Exhibit 99.7


                                           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
                                          )
------------------------------------------

                           EIGHTH MODIFIED JOINT PLAN
            OF REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
          OF CONGOLEUM CORPORATION, ET AL., DATED AS OF MARCH 17, 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
1540 Broadway
New York, NY 10036-4039

Richard L. Epling
Robin L. Spear
Kerry A. Brennan

            And

OKIN, HOLLANDER & DELUCA, LLP
Parker Plaza
400 Kelby Street
Fort Lee, New Jersey 07024

Paul S. Hollander
James J. DeLuca

Attorneys for Congoleum Corporation, et al.
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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...............................21
   1.4  EXHIBITS AND SCHEDULES..............................................21

                     ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS

   2.1  GENERALLY...........................................................21
   2.2  UNCLASSIFIED CLAIMS.................................................21
   2.3  CLASSES.............................................................22

                                   ARTICLE III

                           TREATMENT OF ADMINISTRATIVE
                         CLAIMS AND PRIORITY TAX CLAIMS

   3.1  ADMINISTRATIVE CLAIMS...............................................23
   3.2  PRIORITY TAX CLAIMS.................................................23
   3.3  SUBSTANTIAL CONTRIBUTION CLAIMS.....................................23

                                   ARTICLE IV

                  TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS

   4.1  CLAIMS AND INTERESTS................................................23
   4.2  RESERVATION OF RIGHTS REGARDING CLAIMS..............................28
   4.3  SEPARATE LIABILITIES OF REORGANIZED DEBTORS.........................28

                                    ARTICLE V

                           IMPLEMENTATION OF THE PLAN

   5.1  THE PLAN TRUST......................................................28
   5.2  INTERCOMPANY SETTLEMENT.............................................31
   5.3  CERTIFICATE OF INCORPORATION AND BYLAWS.............................32
   5.4  MANAGEMENT OF THE REORGANIZED DEBTORS...............................32
   5.5  AMENDED CREDIT AGREEMENT............................................32
   5.6  TRANSFER TAXES......................................................32
   5.7  SECTION 346 INJUNCTION..............................................32
   5.8  EFFECTUATING DOCUMENTS AND FURTHER TRANSACTIONS.....................32
   5.9  CORPORATE ACTION....................................................33


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                                   ARTICLE VI

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

   6.1  PLAN DISTRIBUTIONS..................................................33
   6.2  DELIVERY OF DISTRIBUTIONS...........................................33
   6.3  WITHHOLDING OF TAXES................................................33
   6.4  UNCLAIMED PROPERTY..................................................33

                                   ARTICLE VII

                          RESOLUTION OF DISPUTED CLAIMS

   7.1  DISALLOWANCE OF IMPROPERLY FILED CLAIMS.............................34
   7.2  PROSECUTION OF OBJECTIONS TO CLAIMS.................................34
   7.3  NO DISTRIBUTIONS PENDING ALLOWANCE..................................35
   7.4  DISTRIBUTIONS AFTER ALLOWANCE.......................................35
   7.5  LIQUIDATION OF ABI ASBESTOS PERSONAL INJURY INDEMNITY CLAIMS........35

                                  ARTICLE VIII

                        TREATMENT OF EXECUTORY CONTRACTS,
                        UNEXPIRED LEASES AND SETTLEMENTS

   8.1  ASSUMPTION OF UNEXPIRED LEASES AND EXECUTORY CONTRACTS..............36
   8.2  DAMAGES UPON REJECTION..............................................37
   8.3  EXECUTORY AND OTHER SETTLEMENTS.....................................37
   8.4  INSURANCE AGREEMENTS................................................37
   8.5  COMPENSATION AND BENEFITS PROGRAMS..................................38
   8.6  RETIREE BENEFITS....................................................38
   8.7  INDEMNIFICATION OF DIRECTORS, OFFICER AND EMPLOYEES.................38

