However,
the Plan Trust shall inform the claimant that it plans to obtain information as
available from such other organizations and may do so unless the claimant
objects in writing or provides such information directly to the Plan Trust. If
requested by the claimant, the Plan Trust shall accept information provided
electronically. The claimant may, but shall not be required to, provide the Plan
Trust with evidence of recovery from other asbestos defendants and claims
resolution organizations.

      7.3 Withdrawal or Deferral of Claims. A claimant can withdraw a Plan Trust
PI Asbestos Claim at any time upon written notice to the Plan Trust and file
another claim subsequently without affecting the status of the claim for statute
of limitations purposes, but any such claim filed after withdrawal shall be
given a place in the FIFO Processing Queue based on the date of such subsequent
filing. A claimant can also request that the processing of his or her Plan Trust
PI Asbestos Claim by the Plan Trust be deferred for a period not to exceed three
(3) years without affecting the status of the claim for statute of limitation
purposes, in which case the claimant shall also retain his or her original place
in the FIFO Processing Queue. Except for Plan Trust PI Asbestos Claims held by
representatives of deceased or incompetent claimants for which court or probate
approval of the Plan Trust's offer is required, or a Plan Trust PI Asbestos
Claim for which deferral status has been granted, a claim shall be deemed to
have been withdrawn if the claimant neither accepts, rejects, nor initiates
arbitration within six months of the Plan Trust's offer of payment or rejection
of the claim. Upon written request and good cause, the Plan Trust may extend the
withdrawal or deferral period for an additional six months.

      7.4 Filing Requirements and Fees. The Plan Trustees shall have the
discretion to determine, with the consent of the TAC and the Futures
Representative, (a) whether a claimant must have previously filed an
asbestos-related personal injury claim in the tort system to be eligible to file
the claim with the Plan Trust and (b) whether a filing fee should be required
for any Plan Trust PI Asbestos Claims.

      7.5 Confidentiality of Claimants' Submissions. All submissions to the Plan
Trust by a holder of a Plan Trust PI Asbestos Claim of a proof of claim form and
materials related thereto shall be treated as made in the course of settlement
discussions between the holder and the Plan Trust, and intended by the parties
to be confidential and to be protected by all applicable state and federal
privileges, including but not limited to those directly applicable to settlement
discussions. The Plan Trust will preserve the confidentiality of such claimant
submissions, and shall disclose the contents thereof only, with the permission
of the holder, to another trust established for the benefit of asbestos personal
injury claimants pursuant to section 524(g) and/or section 105 of the Bankruptcy
Code or other applicable law, to such other persons as authorized by the holder,
or in response to a valid subpoena of such materials issued by the Bankruptcy
Court. Furthermore, the Plan Trust shall provide counsel for the holder a copy
of any such subpoena immediately upon being served. The Plan Trust shall on its
own initiative or upon request of the claimant in question take all necessary
and appropriate steps to preserve said privileges before the Bankruptcy Court
and before those courts having appellate jurisdiction related thereto.


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                                  SECTION VIII

              General Guidelines for Liquidating and Paying Claims

      8.1 Showing Required. To establish a valid Plan Trust PI Asbestos Claim, a
claimant must meet the requirements set forth in this TDP. The Plan Trust may
require the submission of X-rays, CT scans, laboratory tests, medical
examinations or reviews, other medical evidence, or any other evidence to
support or verify the claim, and may further require that medical evidence
submitted comply with recognized medical standards regarding equipment, testing
methods, and procedures to assure that such evidence is reliable.

      8.2 Costs Considered. Notwithstanding any provisions of this TDP to the
contrary, the Plan Trustees shall always give appropriate consideration to the
cost of investigating and uncovering invalid Plan Trust PI Asbestos Claims so
that the payment of valid Plan Trust PI Asbestos Claims is not further impaired
by such processes with respect to issues related to the validity of the medical
evidence supporting a Plan Trust PI Asbestos Claim. The Plan Trustees shall also
have the latitude to make judgments regarding the amount of transaction costs to
be expended by the Plan Trust so that valid Plan Trust PI Asbestos Claims are
not unduly further impaired by the costs of additional investigation. Nothing
herein shall prevent the Plan Trustees, in appropriate circumstances, from
contesting the validity of any claim against the Plan Trust whatever the costs,
or to decline to accept medical evidence from sources that the Plan Trustees
have determined to be unreliable pursuant to the Claims Audit Program described
in Section 6.7 above.

      8.3 Discretion to Vary the Order and Amounts of Payments in Event of
Limited Liquidity. Consistent with the provisions hereof and subject to the FIFO
Processing and Payment Queues, the Maximum Annual Payment, the Maximum Available
Payment and the Claims Payment Ratio requirements set forth above, the Plan
Trustees shall proceed as quickly as possible to liquidate valid Plan Trust PI
Asbestos Claims, and shall make payments to holders of such claims in accordance
with this TDP promptly as funds become available and as claims are liquidated,
while maintaining sufficient resources to pay future valid claims in
substantially the same manner.

      Because the Plan Trust's income over time remains uncertain, and decisions
about payments must be based on estimates that cannot be done precisely, they
may have to be revised in light of experiences over time, and there can be no
guarantee of any specific level of payment to claimants. However, the Plan
Trustees shall use their best efforts to treat similar claims in substantially
the same manner, consistent with their duties as Plan Trustees, the purposes of
the Plan Trust, the established allocation of funds to claims in Categories A
and B, and the practical limitations imposed by the inability to predict the
future with precision.

      In the event that the Plan Trust faces temporary periods of limited
liquidity, the Plan Trustees may, with the consent of the TAC and the Futures
Representative, suspend the normal order of payment and may temporarily limit or
suspend payments altogether, and may offer a Reduced Payment Option as described
in Section 2.6 above.


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      8.4 Punitive Damages. Except as provided below for claims asserted under
the Alabama Wrongful Death Statute, in determining the value of any liquidated
or unliquidated Plan Trust PI Asbestos Claim, punitive or exemplary damages,
i.e., damages other than compensatory damages, shall not be considered or
allowed, notwithstanding their availability in the tort system.

      Similarly, no punitive or exemplary damages shall be payable with respect
to any claim litigated against the Plan Trust in the tort system pursuant to
Sections 6.10 above and 8.6 below. The only damages that may be awarded pursuant
to this TDP to Alabama Claimants who are deceased and whose personal
representatives pursue their claims only under the Alabama Wrongful Death
Statute shall be compensatory damages determined pursuant to the statutory and
common law of the State of New Jersey, without regard to its choice of law
principles. The choice of law provision in this Section 8.4 applicable to any
claim with respect to which, but for this choice of law provision, the
applicable law of the Claimant's Jurisdiction pursuant to Section 6.3(b)(2) is
determined to be the Alabama Wrongful Death Statute, shall only govern the
rights between the Plan Trust and the claimant including, but not limited to,
suits in the tort system pursuant to Section 8.6, and to the extent the Plan
Trust seeks recovery from any entity that provided insurance to Congoleum, the
Alabama Wrongful Death Statute shall govern.

      8.5 Interest.

            (a) In General. Except for any Plan Trust PI Asbestos Claim
involving Other Asbestos Disease (Disease Level I - Cash Discount Payment) and
subject to the limitations set forth below, interest shall be paid on all Plan
Trust PI Asbestos Claims with respect to which the claimant has had to wait a
year or more for payment, provided, however, that no claimant shall receive
interest for a period in excess of seven (7) years. The initial interest rate
shall be six percent (6%) simple interest per annum for each of the first five
(5) years after the Effective Date; thereafter, the Plan Trustees shall have the
discretion to change the annual interest rate with the consent of the TAC and
the Futures Representative.

            (b) Plan Trust PI Asbestos Claims. Interest shall be payable on the
Scheduled Value of any Plan Trust PI Asbestos Claim that meets the requirements
of Disease Levels II - V, VII and VIII, whether the claim is liquidated under
Expedited Review, Individual Review, or by arbitration. No interest shall be
paid on any claim involving Disease Level I or on any claim liquidated in the
tort system pursuant to Section 6.10 above and Section 8.6 below. Interest on an
unliquidated Plan Trust PI Asbestos Claim that meets the requirements of Disease
Level VI shall be based on the Average Value of such a claim. Interest on all
such unliquidated claims shall be measured from the date of payment back to the
earliest of the date that is one year after the date on which (a) the claim was
filed against Congoleum prior to the Petition Date; (b) the claim was filed
against another defendant in the tort system on or after the Petition Date but
before the Effective Date; (c) the claim was filed with the Bankruptcy Court
during the pendency of the Chapter 11 proceeding; or (d) the claim was filed
with the Plan Trust after the Effective Date. Provided, however, that interest
on any Plan Trust Disputed Claim shall be measured from the date of payment back
to one year after the date on which the claim was filed with the Plan Trust.


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      8.6 Suits in the Tort System. If the holder of a disputed claim disagrees
with the Plan Trust's determination regarding the Disease Level of the claim,
the claimant's exposure history or the liquidated value of the claim, and if the
holder has first submitted the claim to non-binding arbitration as provided in
Section 6.9 above, the holder may file a lawsuit in the Claimant's Jurisdiction
as defined in Section 6.2(b)(2) above. Any such lawsuit must be filed by the
claimant in his or her own right and name and not as a member or representative
of a class, and no such lawsuit may be consolidated with any other lawsuit. All
defenses (including, with respect to the Plan Trust, all defenses which could
have been asserted by Congoleum) shall be available to both sides at trial;
however, the Plan Trust may waive any defense and/or concede any issue of fact
or law. If the claimant was alive at the time the initial pre-petition complaint
was filed or on the date the proof of claim form was filed with the Plan Trust,
the case shall be treated as a personal injury case with all personal injury
damages to be considered even if the claimant has died during the pendency of
the claim.

      8.7 Payment of Judgments for Money Damages. If and when a claimant obtains
a judgment in the tort system, the claim shall be placed in the FIFO Payment
Queue based on the date on which the judgment became final. Thereafter, the
claimant shall receive from the Plan Trust an initial payment (subject to the
applicable Payment Percentage, the Maximum Available Payment, and the Claims
Payment Ratio provisions set forth above) of an amount equal to the greater of
(i) the Plan Trust's last offer to the claimant or (ii) the award that the
claimant declined in non-binding arbitration. The claimant shall receive the
balance of the judgment, if any, in five equal installments in years six (6)
through ten (10) following the year of the initial payment (also subject to the
applicable Payment Percentage, the Maximum Available Payment and the Claims
Payment Ratio provisions above).

      In the case of non-Extraordinary Claims involving Disease Levels I, II and
III, the total amounts paid with respect to such claims shall not exceed the
relevant Scheduled Value for such Disease Levels as set forth in Section
6.2(b)(3) above. In the case of claims involving a non-malignant
asbestos-related disease that does not attain classification under Disease
Levels I, II or III, the amount payable shall not exceed the Scheduled Value for
the Disease Level most comparable to the disease proven. In the case of
non-Extraordinary Claims involving severe asbestosis and malignancies (Disease
Levels IV - VIII), the total amounts paid with respect to such claims shall not
exceed the Maximum Values for such Disease Levels set forth in Section
6.2(b)(3). In the case of Extraordinary Claims, the total amounts paid with
respect to such claims shall not exceed the Maximum Value for such claims set
forth in Section 6.2(b)(3) above. Under no circumstances shall interest be paid
pursuant to Section 8.5 or under any statute on any judgments obtained in the
tort system.

      8.8 Releases. The Plan Trustees shall have the discretion to determine the
form and substance of the releases to be provided to the Plan Trust in order to
maximize recovery for claimants against other tortfeasors without increasing the
risk or amount of claims for indemnification or contribution from the Plan
Trust. As a condition to making any payment to a claimant, the Plan Trust shall
obtain a general, partial, or limited release as appropriate in accordance with


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the applicable state or other law. If allowed by state law, the endorsing of a
check or draft for payment by or on behalf of a claimant shall constitute such a
release.

      8.9 Third-Party Services. Nothing in this TDP shall preclude the Plan
Trust from contracting with another asbestos claims resolution organization to
provide services to the Plan Trust so long as decisions about the categorization
and liquidated value of Plan Trust PI Asbestos Claims are based on the relevant
provisions of this TDP, including the Disease Levels, Scheduled Values, Average
Value (Level VI), Maximum Values, and Medical/Exposure Criteria set forth above.

      8.10 Plan Trust Disclosure of Information. Periodically, but not less
often than once a year, the Plan Trust shall make available to claimants and
other interested parties, the number of claims by Disease Levels that have been
resolved both by the Individual Review Process and by arbitration as well as by
litigation in the tort system indicating the amounts of the awards and the
averages of the awards by jurisdiction.

                                   SECTION IX

                                  Miscellaneous

      9.1 Amendments. Except as otherwise provided herein, the Plan Trustees may
amend, modify, delete, or add to any provisions of this TDP (including, without
limitation, amendments to conform this TDP to advances in scientific or medical
knowledge or other changes in circumstances), provided they first obtain the
consent of the TAC and the Futures Representative pursuant to the Consent
Process set forth in Sections 5.8(b) and 6.6(b) of the Plan Trust Agreement,
except that the right to amend the Claims Payment Ratio is governed by the
restrictions in Section 2.6 above, and the right to adjust the Payment
Percentage is governed by Section 5.2 above. Nothing herein is intended to
preclude the TAC or the Futures Representative from proposing to the Plan
Trustees, in writing, amendments to the TDP. Any amendment proposed by the TAC
or the Futures Representative shall remain subject to Section 7.3 of the Plan
Trust Agreement. Notwithstanding anything herein to the contrary, no amendment
may weaken the medical or product exposure requirements of this TDP.

      9.2 Severability. Should any provision contained in this TDP be determined
to be unenforceable, such determination shall in no way limit or affect the
enforceability and operative effect of any and all other provisions of this TDP.
Should any provision contained in this TDP be determined to be inconsistent with
or contrary to Congoleum's obligations to any insurance company providing
insurance coverage to Congoleum in respect of claims for personal injury based
on exposure to an asbestos-containing product manufactured, produced or
distributed by Congoleum, or in a Congoleum facility, the Plan Trustees with the
consent of the TAC and the Futures Representative may amend this TDP and/or the
Plan Trust Agreement to make the provisions of either or both documents
consistent with the duties and obligations of Congoleum to said insurance
company.

      9.3 Governing Law. Except for purposes of determining the liquidated value
of any Plan Trust PI Asbestos Claim, administration of this TDP shall be
governed by, and construed in accordance with, the laws of the State of New
Jersey. The law governing the liquidation of Plan Trust PI Asbestos Claims in
the case of Individual Review, arbitration or litigation in the tort system
shall be the law of the Claimant's Jurisdiction as described in Section
6.2(b)(2) above.


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                                  ATTACHMENT A

                                "ADR PROCEDURES"
<PAGE>

                                                           EXHIBIT G TO THE PLAN


                              CONGOLEUM PLAN TRUST

                    ALTERNATIVE DISPUTE RESOLUTION PROCEDURES


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                              CONGOLEUM PLAN TRUST

                    ALTERNATIVE DISPUTE RESOLUTION PROCEDURES

Pursuant to Section 6.9(a) of the Congoleum Plan Trust Distribution Procedures
(the "TDP"), the Congoleum Plan Trust (the "Plan Trust") hereby establishes the
following alternative dispute resolution ("ADR") procedures. All capitalized
terms herein shall be as defined and/or referenced within the TDP.

I.    OVERVIEW

      The Plan Trust shall appoint a Private Adjudication Center, at the cost of
      the Plan Trust, to administer the ADR proceedings. To initiate these
      procedures, the claimant must make a written request to the Plan Trust.
      Within twenty (20) days of a claimant's request for ADR, the Plan Trust
      will send the claimant an ADR packet containing the documents necessary to
      pursue the ADR process. The ADR procedures shall not be construed as
      imparting to any claimant any substantive or procedural rights beyond
      those conferred by the TDP.

      The ADR process available to the claimant includes both non-binding and
      binding elements. In addition, there are mandatory as well as voluntary
      options that can/will be utilized by the claimant and the Plan Trust in
      proceeding toward settlement. As a general matter, the ADR procedures must
      be pursued by claimants on an individual basis. As a general matter,
      claims of different claimants cannot be grouped together even if the
      claimants are represented by the same counsel, unless the Plan Trust, in
      its sole discretion, decides it would be expeditious to conduct ADR
      proceedings with respect to more than one claim involving differently
      exposed claimants with those claimants' representative. In such a case,
      however, the arbitrator, mediator or other neutral party must individually
      value each such claim using the valuation factors set forth in Section
      6.2(b)(2) of the TDP, and the claimants' positions in the Plan Trust's
      FIFO Processing and Payment Queues must be separately maintained. The
      requisite steps in the process are as follows, in order:

                     Mandatory ADR Proceedings (Two Stages)

      Stage One (Claimant Must Select One):

      1.    Pro Bono Evaluation
      2.    Mediation

      Stage Two: Arbitration (Binding or Non-Binding)

      Initiation of ADR

      Within twenty (20) days of a claimant's request for ADR, the Plan Trust
      will send the claimant an ADR packet containing a copy of these procedures
      and the following:

      1.    A Summary Outline of the ADR procedures with the time limits
            identified;
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      2.    Form Affidavit of Completeness;
      3.    Election Form for Pro Bono Evaluation;
      4.    Request for Mediation Form;
      5.    Election Form and Agreement to submit to Binding Arbitration; and
      6.    Election Form and Agreement to submit to Non-binding Arbitration.

      A claimant who wishes to proceed through the ADR process must engage in
      one of the two ADR options (pro bono evaluation or mediation) before any
      form of arbitration. Only after either party rejects a non-binding
      arbitration award, may a claimant proceed to then commence a lawsuit in
      the tort system. It is the claimant's responsibility to comply with the
      ADR time deadlines. Although the deadlines may be extended by agreement or
      for cause shown, failure to comply with a deadline without obtaining an
      extension may result in withdrawal of the claim. Promptly after a claimant
      fails to comply with a specified deadline without obtaining an extension,
      the Plan Trust shall send the claimant written notice of the failure to
      comply. If the claimant does not take any action on the claim, then thirty
      (30) days thereafter the claim will be deemed withdrawn under Section 6.3
      of the TDP.

      If the claimant requests arbitration, either binding or non-binding, then
      the Plan Trust shall execute the appropriate election form and agreement.
      If the claimant requests binding arbitration, then the claimant and the
      Plan Trust waive their respective rights to seek a jury trial as set forth
      in the TDP upon execution of the Agreement for Binding Arbitration.

      If either party rejects a non-binding arbitration award, and the claimant
      has otherwise complied with the requirements of these ADR/Arbitration
      procedures and the Plan, then the claimant may commence a lawsuit against
      the Plan Trust in the Claimant's Jurisdiction as that term is defined in
      Section 6.2(b)(2) of the TDP.

II.   ADR PROCEEDINGS SUMMARY

      A.    Showing Required

            As set forth in the TDP, in order to establish a valid Plan Trust
            Asbestos Claim, a claimant must among other things make a
            demonstration of Congoleum Exposure or Significant Occupational
            Exposure, as such terms are defined in the TDP.

      B.    Pro Bono Evaluation

            This ADR alternative consists of an evaluation of the claim by an
            evaluator selected from a pro bono panel. The panel shall be
            comprised of asbestos litigation attorneys as mutually agreed upon
            between the Plan Trust Advisory Committee (the "TAC") and the
            Trustees. The TAC will be provided, on a quarterly basis, with a
            list of the pro bono panelists. Each evaluation will have a pro bono
            evaluator randomly selected by the Private Adjudication Center from
            the list of pro bono panelists. Within fifteen (15) days of the
            claimant's request for the pro bono evaluation, the individual pro
            bono evaluator shall be randomly chosen from the approved panel.


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            A pro bono evaluation will be done by document submission. The
            identity of the pro bono evaluator will not be disclosed to the
            claimant and the claimant's attorney. The Plan Trust encourages
            identification of and not anonymity as to the alleged injured party
            so that medical records can be transmitted in their original form.
            The Private Adjudication Center will communicate to the parties the
            pro bono evaluator's written evaluation. The parties will
            communicate their respective rejection or acceptance of settlement
            upon the terms of the written evaluation. If either or both parties
            reject settlement upon those terms, then the claimant may submit an
            Election Form and Agreement for Binding or Non-binding Arbitration.

      C.    Mediation

            The claimant may request telephone mediation as an ADR alternative.
            This process will require detailed written submissions to
            familiarize the mediator with the respective positions. The Plan
            Trust shall establish and maintain a list of qualified regional
            mediators compensated by the Plan Trust. The Private Adjudication
            Center shall select a qualified mediator from the list based upon
            location of claimant within fifteen (15) days after receipt of the
            Request for Mediation Form signed by the claimant and the Plan
            Trust.

            Claims shall be handled by each mediator in the order received by
            him or her, to the extent practicable. Any party may be represented
            by legal counsel. The mediator shall review the claim and the
            positions of the parties, such information as the parties may wish
            to submit as to a fair and equitable settlement, and all documents
            and medical reports relevant to the claim as submitted by the
            parties. At least five (5) business days prior to the mediation
            conference, claimant and the Plan Trust shall each submit to the
            mediator a detailed written submission consisting of a confidential
            statement outlining the claimant's medical condition, Congoleum
            Exposure or Significant Occupational Exposure, as such terms are
            defined in the TDP and each party's detailed position on overall
            claim value.

            The mediator shall confer with the parties and/or their legal
            representatives, individually and jointly. Such conference shall be
            conducted by telephone unless both parties agree otherwise. A
            representative of the Plan Trust with settlement authority must
            participate in the conference. The mediator may request, but not
            require, that the claimant personally participate in the conference.
            Such conference shall be in the nature of a settlement conference.
            The mediator shall work with both sides toward reaching an
            acceptable, reasonable settlement. The mediator does not have the
            authority to impose a settlement on the parties. Ten (10) days after
            the conclusion of the mediation, if the parties have not settled the
            matter, the claimant may submit to the Plan Trust an Election Form
            and Agreement for Binding or Non-binding Arbitration.


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                                                           EXHIBIT G TO THE PLAN


      D.    Binding and Non-binding Arbitration Procedures

            Upon completion of either pro bono evaluation or mediation, the
            claimant may request non-binding and/or binding arbitration. Binding
            arbitration will be conducted in the "final offer" format also known
            as "baseball style" arbitration. If the claim is arbitrated in
            either the binding or non-binding format, then the arbitrator shall
            return an award no greater than the Maximum Value for the category
            in which the claim properly falls in the Tables set forth in the
            TDP, unless the Extraordinary Claims Panel has previously determined
            that the claim should receive extraordinary claim treatment. In that
            case, the arbitrator shall return an award no greater than the
            Maximum Value for such claim as set forth in Section 6.2(b)(3) of
            the TDP.

            If the claimant requests arbitration, either binding or non-binding,
            then the Plan Trust shall execute the appropriate Election Form and
            Agreement. The Plan Trust may not decline the claimant's election of
            either binding or non-binding arbitration, but reserves all rights
            to reject any award in a non-binding arbitration proceeding. If the
            parties agree to engage in binding arbitration, then the claimant
            and the Plan Trust waive their respective rights to seek a jury
            trial as set forth in the TDP.

III.  RULES GOVERNING PRO BONO EVALUATION AND MEDIATION

      Within ninety (90) days of a claimant's receipt of the ADR packet from the
      Plan Trust, the claimant must elect one of the two ADR procedures and
      return the appropriate form to the Plan Trust along with an executed
      Affidavit of Completeness.

      A.    Rules Governing Pro Bono Evaluation

            1.    Election and Time Limits

                  a.    If the claimant chooses pro bono evaluation, then within
                        ninety (90) days of claimant's receipt of the ADR
                        packet, the claimant must send the Plan Trust the
                        Election Form for Pro Bono Evaluation. (See Attachment
                        A). The claimant or his/her attorney shall personally
                        sign the Election Form for Pro Bono Evaluation.

                  b.    The claimant must also sign an Affidavit of Completeness
                        (See Attachment B) and return it to the Plan Trust with
                        a copy to the Private Adjudication Center within ninety
                        (90) days of receipt of the ADR packet. The claim will
                        not proceed until the Plan Trust has received a
                        completed Election Form and Affidavit of Completeness
                        from the claimant. The Affidavit of Completeness shall
                        verify that all information to be considered in the ADR
                        process has been provided to the Plan Trust while the
                        claim was under review by the Plan Trust.


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                                                           EXHIBIT G TO THE PLAN


                  c.    After receiving the signed Election Form and Affidavit
                        of Completeness, the Plan Trust shall review and sign
                        the Election Form within five (5) business days of
                        receipt.

                  d.    Within fifteen (15) days from the date the Plan Trust
                        notifies the claimant's counsel of the Plan Trust's
                        consent to the Election Form, the Plan Trust shall send
                        a copy of the signed Election Form, the Affidavit of
                        Completeness together with complete copies of all
                        materials submitted to the Plan Trust by the claimant
                        and factual information in the Plan Trust file, if any,
                        gathered by the Plan Trust from other sources, and a
                        completed Affidavit of Accuracy to the claimant's
                        counsel and the Private Adjudication Center who will
                        forward the materials to the selected pro bono evaluator
                        at the time the evaluator is selected. The Plan Trust
                        may not send the Private Adjudication Center any
                        materials in the Plan Trust file that have not
                        previously been provided to the claimant.

            2.    Selection of the Pro Bono Evaluator

                  Within fifteen (15) days of the date the Private Adjudication
                  Center receives the claimant's election agreement, the Private
                  Adjudication Center shall randomly select the pro bono
                  evaluator from the list of pro bono panelists and notify the
                  parties that the evaluator has been designated without
                  disclosing the identity of the evaluator. The pro bono
                  evaluator shall be selected from a panel of asbestos
                  litigation plaintiff attorneys who have volunteered to serve
                  the Plan Trust at the request of the TAC. Pro bono assignments
                  will be made on a rotating basis.

                  The identity of the pro bono evaluator shall not be disclosed
                  to the claimant and the claimant's attorney. The injured party
                  should not be anonymous so that medical records can be
                  transmitted in their original form.

            3.    Submission of Written Arguments

                  Fifteen (15) days after the Plan Trust sends the complete file
                  materials to the Private Adjudication Center, the claimant and
                  the Plan Trust shall simultaneously exchange and submit
                  written arguments to the Private Adjudication Center. The
                  Private Adjudication Center will immediately forward the
                  written arguments to the pro bono evaluator. The written
                  arguments shall comply with the following rules:

                  a.    The argument shall not exceed ten (10) double spaced
                        typewritten pages. In order to preserve anonymity in a
                        pro bono evaluation, the name of counsel should not be
                        mentioned. The argument may not introduce factual matter
                        not contained in the documents in the Plan Trust's file.
                        The evaluator shall disregard any argument that does not
                        comply with this rule.


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                                                           EXHIBIT G TO THE PLAN


                  b.    When a party fails to submit the written argument within
                        the fifteen (15) days, the party waives written argument
                        and the pro bono evaluator shall disregard any argument
                        received after that time.

            4.    Evaluation of Documents

                  The pro bono evaluation is only a document review with
                  complete anonymity preserved between claimant's counsel and
                  the pro bono evaluator. The documents that the pro bono
                  evaluator may consider shall be limited to the following:

                  a.    The documents in Plan Trust's file forwarded to the pro
                        bono evaluator.

                  b.    The claimant's Affidavit of Completeness and the Plan
                        Trust's Affidavit of Accuracy.

                  c.    The written arguments of the claimant and the Plan Trust
                        that comply with the rules for written arguments set
                        forth above.

                  d.    Before the Private Adjudication Center forwards any
                        documents to the pro bono evaluator it will redact all
                        references to claimant's counsel.

            5.    Written Evaluation and Procedure for Acceptance/Rejection

                  Within fifteen (15) days after the submission of written
                  arguments, the pro bono evaluator shall submit a written
                  evaluation of the claim to the Private Adjudication Center who
                  will promptly mail it to the parties.

                  Within fifteen (15) days after receipt of the pro bono
                  evaluator's written evaluation, the claimant and the Plan
                  Trust will each communicate in writing to the Private
                  Adjudication Center whether they will accept the amount of the
                  pro bono evaluator's written evaluation to settle the claim.
                  If both parties accept, then the Private Adjudication Center
                  will immediately inform both parties that they have achieved a
                  settlement and the Plan Trust shall pay the claim pursuant to
                  the TDP. If either or both parties reject the pro bono
                  evaluator's written evaluation, then within five (5) business
                  days of receipt of both parties' written communication, the
                  Private Adjudication Center shall send each party a notice of
                  rejection of pro bono evaluator's written evaluation that will
                  not indicate whether the opposing party has accepted or
                  rejected the pro bono evaluator's written evaluation amount.


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                                                           EXHIBIT G TO THE PLAN


            6.    Arbitration May Proceed After Rejection of Pro Bono
                  Evaluator's Written Evaluation

                  Within sixty (60) days after receipt of the notice of
                  rejection of pro bono evaluator's written evaluation, the
                  claimant may request arbitration by returning to the Plan
                  Trust a signed Election Form and Agreement for either Binding
                  or Non-binding Arbitration.

      B.    Rules Governing Mediation

            1.    Election

                  If the claimant chooses mediation, then the claimant shall
                  submit to the Plan Trust a signed Request for Mediation Form
                  (Attachment C) along with an executed Affidavit of
                  Completeness within ninety (90) days of claimant's receipt of
                  the ADR packet. Within five (5) business days of the Plan
                  Trust's receipt of the signed Request for Mediation Form, the
                  Plan Trust shall review and sign the form and forward a signed
                  copy along with an executed Affidavit of Accuracy to the
                  claimant and the Private Adjudication Center.

            2.    Selection of Mediator

                  Within fifteen (15) days of the signed Request for Mediation
                  Form, the Private Adjudication Center shall retain a mediator
                  from the approved list of mediators. The Private Adjudication
                  Center shall select the mediator based upon the region in
                  which the claimant is located. The mediator shall be
                  compensated by the Plan Trust. The Private Adjudication Center
                  shall schedule a mediation conference within sixty (60) days
                  after receipt of the signed Request for Mediation Form. The
                  mediation will be conducted by telephone conference unless the
                  parties agree otherwise. Scheduling of the conference shall be
                  coordinated with the mediator and the conferences shall take
                  place in the order received by the mediator, to the extent
                  practicable.

            3.    Submission of Materials to Mediator

                  At least five (5) business days prior to the mediation
                  conference, the claimant and the Plan Trust shall each submit
                  to the mediator a detailed written submission consisting of a
                  confidential statement outlining the claimant's medical
                  condition, Congoleum Exposure or Significant Occupational
                  Exposure, as defined by the TDP and each party's position on
                  overall claim value. The parties may also submit to the
                  mediator documents and medical reports that they believe are
                  relevant to the claim. The mediator shall review the claim and
                  the positions of the parties and the other information that
                  the parties submit prior to the mediation conference. The
                  mediation briefs shall comply with the following rules:


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                                                           EXHIBIT G TO THE PLAN


                  a.    The confidential statement should not exceed ten (10)
                        double spaced typewritten pages exclusive of
                        attachments.

                  b.    The submission may not introduce factual matter not
                        contained in the documents in the Plan Trust's file as
                        certified by the Affidavit of Completeness.

            4.    Mediation Conference

                  Any party may be represented by legal counsel at the mediation
                  conference. The mediator shall confer with the parties' legal
                  representatives and, if the claimant is present and consents,
                  with the claimant. A representative of the Plan Trust with
                  settlement authority must participate in the conference. The
                  mediator may request, but not require, that the claimant
                  personally participate in the conference.

            5.    Negotiations at the Mediation Conference

                  The mediator may facilitate settlement in any manner the
                  mediator believes is appropriate. The mediator will help the
                  parties focus on their underlying interests, explore
                  resolution alternatives and develop settlement options. The
                  mediator will decide when to hold joint conferences, and when
                  to confer separately with each party.

                  The parties are expected to initiate and convey to the
                  mediator proposals for settlement. Each party shall provide a
                  rationale for any settlement terms proposed. Finally, if the
                  parties fail to develop mutually acceptable settlement terms,
                  before terminating the procedure, and only with the consent of
                  the parties, (a) the mediator may submit to the parties a
                  final settlement proposal; and (b) if the mediator believes
                  he/she is qualified to do so, the mediator may give the
                  parties an evaluation (which if all parties choose, and the
                  mediator agrees, may be in writing) of the likely outcome of
                  the case if it were tried to final judgment, subject to any
                  limitations under the Plan, the TDP and ethical codes.

            6.    Confidentiality of Mediation

                  The entire mediation process is confidential. Unless agreed
                  among all the parties or required to do so by law, the parties
                  and the mediator shall not disclose to any person who is not
                  associated with participants in the process, including any
                  judicial officer, any information regarding the process
                  (including pre-process exchanges and agreements), contents
                  (including written and oral information), settlement terms or
                  outcome of the proceeding.

                  Under this procedure, the entire process is a compromise
                  negotiation subject to Federal Rule of Evidence 408 and all
                  state counterparts, together with any applicable statute
                  protecting the confidentiality of mediation. All offers,


                                        8
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                                                           EXHIBIT G TO THE PLAN


                  promises, conduct and statements, whether oral or written,
                  made in the course of the proceeding by any of the parties,
                  their agents, employees, experts and attorneys, and by the
                  mediator are confidential.

                  Such offers, promises, conduct and statements are privileged
                  under any applicable mediation privilege and are inadmissible
                  and not discoverable for any purpose, including impeachment,
                  in litigation between the parties. However, any written or
                  oral information or other materials submitted to the mediator
                  by either the Plan Trust or the claimant may be submitted by
                  either party to the arbitrator in an arbitration that takes
                  place under these ADR procedures.

                  In addition, evidence that is otherwise admissible or
                  discoverable shall not be rendered inadmissible or
                  non-discoverable solely as a result of its presentation or use
                  during the mediation. The exchange of any tangible material
                  shall be without prejudice to any claim that such material is
                  privileged or protected as work-product within the meaning of
                  Federal Rule of Civil Procedure 26 and all state and local
                  counterparts.

                  The mediator and any documents and information in the
                  mediator's possession will not be subpoenaed in any such
                  investigation, action or proceeding, and all parties will
                  oppose any effort to have the mediator or documents
                  subpoenaed. The mediator will promptly advise the parties of
                  any attempt to compel him/her to divulge information received
                  in mediation.

            7.    Submission of Written Offers After Mediation

                  At the conclusion of the mediation, the mediator shall require
                  the parties to exchange written settlement offers that shall
                  remain open for ten (10) days. If after the expiration of that
                  ten (10) day period neither party accepts the other's written
                  offer or the parties do not otherwise settle the matter, then
                  the claimant may request binding or non-binding arbitration by
                  sending to the Plan Trust the appropriate signed Election Form
                  and Agreement for either Binding or Non-binding Arbitration.

IV.   RULES GOVERNING NON-BINDING AND BINDING ARBITRATION

      A.    Election by the Claimant

            The Plan Trust shall review the Election Form and Agreement for
            Binding or Non-binding Arbitration (Attachments D and E) and within
            five (5) business days of receipt the Plan Trust shall sign the
            Agreement and shall immediately send a fully signed Arbitration
            Agreement to the Private Adjudication Center.


                                        9
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                                                           EXHIBIT G TO THE PLAN


      B.    Selection of the Arbitrator

            1.    As soon as reasonably possible after the receipt of the signed
                  Arbitration Agreement, but no more than fifteen (15) days
                  after the receipt of the signed Arbitration Agreement, the
                  Private Adjudication Center shall select three potential
                  arbitrators from a rotating list kept by the Private
                  Adjudication Center. Assignments of arbitrators will be made
                  on a rotating basis nationally, by the Private Adjudication
                  Center. The Private Adjudication Center shall promptly notify
                  the arbitrators and the parties of the potential arbitrators'
                  selection. If a potential arbitrator is unable or unwilling to
                  serve, then a replacement selection will be made prior to
                  notifying the Plan Trust and the claimant of the potential
                  arbitrators selected.

            2.    Within seven (7) days of receipt of the list of potential
                  arbitrators, the Plan Trust may select, and identify to the
                  Private Adjudication Center, one potential arbitrator to be
                  stricken from the list. The Private Adjudication Center shall
                  then promptly notify the claimant of the Plan Trust's
                  selection, whereupon, within seven (7) days of the receipt of
                  such notification, the claimant may select, and identify to
                  the Private Adjudication Center, a second potential arbitrator
                  to be stricken from the list. The Private Adjudication Center
                  shall then notify all parties which potential arbitrator
                  remains and will conduct the arbitration. If either the Plan
                  Trust or the claimant, or both, fails to exercise the right to
                  strike an arbitrator from the list of potential arbitrators,
                  the Private Adjudication Center shall appoint from those
                  potential arbitrators remaining the arbitrator next in
                  rotation on the Plan Trust's rotating list.

            3.    Any appointed arbitrator shall disclose to the Private
                  Adjudication Center any circumstances likely to affect
                  impartiality, including any bias or any financial or personal
                  interest in the result of the arbitration or any past or
                  present relationship with the parties or representatives. Upon
                  receipt of such information from the arbitrator or another
                  source, the Private Adjudication Center shall communicate the
                  information to the parties and, if the administrator deems
                  necessary, to the arbitrator and others. Upon objection of a
                  party to the continued service, the Private Adjudication
                  Center shall determine whether the arbitrator should be
                  disqualified and shall inform the parties of the decision,
                  which shall be final.

      C.    Extraordinary Claims and Those Reviewed by the Extraordinary Claims
            Panel

            In the event that the Extraordinary Claims Panel has deemed the
            claim worthy of extraordinary treatment, the Private Adjudication
            Center shall forward to the arbitrator the written decision of the
            Extraordinary Claims Panel, and the parties may submit a final
            request that exceeds the values ascribed to the type of injury in
            the TDP. In such circumstances, the arbitrator may issue an award in
            accordance with such a final offer/request.


                                       10
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                                                           EXHIBIT G TO THE PLAN


            In the event that the Extraordinary Claims Panel declined to give
            extraordinary treatment to the claim, the arbitrator shall not be
            informed of the Extraordinary Claims Panel's decision, and the
            claimant must confine his/her award to the values ascribed to the
            type of injury in the TDP because the arbitrator may not award an
            amount in excess of the Maximum Value assigned to the appropriate
            category for the injury in the TDP. The Plan Trust will not engage
            in non-binding or binding arbitration, and reserves the unilateral
            right to withdraw from a signed non-binding or binding arbitration
            agreement at any time, where the claimant's final offer and award
            demand exceeds the Maximum Value assigned to the type of injury in
            the TDP and the Extraordinary Claims Panel has declined to give
            extraordinary treatment to the claim.

      D.    Final Offer or "Baseball Style" Binding Arbitration

            All binding arbitration shall be conducted in the "final offer"
            format also known as "baseball style" arbitration. In the course of
            submitting the arbitration materials, as explained in these rules,
            the parties shall submit their final offer of settlement which shall
            also serve as the party's demand for arbitration award. The
            arbitrator must choose from one of these two demands in determining
            the amount of the arbitration award.

      E.    Submission of Pre-Hearing Statements

            Within twenty (20) days of the appointment of an arbitrator each
            party shall submit to the opposing party and to the arbitrator a
            written statement (not to exceed ten (10) double spaced pages)
            containing that party's positions and arguments. Each party may then
            submit a supplement to its written statement (not to exceed five (5)
            double spaced pages) following the initial pre-hearing conference to
            respond to the opposing party's positions and arguments and
            addressing issues raised at the initial pre-hearing conference.
            Supplements must be sent to the opposing party and to the arbitrator
            within ten (10) days after the date of the pre-hearing conference.

            The Private Adjudication Center will provide the arbitrator with a
            complete schedule of categories of injuries and Scheduled, Average
            (Level VI) and Maximum Values therefor in the TDP.

      F.    Initial Pre-Hearing Conference, Scheduling Hearing Date, Optional
            Video Conference for Arbitration Hearing

            1.    Within fifteen (15) calendar days of the receipt of both
                  party's briefs, the Private Adjudication Center shall contact
                  the claimant, the arbitrator, and the Plan Trust to schedule
                  the initial pre-hearing conference. The pre-hearing conference
                  shall be presided over by the arbitrator and held by telephone
                  conference call.


                                       11
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                                                           EXHIBIT G TO THE PLAN


            2.    During the initial pre-hearing conference, the arbitrator
                  shall schedule the date and select the location of the
                  arbitration hearing either at the location of the arbitrator
                  or a location mutually agreeable to the parties. The
                  arbitration hearing should be scheduled not less than
                  forty-five (45) days, and not more than sixty (60) days, from
                  the date of the initial pre-hearing conference. The Private
                  Adjudication Center will mail a confirmation notice of this
                  date to the claimant and the Plan Trust.

            3.    At the election of the claimant, the arbitration hearing may
                  be conducted by video conference. If the claimant so elects,
                  then the claimant must state that election in writing prior to
                  the initial pre-hearing conference. The Private Adjudication
                  Center will make appropriate arrangements for the Plan Trust
                  and the arbitrator to participate by video conference. The
                  Plan Trust shall pay for its and the arbitrator's cost for use
                  of video conference equipment and facilities. The claimant
                  shall only be responsible for his/her costs (including
                  participation by claimant's counsel).

            4.    During the initial pre-trial conference, the arbitrator shall
                  seek to achieve agreement between the parties on:

                  a.    narrowing the issues (through methods including but not
                        limited to stipulation of facts);

                  b.    whether the claimant will appear at the hearing (at the
                        claimant's sole discretion);

                  c.    any legal issues;

                  d.    and any other matters that will expedite the arbitration
                        proceedings.

                  If appropriate or if the parties do not agree on these issues,
                  then the arbitrator must issue orders governing the process.

      G.    No Discovery With Limited Exceptions

            There shall be no discovery except as specifically provided below.
            The purpose of the arbitration is to resolve differences between the
            Plan Trust and the claimant based only on the documents that have
            been previously submitted to the Plan Trust by the claimant and any
            other documents relied upon by the Plan Trust to make a settlement
            offer to the claimant or to disallow the claim. However, if the Plan
            Trust commissions an independent medical examination or a
            third-party medical review upon which the Plan Trust relies in
            evaluating the claimant's claim, then the claimant may depose the
            medical professional conducting the review or examination after
            having a reasonable opportunity to study any report or written
            opinion generated by the medical professional.


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                                                           EXHIBIT G TO THE PLAN


      H.    No Record of Proceedings Unless Requested by Arbitrator

            There will be no record or transcript of the proceedings unless the
            arbitrator requests a transcript to assist him/her in reviewing the
            evidence or otherwise to aid in the decision making process. In the
            event an arbitrator requests a transcript prior to the arbitration,
            then the Plan Trust shall arrange for a court reporter and shall pay
            all expenses associated with the preparation of the transcript. In
            no event, however, will the transcript be made available to the
            parties, nor shall any time required for preparation of the
            transcript affect the time for the arbitrator to render a decision.

      I.    Postponement of Hearing

            The arbitrator for good cause may postpone any hearing upon the
            request of a party or upon the arbitrator's own initiative, and
            shall also grant such postponement when all of the parties agree.

      J.    Duration of Hearings

            The arbitrator shall complete the hearing in one day except for good
            cause shown. The arbitrator shall set time limits on the respective
            presentations, and shall enforce those set limits. The parties shall
            request no more than three hours apiece for presentation of their
            cases.

      K.    Procedure at Arbitration Hearing

            1.    Testimony Under Oath or Affirmation

                  If the claimant or any other witness testifies, such testimony
                  shall be under oath or affirmation administered by the
                  arbitrator.

            2.    Conduct of Hearing

                  At the opening of the arbitration hearing, the arbitrator
                  shall make a written record of the time, place, and date of
                  the hearing, and the presence of the parties and counsel.

            3.    Evidence

                  a.    Rules of Evidence: The arbitrator is not required to
                        apply the rules of evidence used in judicial
                        proceedings, provided, however that the arbitrator shall
                        apply the attorney-client privilege and the work product
                        privilege. The arbitrator shall determine the
                        applicability of any privilege or immunity and the
                        admissibility, relevance, materiality and weight of the
                        evidence offered.

                  b.    Admission of Evidence: The evidence that the arbitrator
                        may consider shall be limited to the following:


                                       13
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                                                           EXHIBIT G TO THE PLAN


                        (i)   The documents supplied to the Plan Trust prior to
                              the execution of the Affidavit of Completeness;

                        (ii)  Non-binding or binding arbitration election
                              agreement;

                        (iii) Testimony of the claimant. The claimant may offer
                              evidence regarding the nature and extent of
                              compensable damages, including physical injuries,
                              and/or the market share of Congoleum Products, if
                              there is a claim of greater than average market
                              share. The Plan Trust may cross-examine on these
                              issues. At the claimant's option, a claimant's
                              deposition, including videotaped testimony, shall
                              be admissible into evidence in lieu of live
                              testimony.

                        (iv)  Any additional deposition testimony taken by the
                              Plan Trust or the claimant, and provided to both
                              sides, prior to the initiation of ADR.

                        (v)   Any evidence submitted in mediation.

                        (vi)  Closing arguments of the claimant and the Plan
                              Trust. The arguments shall be limited to the
                              evidence contained and the issues raised in the
                              documents or testimony referred to above and shall
                              be limited to 1/2 hour for each party. The
                              arbitrator shall disregard any effort to introduce
                              further evidence or issues in argument.

      L.    Arbitration in the Absence of a Party or Representative

            The claimant may choose whether or not to attend the arbitration in
            person in his/her sole discretion. The arbitration may proceed in
            the absence of any party or representative who, after due notice,
            chooses not to be present, fails to be present or fails to obtain a
            postponement if he/she desires to be present but cannot. An award
            shall not be made against a party solely for the failure to appear.
            The arbitrator shall require the party who is present to submit such
            evidence as the arbitrator may require for the making of an award.

      M.    Conclusion of Hearing and Submission of Post-Hearing Briefs

            When the parties state that they have no further evidence or
            witnesses to offer, and after the parties have made their closing
            arguments, if any, the arbitrator shall declare the hearing closed.
            Post-hearing briefs will be permitted only upon order of the
            arbitrator and shall be served upon the arbitrator no later than ten
            (10) days after the hearing is closed. Such briefs shall be no
            longer than five (5) double spaced pages. The time limit within
            which the arbitrator is required to make the award shall commence to
            run upon the closing of the hearing or the submission of
            post-hearing briefs, whichever is later.


                                       14
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                                                           EXHIBIT G TO THE PLAN


      N.    Option to Waive Oral Hearings

            The parties may request a waiver of oral hearings. Oral hearings
            will only be waived if all parties consent.

      O.    Arbitration Decision

            1.    The arbitrator shall issue a decision no later than fifteen
                  (15) calendar days after the date of the close of the hearing
                  or submission of post-hearing briefs, whichever is later.

            2.    The decision shall state only the amount of the award, if any.
                  The decision shall not state reasons for the award. An
                  arbitrator shall not be permitted to award punitive,
                  exemplary, trebled or other like damages or attorneys' fees,
                  and prejudgment and post-judgment interest and costs shall not
                  be sought or allowed. The award shall dispose of all monetary
                  claims presented to the arbitrator and shall determine fully
                  the only issue to be decided pursuant to the arbitration
                  agreement: the amount, if any, at which the claim value should
                  be fixed. To assist the arbitrator, the Private Adjudication
                  Center will provide the arbitrator with a schedule setting
                  forth the Disease Levels and the Scheduled, Average (Level VI)
                  and Maximum Values associated with each category. Unless the
                  Extraordinary Claims Panel has determined that a claim is
                  entitled to extraordinary treatment during the claims review
                  process, the arbitrator's award shall not exceed the ---
                  Maximum Value amount for the appropriate Category in the TDP.

      P.    Payment of Award

            Pursuant to the terms of the arbitration agreement, the Plan Trust
            will promptly send to the claimant the appropriate Release. The Plan
            Trust will then pay the claim based upon the binding or, if accepted
            by both parties, the non-binding award, in accordance with the TDP
            in effect at that time.

      Q.    Rejection of Non-binding Award

            1.    A party in a non-binding arbitration proceeding that wishes to
                  reject the award must notify the other party within thirty
                  (30) days from the date a non-binding award is issued. If no
                  rejection is received or sent by the Plan Trust, then the
                  decision will stand and the award will be deemed accepted by
                  both parties and the Plan Trust will promptly send to the
                  claimant the appropriate Release. The Plan Trust will then pay
                  the claim in accordance with the Claim Resolution Procedures
                  in effect at that time.


                                       15
<PAGE>

                                                           EXHIBIT G TO THE PLAN


            2.    Procedure for Rejected Award

                  a.    Rejection by Claimant

                        If claimant has sent the Plan Trust timely notification
                        of rejection of a non-binding award and wishes to pursue
                        the claim, then the claimant must notify the Plan Trust
                        through correspondence postmarked no later than sixty
                        (60) days from the date of the non-binding award. If
                        notification is received within the sixty (60) day
                        deadline and claimant wishes to pursue the claim, then
                        the Plan Trust will within fifteen (15) days of receipt
                        of this notification send the claimant an authorization
                        to commence litigation.

                  b.    Rejection by Plan Trust

                        If the Plan Trust rejects the non-binding award, then
                        claimant may elect binding arbitration or request that
                        the Plan Trust forward the authorization to commence
                        litigation.

V.    GENERAL ADR PROCEDURES GOVERNING PRO BONO EVALUATION, MEDIATION,
      NON-BINDING ARBITRATION, AND BINDING ARBITRATION

      A.    ADR Submissions

            The claimant's submissions (with the exception of the binding
            arbitration's written argument) will be reviewed by the ADR
            administrator before they are submitted to the pro bono evaluator,
            mediator or arbitrator. If they contain materials not previously
            submitted in support of the claim, then the Plan Trust claims
            department will review the additional information and determine the
            effect, if any, it would have on the Plan Trust's evaluation of the
            claim. In appropriate situations, a new offer may be made to the
            claimant.

            If an attorney or other agent represents the claimant, both the
            attorney and the claimant must also sign the Election and Agreement
            for Binding Arbitration. The attorney or agent may not sign in place
            of, or for, the claimant unless the claimant is incapacitated,
            incompetent or deceased and the attorney or agent has been
            designated legally to act on the claimant's behalf. Documentation of
            this legal designation will be required.

      B.    No Grouping or Bundling of Claims

            As a general matter, there shall be no grouping or bundling of
            claims by separate claimants at any stage of the ADR or arbitrations
            even if the claims are related and/or the claimants have the same
            counsel. Each claimant must proceed individually through the ADR and
            arbitration processes with all claims that claimant may have or
            represent. This provision is intended to separate claims of
            different exposed persons and has no effect upon multiple claims


                                       16
<PAGE>

                                                           EXHIBIT G TO THE PLAN


            brought by a claimant's representative, such as heirs of a deceased
            worker. However, the Plan Trust, in its sole discretion, may decide
            that it would be expeditious to allow the conduct of arbitration
            proceeding with respect to more than one claim of different exposed
            persons, provided that the arbitrator individually values each such
            claim in accordance with the valuation factors set forth in Section
            6.2(b)(2) of the TDP, and the respective claimants' separate
            positions in the Plan Trust's FIFO Processing and Payment Queues are
            maintained.

      C.    No Ex Parte Communication

            There shall be no ex parte communication between the arbitrator or
            pro bono evaluator and any counsel or party in any matter. All
            correspondence between the arbitrator or pro bono evaluator and the
            parties will be facilitated by the Private Adjudication Center.

      D.    Claims and Defenses

            All available claims and defenses which exist under the law subject
            to the claimant's election under the TDP shall be available to both
            sides.

      E.    Costs of ADR

            1.    ADR expenses

                  The Plan Trust will pay the arbitrator's fee for non-binding
                  or binding arbitration up to two thousand dollars ($2,000.00)
                  per claim depending on the length of the hearing. The pro bono
                  evaluator is a volunteer and thus no fee will be incurred. The
                  Plan Trust will assume costs of meeting and hearing facilities
                  for arbitration. Claimants will pay their costs and attorney
                  fees, including any expenses incurred should the claimant
                  testify.

            2.    Filing Fee

                  No filing fee is required of the claimant for any ADR
                  selection, unless the Plan Trust with the consent of the TAC
                  and the Futures Representative decide that it would be in the
                  best interests of the Plan Trust and its beneficiaries to
                  adopt such a fee.

      F.    Waiver of Objection to Rules Infraction

            Either party who continues with the pro bono evaluation, mediation,
            non-binding arbitration, or binding arbitration proceeding after
            knowing that any provision or requirement of the applicable rules
            has not been complied with, and who fails to state a timely
            objection in writing to the arbitrator, mediator or pro bono
            evaluator, shall be deemed to have waived the right to object. A
            timely objection by a claimant must be stated in writing and mailed
            to the Plan Trust with instructions to forward the objection to the
            Private Adjudication Center and to the arbitrator, mediator or pro
            bono evaluator. A timely objection by the Plan Trust will be mailed
            to the claimant and to the Private Adjudication Center with
            instructions to forward to the arbitrator, mediator or pro bono
            evaluator.


                                       17
<PAGE>

                                                           EXHIBIT G TO THE PLAN


      G.    Serving of Notices and Other Papers

            Each party to the ADR and arbitration agreements shall be deemed to
            have consented that any papers, notices, or processes necessary or
            proper for the initiation or continuation of ADR and Arbitration
            proceedings under these rules may be served upon such party as
            follows:

            1.    By regular U.S. mail or overnight courier addressed to such
                  party or their attorneys at their last known address;

            2.    By facsimile transmission or electronic mail, if a copy of the
                  transmitted papers is mailed addressed to the party or their
                  attorney at their last known address within twenty-four (24)
                  hours of the facsimile transmission or electronic mail; or,

            3.    By personal service, within or without the state where the pro
                  bono evaluation, mediation or arbitration is to be held,
                  whether the party is within or without the United States of
                  America.

      H.    Time Limits Triggered Upon Receipt

            1.    Documents sent by U.S. mail under these rules shall be deemed
                  received three (3) business days after the date of postmark.
                  Documents sent via overnight mail shall be deemed received on
                  the next business day after mailing.

            2.    Documents sent via facsimile transmission or electronic mail
                  shall be deemed received on the business day that the
                  transmission is sent.

      I.    Exclusion of Liability

            Neither the Private Adjudication Center nor the mediator, nor the
            arbitrator nor pro bono evaluator shall be liable to any party for
            any act or omission in connection with any evaluation conducted
            under these rules.

      J.    Relationship of Rules to Election Form for Pro Bono Evaluation,
            Request for Mediation, Non-binding Arbitration Agreement or Binding
            Arbitration Agreement

            These Rules shall be deemed a part of, and incorporated by reference
            in, every duly executed ADR agreement or arbitration agreement and
            shall be binding on all parties.


                                       18
<PAGE>

                                                           EXHIBIT G TO THE PLAN


      K.    Arbitrator/Mediator/Pro Bono Evaluator Immunity

            Arbitrators, mediators or pro bono evaluators who serve pursuant to
            these rules shall have the same immunity as judges for their
            official acts.

      L.    Jurisdiction

            Any dispute under these rules shall be subject to the jurisdiction
            of the United States Bankruptcy Court for the District of Delaware.

      M.    Statement of Confidentiality

            1.    All ADR and arbitration proceedings and information relating
                  to the proceeding will be confidential. Neither party shall
                  disclose the information obtained during the proceedings, nor
                  the valuation placed on the case by an arbitrator or pro bono
                  evaluator, to anyone or use such information or valuation in
                  any further proceeding except as necessary to maintain the
                  Plan Trust's obligation to report to the Bankruptcy Court and
                  to provide ongoing evaluation by the Plan Trust and TAC.
                  Except for documents prepared by a non-party which are
                  introduced as evidence before an arbitrator or pro bono
                  evaluator, any document prepared by another party, attorney or
                  other participant in anticipation of the ADR is privileged and
                  shall not be disclosed to any court or arbitrator/pro bono
                  evaluator or construed for any purpose as an admission against
                  interest.

            2.    All ADR and arbitration proceedings shall be deemed a
                  settlement conference pursuant to Rule 408 of the Federal
                  Rules of Evidence. Except by agreement of the parties, the
                  parties will not introduce into evidence in any other
                  proceedings the fact that there was an arbitration, the nature
                  or amount of the award, and written submissions may not be
                  used for purposes of showing accord and satisfaction or res
                  judicata. In binding arbitration, the decision of the
                  arbitrator may be admissible in the event the claimant
                  improperly seeks to litigate the claim. The binding
                  arbitration award shall be admissible in support of a motion
                  to enjoin such litigation. No arbitrator or pro bono evaluator
                  will ever be subpoenaed or otherwise required by any party or
                  any third party, to testify or produce records, notes or work
                  product in any future proceedings.

      N.    Amendments

            Except as otherwise ruled by the Bankruptcy Court, these rules, as
            they may from time to time be amended by the Plan Trustees with the
            consent of the TAC and the Futures Representative, will be binding
            on all parties in the form in which they are in force on the date
            the claimant signs the election agreement.


                                       19
<PAGE>

                                                           EXHIBIT G TO THE PLAN


      O.    Time Limits

            The time limits included in these procedures are to be strictly
            enforced. Any time limit set forth herein may be extended by
            agreement of the parties or for cause shown to the neutral party
            presiding over the particular ADR or arbitration proceeding. Any
            request for extension, however, shall first be made to the opposing
            party and then if the parties cannot agree, shall be submitted to
            the Private Adjudication Center who will request a ruling from the
            pro bono evaluator, mediator, or arbitrator as the case may be.

            Although the deadlines may be extended by agreement or for cause
            shown, failure to comply with a deadline without obtaining an
            extension may result in withdrawal of the claim. Promptly after a
            claimant fails to comply with a specified deadline without obtaining
            an extension, the Plan Trust shall send the claimant written notice
            of the failure to comply. If the claimant does not take any action
            on the claim, then thirty (30) days thereafter the claim will be
            deemed withdrawn under Section 6.3 of the TDP.


                                       20
<PAGE>

                              CONGOLEUM PLAN TRUST
                      ELECTION FORM FOR PRO BONO EVALUATION


      I, ___________________________________ ("Claimant"), Claim No.
_____________, hereby elect and agree to:

      Non-Binding document evaluation of my claim by an individual selected from
      a Panel of Pro Bono Evaluators who volunteered to serve at the request of
      the Plan Trust Advisory Committee pursuant to Section 6.9(b) of the TDP.

      Unless the box below is initialed, the undersigned waives anonymity of the
      claimant in the Pro Bono Evaluation of this claim. The Plan Trust
      encourages leaving this box blank and waiving anonymity so that medical
      records may be transmitted in their original form.


Dated: _____________________________, ______.


                                          ______________________________________
                                              Claimant or Claimant's Attorney


Accepted and Consented to:

CONGOLEUM PLAN TRUST

By: _________________________________

_______________________________ Title

Dated: ______________________________


                                       1
<PAGE>

STATE OF ______________________     )
                                    )  SS:
COUNTY OF ____________________      )


                            AFFIDAVIT OF COMPLETENESS

      I, ______________________________________, as the person [or legal
representative of the person] who has filed a claim against the Congoleum Plan
Trust, being duly sworn, depose and say:

      I have furnished all information which I wish to be considered in the
      valuation of claim number ______________________.

      I certify (or declare) under penalty of perjury, that the foregoing is
      true and correct.


                              By _____________________________________________
                                  Claimant or Legal Representative of Claimant


                                    Date _________________________


Sworn to before me this _______ day of __________________________, _______.


                                    ____________________________________________


                                       1
<PAGE>

                              CONGOLEUM PLAN TRUST
                           REQUEST FOR MEDIATION FORM


      I, ___________________________________ ("Claimant"), Claim No.
_____________, hereby elect and agree to:

      Attempt in good faith to resolve the dispute with the Plan Trust relating
      to my claim promptly by confidential Mediation under the terms set forth
      for Mediation procedure established by the Plan Trust under Sections
      6.9(b) of the TDP. I have been provided with a copy of the rules relating
      to Mediation established by the Plan Trust. I understand and agree to
      abide by those rules in the course of the Mediation.


Dated: _____________________________, ______.


                                          ______________________________________
                                              Claimant or Claimant's Attorney


Accepted and Consented to:

CONGOLEUM PLAN TRUST

By: __________________________________

________________________________ Title

Dated: _______________________________


                                       1
<PAGE>

                                                           EXHIBIT G TO THE PLAN


                              CONGOLEUM PLAN TRUST
                         ELECTION FORM AND AGREEMENT FOR
                               BINDING ARBITRATION

      I, ___________________________________ ("Claimant"), Claim No.
_____________, hereby elect and agree to:

      Submit all disputes with the Plan Trust relating to my claim to Binding
      Arbitration under the terms set forth for Binding Arbitration procedure
      established by the Plan Trust under Section 6.9(a) of the TDP. I have been
      provided with a copy of the rules relating to Binding Arbitration
      established by the Plan Trust. I understand and agree to abide by those
      rules in the course of the Binding Arbitration. I understand that as a
      result of this agreement if accepted by the Plan Trust, I will waive my
      rights to litigate my claim in Court including the right to trial by jury
      and I will be bound by the arbitration award.


Dated: _____________________________, _______.


                                          _____________________________________
                                                        Claimant


                                          _____________________________________
                                                   Claimant's Attorney

                                          Claimant and attorney must both sign

Accepted and Consented to:

By accepting this agreement the Plan Trust waives its rights to litigate the
claimant's claim in Court including the right to trial by jury and agrees to be
bound by the arbitration award.


CONGOLEUM PLAN TRUST

By: __________________________________

________________________________ Title

Dated: _______________________________


                                       1
<PAGE>

                                                           EXHIBIT G TO THE PLAN


                              CONGOLEUM PLAN TRUST
                         ELECTION FORM AND AGREEMENT FOR
                             NON-BINDING ARBITRATION

      I, ___________________________________ ("Claimant"), Claim No.
_____________, hereby elect and agree to:

      Submit all disputes with the Plan Trust relating to my claim to
      Non-Binding Arbitration under the terms set forth for Non-Binding
      Arbitration procedure established by the Plan Trust under Section 6.9(a)
      of the TDP. I have been provided with a copy of the rules relating to
      Non-Binding Arbitration established by the Plan Trust. I understand and
      agree to abide by those rules in the course of the Non-Binding
      Arbitration.


Dated: _____________________________, _______.


                                          _____________________________________
                                             Claimant or Claimant's Attorney


Accepted and Consented to:


CONGOLEUM PLAN TRUST

By: __________________________________

________________________________ Title

Dated: _______________________________

<PAGE>

                                                           EXHIBIT H TO THE PLAN


                              Exhibit H to the Plan
                               "The New Indenture"

<PAGE>

                                                           EXHIBIT H TO THE PLAN


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


                              CONGOLEUM CORPORATION

                        10% SENIOR SECURED NOTES DUE 2011



                                    INDENTURE



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

                        Dated as of _______________, 2006

                                [HSBC BANK, USA]



                                     Trustee


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

<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE..........................1
        Section 1.01.   Definitions............................................1
        Section 1.02.   Other Definitions.....................................27
        Section 1.03.   Terms of TIA..........................................28
        Section 1.04.   Rules of Construction.................................28

ARTICLE 2. THE NOTES..........................................................29
        Section 2.01.   Form and Dating.......................................29
        Section 2.02.   Execution and Authentication..........................31
        Section 2.03.   Registrar and Paying Agent............................31
        Section 2.04.   Paying Agent to Hold Money in Trust...................32
        Section 2.05.   Holder Lists..........................................32
        Section 2.06.   Transfer and Exchange.................................32
        Section 2.07.   Replacement Notes.....................................36
        Section 2.08.   Outstanding Notes.....................................36
        Section 2.09.   Treasury Notes........................................37
        Section 2.10.   Temporary Notes.......................................37
        Section 2.11.   Cancellation..........................................37
        Section 2.12.   Defaulted Interest....................................38
        Section 2.13.   CUSIP Numbers.........................................38
        Section 2.14.   Computation of Interest...............................38

ARTICLE 3. REDEMPTION AND PREPAYMENT..........................................38
        Section 3.01.   No Optional Redemption................................38
        Section 3.02.   Offer to Purchase by Application of Excess Proceeds
                        and Net Loss Proceeds.................................38

ARTICLE 4. COVENANTS..........................................................41
        Section 4.01.   Payment of Notes......................................41
        Section 4.02.   Maintenance of Office or Agency.......................41
        Section 4.03.   Reports; Fiscal Year..................................41
        Section 4.04.   Compliance Certificate................................42
        Section 4.05.   Taxes.................................................43
        Section 4.06.   Stay, Extension and Usury Laws........................43
        Section 4.07.   Restricted Payments...................................43
        Section 4.08.   Dividend and Other Payment Restrictions Affecting
                        Subsidiaries..........................................44
        Section 4.09.   Incurrence of Indebtedness and Issuance of
                        Preferred Stock.......................................47
        Section 4.10.   Asset Sales...........................................49
        Section 4.11.   Events of Loss........................................51
        Section 4.12.   Transactions with Affiliates..........................52
        Section 4.13.   Liens.................................................52
        Section 4.14.   Corporate Existence...................................53
        Section 4.15.   Offer to Repurchase Upon Change of Control............53
        Section 4.16.   Payments for Consent..................................55


                                        i
<PAGE>

        Section 4.17.   Additional Subsidiary Guarantees......................55
        Section 4.18.   Conduct of Business...................................55
        Section 4.19.   Sale and Leaseback Transactions.......................55
        Section 4.20.   Maintenance of Insurance..............................56
        Section 4.21.   Limitation on Issuance of Capital Stock of
                        Restricted Subsidiaries...............................56
        Section 4.22.   Perfection of Security Interests......................56
        Section 4.23.   Consummation of Plan of Reorganization................56

ARTICLE 5. SUCCESSORS.........................................................57
        Section 5.01.   Merger, Consolidation, or Sale of Assets..............57
        Section 5.02.   Successor Corporation Substituted.....................58

ARTICLE 6. DEFAULTS AND REMEDIES..............................................58
        Section 6.01.   Events of Default.....................................58
        Section 6.02.   Acceleration..........................................60
        Section 6.03.   Collection of Indebtedness and Suits for
                        Enforcement by Trustee................................61
        Section 6.04.   Waiver of Past Defaults...............................62
        Section 6.05.   Control by Majority...................................63
        Section 6.06.   Limitation on Suits...................................63
        Section 6.07.   Rights of Holders of Notes to Receive Payment.........63
        Section 6.08.   Trustee May Enforce Claims Without Possession
                        of Notes..............................................63
        Section 6.09.   Trustee May File Proofs of Claim......................64
        Section 6.10.   Priorities............................................64
        Section 6.11.   Restoration of Rights and Remedies....................65
        Section 6.12.   Rights and Remedies Cumulative........................65
        Section 6.13.   Delay or Omission Not Waiver..........................65
        Section 6.14.   Undertaking for Costs.................................65

ARTICLE 7. TRUSTEE............................................................66
        Section 7.01.   Duties of Trustee.....................................66
        Section 7.02.   Rights of Trustee.....................................67
        Section 7.03.   Individual Rights of Trustee..........................68
        Section 7.04.   Trustee's Disclaimer..................................68
        Section 7.05.   Notice of Defaults....................................68
        Section 7.06.   Reports by Trustee to Holders of the Notes............69
        Section 7.07.   Compensation and Indemnity............................69
        Section 7.08.   Replacement of Trustee................................70
        Section 7.09.   Successor Trustee by Merger, Etc......................71
        Section 7.10.   Eligibility; Disqualification.........................71
        Section 7.11.   Preferential Collection of Claims Against Company.....71

ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE...........................71
        Section 8.01.   Option to effect Legal Defeasance or Covenant
                        Defeasance............................................71
        Section 8.02.   Legal Defeasance and Discharge........................72
        Section 8.03.   Covenant Defeasance...................................72
        Section 8.04.   Conditions to Legal or Covenant Defeasance............73
        Section 8.05.   Deposited Money and Government Securities to be
                        Held in Trust; Other Miscellaneous Provisions.........74
        Section 8.06.   Repayment to Company..................................74
        Section 8.07.   Reinstatement.........................................75


                                       ii
<PAGE>

ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER...................................75
        Section 9.01.   Without Consent of Holders of Notes...................75
        Section 9.02.   With Consent of Holders of Notes......................76
        Section 9.03.   Compliance with Trust Indenture Act...................78
        Section 9.04.   Revocation and Effect of Consents.....................78
        Section 9.05.   Notation on or Exchange of Notes......................79
        Section 9.06.   Trustee to Sign Amendments, Etc.......................79

ARTICLE 10. SECURITY ARRANGEMENTS.............................................79
        Section 10.01.  Collateral and Security Documents.....................79
        Section 10.02.  Release of Collateral.................................82
        Section 10.03.  Specified Releases of Collateral......................82
        Section 10.04.  Opinions as to Recording..............................85
        Section 10.05.  Further Assurances and Security.......................86
        Section 10.06.  Authorization of Actions to be Taken by Collateral
                        Agent Under the Security Documents....................86
        Section 10.07.  Authorization of Receipt of Funds by the Trustee
                        Under the Security Documents..........................87
        Section 10.08.  Covenants of Collateral Agent with Respect to the
                        Exit Facility.........................................87

ARTICLE 11. SUBSIDIARY GUARANTEES.............................................87
        Section 11.01.  Guarantee.............................................87
        Section 11.02.  Limitation on Guarantor Liability.....................90
        Section 11.03.  Successors and Assigns................................90
        Section 11.04.  No Waiver.............................................90
        Section 11.05.  Guarantors May Consolidate, Etc., on Certain Terms....90
        Section 11.06.  Releases Following Sale of Assets or Capital Stock....91

ARTICLE 12. COLLATERAL ACCOUNT................................................91
        Section 12.01.  Collateral Account....................................91
        Section 12.02.  Withdrawal of Net Loss Proceeds.......................92
        Section 12.03.  Withdrawal of Net Proceeds to Fund an Asset Sale
                        Offer.................................................92
        Section 12.04.  Withdrawal of Trust Monies Pursuant to Section 4.10...93
        Section 12.05.  Investment of Trust Monies............................94
        Section 12.06.  Use of Trust Monies...................................95

ARTICLE 13. MISCELLANEOUS.....................................................95
        Section 13.01.  Trust Indenture Act Controls..........................95
        Section 13.02.  Notices...............................................95
        Section 13.03.  Communication by Holders of Notes with Other
                        Holders of Notes......................................96
        Section 13.04.  Certificate and Opinion as to Conditions Precedent....96
        Section 13.05.  Statements Required in Certificate or Opinion.........97
        Section 13.06.  Rules by Trustee and Agents...........................97
        Section 13.07.  No Personal Liability of Directors, Officers,
                        Employees and Stockholders............................98
        Section 13.08.  Governing Law.........................................98
        Section 13.09.  No Adverse Interpretation of Other Agreements.........98
        Section 13.10.  Successors............................................98
        Section 13.11.  Severability..........................................98
        Section 13.12.  Counterpart Originals.................................98
        Section 13.13.  Table of Contents, Headings, Etc......................98


                                       iii
<PAGE>

EXHIBITS

Exhibit A     FORM OF NOTE

Exhibit B     FORM OF SUPPLEMENTAL INDENTURE

Exhibit C     FORM OF INTERCREDITOR AGREEMENT

Exhibit D     FORM OF SECURITY AGREEMENT



SCHEDULES

Schedule I    EXISTING AFFILIATE TRANSACTIONS

Schedule II   EXISTING INDEBTEDNESS

Schedule III  EXISTING INVESTMENTS

Schedule IV   EXISTING LIENS


                                       iv
<PAGE>

                                                           EXHIBIT H TO THE PLAN


      INDENTURE dated as of _________, 2006 between Congoleum Corporation, a
Delaware corporation (the "Company"), and [HSBC Bank, USA], a national banking
association, as trustee (the "Trustee").

                             RECITALS OF THE COMPANY

      A. The Company and certain of its subsidiaries filed for reorganization
(the "Bankruptcy") under chapter 11 of title 11 of the United States Code (the
"Bankruptcy Code") in the United States Bankruptcy Court for the District of New
Jersey (the "Bankruptcy Court"); and

      B. By order, dated _____________, 2006, the Bankruptcy Court has confirmed
the Company's plan of reorganization (the "Plan") in accordance with section
1129 of the Bankruptcy Code and such Plan has become effective as of _________,
2006; and

      C. As part of the Plan, the Company has agreed, inter alia, to issue
$100.0 million aggregate principal amount of 10% Senior Secured Notes due 2011
(the "Notes") to holders of the Company's outstanding 8-5/8% Senior Notes Due
2008 (the "Old Notes") in exchange for all of the Company's outstanding Old
Notes and obligations thereunder.

      All things necessary to make the Notes, when executed by the Company and
authenticated and delivered hereunder and duly issued by the Company, the valid
obligations of the Company, and to make this Indenture a valid agreement of the
Company, in accordance with their and its terms, have been done.

      NOW, THEREFORE, THIS INDENTURE WITNESSETH:

      For and in consideration of the premises and the issuance of the Notes to
the Holders (as defined herein), it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Notes, as follows:

                                   ARTICLE 1.
                   DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01. Definitions.

      "Acquired Debt" means, with respect to any specified Person,

      (i)   Indebtedness of any other Person existing at the time such other
            Person is merged with or into or became a Subsidiary of such
            specified Person, including, without limitation, Indebtedness
            Incurred in connection with, or in contemplation of, such other
            Person merging with or into or becoming a Subsidiary of such
            specified Person, and

      (ii)  Indebtedness secured by a Lien encumbering any asset acquired by
            such specified Person.

<PAGE>

                                                           EXHIBIT H TO THE PLAN


      "Adjusted Net Assets" of a Guarantor at any date means the amount by which
the fair value of the assets and property of such Guarantor exceeds the total
amount of liabilities, including, without limitation, contingent liabilities
(after giving effect to all other fixed and contingent liabilities incurred or
assumed on such date), but excluding liabilities under any Subsidiary Guarantee,
of such Guarantor at such date.

      "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.

      "Agent" means any Registrar, Paying Agent or co-registrar.

      "American Biltrite" means American Biltrite Inc., a Delaware corporation.

      "Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Clearstream that apply to such transfer or exchange.

      "Asset Acquisition" means

      (iii) an Investment by the Company or any Restricted Subsidiary of the
            Company in any other Person if, as a result of such Investment, such
            Person shall become a Restricted Subsidiary of the Company, or shall
            be merged, consolidated or amalgamated with or into the Company or
            any Restricted Subsidiary of the Company, or

      (iv)  the acquisition by the Company or any Restricted Subsidiary of the
            Company of all or substantially all of the assets of any other
            Person or any division or line of business of any other Person.

      "Asset Sale" means

      (i)   the sale, lease, transfer, exchange, conveyance or other disposition
            of any assets or rights (or a series of sales, leases, transfers,
            exchanges, conveyances or dispositions), including, without
            limitation, dispositions by way of transfer, exchange, merger,
            consolidation, amalgamation or sale and leaseback) other than sales
            of inventory in the ordinary course of business consistent with past
            practices (provided that the sale, lease, transfer, exchange,
            conveyance or other disposition of all or substantially all of the
            assets of the Company or of the Company and its Restricted
            Subsidiaries taken as a whole will be governed by Section 4.15 or
            Section 5.01, as applicable, and not by Section 4.10 hereof) and

      (ii)  the issue or sale by the Company or any of its Restricted
            Subsidiaries of Equity Interests of any of the Company's Restricted
            Subsidiaries;


                                       2
<PAGE>

whether in a single transaction or a series of related transactions, which in
the case of either clause (i) or (ii), (a) have a fair market value in excess of
$500,000 or (b) have net proceeds in excess of $500,000.

Notwithstanding the foregoing, the following items shall not be deemed to be
Asset Sales: (i) a transfer of assets by the Company to a Guarantor or by a
Restricted Subsidiary to the Company or to another Restricted Subsidiary, (ii)
an issuance or sale of Equity Interests by a Restricted Subsidiary to the
Company or to a Wholly Owned Restricted Subsidiary, (iii) a Permitted
Investment, (iv) transfers of Cash Equivalents and (v) the granting of a
Permitted Lien.

      "Authority" means any national, federal, state, municipal or local
government or quasi-government agency or authority.

      "Bankruptcy Law" means Title 11, U.S. Code or any similar federal, state
or foreign law for the relief of debtors.

      "Beneficial Owner" shall be as defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act.

      "Board of Directors" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.

      "Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.

      "Business Day" means any day other than a Legal Holiday.

      "Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other Indebtedness arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with GAAP. The Stated
Maturity of such obligation shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty.

      "Capital Stock" means:

      (i)   in the case of a corporation, corporate stock;

      (ii)  in the case of an association or business entity, any and all share,
            interests, participations, rights or other equivalents (however
            designated) of corporate stock;

      (iii) in the case of a partnership or limited liability company,
            partnership interests (whether general or limited) or membership
            interests; and


                                       3
<PAGE>

      (iv)  any other interest or participation that confers on a Person the
            right to receive a share of the profits and losses of, or
            distributions of assets of, the issuing Person, but excluding from
            all of the foregoing any debt securities convertible into Capital
            Stock, whether or not such debt securities include any right of
            participation with Capital Stock.

      "Cash Equivalents" means:

      (i)   United States dollars;

      (ii)  securities issued or directly and fully guaranteed or insured by the
            United States government or any agency or instrumentality of the
            United States government (provided that the full faith and credit of
            the United States is pledged in support of those securities) having
            maturities of not more than one year from the date of acquisition;

      (iii) marketable general obligations issued by any state of the United
            States of America or any political subdivision of any such state or
            any public instrumentality thereof maturing within one year from the
            date of acquisition thereof and, at the same time of acquisition
            thereof, having a credit rating of "A" or better from either S&P or
            Moody's;

      (iv)  certificates of deposit, demand deposit accounts and Eurodollar time
            deposits with maturities of one year or less from the date of
            acquisition, bankers' acceptances with maturities not exceeding one
            year and overnight bank deposits, in each case, with any domestic
            commercial bank or any United States branch of a foreign bank having
            capital and surplus in excess of $500.0 million and a Thomson Bank
            Watch Rating of "B" or better;

      (v)   repurchase obligations with a term of not more than seven days for
            underlying securities of the types of describing clauses (ii), (iii)
            and (iv) above entered into with any financial institution meeting
            the qualifications specified in clause (iv) above;

      (vi)  commercial paper having one of the two highest ratings obtainable
            from Moody's or S&P and, in each case, maturing within six months
            after the date of acquisition; and

      (vii) money market funds at least 95% of the assets of which constitute
            Cash Equivalents of the kinds described in clauses (i) through (vi)
            of this definition.

      "Casualty" means, with respect to any Collateral, any loss of, damage to
or destruction of all or any material part of such Collateral.

      "Change of Control" means the occurrence of any of the following:


                                       4
<PAGE>

      (i)   the sale, lease, transfer, conveyance or other disposition (other
            than by way of merger, amalgamation or consolidation), in one or a
            series of related transactions, of all or substantially all of the
            assets of the Company and its Restricted Subsidiaries taken as a
            whole to any "person" or "group" (as such terms are used in Sections
            13(d) and 14(d) of the Exchange Act) other than one or more
            Principals and their Related Parties;

      (ii)  the consummation of any transaction (including, without limitation,
            any merger, consolidation or amalgamation) the result of which is
            that any "person" or "group" (as such terms are used in Sections
            13(d) and 14(d) of the Exchange Act), other than one or more
            Principals and their Related Parties and other than American
            Biltrite so long as it continuously remains the Beneficial Owner of
            more than 50% of the Voting Stock of the Company (measured by voting
            power rather than number of shares), except that a person shall be
            deemed to have Beneficial Ownership of all securities that such
            person has the right to acquire, whether such right is currently
            exercisable or is exercisable only upon the occurrence of a
            subsequent condition), directly or indirectly, of more than 50% of
            the Voting Stock of the Company (measured by voting power rather
            than number of shares); provided that the Plan Trust shall not be
            deemed to have Beneficial Ownership of Voting Stock of the Company
            as a result of its holding the New Convertible Security in the form
            in existence on the Effective Date;

      (iii) the Company consolidates, amalgamates or merges with or into another
            Person or any Person consolidates, amalgamates or merges with or
            into the Company, in either case under this clause (iii), in one
            transaction or a series of related transactions in which any of the
            outstanding Voting Stock of the Company is converted into or
            exchanged for cash, securities or other property, other than any
            such transaction where the Voting Stock of the Company outstanding
            immediately prior to such transaction is converted into or exchanged
            for Voting Stock (other than Disqualified Stock) of the surviving or
            transferee Person constituting a majority of the outstanding shares
            of such Voting Stock of such surviving or transferee Person
            immediately after giving effect to such issuance;

      (iv)  the first day on which a majority of the members of the Board of
            Directors of the Company are not Continuing Directors; or

      (v)   so long as American Biltrite continuously remains the Beneficial
            Owner of more than 50% of the Voting Stock of American Biltrite
            (measured by voting power rather than number of shares:

            (a)   the sale, lease, transfer, conveyance or other disposition
                  (other than by way of merger, amalgamation or consolidation),
                  in one or a series of related transactions, of all or
                  substantially all of the assets of American Biltrite taken as
                  a whole to any "person" or "group" (as such terms are used in
                  Sections 13(d) and 14(d) of the Exchange Act) other than one
                  or more Principals and their Related Parties;


                                       5
<PAGE>

            (b)   the consummation of any transaction (including, without
                  limitation, any merger, consolidation or amalgamation) the
                  result of which is that any "person" or "group" (as such terms
                  are used in Sections 13(d) and 14(d) of the Exchange Act),
                  other than one or more Principals and their Related Parties,
                  becomes the Beneficial Owner, except that a person shall be
                  deemed to have "beneficial ownership" of all securities that
                  such person has the right to acquire, whether such right is
                  currently exercisable or is exercisable only upon the
                  occurrence of a subsequent condition), directly or indirectly,
                  of more than 50% of the Voting Stock of American Biltrite
                  (measured by voting power rather than number of shares);

            (c)   American Biltrite consolidates, amalgamates or merges with or
                  into another Person or any Person consolidates, amalgamates or
                  merges with or into American Biltrite, in either case under
                  this clause (v)(c), in one transaction or a series of related
                  transactions in which any of the outstanding Voting Stock of
                  American Biltrite is converted into or exchanged for cash,
                  securities or other property, other than any such transaction
                  where the Voting Stock of American Biltrite outstanding
                  immediately prior to such transaction is converted into or
                  exchanged for Voting Stock (other than Disqualified Stock) of
                  the surviving or transferee Person constituting a majority of
                  the outstanding shares of such Voting Stock of such surviving
                  or transferee Person immediately after giving effect to such
                  issuance; or

            (d)   the first day on which a majority of the members of the Board
                  of Directors of American Biltrite are not Continuing
                  Directors.

      "Clearstream" means Clearstream Banking, societe anonyme.

      "Collateral" means the collective reference to all assets, whether now
owned or hereafter acquired, upon which a Lien is created or granted from time
to time pursuant to any Security Document, including, without limitation, the
Liens, if any, required to be granted pursuant to Section 4.10, 4.11, 4.21,
5.01, 10.1(c), 10.5 and 12.4 hereof; provided that in no event shall Collateral
include the GHR/Kenesis Actions or any right or interest therein or proceeds
thereof.

      "Collateral Account" means the collateral account established by the
Trustee pursuant to Article 12 hereof.

      "Collateral Agent" means the Trustee, in its capacity as collateral agent
under the Security Documents, until a successor collateral agent shall have
become such pursuant to the Security Documents, and thereafter "Collateral
Agent" shall mean such successor collateral agent.

      "Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.


                                       6
<PAGE>

      "Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.

      "Company" means Congoleum Corporation, a Delaware corporation, until a
successor Person or Persons shall have become such pursuant to the applicable
provisions of this Indenture and thereafter "Company" shall mean such successor
Person.

      "Company Order" means a written request or order signed in the name of the
Company by two Officers of the Company and delivered to the Trustee.

      "Condemnation" means any taking of the Collateral or any material part
thereof, in or by condemnation, expropriation or similar proceeding, eminent
domain proceedings, seizure or forfeiture, pursuant to any law, general or
special, or by reason of the temporary requisition of the use or occupancy of
the Collateral, or any part thereof, by any Authority.

      "Consolidated Cash Flow" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus
without duplication:

      (1)   an amount equal to any unusual, non-recurring or extraordinary loss
            plus any net loss realized by such Person or any of its Restricted
            Subsidiaries in connection with an Asset Sale, to the extent such
            losses were deducted in computing such Consolidated Net Income; plus

      (2)   provision for taxes based on income or profits of such Person and
            its Restricted Subsidiaries for such period, to the extent that such
            provision for taxes was deducted in computing such Consolidated Net
            Income; plus

      (3)   the Fixed Charges of such Person and its Restricted Subsidiaries for
            such period, to the extent that such Fixed Charges were deducted in
            computing such Consolidated Net Income; plus

      (4)   depreciation, amortization (including amortization of intangibles
            but excluding amortization of prepaid cash expenses that were paid
            in a prior period), impairment and other non-cash expenses
            (excluding any such non-cash expense to the extent that it
            represents an accrual of or reserve for cash expenses in any future
            period or amortization of a prepaid cash expense that was paid in a
            prior period) of such Person and its Restricted Subsidiaries for
            such period for the extent that such depreciation, amortization,
            impairment and other non-cash expenses were deducted in computing
            such Consolidated Net Income; plus

      (5)   non-recurring financing, advisory, attorney and other expenses
            incurred in connection with the Transactions and paid within 60 days
            after the Effective Date; minus

      (6)   non-cash items increasing such Consolidated Net Income for such
            period, other than items that were accrued in the ordinary course of
            business, and minus

      (7)   gains from purchases of indebtedness at a discount,


                                       7
<PAGE>

in each case, on a consolidated basis and determined in accordance with GAAP.

      Notwithstanding the foregoing, the provision for taxes on the income or
profits of, and the depreciation and amortization and other non-cash charges and
expenses of, a Restricted Subsidiary of the referent Person shall be added to
Consolidated Net Income to compute Consolidated Cash Flow only to the extent
(and in the same proportion) that the Net Income of such Restricted Subsidiary
was included in calculating the Consolidated Net Income of such Person and only
if a corresponding amount would be permitted at the date of determination to be
dividended to the referent Person by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Restricted Subsidiary or its stockholders.

      "Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:

      (1)   the Net Income (but not loss) of any Person that is not a Restricted
            Subsidiary or that is accounted for by the equity method of
            accounting will be included only to the extent of the amount of
            dividends or similar distributions paid in cash to the specified
            Person or a Restricted Subsidiary of the Person;

      (2)   the Net Income of any Restricted Subsidiary will be excluded to the
            extent that the declaration or payment of dividends or similar
            distributions by that Restricted Subsidiary of that Net Income is
            not at the date of determination permitted without any prior
            governmental approval (that has not bee obtained) or, directly or
            indirectly, by operation of the terms of its charter or any
            agreement, instrument, judgment, decree, order, statute, rule or
            governmental regulation applicable to that Restricted Subsidiary or
            its stockholders, partners or members;

      (3)   the Net Income of any Person acquired in a pooling of interests
            transaction for any period prior to the date of such acquisition
            shall be excluded;

      (4)   the cumulative effect of a change in accounting principles shall be
            excluded;

      (5)   any gain or loss realized on the termination of any employee pension
            benefit plan shall be excluded;

      (6)   the Net Income of any Restricted Subsidiary shall be calculated
            after deducting preferred stock dividends payable by such Restricted
            Subsidiary to Persons other than the Company and its other
            Restricted Subsidiaries;

      (7)   any gain (loss) realized upon the sale or other disposition of any
            property, plant or equipment of such Person or its consolidated
            Restricted Subsidiaries (including pursuant to any sale or leaseback
            transaction) which is not sold or otherwise disposed of in the
            ordinary course of business and any gain (loss) realized upon the
            sale or other disposition of any Capital Stock of any Person will be
            excluded;


                                       8
<PAGE>

      (8)   any unrealized non-cash gains or losses or charges in respect of
            hedge or non-hedge derivatives (including those resulting from the
            application of FAS 133) will be excluded; and

      (9)   any gain arising from the acquisition of any securities, or the
            extinguishment, under GAAP, of any Indebtedness of the Company and
            its Restricted Subsidiaries will be excluded.

      "Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of

      (i)   the consolidated equity of the common stockholders of such Person
            and its consolidated Subsidiaries as of such date plus

      (ii)  the respective amounts reported on such Person's balance sheet as of
            such date with respect to any series of preferred stock (other than
            Disqualified Stock) that by its terms is not entitled to the payment
            of dividends unless such dividends may be declared and paid only out
            of net earnings in respect of the year of such declaration and
            payment, but only to the extent of any cash received by such Person
            upon issuance of such preferred stock, less all investments as of
            such date in unconsolidated Subsidiaries and in Persons that are not
            Subsidiaries (except, in each case, Permitted Investments).

      "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of a Person who

      (i)   was a member of such Board of Directors on the date of this
            Indenture or

      (ii)  was nominated for election or elected to such Board of Directors
            with the approval of a majority of the Continuing Directors who were
            members of such Board at the time of such nomination or election.

      "Corporate Trust Office" shall be at the address of the Trustee specified
in Section 13.02 hereof or such other address as to which the Trustee may give
notice to the Company.

      "Custodian" means the Trustee, as custodian with respect to the Notes in
global form, or any successor entity thereto.

      "Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.

      "Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, in the form of
Exhibit A hereto except that such Note shall not bear the Global Note Legend,
shall not contain certain phrases specified in Exhibit A to be for Global Notes
only and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.


                                       9
<PAGE>

      "Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.

      "Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the Holder thereof,
in whole or in part, on or prior to the date that is 121 days after the date on
which the Notes mature; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
change of control or an asset sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 4.07 hereof. The amount of Disqualified
Stock deemed to be outstanding at any time for purposes of this Indenture will
be the maximum amount that the Company and its Restricted Subsidiaries may
become obligated to pay upon the maturity of, or pursuant to any mandatory
redemption provisions of, such Disqualified Stock, exclusive of accrued
dividends.

      "Effective Date" means the Effective Date as defined in the Plan.

      "Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

      "Euroclear" means Euroclear Bank S.A./N.V., as operator of the Euroclear
system.

      "Event of Loss" means, with respect to any Collateral, any (1) Casualty
with respect to such Collateral, (2) Condemnation of such Collateral of (3)
settlement in lieu of clause (2) above.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      "Existing Affiliate Transactions" means any transaction between the
Company or any Subsidiary and any Affiliates of any of the foregoing
contemplated by the Plan and in the agreements listed on Schedule I.

      "Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Exit Facility, the Plan Trust
Note and the New Convertible Security) in existence on the date of this
Indenture and listed on Schedule II, until such amounts are repaid.

      "Exit Facility" means that certain [Credit Agreement,] dated as _________,
2006, by and among the Company and ___________________ and providing for
__________, and any refinancing, extension, renewal, modification, restatement
or replacement thereof in whole or in part, from time to time.

      "Fair Market Value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between an informed and willing seller and an informed and willing and
able buyer, neither of whom is under undue pressure or compulsion to complete
the transaction. The Fair Market Value of any non-cash Restricted Investment


                                       10
<PAGE>

shall be determined by the Board of Directors of the Company acting reasonably
and in good faith and shall be evidenced by a Board Resolution delivered to the
Trustee, such determination to be based upon an opinion or appraisal issued by
an accounting firm, appraisal firm or investment banking firm of national
standing if such Fair Market Value exceeds $5.0 million.

      "Fiscal Year" means the calendar year.

      "Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
specified Person or any of its Restricted Subsidiaries Incurs, assumes,
Guarantees, repays, repurchases, redeems, defeases or otherwise discharges any
Indebtedness (other than revolving credit borrowings) or issues, repurchases or
redeems Preferred Stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated and on or prior to the
Calculation Date, then the Fixed Charge Coverage Ratio will be calculated giving
pro forma effect to such Incurrence, assumption, Guarantee, repayment,
repurchase or redemption of Preferred Stock, and the use of the proceeds
therefrom, as if the same had occurred at the beginning of the applicable
four-quarter reference period.