                                   ARTICLE IX

                       ACCEPTANCE OR REJECTION OF THE PLAN

   9.1  CLASSES ENTITLED TO VOTE............................................39
   9.2  ACCEPTANCE BY IMPAIRED CLASSES OF CLAIMS............................39
   9.3  ACCEPTANCE BY IMPAIRED CLASS OF INTERESTS...........................39
   9.4  ACCEPTANCE PURSUANT TO SECTION 524(G) OF THE BANKRUPTCY CODE........39
   9.5  PRESUMED ACCEPTANCE OF PLAN.........................................39
   9.6  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..............................39


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                                    ARTICLE X

                  CONDITIONS TO CONFIRMATION AND EFFECTIVENESS

   10.1  CONDITIONS TO CONFIRMATION..........................................39
   10.2  CONDITIONS TO EFFECTIVENESS.........................................42
   10.3  WAIVER OF CONDITIONS................................................43

                                    ARTICLE XI

                        INJUNCTIONS, RELEASES AND DISCHARGE

   11.1  DISCHARGE...........................................................43
   11.2  RELEASE OF REPRESENTATIVES OF THE DEBTORS...........................44
   11.3  EXCULPATION.........................................................44
   11.4  RELEASES BY HOLDERS OF CLAIMS.......................................44
   11.5  DISCHARGE INJUNCTION................................................45
   11.6  ASBESTOS CHANNELING INJUNCTION......................................45
   11.7  RESERVATION OF RIGHTS...............................................46
   11.8  RIGHTS AGAINST NON-DEBTORS UNDER SECURITIES LAWS....................46
   11.9  RIGHTS AGAINST DEBTORS UNDER ENVIRONMENTAL LAWS.....................47
   11.10 DISALLOWED CLAIMS AND DISALLOWED INTERESTS..........................47
   11.11 ANTI-SUIT INJUNCTION................................................47
   11.12 RESERVATION OF ASBESTOS INSURANCE COMPANY RIGHTS....................47

                                    ARTICLE XII

                       MATTERS INCIDENT TO PLAN CONFIRMATION

   12.1  TERM OF CERTAIN INJUNCTIONS AND AUTOMATIC STAY......................48
   12.2  NO SUCCESSOR LIABILITY..............................................48
   12.3  REVESTING...........................................................48
   12.4  VESTING AND ENFORCEMENT OF CAUSES OF ACTION.........................49
   12.5  PLAN TRUST BANKRUPTCY CAUSES OF ACTION..............................49
   12.6  BANKRUPTCY CAUSES OF ACTION.........................................49

                                   ARTICLE XIII

                                   MISCELLANEOUS

   13.1  JURISDICTION........................................................49
   13.2  GENERAL RETENTION...................................................50
   13.3  SPECIFIC PURPOSES...................................................50
   13.4  PAYMENT OF STATUTORY FEES...........................................51
   13.5  THE ASBESTOS CLAIMANTS' COMMITTEE AND THE FUTURES REPRESENTATIVE....52
   13.6  REVOCATION OF PLAN..................................................52
   13.7  MODIFICATION OF PLAN................................................52
   13.8  MODIFICATION OF PAYMENT TERMS.......................................53
   13.9  ENTIRE AGREEMENT....................................................53
   13.10 HEADINGS............................................................53
   13.11 PROFESSIONAL FEE CLAIMS.............................................53


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


   13.12 RECORDABLE ORDER....................................................53
   13.13 GOVERNING LAW.......................................................53
   13.14 NO ADMISSION........................................................53
   13.15 CONSENT TO JURISDICTION.............................................53
   13.16 SETOFFS.............................................................54
   13.17 SUCCESSORS AND ASSIGNS..............................................54
   13.18 NON-DEBTOR WAIVER OF RIGHTS.........................................54
   13.19 FURTHER AUTHORIZATIONS..............................................54
   13.20 NOTICES.............................................................54
   13.21 DUTY TO COOPERATE...................................................54


                                       iv
<PAGE>

                                           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) 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 13.7 of the Plan, the
Debtors 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.