      In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

      (1)   Asset Acquisitions that have been made by the specified Person of
            any of its Restricted Subsidiaries, including through mergers,
            consolidations or otherwise, or any Person or any of its Restricted
            Subsidiaries acquired by the specified Person or any of its
            Restricted Subsidiaries, and including any related financing
            transactions and including increases in ownership of Restricted
            Subsidiaries, during the four-quarter reference period and the
            Consolidated Cash Flow for such reference period will be calculated
            giving pro forma effect to any expense and cost reductions that have
            occurred or, in the reasonable judgment of the chief financial
            officer of the Company, are reasonably expected to occur (regardless
            of whether those operating improvements or cost savings could then
            be reflected in pro forma financial statements prepared in
            accordance with Regulation S-X under the Securities Act or any other
            regulation or policy of the SEC related thereto);

      (2)   the Consolidated Cash Flow attributable to discontinued operations,
            as determined in accordance with GAAP, and operations or businesses
            (and ownership interests therein) disposed of prior to the
            Calculation Date, will be excluded;

      (3)   the Fixed Charges attributable to discontinued operations, as
            determined in accordance with GAAP, and operations or businesses
            (and ownership interests therein) disposed of prior to the
            Calculation Date, will be excluded, but only to the extent that the
            obligations giving rise to such Fixed Charges will not be
            obligations of the specified Person or any of its Restricted
            Subsidiaries following the Calculation Date;


                                       11
<PAGE>

      (4)   any Person that is a Restricted Subsidiary on the Calculation Date
            will be deemed to have been a Restricted Subsidiary at all times
            during such four-quarter period;

      (5)   any Person that is not a Restricted Subsidiary on the Calculation
            Date will be deemed not to have been a Restricted Subsidiary at any
            time during the four-quarter period; and

      (6)   if any Indebtedness bears a floating rate of interest, the interest
            expense on such Indebtedness will be calculated as if the rate in
            effect on the Calculation Date had been the applicable rate for the
            entire period (taking into account any Hedging Obligation applicable
            to such Indebtedness if such Hedging Obligation has a remaining term
            as at the Calculation Date in excess of 12 months).

      "Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:

      (1)   the consolidated interest expense of such Person and its Restricted
            Subsidiaries for such period, whether paid or accrued (including,
            without limitation, amortization of debt issuance costs and original
            issue discount, non-cash interest payments, the interest component
            of any deferred payment obligations, the interest component of all
            payments associated with Capital Lease Obligations, commissions,
            discounts and other fees and charges incurred in respect of letter
            of credit or bankers' acceptance financings), and net of the effect
            of all payments made or received pursuant to Hedging Obligations in
            respect of interest rates; plus

      (2)   the consolidated interest expense of such Person and its Restricted
            Subsidiaries that was capitalized during such period; plus

      (3)   any interest on Indebtedness of another Person that is Guaranteed by
            such Person or one of its Restricted Subsidiaries or secured by a
            Lien on assets of such Person or one of its Restricted Subsidiaries,
            whether or not such Guarantee or Lien is called upon; plus

      (4)   all dividends, whether paid or accrued and whether or not in cash,
            on any series of Preferred Stock of such Person or any of its
            Restricted Subsidiaries, other than dividends on Equity Interests
            payable solely in Equity Interests of the Company (other than
            Disqualified Stock) or to the Company or a Restricted Subsidiary of
            the Company.

      "Foreign Subsidiary" means any Restricted Subsidiary of the Company that
was not formed under the laws of the United States or any state of the United
States or the District of Columbia.

      "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.


                                       12
<PAGE>

      "GHR/Kenesis Actions" has the meaning assigned to such term in the Plan.

      "GHR/Kenesis Litigation Trust" has the meaning assigned to such term in
the Plan.

      "GHR Settlement Note" means ____________________________________________.

      "Global Notes" means, individually and collectively, the Notes in the form
of Exhibit A hereto issued in accordance with Section 2.01 and Section 2.06.

      "Global Note Legend" means the legend set forth in Section 2.06, which is
required to be placed on all Global Notes issued under this Indenture.

      "Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.

      "Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person guaranteeing, or having the economic effect of guaranteeing, any
Indebtedness or other obligation of any other Person (the "primary obligor") in
any manner, whether directly or indirectly, and including, without limitation,
any obligation of such Person,

      (i)   to purchase or pay (or advance or supply funds for the purchase or
            payment of) such Indebtedness or to purchase (or to advance or
            supply funds for the purchase of) any security for the payment of
            such Indebtedness, or other obligation of such other Person (whether
            arising by virtue of partnership arrangements, or by agreement to
            keep-well, to take-or-pay, or to maintain financial statement
            conditions or otherwise)

      (ii)  to purchase property, securities or services for the purpose of
            assuring the holder of such Indebtedness of the payment of such
            Indebtedness, or

      (iii) to maintain working capital, equity capital or other financial
            statement condition or liquidity of the primary obligor so as to
            enable the primary obligor to pay such Indebtedness or other
            obligation

(and "Guaranteed," and "Guaranteeing" shall have meanings correlative to the
foregoing); provided, however, that the Guarantee by any Person shall not
include endorsements by such Person for collection or deposit, in either case,
in the ordinary course of business.

      "Guarantor" means any Restricted Subsidiary that executes a Subsidiary
Guarantee in accordance with the provisions of this Indenture, and its
successors and assigns.

      "Hedging Obligations" means, with respect to any Person, the obligations
of such Person under

      (i)   interest rate swap agreements (whether from fixed to floating or
            from floating to fixed), interest rate cap agreements and interest
            rate collar agreements entered into with one or more financial
            institutions and other arrangements or agreements designed to
            protect the Person entering into the agreement against fluctuations
            in interest rates with respect to Indebtedness incurred and not for
            purposes of speculation;


                                       13
<PAGE>

      (ii)  foreign exchange contracts and currency protection agreements
            entered into with one or more financial institutions and designed to
            protect the Person entering into the agreement against fluctuations
            in currency exchange rates with respect to Indebtedness incurred and
            not for purposes of speculation; and

      (iii) any commodity futures contract, commodity option or other similar
            agreement or arrangement designed to protect against fluctuations in
            the price of commodities used, produced, processed or sold by the
            Person or any of its Restricted Subsidiaries at the time.

      "Holder" means a Person in whose name a Note is registered.

      "Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Indebtedness or other
obligation including by acquisition of Restricted Subsidiaries or the recording,
as required pursuant to GAAP or otherwise, of any such Indebtedness or other
obligation on the balance sheet of such Person (and "Incurrence", "Incurred" and
"Incurring" shall have meanings correlative to the forgoing); provided that the
accrual of interest (whether such interest is payable in cash or in kind) and
the accretion of original issue discount shall not be deemed an Incurrence of
Indebtedness; provided, that any Indebtedness of a Person existing at the time
such Person becomes (after the Effective Date) a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) of the Company shall be deemed to be
Incurred by such Subsidiary at the time it becomes a Subsidiary of the Company,
and any amendment, modification or waiver of any document pursuant to which
Indebtedness was previously Incurred shall be deemed to be an Incurrence of
Indebtedness unless such amendment, modification or waiver does not increase the
principal or premium thereof; and provided further, however, that a change in
GAAP that results in an obligation of such Person that exists at such time
becoming Indebtedness shall not be deemed an Incurrence of such Indebtedness.

      "Indebtedness" means, with respect to any Person, whether recourse is to
all or a portion of the assets of such Person and whether or not contingent,

      (i)   every obligation of such Person for money borrowed;

      (ii)  every obligation of such Person evidenced by bonds, debentures,
            notes or other similar instruments, including obligations Incurred
            in connection with the acquisition of property, assets or
            businesses;

      (iii) every reimbursement obligation of such Person with respect to
            letters of credit, bankers' acceptances or similar facilities issued
            for the account of such Person (including reimbursement obligations
            with respect thereto);


                                       14
<PAGE>

      (iv)  every obligation of such Person issued or assumed as the deferred
            purchase price of property or services (including securities
            repurchase agreements), even if the rights and remedies of the
            seller under such agreement in the event of default are limited to
            repossession or sale of such property, but excluding trade accounts
            payable arising in the ordinary course of business that are not
            overdue by 90 days or more or are being contested in good faith by
            appropriate proceedings promptly instituted and diligently
            conducted;

      (v)   every Capital Lease Obligation of such Person;

      (vi)  Hedging Obligations of such Person;

      (vii) all Indebtedness of others secured by (or for which the holder of
            such Indebtedness has an existing right, contingent or otherwise, to
            be secured by) any Lien on any asset or property (including, without
            limitation, leasehold interests and any other tangible of intangible
            property) of such Person, whether or not such Indebtedness is
            assumed by such Person or is not otherwise such Person's legal
            liability, provided that if the obligations so secured have not been
            assumed in full by such Person or are otherwise not such Person's
            legal liability in full, the amount of such Indebtedness for the
            purposes of this definition shall be limited to the lesser of the
            amount of the Indebtedness secured by such Lien or the Fair Market
            Value of the assets or property securing such Lien;

     (viii) all Indebtedness of others (including all dividends of other
            Persons the payment of which is) guaranteed, directly or indirectly,
            by such Person or that is otherwise its legal liability or which
            such Person has agreed contingently to supply or advance funds; and

      (ix)  all Disqualified Stock issued by such Person and all preferred stock
            issued by Subsidiaries of such Person, with the amount of
            Indebtedness represented by such Disqualified Stock or preferred
            stock being equal to the greater of its voluntary or involuntary
            liquidation preference and its maximum fixed repurchase price, but
            excluding accrued dividends, if any.

For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Stock or preferred stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock or preferred
stock, as the case may be, as if such stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Indenture, and
if such price is based upon, or measured by, the Fair Market Value of such
Disqualified Stock or preferred stock, such Fair Market Value shall be
determined reasonably and in good faith by the board of directors of the issuer
of such Disqualified Stock or preferred stock, as the case may be. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date, provided that the amount outstanding
at any time of any Indebtedness issued with original issue discount is the full
amount of such Indebtedness less the remaining unamortized portion of the
original issue discount of such Indebtedness at such time as determined in
conformity with GAAP.


                                       15
<PAGE>

      "Indenture" means this Indenture, as amended or supplemented from time to
time by one or more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof.

      "Intercreditor Agreement" means an Intercreditor Agreement between the
__________ as agent for itself and other lenders pursuant to the Exit Facility,
and the Trustee and acknowledged by the Company, in substantially the form
attached hereto as Exhibit C.

      "Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.

      "Investment" by any Person means any direct or indirect

      (i)   loan, advance or other extension of credit or capital contribution
            (by means of transfers of cash or other property (valued at the Fair
            Market Value thereof as of the date of transfer) to others of
            payments for property or services for the account or use of others,
            or otherwise),

      (ii)  purchase or acquisition of Capital Stock, bonds, notes, debentures
            or other securities or evidences of Indebtedness issued by any other
            Person (whether by merger, consolidation, amalgamation or otherwise
            and whether or not purchased directly from the issuer of such
            securities or evidences of Indebtedness),

      (iii) guarantee or assumption of the Indebtedness of any other Person and

      (iv)  all other items that would be classified as investments (including,
            without limitation, purchases of assets outside the ordinary course
            of business) on a balance sheet of such Person prepared in
            accordance with GAAP.

If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Subsidiary of the Company, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Restricted
Subsidiary not sold or disposed of in an amount determined as provided in
Section 4.08 hereof. The amount or any Investment shall be the original cost of
such Investment plus the cost of all additions thereto, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment.

      "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in The City of New York or the city in which the principal
Corporate Trust Office of the Trustee is located are authorized by law,
regulation or executive order to remain closed. If a payment date is a Legal
Holiday at a place of payment, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue on such
payment for the intervening period.


                                       16
<PAGE>

      "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).

      "Maturity", when used with respect to any Note, means the date on which
the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.

      "Moody's" means Moody's Investors Service, Inc. or any successor to the
rating agency business thereof.

      "Mortgages" means the mortgages granted pursuant to the Security Documents
on certain of the Real Property owned or leased by the Company or the
Guarantors.

      "Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however,

      (i)   any gain (but not loss), together with any related provision for
            taxes on such gain (but not loss), realized in connection with (a)
            any Asset Sale (including, without limitation, dispositions pursuant
            to sale and leaseback transactions) or (b) the disposition of any
            securities by such Person or any of its Restricted Subsidiaries or
            the extinguishment of any Indebtedness of such Person or any of its
            Restricted Subsidiaries and

      (ii)  any unusual, extraordinary or non-recurring gain (but not loss),
            together with any related provision for taxes on such unusual,
            extraordinary or non-recurring gain (but not loss).

      "Net Loss Proceeds" means, with respect to any Event of Loss, the proceeds
in the form of (a) cash or Cash Equivalents and (b) insurance proceeds,
condemnation awards or damages awarded by any judgment, in each case received by
the Company from such Event of Loss net of:

      (1)   reasonable out-of-pocket expenses and fees relating to such Event of
            Loss (including, without limitation, legal, accounting and appraisal
            and insurance adjuster fees);

      (2)   all federal, state, provincial, foreign and local taxes required to
            be accrued as a liability under GAAP as a consequence of such Event
            of Loss;

      (3)   repayment of Indebtedness (other than Indebtedness evidenced by the
            Notes) that is secured by the property or assets that are the
            subject of such Event of Loss; and


                                       17
<PAGE>

      (4)   appropriate amounts to be provided by the Company as a reserve, in
            accordance with GAAP, against any liabilities associated with such
            Event of Loss and retained by the Company after such Event of Loss,
            including, without limitation, liabilities related to environmental
            matters and liabilities under any indemnification obligations
            associated with such Event of Loss.

      "Net Proceeds" means the aggregate proceeds in the form of cash or Cash
Equivalents received by the Company or any of its Restricted Subsidiaries (i)
with respect to any Asset Sale (including, without limitation, any cash received
upon the sale or other disposition of any non-cash consideration received in any
Asset Sale), net of:

      (a)   all legal, accounting, investment banking, title and recording tax
            expenses, commissions and other fees and expenses incurred, and all
            Federal, state, provincial, foreign and local taxes required to be
            paid or accrued as a liability under GAAP (after taking into account
            any available tax credits or deductions and any tax sharing
            agreements), as a consequence of such Asset Sale;

      (b)   all payments made on any Indebtedness which is secured by any assets
            subject to such Asset Sale, in accordance with the terms of any Lien
            upon such assets, or which must by its terms, or in order to obtain
            a necessary consent to such Asset Sale, or by applicable law be
            repaid out of the proceeds from such Asset Sale;

      (c)   all distributions and other payments required to be made to holders
            of minority interests in Subsidiaries or joint ventures as a result
            of such Asset Sale; and

      (d)   the deduction of appropriate amounts to be provided by the seller as
            a reserve, in accordance with GAAP, or held in escrow, in either
            case for adjustment in respect of the sale price or for any
            liabilities associated with the assets disposed of in such Asset
            Sale and retained by the Company or any Restricted Subsidiary after
            such Asset Sale; provided, however, that any reduction in such
            reserve within twelve months following the consummation of such
            Asset Sale will be treated for all purposes of this Indenture and
            the Notes as a new Asset Sale at the time of such reduction with Net
            Proceeds equal to the amount of such reduction; and

(ii) with respect to the issuance or sale of Capital Stock, or options, warrants
or rights to purchase Capital Stock, or Indebtedness, debt securities or
Disqualified Stock that has been converted into or exchanged for Capital Stock,
the proceeds of such issuance or sale in the form of cash or Cash Equivalents,
including payments in respect of deferred payment obligations, net of:

      (a)   all legal, accounting, investment banking, brokerage, consultation,
            underwriting and other fees and expenses actually incurred in
            connection with such issuance or sale, conversion or exchange,
            whether such proceeds are in cash or in other property (valued as
            determined reasonably and in good faith by the Board of Directors of
            the Company, as evidenced by a Board Resolution delivered to the
            Trustee, at the Fair Market Value thereof at the time of receipt),


                                       18
<PAGE>

      (b)   in the case of any exchange, exercise, conversion or surrender of
            any outstanding Indebtedness, debt securities or Disqualified Stock
            of the Company of any Subsidiary for or into shares of Capital Stock
            of the Company consummated after the Effective Date, the amount of
            such Indebtedness, debt security or Disqualified Stock (or, if such
            Indebtedness, debt security or Disqualified Stock was issued at an
            amount less than the stated principal amount thereof, the accrued
            amount thereof as determined in accordance with GAAP) as reflected
            in the consolidated financial statements of the Company prepared in
            accordance with GAAP as of the most recent date next preceding the
            date of such exchange, exercise, conversion or surrender, plus any
            additional amount required to be paid by the holder of such
            Indebtedness, debt security or Disqualified Stock to the Company or
            to any Guarantor upon such exchange, exercise, conversion or
            surrender and less any and all payments made to the holders of such
            Indebtedness, debt security or Disqualified Stock,

      (c)   any consolidated interest expense attributable to any Indebtedness
            or debt securities paid to the holders thereof prior to the
            conversion or exchange, and

      (d)   taxes paid or payable as a result thereof, and all other expenses
            incurred by the Company in connection therewith,

provided that the exchange, exercise, conversion or surrender of any
Indebtedness outstanding on the Effective Date which is subordinated (whether
pursuant to its terms or by operation of law) to the Securities shall not be or
be deemed to be included in Net Proceeds.

      "New Convertible Security" has the meaning assigned to such term in the
Plan.

      "Notes" has the meaning assigned to it in the preamble to this Indenture.

      "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

      "Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer or the Senior Vice-President--Finance of
such Person.

      "Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Sections 13.04 and 13.05 hereof.

      "Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Sections 13.04 and
13.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.


                                       19
<PAGE>

      "Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to The Depositary Trust Company,
shall include Euroclear and Clearstream).

      "Permitted Business" means (i) manufacturing and selling flooring products
of all types, and (ii) businesses that are reasonably related thereto or
reasonable extensions thereof.

      "Permitted Investments" means

      (a)   any Investment in the Company or in a Restricted Subsidiary of the
            Company that is a Guarantor or a Foreign Subsidiary;

      (b)   any Investment in Cash Equivalents;

      (c)   any Investment by the Company or any Restricted Subsidiary of the
            Company in a Person, if as a result of such Investment (i) such
            Person becomes a Restricted Subsidiary of the Company and a
            Guarantor or a Foreign Subsidiary or (ii) such Person is merged,
            consolidated or amalgamated with or into, or transfers or conveys
            substantially all of its assets to, or is liquidated into, the
            Company or a Restricted Subsidiary of the Company that is a
            Guarantor or a Foreign Subsidiary;

      (d)   any Investment made as a result of the receipt of non-cash
            consideration from an Asset Sale that was made pursuant to and in
            compliance with Section 4.10 hereof;

      (e)   any acquisition of assets solely in exchange for the issuance of
            Equity Interests (other than Disqualified Stock) of the Company;

      (f)   Hedging Obligations;

      (g)   other Investments in any Person having an aggregate fair market
            value (measured on the date each such Investment was made and
            without giving effect to subsequent changes in value), when taken
            together with all other Investments made pursuant to this clause (g)
            that are at the time outstanding, not to exceed $1.0 million;

      (h)   Guarantees issued in accordance with Section 4.09 of this Indenture;
            and

      (i)   Investments in surety and performance bonds and prepaid expenses,
            negotiable instruments held for collection and lease, utility and
            worker's compensation, performance and other similar deposits;

      (j)   any Investments received in compromise or resolution of (A)
            obligations of trade creditors or customers that were incurred in
            the ordinary course of business of the Company or any of its
            Restricted Subsidiaries, including pursuant to any plan of
            reorganization or similar arrangement upon the bankruptcy or
            insolvency of any trade creditor or customer; or (B) litigation,
            arbitration or other disputes with Persons who are not Affiliates
            (including the GHR Settlement Note);


                                       20
<PAGE>

      (k)   loans or advances to employees in the ordinary course of business or
            consistent with past practice not to exceed $500,000 in the
            aggregate at any one time outstanding;

      (l)   receivables owing to the Company or any Restricted Subsidiary
            created or acquired in the ordinary course of business and payable
            or dischargeable in accordance with customary trade terms; provided,
            however, that such trade terms may include such concessionary trade
            terms as the Company or any such Restricted Subsidiary deems
            reasonable under the circumstances;

      (m)   guarantees by the Company or any of its Restricted Subsidiaries of
            operating leases (other than Capital Lease Obligations) or of other
            obligations that do not constitute Indebtedness, in each case
            entered into by any Restricted Subsidiary in the ordinary course of
            business; and

      (n)   Investments existing on the Closing Date and set forth on Schedule
            III hereto.

      "Permitted Liens" means

      (i)   Liens on property or assets of the Company or any of the Guarantors
            securing the Exit Facility;

      (ii)  Liens in favor of the Company or the Guarantors, if any;

      (iii) Liens on property or assets of a Person existing at the time such
            Person is merged into or consolidated or amalgamated with the
            Company or any Restricted Subsidiary of the Company; provided that
            such Liens were in existence prior to the contemplation of such
            merger, consolidation or amalgamation and do not extend to any
            assets other than those of the Person merged into or consolidated or
            amalgamated with the Company or such Restricted Subsidiary;

      (iv)  Liens on property or assets existing at the time of acquisition
            thereof or the acquisition of a Person owning such property or
            assets by the Company or any Restricted Subsidiary of the Company,
            provided that such Liens were in existence prior to the
            contemplation of such acquisition and do not extend to any assets
            other than the acquired property and accessions and additions
            thereto and proceeds thereof;

      (v)   Liens to secure the performance of statutory obligations, surety or
            appeal bonds, performance bonds or other obligations of a like
            nature Incurred in the ordinary course of business;

      (vi)  Liens to secure Capital Lease Obligations and mortgage financing or
            purchase money obligations of the type (but without reference to any
            restrictions on amount) described in clause (xiii) of the second
            paragraph of Section 4.09 that are permitted to be Incurred pursuant
            to the terms of this Indenture covering only the assets acquired
            with such Indebtedness and proceeds thereof, provided, however, that
            (a) the principal amount of any Indebtedness secured by such a Lien


                                       21
<PAGE>

            does not exceed 100% of such purchase price or cost, (b) such a Lien
            is created within 120 days of the construction, acquisition or
            improvement of such property and does not extend to or cover any
            other property other than such item of property and any improvements
            or accessions thereto and proceeds thereof and (c) the Incurrence of
            such Indebtedness is otherwise permitted by this Indenture;

      (vii) Liens existing on the date of this Indenture listed on Schedule IV;

     (viii) Liens for taxes, assessments or governmental charges or claims
            (other than any Lien imposed by the Employee Retirement Income
            Security Act of 1974, as amended) that are not yet delinquent or
            that are being contested in good faith by appropriate proceedings
            promptly instituted and diligently concluded, provided that any
            reserve or other appropriate provision as shall be required in
            conformity with GAAP shall have been made therefor;

      (ix)  statutory Liens of landlords and Liens of carriers, warehousemen,
            mechanics, suppliers, materialmen, repairmen and other Liens imposed
            by law incurred in the ordinary course of business for sums not yet
            delinquent or being contested in good faith, if such reserve or
            other appropriate provision, if any, as shall be required by GAAP
            shall have been made in respect thereof;

      (x)   easements, rights-of-way, zoning restrictions and other similar
            charges or encumbrances in respect of real property not interfering
            in any material respect with the ordinary conduct of the business of
            the Company or any of its Restricted Subsidiaries;

      (xi)  pledges or deposits made in the ordinary course of business (A) in
            connection with leases, tenders, bids, statutory obligations, surety
            or appeal bonds, government contracts, performance bonds and similar
            obligations, or (B) in connection with workers' compensation,
            unemployment insurance and other social security legislation;

      (xii) Liens encumbering property or assets under construction arising from
            progress or partial payment by a customer of the Company or its
            Restricted Subsidiaries relating to such property or assets;

     (xiii) Liens in favor of customs and revenue authorities arising as a
            matter of law to secure payments of customs duties in connection
            with the importation of goods;

      (xiv) any attachment or judgment Lien that does not constitute an Event of
            Default;

      (xv)  Liens created for the benefit of (or to secure) the Notes (or the
            Subsidiary Guarantees);

      (xvi) Liens arising solely by virtue of any statutory or common law
            provisions relating to banker's Liens, rights of set-off or similar
            rights and remedies as to deposit accounts or other funds maintained
            or deposited with a depositary institution; provided that: (a) such
            deposit account is not a dedicated cash collateral account and is


                                       22
<PAGE>

            not subject to restrictions against access by the Company in excess
            of those set forth by regulations promulgated by the Federal Reserve
            Board, and (b) such deposit account is not intended by the Company
            or any Restricted Subsidiary to provide collateral to the depositary
            institution;

     (xvii) Liens arising from Uniform Commercial Code financing statement
            filings regarding operating leases entered into by the Company and
            its Restricted Subsidiaries in the ordinary course of business;

    (xviii) Liens securing Hedging Obligations of the Company and its
            Restricted Subsidiaries;

      (xix) Liens on the GHR/Kenesis Actions securing the Plan Trust Note and
            the New Convertible Security;

      (xx)  Liens to secure Indebtedness Incurred to extend, renew, refinance or
            refund (or successive extensions, renewals, refinancings or
            refundings), in whole or in part, Indebtedness secured by any Lien
            referred to in the foregoing clauses (i), (iii), (iv), (vi), (vii),
            (xiv) and (xvii) so long as such Lien does not extend to any other
            property and the principal amount of Indebtedness so secured is not
            increased;

      (xxi) Liens incurred in the ordinary course of business of the Company or
            any Restricted Subsidiary of the Company with respect to obligations
            that do not exceed $1,000,000 at any one time outstanding and that
            (a) are not incurred in connection with the borrowing of money or
            the obtaining of advances or credit (other than trade credit in the
            ordinary course of business) and (b) do not in the aggregate
            materially detract from the value of the property or materially
            impair the use thereof in the operation of business by the Company
            or such Restricted Subsidiary;

     (xxii) Liens securing reimbursement obligations with respect to letters of
            credit incurred in the ordinary course of business and in accordance
            with this Indenture that encumber documents and other property
            relating to such letters of credit and the products and proceeds
            thereof; and

    (xxiii) Liens in favor of the Trustee arising under this Indenture.

      "Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:

      (i)   the principal amount (or accreted value, if applicable) of such
            Permitted Refinancing Indebtedness does not exceed the principal
            amount of (or accreted value, if applicable), plus accrued interest
            on, the Indebtedness so extended, refinanced, renewed, replaced,
            defeased or refunded (plus the amount of reasonable expenses
            Incurred in connection therewith);


                                       23
<PAGE>

      (ii)  such Permitted Refinancing Indebtedness has a final maturity date
            equal to or later than the final maturity date of, and has a
            Weighted Average Life to Maturity equal to or greater than the
            Weighted Average Life to Maturity of, the Indebtedness being
            extended, refinanced, renewed, replaced, defeased or refunded;

      (iii) if the Indebtedness being extended, refinanced, renewed, replaced,
            defeased or refunded is subordinated in right of payment to the
            Notes or a Subsidiary Guarantee, such Permitted Refinancing
            Indebtedness is subordinated in right of payment to the Notes or
            such Subsidiary Guarantee, as the case may be, on terms at least as
            favorable to the Holders of Notes as those contained in the
            documentation governing the Indebtedness being extended, refinanced,
            renewed, replaced, defeased or refunded; and

      (iv)  such Indebtedness is Incurred either by the Company or by the
            Restricted Subsidiary who is the obligor on the Indebtedness being
            extended, refinanced, renewed, replaced, defeased or refunded.

      "Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or agency or political subdivision thereof (including
any subdivision or ongoing business of any such entity) or other entity.

      "Plan" has the meaning assigned to it in the preamble of this Indenture.

      "Plan Trust Note" has the meaning assigned to such term in the Plan.

      "Principals" means any or all of Richard G. Marcus, William M. Marcus and
Roger S. Marcus.

      "Real Property" means any interest in any real property or any portion
thereof whether owned in fee or leased or otherwise.

      "Regular Record Date" has the meaning set forth in Exhibit A attached
hereto.

      "Related Party" with respect to any Principal means

      (A)   any controlling holder of Equity Interests, 80% (or more) owned
            Subsidiary, or spouse or ex-spouse or immediate family member (in
            the case of an individual) of such Principal or

      (B)   any trust, corporation, partnership or other entity, the
            beneficiaries, stockholders, partners, owners or Persons
            beneficially holding an 80% or more controlling interest of which
            consist of such Principal and/or such other Persons referred to in
            the immediately preceding clause (A) or (C) any investment fund,
            whether a limited partnership, limited liability corporation or
            corporation, or other entity managed and controlled by such
            Principal.


                                       24
<PAGE>

      "Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.

      "Restricted Investment" means any Investment other than a Permitted
Investment.

      "Restricted Subsidiary" means, with respect to any Person, each Subsidiary
of such Person.

      "Securities Act" means the Securities Act of 1933, as amended.

      "Security Agreement" means the Security Agreement, dated as of the Closing
Date, by and between the Company and the Collateral Agent in substantially the
form attached hereto as Exhibit D.

      "Security Documents" means the Security Agreement, the Mortgages and any
other document or agreement that secures the Notes or the Subsidiary Guarantees.

      "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.

      "Senior Debt" means:

      (1)   all Indebtedness of the Company or any of its Restricted
            Subsidiaries outstanding under the Exit Facility and all Hedging
            Obligations with respect thereto;

      (2)   any other Indebtedness of the Company or any of its Restricted
            Subsidiaries permitted to be incurred under the terms of this
            Indenture, unless the instrument under which such Indebtedness is
            incurred expressly provides that it is subordinated in right of
            payment to the Notes or any Subsidiary Guarantee; and

      (3)   all Obligations with respect to the items listed in the preceding
            clauses (1) and (2).

Notwithstanding anything to the contrary in the preceding sentence, Senior Debt
will not include:

      (a)   any intercompany Indebtedness of the Company or any of its
            Subsidiaries to the Company or any of its Affiliates; or

      (b)   any Indebtedness that is incurred in violation of this Indenture.

For the avoidance of doubt, "Senior Debt" will not include any trade payables or
taxes owed or owing by the Company or any Restricted Subsidiary.


                                       25
<PAGE>

      "Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act and the Exchange Act, as such Regulation is in
effect on the date of this Indenture.

      "Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

      "Subsidiary" means, with respect to any Person,

      (i)   any corporation, association or other business entity of which more
            than 50% of the total voting power of shares of Capital Stock
            entitled (without regard to the occurrence of any contingency) to
            vote in the election of directors, managers or trustees thereof is
            at the time owned or controlled, directly or indirectly, by such
            Person or one or more of the other Subsidiaries of that Person (or a
            combination thereof) and

      (ii)  any partnership (a) the sole general partner or the managing general
            partner of which is such Person or a Subsidiary of such Person or
            (b) the only general partners of which are such Person or of one or
            more Subsidiaries of such Person (or any combination thereof).

      "Subsidiary Guarantee" means the Guarantee by each Guarantor of the
Company's Obligations under this Indenture, the Security Documents and the
Notes, executed pursuant to the provisions of this Indenture.

      "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 9.03; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "TIA"
means, to the extent required by any such amendment, the Trust Indenture Act of
1939 as so amended.

      "Transactions" means the transactions contemplated by the Plan.

      "Trust Monies" means all cash and Cash Equivalents received:

      (1)   all Net Proceeds and, subject to the provisions of Section 4.11
            hereof, all Net Loss Proceeds; or

      (2)   as proceeds of any sale or other disposition of all or any part of
            the Collateral by or on behalf of the Trustee or any collection,
            recovery, receipt, appropriation or other realization of or from all
            or any part of the Collateral by or on behalf of the Trustee
            pursuant to this Indenture or any of the Security Documents or
            otherwise;


                                       26
<PAGE>

provided, however, that Trust Monies shall in no event include any property
deposited with the Trustee for any redemption, legal defeasance or covenant
defeasance of Notes, for the satisfaction and discharge of this Indenture or to
pay the purchase price of Notes pursuant to a Change of Control Offer, an Asset
Sale Offer or a Loss Proceeds Offer.

      "Trustee" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.

      "Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) at such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.

      "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing

      (i)   the sum of the products obtained by multiplying (a) the amount of
            each then remaining installment, sinking fund, serial maturity or
            other required payments of principal, including payment at final
            maturity, in respect thereof, by (b) the number of years (calculated
            to the nearest one-twelfth) that will elapse between such date and
            the making of such payment, by

      (ii)  the then outstanding principal amount of such Indebtedness.

      "Wholly Owned" means, when used with respect to any Subsidiary or
Restricted Subsidiary of a Person, a Subsidiary (or Restricted Subsidiary, as
appropriate) of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors, qualifying shares) shall at
the time be owned by such Person or by one or more wholly owned Subsidiaries (or
Wholly Owned Restricted Subsidiaries, as appropriate) of such Person and one or
more Wholly Owned Subsidiaries (or Wholly Owned Restricted Subsidiaries, as
appropriate) of such Person.

Section 1.02. Other Definitions.

                                                                      Defined
       Term                                                          in Section
       ----                                                          ----------

       "Affiliate Transaction"....................................      4.12
       "Asset Sale Offer".........................................      4.10
       "DTC"......................................................      2.03
       "Change of Control Offer"..................................      4.15
       "Change of Control Payment"................................      4.15
       "Change of Control Payment Date"...........................      4.15
       "Change of Control Purchase Price".........................      4.15
       "Covenant Defeasance"......................................      8.03
       "Event of Default".........................................      6.01
       "Excess Loss Proceeds"....................................       4.11
       "Excess Proceeds"..........................................      4.10
       "Legal Defeasance".........................................      8.02


                                       27
<PAGE>

                                                                      Defined
       Term                                                          in Section
       ----                                                          ----------

       "Loss Proceeds Offer"......................................      4.11
       "Loss Proceeds Offer Amount"...............................      4.11
       "Loss Proceeds Offer Trigger Date".........................      4.11
       "Offer Amount".............................................      4.10
       "Offer Period".............................................      3.09
       "Paying Agent".............................................      2.03
       "Permitted Debt"...........................................      4.09
       "Purchase Date"............................................      3.09
       "Registrar"................................................      2.03
       "Released Collateral"......................................     10.06
       "Released Trust Monies"....................................     12.04
       "Replacement Assets".......................................      4.10
       "Restricted Payments"......................................      4.07
       "Senior Secured Debt"......................................      4.11
       "Subject Property".........................................      4.11

Section 1.03. Terms of TIA.

      Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.

      The following TIA terms used in this Indenture have the following
meanings:

      "indenture securities" means the Notes;

      "indenture security Holder" means a Holder of a Note;

      "indenture to be qualified" means this Indenture;

      "indenture trustee" or "institutional trustee" means the Trustee; and

      "obligor" on the Notes and the Subsidiary Guarantees means the Company and
the Guarantors, respectively, and any successor obligor upon the Notes and the
Subsidiary Guarantees, respectively.

      All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.

Section 1.04. Rules of Construction.

      Unless the context otherwise requires:

            (1) a term has the meaning assigned to it;


                                       28
<PAGE>

            (2) an accounting term not otherwise defined has the meaning
      assigned to it in accordance with GAAP (whether or not such is indicated
      herein), and, except as otherwise herein expressly provided, the term
      "generally accepted accounting principles" with respect to any computation
      required or permitted hereunder shall mean such accounting principles as
      are generally accepted in the United States as consistently applied by the
      Company on the Effective Date;

            (3) "or" is not exclusive;

            (4) words in the singular include the plural, and in the plural
      include the singular;

            (5) unless otherwise specifically set forth herein, all calculations
      or determinations of a Person shall be performed or made on a consolidated
      basis in accordance with GAAP but shall not include the accounts of
      Unrestricted Subsidiaries, except to the extent of dividends and
      distributions actually paid to the Company or a Restricted Subsidiary;

            (6) the words "herein", "hereof" and "hereunder" and other words of
      similar import refer to this Indenture as a whole and not to any
      particular Article, Section or other subdivision;

            (7) unless the context otherwise requires, any reference to a
      "Clause," and "Article" or a "Section", or to an "Exhibit" or a
      "Schedule", refers to a Clause, an Article or Section of, or to an Exhibit
      or a Schedule attached to, this Indenture, as the case may be;

            (8) unless the context otherwise requires, any reference to a
      statute, rule or regulation refers to the same (including any successor
      statute, rule or regulation thereto) as it may be amended from time to
      time;

            (9) unless otherwise expressly provided herein, the principal amount
      of any preferred stock shall be greater of (i) the maximum liquidation
      value of such preferred stock or (ii) the maximum mandatory redemption or
      mandatory repurchase price with respect to such preferred stock; and

            (10) provisions apply to successive events and transactions.

                                   ARTICLE 2.
                                   THE NOTES

Section 2.01. Form and Dating.

      (a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends, endorsements required by law, stock exchange rule or usage.
Each Note shall be dated the date of its authentication. The Notes shall be in
denominations of $1000 and integral multiples thereof.


                                       29
<PAGE>

      The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company and the Trustee,
by their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby. However, to the extent any provision of
any Note conflicts with the express provisions of this Indenture, the provisions
of this Indenture shall govern and be controlling.

      Upon their original issuance, Notes shall be issued in the form of one or
more Global Notes registered in the name of DTC, as Depositary, or its nominee
and deposited with the Trustee, as Custodian for DTC, for credit by DTC to the
respective accounts of beneficial owners of the Notes represented thereby (or
such other accounts as they may direct).

      (b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.

      Except as set forth in Section 2.06 hereof, the Global Notes may be
transferred, in whole and not in part, only by the Depositary to a nominee of
the Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary, or a nominee of such successor Depositary.

      (c) Book-Entry Provisions. This Section 2.01(c) shall apply only to Global
Notes deposited with or on behalf of the Depositary.

      The Company shall execute and the Trustee shall, in accordance with this
Section 2.01(c), authenticate and deliver the Global Notes that (i) shall be
registered in the name of the Depositary or the nominee of the Depositary and
(ii) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instructions or held by the Custodian.

      Participants shall have no rights either under this Indenture with respect
to any Global Note held on their behalf by the Depositary or by the Custodian as
custodian for the Depositary or under such Global Note, and the Depositary may
be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Participants, the operation of
customary practices of such Depositary governing the exercise of the rights of
an owner of a beneficial interest in any Global Note.


                                       30
<PAGE>

      (d) Definitive Notes. Notes issued in definitive form shall be
substantially in the form of Exhibit A attached hereto (but without the Global
Note Legend thereon, without certain phrases specified in Exhibit A to be for
Global Notes only and without the "Schedule of Exchanges of Interests in the
Global Note" attached thereto) and shall be printed, typewritten, lithographed
or engraved or produced by any combination of these methods or may be produced
by any other method permitted by the rules of any securities exchange on which
the Notes may be listed, as evidenced by the execution of such Notes.

      (e) Provisions Applicable to Forms of Notes. The Notes may also have such
additional provisions, omissions, variations or substitutions as are not
inconsistent with the provisions of this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with this Indenture, any applicable law or
with any rules made pursuant thereto or with the rules of any securities
exchange or governmental agency or as may be determined consistently herewith by
the Officers of the Company executing such Notes, as conclusively evidenced by
their execution of such Notes. All Notes will be otherwise substantially
identical except as provided herein.

      Subject to the provisions of this Article 2, a Holder of a Global Note may
grant proxies and otherwise authorize any Person to take any action that a
Holder is entitled to take under this Indenture or the Notes.

Section 2.02. Execution and Authentication.

      An Officer shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Notes and may be in
facsimile form.

      If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.

      A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.

      The Trustee shall, upon a Company Order, authenticate Notes for original
issue up to the aggregate principal amount of $100.0 million. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof.

      The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders or an Affiliate of the Company.

Section 2.03. Registrar and Paying Agent.

      The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional


                                       31
<PAGE>

paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.

      The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.

      The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.

      The Company shall, prior to each Regular Record Date, notify the Paying
Agent of any wire transfer instructions for payments that it receives from
Holders.

Section 2.04. Paying Agent to Hold Money in Trust.

      The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of or interest on the Notes, and will notify the Trustee of any
default by the Company in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it to
the Trustee. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent
(if other than the Company or a Subsidiary) shall have no further liability for
the money. If the Company or a Subsidiary acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Holders all
money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.

Section 2.05. Holder Lists.

      The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).

Section 2.06. Transfer and Exchange.

      (a) Transfer and Exchange of Global Notes. (i) Except as provided in this
Section 2.06 and the sections of the Indenture referenced herein,
notwithstanding any other provision in this Indenture, no Global Note may be
exchanged in whole or in part for Definitive Notes, and no transfer of a Global
Note in whole or in part may be registered, in the name of any Person other than
the Depositary for such Global Notes or a nominee thereof unless (i) such
Depositary or the Trustee has notified the Company that the Depository is (A)


                                       32
<PAGE>

unwilling or unable to continue as Depositary for such Global Notes or (B) has
ceased to be clearing agency registered as such under the Exchange Act, and in
either case the Company fails to appoint a successor Depositary within 90 days
of such notice, (ii) the Company executes and delivers to the Trustee a Company
Order stating that it elects to cause the issuance of the Notes in definitive
form and that all Global Notes shall be exchanged in whole for Definitive Notes
(in which case such exchange shall be effected by the Trustee) or (iii) there
shall have occurred and be continuing an Event of Default with respect to the
Notes. Notwithstanding the foregoing provisions of this Section 2.06(a), Global
Notes also may be exchanged or replaced, in whole or in part, as provided in
Sections 2.07 and 2.10 hereof. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a); however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b) or (d) hereof.

      (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures.

            (i) If any Global Note is to be exchanged for other Notes or
      cancelled in whole, it shall be surrendered by or on behalf of the
      Depositary or its nominee to the Trustee, as Registrar, for exchange or
      cancellation as provided in this Article 2. If any Global Note is to be
      exchanged for other Notes or cancelled in part, or if another Note is to
      be exchanged in whole or in part for a beneficial interest in any Global
      Note, then either (i) such Global Note shall be so surrendered for
      exchange or cancellation as provided in this Article 2 or (ii) the
      principal amount thereof shall be reduced or increased by an amount equal
      to the portion thereof to be so exchanged or cancelled, or equal to the
      principal amount of such other Note to be so exchanged for a beneficial
      interest therein, as the case may be, by means of an appropriate
      endorsement made on the Global Notes by the Trustee, as Custodian,
      whereupon the Trustee, in accordance with the Applicable Procedures, shall
      instruct the Depositary or its authorized representative to make a
      corresponding adjustment to its records. Upon any such surrender or
      adjustment of a Global Note, the Trustee shall, as provided in this
      Article 2, authenticate and deliver any Notes issuable in exchange for
      such Global Note (or any portion thereof) to or upon the order of, and
      registered in such names as may be directed by, the Depositary or its
      authorized representative. Upon the request of the Trustee in connection
      with the occurrence of any of the events specified in Section 2.06(a), the
      Company shall promptly make available to the Trustee a reasonable supply
      of Definitive Notes that are not in the form of Global Notes. The Trustee
      shall be entitled to rely upon any order, direction or request of the
      Depositary or its authorized representative which is given or made
      pursuant to this Article 2 if such order, direction or request is given or
      made in accordance with the Applicable Procedures and in accordance with
      all applicable laws. Every Note authenticated and delivered upon
      registration of transfer of, or in exchange for or in lieu of, a Global
      Note or any portion thereof, whether pursuant to this Article 2 or
      otherwise, shall be authenticated and delivered in the form of, and shall
      be, a Global Note, unless such Note is registered in the name of a Person
      other than the Depositary for such Global Note or a nominee thereof.


                                       33
<PAGE>

            (ii) The Depositary or its nominee, as registered owner of a Global
      Note, shall be the Holder of such Global Note for all purposes under this
      Indenture and the Notes and owners of beneficial interests in a Global
      Note shall hold such interests pursuant to the Applicable Procedures.
      Accordingly, any such owner's beneficial interest in a Global Note will be
      shown only on, and the transfer of such interest shall be effected only
      through, records maintained by the Depositary or its nominee or its
      Participants.

      (c) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:

            THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
      HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
      NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
      NOTE REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE
      REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A
      NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
      INDENTURE.

            UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
      DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
      ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
      ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
      TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
      REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
      OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
      OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

      (d) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction to reflect such increase.

      (e) General Provisions Relating to Transfers and Exchanges.


                                       34
<PAGE>

      Subject to the other provisions of this Indenture regarding restrictions
on transfer, upon surrender for registration of transfer of any Note at any
office or agency of the Company designated pursuant to Section 4.02 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferee or transferees,
one or more new Notes of any authorized denominations, of a like aggregate
principal amount and bearing such restrictive legends as may be required by this
Indenture.

            (i) At the option of the Holder, and subject to the other provisions
      of this Section 2.06, Notes may be exchanged for other Notes of any
      authorized denominations, of a like aggregate principal amount and bearing
      such restrictive legends as may be required by this Indenture upon
      surrender of the Notes to be exchanged at any such office or agency.
      Whenever any Notes are so surrendered for exchange, the Company shall
      execute, the Trustee shall authenticate and make available for delivery,
      the Notes which the Holder making the exchange is entitled to receive.

            (ii) Every Note presented or surrendered for registration of
      transfer or for exchange shall (if so required by the Company or the
      Registrar) be duly endorsed, or be accompanied by a written instrument of
      transfer, in form satisfactory to the Company and the Registrar, duly
      executed by the Holder thereof or his attorney duly authorized in writing.

            (iii) No service charge shall be made to a holder of a beneficial
      interest in a Global Note or to a Holder of a Definitive Note for any
      registration of transfer or exchange, but the Company may require payment
      of a sum sufficient to cover any transfer tax or similar governmental
      charge payable in connection therewith (other than any such transfer taxes
      or similar governmental charge payable upon exchange or transfer pursuant
      to Sections 2.10, 3.06, 3.08, 3.09, 4.10, 4.11, 4.15 and 9.05 hereof).

            (iv) The Registrar shall not be required to register the transfer of
      or exchange any Note selected for redemption in whole or in part, except
      the unredeemed portion of any Note being redeemed in part.

            (v) All Global Notes and Definitive Notes issued upon any
      registration of transfer or exchange of Global Notes or Definitive Notes
      shall be the valid obligations of the Company, evidencing the same debt,
      and entitled to the same benefits under this Indenture, as the Global
      Notes or Definitive Notes surrendered upon such registration of transfer
      or exchange.

            (vi) The Registrar shall not be required (A) to issue, to register
      the transfer of or to exchange any Notes during a period beginning at the
      opening of business 15 days before the day of any selection of Notes for
      redemption under Section 3.02 hereof and ending at the close of business
      on the day of selection, (B) to register the transfer of or to exchange
      any Note so selected for redemption in whole or in part, except the
      unredeemed portion of any Note being redeemed in part or (C) to register
      the transfer of or to exchange a Note between a record date and the next
      succeeding Interest Payment Date.


                                       35
<PAGE>

            (vii) Prior to due presentment for the registration of a transfer of
      any Note, the Trustee, any Agent and the Company may deem and treat the
      Person in whose name any Note is registered as the absolute owner of such
      Note for the purpose of receiving payment of principal of and interest on
      such Notes and for all other purposes, and none of the Trustee, any Agent
      or the Company shall be affected by notice to the contrary.

            (viii) The Trustee shall authenticate Global Notes and Definitive
      Notes in accordance with the provisions of Section 2.02 hereof.

Section 2.07. Replacement Notes.