      "AAA" shall have the meaning ascribed to such term in Section 7.5(d) of
the Plan.

      "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 ABI Asbestos Indemnity Claim or Other ABI
Asbestos 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 5.2 of
the Plan.

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

      "Additional Indemnitees" has the meaning set forth in the Plan Trust
Agreement.

      "Additional Plan Trust Contribution" means (i) $7,658,000 in Cash and (ii)
any funds in excess of the Maximum Additional Bondholder Recovery (net of all
costs and expenses incurred by the Estates, the Debtors or Reorganized Congoleum
in order to recover such funds) actually recovered by the Debtors or Reorganized
Congoleum on account of those certain judgments against Gilbert Heintz &
Randolph LLP and The Kenesis Group LLC entered by the Bankruptcy Court on March
[ ], 2006 and March 10, 2006, respectively, or on account of any other actions
against such parties, including for malpractice.

      "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, and (4) 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.

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

      "Allowed" means:

            (a) With respect to the Claims Handling Fee, the amount certified by
the Collateral Trustee pursuant to Section 5.1(i);

            (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; and

                  (ii) other than with respect to a Claim described in clause
(b)(i) 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;


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (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;

            (d) With respect to an ABI Asbestos Personal Injury Indemnity Claim,
such amount as is determined in accordance with Section 7.5 of the Plan; and

            (e) 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 and Restated Certificate of Incorporation" means the Amended and
Restated Certificate of Incorporation of Reorganized Congoleum, a form of which
is annexed to the Plan as Exhibit "E."

      "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.

      "Anti-Suit Injunction" means the injunction described in Section 11.11 of
the Plan.

      "Asbestos Channeling Injunction" means the injunction described in Section
11.6 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 Asbestos Personal Injury Claims, which
committee as of the date hereof consists 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 and Robert Taylor,
II, Esquire.


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "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.

      "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 V of the
Plan, which will be effectuated pursuant to the Insurance Assignment Agreement.

      "Asbestos Insurance Company" means any insurance company, insurance
broker, guaranty association 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.


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "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;

                  (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 applicable
non-bankruptcy law to provide Asbestos In-Place Insurance Coverage to or for
Asbestos Personal Injury Claims, Coverage Costs or Plan Trust Expenses that have
been channeled to or assumed by or incurred by the Plan Trust pursuant to the
Plan.

      "Asbestos Personal Injury Claim" means (a) 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 (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 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


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


other theory of law, equity or admiralty); in either case (a) or (b) 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.

      "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.


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                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "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 8.7 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.

      "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.


                                        7
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "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.

      "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.

      "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.


                                        8
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


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

      "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 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.


                                        9
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "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, an ABI Asbestos Property Damage
Indemnity Claim or an Other 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) under the Plan.

      "Discharge Injunction" means the injunction described in Section 11.5 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.

      "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), 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.


                                       10
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "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 10.2 of the Plan have been
satisfied or waived pursuant to Section 10.3 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.

      "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.


                                       11
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


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

      "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.

      "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.

      "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.

      "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.


                                       12
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "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).

      "Insurance Assignment Agreement" means the insurance assignment agreement
referenced in Section 5.1(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.

      "Maximum Additional Bondholder Recovery" means $10 million together with
interest from the Effective Date to the date of payment at 8?%.

      "Negotiation Period" shall have the meaning ascribed to such term in
Section 7.5(b) of the Plan.

      "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.