      If any mutilated Note is surrendered to the Trustee or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon receipt of a Company
Order, shall authenticate a replacement Note if the Trustee's requirements are
met. If required by the Trustee or the Company, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Trustee and the
Company to protect the Company, the Trustee, any Agent and any authenticating
agent from any loss that any of them may suffer if a Note is replaced. The
Company may charge for its expenses in replacing a Note.

      In case any such mutilated, destroyed, lost or stolen Note has become or
is about to become due and payable, the Company in its discretion may, instead
of issuing a new Note, pay such Note.

      Upon the issuance of any new Note under this Section, the Company and the
Trustee (without duplication) may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
and reasonable attorneys' fees) connected therewith.

      Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.

      The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.

Section 2.08. Outstanding Notes.

      The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section 3.08
hereof.

      If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.


                                       36
<PAGE>

      If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.

      If the Paying Agent (other than the Company, a Subsidiary of the Company
or an Affiliate of any thereof) holds, on a redemption date or Maturity, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.

Section 2.09. Treasury Notes.

      In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Affiliate of the Company, shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that the Trustee knows are so owned shall be so disregarded.

      Notwithstanding the foregoing, with respect to any Global Note, nothing
herein shall prevent the Company, the Trustee, or any agent of the Company or
the Trustee, from giving effect to any written certification, proxy or other
authorization furnished by a Depositary or impair, as between a Depositary and
holders of beneficial interests in any Global Note the operation of customary
practices governing the exercise of the rights of the Depositary as Holder of
such Global Note.

Section 2.10. Temporary Notes.

      Until certificates representing Notes are ready for delivery, the Company
may prepare and the Trustee, upon receipt of a Company Order, shall authenticate
temporary Notes. Temporary Notes shall be substantially in the form of
certificated Notes but may have variations that the Company considers
appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall, as soon as practicable upon its receipt of a Company Order, authenticate
definitive Notes in exchange for temporary Notes.

      Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.

Section 2.11. Cancellation.

      The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.


                                       37
<PAGE>

Section 2.12. Defaulted Interest.

      If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.

Section 2.13. CUSIP Numbers.

      The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice and that reliance may be placed only
on the other identification numbers printed on the Notes and any such redemption
shall not be affected by any defect in or omission of such numbers. The Company
will promptly notify the Trustee of any change in the "CUSIP" numbers.

Section 2.14. Computation of Interest.

      Interest on the Notes shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.

                                   ARTICLE 3.
                            REDEMPTION AND PREPAYMENT

Section 3.01. No Optional Redemption.

      The Notes are not optionally redeemable at any time.

Section 3.02. Offer to Purchase by Application of Excess Proceeds and Net Loss
Proceeds.

      In the event that, pursuant to Section 4.10 or Section 4.11 hereof, the
Company shall be required to commence an Asset Sale Offer or a Loss Proceeds
Offer, it shall follow the procedures specified below. The Asset Sale Offer or
Loss Proceeds Offer shall be made to all Holders and all holders of the
Indebtedness of the Company or the Subsidiaries that is pari passu with the
Notes or the Subsidiary Guarantee in question that contains provisions similar
to those set forth in this Indenture with respect to offers to purchase or
redeem with the proceeds of sales of assets or that is Senior Secured Debt in
the case of an Event of Loss.


                                       38
<PAGE>

      An Asset Sale Offer or Loss Proceeds Offer shall remain open for a period
of 20 Business Days following its commencement and no longer, except to the
extent that a longer period is required by applicable law (the "Offer Period").
No later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 or Section 4.11 or, if less
than the Offer Amount or Loss Proceeds Offer Amount has been tendered, all Notes
tendered in response to the Asset Sale Offer or the Loss Proceeds Offer, as
applicable. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.

      If the Purchase Date is on or after a Regular Record Date and on or before
the related Interest Payment Date, any accrued and unpaid interest shall be paid
to the Person in whose name a Note is registered at the close of business on
such record date, and no additional interest shall be payable to Holders who
tender Notes pursuant to the Asset Sale Offer or the Loss Proceeds Offer, as
applicable.

      Upon the commencement of an Asset Sale Offer or Loss Proceeds Offer, the
Company shall send, by first class mail, a notice to the Trustee and each of the
Holders. The notice shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Asset Sale Offer or the Loss
Proceeds Offer, as applicable. The notice shall contain (i) the most recent
annual and quarterly financial statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in the
documents required to be filed with the Trustee pursuant to Section 4.03(a) of
this Indenture (which requirements may be satisfied by delivery of such
documents together with the Asset Sale Offer or Loss Proceeds Offer, as
applicable), (ii) a description of material developments as found in press
releases and public filings in the Company's business subsequent to the date of
the latest of such financial statements referred to in clause (i), (iii) a
description of the events requiring the Company to make the Asset Sale Offer or
the Loss Proceeds Offer, and (iv) any other information required by applicable
law to be included therein. The notice, which shall govern the terms of the
Asset Sale Offer or the Loss Proceeds Offer, as applicable, shall also state:

      (a) that the Asset Sale Offer or the Loss Proceeds Offer is being made
pursuant to this Section 3.02 and Section 4.10 or Section 4.11 hereof and the
length of time the Asset Sale Offer or Loss Proceeds Offer, as applicable, shall
remain open;

      (b) the Offer Amount or the Loss Proceeds Offer Amount, the purchase price
and the Purchase Date;

      (c) that any Note not tendered or accepted for payment shall continue to
accrue interest;

      (d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer or the Loss Proceeds
Offer, as applicable, shall cease to accrue interest after the Purchase Date;

      (e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer or the Loss Proceeds Offer, as applicable, may only elect to have all
of such Note purchased and may not elect to have only a portion of such Note
purchased;


                                       39
<PAGE>

      (f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer or Loss Proceeds Offer, shall be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, or transfer by book-entry transfer, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;

      (g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;

      (h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount or the Loss Proceeds Offer Amount, as
applicable, the Company shall select the Notes to be purchased on a pro rata
basis (with such adjustments as may be deemed appropriate by the Company so that
only Notes in denominations of $1,000, or integral multiples thereof, shall be
purchased); and

      (i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).

      On or prior to 10:00 a.m. New York City time, on any Purchase Date, the
Company shall deposit with the Trustee or with the Paying Agent money sufficient
to pay the redemption price of and accrued interest on all Notes to be redeemed
on that date. The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of, and accrued
interest on, all Notes to be redeemed.

      On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount or the Loss Proceeds Offer Amount, as applicable, of Notes or portions
thereof tendered pursuant to the Asset Sale Offer or the Loss Proceeds Offer, as
applicable, or if less than the Offer Amount or the Loss Proceeds Offer Amount
has been tendered, all Notes tendered, and shall deliver to the Trustee an
Officers' Certificate stating that such Notes or portions thereof were accepted
for payment by the Company in accordance with the terms of this Section 3.02.
The Company, the Depositary or the Paying Agent, as the case may be, shall
promptly (but in any case not later than five days after the Purchase Date) mail
or deliver to each tendering Holder an amount equal to the purchase price of the
Notes tendered by such Holder and accepted by the Company for purchase, and the
Company shall promptly issue a new Note, and the Trustee, upon receipt of a
Company Order from the Company, shall authenticate and mail or deliver such new
Note to such Holder, in a principal amount equal to any unpurchased portion of
the Note surrendered. Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce the results of the Asset Sale Offer or the Loss Proceeds Offer, as
applicable, on the Purchase Date.


                                       40
<PAGE>

                                   ARTICLE 4.
                                    COVENANTS

Section 4.01. Payment of Notes.

      The Company shall pay or cause to be paid the principal of and interest on
the Notes on the dates and in the manner provided in the Notes. Principal and
interest shall be considered paid on the date due if the Paying Agent, if other
than the Company or a Subsidiary thereof, (i) holds as of 10:00 a.m. New York
City Time on the due date money deposited by the Company in immediately
available funds and designated for and sufficient to pay all principal and
interest then due and (ii) is not prohibited from paying such money to the
Holders.

      The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
2% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including interest that accrues after, or
would have accrued but for, the commencement of a proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful.

Section 4.02. Maintenance of Office or Agency.

      The Company shall maintain in the Borough of Manhattan, The City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.

      The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
The City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.

      The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03.

Section 4.03. Reports; Fiscal Year.

      (a) Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company shall furnish to
the Trustee and the Holders of Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the


                                       41
<PAGE>

Commission on Forms 10-Q and 10K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports, in each case within the
time periods specified in the Commission's rules and regulations. In addition,
whether or not required by the rules and regulations of the Commission, the
Company shall file a copy of all such information and reports with the
Commission for public availability within the time periods specified in the
Commission's rules and regulations (unless the Commission will not accept such a
filing) and make such information available to securities analysts and
prospective investors upon request.

      (b) Any materials required to be furnished to Holders of Notes by this
Section 4.03 shall discuss, in reasonable detail, either on the face of the
financial statements included therein or in the footnotes thereto and in any
Management's Discussion and Analysis of Financial Condition and Results of
Operations, the financial condition and results of operations of the Company and
its Restricted Subsidiaries separate from the financial condition and results of
operations of the Unrestricted Subsidiaries of the Company.

      (c) The Company shall not, and shall not permit any of its Subsidiaries,
to change the date of the end of its Fiscal Year from December 31.

Section 4.04. Compliance Certificate.

      (a) The Company and each Guarantor (to the extent that such Guarantor is
so required under the TIA) shall deliver to the Trustee, within [120] days after
the end of each Fiscal Year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding Fiscal
Year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
scheduled payments on account of the principal of or interest, if any, on the
Notes is prohibited or if such event has occurred, a description of the event
and what action the Company is taking or proposes to take with respect thereto.

      (b) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon and in any event within 5 Business Days
after any Officer's becoming aware of any Default or Event of Default, an
Officers' Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.


                                       42
<PAGE>

Section 4.05. Taxes.

      The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.

Section 4.06. Stay, Extension and Usury Laws.

      The Company and each of the Guarantors covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company and
each of the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.

Section 4.07. Restricted Payments.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company or
any of its Restricted Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or to the Company or a
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value (including; without limitation, in connection with
any merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company; (iii) make any payment
on or with respect to, or purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness that is subordinated to the Notes or a
Subsidiary Guarantee, except a payment of interest or principal at Stated
Maturity or any payments made with the proceeds of the GHR/Kenesis Actions or
otherwise from the GHR/Kenesis Litigation Trust; or (iv) make any Restricted
Investments, (all such payments and other actions set forth in clauses (i)
through (iv) above being collectively referred to as "Restricted Payments").

      The foregoing provisions shall not prohibit (i) the redemption,
repurchase, retirement, defeasance or other acquisition of any Indebtedness that
is subordinated to the Notes or Equity Interests of the Company in exchange for,
or out of the net cash proceeds of the substantially concurrent sale (other than
to a Restricted Subsidiary of the Company) of, other Equity Interests of the
Company (other than any Disqualified Stock); (ii) the defeasance, redemption,
repurchase or other acquisition of Indebtedness that is subordinated to the
Notes with the net cash proceeds from an Incurrence of Permitted Refinancing
Indebtedness; (iii) the payment of any dividend (in cash or otherwise) by a
Restricted Subsidiary of the Company to the holders of its common Equity


                                       43
<PAGE>

Interests on a pro rata basis; (iv) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Subsidiary of the Company held by any member of the Company's (or any of its
Subsidiaries') management pursuant to any management equity subscription
agreement, stock option agreement or employment agreement, provided that the
purchase price is paid with the proceeds to the Company of key man life or
disability insurance policies purchased by the Company specifically to finance
any such repurchase, redemption or other acquisition; (v) the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of the Company or any Restricted Subsidiary of the Company held by any member of
the Company's (or any of its Restricted Subsidiaries') management pursuant to
any management equity subscription agreement, stock option agreement, or
employment agreement; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests of the Company or
any Restricted Subsidiary shall not exceed $200,000 in any twelve-month period
and no Default or Event of Default shall have occurred and be continuing
immediately after such transaction; (vi) upon the occurrence of a Change of
Control or an Asset Sale and within 60 days after the completion of the offer to
repurchase the Notes pursuant to the covenants described under Section 3.09,
4.10 and 4.15, any purchase, repurchase, redemption, defeasance, acquisition or
other retirement for value of Indebtedness subordinated to the Notes or a
Subsidiary Guarantee required pursuant to the terms thereof at a purchase price
not to exceed 101% of the outstanding principal amount thereof, plus accrued and
unpaid interest thereon, if any, as a result of such Change of Control, and at a
purchase price not to exceed 100% of the outstanding principal amount, plus
accrued and unpaid interest thereon, if any, as a result of an Asset Sale;
provided, however, that at the time of such purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value, no Default or Event of
Default shall have occurred and be continuing (or would result therefrom); (vii)
payments made to American Biltrite pursuant to the Business Relations Agreement
dated as of March 11, 1993, by and between American Biltrite and the Company, as
amended to the date of this Indenture or (viii) the payment of amounts due in
lieu of compensation under the Personal Services Agreement dated as of March 11,
1993, by and between American Biltrite and the Company, as amended to the date
of this Indenture, provided that any incentive fees payable shall be approved by
a majority of the disinterested directors of the Company.

Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.

      (a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to

            (i)   pay dividends or make any other distributions to the Company
                  or any of its Restricted Subsidiaries (1) on its Capital Stock
                  or (2) with respect to any other interest or participation in,
                  or measured by, its profits, or (b) pay any Indebtedness owed
                  to the Company or any of its Restricted Subsidiaries,

            (ii)  make loans or advances to the Company or any of its Restricted
                  Subsidiaries or


                                       44
<PAGE>

            (iii) transfer any of its properties or assets to the Company or any
                  of its Restricted Subsidiaries.

      (b) However, the foregoing restrictions will not apply to encumbrances or
restrictions existing under or by reason of

            (i)   Existing Indebtedness, the Plan Trust Note and the New
                  Convertible Security, each as in effect on the date of this
                  Indenture and any amendments, modifications, restatements,
                  renewals, increases, supplements, refundings, replacements or
                  refinancings thereof; provided that such amendments,
                  modifications, restatements, renewals, increases, supplements,
                  refundings, replacement or refinancings are not materially
                  more restrictive, taken as a whole, with respect to such
                  dividend and other payment restrictions than those contained
                  in the agreements governing the Existing Indebtedness as in
                  effect on the date of this Indenture,

            (ii)  the Exit Facility as in effect as of the date of this
                  Indenture and any amendments, modifications, refundings,
                  replacements, renewals or supplements thereof; provided that
                  such amendments, modifications, refundings, replacements,
                  renewals or supplements are not materially more restrictive,
                  taken as a whole, with respect to such dividend and other
                  payment restrictions than those contained in the Exit Facility
                  as in effect on the date of this Indenture as determined in
                  good faith by the Company's Board of Directors,

            (iii) this Indenture, the Security Documents and the Notes,

            (iv)  applicable law,

            (v)   any instrument governing Indebtedness or Capital Stock of a
                  Person acquired by the Company or any of its Restricted
                  Subsidiaries as in effect at the time of such acquisition
                  (except to the extent such Indebtedness was Incurred in
                  connection with or in contemplation of such acquisition),
                  which encumbrance or restriction is not applicable to any
                  Person, or the properties or assets of any Person, other than
                  the Person, or the property or assets of the Person, so
                  acquired; provided that, in the case of Indebtedness, such
                  Indebtedness was permitted by the terms of this Indenture to
                  be Incurred,

            (vi)  customary non-assignment provisions in leases, licenses and
                  other contracts entered into in the ordinary course of
                  business and consistent with past practices,

            (vii) purchase money obligations for property acquired in the
                  ordinary course of business that impose restrictions of the
                  nature described in clause (iii) of Section 4.08(a) above on
                  the property so acquired,


                                       45
<PAGE>

           (viii) any agreement for the sale of a Subsidiary or a substantial
                  portion of such Subsidiary's assets that restricts
                  distributions or transfers of assets by that Subsidiary
                  pending its sale,

            (ix)  Permitted Refinancing Indebtedness; provided that the
                  restrictions contained in the agreements governing such
                  Permitted Refinancing Indebtedness are not materially more
                  restrictive, taken as a whole, than those contained in the
                  agreements governing the Indebtedness being refinanced as
                  determined in good faith by the Company's Board of Directors,

            (x)   Liens permitted to be incurred under the provisions of Section
                  4.13 that limit the right of the debtor to dispose of the
                  assets subject to such Liens,

            (xi)  provisions limiting the disposition or distribution of assets
                  or property in, or transfer of Capital Stock of, joint venture
                  agreements, asset sale agreements, sale-leaseback agreements,
                  stock sale agreements and other similar agreements entered
                  into (a) in the ordinary course of business, consistent with
                  past practice or (b) with the approval of the Company's Board
                  of Directors, which limitations are applicable only to the
                  assets, property or Capital Stock that are the subject of such
                  agreements,

            (xii) the issuance of preferred stock by a Restricted Subsidiary or
                  the payment of dividends thereon in accordance with the terms
                  thereof; provided that issuance of such preferred stock is
                  permitted pursuant Section 4.09 hereof and the terms of such
                  preferred stock do not expressly restrict the ability of a
                  Restricted Subsidiary to pay dividends or make any other
                  distributions on its Capital Stock (other than requirements to
                  pay dividends or make or liquidation preferences on such
                  Preferred Stock prior to paying any dividends or making any
                  other distributions on such other Capital Stock),

           (xiii) customary provisions restricting subletting or assignment of
                  any lease governing a leasehold interest,

            (xiv) encumbrances or restrictions contained in Hedging Obligations
                  permitted from time to time under this Indenture,

            (xv)  restrictions on cash or other deposits or net worth imposed by
                  customers under contracts entered into in the ordinary course
                  of business, and

            (xvi) any agreement or instrument governing Indebtedness permitted
                  to be Incurred under this Indenture; provided that the terms
                  and conditions of any restrictions and encumbrances, taken as
                  a whole, are not more restrictive than those contained in this
                  Indenture.


                                       46
<PAGE>

Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, Incur or otherwise become directly or
indirectly liable, contingently or otherwise, with respect to any Indebtedness
(including Acquired Debt) and that the Company shall not issue any Disqualified
Stock and shall not permit any of its Restricted Subsidiaries to issue any
shares of preferred stock; provided, however, that the Company may Incur
Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock and
the Company's Restricted Subsidiaries may Incur Indebtedness or issue preferred
stock if (i) as of the date of such proposed Incurrence or issuance (the
"Calculation Date") the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is Incurred or such Disqualified Stock or preferred stock is issued
would have been at least 2.25 to 1 and (ii) no Default or Event of Default shall
have occurred and be continuing at the time of the Incurrence of such additional
Indebtedness or the issuance of such Disqualified Stock or preferred stock or
shall occur as a result of such Incurrence or issuance.

      The provisions of the first paragraph of this Section 4.09 will not apply
to the Incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):

            (i) the Incurrence by the Company and any Guarantor of Indebtedness
      and letters of credit (with letters of credit being deemed to have a
      principal amount equal to the stated amount thereof) and other obligations
      under the Exit Facility in an aggregate principal amount that does not
      exceed at any one time $30,000,000 less the aggregate amount of all Net
      Proceeds of Asset Sales and Net Loss Proceeds of Events of Loss applied to
      repay Indebtedness under such Exit Facility pursuant to Section 4.10 or
      Section 4.11 hereof (other than temporary paydowns pending final
      application of such Net Proceeds or Net Loss Proceeds);

            (ii) the Incurrence by the Company of the Plan Trust Note and the
      New Convertible Security;

            (iii) the Incurrence by the Company of the Existing Indebtedness;

            (iv) the Incurrence by the Company of Indebtedness represented by
      the Notes in an aggregate principal amount not to exceed $100.0 million
      and any Subsidiary Guarantees issued in connection therewith;

            (v) the Incurrence by the Company or any Guarantor of Permitted
      Refinancing Indebtedness in exchange for, or the net proceeds of which are
      used to refund, refinance or replace Indebtedness (other than intercompany
      Indebtedness) that is permitted by this Indenture to be Incurred under the
      first paragraph hereof or clauses (iii) and (iv) or this clause (v);

            (vi) the Incurrence by the Company or any of its Restricted
      Subsidiaries of intercompany Indebtedness between or among the Company and
      any of its Restricted Subsidiaries; provided, however, that:


                                       47
<PAGE>

                  (a) if the Company or any Guarantor is the obligor on such
            Indebtedness and the payee is not the Company or a Guarantor, such
            Indebtedness must be expressly subordinated to the prior payment in
            full in cash of all Obligations then due with respect to the Notes,
            in the case of the Company, or the Subsidiary Guarantee, in the case
            of a Guarantor; and

                  (b) (1) any subsequent issuance or transfer of Equity
            Interests that results in any such Indebtedness being held by a
            Person other than the Company or a Restricted Subsidiary of the
            Company and (2) any sale or other transfer of any such Indebtedness
            to a Person that is not either the Company or a Restricted
            Subsidiary of the Company will be deemed, in each case, to
            constitute an incurrence of such Indebtedness by the Company or such
            Restricted Subsidiary, as the case may be, that was not permitted by
            this clause (vi);

            (vii) the issuance by any of the Company's Restricted Subsidiaries
      to the Company or to any of its Restricted Subsidiaries of shares of
      Preferred Stock; provided, however, that:

                  (a) any subsequent issuance or transfer of Equity Interests
            that results in any such preferred stock being held by a Person
            other than the Company or a Restricted Subsidiary of the Company;
            and

                  (b) any sale or other transfer of any such preferred stock to
            a Person that is neither the Company nor a Restricted Subsidiary of
            the Company,

      will be deemed, in each case, to constitute an issuance of such preferred
      stock by such Restricted Subsidiary that was not permitted by this clause
      (vii);

            (viii) the Incurrence by the Company or any of its Restricted
      Subsidiaries of Hedging Obligations in the ordinary course of business;

            (ix) the Guarantee by the Company or any Guarantor of Indebtedness
      of the Company or a Restricted Subsidiary of the Company that was
      permitted to be incurred by another provision of this Section 4.09;
      provided that if the Indebtedness being guaranteed is subordinated to or
      pari passu with the Notes (in the case of the Company) or a Subsidiary
      Guarantee (in the case of a Guarantor), then the Guarantee shall be
      subordinated or pari passu, as applicable, to the same extent as the
      Indebtedness guaranteed;

            (x) Indebtedness consisting of the financing of insurance premiums
      in customary amounts consistent with the operations and business of the
      Company and its Restricted Subsidiaries;

            (xi) the Incurrence by the Company or any of its Restricted
      Subsidiaries of Indebtedness arising from agreements of the Company or any
      of its Restricted Subsidiaries providing for indemnification, adjustment
      of purchase price or similar obligations, in each case, incurred or
      assumed in connection with the disposition of any business, assets or
      Capital Stock of a Subsidiary, provided that the maximum aggregate
      liability in respect of all such Indebtedness shall at no time exceed the
      gross proceeds actually received or to be received by the Company and its
      Restricted Subsidiaries in connection with such disposition;


                                       48
<PAGE>

            (xii) the Incurrence by the Company or any of its Restricted
      Subsidiaries of Indebtedness in respect of bid, performance, surety and
      similar bonds issued for the account of the Company and any of its
      Restricted Subsidiaries in the ordinary course of business, including
      Guarantees and obligations of the Company or any of its Restricted
      Subsidiaries with respect to letters of credit supporting such obligations
      (in each case, other than on obligation for money borrowed); and

            (xiii) the Incurrence by the Company or any Guarantor of additional
      Indebtedness in an aggregate principal amount (or accreted value, as
      applicable) at any time outstanding, including all Permitted Refinancing
      Indebtedness Incurred to refund, refinance or replace any Indebtedness
      Incurred pursuant to this clause (xiii), not to exceed $5 million.

      The Company will not incur, and will not permit any Guarantor to incur,
any Indebtedness (including Permitted Debt) that is contractually subordinated
in right of payment to any other Indebtedness of the Company or such Guarantor
unless such Indebtedness is also contractually subordinated in right of payment
to the Notes or the applicable Subsidiary Guarantee on substantially identical
terms; provided, however, that no Indebtedness will be deemed to be
contractually subordinated in right of payment to any other Indebtedness of the
Company solely by virtue of being unsecured or by virtue of being secured on a
first or junior Lien basis.

      For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xiii) above or is
entitled to be Incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify at the time of Incurrence
such item of Indebtedness, in any manner that complies with this Section 4.09.
Accrual of interest, accretion or amortization of original issue discount, the
payment of interest on any Indebtedness in the form of additional Indebtedness
with the same terms, and the payment of dividends on Disqualified Stock in the
form of additional shares of the same class of Disqualified Stock will not be
deemed to be an Incurrence of Indebtedness or an issuance of Disqualified Stock
for purposes of this Section 4.09; provided, in each such case, that the amount
thereof is included in Fixed Charges of the Company as accrued (to the extent
not already included in Fixed Charges).

Section 4.10. Asset Sales.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a Board
Resolution) of the assets or Equity Interests issued or sold or otherwise
disposed of and (ii) at least 75% of the consideration therefor received by the
Company or such Restricted Subsidiary is in the form of cash; provided that the
amount of (x) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet) of the Company or any Restricted


                                       49
<PAGE>

Subsidiary (other than contingent liabilities and liabilities that are by their
terms subordinated to the Notes or the Subsidiary Guarantees) that are assumed
by the transferee of any such assets pursuant to a customary novation agreement
that releases the Company or such Restricted Subsidiary from further liability
and (y) in the case of any Asset Sale constituting the transfer (by merger or
otherwise) of all of the Capital Stock of a Restricted Subsidiary, any
liabilities (as shown on such Restricted Subsidiary's most recent balance sheet)
of such Restricted Subsidiary (other than contingent liabilities and liabilities
that are by their terms subordinated to the Notes or the Subsidiary Guarantees)
that will remain outstanding after such transfer and will not be a liability of
the Company or any other Restricted Subsidiary of the Company following such
transfer and (z) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that are within
30 days of the receipt thereof converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision. To the extent that the assets which are the
subject of any Asset Sale constitute Collateral, all proceeds thereof shall, to
the extent permitted by law, be subject to a perfected Lien in favor of the
Collateral Agent, and to the extent permitted by the Exit Facility, all Net
Proceeds from such an Asset Sale shall be deposited in the Collateral Account.

      Within 270 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or its Restricted Subsidiary, as applicable, may apply such Net
Proceeds, at its option, (a) to repay Senior Debt, or (b) to invest in
[inventory], the making of a capital expenditure or the acquisition of other
long-term assets for use in a Permitted Business ("Replacement Assets"). Pending
the final application of any such Net Proceeds, the Company may temporarily
reduce revolving credit borrowings or otherwise invest such Net Proceeds in any
manner that is not prohibited by this Indenture. Any Net Proceeds from Asset
Sales that are not applied or invested as provided in the first sentence of this
paragraph and within the time specified in the first sentence of this paragraph
will be deemed to constitute "Excess Proceeds." When the aggregate amount of
Excess Proceeds exceeds $5.0 million, the Company will be required to make a pro
rata offer to all Holders of Notes and any holders of other Indebtedness that is
pari passu with the Notes or the Subsidiary Guarantee in question and that
requires such an offer and contains provisions similar to those set forth in
this Indenture with respect to offers (an "Asset Sale Offer"), to purchase or
redeem with the proceeds of sales of assets in accordance with Section 3.02, the
maximum principal amount of Notes and such other pari passu Indebtedness that
may be purchased out of the Excess Proceeds, at an offer price in cash in an
amount equal to 100% of the principal amount thereof plus accrued and unpaid
interest to the date of purchase, in accordance with the procedures set forth in
this Indenture. To the extent that any Excess Proceeds remain after consummation
of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose
not otherwise prohibited by this Indenture. If the aggregate principal amount of
Notes tendered into such Asset Sale Offer surrendered by Holders thereof exceeds
the amount of Excess Proceeds allocated for the Notes (the "Offer Amount"), the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.


                                       50
<PAGE>

Section 4.11. Events of Loss.

      In the event of an Event of Loss with respect to any Collateral, the
Company or the affected Guarantor, as the case may be, will, subject to the
terms of the Exit Facility, apply the Net Loss Proceeds from such Event of Loss,
within 180 days after receipt, at its option:

      (1)   to the rebuilding, repair, replacement or construction of
            improvements to the affected property (the "Subject Property"); or

      (2)   to make capital expenditures with respect to Collateral or to
            acquire properties or long-term assets that will constitute
            Collateral and be used or useful in the Permitted Business of the
            Company or any of its Restricted Subsidiaries;

      provided that if during such 180-day period the Company or a Restricted
      Subsidiary enters into a definitive agreement committing it to apply such
      Net Loss Proceeds in accordance with the requirements of clause (1) or (2)
      or if the application of such Net Loss Proceeds is part of a project
      authorized by the Board of Directors of the Company in good faith that
      will take longer than 180 days (but in no event longer than 270 days in
      the aggregate) to complete, and such project has begun, such 180-day
      period will be extended with respect to the amount of Net Loss Proceeds so
      committed until required to be paid in accordance with such agreement (or,
      if earlier, until termination of such agreement) or until completion of
      such project, as the case may be. Pending the final application of Net
      Loss Proceeds, the Company or any Restricted Subsidiary shall deposit such
      Net Loss Proceeds in the Collateral Account to the extent permitted by the
      Exit Facility; provided that the Company is not required to deposit up to
      $1,000,000 of such Net Loss Proceeds for 30 days after the receipt
      thereof, so long as on the 31st day after such receipt funds in an amount
      equal to the amount of Net Loss Proceeds not previously deposited in the
      Collateral Account are deposited in such Collateral Account.

      Any Net Loss Proceeds from an Event of Loss that are not applied or
invested as provided in the first sentence of the preceding paragraph and within
the time specified in the first sentence of the preceding paragraph will be
deemed to constitute "Excess Loss Proceeds." When the aggregate amount of Excess
Loss Proceeds exceeds $5.0 million (such date, the "Loss Proceeds Offer Trigger
Date"), the Company will make an offer to all Holders and the holders of any
other Senior Debt that is equally and ratably secured by the Subject Property
(the "Senior Secured Debt") and the terms of which require that an offer be made
to all holders of such Senior Secured Debt (a "Loss Proceeds Offer") to purchase
the maximum principal amount of Notes (and Senior Secured Debt) that may be
purchased out of such Excess Loss Proceeds, at an offer price in cash in an
amount equal to 100% of their principal amount plus accrued and unpaid interest,
if any, to the date of purchase (subject to the right of Holders of record on a
Regular Record Date to receive interest on the relevant Interest Payment Date in
accordance with the procedures set forth in this Indenture).

      If the aggregate principal amount of Notes surrendered by Holders exceeds
the Excess Loss Proceeds to be used to purchase Notes (the "Loss Proceeds Offer
Amount"), the Trustee shall select the Notes to be purchased on a pro rata
basis. Notwithstanding anything to the contrary in the foregoing, the Company
may commence a Loss of Proceeds Offer prior to the expiration of 270 days after


                                       51
<PAGE>

the occurrence of an Event of Loss. If any Excess Loss Proceeds remain after the
consummation of any Loss Proceeds Offer, the Company may use those Excess Loss
Proceeds for any purpose not otherwise prohibited by this Indenture. Upon
completion of such offer to purchase, the amount of Excess Loss Proceeds shall
be reset at zero.

      The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Notes pursuant to a Loss Proceeds Offer. To the extent that the
provisions of any applicable securities laws or regulations conflict with the
provisions of this Indenture, the Company will comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.11 by virtue thereof.

Section 4.12. Transactions with Affiliates.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $500,000, a Board
Resolution certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $1.0 million, unless such Affiliate
Transaction involves a sale of an asset or assets in a single transaction not
related to any other Affiliate Transaction, an opinion as to the fairness to the
Trustee for the benefit of the Holders of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment banking
firm of national standing. Notwithstanding the foregoing, the following items
shall not be deemed to be Affiliate Transactions: (i) any employment agreement
entered into by the Company or any of its Subsidiaries in the ordinary course of
business and consistent with the past practice of the Company or such
Subsidiary, (ii) transactions between or among the Company and/or its Restricted
Subsidiaries, (iii) payment of reasonable directors fees to Persons who are not
otherwise Affiliates of the Company, (iv) any sale or other issuance of Equity
Interests (other than Disqualified Stock) of the Company, (v) Existing Affiliate
Transactions and (vi) any transactions permitted by Section 4.07 hereof.

Section 4.13. Liens.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, Incur, assume or suffer to
exist any Lien of any kind on any asset now owned or hereafter acquired,
securing Indebtedness or trade payables, except Permitted Liens.


                                       52
<PAGE>

Section 4.14. Corporate Existence.

      Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders of the Notes.

Section 4.15. Offer to Repurchase Upon Change of Control.

      (a) Upon the occurrence of a Change of Control, each Holder of Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest thereon (the "Change of Control Purchase Price"), to the date of
purchase (the "Change of Control Payment Date"). If the Change of Control
Payment Date is on or after a Regular Record Date and on or before the related
Interest Payment Date, any accrued and unpaid interest shall be paid to the
Person in whose name a Note is registered at the close of business on such
Regular Record Date, and no additional interest shall be payable to Holders who
validly tender Notes pursuant to the Change of Control Offer in respect of such
Interest Payment Date.

      (b) Within thirty days following any Change of Control, the Company shall
mail a notice to each Holder, with a copy of such notice to the Trustee. The
notice, which shall govern the terms of the Change of Control Offer, shall
state, among other things:

                  (i) that a Change of Control has occurred and a Change of
            Control Offer is being made as provided for herein that each Holder
            has the right to require the Company to purchase such Holder's Notes
            at the Change of Control Purchase Price, and that, although Holders
            are not required to tender their Notes, all Notes that are validly
            tendered shall be accepted for payment;

                  (ii) the circumstances giving rise to the Change of Control;

                  (iii) the Change of Control Purchase Price and the Change of
            Control Payment Date, which will be no earlier than 30 days and no
            later than 60 days after the date such notice is mailed;

                  (iv) that any Note accepted for payment pursuant to the Change
            of Control Offer (and duly paid for on the Change of Control Payment
            Date) shall cease to accrue interest, after the Change of Control
            Payment Date;


                                       53
<PAGE>

                  (v) that any Notes (or portions thereof) not validly tendered
            shall continue to accrue interest;

                  (vi) that any Holder electing to have a Note purchased
            pursuant to any Change of Control Offer shall be required to
            surrender the Note, with the form entitled "Option of Holder to
            Elect Purchase" on the reverse of the Note completed, or transfer by
            book entry transfer, to the Company, a depositary, if appointed by
            the Company, or a Paying Agent at the address specified in the
            notice at least three (3) Business Days before the Change of Control
            Payment Date;

                  (vii) that Holders shall be entitled to withdraw their
            election if the Company, the depositary or the Paying Agent, as the
            case may be, receives, not later than the close of business on the
            second Business Day preceding the Change of Control Payment Date, a
            telegram, facsimile transmission or letter setting forth the name of
            the Holder, the principal amount of the Note the Holder delivered
            for purchase and a statement that such Holder is withdrawing his
            election to have such Note purchased;

                  (viii) the instructions and any other information necessary to
            enable Holders to tender their Notes (or portions thereof) and have
            such Notes (or portions thereof) purchased pursuant to the Change of
            Control Offer; and

                  (ix) that Holders whose Notes are being purchased only in part
            will be issued new Notes equal in principal amount to the
            unpurchased portion of the Notes; provided that such new Note must
            be equal to $1,000 principal amount and integral multiples thereof.

      (c) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being repurchased by the
Company. The Paying Agent shall promptly (but in any case not later than five
days after the Change of Control Payment Date) mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unrepurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof.

      (d) Upon surrender and cancellation of a Definitive Note that is purchased
in part pursuant to the Change of Control Offer, the Company shall promptly
issue and the Trustee shall authenticate and mail (or cause to be transferred by
book entry) to the surrendering Holder of such Definitive Note, a new Definitive
Note equal in principal amount to the unpurchased portion of such surrendered
Definitive Note; provided that each such new Definitive Note shall be in a
principal amount of $1,000 or an integral multiple thereof. Upon surrender of a


                                       54
<PAGE>

Global Note that is purchased in part pursuant to a Change of Control Offer, the
Paying Agent shall forward such Global Note to the Trustee who shall make a
notation on Schedule of Exchanges of Interests thereof to reduce the principal
amount of such Global Note to an amount equal to the unpurchased portion of such
Global Note, as provided in Section 2.06 hereof. The Company shall publicly
announce the results of the Change of Control Offer on the Change of Control
Payment Date. For purposes of this Section 4.15, the Trustee shall act as the
Paying Agent.

      (e) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in this
Section 4.15 hereof and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.

      (f) The Company shall comply with the requirements of Rules 13e-4 and
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Notes as a result of a Change of Control. To the
extent that the provisions of any securities laws or regulations conflict with
this Section 4.15, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
this Section 4.15 by virtue thereof.

Section 4.16. Payments for Consent.

      Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is paid to all Holders of the
Notes.

Section 4.17. Additional Subsidiary Guarantees.

      If the Company or any of its Restricted Subsidiaries shall acquire or
create a Subsidiary other than a Foreign Subsidiary after the date of this
Indenture, then such newly acquired or created Subsidiary shall become a
Guarantor and execute and deliver a Supplemental Indenture substantially in the
form of Exhibit B hereto and applicable Security Documents and deliver an
Opinion of Counsel, in accordance with the terms of this Indenture.

Section 4.18. Conduct of Business.

      The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, engage in any business other than a Permitted Business;
provided, however, that the Company may continue the business of any Restricted
Subsidiary that was engaged in on the Effective Date or on the date of
acquisition thereof, as the case may be.

Section 4.19. Sale and Leaseback Transactions.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction.


                                       55
<PAGE>

Section 4.20. Maintenance of Insurance.

      The Company shall, and the Company shall cause its Restricted Subsidiaries
to, keep at all times all of its properties which are of an insurable nature
insured (which may include self-insurance) against loss or damage with insurers
believed by the Company to be financially sound and reputable to the extent that
property of similar character is usually so insured by corporations similarly
situated and owning like properties in accordance with good business practice.
To the extent that the Company and its Restricted Subsidiaries are required to
maintain insurance by the Exit Facility, the Company will have satisfied its
obligations under this Section 4.20 if it complies with the insurance covenants
contained in the Exit Facility. The Company shall deliver contemporaneously with
the delivery of any certificates of insurance to the agent or lenders party to
the Exit Facility a copy of such certificates of insurance.

Section 4.21. Limitation on Issuance of Capital Stock of Restricted
Subsidiaries.

      The Company will not sell, and will not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell, any shares of Capital Stock of a
Restricted Subsidiary (including options, warrants, or other rights to purchase
shares of such Capital Stock) except: (i) to the Company or a Wholly Owned
Restricted Subsidiary of the Company; (ii) issuances of director's qualifying
shares or sales to foreign nationals of shares of Capital Stock of foreign
Restricted Subsidiaries, to the extent required by applicable law; or (iii)
issuances or sales of Common Stock of a Restricted Subsidiary so long as
immediately after giving effect to the issuance or sale, the Restricted
Subsidiary would no longer constitute a Restricted Subsidiary, provided that (x)
the proceeds therefrom shall be treated as proceeds from an Asset Sale in
accordance with Section 4.10 and (y) any Investment in any Person remaining
after giving effect to the issuance or sale would have been permitted to be made
under Section 4.08 if made on the date of the issuance or sale.

Section 4.22. Perfection of Security Interests.

      The Company shall preserve the Liens granted under the Security Documents
and undertake all actions which are required by applicable law that are
necessary or appropriate in the reasonable judgment of the Trustee or the
Collateral Agent to (a) maintain the Liens of the Collateral Agent in the
Collateral in full force and effect at all times (including the priority
thereof), and (b) preserve and protect the Collateral and protect and enforce
the Company's rights and title and the rights of the Collateral Agent to the
Collateral, including, without limitation, the making or delivery of all filings
and recordations, the payment of fees and other charges and the issuance of
supplemental documentation for such purposes.

Section 4.23. Consummation of Plan of Reorganization.

      No provision of this Indenture shall prevent the Company and its
Restricted Subsidiaries from consummating the Plan and the transactions
contemplated thereby.


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<PAGE>

                                   ARTICLE 5.
                                   SUCCESSORS

Section 5.01. Merger, Consolidation, or Sale of Assets.

      (a) The Company shall not consolidate, amalgamate or merge with or into
(whether or not the Company is the surviving corporation) or continue in another
jurisdiction; or sell, assign, transfer, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to another corporation, Person or entity unless

                  (i) the Company is the surviving corporation or the Person
            formed by or surviving any such consolidation, amalgamation or
            merger (if other than the Company) or to which such sale,
            assignment, transfer, conveyance or other disposition shall have
            been made is a corporation organized or existing under the laws of
            the United States, any state thereof or the District of Columbia;

                  (ii) except in the case of a merger, consolidation or
            amalgamation of the Company with or into a Wholly Owned Restricted
            Subsidiary of the Company, the entity or Person formed by or
            surviving any such consolidation, merger or amalgamation (if other
            than the Company) or the entity or Person to which such sale,
            assignment, transfer, conveyance or other disposition shall have
            been made assumes all the obligations of the Company under the
            Notes, this Indenture and the Security Documents pursuant to a
            supplemental indenture in a form reasonably satisfactory to the
            Trustee;

                  (iii) immediately after such transaction no Default or Event
            of Default exists; and

                  (iv) except in the case of a merger, consolidation or
            amalgamation of the Company with or into a Wholly Owned Restricted
            Subsidiary of the Company, the Company or the entity or Person
            formed by or surviving any such consolidation, merger or
            amalgamation (if other than the Company), or to which such sale,
            assignment, transfer, conveyance or other disposition shall have
            been made (A) shall have Consolidated Net Worth immediately after
            the transaction equal to or greater than the Consolidated Net Worth
            of the Company immediately preceding the transaction and (B) shall,
            immediately after such transaction after giving pro forma effect
            thereto and any related financial transaction as if the same had
            occurred at the beginning of the applicable four-quarter period, be
            permitted to Incur at least $1.00 of additional Indebtedness
            pursuant to the first paragraph of Section 4.09 hereof, and

                  (v) the Company or the surviving entity shall have delivered
            to the Trustee an Officers' Certificate and an Opinion of Counsel,
            each stating that such consolidation, merger, sale, assignment,
            transfer, conveyance or other disposition and, if a supplemental
            indenture is required in connection with such transaction, such
            supplemental indenture comply with the applicable provisions of this
            Indenture and that all conditions precedent in this Indenture
            relating to such transaction have been satisfied.


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<PAGE>

      For purposes of the foregoing, (i) the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company; and (ii) any Collateral transferred to the transferee shall (a)
continue to constitute Collateral under this Indenture and the Security
Documents, (b) be subject to the Lien in favor of the Trustee for the benefit of
the Holders (or in favor of the Collateral Agent for the benefit of the Trustee
and the Holders), and (c) not be subject to any Lien other than Permitted Liens.
The Company shall not lease its properties and assets substantially as an entity
to any Person.

Section 5.02. Successor Corporation Substituted.

      Upon any consolidation or merger, or any sale, assignment, transfer,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, conveyance or other disposition, the provisions of
this Indenture referring to the "Company" shall refer instead to the successor
corporation and not to the Company), and may exercise every right and power of
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein; provided, however, that the
predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.

                                   ARTICLE 6.
                              DEFAULTS AND REMEDIES

Section 6.01. Events of Default.

      An "Event of Default" occurs if:

      (a) the Company defaults for 30 days in the payment when due of interest
on the Notes;

      (b) the Company defaults in the payment when due of principal of the
Notes;

      (c) failure by the Company or any of its Subsidiaries to comply with any
of the provisions of Section 4.07 or 4.15 or Article 5;

      (d) the Company or any of its Subsidiaries fails to comply with any other
covenant, representation, warranty or other agreement in this Indenture, the
Notes or the Security Documents and such failure continues for 30 days after
written notice to the Company by the Trustee or to the Company and the Trustee
by Holders of at least 25% in aggregate principal amount of outstanding Notes,
each such notice specifying such default or breach and that is a "Notice of
Default" hereunder;


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<PAGE>

      (e) (i) a default occurs and is continuing under the Plan Trust Note or
the New Convertible Security; or (ii) a default occurs under any other mortgage,
indenture (other than the Plan Trust Note or the New Convertible Security or as
referred to in clauses (a) and (b) above), debt security or instrument under
which there may be issued or by which there may be issued or by which there may
be secured or evidenced any Indebtedness for money borrowed by the Company or
any of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries), whether such Indebtedness or
Guarantee now exists or is created after the date of this Indenture, which
default results in the failure to pay such Indebtedness at its Stated Maturity
or in the acceleration of such Indebtedness prior to its express maturity and,
in each case under this clause (ii), the amount of such Indebtedness, whether
principal, premium or interest, together with the amount of any other such
Indebtedness which has not been so paid or the maturity of which has been so
accelerated, aggregates [$2.0] million or more (other than Existing Indebtedness
to the extent it is secured by or paid by the drawing against a letter of credit
permitted to be issued under this Indenture);

      (f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Restricted Subsidiaries and such judgment or judgments remain
undischarged for a period (during which execution shall not be effectively
stayed) of 30 days; provided that the aggregate of all such undischarged
judgments exceeds [$2.0] million (net of any amounts that a reputable and
creditworthy insurance company has acknowledged liability for in writing;

      (g) the Company or any of its Significant Subsidiaries that is a
Restricted Subsidiary or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary, pursuant to or within the
meaning of Bankruptcy Law:

                  (i) commences a voluntary case,

                  (ii) consents to the entry of an order for relief against it
            in an involuntary case,

                  (iii) consents to the appointment of a custodian of it or for
            all or substantially all of its property,

                  (iv) makes a general assignment for the benefit of its
            creditors,

                  (v) generally is not paying its debts as they become due; or

      (h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:

                  (i) is for relief against the Company or any of its
            Significant Subsidiaries that is a Restricted Subsidiary or any
            group of Restricted Subsidiaries that, taken as a whole, would
            constitute a Significant Subsidiary in an involuntary case;


                                       59
<PAGE>

                  (ii) appoints a custodian of the Company or any of its
            Significant Subsidiaries that is a Restricted Subsidiary or any
            group of Restricted Subsidiaries that, taken as a whole, would
            constitute a Significant Subsidiary or for all or substantially all
            of the property of the Company or any of its Significant
            Subsidiaries that is a Restricted Subsidiary or any group of
            Restricted Subsidiaries that, taken as a whole, would constitute a
            Significant Subsidiary; or

                  (iii) orders the liquidation of the Company or any of its
            Significant Subsidiaries that is a Restricted Subsidiary or any
            group of Restricted Subsidiaries that, taken as a whole, would
            constitute a Significant Subsidiary;

and the order or decree remains unstayed and in effect for 60 consecutive days;

      (i) the Liens created by the Security Documents shall at any time not
constitute valid and perfected Liens on the Collateral intended to be covered
thereby (to the extent perfection by filing, registration, recordation or
possession is required herein or therein) in favor of the Collateral Agent, free
and clear of all other Liens (other than Permitted Liens), or, except for
expiration in accordance with its terms or amendment, modification, waiver,
termination or release in accordance with the terms of this Indenture, any of
the Security Documents shall for whatever reason be terminated or cease to be in
full force and effect, if in either case, such default continues for [15] days
after written notice to the Company by the Trustee or to the Company and the
Trustee by Holders of at least 25% in aggregate principal amount of outstanding
Notes (each such notice specifying such default or breach and stating that such
notice is a "Notice of Default" hereunder), or the enforceability thereof shall
be contested by the Company or any Subsidiary Guarantor;

      (j) failure of the Company to make, when due, any transfer, delivery,
pledge, assignment or grant of Collateral required to be made by it and such
failure continues unremedied for ten Business Days after notice of such failure
is given to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the outstanding Notes;
or

      (k) except as permitted by this Indenture, any Subsidiary Guarantee is
held in any judicial proceeding to be unenforceable or invalid in any material
respect or shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee.