      "New Convertible Security" means either shares of preferred stock or
convertible promissory notes 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 New Convertible Security is to be shares
of preferred stock of Reorganized Congoleum, it shall have the following terms:


                                       13
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


(i) an initial liquidation preference equal to $2,738,234.75 in the aggregate,
such amount being subject to increase in the amount, if any, by which 36% of
Reorganized Congoleum's market capitalization based on average trading prices
for Reorganized Congoleum's Class A common stock at the close of trading for the
90 consecutive trading days beginning on the one year anniversary of the
Effective Date, exceeds such initial liquidation preference; (ii) an initial
dividend rate equal to 9% of the liquidation preference per annum, payable
semi-annually in arrears, with such dividend rate to reset at the rate of 5% of
the liquidation preference per annum on the tenth anniversary of the Effective
Date and payable at such reset dividend rate per annum unless and until
redeemed; (iii) redeemable for the liquidation preference at the option of the
Plan Trust or Reorganized Congoleum following the tenth anniversary of the
Effective Date; (iv) a mandatory redemption on the fifteenth anniversary of the
Effective Date if not redeemed earlier; (v) convertible into 5,700,000 shares of
Class A Common Stock (or the equivalent thereof on a fully diluted basis) upon a
specified default of the obligation to pay dividends and a failure to cure such
default within any cure period, which, when combined with the New Class A Common
Stock, will result in the Plan Trust owning 51% of the voting common shares and
65.4% of the total economic equity value of Reorganized Congoleum on a fully
diluted basis; and (vi) no voting rights. If the New Convertible Security is
convertible promissory notes, such notes will be on economic terms substantially
equivalent to provisions (i) and (v) of the preferred stock described herein,
with other terms substantially the same as the Promissory Note described in the
Sixth Modified Plan.

      "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.

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

      "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.


                                       14
<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
Amended and Restated Certificate of Incorporation or the Promissory Notes, as
applicable, 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 5.1(a) of the Plan as of the Effective Date.

      "Plan Trust Agreement" means that certain Congoleum Plan Trust Agreement,
effective as of 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, Allowed Asbestos Property Damage Claims and ABI
Asbestos Personal Injury Indemnity 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; (b) the New Convertible Security; (c) the
Additional Plan Trust Contribution; (d) the Asbestos Insurance Rights; (e) the
proceeds of the Asbestos Insurance Settlement Agreements; (f) the proceeds of
the Asbestos In-Place Insurance Coverage; (g) the proceeds of the Asbestos
Insurance Actions; (h) all of the assets held by the Collateral Trust as of the
Effective Date; (i) the proceeds of the Asbestos Insurance Action Recoveries;
(j) the ABI Contribution; (k) Plan Trust Bankruptcy Causes of Action including,
without limitation, the Avoidance Actions to the extent not already adjudicated
prior to the Effective Date; (l) other Causes of Action, other than Bankruptcy
Causes of Action, related to Plan Trust Asbestos Claims and 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, 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 rights granted to the Plan Trust pursuant to
the Insurance Assignment Agreement; and (n) the Asbestos Property Damage
Insurance Rights.


                                       15
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "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 Trustee, the
Trust Advisory Committee and the Futures Representative, effective as of the
Effective Date, as may be modified from time to time with the consent and
approval of the Plan Trustee, the Trust Advisory Committee and the Futures
Representative.

      "Plan Trust Disputed Claim" means (a) any Asbestos Claim of a
Participating Claimant or a Pre-Petition Settlement Claimant as to which the
holder of such Claim has timely objected to the Forbearance of his, her or its
rights under the Claimant Agreement, if any, or under any Pre-Petition
Settlement Agreement, as applicable, and his, her or its rights, if any, under
the Collateral Trust Agreement and the Security Agreement and (b) any Asbestos
Claim of a Participating Claimant or a Pre-Petition Settlement Claimant who is
either (i) a party to either of the Avoidance Actions or (ii) 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 Trustee" means the Persons appointed pursuant to Article V 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.

      "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, 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.


                                       16
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "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.

      "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.


                                       17
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "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.