Section 6.02. Acceleration.

      If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) occurs and is continuing, the
Trustee by a written notice to the Company or the Holders of at least 25% in
aggregate principal amount of the then outstanding Notes by a written notice to
the Company and the Trustee may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof occurs with respect to the Company, any
of its Significant Subsidiaries or any group of Restricted Subsidiaries that,


                                       60
<PAGE>

taken as a whole, would constitute a Significant Subsidiary, all outstanding
Notes shall be due and payable without further action or notice. Holders of the
Notes may not enforce this Indenture, the Security Documents or the Notes except
as provided in this Indenture. In the event of a declaration of acceleration
because an Event or Default set forth in clause (e)(ii) of Section 6.01 has
occurred and is continuing, such declaration of acceleration shall be
automatically rescinded and annulled if the event of default triggering such
Event of Default pursuant to clause (e)(ii) of Section 6.01 shall be remedied or
cured or waived by the holders of the relevant Indebtedness within 30 days after
such event of default; provided that no judgment or decree for the payment of
the money due on Notes has been obtained by the Trustee as provided in this
Indenture.

      At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article, the Holders of at least a
majority in aggregate principal amount of the outstanding Notes, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if:

            (1) the Company has paid or deposited with the Trustee a sum
      sufficient to pay:

                  (A) the principal of any Notes which have become due otherwise
            than by such declaration of acceleration (including any Notes
            required to have been purchased on a Change of Control Payment Date
            or a Purchase Date pursuant to a Change of Control Offer, an Offer
            to Purchase or a Loss Proceeds Offer, as applicable, made by the
            Company) and, to the extent that payment of such interest is lawful,
            any interest thereon at the rate provided therefor in the Notes;

                  (B) to the extent that payment of such interest is lawful,
            interest upon overdue interest at the rate provided therefor in
            Section 4.01 and the Notes, and all sums paid or advanced by the
            Trustee hereunder and the reasonable compensation, expenses,
            disbursements and advances of the Trustee, its agents and counsel
            and any other amount due under Section 7.07; and

            (2) all Events of Default, other than the non-payment of the
      principal of or interest on, the Notes which have become due solely by
      such declaration of acceleration, have been cured or waived as provided in
      Section 6.04.

      No such rescission shall affect any subsequent default or impair any right
consequent thereon.

Section 6.03. Collection of Indebtedness and Suits for Enforcement by Trustee.

      The Company covenants that if there is:

      (1)   a default in the payment of any interest on any Note when such
            interest becomes due and payable and such default continues for a
            period of 30 days, or


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<PAGE>

      (2)   a default in the payment of the principal of any Note at the
            Maturity thereof or, with respect to any Note required to have been
            purchased pursuant to a Change of Control Offer, an Offer to
            Purchase or a Loss Proceeds Offer made by the Company, at the Change
            of Control Payment Date or Purchase Date thereof, as applicable,

the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Notes, the whole amount then due and payable on such Notes for
principal and interest, and, to the extent that payment of such interest shall
be legally enforceable, interest on any overdue principal and on any overdue
interest, at the rate provided therefore in Section 4.01 hereof and the Notes,
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel and
any amounts due the Trustee under Section 7.07 hereof.

      If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute and such proceeding to judgment or final decree and may enforce the
same against the Company or any other obligor upon the Notes and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property and assets of the Company or any other obligor upon the Notes,
wherever situated.

      If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal and interest on the
Notes or to enforce the performance of any provision of the Notes, the Security
Documents or this Indenture. The Trustee may maintain a proceeding even if it
does not possess any of the Notes or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder of a Note in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.

Section 6.04. Waiver of Past Defaults.

      Subject to Section 6.07 and Section 9.02 hereof, Holders of not less than
a majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences hereunder, except a
continuing Default or Event of Default in the payment of the principal of and
interest on the Notes (including any waiver obtained in connection with a
purchase of, tender offer or exchange offer for Notes) (provided, however, that
the Holders of at least a majority in aggregate principal amount of then
outstanding Notes may rescind an acceleration and its consequences, including
any related payment default that resulted from such acceleration). Upon such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.


                                       62
<PAGE>

Section 6.05. Control by Majority.

      Holders of at least a majority in aggregate principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or that the Trustee
determines may be unduly prejudicial to the rights of other Holders of Notes or
that may result in the incurrence of liability by the Trustee.

Section 6.06. Limitation on Suits.

      A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:

      (a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;

      (b) the Holders of at least 25% in aggregate principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;

      (c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;

      (d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and

      (e) during such 60-day period the Holders of a majority in aggregate
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.

      A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.

Section 6.07. Rights of Holders of Notes to Receive Payment.

      Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal and interest on the Note, on or
after the respective due dates expressed in the Note (including in connection
with an offer to purchase), or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder, except that no Holder shall have the right
to institute any such suit, if and to the extent that the institution or
prosecution thereof or the entry of judgment therein would under applicable law
result in the surrender, impairment, waiver, or loss of the Liens of the
Security Documents upon any property or assets subject to the Liens.

Section 6.08. Trustee May Enforce Claims Without Possession of Notes.

      All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee


                                       63
<PAGE>

of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any amounts due the Trustee under
Section 7.07 hereof, be for the ratable benefit of the Holders of the Notes in
respect of which such judgment has been recovered.

Section 6.09. Trustee May File Proofs of Claim.

      The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.10. Priorities.

      If the Trustee collects any money pursuant to this Article, it shall,
subject to Article 12, pay out the money in the following order:

      First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;

      Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
interest, respectively; and

      Third: to the Company or any Guarantors or to such other party as a court
of competent jurisdiction shall direct.


                                       64
<PAGE>

      The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.

Section 6.11. Restoration of Rights and Remedies.

      If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture, the Subsidiary Guarantees or the Security
Documents and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then and in
every such case, subject to any determination in such proceeding, the Company,
the Guarantors, if any, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.

Section 6.12. Rights and Remedies Cumulative.

      Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes in the last paragraph of Section
2.07, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

Section 6.13. Delay or Omission Not Waiver.

      No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.

Section 6.14. Undertaking for Costs.

      In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
aggregate principal amount of the then outstanding Notes.


                                       65
<PAGE>

                                   ARTICLE 7.
                                     TRUSTEE

Section 7.01. Duties of Trustee.

      (a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs; provided that if an Event of Default occurs and is continuing, the
Trustee will be under no obligation to exercise the rights or powers under this
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee indemnity or security against loss, liability or
expense satisfactory to the Trustee in its sole discretion.

      (b) Except during the continuance of an Event of Default:

                  (i) the duties of the Trustee shall be determined solely by
            the express provisions of this Indenture and the Trustee need
            perform only those duties that are specifically set forth in this
            Indenture and the Security Documents and no others, and no implied
            covenants or obligations shall be read into this Indenture or the
            Security Documents against the Trustee; and

                  (ii) in the absence of bad faith on its part, the Trustee may
            conclusively rely, as to the truth of the statements and the
            correctness of the opinions expressed therein, upon certificates or
            opinions furnished to the Trustee and conforming to the requirements
            of this Indenture. However, the Trustee shall examine the
            certificates and opinions to determine whether or not they conform
            to the requirements of this Indenture but need not verify the
            contents thereof.

      (c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:

                  (i) this paragraph does not limit the effect of paragraph (b)
            of this Section;

                  (ii) the Trustee shall not be liable for any error of judgment
            made in good faith by a Responsible Officer, unless it is proved
            that the Trustee was negligent in ascertaining the pertinent facts;
            and

                  (iii) the Trustee shall not be liable with respect to any
            action it takes or omits to take in good faith in accordance with a
            direction received by it pursuant to Section 6.05 hereof.

      (d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to this Section 7.01
and Section 7.02.


                                       66
<PAGE>

      (e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture or the
Security Documents at the request of any Holders, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.

      (f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.

Section 7.02. Rights of Trustee.

      (a) In connection with the Trustee's rights and duties under this
Indenture, the Trustee may conclusively rely, and shall be fully protected in
acting or refraining from acting, upon any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.

      (b) Before the Trustee acts or refrains from acting under this Indenture,
it may require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel and the advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.

      (c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.

      (d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.

      (e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.

      (f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture or the Security Documents at the
request or direction of any of the Holders unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction.

      (g) Except with respect to Section 4.01 hereof, the Trustee shall have no
duty to inquire as to the performance of the Company's covenants in Article 4
hereof. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 6.01(a), 6.01(b) and 4.01 or (ii) any Default or Event of Default of
which the Trustee shall have received written notification or obtained actual
knowledge.


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<PAGE>

      (h) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the Trustee
may, in its discretion, make such further inquiry or investigation into such
facts or matters as it may see fit and if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company personally or by agent or attorney.

      (i) The Trustee is not required to give any bond or surety with respect to
the performance of its duties or the exercise of its powers under this
Indenture.

      (j) In the event the Trustee receives inconsistent or conflicting requests
and indemnity from two or more groups of Holders of Notes, each representing
less than the aggregate principal amount of Notes outstanding required to take
any action thereunder, the Trustee, in its sole discretion may determine what
action, if any, shall be taken.

      (k) The Trustee's immunities and protections from liability and its right
to indemnification in connection with the performance of its duties under this
Indenture shall extend to the Trustee's officers, directors, agents, attorneys
and employees. Such immunities and protections and right to indemnification,
together with the Trustee's right to compensation, shall survive the Trustee's
resignation or removal, the discharge of this Indenture and final payments of
the Notes.

      (l) The permissive right of the Trustee to take actions permitted by this
Indenture shall not be construed as an obligation or duty to do so.

Section 7.03. Individual Rights of Trustee.

      The Trustee may become the owner or pledgee of Notes and may otherwise
deal with the Company or any Affiliate of the Company with the same rights it
would have if it were not Trustee. However, in the event that the Trustee
acquires any conflicting interest (as defined in the TIA) it must eliminate such
conflict within 90 days, apply to the Commission for permission to continue as
trustee or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11 hereof.

Section 7.04. Trustee's Disclaimer.

      The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.

Section 7.05. Notice of Defaults.

      If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after such Default or Event of
Default becomes known to the Trustee. Except in the case of a Default or Event
of Default relating to the payment of principal of or interest on any Note, the
Trustee may withhold the notice if it determines that withholding the notice is
in the interests of the Holders of the Notes.


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<PAGE>

Section 7.06. Reports by Trustee to Holders of the Notes.

      Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA ss. 313(a) (but if no event described in TIA
ss.313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).

      A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the Commission and each stock
exchange, if any, on which the Notes are listed in accordance with TIA ss.
313(d). The Company shall promptly notify the Trustee when the Notes are listed
on any stock exchange.

Section 7.07. Compensation and Indemnity.

      The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.

      The Company and the Guarantors shall jointly and severally indemnify the
Trustee and each of its officers, directors, employees and agents for, and hold
the same harmless against, any and all losses, liabilities or expenses
(including, without limitation, reasonable attorneys' fees) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture, including the costs and expenses of enforcing this
Indenture against the Company (including this Section 7.07) and defending itself
against any claim (whether asserted by the Company or any Holder or any other
person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except to the extent any such loss, liability or
expense may be attributable to its negligence or bad faith. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. At the Trustee's sole discretion, the Company shall
defend the claim with counsel reasonably satisfactory to the Trustee and the
Trustee shall cooperate in the defense at the Company's expense. The Trustee may
have separate counsel and the Company shall pay the reasonable fees and expenses
of such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.


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<PAGE>

      The obligations of the Company and the Guarantors under this Section 7.07
shall survive the resignation of the Trustee and/or the satisfaction and
discharge or termination of this Indenture.

      To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the resignation of the Trustee and/or
the satisfaction and discharge or termination of this Indenture.

      When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

      The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the
extent applicable.

Section 7.08. Replacement of Trustee.

      A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.

      The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:

      (a) the Trustee fails to comply with Section 7.10 hereof;

      (b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;

      (c) a custodian or public officer takes charge of the Trustee or its
property; or

      (d) the Trustee becomes incapable of acting.

      If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.

      If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.


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<PAGE>

      If the Trustee, after written request by any Holder of a Note who has been
a Holder of a Note for at least six months, fails to comply with Section 7.10,
such Holder of a Note may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.

      A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Notes. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.

Section 7.09. Successor Trustee by Merger, Etc.

      If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.

Section 7.10. Eligibility; Disqualification.

      There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has (or in the case of a corporation included in a bank
holding company, the bank holding company and related entities has) a combined
capital and surplus of at least $100 million as set forth in its most recent
published annual report of condition.

      This Indenture shall always have a Trustee who satisfies the requirements
of TIA ss.ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b).

Section 7.11. Preferential Collection of Claims Against Company.

      The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.

                                   ARTICLE 8.
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01. Option to effect Legal Defeasance or Covenant Defeasance.

      The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.


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<PAGE>

Section 8.02. Legal Defeasance and Discharge.

      Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its Obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and the Company and the Guarantors, if any,
shall be deemed to have satisfied all their respective other obligations under
the Notes, this Indenture, the Subsidiary Guarantees and the Security Documents,
and the Subsidiary Guarantees and the Security Documents and all Collateral
shall be released (and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging the same), except for
the following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
payments in respect of the principal of and interest on such Notes when such
payments are due, solely from the trust fund described in Section 8.04 hereof,
(b) the Company's Obligations with respect to such Notes under Article 2 and
Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of
the Trustee hereunder and the Company's obligations in connection therewith and
(d) this Article Eight. Subject to compliance with this Article Eight, the
Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.

Section 8.03. Covenant Defeasance.

      Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, (i) the Company and the Guarantors, if any,
shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be released from their respective obligations under the covenants
contained in Sections 4.03, 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13,
4.15, 4.17, 4.18, 4.19, 4.20, 4.21 and 4.22, and clause (iv) of Section 5.01
hereof and (ii) the occurrence of an event specified in Section 6.01(c) (with
respect to Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.15 or 4.21, clause (iv) of
Section 5.01), 6.01(d) (with respect to any of Sections 4.03, 4.05, 4.12, 4.13,
4.17, 4.18, 4.19, 4.20 and 4.21 hereof), 6.01(e), 6.01(f), 6.01(g), 6.01(i) and
6.01(j) shall not be deemed to be an Event of Default on and after the date the
conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby.


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<PAGE>

Section 8.04. Conditions to Legal or Covenant Defeasance.

      The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:

      (a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, cash in United States dollars,
noncallable Government Securities, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of and interest on the
outstanding Notes on the Stated Maturity or on the applicable redemption date,
as the case may be, and the Company must specify whether the Notes are being
defeased to Stated Maturity or to a particular redemption date;

      (b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;

      (c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;

      (d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied to such deposit) or insofar as
Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period
ending on the 121st day after the date of deposit;

      (e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is bound including, without limitation, the Exit Facility;

      (f) the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that after the 121st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;


                                       73
<PAGE>

      (g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over any other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding any other creditors
of the Company or others; and

      (h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.

Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.

      Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal and interest, but such money need not
be segregated from other funds except to the extent required by law.

      The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

      Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.

Section 8.06. Repayment to Company.

      Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or interest on any
Note and remaining unclaimed for two years after such principal or interest has
become due and payable shall be paid to the Company on its request or (if then
held by the Company) shall be discharged from such trust; and the Holder of such
Note shall thereafter, as a secured creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.


                                       74
<PAGE>

Section 8.07. Reinstatement.

      If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and the Guarantors' Obligations under this
Indenture, the Notes, the Subsidiary Guarantees and the Security Documents shall
be revived and reinstated as though no deposit had occurred pursuant to Section
8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted
to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the
case may be; provided, however, that, if the Company or a Guarantor makes any
payment of principal of or interest on any Note following the reinstatement of
its obligations, the Company or such Guarantor shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.

                                   ARTICLE 9.
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01. Without Consent of Holders of Notes.

      Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors, if any, and the Trustee may amend or supplement this Indenture, the
Notes, the Security Documents or the Intercreditor Agreement without the consent
of any Holder of a Note:

            (1)   to evidence the succession of another Person to the Company or
                  a Guarantor and the assumption by any such successor of the
                  covenants of the Company herein and in the Notes, the Security
                  Documents and the Intercreditor Agreement and of such
                  Guarantor contained herein and in the Security Documents; or

            (2)   to add to the covenants of the Company or the Guarantors for
                  the benefit of the Holders, or to surrender any right or power
                  herein conferred upon the Company or the Guarantors; or

            (3)   to comply with any requirements of the Commission in order to
                  effect or maintain the qualification of this Indenture under
                  the TIA; or

            (4)   to cure any ambiguity, to correct or supplement any provision
                  herein or in the Security Documents which may be inconsistent
                  with any other provision herein, or to make any other
                  provisions with respect to matters or questions arising under
                  this Indenture or the Security Documents which shall not be
                  inconsistent with the provisions of this Indenture; provided
                  that such action pursuant to this clause (4) shall not
                  adversely affect the interests of the Holders in any material
                  respect;


                                       75
<PAGE>

            (5)   to evidence and provide for the acceptance and appointment
                  hereunder of a successor Trustee with respect to the Notes;

            (6)   to mortgage, pledge, hypothecate or grant a Lien in favor of
                  the Collateral Agent for the benefit of Trustee and the
                  Holders of the Notes as additional security for the payment of
                  principal of and interest on the Notes by the Company or on
                  the Subsidiary Guarantees by the Guarantors under this
                  Indenture in any property or assets, including any which are
                  required to be mortgaged, pledged or hypothecated, or in which
                  a Lien is required to be granted to the Collateral Agent,
                  pursuant to this Indenture or the Security Documents;

            (7)   to add Guarantees with respect to the Notes, to secure the
                  Notes or to release Guarantors from Subsidiary Guaranties as
                  provided by the terms of this Indenture; or

            (8)   to add additional Events of Default.

Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors, if any,
in the execution of any amended or supplemental Indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into such amended or supplemental Indenture that
affects its own rights, duties or immunities under this Indenture or otherwise.

Section 9.02. With Consent of Holders of Notes.

      Except as provided below in this Section 9.02, the Company, the
Guarantors, if any, and the Trustee may amend or supplement this Indenture, the
Notes, any Subsidiary Guarantees, the Security Documents and the Intercreditor
Agreement with the consent of the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding voting as a single class
(including, without limitation, consents obtained in connection with a purchase
of, tender offer or exchange offer for, Notes), and, subject to Sections 6.04
and 6.07 hereof, any existing Default or Event of Default (other than a Default
or Event of Default in the payment of the principal of or interest on the Notes,
except a payment default resulting from an acceleration that has been rescinded)
or compliance with any provision of this Indenture or the Notes may be waived
with the consent of the Holders of at least a majority in aggregate principal
amount of the then outstanding Notes (including consents obtained in connection
with a purchase of, tender offer or exchange offer for, Notes). Section 2.08
hereof shall determine which Notes are considered to be "outstanding" for
purposes of this Section 9.02.


                                       76
<PAGE>

      The Company may not fix any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted to be given or taken by Holders prior to the
first date of any solicitation of a Holder made by any Person in respect of any
such action, or, in the case of any such vote, prior to such vote.

      Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company and the Guarantors, if any, in the execution of such
amended or supplemental Indenture unless such amended or supplemental Indenture
directly affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture.

      It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.

      After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):

            (1)   change the Stated Maturity of the principal of, or any
                  installment of interest on, any Note, or reduce the principal
                  amount thereof or the rate of interest thereon, or change the
                  place of payment where, or the coin or currency in which, any
                  Note or the interest thereon is payable, or impair the right
                  to institute suit for the enforcement of any such payment on
                  or after the Stated Maturity thereof (or, in the case of
                  redemption, on or after the Redemption Date or, in the case of
                  a Change of Control Offer, an Asset Sale Offer or a Loss
                  Proceeds Offer which has been made, on or after the applicable
                  Change of Control Payment Date or Purchase Date), or

            (2)   reduce the percentage in principal amount of the outstanding
                  Notes, the consent of whose Holders is required for any such
                  supplemental indenture, or the consent of whose Holders is
                  required for any waiver (of compliance with certain provisions
                  of this Indenture or certain defaults hereunder and its
                  consequences) provided for in this Indenture, or

            (3)   modify any of the provisions of this Section, Section 6.02,
                  Section 6.04 or Section 6.07, except to increase any such
                  percentage or to provide that certain other provisions of this
                  Indenture cannot be modified or waived without the consent of
                  the Holders of each outstanding Note affected thereby, or


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            (4)   after the Company's obligation to purchase Notes arises
                  thereunder, amend, change or modify in any material respect
                  the obligation of the Company to make and consummate a Change
                  of Control Offer in the event of a Change of Control or make
                  and consummate an Asset Sale Offer with respect to any Asset
                  Sale that has been consummated or make and consummate a Loss
                  Proceeds Offer in the event of an Event of Loss or, after such
                  Change of Control or Event of Loss has occurred or such Asset
                  Sale has been consummated, modify any of the provisions or
                  definitions with respect thereto;

            (5)   modify or change any provision of this Indenture or the
                  related definitions affecting the subordination or ranking of
                  the Notes or any Guarantee in a manner which adversely affects
                  the Holders; provided, however, that the ranking of the Notes
                  shall not be deemed to be affected solely by virtue of any
                  change to or release of the Collateral as permitted under this
                  Indenture and the Security Documents;

            (6)   release any Guarantor that is a Significant Subsidiary from
                  any of its obligations under its Guarantee or this Indenture
                  otherwise than in accordance with the terms of this Indenture;
                  or

            (7)   release all or substantially all of the Collateral from the
                  Liens under this Indenture and the Security Documents (except
                  as specifically provided therein or in this Indenture).

Section 9.03. Compliance with Trust Indenture Act.

      Every amendment or supplement to this Indenture or the Notes shall be set
forth in an amended or supplemental Indenture that complies with the TIA as then
in effect.

Section 9.04. Revocation and Effect of Consents.

      Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.


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Section 9.05. Notation on or Exchange of Notes.

      The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of a
Company Order, authenticate new Notes that reflect the amendment, supplement or
waiver.

      Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.

Section 9.06. Trustee to Sign Amendments, Etc.

      The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee.

      The Company may not sign an amendment or supplemental Indenture until the
Board of Directors approves it. In executing any amended or supplemental
indenture, the Trustee shall be entitled to receive and (subject to Section 7.01
hereof) shall be fully protected in relying upon, in addition to the documents
required by Section 12.04 hereof, an Officers' Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.

                                   ARTICLE 10.
                              SECURITY ARRANGEMENTS

Section 10.01. Collateral and Security Documents.

      (a) To secure the due and punctual payment of principal of and interest on
the Notes by the Company when and as the same shall be due and payable, whether
on an Interest Payment Date, at Stated Maturity, by acceleration, call for
redemption, upon a Change of Control Offer or an Offer to Purchase, or
otherwise, and interest on the overdue principal of and interest (to the extent
permitted by law), on the Notes and performance of all other Obligations of the
Company and the Guarantors, if any, to the Holders of the Notes, the Trustee or
the Collateral Agent under this Indenture, the Notes, the Subsidiary Guarantees,
and the Security Documents, according to the terms hereunder or thereunder, each
of the Company has entered into, and pursuant to Sections 4.10, 4.11, 4.21,
5.01, 10.01(c), 10.05 and 12.04, each of the Company and the Guarantors, if any,
will enter into, the Security Documents, to create the security interests with
respect to the Collateral (except to the extent that granting such Liens is
precluded by the provisions or the documents evidencing the Exit Facility as in
effect on the Effective Date). The Trustee, the Collateral Agent, the Guarantors
and the Company hereby acknowledge and agree that the Collateral Agent holds the
Collateral in trust for the benefit of the Holders and the Trustee, among
others, pursuant to the terms of the Security Documents.

      (b) Each Holder, by accepting a Note, agrees to all of the terms and
provisions of the Security Documents (including, without limitation, the
provisions providing for foreclosure and release of Collateral) as the same may
be in effect or may be amended from time to time in accordance with the terms
thereof and hereof, and authorizes and directs the Trustee, in its capacity as


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Collateral Agent, to perform their respective obligations and exercise their
respective rights under the Security Documents in accordance therewith;
provided, however, that if any provisions of the Security Documents limit,
qualify or conflict with the duties imposed by the provisions of the TIA, the
TIA will control.

      (c) Concurrently with (i) a Person becoming a Guarantor, (ii) the
acquisition by the Company or any Restricted Subsidiary of any assets or
property other than Real Property of the type which constitutes Collateral with
a Fair Market Value in excess of $100,000 individually or in the aggregate
(provided that only 65% of capital stock of any first-tier Foreign Subsidiary
need be subject to a Lien), (iii) the acquisition by the Company or any
Restricted Subsidiary of Real Property constituting fee-owned Real Property with
a Fair Market Value in excess of $2.5 million or the acquisition of Real
Property constituting leased property with an aggregate rent in excess of
$200,000 in any twelve-month period, or (iv) a Lien on any asset of the Company
or its Restricted Subsidiaries being granted in favor of the Exit Facility, the
Company shall, or shall cause the applicable Restricted Subsidiary to, among
other things:

            (1)   in the case of personal property, execute and deliver to the
                  Trustee such Uniform Commercial Code financing statements or
                  take such other actions as shall be necessary or desirable to
                  perfect and protect the Trustee's Lien on and security
                  interest in such assets or property and the first priority
                  thereof (subject only to Permitted Liens);

            (2)   in the case of Real Property [other than the existing Office
                  Lease unless Exit Facility obtains a Lien thereon], execute
                  and deliver to the Trustee:

                  (a)   a Mortgage, under which the Company or such Restricted
                        Subsidiary shall grant to the Collateral Agent a first
                        priority lien on and security interest in such Real
                        Property and any related fixtures (subject only to
                        Collateral Liens);

                  (b)   survey (for fee-owned Real Property) and title insurance
                        (provided that (i) any mortgagee title insurance policy
                        in respect of any owned Real Property shall include
                        additional endorsements for survey, public road access
                        and so-called comprehensive coverage, if available, and
                        (ii) with regard to Real Property acquired after the
                        Effective Date, any survey shall be sufficient for the
                        title insurance company to issue the so-called
                        comprehensive endorsement to the title insurance policy
                        and remove the standard survey exception from the title
                        insurance policy), covering any Real Property that is
                        owned by such Restricted Subsidiary in an amount at
                        least equal to the purchase price of such Real Property;

                  (c)   UCC fixture filings; and

                  (d)   such other documents of the type described in Section
                        4.22 of this Indenture; and


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            (3)   upon request of the Trustee, promptly deliver to the Trustee
                  Opinions of Counsel as to the enforceability and perfection of
                  such Liens and security interests.

      (d) As more fully set forth in, and subject to the provisions of, the
Security Documents and the Intercreditor Agreement, the Holders, and the Trustee
and the Collateral Agent on behalf of such Holders, will have rights in and to
the Collateral that are subject to the rights that have been or may be created
in favor of the holders of other Indebtedness and obligations of the Company.

      (e) As among the Holders, the Collateral shall be held for the equal and
ratable benefit of the Holders without preference, priority or distinction of
any thereof over any other.

      (f) With respect to the Trustee acting as Collateral Agent, the Trustee
(i) shall not be deemed to have breached its fiduciary duty as Trustee to the
Holders as a result of the performance of its duties as Collateral Agent to the
extent it acts in compliance with the Security Documents and (ii) shall not be
liable to the Holders for any such action or inaction. The rights and interests
created under this Indenture shall be subject to the terms of the Security
Documents.

      (g) The Company and each Guarantor will do or cause to be done all such
acts and things as may be necessary or proper, or as may be required by the
provisions of the Security Documents to which it is a party, to assure and
confirm to the Trustee, in its capacity as Collateral Agent, the Liens on the
Collateral contemplated by the Security Documents to which it is a party, as
from time to time constituted, so as to render the same available for the
security and benefit of this Indenture and of the Notes and each Subsidiary
Guarantee secured thereby, as applicable, according to the intent and purposes
herein and therein expressed. The Company will take, as required by applicable
law, any and all actions required to cause the Security Documents to create and
maintain, as security for the Obligations of the Company under this Indenture
and the Notes and the Security Documents to which it is a party, valid and
enforceable, perfected (except as expressly provided herein and therein) Liens
in and on all the Collateral in favor of the Collateral Agent for the benefit of
the Trustee and for the equal and ratable benefit of the Holders of the Notes.
Each Guarantor will take, as required by applicable law, any and all actions
required to cause the Security Documents to which it is a party to create and
maintain for its Obligations under each Subsidiary Guarantee and the Security
Document related thereto, valid and enforceable, perfected (except as expressly
provided herein or therein), Liens in favor of the Collateral Agent for the
benefit of the Trustee and for the equal and ratable benefit of the Holders of
the Notes.

      (h) The Collateral Agent is authorized to file UCC-1 Financing Statements
and all other necessary documentation to perfect the Liens hereunder on behalf
of each of the Company and the Guarantors and for the benefit of the Trustee and
the Holders. Each of the Company and the Guarantors agrees that such financing
statements may describe the Collateral in the same manner as described in the
Security Documents or as "all assets" or "personal property" of such Grantor or
contain such other descriptions of the Collateral as the Collateral Agent, in
its sole judgment, deems necessary or advisable. Each of the Company and the
Guarantors hereby ratifies each such financing statement and any and all
financing statements filed prior to the date of this Indenture by the Collateral
Agent.


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Section 10.02. Release of Collateral.

      Collateral may be released from the Liens created by the Security
Documents at any time or from time to time, and the Security Documents may be
terminated, in accordance with the provisions of the Security Documents or in
accordance with this Indenture. In addition, upon the request of the Company
pursuant to an Officers' Certificate and Opinion of Counsel certifying that all
conditions precedent hereunder have been met, the Trustee will release
Collateral that is sold, conveyed, or disposed of in compliance with the
provisions of this Indenture. Upon receipt of such Officers' Certificate and
Opinion of Counsel, the Trustee will execute, deliver and acknowledge any
necessary or proper instruments of termination or release to evidence the
release of any Collateral permitted to be release pursuant to this Indenture or
the Collateral Documents. The release of any Collateral from the terms hereof
and of the Security Documents or the release of, in whole or in part, the Liens
created by the Security Documents, or the termination of the Security Documents,
will not be deemed to impair the Liens on the Collateral in contravention of the
provisions hereof if and to the extent that the Liens on Collateral are
released, or the Security Documents are terminated, pursuant to this Indenture
or the applicable Security Documents. The Trustee and each of the Holders
acknowledge that a release of Collateral or a Lien in accordance with the terms
of the Security Documents will not be deemed for any purpose to be an impairment
of the Lien on the Collateral in contravention of the terms of this Indenture.
To the extent applicable, the Company and each obligor on the Notes shall cause
ss. 314(d) of the TIA relating to the release of property or securities from the
Lien hereof and of the Security Documents to be complied with. Any certificate
or opinion required by ss. 314(d) of the TIA may be made by an officer of the
Company, except in cases which ss. 314(d) of the TIA requires that such
certificate or opinion be made by an independent person. In releasing any
Collateral pursuant to the terms of the Indenture, including the provisions of
Section 10.07(a) hereof, or any Security Document, the Trustee shall be entitled
to receive, and shall be fully protected in relying upon, in addition to the
documents required by Section 13.04, an Officers' Certificate certifying that
such release is authorized or permitted by this Indenture and the Security
Documents and the Intercreditor Agreement and that all conditions precedent, if
any, to such release have been satisfied.

Section 10.03. Specified Releases of Collateral.

      (a) The Company shall be entitled to obtain a full release of all of the
Collateral from the Liens of this Indenture and of the Security Documents upon
payment in full of all principal, premium, if any, and interest, if any, on the
Notes and of all other Obligations for the payment of money due and owing to the
Trustee or the Holders under this Indenture, the Notes, the Subsidiary
Guarantees and the Security Documents, or upon compliance with the conditions
precedent set forth in Article 8 hereof for Legal Defeasance or Covenant
Defeasance. Upon such payment or upon delivery by the Company to the Trustee of
an Officers' Certificate and an Opinion of Counsel, each to the effect that such
conditions precedent have been complied with (and which may be the same
Officers' Certificate and Opinion of Counsel required by Article 7 hereof),
together with such documentation, if any, as may be required by the TIA
(including, without limitation, TIA Section 314(d)) or reasonably required by
the Trustee prior to the release of such Collateral, the Trustee shall forthwith
take all action that is necessary or reasonably requested by the Company (in
each case at the expense of the Company) to release and reconvey to the Company
or a Guarantor without recourse all of the Collateral, and shall deliver such


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Collateral in its possession to the Company or a Guarantor and shall execute and
deliver to the Company releases and satisfactions, in recordable form, to the
extent reasonably requested by the Company.

      (b) The Company shall be entitled to obtain a release of, and the Trustee
shall release, items of Collateral subject to a sale or disposition (other than
Trust Monies constituting Net Proceeds from an Asset Sale of Collateral, which
Trust Monies are subject to release from the Lien of the Security Documents as
provided under Article 12 hereof) (the "Released Collateral") upon compliance
with the conditions precedent that the Company shall have delivered to the
Trustee the following:

            (i)   a Company Order requesting release of Released Collateral and

                  (A)   specifically describing the proposed Released
                        Collateral,

                  (B)   certifying that the sale of such Released Collateral
                        complies with the terms and conditions of this
                        Indenture, including, without limitation, Section 4.10
                        hereof if the sale of such Released Collateral
                        constitutes an Asset Sale, and

                  (C)   in the event that there is to be a substitution of
                        property for the Collateral subject to the Asset Sale,
                        specifying the property intended to be substituted for
                        the Collateral to be disposed of;

            (ii)  an Officers' Certificate certifying that

                  (A)   such sale covers only the Released Collateral,

                  (B)   such sale complies with the terms and conditions of this
                        Indenture, including, without limitation, Section 4.10
                        hereof,

                  (C)   all Net Proceeds from the sale of any of the Released
                        Collateral will be applied pursuant to the terms and
                        conditions of this Indenture, including, without
                        limitation, Section 4.10 hereof,

                  (D)   all conditions precedent in this Indenture and the
                        Security Documents to such release have been complied
                        with,

                  (E)   no Default pursuant to clause (a) or (b) of Section 6.01
                        hereof or Event of Default is in effect or continuing on
                        the date thereof, and

                  (F)   the release of the Collateral will not result in a
                        Default or Event of Default;

            (iii) the Net Proceeds and other property received as consideration
                  from the Asset Sale, together with such instruments of
                  conveyance, assignment and transfer, if any, as may be
                  necessary to subject to the Lien of the Security Documents all
                  the right, title and interest of the Company or a Guarantor,
                  as the case may be, in and to such property (to the extent
                  required by this Indenture and the Security Documents);


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<PAGE>

            (iv)  all documentation required by the TIA (including, without
                  limitation, TIA Section 314(d)), if any, prior to the release
                  by the Trustee of the Released Collateral, and, in the event
                  there is to be a concurrent substitution of property for the
                  Collateral subject to the Asset Sale, all documentation
                  required by the TIA to effect the substitution of such new
                  Collateral and to subject such new Collateral to the Lien of
                  the relevant Security Documents, and all documents required by
                  Section 10.01 hereof with respect to such new Collateral;

            (v)   an Opinion of Counsel substantially to the effect that all
                  conditions precedent herein and under any of the Security
                  Documents relating to the release of such Collateral have been
                  complied with; and

            (vi)  if the Collateral to be released is only a portion of a
                  discrete parcel of real property, an Opinion of Counsel or an
                  endorsement to any title insurance policy insuring the Lien in
                  favor of the Trustee created by a Mortgage on such Real
                  Property confirming that after such release, the Lien of such
                  Mortgage continues unimpaired as a first priority perfected
                  Lien upon the remaining Real Property, subject only to
                  Permitted Liens.

      Upon compliance by the Company with the conditions precedent set forth
above, the Trustee shall cause to be released and reconveyed to the Company
without recourse the Released Collateral and shall deliver any such Released
Collateral in its possession to the Company and shall execute and deliver to the
Company at the Company's expense releases and satisfactions, in recordable form,
to the extent reasonably requested by the Company.

      (c) The Company shall be entitled to obtain a release of, and the Trustee
shall release, items of Collateral subject to an Event of Loss (other than Trust
Monies constituting Net Loss Proceeds from an Event of Loss with respect to
Collateral, which Trust Monies are subject to release from the Lien of the
Security Documents as provided under Article 12 hereof) upon compliance with the
conditions precedent that the Company shall have delivered to the Trustee the
following:

            (i)   an Officers' Certificate of the Company certifying that

                  (A)   such release covers only Collateral subject to an Event
                        of Loss,

                  (B)   if applicable, that such property has been taken by
                        Condemnation,

                  (C)   in the case of a taking by Condemnation, that the award
                        for the property so taken has become final and that an
                        appeal from such award is not advisable in the interests
                        of the Company or the Holders, and


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<PAGE>

                  (D)   that all conditions precedent herein and in the Security
                        Documents provided for relating to such release have
                        been complied with;

            (ii)  the Net Loss Proceeds and other property received in respect
                  of the Event of Loss, together with such instruments of
                  conveyance, assignment and transfer, if any, as may be
                  necessary to subject to the Lien of this Indenture and the
                  Security Documents all the right, title and interest of the
                  Company in and to such property (to the extent required by
                  this Indenture and the Security Documents);

            (iii) all documentation required by the TIA (including, without
                  limitation, TIA Section 314(d)), if any, prior to the release
                  by the Trustee of the Released Collateral, and, in the event
                  there is to be a concurrent substitution of property for the
                  Collateral subject to the Event of Loss, all documentation
                  required by the TIA to effect the substitution of such new
                  Collateral and to subject such new Collateral to the Lien of
                  the relevant Security Documents, and all documents required by
                  Section 10.01 hereof with respect to such new Collateral;

            (iv)  an Opinion of Counsel substantially to the effect that all
                  conditions precedent herein and under any of the Security
                  Documents relating to the release of such Collateral have been
                  complied with; and

            (v)   if the Collateral to be released is only a portion of a
                  discrete parcel of Real Property, an Opinion of Counsel or an
                  endorsement to any title insurance policy insuring the Lien in
                  favor of the Trustee created by a Mortgage on such Real
                  Property confirming that after such release, the Lien of such
                  Mortgage continues unimpaired as a first priority perfected
                  Lien upon the remaining Real Property, subject only to
                  Permitted Liens.

      In any proceedings for the Condemnation of any Collateral, the Trustee may
be represented by counsel who may be counsel for the Company.

      Upon compliance by the Company with the conditions precedent set forth
above, the Trustee shall cause to be released and reconveyed without recourse to
the Company the Collateral which is the subject of such Event of Loss, and shall
deliver such Collateral in its possession to the Company and shall execute and
deliver to the Company at the Company's expense releases and satisfactions, in
recordable form, to the extent reasonably requested by the Company.

Section 10.04. Opinions as to Recording.

      (a) The Company represents that is has caused or will promptly cause to be
executed and delivered, filed and recorded and covenants that it and the
Guarantors, if any, will promptly cause to be executed and delivered and filed
and recorded, all instruments and documents, and represents that it has done and
will do or will cause to be done all such acts and other things, at the
Company's expense, as applicable, as are necessary to subject the applicable
Collateral to valid Liens and to perfect those Liens to the extent contemplated
by the Security Documents. Each of the Company and the Guarantors, if any,


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<PAGE>

shall, as promptly as practicable, cause to be executed and delivered, filed and
recorded all instruments and do all acts and other things as may be required by
law to perfect, maintain and protect the Liens under the applicable Security
Documents to which it is party (except as otherwise expressly provided herein
and therein) to the extent contemplated by the Security Documents.

      (b) The Company shall furnish to the Trustee and the Collateral Agent
promptly after the execution and delivery of this Indenture an Opinion of
Counsel either (i) stating that in the opinion of such counsel all action has
been taken with respect to the recording, registering and filing of this
Indenture, financing statements or other instruments or otherwise necessary to
make effective the Liens intended to be created by the Security Documents and
reciting the details of such action, or (ii) stating that, in the opinion of
such counsel, no such action is necessary to make such Lien effective. Such
Opinion of Counsel shall cover the necessity for recordings, registrations and
filings required in all relevant jurisdictions. Such Opinion of Counsel may
contain such qualifications, assumptions and limitations as are customary for
such opinions.

      (c) The Company and the Guarantors, if any, shall furnish to the Trustee
and the Collateral Agent within three months after each anniversary of the
Effective Date, an Opinion of Counsel, dated as of such date, stating either
that (i) in the opinion of such counsel, all action has been taken with respect
to the recording, registering, filing, re-recording, re-registering and
refilling of all supplemental indentures, financing statements, continuation
statements or other instruments of further assurance or otherwise as is
necessary to maintain the effectiveness of the Liens intended to be created by
the Security Documents and reciting the details of such action or (ii) in the
opinion of such counsel, no such action is necessary to maintain the
effectiveness of such Liens. Such opinion of counsel shall cover the necessity
of recordings, registrations, filing, re-recordings, re-registrations and
refilings in all relevant jurisdictions.

      (d) The Company and the Guarantors shall otherwise comply with the
provisions of ss. 314(b) and, as applicable ss.ss. 314(c), (d) and (e) of the
TIA.

Section 10.05. Further Assurances and Security.

      The Company and the Guarantors, if any, will execute, acknowledge and
deliver to the Trustee, at the Company's and/or such Guarantor's expense, at any
time and from time to time such further assignments, transfers, assurances or
other instruments as may be reasonably required to effectuate the terms of this
Indenture and the Security Documents, and will at any time and from time to time
do or cause to be done all such acts and things as may be necessary or proper,
or as may be reasonably required by the Trustee, to assure and confirm to the
Trustee, in its capacity as Collateral Agent, the Liens in the Collateral
contemplated hereby and by the Security Documents, all to the extent
contemplated by the Security Documents.

Section 10.06. Authorization of Actions to be Taken by Collateral Agent Under
the Security Documents.

      The Trustee, in its capacity as Collateral Agent, may, in its sole
discretion and without the consent of the Holders, on behalf of the Holders,
take all actions it deems necessary or appropriate in order to (a) enforce any
of the terms of the Security Documents and (b) collect and receive any and all
amounts payable in respect of the obligations of the Company and the Guarantors


                                       86
<PAGE>

hereunder. The Trustee, in its capacity as Collateral Agent, shall have the
power to institute and to maintain such suits and proceedings as such Person may
deem expedient to prevent any impairment of the Collateral by any acts that may
be unlawful or in violation of the Security Documents or this Indenture, and
such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders in the Collateral
(including power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other government enactment,
rule or order that may be unconstitutional or otherwise invalid if the
enforcement of, or compliance with, such enactment, rule or order would impair
the security interest hereunder or be prejudicial to the interests of the
Holders or of the Trustee).

Section 10.07. Authorization of Receipt of Funds by the Trustee Under the
Security Documents.

      The Trustee, in its capacity as Collateral Agent, is authorized to receive
any funds for the benefit of the Holders distributed under the Security
Documents, and to make further distributions of such funds to the Holders
according to the provisions of this Indenture and the Security Documents.

Section 10.08. Covenants of Collateral Agent with Respect to the Exit Facility.

      The Trustee, in its capacity as Collateral Agent, and any successor
Collateral Agent, hereby agrees that it shall, upon the written request of the
Company, either:

                  (1) enter into the Intercreditor Agreement with regard to the
            Exit Facility to effectuate the priority of the Liens granted under
            the Exit Facility over the Liens of the Collateral Agent with
            respect to the Collateral to the extent contemplated herein; or

                  (2) release its Lien with respect to Collateral to the extent
            required under the Intercreditor Agreement.

                                   ARTICLE 11.
                              SUBSIDIARY GUARANTEES

Section 11.01. Guarantee.

      Subject to this Article 11, any Restricted Subsidiary, which in accordance
with Section 4.17 or Section 11.05 hereof is required in the future to guarantee
the Obligations of the Company and to execute and deliver a Supplemental
Indenture substantially in the form of Exhibit C hereto hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes,
the Security Documents or the Obligations of the Company hereunder or
thereunder, that: (a) the principal of and interest on the Notes (including,
without limitation, any interest that accrued after, or would accrue but for,
the commencement of a proceeding of the type described in Section 6.01(g) or
(h)) and any fees, expenses and other amounts owing under this Indenture will be
duly and punctually paid in full when due, whether at Stated Maturity, by
acceleration, mandatory redemption, call for redemption, upon a Change of


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Control Offer, an Asset Sale Offer, a Loss Proceeds Offer or otherwise, and
interest on the overdue principal and (to the extent permitted by law) interest,
if any, on the Notes and any other amounts due in respect of the Notes and the
Security Documents, and all other Obligations of the Company, including the
Company's Obligations to the Holders of the Notes under this Indenture, the
Notes and the Security Documents and all Obligations of the Subsidiary
Guarantors under this Indenture, the Security Documents and the Subsidiary
Guarantees, whether nor or hereafter existing, will be promptly paid in full or
performed, all strictly in accordance with the terms hereof and thereof; and (b)
in case of any extension of time of payment or renewal of any Notes or any of
such other Obligations, that same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
Stated Maturity, by acceleration or otherwise. Failing payment when due of any
amount so guaranteed or any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay in full or perform
the same immediately, all strictly in accordance with the terms of the Notes,
this Indenture and the Security Documents. An Event of Default under this
Indenture or the Notes shall constitute an Event of Default under each
Subsidiary Guarantee, and shall entitle the Holders to accelerate the
Obligations of each Subsidiary Guarantor hereunder in the same manner and to the
same extent as the Obligations of the Company. Each Subsidiary Guarantee is
intended to be superior to or pari passu in right of payment with all
Indebtedness of the respective Guarantor and each Guarantor's Obligations are
independent of any Obligation of the Company or any other Guarantor. Each
Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice or further assent from such Guarantor, and that
each Guarantor will remain bound under this Article 11 notwithstanding any
extension or renewal of any Obligation.

      Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes, this Indenture or the Security Documents, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice and
all demands whatsoever and covenant that this Subsidiary Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Notes and this Indenture. Each Guarantor waives notice of any default under the
Notes or the Obligations. The obligations of each Guarantor hereunder shall not
be affected by (a) the failure of any Holder, Trustee or the Collateral Agent to
assert any claim or demand or to enforce any right or remedy against the Company
or any other Person under this Indenture, the Notes, or any other agreement or
otherwise; (b) any extension or renewal of any thereof; (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Indenture, the Notes, the Security Documents or any other agreement; (d) the
release of any security held by any Holder, the Collateral Agent or the Trustee
for the Obligations or any of them; (e) the failure of any Holder, the Trustee
or the Collateral Agent to exercise any right or remedy against any other
guarantor of the Obligations; or (f) any change in the ownership of such
Guarantor.


                                       88
<PAGE>

      Each Guarantor further agrees that its Subsidiary Guaranty herein
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee of collection) and waives any right to require that any resort be
had by any Holder or the Trustee to any security held for payment of the
Obligations.

      If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.

      Until such time as the Notes and the other Obligations of the Company
guaranteed hereby have been satisfied in full, each Guarantor hereby irrevocably
waives any claim or other rights that it may now or hereafter acquire against
the Company or any other Guarantor that arise from the existence, payment,
performance or enforcement of such Guarantor's Obligations under its Subsidiary
Guarantee including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Holders, the Trustee or the Collateral
Agent against the Company or any other Guarantor or any security, whether or not
such claim, remedy or right arises in equity or under contract, statute or
common law, including, without limitation, the right to take or receive from the
Issuer or any other Guarantor, directly or indirectly, in cash or other property
or by set-off or in any other manner, payment or security on account of such
claim, remedy or right. If any amount shall be paid to such Guarantor in
violation of the preceding sentence at any time prior to the later of the
payment in full of the Notes and all other amounts payable under this Indenture
and each Subsidiary Guarantee upon the Stated Maturity of the Notes, such amount
shall be held in trust for the benefit of the Holders and the Trustee and shall
forthwith be paid to the Trustee to be credited and applied to the Notes and all
other amounts payable under each Subsidiary Guarantee, whether matured or
unmatured, in accordance with the terms of this Indenture, or to be held as
security for any Obligations or other amounts payable under any Subsidiary
Guarantee thereafter arising.

      Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Indenture and that
the waiver set forth in this Section 11.01 is knowingly made in contemplation of
such benefits. Each Guarantor further agrees that, as between it, on the one
hand, and the Holders and the Trustee, on the other hand, (x) the maturity of
the Obligations guaranteed hereby may be accelerated as provided in Article 6
for the purposes of each Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed hereby, and (y) in the event of any acceleration of such
Obligations guaranteed hereby as provided in Article 6, such Obligations
(whether or not due and payable) shall, forthwith become due and payable by the
Guarantor for the purposes of each Subsidiary Guarantee.

      A Guarantor that makes a distribution or payment under its Subsidiary
Guarantee shall be entitled to contribution from each other Guarantor in a pro
rata amount based on the Adjusted Net Assets of each such other Guarantor for
all payments, damages and expenses incurred by that Guarantor in discharging the
Company's Obligations with respect to the Notes and this Indenture or any other
Guarantor with respect to its Subsidiary Guarantee, so long as the exercise of
such right does not impair the rights of the Holders of the Notes under the
Subsidiary Guarantees.


                                       89
<PAGE>

      Each Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any Holder in
enforcing any rights under this Section 11.01.

Section 11.02. Limitation on Guarantor Liability.

      Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Subsidiary
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Subsidiary Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the Obligations of such Guarantor under its Subsidiary Guarantee and this
Article 11 shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the Obligations of such other
Guarantor under this Article 11, result in the obligations of such Guarantor
under its Subsidiary Guarantee not constituting a fraudulent transfer or
conveyance. Each Guarantor that makes a payment or distribution under its
Subsidiary Guarantee shall be entitled to a contribution from each other
Guarantor in a pro rata amount based on the Adjusted Net Assets of each such
other Guarantor.

Section 11.03. Successors and Assigns.

      This Article 11 shall be binding upon each Guarantor and its successors
and assigns and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges conferred upon
that party in this Indenture and in the Notes shall automatically extend to and
be vested in such transferee or assignee, all subject to the terms and
conditions of this Indenture.

Section 11.04. No Waiver.

      Neither a failure nor a delay on the part of either the Trustee or the
Holders in exercising any right, power or privilege under this Article 11 shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise of any right, power or privilege. The
rights, remedies and benefits of the Trustee and the Holders herein expressly
specified are cumulative and not exclusive of any other rights, remedies or
benefits which either may have under this Article 11 at law, in equity, by
statute or otherwise.

Section 11.05. Guarantors May Consolidate, Etc., on Certain Terms.

      No Guarantor may consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person), another corporation, Person or other
entity whether or not affiliated with such Guarantor unless (i) subject to the
provisions of the following paragraph, the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor, pursuant to a supplemental indenture in form and


                                       90
<PAGE>

substance reasonably satisfactory to the Trustee, under the Notes, the Security
Documents and the Indenture; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; and (iii) except in the case
of a merger of a Guarantor with or into another Guarantor or a merger of a
Guarantor with or into the Company, the Company would be permitted by virtue of
the Company's pro forma Fixed Charge Coverage Ratio, immediately after giving
effect to such transaction, to Incur at least $1.00 of additional Indebtedness
pursuant to the terms of the first paragraph of Section 4.09 hereof.

Section 11.06. Releases Following Sale of Assets or Capital Stock.

      In the event of a sale or other disposition of all of the assets of any
Guarantor (other than to the Company, another Guarantor or a Restricted
Subsidiary), by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the Capital Stock of any Guarantor (other than to, the
Company, another Guarantor or a Restricted Subsidiary), then such Guarantor (in
the event of a sale or other disposition, by way of such a merger, consolidation
or otherwise, of all of the Capital Stock of such Guarantor) or the entity
acquiring the property (in the event of a sale or other disposition of all of
the assets of such Guarantor) will be released and relieved of any obligations
under its Subsidiary Guarantee and any such acquiring entity will not be
required to assume any obligations of such Guarantor under the applicable
Subsidiary Guarantee; provided that such sale or other disposition complies with
all applicable provisions of this Indenture including, without limitation,
Section 4.10 and this Article 11.

      Any Guarantor not released from its obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 11.

                                   ARTICLE 12.
                               COLLATERAL ACCOUNT

Section 12.01. Collateral Account.

      On the Effective Date there shall be established and, at all times
hereafter until the Obligations of the Company under this Indenture, the Notes
and the Security Documents are discharged or defeased in accordance with this
Indenture, there shall be maintained by the Company with the Trustee, the
Collateral Account. The Collateral Account shall be established and maintained
with the Trustee at its Corporate Trust Office and designated in the name of
Congoleum Corporation, subject to the security interest in favor of the Trustee.
To the extent permitted by the Exit Facility and the Intercreditor Agreement,
all Trust Monies shall be deposited in the Collateral Account and thereafter
shall be held by and under the control of the Trustee for its benefit and for
the benefit of the Holders as a part of the Collateral and, upon any entry upon
or sale or other disposition of the Collateral or any part thereof pursuant to
any of the Security Documents, said Trust Monies shall be applied in accordance
with Section 6.10 hereof; but prior to any such entry, sale or other
disposition, all or any part of the Trust Monies held by the Trustee may be
withdrawn, and shall be released, paid or applied by the Trustee in accordance
with the terms of this Article 12.


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<PAGE>

Section 12.02. Withdrawal of Net Loss Proceeds.

      To the extent that any Trust Monies consist of Net Loss Proceeds, such
Trust Monies may be withdrawn by the Company and shall be paid by the Trustee
upon a Company Request delivered to the Trustee to be applied for any purpose
permitted by Section 4.11 upon receipt by the Trustee of the following:

      (a) An Officers' Certificate, dated not more than 30 days prior to the
date of the application for the withdrawal and payment of such Trust Monies
setting forth:

            (i)   that such funds are being used in accordance with Section 4.11
                  for the purposes briefly described in such Officers'
                  Certificate; and

            (ii)  that all conditions precedent herein provided for relating to
                  such withdrawal and application have been complied with;

      (b) All documentation required under the TIA (including, without
limitation, TIA Section 314(d)); and

      (c) an Opinion of Counsel substantially to the effect that:

            (i)   upon the basis of the accompanying documents specified in this
                  Section 12.02, all conditions precedent herein provided for
                  relating to such withdrawal and application have been complied
                  with; and

            (ii)  that the relevant Security Documents create a Lien in favor of
                  the Trustee and, to the extent that such Lien is a security
                  interest in any such Collateral that may be perfected under
                  the relevant UCC, that such security interest in such
                  Collateral will be perfected upon consummation of the
                  transaction.

      Upon compliance with the foregoing provisions of this Section 12.02 and
Section 12.01 hereof, the Trustee shall, upon receipt of a Company request, pay
to the Company or its designee an amount of Net Loss Proceeds constituting Trust
Monies equal to the amount stated in the Officers' Certificate required by
clause (i) of paragraph (a) of this Section 12.02.

Section 12.03. Withdrawal of Net Proceeds to Fund an Asset Sale Offer.

      To the extent that any Trust Monies consist of Net Proceeds of Collateral
received by the Trustee pursuant to the provisions of Section 4.10 hereof and an
Asset Sale Offer has been made in accordance therewith, such Trust Monies may be
withdrawn by the Company and shall be paid by the Trustee to the Paying Agent
for application in accordance with Sections 3.02 and 4.10 hereof upon a Company
Notice to the Trustee and upon receipt by the Trustee of the following:

      (a) An Officers' Certificate, dated not more than three Business Days
prior to the Purchase Date stating:


                                       92
<PAGE>

            (i)   that no Event of Default shall have occurred and be continuing
                  after giving effect to such application;

            (ii)  (x) that such Trust Monies constitute Net Cash Proceeds of
                  Collateral, (y) that pursuant to and in accordance with
                  Section 4.10 hereof, the Company has made an Asset Sale Offer
                  and (z) the amount of Net Cash Proceeds to be applied to the
                  repurchase of the Notes pursuant to the Asset Sale Offer;

            (iii) the Payment Date; and

            (iv)  that all conditions precedent herein provided for relating to
                  such application of Trust Monies have been complied with; and

      (b) All documentation, if any, required under TIA Section 314(d).

      Upon compliance with the foregoing provisions of this Section 12.03, the
Trustee shall apply the Trust Monies as directed and specified by such Company
Notice, subject to Sections 3.02 and 4.10 hereof.

Section 12.04. Withdrawal of Trust Monies Pursuant to Section 4.10.

      In the event the Company intends to utilize Net Proceeds of an Asset Sale
of Collateral (the "Released Trust Monies") in a manner provided for in the
first sentence of the second paragraph of Section 4.10, such Net Proceeds
constituting Trust Monies may be withdrawn by the Company and shall be paid by
the Trustee to the Company upon receipt by the Trustee of the following:

      (a) A Notice signed by the Company which shall (i) refer to this Section
12.04, and (ii) describe with reasonable particularity the Replacement Assets to
be invested in or the Senior Debt to be repaid with respect to the Released
Trust Monies;

      (b) An Officers' Certificate certifying that (i) such Trust Monies
constitute Net Proceeds of Collateral, and (ii) all conditions precedent herein
to such release have been complied with;

      (c) All documentation required under the TIA (including, without
limitation, TIA Section 314(d));

      (d) If any Replacement Asset is Real Property, the Company or the
appropriate Guarantor shall also deliver to the Trustee a mortgage, policy of
title insurance, survey and documents of the type described in Section 10.01(c),
in each case in form and substance satisfactory to the Trustee;

      (e) If any Replacement Asset is personal property constituting Collateral,
the Company or the appropriate Guarantor shall deliver to the Trustee:


                                       93
<PAGE>

            (i)   a Security Document or an amendment to an existing Security
                  Document and such financing statements and other instruments,
                  if any, necessary to create and perfect the Lien of any
                  applicable Security Document on such personal property
                  interest; and

            (ii)  evidence of payment or a closing statement indicating payments
                  to be made by the Company or the appropriate Guarantor of all
                  filing fees, recording charges and/or transfer taxes, if any,
                  and other costs and expenses, including reasonable legal fees
                  and disbursements of one counsel for the Trustee (and any
                  local counsel), that may be incurred to validly and
                  effectively subject the Replacement Asset to the Lien of any
                  Security Document; and

      (f) An Opinion of Counsel substantially to the effect that:

            (i)   all conditions precedent herein provided for relating to such
                  application of Trust Monies have been complied with; and

            (ii)  to the extent that such Replacement Assets constitute
                  Collateral and were acquired with Net Proceeds of Collateral,
                  the relevant Security Documents create a Lien in favor of the
                  Trustee on such Replacement Assets and, to the extent that
                  such Lien is a security interest in any such Replacement
                  Assets that may be perfected under the relevant UCC, that such
                  security interest in such Replacement Assets will be perfected
                  upon consummation of such acquisition.

      Upon compliance with the foregoing provisions, the Trustee shall apply the
Released Trust Monies as directed and specified by the Company.

Section 12.05. Investment of Trust Monies.

      So long as no Default or Event of Default shall have occurred and be
continuing, all or any part of any Trust Monies held by the Trustee shall from
time to time be invested or reinvested by the Trustee in any Cash Equivalents
pursuant to a Company Order, which shall specify the Cash Equivalents in which
such Trust Monies shall be invested and shall certify that such investments
constitute Cash Equivalents and the Trustee shall sell any such Cash Equivalent
only upon receipt of such a Company request specifying the particular Cash
Equivalent to be sold. So long as no Default or Event of Default shall have
occurred and be continuing, any interest or dividends accrued, earned or paid on
such Cash Equivalents (in excess of any accrued interest or dividends paid at
the time of purchase) that may be received by the Trustee shall be forthwith
paid to the Company. Such Cash Equivalents shall be held by the Trustee as a
part of the Collateral, subject to the same provisions hereof as the cash used
by it to purchase such Cash Equivalents.

      The Trustee shall not be liable or responsible for any loss resulting from
such investments or sales except only for its own negligent action, its own
negligent failure to act or its own willful misconduct in complying with this
Section 12.05.


                                       94
<PAGE>

Section 12.06. Use of Trust Monies.

      Prior to the delivery of an Acceleration Notice in accordance with Section
6.02 hereof, the Trustee shall apply Trust Monies not required to be applied to
fund a Net Proceeds Offer or a Loss Proceeds Offer to such purposes and in such
manner that is not prohibited by this Indenture (including, without limitation,
to the payment of the principal of, premium, and interest on, any Notes, on any
redemption date or at Maturity or to the redemption thereof or the purchase
thereof upon tender or in the open market or at private sale or upon any
exchange or in any one or more of such ways, including, without limitation,
pursuant to a Change of Control Offer), as the Company shall request in writing.

      Any Trust Monies and any cash deposited with the Trustee for the payment
of accrued interest shall not, after compliance with the foregoing provisions of
this Section, be deemed to be part of the Collateral or Trust Monies.

                                   ARTICLE 13.
                                  MISCELLANEOUS

Section 13.01. Trust Indenture Act Controls.

      If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA Section 318(c), the imposed duties shall control.

Section 13.02. Notices.

      Any notice or communication by the Company, any Guarantor or the Trustee
to the others is duly given if in writing and delivered in person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight courier guaranteeing next day delivery, to the other's
address.

      If to the Company and/or any Guarantor:

      3705 Quakerbridge Road
      Mercerville, New Jersey 08619
      Attention: Howard N. Feist III
      Fax: (609) 584-3555

      With a copy to:

      Pillsbury Winthrop Shaw Pittman LLP
      1540 Broadway
      New York, NY  10036-4039
      Attention: Richard L. Epling, Esq.
                 Robin L. Spear, Esq.
      Fax: (212) 858-1000


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<PAGE>

      If to the Trustee:

      with a copy to:

      The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.

      All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight courier guaranteeing next day delivery.

      Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight courier
guaranteeing next day delivery to its address shown on the register kept by the
Registrar. Any notice or communication shall also be so mailed to any Person
described in TIA ss. 313(c), to the extent required by the TIA. Failure to mail
a notice or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders.

      If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.

      If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent, if any, at the same time.

Section 13.03. Communication by Holders of Notes with Other Holders of Notes.

      Holders may communicate pursuant to TIA ss. 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).

Section 13.04. Certificate and Opinion as to Conditions Precedent.

      Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:

      (a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 13.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and

      (b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 13.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.

      In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such eligible and qualified Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or several
documents.


                                       96
<PAGE>

      Any certificate or opinion of an Officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such Officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any certificate or opinion of counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the Company stating the information on which
counsel is relying unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.

      Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

Section 13.05. Statements Required in Certificate or Opinion.

      Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:

      (a) a statement that the Person making such certificate or opinion has
read such covenant or condition;

      (b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;

      (c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and

      (d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.

Notwithstanding any provision of this Indenture, any Note or any Security
Document to the contrary, any Opinion of Counsel delivered hereunder may contain
such qualifications, assumptions and limitations as are customary for such
opinions.

Section 13.06. Rules by Trustee and Agents.

      The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.


                                       97
<PAGE>

Section 13.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.

      No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or such Guarantor under the Notes, the
Subsidiary Guarantees, this Indenture, the Security Documents or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.

Section 13.08. Governing Law.

      THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES, WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 13.09. No Adverse Interpretation of Other Agreements.

      This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.

Section 13.10. Successors.

      All agreements of the Company in this Indenture and the Notes shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors.

Section 13.11. Severability.

      In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the remaining provisions shall not in any way be
affected or impaired thereby.

Section 13.12. Counterpart Originals.

      The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.

Section 13.13. Table of Contents, Headings, Etc.

      The Table of Contents and Headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part of this Indenture and shall in no way modify or restrict any
of the terms or provisions hereof.

                         [SIGNATURES ON FOLLOWING PAGES]


                                       98
<PAGE>

                                    SIGNATURES

                                    CONGOLEUM CORPORATION

                                    By:     __________________________________
                                    Name:
                                    Title:


                                    [HSBC BANK, USA], as Trustee

                                    By:     __________________________________
                                    Name:
                                    Title:


                                       99
<PAGE>

                                   EXHIBIT A-1
                                 (Face of Note)

      [IF THE NOTE IS A GLOBAL NOTE, THEN INSERT: THIS NOTE IS A GLOBAL NOTE
WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGED IN
WHOLE OR IN PART FOR A NOTE REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE
ORIN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH
DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE.]

      [IF THE NOTE IS A GLOBAL NOTE AND THE DEPOSITORY TRUST COMPANY IS TO BE
THE DEPOSITARY THEREFOR, THEN INSERT: UNLESS THIS NOTE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN]

                              CONGOLEUM CORPORATION

                       10 % SENIOR SECURED NOTES DUE 2011

                                                         CUSIP No. [_____ _____]

No. __________

$____________

      Congoleum Corporation, a corporation duly organized and existing under the
laws of Delaware (herein called the "Company", which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to __________, or registered assigns, the principal sum of
_______________ Dollars (such amount the "principal amount" of this Note) [IF
THE NOTE IS A GLOBAL NOTE, THEN INSERT -- , or such other principal amount as
may be set forth in the records of the Trustee as referred to in accordance with
the Indenture,] on __________, 2011 at the office or agency of the Company in
the Borough of Manhattan, The City of New York, State of New York, in such coin
or currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest
semi-annually on _________ and _________ of each year (each, an "Interest
Payment Date"), on said principal sum at the rate per annum specified below, at
such office or agency, in like coin or currency, from the _________ or
_________, as the case may be, to which interest on the Notes has been paid
preceding the date thereof (unless the date thereof is a _________ or a


                                      A-1
<PAGE>

_________ to which interest has been paid, in which case from the date thereof)
until payment of said principal sum has been made or duly provided for. This
Note shall bear interest at the rate of 10% per annum until the principal hereof
is paid or made available for payment. Interest will be computed on the basis of
a 360-day year consisting of twelve 30-day months.

      The interest is so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on the record date for such interest, which shall be
the _______________ or _______________ (the "Regular Record Date") (whether or
not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on the relevant Regular Record Date
and may either be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on a special record
date for the payment of such Defaulted Interest to be fixed by the Trustee in
accordance with Section 2.12 of the Indenture, notice whereof shall be given to
Holders of Notes not less than 10 days prior to such special record date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture.

      Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof and such further provisions shall for all purposes have
the same effect as though fully set forth at this place.

      Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

Dated:  __________, _____.


                                    CONGOLEUM CORPORATION


                                    By: __________________________________
                                        Name:
                                        Title:


                                    (SEAL)


                                      A-2
<PAGE>

This is one of the [Global] Notes referred
to in the within-mentioned Indenture:

[HSBC BANK, USA],
as Trustee


By: _____________________________
    Name:
    Title:


                                      A-3
<PAGE>

                                 (Back of Note)

                        10% SENIOR SECURED NOTES DUE 2011

      Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.

      1. Indenture. This Note is one of a duly authorized issue of Notes of the
Company designated as its 10% Senior Secured Notes due 2011 (herein called the
"Notes"), issued under an Indenture, dated as of [_________], 2006 (herein
called the "Indenture", which term shall have the meaning assigned to in such
instrument), between the Company and [HSBC Bank, USA], as Trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Guarantors, if any, the Trustee and
the Holders of the Notes and of the terms upon which the Notes are, and are to
be, authenticated and delivered. To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling.

      2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on the applicable Regular Record Date next preceding the
Interest Payment Date, even if such Notes are cancelled after such Regular
Record Date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. Principal and
interest on the Notes will be payable at the office or agency of the Company
maintained for such purpose or, at the option of the Company, payment of
interest may be made by check mailed to the Holders of the Notes at their
respective addresses set forth in the register of Holders of Notes; provided
that all payments of principal and interest with respect to Notes the Holders of
which have given wire transfer instructions to the Company prior to the Regular
Record Date will be required to be made by wire transfer of immediately
available funds within the United States to the accounts specified by the
Holders thereof. Until otherwise designated by the Company, the Company's office
or agency in New York will be the office of the Trustee maintained for such
purpose. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.

      3. Paying Agent and Registrar. Initially, [HSBC Bank, USA], the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.

      4. Security. The payment of principal of and interest on Notes is secured
by the Liens of the Security Documents pursuant to, and subject to the terms of
the Indenture, the Security Agreement and the other Security Documents.

      5. Redemption. The Notes are not subject to redemption at any time.

      6. Prepayments. Except as set forth in Paragraph 6 below, the Company
shall not be required to make mandatory redemption payments with respect to the
Notes.


                                      A-4
<PAGE>

      7. Repurchase at Option of Holder.

      (a) If there is a Change of Control, each Holder of Notes will have the
right to require the Company to make an offer (a "Change of Control Offer") to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Notes at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date of purchase (the "Change of Control Payment"). Within 30 days following
any Change of Control, the Company will mail a notice to each Holder describing
the circumstances giving rise to the Change of Control and offering to
repurchase Notes on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date"), pursuant to the procedures
required by the Indenture and described in such notice. The Company will comply
with the requirements of Rule 13e-4 and Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.

      (b) If the Company or a Restricted Subsidiary consummates any Asset Sale,
when the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company
will be required to make an offer to all Holders of Notes and to the extent
required by the terms thereof, an offer to the holders of any other Indebtedness
of the Company that is pari passu with the Notes or Indebtedness of a Restricted
Subsidiary that is pari passu with its Subsidiary Guarantee and containing
provisions similar to those set forth in the Indenture with respect to offers to
purchase or redeem with proceeds of sales of assets (an "Asset Sale Offer"), to
purchase the maximum principal amount of Notes that may be purchased with the
amount of Excess Proceeds allocated for the Notes at an offer price in cash
equal to 100% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of purchase, in accordance with the procedures set forth in
the Indenture. To the extent that any Excess Proceeds remain after consummation
of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose
not otherwise prohibited by the Indenture. If the aggregate principal amount of
Notes tendered into such Asset Sale Offer surrendered by Holders thereof exceeds
the amount of Excess Proceeds allocated for the Notes, the Trustee shall select
the Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.

      (c) Any Net Loss Proceeds from an Event of Loss with respect to Collateral
that are not applied or invested as provided in the first sentence of Section
4.11 of the Indenture within the time periods set forth therein will be deemed
to constitute "Excess Loss Proceeds." When the aggregate amount of Excess Loss
Proceeds exceeds $5.0 million (such date, the "Loss Proceeds Offer Trigger
Date"), the Company will make an offer to all Holders and the holders of any
Senior Secured Debt the terms of which require that an offer be made to all
holders of such Senior Secured Debt (a "Loss Proceeds Offer") on a date (the
"Payment Date") not less than 25 days following the 180th day after the Event of
Loss, or the 271st day after the Event of Loss if the Company had determined
such longer period was applicable in accordance with Section 4.11 of the
Indenture, the maximum principal amount of Notes (and Senior Secured Debt) that
may be purchased out of such Excess Loss Proceeds at an offer price in cash in
an amount equal to 100% of the principal amount of Notes and Senior Secured
Indebtedness to be purchased, plus accrued and unpaid interest (including, if
any) thereon, if any, to the date of purchase (subject to the right of Holders
of record on a Regular Record Date to receive interest, if any, on the relevant


                                      A-5
<PAGE>

Interest Payment Date in accordance with the procedures set forth herein). If
the aggregate principal amount of Notes surrendered by Holders exceeds the
Excess Loss Proceeds to be used to purchase Notes, the Trustee shall select the
Notes to be purchased on a pro rata basis. To the extent that the aggregate
amount of Notes tendered pursuant to a Loss Proceeds Offer is less than the Loss
Proceeds Offer Amount, the Company may apply any remaining Excess Loss Proceeds
to any purpose consistent with the Indenture and, following the consummation of
each Loss Proceeds Offer, the Excess Loss Proceeds shall be reset to zero.
Notwithstanding anything to the contrary in the foregoing, the Company may
commence a Loss Proceeds Offer prior to the expiration of 270 days after the
occurrence of an Event of Loss.

      8. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1000 and integral multiples of $1000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company or the Registrar is not required to
transfer or exchange any Note selected for redemption. Also, the Company or the
Registrar is not required to transfer or exchange any Notes for a period of 15
days before a selection of Notes to be redeemed.

      9. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.

      10. Amendment, Supplement and Waiver. The Indenture permits, with certain
exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the Guarantors and the rights of
the Holders of the Notes under the Indenture and the Security Documents at any
time by the Company, the Guarantors and the Trustee with the consent of the
Holders of at least a majority in aggregate principal amount of the then
outstanding Notes. The Indenture also contains provisions permitting the Holders
of at least a majority in aggregate principal amount of the Notes at the time
outstanding, on behalf of the Holders of all the Notes, to waive compliance by
the Company with certain provisions of the Indenture and the Security Documents
and certain past defaults under the Indenture and its consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of the Note and of any Note issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Note.

      11. Defaults and Remedies. Events of Default include in summary form: (i)
default for 30 days in the payment when due of interest on the Notes; (ii)
default in payment when due of principal on the Notes; (iii) failure by the
Company or any of its Subsidiaries to comply with Section 4.07, or 4.15 or
Article 5 of the Indenture; (iv) failure by the Company or any of its
Subsidiaries for 30 days after written notice to comply with any of its other
agreements in the Indenture, the Notes or the Security Documents; (v) a
continuing default occurs under the Plan Trust Note or the New Convertible
Security, or a default under any other mortgage, indenture, debt security or
instrument (other than the Plan Trust Note or the New Convertible Security or as
referred to in clauses (i) and (ii) above) under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries (or the payment of which is


                                      A-6
<PAGE>

guaranteed by the Company or any of its Restricted Subsidiaries), whether such
Indebtedness or Guarantee now exists or is created after the date of the
Indenture, which default results in the failure to pay such Indebtedness at its
Stated Maturity or in the acceleration of such Indebtedness prior to its express
maturity and, in each case involving such Indebtedness other than the Plan Trust
Note or the New Convertible Security, the amount of any such Indebtedness,
whether principal, premium or interest, together with the amount of any other
such Indebtedness which has been not so paid or the majority of which has been
so accelerated, aggregates $2.0 million or more (other than Existing
Indebtedness to the extent it is secured by or paid by the drawing against a
letter of credit permitted to be issued under the Indenture); (vi) failure by
the Company or any Restricted Subsidiaries to pay final judgments aggregating in
excess of $2.0 million (net of any amounts that a reputable and creditworthy
insurance company has acknowledged liability for in writing), which judgments
are not paid, discharged or stayed for a period of 30 days; (vii) certain events
of bankruptcy or insolvency with respect to the Company or any of its
Significant Subsidiaries that is a Restricted Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary as set forth in the Indenture; (viii) the Liens created by the
Security Documents shall at any time not constitute valid and perfected Liens on
the Collateral intended to be covered thereby (to the extent perfection by
filing, registration, recordation or possession is required herein or therein)
in favor of the Collateral Agent, free and clear of all other Liens (other than
Permitted Liens), or, except for expiration in accordance with its terms or
amendment, modification, waiver, termination or release in accordance with the
terms of this Indenture, any of the Security Documents shall for whatever reason
be terminated or cease to be in full force and effect, if in either case, such
default continues for [15] days after written notice, or the enforceability
thereof shall be contested by the Company or any Subsidiary Guarantor; (ix)
failure of the Company to make, when due, any transfer, delivery, pledge,
assignment or grant of Collateral required to be made by it and such failure
continues unremedied for ten Business Days after notice of such failure is given
to the Company by the Trustee or to the Company and the Trustee by the Holders
of at least 25% in aggregate principal amount of the then outstanding Notes; or
(x) except as permitted by the Indenture, any Subsidiary Guarantee is held in
any judicial proceeding to be unenforceable or invalid in any material respect
or shall cease for any reason to be in full force and effect or any Guarantor,
or any Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Subsidiary Guarantee. If any Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency as set forth in the
Indenture, with respect to the Company, any Significant Subsidiary that is a
Restricted Subsidiary or any group of Restricted Subsidiaries, that taken
together would constitute a Significant Subsidiary, all outstanding Notes will
become due and payable without further action or notice. Holders of the Notes
may not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of at least a majority in aggregate
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of at least
a majority in aggregate principal amount of the then outstanding Notes by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any


                                      A-7
<PAGE>

existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required, within 5 Business Days of any Officer becoming aware of any
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.

      12. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue or resign.

      13. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall not
have any liability for any obligations of the Company or any Guarantor under the
Notes, the Subsidiary Guarantees, the Indenture, the Security Documents or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a waiver
is against public policy.

      14. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.

      15. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

      16. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other. identification numbers placed thereon.

      The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture, the Intercreditor Agreement and/or the Security
Document. Requests may be made to:

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________


                                      A-8
<PAGE>

                                 ASSIGNMENT FORM

To assign this Note, fill in the form below:  (I) or (we) assign and transfer
this Note to

________________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
              (Print or type assignee's name, address and zip code)

and irrevocably appoint ________________________________________________________

to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

________________________________________________________________________________

Date: __________________

                                    Your Signature: __________________________
                                    (Sign exactly as your name appears on the
                                    face of this Note)

SIGNATURE GUARANTEE.

________________________________________
Participant in a Recognized Signature
Guarantee Medallion Program


                                      A-9
<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

      If you want to elect to have this Note purchased by the Company pursuant
to Sections 3.02 and 4.10, Sections 3.02 and 4.11 or Section 4.15 of the
Indenture, check the box below:

      [_] Sections 3.02 and 4.10   [_] Sections 3.02 and 4.11   [_] Section 4.15

      If you want to elect to have only part of the Note purchased by the
Company pursuant to Sections 3.02 and 4.10, Sections 3.02 and 4.11 or Section
4.15 of the Indenture, state the amount you elect to have purchased: $__________


Date: ____________               Your Signature: _______________________________
                                 (Sign exactly as your name appears on the Note)

                                 Tax Identification No: ________________________


SIGNATURE GUARANTEE.


_____________________________________
Participant in a Recognized Signature
Guarantee Medallion Program


                                      A-10
<PAGE>

            SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/1/

      The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:

--------------------------------------------------------------------------------
                   AMOUNT OF      AMOUNT OF        PRINCIPAL        SIGNATURE
                  DECREASE IN    INCREASE IN     AMOUNT OF THIS         OF
                   PRINCIPAL      PRINCIPAL       GLOBAL NOTE       AUTHORIZED
                   AMOUNT OF      AMOUNT OF        FOLLOWING        OFFICER OF
    DATE OF       THIS GLOBAL    THIS GLOBAL     SUCH DECREASE      TRUSTEE OR
    EXCHANGE          NOTE           NOTE        (OR INCREASE)      CUSTODIAN
    --------          ----           ----        -------------      ---------
--------------------------------------------------------------------------------

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

----------
/1/ This should be included only if the Note is issued in global form.


                                      A-11
<PAGE>

                                    EXHIBIT B

                         FORM OF SUPPLEMENTAL INDENTURE
                    TO BE DELIVERED BY SUBSEQUENT GUARANTORS


      Supplemental Indenture (this "Supplemental Indenture"), dated as of
_______________, among _______________ (the "Guaranteeing Subsidiary"), a
subsidiary of Congoleum Corporation (or its permitted successor), a Delaware
corporation (the "Company"), the Company, the other Guarantors (as defined in
the Indenture referred to herein) and [HSBC Bank, USA], as trustee under the
indenture referred to below (the "Trustee").

                                   W I T N E S S E T H

      WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture (the "Indenture"), dated as of ________, 2006 providing for the
issuance of an aggregate principal amount of up to $100.0 million of 10% Senior
Secured Notes due 2011 (the "Notes");

      WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Subsidiary Guarantee"); and

      WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.

      NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:

1. Capitalized Terms. Capitalized terms used herein without definition shall
have the meanings assigned to them in the Indenture.

2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees as follows:

      (a)   Along with all Guarantors named in the Indenture, to jointly and
            severally Guarantee to each Holder of a Note authenticated and
            delivered by the Trustee and to the Trustee and its successors and
            assigns, irrespective of the validity and enforceability of the
            Indenture, the Notes or the obligations of the Company hereunder or
            thereunder, that:

            (i)   the principal of and interest on the Notes will be promptly
                  paid in full when due, whether at maturity, by acceleration,
                  redemption or otherwise, and interest on the overdue principal
                  of and interest on the Notes, if any, if lawful, and all other
                  obligations of the Company to the Holders or the Trustee
                  hereunder or thereunder will be promptly paid in full or
                  performed, all in accordance with the terms hereof and
                  thereof; and


                                      B-1
<PAGE>

            (ii)  in case of any extension of time of payment or renewal of any
                  Notes or any of such other obligations, that same will be
                  promptly paid in full when due or performed in accordance with
                  the terms of the extension or renewal, whether at stated
                  maturity, by acceleration or otherwise. Failing payment when
                  due of any amount so guaranteed or any performance so
                  guaranteed for whatever reason, the Guarantors shall be
                  jointly and severally obligated to pay the same immediately.

      (b)   The obligations hereunder shall be unconditional, irrespective of
            the validity, regularity or enforceability of the Notes or the
            Indenture, the absence of any action to enforce the same, any waiver
            or consent by any Holder of the Notes with respect to any provisions
            hereof or thereof, the recovery of any judgment against the Company,
            any action to enforce the same or any other circumstance which might
            otherwise constitute a legal or equitable discharge or defense of a
            guarantor.

      (c)   The following is hereby waived: diligence, presentment, demand of
            payment, filing of claims with a court in the event of insolvency or
            bankruptcy of the Company, any right to require a proceeding first
            against the Company, protest, notice and all demands whatsoever.

      (d)   This Subsidiary Guarantee shall not be discharged except by complete
            performance of the obligations contained in the Notes, the Security
            Documents and the Indenture.

      (e)   If any Holder or the Trustee is required by any court or otherwise
            to return to the Company, the Guarantors, or any custodian, Trustee,
            liquidator or other similar official acting in relation to either
            the Company or the Guarantors, any amount paid by either to the
            Trustee or such Holder, this Subsidiary Guarantee, to the extent
            theretofore discharged, shall be reinstated in full force and
            effect.

      (f)   The Guaranteeing Subsidiary shall not be entitled to any right of
            subrogation in relation to the Holders in respect of any Obligations
            guaranteed hereby until payment in full of all Obligations
            guaranteed hereby.

      (g)   As between the Guarantors, on the one hand, and the Holders and the
            Trustee, on the other hand, (x) the maturity of the Obligations
            guaranteed hereby may be accelerated as provided in Article 6 of the
            Indenture for the purposes of this Subsidiary Guarantee,
            notwithstanding any stay, injunction or other prohibition preventing
            such acceleration in respect of the Obligations guaranteed hereby,
            and (y) in the event of any declaration of acceleration of such
            obligations as provided in Article 6 of the Indenture, such
            Obligations (whether or not due and payable) shall forthwith become
            due and payable by the Guarantors for the purpose of this Subsidiary
            Guarantee.


                                      B-2
<PAGE>

      (h)   The Guarantors shall have the right to seek contribution from any
            non-paying Guarantor so long as the exercise of such right does not
            impair the rights of the Holders under the Guarantee.

3. Execution and Delivery. Each Guaranteeing Subsidiary agrees that the
Subsidiary Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.

4. Guaranteeing Subsidiary May Consolidate, Etc. on Certain Terms.

      (a)   The Guaranteeing Subsidiary may not consolidate with or merge with
            or into (whether or not such Guarantor is the surviving Person)
            another corporation, Person or entity whether or not affiliated with
            such Guarantor unless:

            (i)   the Person formed by or surviving any such consolidation or
                  merger (if other than a Guarantor or the Company)
                  unconditionally assumes all the obligations of such Guarantor,
                  pursuant to a supplemental indenture in form and substance
                  reasonably satisfactory to the Trustee, under the Notes, the
                  Indenture and the Subsidiary Guarantee on the terms set forth
                  herein or therein;

            (ii)  immediately after giving effect to such transaction, no
                  Default or Event of Default exists; and

            (iii) except in the case of a merger of a Guarantor with or into
                  another Guarantor or a merger of a Guarantor with or into the
                  Company, the Company would be permitted by virtue of the
                  Company's pro forma Fixed Charge Coverage Ratio, immediately
                  after giving effect to such transaction, to Incur at least
                  $1.00 of additional Indebtedness pursuant to the terms of the
                  first paragraph of Section 4.09 of the Indenture.

      (b)   In case of any such consolidation, merger, sale or conveyance and
            upon the assumption by the successor corporation, by supplemental
            indenture, executed and delivered to the Trustee and satisfactory in
            form to the Trustee, of the Subsidiary Guarantee endorsed upon the
            Notes and the due and punctual performance of all of the covenants
            and conditions of the Indenture to be performed by the Guarantor,
            such successor corporation shall succeed to and be substituted for
            the Guarantor with the same effect as if it had been named herein as
            a Guarantor. Such successor corporation thereupon may cause to be
            signed any or all of the Subsidiary Guarantees to be endorsed upon
            all of the Notes issuable hereunder which theretofore shall not have
            been signed by the Company and delivered to the Trustee. All the
            Subsidiary Guarantees so issued shall in all respects have the same
            legal rank and benefit under the Indenture as the Subsidiary
            Guarantees theretofore and thereafter issued in accordance with the
            terms of the Indenture as though all of such Subsidiary Guarantees
            had been issued at the date of the execution hereof.


                                      B-3
<PAGE>

      (c)   Except as set forth in Articles 4 and 5 of the Indenture, and
            notwithstanding clauses (a) and (b) above, nothing contained in the
            Indenture or in any of the Notes shall prevent any consolidation or
            merger of a Guarantor with or into the Company or another Guarantor,
            or shall prevent any sale or conveyance of the property of a
            Guarantor as an entirety or substantially as an entirety to the
            Company or another Guarantor.

5. Releases.

      (a)   In the event of a sale or other disposition of all of the assets of
            any Guarantor, by way of merger, consolidation or otherwise, or a
            sale or other disposition of all of the Capital Stock of any
            Guarantor (other than to the Company or another Guarantor), then
            such Guarantor (in the event of a sale or other disposition, by way
            of merger, consolidation or otherwise, of all of the Capital Stock
            of such Guarantor (other than to the Company or another Guarantor))
            or the entity acquiring the property (in the event of a sale or
            other disposition of all or substantially all of the assets of such
            Guarantor) will be released and relieved of any Obligations under
            its Subsidiary Guarantee and the Security Documents and any such
            acquiring entity will not be required to assume any Obligations of
            such Guarantor under the applicable Subsidiary Guarantee and the
            Security Documents; provided that such sale or other disposition
            complies with all applicable provisions of the Indenture including,
            without limitation, Section 4.10 hereof. Upon delivery by the
            Company to the Trustee of an Officers' Certificate and an Opinion of
            Counsel to the effect that such sale or other disposition was made
            by the Company in accordance with the provisions of the Indenture,
            including without limitation Section 4.10 of the Indenture, the
            Trustee shall execute any documents reasonably required in order to
            evidence the release of any Guarantor from its obligations under its
            Subsidiary Guarantee.

      (b)   Any Guarantor not released from its Obligations under its Subsidiary
            Guarantee shall remain liable for the full amount of principal of
            and interest on the Notes and for the other obligations of any
            Guarantor under the Indenture as provided in Article 11 of the
            Indenture.

6. No Recourse Against Others. No past, present or future director, officer,
employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as
such, shall have any liability for any obligations of the Company or any
Guaranteeing Subsidiary under the Notes, any Subsidiary Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may
not be effective to waive liabilities under the federal securities laws and it
is the view of the Commission that such a waiver is against public policy.

7. New York Law to Govern. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.


                                      B-4
<PAGE>

8. Counterparts. The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.

9. Effect of Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.

10. The Trustee. The Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity or sufficiency of this Supplemental Indenture
or for or in respect of the recitals contained herein, all of which recitals are
made solely by the Guaranteeing Subsidiary and the Company.

      IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.

Dated: ____________, _____

                                    [Guaranteeing Subsidiary]

                                    By: ______________________________________
                                        Name:
                                        Title:

                                    CONGOLEUM CORPORATION

                                    By: ______________________________________
                                        Name:
                                        Title:

                                    [Other Guarantors]

                                    By: ______________________________________
                                        Name:
                                        Title:

                                    [HSBC BANK, USA], as Trustee

                                    By: ______________________________________
                                        Name:
                                        Title:


                                      B-5
<PAGE>

                                                           EXHIBIT I TO THE PLAN


                              Exhibit I to the Plan
                    "GHR/Kenesis Litigation Trust Agreement"


<PAGE>

                                                           EXHIBIT I TO THE PLAN


                           LITIGATION TRUST AGREEMENT

      This LITIGATION TRUST AGREEMENT, dated as of the date set forth on the
signature page hereof and effective as of the Effective Date (this "Agreement"),
is by and among Congoleum Corporation, Congoleum Sales, Inc. and Congoleum
Fiscal, Inc. (collectively referred to as the "Debtors," "Congoleum," or the
"Settlors"), the debtors and debtors-in-possession in Case No. 03-51524 in the
United States Bankruptcy Court for the district of New Jersey; the Futures
Representative; the Asbestos Claimants' Committee and [           ], as Trustee
(the "Trustee").

                                    RECITALS

      WHEREAS, on or about [           ], the United States Bankruptcy Court
for the District of New Jersey (the "Bankruptcy Court") entered an order
confirming the Eleventh Modified Joint Plan of Reorganization Under Chapter 11
of the Bankruptcy Code of Congoleum Corporation, et al. and the Asbestos
Claimants' Committee, dated as of October 23, 2006 (as it may thereafter be
amended, restated or otherwise modified, the "Plan"); and

      WHEREAS, pursuant to the Plan, (i) the GHR/Kenesis Actions and (ii)
proceeds realized from the prosecution of the GHR/Kenesis Actions (the
"Proceeds") have been, on the date hereof, assigned to the GHR/Kenesis
Litigation Trust created by this Agreement, on behalf of and for the benefit of
Reorganized Congoleum pursuant to the Plan (the "Beneficiary"), by the Debtors
in accordance with section 1123(b)(3)(B) of the Bankruptcy Code; and

      WHEREAS, the GHR/Kenesis Litigation Trust is being created pursuant to
this Agreement for the purposes set forth in Section 6.1(o) of the Plan; and

      WHEREAS, pursuant to Section 6.1(o) of the Plan, the Debtors have granted,
assigned, transferred, conveyed and delivered to the Trustee, on behalf of and
for the benefit of the Beneficiary, control of all of the Debtors' right, title
and interest in the GHR/Kenesis Actions and to the Proceeds; and

      WHEREAS, pursuant to Section 6.1(o) of the Plan, the costs of the
GHR/Kenesis Litigation Trust shall be funded by a one time capital contribution
(the "Initial Contribution") of $600,000 to be made from the proceeds of the
Asbestos Insurance Settlement Agreement with Liberty Mutual Insurance Company
on, or as soon as practicable after, the Effective Date; and

      WHEREAS, the Bankruptcy Court shall have original but not exclusive
jurisdiction over the GHR/Kenesis Litigation Trust, the Trustee, the GHR/Kenesis
Actions and the Trust Assets, as provided herein.

                              DECLARATION OF TRUST

      NOW THEREFORE, in order to declare the terms and conditions hereof, and in
consideration of the Recitals, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and subject to the
terms and conditions of the Plan and this Agreement, the Debtors have executed
this Agreement and absolutely and irrevocably assign to the Trustee, and to its
successors and assigns, on behalf of and for the benefit of the Beneficiary, the
Initial Contribution and all right, title and interest of Reorganized Congoleum
in the GHR/Kenesis Actions and the Proceeds;


<PAGE>

                                                           EXHIBIT I TO THE PLAN


      TO HAVE AND TO HOLD unto the Trustee and its successors in trust;

      PROVIDED, HOWEVER, that upon termination of the GHR/Kenesis Litigation
Trust in accordance with Section 4.01 hereof, this Agreement shall cease,
terminate and be of no further force and effect.

      IT IS HEREBY FURTHER COVENANTED AND DECLARED, that the GHR/Kenesis Actions
and the Proceeds, the Initial Contribution and all other property held from time
to time by the Trustee under this Agreement and any earnings thereon
(collectively, the "Trust Assets") are to be held and applied by the Trustee
solely for the benefit of the Beneficiary and for no other party, subject to the
further covenants, conditions and terms hereinafter set forth.