      "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; provided, however, that any contractual right that does not
pertain to the payment when due of principal and interest on the obligations on
which such Claim or Interest is based, including, but not limited to, financial
covenant ratios, negative pledge covenants, covenants or restrictions on merger
or consolidation, and affirmative covenants regarding corporate existence,
prohibiting certain transactions or actions contemplated by the Plan, or
conditioning such transactions or actions on certain factors, shall not be
required to be reinstated in order to accomplish Reinstatement.

      "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 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.


                                       18
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "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.

      "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 15 and 16 that are Pre-Petition Settlement Claimants or Participating
Claimants.

      "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.

      "Sixth Modified Plan" means that certain Sixth Modified Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code of Congoleum Corporation,
et al., dated as of July 22, 2005.

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


                                       19
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      "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.

      "Substantial Contribution Claim" shall have the meaning ascribed thereto
in Section 3.3 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.

      "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 Trustee and to approve and consent to certain actions as specified herein
and in the Plan Trust Agreement.

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

      "United States Trustee" means the United States Trustee for the judicial
district in which the Reorganization Cases are commenced.

      "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 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 4.1(d).

      "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) 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.


                                       20
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      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

                     CLASSIFICATION OF CLAIMS AND INTERESTS

      2.1 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. The Plan
does not provide for substantive consolidation of the Estates. In accordance
with Section 4.3 of the Plan, the structure of the Plan shall not operate to
impose liability on any Reorganized Debtor for the Claims against any other
Debtor or the debts and obligations of any other Reorganized Debtor.

      2.2 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 2.3 of the Plan. The treatment accorded
Administrative Claims, Substantial Contribution Claims and Priority Tax Claims
is set forth in Article III of the Plan.


                                       21
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      2.3 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 - Intentionally Omitted.

            (c) Class 3 - Intentionally Omitted.

            (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 - Intentionally Omitted.

            (k) Class 11 - Intentionally Omitted.

            (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.

            (o) Class 15 - Secured Asbestos Claims of Qualified Claimants. Class
15 consists of all Secured Asbestos Claims of Qualified Claimants to the extent
secured under the terms of the Collateral Trust Agreement. Class 15 is Impaired.

            (p) Class 16 - Unsecured Asbestos Personal Injury Claims. Class 16
consists of all Unsecured Asbestos Personal Injury Claims. Class 16 is Impaired.


                                       22
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                                  ARTICLE III

                           TREATMENT OF ADMINISTRATIVE
                         CLAIMS AND PRIORITY TAX CLAIMS

      3.1 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 13.11 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.

      3.2 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.

      3.3 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 Confirmation Date and serve such application on counsel for
the Debtors, 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 IV

                  TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS

      4.1 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.


                                       23
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (b) Class 2 - Intentionally Omitted.

            (c) Class 3 - Intentionally Omitted.

            (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 mutually acceptable to the Debtors and
Wachovia Bank, National Association, successor by merger to Congress Financial
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, the Allowed
Senior Note Claims shall be Reinstated; provided, however, that (i) the maturity
date of such Senior Notes shall be extended to August 1, 2011 and (ii) holders
of the Allowed Senior Note Claims shall receive (x) all accrued and unpaid
interest on the Senior Notes from the Petition Date through and including the
interest payment date immediately preceding the Effective Date and (y) any
accrued and unpaid applicable default interest in accordance with the Indenture
from the Petition Date through and including the Effective Date less (z) $10
million; provided, further, that all interest accruing on the Senior Notes from
such interest payment date preceding the Effective Date shall be paid on the
next succeeding interest payment date after the Effective Date and thereafter
interest shall be paid in accordance with the Indenture. In addition, any funds


                                       24
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


up to the Maximum Additional Bondholder Recovery (net of all costs and expenses
incurred by the Estates, the Debtors or Reorganized Congoleum in order to
recover such funds) actually recovered by the Debtors or Reorganized Congoleum
on account of those certain judgments against Gilbert Heintz & Randolph LLP and
The Kenesis Group LLC entered by the Bankruptcy Court on March [ ], 2006 and
March 10, 2006, respectively, or on account of any other actions against such
parties, including for malpractice, shall be paid to the holders of the Senior
Note Claims and any settlement of any such judgments or actions that result in
the receipt by the holders of the Senior Note Claims of less than the Maximum
Additional Bondholder Recovery in the aggregate shall be subject to approval by
the Bondholders' Committee.