                                    ARTICLE I
                                   DEFINITIONS

      1.01 Certain Terms Defined. Terms defined in the Plan, and not otherwise
defined herein, shall, when used herein (including in the Recitals hereto), have
the meanings ascribed to such terms in the Plan.

      1.02 Meanings of Other Terms. Except where the context otherwise requires,
words importing the masculine gender include the feminine and the neuter, if
appropriate, words importing the singular number shall include the plural number
and vice versa and words importing persons shall include firms, associations,
corporations and other entities. All references herein to Articles, Sections and
other subdivisions, unless referring specifically to the Plan or provisions of
the Bankruptcy Code, Bankruptcy Rules or other law, statute or regulation, refer
to the corresponding Articles, Sections and other subdivisions of this
Agreement, and the words herein and words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or subdivisions
of this Agreement.

                                   ARTICLE II
                              TRUSTEE'S ACCEPTANCE

      2.01 Acceptance. The Trustee accepts the GHR/Kenesis Litigation Trust
created by this Agreement and the transfer and assignment to the GHR/Kenesis
Litigation Trust, on behalf of and for the benefit of the Beneficiary, of the
Initial Contribution, the GHR/Kenesis Actions and the Proceeds as set forth in
the Plan, and agrees to observe and perform the GHR/Kenesis Litigation Trust,
upon and subject to the terms and conditions set forth herein and in the Plan.

      2.02 Purpose of Trust. The sole purpose of this Agreement is to implement
Sections 6.1(o) and (p) of the Plan by providing for the vesting in the Trustee
of the ownership of and the responsibility for the protection and conservation
of the Trust Assets on behalf of and for the benefit of the Beneficiary. Such
responsibility shall be limited to the retention, prosecution, direction,
settlement, collection and enforcement of the GHR/Kenesis Actions by the Trustee
on behalf of and for the benefit of the Beneficiary, including the powers with
respect thereto set forth in Article VII hereof; the collection of the Proceeds,
the temporary investment thereof and other Trust moneys, including, but not
limited to, the Initial Contribution, as provided in Section 7.03 hereof, the
payment of the costs and expenses of the GHR/Kenesis Actions, the making of any
other payments provided to be made from the GHR/Kenesis Litigation Trust as set
forth in the Plan and this Agreement and the distribution of the Proceeds, any
income earned thereon and other Trust moneys to the Beneficiary in accordance
with the provisions of the Plan and this Agreement.


                                        2
<PAGE>

                                                           EXHIBIT I TO THE PLAN


      2.03 Incidents of Ownership. The Beneficiary shall be the sole beneficiary
of the GHR/Kenesis Litigation Trust and the Trustee shall retain only such
incidents of ownership as are necessary to undertake the actions and
transactions authorized herein on their behalf.

                                   ARTICLE III
                                   BENEFICIARY

      3.01 Beneficial Interests. The interest of the Beneficiary in the Trust
Assets (the "Beneficial Interest") shall be 100% of the Trust Assets after the
payment of the fees and expenses of the Trustee; provided, however, that the
Distributable Proceeds (as defined in Section 4.03 herein) are hereby pledged to
the Plan Trust by the Beneficiary and the Trustee to secure the Beneficiary's
obligations under the Plan Trust Note and the New Convertible Security, and such
Distributable Proceeds shall be used as follows: (i) first, to pay principal and
accrued interest under the Plan Trust Note until such time as the Plan Trust
Note has been paid in full; (ii) second, to pay principal and accrued interest
under the New Convertible Security until such time as the New Convertible
Security has been paid in full or is no longer outstanding; provided, however,
that the New Convertible Security shall not be satisfied in full or retired
before the Reset Date and any proceeds of the GHR/Kenesis Actions that are
received by the Plan Trust on account of the New Convertible Security prior to
the Reset Date shall be held by the Plan Trust in an interest bearing account
and applied to amounts outstanding under the New Convertible Security
immediately after the Reset Date; and (iii) thereafter, any remaining or further
Distributable Proceeds shall be paid to the Beneficiary.

      3.02 Rights of Beneficiary. Except as expressly provided hereunder, the
Beneficiary shall have no title to, right to, possession of, management of or
control of the GHR/Kenesis Litigation Trust or the Trust Assets. The whole title
to all the GHR/Kenesis Litigation Trust's assets shall be vested in the Trustee
and the sole interest of the Beneficiary shall be the rights and benefits given
under this Agreement and the Plan.

      3.03 Blocked Account. All Distributable Proceeds shall be deposited in and
held in an account that is subject to a blocked or control account agreement in
favor of the Plan Trust in form and substance sufficient to perfect the Plan
Trust's security interest in such Distributable Proceeds and otherwise
reasonably acceptable to the Plan Trust.

      3.04 Further Assurances. Each of the Beneficiary and the GHR/Kenesis
Litigation Trust agree that from time to time it will execute and deliver all
further instruments and documents, and take all further action, that may be
necessary, or that the Plan Trust may reasonably request, in order to perfect
and protect the security interest granted or purported to be granted in Section
3.01 hereof or to enable the Plan Trust to exercise and enforce its rights and
remedies with respect to any of the Trust Assets (after payment of fees and
reimbursement of expenses of the GHR/Kenesis Litigation Trust) upon an Event of
Default under, and as defined in, the Plan Trust Note or an Event of Default
under, and as defined in, the New Convertible Security.


                                        3
<PAGE>

                                                           EXHIBIT I TO THE PLAN


                                   ARTICLE IV
                        DURATION AND TERMINATION OF TRUST

      4.01 Duration. The existence of the GHR/Kenesis Litigation Trust shall
terminate on the earlier of: (a) the date on which all of the Trust Assets have
been liquidated and the proceeds thereof distributed to or on behalf of the
Beneficiary, or (b) two years after the Effective Date; provided, however, that
the Trustee may extend the term of the GHR/Kenesis Litigation Trust, provided
that he receives Bankruptcy Court approval for cause within six months after the
beginning of the extended term. Notwithstanding anything to the contrary in this
Agreement, in no event shall the Trustee unduly prolong the duration of the
GHR/Kenesis Litigation Trust, and the Trustee shall at all times endeavor to
prosecute, direct, settle or compromise expeditiously the GHR/Kenesis Actions,
so as to distribute the Trust Assets to or on behalf of the Beneficiary and
terminate the GHR/Kenesis Litigation Trust as soon as practicable in accordance
with this Agreement.

      4.02 Termination by Beneficiary. The GHR/Kenesis Litigation Trust may not
be terminated at any time by the Beneficiary.

      4.03 Continuance of Trust for Winding Up. After the termination of the
GHR/Kenesis Litigation Trust and solely for the purpose of liquidating and
winding up the affairs of the GHR/Kenesis Litigation Trust, the Trustee shall
continue to act as such until its duties have been fully performed. Upon
distribution of all Proceeds and any investment income earned on Trust Assets
not used to pay expenses associated with prosecution of the GHR/Kenesis Actions
(collectively, the "Distributable Proceeds") and any remaining moneys or other
assets after termination of the GHR/Kenesis Litigation Trust and liquidation of
any remaining Trust Assets, the Trustee shall retain the books, records and
files which shall have been delivered to or created by the Trustee. At the
Trustee's discretion, all of such records and documents may be destroyed at any
time after six years from the distribution of all Distributable Proceeds (unless
such records and documents are necessary to fulfill the Trustee's obligations
pursuant to Section 5.06 hereunder). Except as otherwise specifically provided
herein, upon the distribution of all Distributable Proceeds, the Trustee shall
be deemed discharged and have no further duties or obligations hereunder except
to account to the GHR/Kenesis Litigation Trust Advisory Committee (the
"Litigation Trust Advisory Committee") as provided in Section 5.03 hereof and as
may be imposed on the Trustee by virtue of Section 5.06 and Article VI hereof.

                                    ARTICLE V
                         ADMINISTRATION OF TRUST ESTATE

      5.01 Payment of Claims, Expenses and Liabilities. The Trustee shall pay
from the Trust Assets all claims, expenses, charges, liabilities and obligations
of the GHR/Kenesis Litigation Trust as contemplated by this Agreement and as
required by law.


                                        4
<PAGE>

                                                           EXHIBIT I TO THE PLAN


      5.02 Distributions. (a) The Trustee shall make distributions to the Plan
Trust on behalf of the Beneficiary of the Distributable Proceeds in accordance
with the provisions of this Agreement at each such time as the Trustee has
available at least $5,000 in Distributable Proceeds for distribution to the
Beneficiary; provided, however, that, notwithstanding the foregoing, the Trustee
must make a distribution of all Distributable Proceeds to the Plan Trust on
behalf of the Beneficiary at least once per year after taking into account any
payments that must be made in accordance with Section 5.01 hereof and after
retaining such moneys as it determines is necessary to pay the on-going costs
and expenses of prosecuting the GHR/Kenesis Actions, provided, further, that,
notwithstanding the preceding clause, the Trustee must distribute at least 50%
of the Distributable Proceeds on an annual basis to the Plan Trust on behalf of
the Beneficiary. Notwithstanding any provision herein to the contrary, the
Trustee shall make a final distribution of the Distributable Proceeds to the
Plan Trust or, after satisfaction of all of the Beneficiary's obligations under
the Plan Trust Note and the New Convertible Security to the Plan Trust, then to
the Beneficiary, as applicable, and any remaining trust moneys and other Trust
Assets in accordance with the terms of this Agreement prior to the termination
of the GHR/Kenesis Litigation Trust in accordance with Section 4.01 hereof. All
Distributions shall be used to satisfy the Beneficiary's obligations to the Plan
Trust under the Plan Trust Note and the New Convertible Security and,
thereafter, shall be paid to the Beneficiary in accordance with Article III of
this Agreement.

      5.03 Reports. The Trustee shall file with the Bankruptcy Court: (a)
unaudited quarterly financial reports and an audited annual financial report
regarding the financial condition and results of operation of the GHR/Kenesis
Litigation Trust, and (b) a quarterly report concerning the status of all
GHR/Kenesis Actions which have been filed with a court of competent
jurisdiction. The Trustee shall provide a copy of such reports to the members of
the Litigation Trust Advisory Committee.

      5.04 Notice of Change of Address. The Beneficiary shall be responsible for
providing the Trustee with written notice of any change in address. The Trustee
is not obligated to make any effort to determine the correct address of the
Beneficiary.

      5.05 Fiscal Year. The fiscal year of the GHR/Kenesis Litigation Trust
shall be the calendar year.

      5.06 Books and Records. The Trustee shall maintain, in respect of the
GHR/Kenesis Litigation Trust, books and records relating to the assets and the
income of the GHR/Kenesis Litigation Trust and the payment of expenses of the
GHR/Kenesis Litigation Trust, in such detail and for such period of time as may
be necessary to enable it to make full and proper reports in respect thereof in
accordance with the provisions of Section 5.03 and Article VI hereof and to
comply with applicable provisions of law.

      5.07 Cash Payments. All payments required to be made by the Trustee to or
on behalf of the Beneficiary shall be made in Cash denominated in U.S. dollars
and, if in check form, drawn on a domestic bank selected by the Trustee.

      5.08 Litigation Trust Advisory Committee. The Litigation Trust Advisory
Committee shall consist of three (3) members; one member being appointed by each
of the Plan Trustees, the Reorganized Debtors and the Futures Representative
effective as of the Effective Date. The Litigation Trust Advisory Committee
shall serve in a fiduciary capacity representing the interests of the
Beneficiary to carry out the terms of this Litigation Trust Agreement and the
Plan.


                                        5
<PAGE>

                                                           EXHIBIT I TO THE PLAN


                                   ARTICLE VI
                                   TAX MATTERS

      6.01 For all federal income tax purposes, the Beneficiary will be treated
as the grantor and deemed owner of the GHR/Kenesis Litigation Trust. The Trustee
will file returns for the GHR/Kenesis Litigation Trust as a grantor trust
pursuant to Section 1.671-4(a) of the Income Tax Regulations and will issue to
the Beneficiary appropriate tax forms and statements required under the IRC and
Treasury Regulations to permit the Beneficiary to report and pay tax on its
share of the GHR/Kenesis Litigation Trust's taxable income.

      6.02 For all federal income tax purposes, the GHR/Kenesis Actions and the
right to receive the Proceeds will be treated by the Debtors, Reorganized
Congoleum, Beneficiary and the Trustee as having had no value at the time of
their transfer to the GHR/Kenesis Litigation Trust on behalf and for the benefit
of the Beneficiary and their pledge (with respect to the Collateral, as that
term is defined in the Pledge Agreement) by the Beneficiary to the Plan Trust.

      6.03 The Trustee will take such actions as are necessary to make certain
that all of the GHR/Kenesis Litigation Trust's taxable income (including, but
not limited to, all Proceeds and earnings, if any, on Trust Assets) will be
subject to federal income tax on a current basis.

                                  ARTICLE VII
                    POWERS OF AND LIMITATIONS ON THE TRUSTEE

      7.01 Powers of the Trustee. Without limiting, but subject to the remaining
provisions herein, the Trustee shall be expressly authorized to:

            (a) execute any documents and take any other actions related to, or
in connection with, the liquidation of the Trust Assets and the exercise of the
Trustee's powers granted herein;

            (b) hold legal title to any and all rights of the Beneficiary in or
arising from the Trust Assets;

            (c) protect and enforce the rights to the Trust Assets vested in the
Trustee by this Agreement by any method deemed appropriate including, without
limitation, by judicial proceedings or pursuant to any applicable bankruptcy,
insolvency, moratorium or similar law and general principles of equity;

            (d) have exclusive power to prosecute and enforce the GHR/Kenesis
Actions;

            (e) have exclusive power to settle or otherwise compromise the
GHR/Kenesis Actions, subject, however, to Bankruptcy Court approval;


                                        6
<PAGE>

                                                           EXHIBIT I TO THE PLAN


            (f) file, if necessary, any and all tax information returns with
respect to the GHR/Kenesis Litigation Trust and pay taxes properly payable by
the GHR/Kenesis Litigation Trust, if any, and make distributions to or on behalf
of the Beneficiary net of such taxes;

            (g) make all necessary filings in accordance with any applicable
law, statute or regulation, including, but not limited to, the Securities
Exchange Act of 1934;

            (h) determine and satisfy any and all ordinary course liabilities
created, incurred or assumed by the GHR/Kenesis Litigation Trust,

            (i) pay all ordinary course expenses and make all other payment
relating to the GHR/Kenesis Litigation Trust;

            (j) retain and pay professionals, including but not limited to
attorneys, necessary to carry out its obligations hereunder;

            (k) invest moneys received by the GHR/Kenesis Litigation Trust or
otherwise held by the GHR/Kenesis Litigation Trust in accordance with Section
7.03 hereof; and

            (l) in the event that the Trustee determines that the Beneficiary or
the GHR/Kenesis Litigation Trust may, will or have become subject to adverse tax
consequences, in its sole discretion, take such actions that will, or are
intended to, alleviate such adverse tax consequences.

      7.02 Limitations on Trustee. (a) The Trustee shall not at any time, on
behalf of the GHR/Kenesis Litigation Trust or the Beneficiary, enter into or
engage in any trade or business.

            (b) No part of the Trust Assets shall be used or disposed of by the
Trustee in furtherance of any trade or business. The Trustee shall, on behalf of
the GHR/Kenesis Litigation Trust, hold the GHR/Kenesis Litigation Trust out as a
trust in the process of liquidation and not as an investment company. The
Trustee shall be restricted to the prosecution, enforcement and settlement on
behalf of and for the benefit of the Beneficiary of the GHR/Kenesis Actions, the
payments and distribution of the Proceeds for the purposes set forth in this
Agreement and the conservation and protection of the Trust Assets and the
administration thereof in accordance with the provisions of this Agreement.

      7.03 Investment of Trust Moneys. The Trustee shall invest the moneys
received by the GHR/Kenesis Litigation Trust or otherwise held in the Trust
Estate in (i) short-term certificates of deposit or money market accounts
maintained by or issued by domestic banks having in excess of $1 billion in
capital and surplus and one of the two highest ratings given by both Moody's and
Standard & Poors, (ii) insured demand deposit accounts or certificates of
deposit maintained by or issued by any savings institution or commercial bank
insured by the United States government or any agency thereof and (iii)
short-term marketable direct obligations of, or guaranteed as to principal and
interest by, the United States government or any agency thereof provided,
however, that the maturities of any of the foregoing shall not exceed 30 days.


                                        7
<PAGE>

                                                           EXHIBIT I TO THE PLAN


                                  ARTICLE VIII
                             CONCERNING THE TRUSTEE

      8.01 Generally. The Trustee accepts and undertakes to discharge the
GHR/Kenesis Litigation Trust created by this Agreement upon the terms and
conditions hereof. The Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in its
exercise as a prudent man would exercise or use under the circumstances in the
conduct of its own affairs. No provisions of this Agreement shall be construed
to relieve the Trustee from liability for its own reckless or its own
intentional or willful and wanton misconduct resulting in personal gain, except
that:

            (a) the Trustee shall not be liable for any action taken in good
faith in reliance upon the advice of professionals;

            (b) the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, and
no implied covenants or obligations shall be read into this Agreement against
the Trustee; and

            (c) the Trustee shall not be liable for any error of judgment made
in good faith.

      8.02 Reliance by Trustee. Except as otherwise provided in this Agreement:

            (a) the Trustee may rely and shall be protected in acting upon any
resolution, statement, instrument, opinion, report, notice, request, consent,
order or other paper or document reasonably believed by the Trustee to be
genuine and to have been signed or presented by the proper party or parties;

            (b) the Trustee may consult with independent legal counsel to be
selected by it and the advice or opinion of such counsel shall be full and
complete personal protection to the Trustee and agents of the GHR/Kenesis
Litigation Trust in respect of any action taken or suffered by it in good faith
and in reliance on, or in accordance with, such advice or opinion; and

            (c) persons dealing with the Trustee shall look only to the Trust
Assets to satisfy any liability incurred by the Trustee to such person in
carrying out the terms of this Agreement, and the Trustee shall have no personal
or individual obligation to satisfy any such liability.

      8.03 Liability to Third Persons. The Beneficiary shall not be subject to
any liability whatsoever, in tort, contract or otherwise, to any person in
connection with the Trust Assets or the affairs of the GHR/Kenesis Litigation
Trust, and no Trustee or agent of the GHR/Kenesis Litigation Trust shall be
subject to any personal liability whatsoever, in tort, contract or otherwise, to
any person in connection with the Trust Assets or the affairs of this Trust,
except for its own recklessness or its own intentional or willful and wanton
misconduct resulting in personal gain; and all such persons shall look solely to
the Trust Assets for satisfaction of claims of any nature arising in connection
with affairs of the GHR/Kenesis Litigation Trust.

      8.04 Nonliability of Trustee for Acts of Others. Nothing contained in this
Trust Agreement shall be deemed to be an assumption by the Trustee of say of the
liabilities, obligations or duties of any of the other parties hereto or of the
Debtors or Reorganized Congoleum; and shall not be deemed to be or contain a
covenant or agreement by the Trustee to assume or accept any such liability,
obligation or duty. Any successor Trustee may accept and rely upon any
accounting made by or on behalf of any predecessor Trustee hereunder, and any
statement or representation made as to the assets comprising the Trust Assets or
as to any other fact bearing upon the prior administration of the GHR/Kenesis
Litigation Trust. A Trustee shall not be liable for having accepted and relied
upon such accounting, statement or representation if it is later proved to be
incomplete, inaccurate or untrue. A Trustee or successor Trustee shall not be
liable for any act or omission of any predecessor Trustee, nor have a duty to
enforce any claims against any predecessor Trustee on account of any such act or
omission.


                                        8
<PAGE>

                                                           EXHIBIT I TO THE PLAN


      8.05 Indemnity. The Trustee, the employees, officers, directors and
principals of the GHR/Kenesis Litigation Trust, and the members of the
Litigation Trust Advisory Committee (collectively, the "Indemnified Parties")
shall be indemnified by the GHR/Kenesis Litigation Trust from any losses,
claims, damages, liabilities or expenses (including, without limitation,
reasonable attorneys' fees, disbursements and related expenses) which the
Indemnified Parties may incur or to which the Indemnified Parties may become
subject in connection with any action, suit, proceeding or investigation brought
by or threatened against the Indemnified Parties on account of the acts or
omissions of the Indemnified Parties in their capacities as the Trustee,
employees, officers, directors and principals of the GHR/Kenesis Litigation
Trust and members of the Litigation Trust Advisory Committee, respectively,
including, without limitation, the GHR/Kenesis Actions, provided, however, that
the GHR/Kenesis Litigation Trust shall not be liable to indemnify the
Indemnified Parties for any of its acts or omissions constituting fraud, gross
negligence or willful misconduct, and, provided further, that nothing in this
Section 8.05 shall be deemed to restrict the Trustee's right to receive an
indemnity based on acts or omissions taken in accordance with the provisions of
Sections 8.01 and 8.02 hereof. Notwithstanding any provision herein to the
contrary, the Indemnified Parties shall be entitled to obtain advances from the
GHR/Kenesis Litigation Trust to cover their expenses of defending themselves in
any action brought against them as a result of the acts or omissions of the
Indemnified Parties in their capacities as the Trustee, employees, officers,
directors and principals of the GHR/Kenesis Litigation Trust and members of the
Litigation Trust Advisory Committee, respectively, provided, however, that the
Indemnified Parties receiving such advances shall repay the amounts so advanced
to the GHR/Kenesis Litigation Trust upon the entry of a Final Order finding that
such Indemnified Parties were not entitled to any indemnity under the provisions
of this Section 8.05.

      8.06 Bond. The Trustee shall serve without bond.

                                   ARTICLE IX
                             COMPENSATION OF TRUSTEE

      9.01 Amount of Compensation. The Trustee shall receive compensation for
its services in accordance with the terms set forth in that certain letter
agreement dated as of [           ] between the Debtors and the Trustee.

      9.02 Expenses. The Trustee shall be entitled to reimburse itself from the
GHR/Kenesis Litigation Trust for all reasonable out-of-pocket expenses actually
incurred by it in the performance of its duties in accordance with this
Agreement.


                                        9
<PAGE>

                                                           EXHIBIT I TO THE PLAN


                                   ARTICLE X
                         TRUSTEE AND SUCCESSOR TRUSTEES

      10.01 Generally. The Trustee shall initially be [           ]. The Trustee
represents that it is a [limited liability corporation] organized under the laws
of the State of Delaware. If the Trustee shall ever change its name or
reorganize, reincorporate or merge with or into or consolidate with any other
entity, such Trustee shall be deemed to be a continuing entity and shall
continue to act as a Trustee hereunder with the same liabilities, duties,
powers, rights, titles, discretion and privileges as are herein specified for a
Trustee.

      10.02 Resignation or Removal. The Trustee may resign and be discharged
from the trusts hereby created by giving at least 30 days prior written notice
thereof to the Beneficiary. Such resignation shall become effective on the later
to occur of (a) the date specified in such written notice, or (b) the effective
date of the appointment of a successor Trustee in accordance with Section 10.04
hereof and such successor's acceptance of such appointment.

      10.03 Removal. The Trustee may be removed, with or without cause, by the
vote of Litigation Trust Advisory Committee. Such resignation shall become
effective on the later to occur of (a) the date such action is taken by the
Litigation Trust Advisory Committee, or (b) the effective date of the
appointment of a successor Trustee in accordance with Section 10.04 hereof and
such successor's acceptance of such appointment, but in no event more than
thirty days after action is taken by the Litigation Trust Advisory Committee.

      10.04 Appointment of Successor. In the event of the death, resignation,
removal, incompetency, bankruptcy or insolvency of the Trustee, a vacancy shall
be deemed to exist and a successor shall be appointed by a majority vote of the
Litigation Trust Advisory Committee and such appointment shall be confirmed by
order of the Bankruptcy Court entered within sixty (60) days of such
appointment.

      10.05 Acceptance of Appointment by Successor Trustee. The death,
resignation, removal, incompetency, bankruptcy or insolvency of the Trustee
shall not operate to terminate the GHR/Kenesis Litigation Trust created by this
Agreement or to revoke any existing agency created pursuant to the terms of this
Agreement or invalidate any action theretofore taken by the Trustee. Any
successor Trustee appointed hereunder shall execute an instrument accepting its
appointment and shall deliver one counterpart thereof to the Bankruptcy Court
for filing, and, in case of the Trustee's resignation, to the retiring Trustee.
Thereupon, such successor shall, without any further act, become vested with all
the liabilities, duties, power, rights, title, discretion and privileges of its
predecessor in the GHR/Kenesis Litigation Trust with like effect as if
originally named Trustee and shall be deemed appointed pursuant to Section
1123(b) (3) (B) of the Bankruptcy Code to retain and enforce the GHR/Kenesis
Actions for the benefit of the Beneficiary; provided, however, that the
successor's appointment shall be confirmed by order of the Bankruptcy Court
entered within sixty (60) days of the date of his, her or its appointment. The
retiring Trustee shall duly assign, transfer and deliver to such successor all
property and money held by such retiring Trustee hereunder and shall, as
directed by the Bankruptcy Court or reasonably requested by such successor,
execute and deliver an instrument or instruments conveying and transferring to
such successor upon the trust herein expressed, all the liabilities, duties,
powers, rights, title, discretion and privileges of such retiring Trustee.


                                       10
<PAGE>

                                                           EXHIBIT I TO THE PLAN


                                   ARTICLE XI
                           CONCERNING THE BENEFICIARY

      11.01 No Suits by Beneficiary. No Beneficiary shall have any right by
virtue of any provision of this Agreement to institute any action or proceeding
at law or in equity against any party other than the Trustee upon or under or
with respect to the Trust Assets.

      11.02 Requirement of Undertaking. The Trustee may request the Bankruptcy
Court to require, in any suit for the enforcement of any right or remedy under
this Agreement, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, including reasonable attorneys' fees,
against any party litigant in such suit; provided, however, that the provisions
of this Section 11.02 shall not apply to any suit by the Trustee.

                                  ARTICLE XII
                                  JURISDICTION

      The parties agree that the Bankruptcy Court shall have jurisdiction over
the GHR/Kenesis Litigation Trust, the Trustee, the GHR/Kenesis Actions and the
remaining Trust Assets, including, without limitation, jurisdiction to determine
all controversies and disputes arising under or in connection with this
Agreement. Nevertheless, the Trustee shall have power and authority to bring any
action in any court of competent jurisdiction to prosecute the GHR/Kenesis
Actions.

                                  ARTICLE XIII
                            MISCELLANEOUS PROVISIONS

      13.01 Construction. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware and the United States of
America; provided that the GHR/Kenesis Litigation Trust and any interpretation
or enforcement of the provisions of this Agreement shall be subject to the
jurisdiction of the Bankruptcy Court as contemplated by Article XII hereof. The
Trustee's interpretation of the provisions of this Agreement and the provisions
of the Plan as they relate to the prosecution of the GHR/Kenesis Actions shall
be deemed conclusive in the absence of a contrary interpretation of the
Bankruptcy Court.

      13.02 Severability. In the event any provision of this Agreement or the
application thereof to any person or circumstances shall be determined by Final
Order of a court of proper jurisdiction to be invalid or unenforceable to any
extent, the remainder of this Agreement or the application of such provision to
persons or circumstances or in jurisdictions other than those as to or in which
it is held invalid or unenforceable, shall not be affected thereby, and each
provision of this Agreement shall be valid and enforced to the fullest extent
permitted by law.

      13.03 Cooperation. Reorganized Congoleum shall provide the Trustee, at no
cost to the Trustee, the GHR/Kenesis Litigation Trust or the Beneficiary, with
such access to its books, records and employees as the Trustee may reasonably
request for the purpose of performing its duties and exercising its duties
hereunder, including, without limitation, to assist the Trustee in prosecuting
the GHR/Kenesis Actions.


                                       11
<PAGE>

                                                           EXHIBIT I TO THE PLAN


      13.04 Notices. Any notice or other communication required or permitted to
be made in accordance with this Agreement shall be in writing and shall be
deemed to have been sufficiently given, for all purposes, if delivered
personally or by telecopier or other telegraphic means or mailed by first class
mail:

            (i) if to the Trustee, to: [                         ].


            (ii) if to the Beneficiary, to: Howard N. Feist III, Congoleum
Corporation, 3500 Quakerbridge Road, P.O. Box 3127, Mercerville, New Jersey
08619; Fax: (609) 584-3685; with a copy to Pillsbury Winthrop Shaw Pittman LLP,
1540 Broadway, New York, New York 10036, Attn: Richard L. Epling, Esq.; Fax:
(212) 858-1500.

            (iii) if to the Plan Trustees to: [                              ].

            (iv) if to the Futures Representative to: R. Scott Williams, Esq.,
Haskell Slaughter Young & Rediker, L.L.C., 2001 Park Place North, Suite 1400,
Birmingham, AL 35203; Fax: (205) 324-1133; with a copy to Orrick, Herrington &
Sutcliffe LLP, 3050 K Street, N.W., Washington, DC 20007, Attn: Richard Wyron,
Esq.; Fax: (202) 339-8500.

      13.05 Headings. The headings contained in this Agreement are solely for
convenience of reference and shall not affect the meaning or interpretation of
this Agreement or of any term or provision hereof.

      13.06 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.


                                       12
<PAGE>

                                                           EXHIBIT I TO THE PLAN


      IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be duly executed by their respective officers and the
Trustee herein has executed this Agreement, as Trustee, effective as of the date
first above written.

                                    The Trustee


                                    By: ________________________________
                                        Name:
                                        Title:

                                    Congoleum Corporation


                                    By: ________________________________
                                        Name:
                                        Title:

                                    Congoleum Sales, Inc.


                                    By: ________________________________
                                        Name:
                                        Title:

                                    Congoleum Fiscal, Inc.


                                    By: ________________________________
                                        Name:
                                        Title:

                                    The Futures Representative


                                    By: ________________________________
                                        Name:
                                        Title:

                                    The Plan Trustees


                                    By: ________________________________
                                        Name:
                                        Title:

                                    By: ________________________________
                                        Name:
                                        Title:

                                    By: ________________________________
                                        Name:
                                        Title:


                                       13
<PAGE>

                                                           EXHIBIT J TO THE PLAN


                              Exhibit J to the Plan
                           "New Convertible Security"
<PAGE>

THIS NOTE AND THE SHARES ISSUABLE ON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAW. THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT, AND NEITHER THIS
NOTE NOR ANY SHARES ISSUABLE ON CONVERSION THEREOF MAY BE TRANSFERRED, SOLD OR
OFFERED FOR SALE, IN WHOLE OR IN PART, UNLESS (1) THERE IS AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITY UNDER THE ACT AND QUALIFICATION UNDER
ANY APPLICABLE STATE SECURITIES LAW, (2) SUCH TRANSFER IS MADE IN COMPLIANCE
WITH RULE 144 UNDER THE ACT AND PURSUANT TO QUALIFICATION UNDER ANY APPLICABLE
STATE SECURITIES LAW OR EXEMPTION THEREFROM, OR (3) THERE IS AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO CONGOLEUM CORPORATION THAT SUCH REGISTRATION
AND QUALIFICATION ARE NOT REQUIRED AS TO SAID TRANSFER, SALE OR OFFER.

FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT
("OID"). IN ADDITION, THIS NOTE IS SUBJECT TO U.S. TREASURY REGULATIONS
GOVERNING CONTINGENT PAYMENT DEBT INSTRUMENTS. THE BORROWER AGREES TO PROVIDE
PROMPTLY TO THE HOLDER OF THIS NOTE, UPON WRITTEN REQUEST, THE AMOUNT OF OID,
ISSUE DATE, YIELD TO MATURITY, COMPARABLE YIELD AND PROJECTED PAYMENT SCHEDULE.
ANY SUCH WRITTEN REQUEST SHOULD BE SENT TO REORGANIZED CONGOLEUM, 3500
QUAKERBRIDGE ROAD, P.O. BOX 3127, MERCERVILLE, NEW JERSEY 08619-0127, ATTENTION:
CHIEF FINANCIAL OFFICER.

                          SUBORDINATED CONVERTIBLE NOTE

                                                                        [Date]

      FOR VALUE RECEIVED, the undersigned, CONGOLEUM CORPORATION, a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of the Congoleum Plan Trust created pursuant to the Plan referred to below
(the "Plan Trust"), in lawful money of the United States and in immediately
available funds as and when due in accordance with the terms set forth herein,
the principal sum of Two Million Seven Hundred Thirty-Eight Thousand Two Hundred
Thirty-Four Dollars and Seventy-Five Cents ($2,738,234.75) (the "Original
Principal Amount"), as the Original Principal Amount may be increased on the
Reset Date (as defined in the Plan referred to below) (the "Outstanding
Principal Amount").


                                        1
<PAGE>

                                                           EXHIBIT J TO THE PLAN


                                    RECITALS

      A. On or about [_____________], the United States Bankruptcy Court for the
District of New Jersey (the "Bankruptcy Court") entered an order confirming the
Eleventh Modified Joint Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code of Congoleum Corporation, et al., and the Asbestos Claimants'
Committee, dated as of October 23, 2006 (as it may thereafter be amended,
restated or otherwise modified, the "Plan"), filed by the Debtors and the
Asbestos Claimants' Committee (as such term is defined in the Plan). Certain
capitalized terms used in this Note are defined in Section 11 hereof;
capitalized terms used in this Note and not defined shall have the respective
meanings ascribed to them in the Plan.

      B. Pursuant to the Plan, the Borrower is required to issue this
Subordinated Convertible Note (this "Note") to the Plan Trust.

      C. This Note will be secured by the Borrower's right to Distributable
Proceeds (as defined in the GHR/Kenesis Litigation Trust Agreement,
"Distributable Proceeds") in accordance with the terms of the Pledge Agreement.

      D. [Concurrently herewith this Note is being subordinated to (i) the
Obligations (as such term is defined in the [Amended Credit Agreement]) under
the [Amended Credit Agreement or other working capital exit facility], pursuant
to that certain [Subordination Agreement] dated as of even date herewith
executed by the Plan Trust in favor of [___________], as lender under the
[Amended Credit Agreement or other working capital exit facility], and (ii) the
Obligations (as such term is defined in the New Indenture) under the New
Indenture, pursuant to that certain [Subordination Agreement] dated as of even
date herewith executed by the Plan Trust in favor of [__________], as Trustee
for the benefit of the holders of the New Senior Notes.]

      In consideration of the foregoing, the parties hereto hereby agree as
follows:

                                    AGREEMENT

1.    Maturity Date; Prepayment; Redemption of Note.

      1.1   Unless the Conversion contemplated by Section 7 shall have
            previously occurred, the Outstanding Principal Amount of this Note,
            and all unpaid interest thereon, are due in full on
            [_______________](1) (the "Maturity Date").

      1.2   Notwithstanding the foregoing, Distributable Proceeds disbursed from
            the GHR/Kenesis Litigation Trust shall be remitted by the
            GHR/Kenesis Litigation Trustee to the Plan Trust on behalf of the
            Borrower and, so long as all principal and interest under the Plan
            Trust Note shall have been paid in full, applied by the Plan Trust
            as a prepayment of the obligations under this Note as follows: (i)

----------
(1)   Insert 15th anniversary of the Effective Date.


                                        2
<PAGE>

                                                           EXHIBIT J TO THE PLAN


            first, to the prepayment of any accrued and unpaid interest under
            this Note, until such interest is paid in full and (ii) second, to
            the prepayment of the Outstanding Principal Amount of this Note.
            Notwithstanding the foregoing, if the Plan Trust shall receive any
            Distributable Proceeds on account of this Note prior to the Reset
            Date, the Plan Trust shall hold such amounts in an interest bearing
            account and, immediately following the Reset Date, shall apply such
            proceeds (and any interest thereon) to this Note as contemplated by
            the immediately preceding sentence.

      1.3   Prior to the Reset Date, this Note may not be prepaid in full. After
            the Reset Date, the Borrower may prepay this Note, in whole or in
            part, without premium or penalty, upon at least two Business Days'
            written notice to the Plan Trust.

      1.4   At the option of the Plan Trust, on and after [___________](2) (the
            "Tenth Anniversary") and prior to any Conversion, the Plan Trust may
            require the Borrower to prepay this Note, in whole or in part (each,
            an "Optional Redemption"), without premium or penalty, upon at least
            two Business Days' written notice from the Plan Trust to the
            Borrower. The Borrower shall pay to the Plan Trust the amount
            specified for prepayment in such notice of Optional Redemption on
            the date specified in such notice (provided that such date shall not
            be sooner than two Business Days after the date of such notice).

2.    Potential Increase in Outstanding Principal Amount on Reset Date.

      2.1   The Outstanding Principal Amount shall be subject to increase on the
            Reset Date in an amount, if any, by which the Re-Measurement Value,
            as defined below, exceeds the Original Principal Amount (such excess
            amount, the "Additional Principal Amount"). The "Re-Measurement
            Value" shall equal the product of (a) 36% multiplied by (b) the
            product of (i) the total number of shares of all classes of common
            stock of the Borrower outstanding on a fully diluted basis (assuming
            all securities exercisable for or convertible into common stock
            (other than this Note) have been so exercised or converted) as of
            the close of business on the Reset Date multiplied by (ii) the
            average trading price per share of the Borrower's Class A Common
            Stock (or such other class of common stock of the Borrower that has
            been registered under the Act, or the Securities Exchange Act of
            1934, as amended, and is listed for trading on a national securities
            exchange in the United States, if such Class A Common Stock is not
            so registered and listed) at the close of trading for the 90
            consecutive Trading Days ending on the Reset Date (as adjusted for
            any stock dividends, splits or combinations, or transactions of
            similar effect); provided, however, that if none of the Borrower's
            common stock is listed for trading on a national securities exchange
            in the United States for the relevant measurement period, the
            Re-Measurement Value shall equal the product of (a) 36% multiplied
            by (b) the product of (i) the total number of all classes of shares
            of common stock of the Borrower outstanding on a fully diluted basis
            (assuming all securities exercisable for or convertible into common
            stock (other than this Note) have been so exercised or converted) as
            of the close of business on the Reset Date multiplied by (ii) the

----------
(2)   Insert 10th anniversary of the Effective Date.


                                      3
<PAGE>

                                                           EXHIBIT J TO THE PLAN


            average of the high bid and low asked prices in the over-the-counter
            market, as reported by the National Association of Securities
            Dealers Automated Quotation System ("NASDAQ"), per share of Class A
            Common Stock (or such other class of common stock of the Borrower
            that is so reported, if the Class A Common Stock is not so reported)
            for each Trading Day over the 90 consecutive Trading Day period
            ending on the Reset Date (as adjusted for any stock dividends,
            splits or combinations, or transactions of similar effect), or if
            none of the Borrower's common stock is so reported for the relevant
            measurement period, the Re-Measurement Value shall equal the product
            of 36% multiplied by the equity valuation of the Borrower as of the
            Reset Date, as determined by the Board of Directors of the Borrower
            in good faith.

      2.2   Within fifteen Business Days after the First Indicated Date, the
            Plan Trust shall give written notice to the Borrower as to whether
            it has selected or rejected the First Indicated Date as the Reset
            Date, provided, however, if the Plan Trust fails to give such
            notice, the Plan Trust shall be deemed to have rejected the First
            Indicated Date as the Reset Date. If the Plan Trust has selected the
            First Indicated Date as the Reset Date then, on the Business Day
            immediately succeeding receipt of such notice, the Outstanding
            Principal Amount of this Note shall be automatically deemed to equal
            the sum of (i) the Original Principal Amount and (ii) the Additional
            Principal Amount. If, within fifteen Business Days after the First
            Indicated Date, the Plan Trust has rejected the First Indicated Date
            as the Reset Date or fails to select the First Indicated Date as the
            Reset Date, then the Second Indicated Date shall be the Reset Date
            and, on the Business Day immediately succeeding the Second Indicated
            Date, the Outstanding Principal Amount of this Note shall be
            automatically deemed to equal the sum of (i) the Original Principal
            Amount and (ii) the Additional Principal Amount.

      2.3   If the Reset Date (whether occurring on the First Indicated Date or
            the Second Indicated Date) shall result in an increase in the
            Outstanding Principal Amount of this Note, then the Borrower shall,
            as soon as reasonably practicable after the Reset Date, execute an
            allonge to this Note modifying this Note to set forth a principal
            amount equal to such new amount, and deliver such allonge to the
            Plan Trust.

3.    Interest.

      3.1   The Borrower agrees to pay interest on the Outstanding Principal
            Amount semi-annually in arrears on [February 1 and August 1] (each
            an "Interest Payment Date") of each year, commencing with [February
            1, 2007], at the rate of 9% per annum; provided that, if this Note
            shall be outstanding on the Tenth Anniversary, the interest rate
            applicable to this Note shall be reduced to 5% per annum effective
            on and after the Tenth Anniversary. Interest will be calculated on
            the basis of a 360-day year, consisting of twelve 30-day months.

      3.2   In no event shall the interest rate payable under this Note exceed
            the highest rate permissible under any applicable law; provided,
            however, that, anything contained herein to the contrary
            notwithstanding, if said rate at any time exceeds the maximum


                                        4
<PAGE>

                                                           EXHIBIT J TO THE PLAN


            allowable under applicable law, then the Borrower shall be liable
            only for the payment of such maximum as allowed by law, and payment
            received from the Borrower in excess of such legal maximum, whenever
            received, shall be applied to reduce the Outstanding Principal
            Amount to the extent of such excess.

4.    Payments Generally. Payments of principal, interest and any other amount
      due hereunder shall be made to the Plan Trust in dollars, by wire transfer
      of immediately available funds, to the account set forth in Exhibit A
      attached hereto, or to such other account designated from time to time for
      such payments by the Plan Trust in a written notice to the Borrower. If
      any payment hereunder becomes due and payable on a day other than a
      Business Day, such payment shall be extended to the next succeeding
      Business Day, and, with respect to payments of principal, interest thereon
      shall be payable at the then applicable rate during such extension.

5.    Conditions. Acceptance of this Note by the Plan Trust is subject to the
      receipt by the Plan Trust, in each case in form and substance reasonably
      acceptable to the Plan Trust, of the following:

      5.1   this Note, the Pledge Agreement, the GHR/Kenesis Litigation Trust
            Agreement, the Wachovia Subordination Agreement and the Indenture
            Subordination Agreement, in each case duly executed by the parties
            thereto;

      5.2   with respect to the Borrower, (i) its certificate of incorporation
            and bylaws; (ii) a certificate of good standing as of a recent date;
            and (iii) resolutions authorizing the Loan Documents to which the
            Borrower is party, in each case certified by an appropriate officer
            of the Borrower;

      5.3   an incumbency certificate of the Borrower with respect to the
            officer(s) of the Borrower authorized to execute the Loan Documents
            to which the Borrower is party; and

      5.4   appropriate UCC lien searches as to the Borrower, none of which
            shall evidence Liens not permitted by this Note.

6.    Covenants. So long as this Note shall be outstanding, the Borrower shall:

[Note: All covenants are open pending determination of covenants applicable to
the Amended Credit Agreement and New Indenture, final forms of which will be
filed prior to the Confirmation Hearing.]

      6.1   [preserve and maintain its corporate existence and good standing in
            the state of its formation;]

      6.2   [keep adequate records and books of account, in which full and
            correct entries shall be made in accordance with GAAP of all
            financial transactions of the Borrower;]


                                        5
<PAGE>

                                                           EXHIBIT J TO THE PLAN


      6.3   [comply with all applicable laws, rules, regulations and orders,
            such compliance to include, without limitation, paying before the
            same become delinquent all taxes, assessments and governmental
            charges imposed upon it or upon its property except (1) where
            failure to do so could not reasonably be expected to have a material
            and adverse effect on the Borrower's business or operations or
            Borrower's ability to pay this Note and (2) for taxes being
            contested in good faith by appropriate proceedings and for which
            adequate reserves have been established to the extent required by
            GAAP;]

      6.4   [maintain, with financially sound and reputable insurance companies
            or associations, insurance on such of its property in at least such
            amounts and against such risks as are usually insured against in the
            same general area by companies engaged in the same or a similar
            business;]

      6.5   [not create, incur, assume or suffer to exist any Liens upon the
            Collateral, other than (i) the Lien on the Collateral granted to the
            Plan Trust under the Pledge Agreement, (ii) the Lien on the
            Collateral granted to the Plan Trust in support of the Plan Trust
            Note and (iii) Liens for taxes, assessments and governmental charges
            that are not yet delinquent or are being contested in good faith by
            appropriate proceedings promptly instituted and diligently conducted
            and for which adequate reserves have been established or other
            provisions have been made in accordance with GAAP;]

      6.6   [provide prompt written notice of any Event of Default or Default,
            specifying the nature and extent thereof and the corrective action
            (if any) taken or proposed to be taken with respect thereto, if
            applicable;]

      6.7   [not declare or make, or agree to declare or make, directly or
            indirectly, any dividend or other distribution on its capital stock,
            or incur any obligation (contingent or otherwise) to do so; ]

      6.8   [not engage in any sale, transfer or other disposition (by way of
            merger, casualty, condemnation or otherwise) of all or substantially
            all of assets of the Borrower; and ]

      6.9   [not create, incur, assume or permit to exist any Indebtedness,
            except Indebtedness outstanding on the Effective Date after
            consummation of the transactions contemplated by the Plan to occur
            on the Effective Date and]

7.    Conversion.

      7.1   Upon the occurrence and at any time during the continuance of an
            Event of Default under Section 8.1(ii) hereof, the Plan Trust shall
            have the right, but not the obligation, to convert the Outstanding
            Principal Amount, and all accrued and unpaid interest and original
            issue discount (as calculated for United States federal income tax
            purposes) thereon (which will be deemed paid in full), into the
            Designated Amount of Borrower's Class A Common Stock (the
            "Conversion"). Any exercise of such right by the Plan Trust shall be


                                        6
<PAGE>

                                                           EXHIBIT J TO THE PLAN


            by delivery to the Borrower of a written notice of conversion in the
            form of Exhibit B attached hereto not less than five Business Days
            prior to the date specified in such notice as the date upon which
            the Conversion shall occur (the "Conversion Date"). Notwithstanding
            any provision herein to the contrary, no Conversion shall take place
            until after the Reset Date has occurred.

      7.2   On the Conversion Date, the Borrower shall issue the Designated
            Amount of Class A Common Stock to the Plan Trust and deliver to the
            Plan Trust one or more share certificates evidencing, in the
            aggregate, such issued Designated Amount of Class A Common Stock. No
            fractional shares of Class A Common Stock shall be issued hereunder;
            instead, the number of shares issued upon Conversion shall be
            rounded up to the nearest whole share.