            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 shall be
channeled to, assumed by, and become the obligations solely of, the Plan Trust,
and shall be payable in accordance with the terms of the Plan and the TDP;

                  (ii) all ABI Asbestos Property Damage Indemnity Claims and
Other ABI Asbestos Claims shall be deemed Disallowed and expunged; and

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

                  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, except as otherwise provided in Section 7.5 of the Plan with respect to
the procedure to determine if an ABI Asbestos Personal Injury Indemnity Claim is
Allowed, the holder of the Class 9 Claims shall not be required to file a Proof
of Claim.


                                       25
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (j) Class 10 - Intentionally Omitted.

            (k) Class 11 - Intentionally Omitted.

            (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, 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. Class 13 is Impaired and the holders of Class 13 Congoleum Interests are
entitled to vote to accept or reject the Plan.

            (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.

            (o) Class 15 - Secured Asbestos Claims of Qualified Claimants. As of
the Effective Date, all liability for all Secured Asbestos Claims of Qualified
Claimants shall be assumed, automatically and without further act or deed, by
the Plan Trust and the Reorganized Debtors shall have no liability therefor. The
Secured Asbestos Claim of each Qualified Claimant shall be determined,
liquidated and treated pursuant to the Plan Trust Agreement and the TDP without
priority of payment and in all respects pari passu with the Unsecured Asbestos
Personal Injury Claims in Class 16.

            Effective as of the Effective Date, each Qualified Claimant shall
have irrevocably consented or be deemed to have irrevocably consented to the
Forbearance of his, her or its rights under the respective Pre-Petition
Settlement Agreements or Claimant Agreement, as applicable, if any, and his, her
or its rights, if any, under the Collateral Trust Agreement and the Security
Agreement by failing to timely object to such Forbearance upon notice thereof in
accordance with procedures established by the Bankruptcy Court. Upon the
occurrence of such Forbearance, such Forbearance shall be irrevocable.

            If any Qualified Claimant timely objects to such Forbearance, the
Secured Asbestos Claim of such objecting Qualified Claimant shall be deemed a
Plan Trust Disputed Claim and the validity of such Secured Asbestos Claim shall
be subject to objection by the Plan Trustee based on (i) the terms of the
Collateral Trust Agreement; (ii) any Plan Trust Bankruptcy Cause of Action; and
(iii) any other Cause of Action available to the Plan Trustee under Section 12.4
of the Plan or otherwise, and each such Qualified Claimant shall be immediately
added as a party defendant to the Avoidance Actions to the extent not already a
party. Plan Trust Disputed Claims shall be treated as provided in a Final Order
of the Bankruptcy Court adjudicating such Claims.


                                       26
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            Each Qualified Claimant that has irrevocably consented or is deemed
to have irrevocably consented to such Forbearance shall be deemed to have
assigned to the Plan Trust, and the Plan Trustee shall be deemed such holder's
sole attorney in fact, as may be appropriate, to prosecute, at the Plan
Trustee's discretion with the consent and approval of the Trust Advisory
Committee and the Futures Representative, any Direct Action. The Plan Trustee
may, with the consent and approval of the Trust Advisory Committee and the
Futures Representative, reassign such Direct Action to such holder at any time.

            Class 15 is Impaired and holders of Class 15 Claims whose Claims are
temporarily allowed for voting purposes are entitled to vote to accept or reject
the Plan.

            (p) Class 16 - Unsecured Asbestos Personal Injury Claims. As of the
Effective Date, all liability for all 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 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 without priority of payment and in all respects pari passu with the
Secured Asbestos Claims in Class 15.