      7.3   Delivery on the Conversion Date to the Plan Trust of the Designated
            Amount of Class A Common Stock shall be against delivery to the
            Borrower of this Note, marked "cancelled". No interest shall accrue
            on the Conversion Date, or on any date thereafter. On and after the
            Conversion Date, the Collateral shall no longer secure any
            obligations in respect of this Note and this Note shall be deemed
            satisfied in full and no longer outstanding (it being understood
            that the Pledge Agreement shall continue in effect in accordance
            with its terms as security for the Plan Trust Note, and the
            Collateral pledged thereunder to secure the Plan Trust Note shall
            not be released or limited as a result of the Conversion). The Plan
            Trust shall execute such releases, UCC terminations, and similar
            documents, and take such actions, as the Borrower shall reasonably
            request to evidence that the Collateral is no longer securing any
            obligation under this Note.

      7.4   Unless and until the Conversion shall occur, the Borrower will
            reserve from its authorized and unissued Class A Common Stock a
            sufficient number of shares to provide for the issuance of the
            Designated Amount of Class A Common Stock upon Conversion. The
            Borrower represents that upon issuance, such shares will be duly and
            validly issued, fully paid and non-assessable. The Borrower agrees
            that its issuance of this Note shall constitute full authority to
            its officers, agents, and transfer agents who are charged with the
            duty of executing and issuing stock certificates to execute and
            issue the Designated Amount of Class A Common Stock upon Conversion.

      7.5   If the Borrower at any time shall, by reclassification or otherwise,
            change its Class A Common Stock into securities of a different class
            or classes, this Note shall thereafter be deemed to evidence the
            right to purchase the class of securities receivable by holders of
            Class A Common Stock as the result of such change, provided that,
            notwithstanding the foregoing, the Conversion shall always result in
            the issuance of stock of the Borrower giving the Plan Trust the
            voting and economic interest contemplated by the defined term
            Designated Amount contained in Section 11 hereof.

      7.6   The Plan Trust acknowledges that it has been advised by the Borrower
            that neither this Note nor any stock which may be issued pursuant
            hereto have been registered under the Act, and that this Note is


                                        7
<PAGE>

                                                           EXHIBIT J TO THE PLAN


            being issued and the stock issuable upon Conversion may be issued on
            the basis of Section 1145 of the Bankruptcy Code. The Plan Trust
            acknowledges that it has been informed by the Borrower of, or is
            otherwise familiar with, the nature of the limitations imposed by
            the Act and the rules and regulations thereunder on the transfer of
            securities.

      7.7   Unless registered pursuant to the provisions of the Act, the
            certificate(s) issued upon any Conversion shall bear the following
            legend, in addition to any other legends that may be applicable to
            such stock at such time:

                  "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
                  SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
                  SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE SOLD
                  OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
                  STATEMENT UNDER THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
                  FROM THE REGISTRATION REQUIREMENTS OF THE ACT OR SUCH OTHER
                  LAWS."

      7.8   Subject to Section 6.10 of the Plan, any documentary, stamp or
            similar issue or transfer tax due as a result of the issuance of
            shares upon Conversion shall be payable by the Plan Trust.

8.    Events of Default. If any of the following events (each an "Event of
      Default") shall occur and be continuing:

      8.1   (i) the Borrower shall fail to make any payment of principal under
            this Note when due, or (ii) the Borrower shall fail to pay any
            interest hereunder within 30 days after the applicable Interest
            Payment Date; or

      8.2   any representation or warranty made to the Plan Trust by the
            Borrower herein or in the Pledge Agreement shall prove to have been
            incorrect or misleading in any material respect when made; or

      8.3   the Borrower shall default in the observance or performance of any
            covenant contained in this Note or the Pledge Agreement and such
            default shall continue unremedied for a period of 30 days after
            written notice thereof from the Plan Trust to the Borrower; or

      8.4   (x) the Borrower shall fail to pay at maturity or shall default in
            the obligation to pay the principal of, interest on, or any other
            payment obligation when due on one or more classes of its
            Indebtedness (other than this Note), having, individually or in the
            aggregate, an outstanding principal amount in excess of [$7,500,000]
            which permits the acceleration of the maturity of such Indebtedness,
            [(y) the Borrower shall be [in default] under the Amended Credit
            Agreement or the New Indenture,] or (z) in the case of a default


                                        8
<PAGE>

                                                           EXHIBIT J TO THE PLAN


            other than a payment default referred to in clause (x) or other
            default referred to in clause (y), when one or more classes of its
            Indebtedness (other than this Note), having, individually or in the
            aggregate, an outstanding principal amount in excess of [$7,500,000]
            is payable prior to its stated maturity by or on behalf of the
            holders thereof; or

      8.5   a court of competent jurisdiction shall enter a decree or order for
            relief in respect of the Borrower in an involuntary case under any
            applicable bankruptcy, insolvency or other similar state or federal
            law now or hereafter in effect, or appointing a receiver,
            liquidator, assignee, custodian, trustee, sequestrator (or similar
            official) of the Borrower or for any substantial part of the
            property of the Borrower or ordering the winding up or liquidation
            of the affairs of the Borrower and such decree or order shall remain
            unstayed and in effect for a period of 60 consecutive days; or

      8.6   the Borrower shall commence a voluntary case under any applicable
            bankruptcy, insolvency or other similar state or federal law now or
            hereafter in effect, or consent to the entry of an order for relief
            in an involuntary case under any such law, or consent to the
            appointment or taking possession by a receiver, liquidator,
            assignee, custodian, trustee, sequestrator (or similar official) of
            the Borrower or for any substantial part of the property of the
            Borrower, or the Borrower shall make any general assignment for the
            benefit of creditors; or

      8.7   the entry by a court of competent jurisdiction of one or more
            judgments or orders against the Borrower or any of its respective
            property or assets in an aggregate amount in excess of $5,000,000
            that are not covered by insurance written by third parties, which
            judgments or orders have not been vacated, discharged, satisfied or
            stayed pending appeal within 60 days from the entry thereof; or

      8.8   the Lien created under the Pledge Agreement shall for any reason
            (other than pursuant to the terms thereof or due to an act or
            omission by the Plan Trust), cease to be a valid and perfected first
            priority (except as permitted by Section 6.5) Lien in any material
            portion of the Collateral, and such default shall continue
            unremedied for a period of 10 days after written notice thereof from
            the Plan Trust to the Borrower;

then, the Plan Trust may, by notice to the Borrower, declare the Outstanding
Principal Amount, and all interest thereon, to be forthwith due and payable,
whereupon the Outstanding Principal Amount and all such interest shall become
and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided that, with respect to the occurrence of an Event of Default
described in clauses 8.5 or 8.6 above, the Outstanding Principal Amount and all
interest thereon shall automatically become due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower.


                                        9
<PAGE>

                                                           EXHIBIT J TO THE PLAN


9.    Representations.

      9.1   The Borrower represents and warrants to the Plan Trust as follows:

            9.1.1 The Borrower is duly organized, validly existing and in good
                  standing under the laws of the jurisdiction of its
                  organization. The Borrower is in compliance with all laws,
                  rules and regulations applicable to it, except where the
                  failure to be in compliance could not reasonably be expected
                  to have a material and adverse effect on the Borrower's
                  business or operations.

            9.1.2 The execution, delivery and performance by the Borrower of the
                  Loan Documents to which it is party are within its powers,
                  have been duly authorized by all necessary corporate action
                  and do not contravene any applicable law, rule, regulation or
                  order binding on or affecting the Borrower.

            9.1.3 Except for the Confirmation Order, no authorization, approval
                  or other action by, or notice to or filing with, any
                  governmental authority is required for the due execution,
                  delivery and performance by the Borrower of the Loan Documents
                  to which it is party;

            9.1.4 Each Loan Document to which the Borrower is party is the
                  legal, valid and binding obligation of the Borrower,
                  enforceable against it in accordance with its terms, except as
                  enforceability may be limited by applicable bankruptcy,
                  insolvency, reorganization, moratorium or similar laws
                  affecting the enforcement of creditors' rights generally and
                  by general equitable principles.

            9.1.5 The Borrower is not an "investment company", or a company
                  "controlled" by an "investment company", within the meaning of
                  the Investment Company Act of 1940, as amended.

      9.2   The Plan Trust represents and warrants to the Borrower as follows:

            9.2.1 The Plan Trust will be acquiring this Note for its own account
                  and not with a view to distribution of this Note or any stock
                  issued upon Conversion. The Plan Trust understands that this
                  Note has not been registered under the Act or under any state
                  securities laws and may not be sold or transferred unless it
                  is subsequently registered under the Act and any applicable
                  state or other securities laws, or unless exemptions from
                  registration under such laws are available and complied with.

10.   Amendments. No amendment or waiver of any provision of this Note, or
      consent to any departure by the Borrower therefrom, shall in any event be
      effective unless the same shall be in writing and signed by the Plan Trust
      and the Borrower, and then such waiver or consent shall be effective only
      in the specific instance and for the specific purpose for which given.


                                       10
<PAGE>

                                                           EXHIBIT J TO THE PLAN


11.   Definitions.

      Capitalized terms not otherwise defined herein or in the Plan shall have
the following respective meanings:

      "Act": as defined in Section 7.7.

      "Bankruptcy Code": Title 11 of the United States Code, 11 U.S.C.ss.ss.101,
et seq., as amended.

      "Borrower": as defined in the preamble hereto.

      "Capitalized Lease Obligation": an obligation under a lease that is
required to be classified and accounted for as a capital lease obligation under
GAAP and, for purposes of this Note, the amount of such obligation at any date
shall be the capitalized amount of such obligation at such date, determined in
accordance with such principles.

      "Capital Stock": any and all shares, interests, participation or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation), any and
all warrants, options or rights to purchase or any other securities convertible
into any of the foregoing.

      "Class A Common Stock": shares of Class A common stock, par value $0.01
per share, of the Borrower.

      "Collateral": all of the property subject to the Lien created by the
Pledge Agreement.

      "Default": any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.

      "Designated Amount": with respect to a Conversion, the number of shares of
Class A Common Stock of the Borrower (with all Class B Common Stock converted to
Class A Common Stock) that, when combined with the number of shares of New Class
A Common held by the Plan Trust immediately prior to the Conversion Date, result
in the Plan Trust being the beneficial owner of (i) 51% of the Borrower's voting
Capital Stock outstanding on a fully diluted basis immediately after the
Conversion on the Conversion Date and (ii) 51% of the economic interest in the
Borrower's Capital Stock outstanding on a fully diluted basis immediately after
the Conversion on the Conversion Date.

      "Event of Default": as defined in Section 8.

      "GAAP": generally accepted accounting principles in the United States in
effect from time to time.

      "Indebtedness": with respect to any Person, at any date, any of the
following, without duplication, (i) any liability, contingent or otherwise, of
such Person (A) for borrowed money (whether or not the recourse of the lender is
to the whole of the assets of such Person or only to a portion thereof), (B)
evidenced by a note, bond, debenture or similar instrument or letters of credit


                                       11
<PAGE>

                                                           EXHIBIT J TO THE PLAN


(including a purchase money obligation) or (C) for the payment of money relating
to a Capitalized Lease Obligation or other obligation (whether issued or
assumed) relating to the deferred purchase price of property; (ii) all
conditional sale obligations and all obligations under any title retention
agreement (even if the rights and remedies of the seller under such agreement in
the event of default are limited to repossession or sale of such property), but
excluding trade accounts payable arising in the ordinary course of business that
are not overdue by 120 days or more or are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted; (iii) all
obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction entered into in the ordinary
course of business; (iv) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on any asset or property (including, without limitation,
leasehold interests and any other tangible or intangible property) of such
Person, whether or not such Indebtedness is assumed by such Person or is not
otherwise such Person's legal liability, provided that if the obligations so
secured have not been assumed in full by such Person or are otherwise not such
Person's legal liability in full, the amount of such indebtedness for the
purposes of this definition shall be limited to the lesser of the amount of the
Indebtedness secured by such Lien or the fair market value of the assets or
property securing such Lien; and (v) all Indebtedness of others guaranteed,
directly or indirectly, by such Person or that is otherwise its legal liability
or which such Person has agreed to purchase or repurchase or in respect of which
such Person has agreed contingently to supply or advance funds. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date, provided that the amount outstanding
at any time of any Indebtedness issued with original issue discount is the full
amount of such Indebtedness less the remaining unamortized portion of the
original issue discount of such Indebtedness at such time as determined in
conformity with GAAP.

      "Indenture Subordination Agreement": that certain [Subordination
Agreement] dated as of even date herewith executed by the Plan Trust in favor of
[__________], as Trustee for the benefit of the holders of the New Senior Notes,
as it may be amended or otherwise modified from time to time in accordance with
the terms thereof.

      "Interest Payment Date": as defined in Section 3.1.

      "Lien": with respect to any Person, any mortgage, pledge, lien,
encumbrance, easement, restriction, covenant, right-of-way, charge or adverse
claim affecting title or resulting in an encumbrance against real or personal
property of such Person, or a security interest of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option, right of first refusal or other similar agreement to sell,
in each case securing obligations of such Person and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent
statute or statutes) of any jurisdiction other than to reflect ownership by a
third party of property leased to such Person under a lease that is not in the
nature of a conditional sale or title retention agreement).


                                       12
<PAGE>

                                                           EXHIBIT J TO THE PLAN


      "Loan Documents": this Note, the Pledge Agreement, the Wachovia
Subordination Agreement, the Indenture Subordination Agreement, and any other
agreement made by the Borrower in connection herewith.

      "Pledge Agreement": that certain Pledge Agreement executed by the Borrower
in favor of the Plan Trust, as it may be amended or otherwise modified from time
to time in accordance with the terms thereof.

      "Wachovia Subordination Agreement": that certain [Subordination Agreement]
dated as of even date herewith executed by the Plan Trust in favor of Wachovia,
as lender under the Amended Credit Agreement, as it may be amended or otherwise
modified from time to time in accordance with the terms thereof.

12.   Notices. Any notice or demand which by any provision of this Note is
      required or permitted to be given or served to or on the Borrower shall be
      given or served by (i) delivery in person, (ii) telecopy (confirmed by
      copy sent by first-class mail) or (iii) certified or registered mail,
      return receipt requested, in each case addressed to Congoleum Corporation,
      3500 Quakerbridge Road, Mercerville, New Jersey 08619, Attention: Chief
      Financial Officer (Telecopy No.: (609) 584-3555), or to such other address
      as the Borrower may notice to the Plan Trust in writing in accordance with
      the provisions hereof. Any notice, direction, request or demand by the
      Borrower to or upon the Plan Trust shall be deemed to have been
      sufficiently given or made, for all purposes, if given or served by one of
      the methods described in the first sentence of this Section, addressed to
      [insert contact information for Plan Trust], or to such other address as
      the Plan Trust may notice to the Borrower in writing in accordance with
      the provisions hereof.

13.   No Waiver; Remedies. No failure on the part of the Plan Trust to exercise,
      and no delay in exercising, any right hereunder shall operate as a waiver
      thereof, nor shall any single or partial exercise of any right hereunder
      preclude any other or further exercise thereof or the exercise of any
      other right. The remedies herein are cumulative and not exclusive of any
      remedies provided by law.

14.   Binding Effect; Assignment. This Note shall be binding upon and inure to
      the benefit of the Plan Trust and its successors and assigns, provided
      that the Plan Trust may not assign, transfer or encumber this Note without
      the prior written consent of the Borrower. The Borrower may not assign,
      transfer or encumber this Note or any of its rights or obligations
      hereunder without the prior written consent of the Plan Trust.

15.   Governing Law. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS
      OF THE STATE OF DELAWARE, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
      ACCORDANCE WITH THE LAWS (OTHER THAN CHOICE OF LAW RULES) OF SAID STATE.
      THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION
      OF ANY UNITED STATES FEDERAL OR NEW JERSEY STATE COURT SITTING IN NEW
      JERSEY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE
      AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF


                                       13
<PAGE>

                                                           EXHIBIT J TO THE PLAN


      SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH UNITED
      STATES FEDERAL OR NEW JERSEY STATE COURT. THE BORROWER IRREVOCABLY WAIVES
      ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
      OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW
      OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDINGS IN
      SUCH RESPECTIVE JURISDICTIONS. THE BORROWER IRREVOCABLY CONSENTS TO THE
      SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BROUGHT IN
      ANY COURT IN OR OF THE STATE OF NEW JERSEY BY THE DELIVERY OF COPIES OF
      SUCH PROCESS TO THE BORROWER, AT ITS ADDRESS SPECIFIED IN SECTION 12
      HEREOF OR BY CERTIFIED MAIL DIRECT TO SUCH ADDRESS.

16.   Integration. This Note sets forth the entire agreement between the
      Borrower and the Plan Trust relating to the subject matter hereof.

      IN WITNESS WHEREOF, the Borrower and the Plan Trust have caused this Note
to be executed by their respective duly authorized representatives, as of the
date first above written.

                                   CONGOLEUM CORPORATION, a
                                   Delaware corporation

                                   By: ___________________________________
                                   Name: _________________________________
                                   Title: ________________________________


                                   CONGOLEUM PLAN TRUST


                                   By: _________________________________,
                                       as Trustee

                                   By: _________________________________,
                                       as Trustee

                                   By: _________________________________,
                                       as Trustee


                                       14
<PAGE>

                                    EXHIBIT A

                    WIRE TRANSFER INSTRUCTIONS FOR PLAN TRUST
<PAGE>

                                    EXHIBIT B
                              NOTICE OF CONVERSION

Congoleum Corporation
3500 Quakerbridge Road
Mercerville, New Jersey 08619
Attention: Chief Financial Officer

(Telecopy No.: (609) 584-3555)


The Plan Trust hereby exercises it right to convert the outstanding principal
and interest under the Subordinated Convertible Note of Congoleum Corporation
(the "Note"). The Conversion Date shall be [______________].

Attached hereto is the original Note, which has been marked "cancelled" by the
Plan Trust.


Dated: _____________, ____

                                   CONGOLEUM PLAN TRUST


                                   By: _________________________________,
                                       as Trustee

                                   By: _________________________________,
                                       as Trustee

                                   By: _________________________________,
                                       as Trustee
<PAGE>

                                                           EXHIBIT K TO THE PLAN


                              Exhibit K to the Plan
                                "Plan Trust Note"
<PAGE>


                     SUBORDINATED PLAN TRUST PROMISSORY NOTE

$[__________]                                                           [Date]

      FOR VALUE RECEIVED, the undersigned, CONGOLEUM CORPORATION, a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of the Congoleum Plan Trust created pursuant to the Plan referred to below
(the "Plan Trust"), in lawful money of the United States and in immediately
available funds as and when due in accordance with the terms set forth herein,
the principal sum of [______________________] ($[___________]) (the "Loan").

                                    RECITALS

      A. On or about [_____________], the United States Bankruptcy Court for the
District of New Jersey (the "Bankruptcy Court") entered an order confirming the
Eleventh Modified Joint Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code of Congoleum Corporation, et al., and the Asbestos Claimants'
Committee, dated as of October 23, 2006 (as it may thereafter be amended,
restated or otherwise modified, the "Plan"), filed by the Debtors and the
Asbestos Claimants' Committee (as such term is defined in the Plan). Certain
capitalized terms used in this Note are defined in Section 9 hereof; capitalized
terms used in this Note and not defined shall have the respective meanings
ascribed to them in the Plan.

      B. Pursuant to the Plan, the Plan Trust is required to make the Loan to
the Borrower, and the Borrower is required to issue this Subordinated Plan Trust
Promissory Note (this "Note") to the Plan Trust.

      C. This Note will be secured by the Borrower's right to Distributable
Proceeds (as defined in the GHR/Kenesis Litigation Trust Agreement,
"Distributable Proceeds") in accordance with the terms of the Pledge Agreement.

      D. Concurrently herewith this Note is being subordinated to (i) the
Obligations (as such term is defined in the [Amended Credit Agreement]) under
the [Amended Credit Agreement or other working capital exit facility], pursuant
to that certain [Subordination Agreement] dated as of even date herewith
executed by the Plan Trust in favor of [_________], as lender under the [Amended
Credit Agreement or other working capital exit facility], and (ii) the
Obligations (as such term is defined in the New Indenture) under the New
Indenture, pursuant to that certain [Subordination Agreement] dated as of even
date herewith executed by the Plan Trust in favor of [__________], as Trustee
for the benefit of the holders of the New Senior Notes.

      In consideration of the foregoing, the parties hereto hereby agree as
follows:

                                    AGREEMENT
<PAGE>

                                                           EXHIBIT K TO THE PLAN


1. Repayment of Loan.

      (a) The principal amount of the Loan and all unpaid interest thereon are
due in full on December 31, 2011 (the "Maturity Date"). Notwithstanding the
foregoing, Distributable Proceeds disbursed from the GHR/Kenesis Litigation
Trust shall be remitted by the GHR/Kenesis Litigation Trustee to the Plan Trust
on behalf of the Borrower and applied by the Plan Trust as a prepayment of the
obligations under this Note as follows: (i) first, to the prepayment of any
accrued and unpaid interest on the Loan, until such interest is paid in full and
(ii) second, to the prepayment of the outstanding principal balance of the Loan.

      (b) The Borrower may, at any time and from time to time, prepay the Loan,
in whole or in part, without premium or penalty, upon at least two Business
Days' written notice to the Plan Trust.

2. Interest (a) The Borrower agrees to pay interest on the Loan semi-annually in
arrears on [February 1 and August 1] (each an "Interest Payment Date") of each
year, commencing with [February 1, 2007], at the rate of 10% per annum. Interest
will be calculated on the basis of a 360-day year, consisting of twelve 30-day
months.

      (b) In no event shall the interest rate payable under this Note exceed the
highest rate permissible under any applicable law; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate at any
time exceeds the maximum allowable under applicable law, then the Borrower shall
be liable only for the payment of such maximum as allowed by law, and payment
received from the Borrower in excess of such legal maximum, whenever received,
shall be applied to reduce the principal balance of the Loan to the extent of
such excess.

3. Payments Generally. Payments of principal, interest and any other amount due
hereunder shall be made to the Plan Trust in dollars, by wire transfer of
immediately available funds, to the account set forth in Exhibit 1 attached
hereto, or to such other account designated from time to time for such payments
by the Plan Trust in a written notice to the Borrower. If any payment hereunder
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension.

4. Representations and Warranties. The Borrower represents and warrants to the
Plan Trust as follows:

      (a) The Borrower is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization. The Borrower is in
compliance with all laws, rules and regulations applicable to it, except where
the failure to be in compliance could not reasonably be expected to have a
material and adverse effect on the Borrower's business or operations.

      (b) The execution, delivery and performance by the Borrower of the Loan
Documents to which it is party are within its powers, have been duly authorized
by all necessary corporate action and do not contravene any applicable law,
rule, regulation or order binding on or affecting the Borrower.


                                        2
<PAGE>

                                                           EXHIBIT K TO THE PLAN


      (c) Except for the Confirmation Order, no authorization, approval or other
action by, or notice to or filing with, any governmental authority is required
for the due execution, delivery and performance by the Borrower of the Loan
Documents to which it is party;

      (d) Each Loan Document to which the Borrower is party is the legal, valid
and binding obligation of the Borrower, enforceable against it in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.

      (e) The Borrower is not an "investment company", or a company "controlled"
by an "investment company", within the meaning of the Investment Company Act of
1940, as amended.

5. Conditions to Loan. The agreement of the Plan Trust to make the Loan is
subject to the receipt by the Plan Trust, in each case in form and substance
reasonably acceptable to the Plan Trust, of the following:

      (a) this Note, the Pledge Agreement, the GHR/Kenesis Litigation Trust
Agreement, the Wachovia Subordination Agreement and the Indenture Subordination
Agreement, in each case duly executed by the parties thereto;

      (b) with respect to the Borrower, (i) its certificate of incorporation and
bylaws; (ii) a certificate of good standing as of a recent date; and (iii)
resolutions authorizing the Loan Documents to which the Borrower is party, in
each case certified by an appropriate officer of the Borrower;

      (c) an incumbency certificate of the Borrower with respect to the
officer(s) of the Borrower authorized to execute the Loan Documents to which the
Borrower is party; and

      (d) appropriate UCC lien searches as to the Borrower, none of which shall
evidence Liens not permitted by this Note.

6. Covenants. So long as the Loan shall be outstanding, the Borrower shall:

[Note: All covenants are open pending determination of covenants applicable to
the Amended Credit Agreement and New Indenture, final forms of which will be
filed prior to the Confirmation Hearing.]

      (a) [preserve and maintain its corporate existence and good standing in
the state of its formation;]

      (b) [keep adequate records and books of account, in which full and correct
entries shall be made in accordance with GAAP of all financial transactions of
the Borrower;]

      (c) [comply with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments and governmental charges imposed upon it or
upon its property except (1) where failure to do so could not reasonably be


                                        3
<PAGE>

                                                           EXHIBIT K TO THE PLAN


expected to have a material and adverse effect on the Borrower's business or
operations or Borrower's ability to pay the Loan and (2) for taxes being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established to the extent required by GAAP;]

      (d) [maintain, with financially sound and reputable insurance companies or
associations, insurance on such of its property in at least such amounts and
against such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business;]

      (e) [not create, incur, assume or suffer to exist any Liens upon the
Collateral, other than (i) the Lien on the Collateral granted to the Plan Trust
under the Pledge Agreement, (ii) the Lien on the Collateral granted to the Plan
Trust in support of the New Convertible Security and (iii) Liens for taxes,
assessments and governmental charges that are not yet delinquent or are being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and for which adequate reserves have been established or
other provisions have been made in accordance with GAAP;]

      (f) [provide prompt written notice of any Event of Default or Default,
specifying the nature and extent thereof and the corrective action (if any)
taken or proposed to be taken with respect thereto, if applicable;]

      (g) [use the proceeds of the Loan only for working capital purposes;]

      (h) [not declare or make, or agree to declare or make, directly or
indirectly, any dividend or other distribution on its capital stock, or incur
any obligation (contingent or otherwise) to do so;]

      (i) [not engage in any sale, transfer or other disposition (by way of
merger, casualty, condemnation or otherwise) of all or substantially all of
assets of the Borrower; and]

      (j) [not create, incur, assume or permit to exist any Indebtedness, except
Indebtedness outstanding on the Effective Date after consummation of the
transactions contemplated by the Plan to occur on the Effective Date and
[propose appropriate basket]]

7. Events of Default. If any of the following events (each an "Event of
Default") shall occur and be continuing:

      (a) the Borrower shall fail to make any payment of principal of the Loan
when due, or shall fail to pay any interest on the Loan within 30 days after the
applicable Interest Payment Date; or

      (b) any representation or warranty made to the Plan Trust by the Borrower
herein or in the Pledge Agreement shall prove to have been incorrect or
misleading in any material respect when made; or


                                        4
<PAGE>

                                                           EXHIBIT K TO THE PLAN


      (c) the Borrower shall default in the observance or performance of any
covenant contained in this Note or the Pledge Agreement and such default shall
continue unremedied for a period of 30 days after written notice thereof from
the Plan Trust to the Borrower; or

      (d) (x) the Borrower shall fail to pay at maturity or shall default in the
obligation to pay the principal of, interest on, or any other payment obligation
when due on one or more classes of its Indebtedness (other than the Loan),
having, individually or in the aggregate, an outstanding principal amount in
excess of [$7,5000,000] which permits the acceleration of the maturity of such
Indebtedness, [(y) the Borrower shall be [in default] under the Amended Credit
Agreement or the New Indenture,] or (z) in the case of a default other than a
payment default referred to in clause (x) or other default referred to in clause
(y), when one or more classes of its Indebtedness (other than the Loan), having,
individually or in the aggregate, an outstanding principal amount in excess of
[$7,500,000] is payable prior to its stated maturity by or on behalf of the
holders thereof; or

      (e) a court of competent jurisdiction shall enter a decree or order for
relief in respect of the Borrower in an involuntary case under any applicable
bankruptcy, insolvency or other similar state or federal law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Borrower or for any substantial part
of the property of the Borrower or ordering the winding up or liquidation of the
affairs of the Borrower and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or

      (f) the Borrower shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar state or federal law now or hereafter in
effect, or consent to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Borrower or for any substantial part of the property of the
Borrower, or the Borrower shall make any general assignment for the benefit of
creditors; or

      (g) the entry by a court of competent jurisdiction of one or more
judgments or orders against the Borrower or any of its respective property or
assets in an aggregate amount in excess of $5,000,000 that are not covered by
insurance written by third parties, which judgments or orders have not been
vacated, discharged, satisfied or stayed pending appeal within 60 days from the
entry thereof; or

      (h) the Lien created under the Pledge Agreement shall for any reason
(other than pursuant to the terms thereof or due to an act or omission by the
Plan Trust), cease to be a valid and perfected first priority (except as
permitted by Section 6(e)) Lien in any material portion of the Collateral, and
such default shall continue unremedied for a period of 10 days after written
notice thereof from the Plan Trust to the Borrower;

then, the Plan Trust may, by notice to the Borrower, declare the Loan and this
Note, and all principal thereunder and interest thereon, to be forthwith due and
payable, whereupon the Loan and this Note and all such principal and interest
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower; provided that, with respect to the occurrence of an Event of


                                        5
<PAGE>

                                                           EXHIBIT K TO THE PLAN


Default described in clauses (e) or (f) above, the Loan, this Note and all
interest thereon shall automatically become due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower.

8. Amendments. No amendment or waiver of any provision of this Note, or consent
to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Plan Trust and the
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.

9. Definitions.

      Capitalized terms not otherwise defined herein or in the Plan shall have
the following respective meanings:

      "Borrower": as defined in the preamble hereto.

      "Capitalized Lease Obligation": an obligation under a lease that is
required to be classified and accounted for as a capital lease obligation under
GAAP and, for purposes of this Note, the amount of such obligation at any date
shall be the capitalized amount of such obligation at such date, determined in
accordance with such principles.

      "Collateral": all of the property subject to the Lien created by the
Pledge Agreement.

      "Default": any of the events specified in Section 7, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.

      "dollars": or "$" means lawful money of the United States of America.

      "Event of Default": as defined in Section 7.

      "GAAP": generally accepted accounting principles in the United States in
effect from time to time.

      "Indebtedness": with respect to any Person, at any date, any of the
following, without duplication, (i) any liability, contingent or otherwise, of
such Person (A) for borrowed money (whether or not the recourse of the lender is
to the whole of the assets of such Person or only to a portion thereof), (B)
evidenced by a note, bond, debenture or similar instrument or letters of credit
(including a purchase money obligation) or (C) for the payment of money relating
to a Capitalized Lease Obligation or other obligation (whether issued or
assumed) relating to the deferred purchase price of property; (ii) all
conditional sale obligations and all obligations under any title retention
agreement (even if the rights and remedies of the seller under such agreement in
the event of default are limited to repossession or sale of such property), but
excluding trade accounts payable arising in the ordinary course of business that
are not overdue by 120 days or more or are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted; (iii) all
obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction entered into in the ordinary
course of business; (iv) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on any asset or property (including, without limitation,


                                        6
<PAGE>

                                                           EXHIBIT K TO THE PLAN


leasehold interests and any other tangible or intangible property) of such
Person, whether or not such Indebtedness is assumed by such Person or is not
otherwise such Person's legal liability, provided that if the obligations so
secured have not been assumed in full by such Person or are otherwise not such
Person's legal liability in full, the amount of such indebtedness for the
purposes of this definition shall be limited to the lesser of the amount of the
Indebtedness secured by such Lien or the fair market value of the assets or
property securing such Lien; and (v) all Indebtedness of others guaranteed,
directly or indirectly, by such Person or that is otherwise its legal liability
or which such Person has agreed to purchase or repurchase or in respect of which
such Person has agreed contingently to supply or advance funds. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date, provided that the amount outstanding
at any time of any Indebtedness issued with original issue discount is the full
amount of such Indebtedness less the remaining unamortized portion of the
original issue discount of such Indebtedness at such time as determined in
conformity with GAAP.

      "Indenture Subordination Agreement": that certain [Subordination
Agreement] dated as of even date herewith executed by the Plan Trust in favor of
[__________], as Trustee for the benefit of the holders of the New Senior Notes,
as it may be amended or otherwise modified from time to time in accordance with
the terms thereof.

      "Interest Payment Date": as defined in Section 2.

      "Lien": with respect to any Person, any mortgage, pledge, lien,
encumbrance, easement, restriction, covenant, right-of-way, charge or adverse
claim affecting title or resulting in an encumbrance against real or personal
property of such Person, or a security interest of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option, right of first refusal or other similar agreement to sell,
in each case securing obligations of such Person and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent
statute or statutes) of any jurisdiction other than to reflect ownership by a
third party of property leased to such Person under a lease that is not in the
nature of a conditional sale or title retention agreement).

      "Loan Documents": this Note, the Pledge Agreement, the Wachovia
Subordination Agreement, the Indenture Subordination Agreement, and any other
agreement made by the Borrower in connection herewith.

      "Loan": as defined in the preamble to this Note.

      "Pledge Agreement": that certain Pledge Agreement executed by the Borrower
in favor of the Plan Trust, as it may be amended or otherwise modified from time
to time in accordance with the terms thereof.

      "Wachovia Subordination Agreement": that certain [Subordination Agreement]
dated as of even date herewith executed by the Plan Trust in favor of Wachovia,
as lender under the Amended Credit Agreement, as it may be amended or otherwise
modified from time to time in accordance with the terms thereof.


                                        7
<PAGE>

                                                           EXHIBIT K TO THE PLAN


10. Notices. Any notice or demand which by any provision of this Note is
required or permitted to be given or served to or on the Borrower shall be given
or served by (i) delivery in person, (ii) telecopy (confirmed by copy sent by
first-class mail) or (iii) certified or registered mail, return receipt
requested, in each case addressed to Congoleum Corporation, 3500 Quakerbridge
Road, Mercerville, New Jersey 08619, Attention: Chief Financial Officer
(Telecopy No.: (609) 584-3555), or to such other address as the Borrower may
notice to the Plan Trust in writing in accordance with the provisions hereof.
Any notice, direction, request or demand by the Borrower to or upon the Plan
Trust shall be deemed to have been sufficiently given or made, for all purposes,
if given or served by one of the methods described in the first sentence of this
Section, addressed to [insert contact information for Plan Trust], or to such
other address as the Plan Trust may notice to the Borrower in writing in
accordance with the provisions hereof.

11. No Waiver; Remedies. No failure on the part of the Plan Trust to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein are cumulative and not exclusive of any remedies
provided by law.

12. Binding Effect; Assignment. This Note shall be binding upon and inure to the
benefit of the Plan Trust and its successors and assigns, provided that the Plan
Trust may not assign, transfer or encumber this Note without the prior written
consent of the Borrower. The Borrower may not assign, transfer or encumber this
Note or any of its rights or obligations hereunder without the prior written
consent of the Plan Trust.

13. Governing Law. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF
THE STATE OF DELAWARE, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS (OTHER THAN CHOICE OF LAW RULES) OF SAID STATE. THE BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR NEW JERSEY STATE COURT SITTING IN NEW JERSEY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE AND THE BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH UNITED STATES FEDERAL OR NEW JERSEY STATE
COURT. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDINGS IN SUCH RESPECTIVE JURISDICTIONS. THE BORROWER
IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY COURT IN OR OF THE STATE OF NEW JERSEY BY THE DELIVERY
OF COPIES OF SUCH PROCESS TO THE BORROWER, AT ITS ADDRESS SPECIFIED IN SECTION
10 HEREOF OR BY CERTIFIED MAIL DIRECT TO SUCH ADDRESS.


                                        8
<PAGE>

                                                           EXHIBIT K TO THE PLAN


14. Integration. This Note, the other Loan Documents and the Plan set forth the
entire agreement between the Borrower and the Plan Trust relating to the subject
matter hereof.

      IN WITNESS WHEREOF, the Borrower and the Plan Trust have caused this
Subordinated Plan Trust Promissory Note to be executed by their respective duly
authorized representatives, as of the date first above written.


                                   CONGOLEUM CORPORATION, a
                                   Delaware corporation


                                   By: ____________________________________
                                   Name: __________________________________
                                   Title: _________________________________

                              CONGOLEUM PLAN TRUST


                                   By: __________________________________,

                                   as Trustee

                                   By: __________________________________,
                                   as Trustee

                                   By: __________________________________,
                                   as Trustee


Acknowledged and Agreed to:

GHR/Kenesis Litigation Trust

By: _____________________________
        as trustee


                                       9
<PAGE>

                                                           EXHIBIT L TO THE PLAN


                              Exhibit L to the Plan
                               "Pledge Agreement"
<PAGE>

                                                           EXHIBIT L TO THE PLAN


                                PLEDGE AGREEMENT

      This Pledge Agreement (this "Agreement"), dated as of [_____________], is
made by CONGOLEUM CORPORATION, a Delaware corporation (the "Pledgor"), in favor
of the CONGOLEUM PLAN TRUST created pursuant to the Plan referred to below (the
"Plan Trust").

                                    Recitals

      A. On or about [_____________], the United States Bankruptcy Court for the
District of New Jersey (the "Bankruptcy Court") entered an order confirming the
Eleventh Modified Joint Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code of Congoleum Corporation, et al., and the Asbestos Claimants'
Committee, dated as of October 2, 2006 (as it may thereafter be amended,
restated or otherwise modified, the "Plan"), filed by the Debtors and the
Asbestos Claimants' Committee (as such term is defined in the Plan). Capitalized
terms used in this Agreement and not defined shall have the respective meanings
ascribed to them in the Plan.

      B. Pursuant to the Plan, (i) the GHR/Kenesis Actions and (ii) proceeds
realized from the prosecution of the GHR/Kenesis Actions have been, on the date
hereof, assigned to the GHR/Kenesis Litigation Trust (the "Trust"), on behalf of
and for the benefit of the Pledgor.

      C. Also pursuant to the Plan, the Pledgor is concurrently herewith issuing
in favor of the Plan Trust (i) the Plan Trust Note and (ii) the New Convertible
Security. The Plan requires the Pledgor to secure its obligations under the Plan
Trust Note and the New Convertible Security by granting to the Plan Trust a
security interest in, and lien on, the Collateral (as defined below).

      In consideration of the foregoing, the parties hereto hereby agree as
follows:

                                    AGREEMENT

      1. Definitions. Unless the context otherwise requires, terms defined in
the Uniform Commercial Code of the State of Delaware (the "Uniform Commercial
Code") and not otherwise defined in this Agreement or in the Plan shall have the
meanings defined for those terms in the Uniform Commercial Code.

      2. Grant of Security. The Pledgor hereby assigns and pledges to the Plan
Trust, and hereby grants to the Plan Trust a security interest in, all of the
Pledgor's right, title and interest in and to all Distributable Proceeds (as
defined in the GHR/Kenesis Litigation Trust Agreement), whether now owned or
hereafter acquired, whether now or hereafter existing and wherever located (the
"Collateral").

      3. Security for Obligations. This Agreement and the pledges made and
security interests granted herein secure the prompt payment and full performance
of all obligations of the Pledgor now or hereafter existing under the Plan Trust
Note and the New Convertible Security, whether for principal, interest or
<PAGE>

otherwise, including, without limitation, all obligations of the Pledgor now or
hereafter existing under this Agreement, and all interest that accrues at the
then applicable rate specified in the Plan Trust Note or the New Convertible
Security, as applicable, on all or any part of any of such obligations after the
filing of any petition or pleading against the Pledgor for a proceeding under
any bankruptcy or related law (collectively, the "Secured Obligations").

      4. Representations and Warranties. The Pledgor represents and warrants as
set forth below.

            (a) Agreement Authorized; No Consents. The execution, delivery and
performance by the Pledgor of this Agreement are within its powers, have been
duly authorized by all necessary corporate action and do not contravene any
applicable law, rule, regulation or order binding on or affecting the Pledgor.
Except for the Confirmation Order and the filing of an appropriate UCC-1
Financing Statement (the "UCC-1 Financing Statement") covering the Collateral
with the office of the Secretary of State of the State of Delaware, no
authorization, approval or other action by, or notice to or filing with, any
governmental authority is required for the due execution, delivery and
performance by the Pledgor of this Agreement.

            (b) Legal Name of Pledgor, Etc. As of the Effective Date, Pledgor's
exact legal name and state of incorporation are as set forth in the Pledgor's
signature block to this Agreement.

            (c) Ownership of Collateral. As of the Effective Date, the Pledgor
is the legal and beneficial owner of the Collateral.

            (d) Agreement Binding and Enforceable. This Agreement is the legal,
valid and binding obligation of the Pledgor, enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.

            (e) Valid and Perfected Security Interest. This Agreement and the
filing of the UCC-1 Financing Statement with the Secretary of State of the State
of Delaware creates a valid and perfected security interest in the Collateral,
securing the payment of the Secured Obligations.

      5. Further Assurances.

            (a) The Pledgor agrees that from time to time it will execute and
deliver all further instruments and documents, and take all further action, that
may be necessary, or that the Plan Trust may reasonably request, in order to
perfect and protect the security interest granted or purported to be granted
hereby or to enable the Plan Trust to exercise and enforce its rights and
remedies hereunder with respect to any of the Collateral.

            (b) The Pledgor hereby authorizes the Plan Trust to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of the Pledgor where permitted
by law. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.


                                        3
<PAGE>

      6. Legal Name. The Pledgor will not change its legal name or state of
incorporation except upon not less than 10 days' prior notice to the Plan Trust
and prior compliance with all applicable requirements of Section 5 hereof
necessary to perfect the Plan Trust's security interest hereunder.

      7. Transfers and Other Liens. The Pledgor will not (i) sell, assign or
otherwise dispose of any of the Collateral or (ii) create or permit to exist any
Lien on the Collateral except for the security interest created by this
Agreement.

      8. Remedies. If (i) any Event of Default under, and as defined in, the
Plan Trust Note, or (ii) any Event of Default under, and as defined in, the New
Convertible Security, occurs and is continuing, the provisions set forth below
shall apply.

            (a) The Plan Trust may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all of the rights and remedies of a secured party on default under the
Uniform Commercial Code (whether or not the Uniform Commercial Code applies to
the affected Collateral).

            (b) The proceeds resulting from the collection, liquidation, sale or
other disposition of the Collateral shall be applied first, to the satisfaction
of the Secured Obligations in the order set forth in the Plan Trust Note and the
New Convertible Security and second, any surplus remaining after the
satisfaction of the Secured Obligations to be paid over to the Pledgor.

            (c) The Plan Trust may exercise any and all rights and remedies of
the Pledgor with respect to the Collateral, including any and all rights of the
Pledgor to demand or otherwise require payment by the GHR/Kenesis Litigation
Trustee of the Distributable Proceeds (as defined in the GHR/Kenesis Litigation
Trust Agreement) in accordance with the terms of the GHR/Kenesis Litigation
Trust Agreement.

      9. Amendments, Etc. No amendment or waiver of any provision of this Pledge
Agreement, or consent to any departure by the Pledgor herefrom, shall in any
event be effective unless the same shall be in writing and signed by the Plan
Trust and the Pledgor, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

      10. No Waiver; Remedies. No failure on the part of the Plan Trust to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, and no single or partial exercise of any right hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.

      11. Binding Effect; Assignment. This Agreement shall inure to the benefit
of the Plan Trust and its successors and assigns, provided that the Plan Trust
may not assign, transfer or encumber this Agreement without the prior written
consent of the Pledgor. The Pledgor may not assign, transfer or encumber this
Agreement or its rights or obligations hereunder without the prior written
consent of the Plan Trust.


                                        4
<PAGE>

      12. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT UNDER
THE LAWS OF THE STATE OF DELAWARE, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS (OTHER THAN CHOICE OF LAW RULES) OF SAID STATE. THE
PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR NEW JERSEY STATE COURT SITTING IN NEW JERSEY IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE
PLEDGOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH UNITED STATES FEDERAL OR NEW
JERSEY STATE COURT. THE PLEDGOR IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDINGS IN SUCH RESPECTIVE JURISDICTIONS. THE PLEDGOR
IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY COURT IN OR OF THE STATE OF NEW JERSEY BY THE DELIVERY
OF COPIES OF SUCH PROCESS TO THE PLEDGOR, AT ITS ADDRESS SPECIFIED IN SECTION 13
HEREOF OR BY CERTIFIED MAIL DIRECT TO SUCH ADDRESS.

      13. Notices. Any notice which by any provision of this Agreement is
required or permitted to be given or served to or on the Pledgor shall be given
or served by (i) delivery in person, (ii) telecopy (confirmed by copy sent by
first-class mail) or (iii) certified or registered mail, return receipt
requested, in each case addressed to Congoleum Corporation, 3500 Quakerbridge
Road, Mercerville, New Jersey 08619, Attention: Chief Financial Officer
(Telecopy No.: (609) 584-3555), or to such other address as the Pledgor may
notice to the Plan Trust in writing in accordance with the provisions hereof.
Any notice, direction, request or demand by the Pledgor to or upon the Plan
Trust shall be deemed to have been sufficiently given or made, for all purposes,
if given or served by one of the methods described in the first sentence of this
Section, addressed to [insert contact information for Plan Trust], or to such
other address as the Plan Trust may notice to the Pledgor in writing in
accordance with the provisions hereof.

      14. Release of Pledgor. This Agreement and all obligations of the Pledgor
hereunder and all security interests granted hereby shall be released and
terminated when all Secured Obligations have been paid in full in cash. Upon
such release and termination, all rights in and to the Collateral shall
automatically revert to the Pledgor, and the Plan Trust shall return any
Collateral in its possession to the Pledgor, and shall endorse, execute,
deliver, record and file all instruments and documents, and do all other acts
and things, reasonably required for the return of the Collateral to the Pledgor
and to evidence or document the release of the security interests arising under
this Agreement, all as requested by the Pledgor.


                                        5
<PAGE>

                                                           EXHIBIT L TO THE PLAN


      IN WITNESS WHEREOF, the Pledgor has executed this Agreement by its duly
authorized representative as of the date first written above.

                                   PLEDGOR

                                   CONGOLEUM CORPORATION, a
                                   Delaware corporation

                                   By: __________________________________
                                   Name: ________________________________
                                   Title: _______________________________


Accepted and Agreed to as of
this ___ day of __________,
200_ on behalf of the
GHR/Kenesis Litigation Trust:

_____________________________
as Trustee


Accepted and Agreed to as of
this ___ day of __________,
200_ on behalf of the
Congoleum Plan Trust:

_____________________________
as Trustee

_____________________________
as Trustee

_____________________________
as Trustee