            Effective as of the Effective Date, each Unsecured Asbestos Personal
Injury Claimant that is a Qualified Participating Claimant shall have
irrevocably consented or be deemed to have irrevocably consented to the
Forbearance of his, her or its rights, if any, under the Claimant Agreement and
his, her or its rights, if any, under the Collateral Trust Agreement and the
Security Agreement by failing to timely object to such Forbearance upon notice
thereof in accordance with procedures established by the Bankruptcy Court. Upon
the occurrence of such Forbearance, such Forbearance shall be irrevocable.

            If any Unsecured Asbestos Personal Injury Claimant that is a
Qualified Participating Claimant timely objects to such Forbearance, the
Asbestos Personal Injury Claim of such objecting Unsecured Asbestos Personal
Injury Claimant shall be deemed a Plan Trust Disputed Claim and the validity of
such Asbestos Personal Injury Claim, including the Class 15 portion of such
Asbestos Personal Injury Claim, shall be subject to objection by the Plan
Trustee based on (i) the terms of the Collateral Trust Agreement; (ii) any Plan
Trust Bankruptcy Cause of Action; and (iii) any other Cause of Action available
to the Plan Trustee under Section 12.4 of the Plan or otherwise and each such
Unsecured Asbestos Personal Injury Claimant shall be immediately added as a
party defendant to the Avoidance Actions to the extent not already a party. Plan
Trust Disputed Claims shall be treated as provided in a Final Order of the
Bankruptcy Court adjudicating such Claims.

            Each holder of an Unsecured Asbestos Personal Injury Claim shall be
deemed to have assigned to the Plan Trust, and the Plan Trustee shall be deemed
such holder's sole attorney in fact, as may be appropriate, to prosecute, at the
Plan Trustee's discretion with the consent and approval of the Trust Advisory
Committee and the Futures Representative, any Direct Action. The Plan Trustee
may, with the consent and approval of the Trust Advisory Committee and the
Futures Representative, reassign such Direct Action to such holder at any time.


                                       27
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            Class 16 is Impaired and holders of Class 16 Claims whose Claims are
temporarily allowed for voting purposes are entitled to vote to accept or reject
the Plan.

      4.2 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.

      4.3 Separate Liabilities of Reorganized Debtors. The structure of the Plan
shall not operate to impose liability on any Reorganized Debtor for the Claims
against any other Debtor or the debts and obligations of any other Reorganized
Debtor. After the Effective Date, each Reorganized Debtor shall be separately
liable for its post-Confirmation debts and obligations.

                                   ARTICLE V

                           IMPLEMENTATION OF THE PLAN

      5.1 The Plan Trust

            (a) Establishment and Purpose of the Plan Trust. On 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 and the New
Convertible Security to, and 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.


                                       28
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (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 to be held in the Asbestos Property
Damage Claim Sub-Account. In accordance with the terms of the Plan Trust
Agreement, the Plan Trustee 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.

            (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 Trustee, 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.

            (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 (other than Asbestos Property Damage Claims) in
accordance with the Plan Trust Agreement and the TDP. The Plan Trustee 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.


                                       29
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (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 Trustee; provided,
however, that such charitable purpose, if practicable, shall be related to the
treatment of or research regarding asbestos-related 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 Trustee, 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.

            (l) Appointment of the Initial Plan Trustee. Prior to the
Confirmation Hearing, the Debtors, with the approval of the Futures
Representative and the Asbestos Claimants' Committee, shall nominate the initial
Plan Trustee. Effective as of the Effective Date, the Bankruptcy Court shall
appoint the initial Plan Trustee to serve as Plan Trustee 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 Trustee shall be deemed to be a party in interest within the
meaning of section 1109(b) of the Bankruptcy Code. The Plan Trustee 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. After the
Confirmation Date, 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.


                                       30
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (o) 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. The Plan Trust 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 Trustee. 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 5.1(o) 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.

            (p) 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.

            (q) Indemnification by the Plan Trust. As and to the extent provided
in the Plan Trust Agreement, the Plan Trust 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, 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, provided, however, that in no event shall
the Pre-Petition Asbestos Claimants' Committee be indemnified or held harmless
for any relief granted or any costs or expenses incurred in connection with the
Avoidance Actions.

            (r) Coverage Costs. Notwithstanding anything in the Plan to the
contrary, Coverage Costs shall be paid to the Reorganized Debtors in accordance
with Section 1.4(d) of the Plan Trust Agreement.

      5.2 Intercompany Settlement. In consideration of the treatment set forth
in Section 4.1(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 8.1(d) of the
Plan; (b) on the Effective Date, Reorganized Congoleum shall assume the Joint
Venture Agreement, pursuant to Section 8.1(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 11.6 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


                                       31
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


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.

      5.3 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.

      5.4 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.

      5.5 Amended Credit Agreement. On the Effective Date, the Amended Credit
Agreement, 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 and all obligations under the Amended Credit
Agreement and related documents shall be repaid as set forth in the Amended
Credit Agreement.

      5.6 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.

      5.7 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.

      5.8 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.


                                       32
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      5.9 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.

                                   ARTICLE VI

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

      6.1 Plan Distributions. The Disbursing Agent shall make all distributions
required under the Plan (other than distributions to holders of Plan Trust
Asbestos 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.

      6.2 Delivery of Distributions. Distributions to holders of Allowed Claims
other than Asbestos Claims shall be made by the Disbursing Agent (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 Trustee, 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 6.4
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.

      6.3 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.

      6.4 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.


                                       33
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                                  ARTICLE VII

                          RESOLUTION OF DISPUTED CLAIMS

      7.1 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.

      7.2 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 13.5 and 13.11 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, 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. Without prejudice to
the right of any Asbestos Insurance Company to assert any Asbestos Insurer
Coverage Defenses, after the Effective Date, only the Plan Trustee shall have
the authority to contest Asbestos Personal Injury Claims, Unknown Asbestos
Claims and ABI Asbestos Personal Injury Indemnity Claims and litigate to
judgment, settle or withdraw such objections and each Asbestos Personal Injury
Claim, Unknown Asbestos Claim and ABI Asbestos Personal Injury Indemnity 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.


                                       34
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      7.3 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.

      7.4 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).

      7.5 Liquidation of ABI Asbestos Personal Injury Indemnity Claims.

            (a) Liability for ABI Asbestos Personal Injury Indemnity Claims
shall be determined under the provisions of the Joint Venture Agreement
applicable thereto and this Section 7.5.

            (b) ABI shall give prompt written notice to the Plan Trust and
Reorganized Congoleum of an ABI Asbestos Personal Injury Indemnity Claim, except
that any delay or failure to so notify the Plan Trust and Reorganized Congoleum
shall relieve the Plan Trust of its obligations in respect of such ABI Asbestos
Personal Injury Indemnity Claim only to the extent, if at all, that the Plan
Trust is materially prejudiced by reason of such delay or failure. Such notice
shall include detailed information concerning the basis for the ABI Asbestos
Personal Injury Indemnity Claim. Reorganized Congoleum shall assist and
cooperate with the Plan Trust in understanding and evaluating the basis of the
ABI Asbestos Personal Injury Indemnity Claim, and each of Reorganized Congoleum
and ABI shall provide such further information to the Plan Trust as it may
reasonably request during the 30 day period following the Plan Trust's receipt
of ABI's notice, provided, however, that Reorganized Congoleum and ABI shall not
be required to disclose privileged information. If, by the expiration of such 30
day period, the Plan Trust has not notified ABI that it has determined that the
asserted ABI Asbestos Personal Injury Indemnity Claim is due and payable by the
Plan Trust, or if the Plan Trust concludes (and notifies ABI) during such period
that it is unable to determine based on the information provided whether the
Plan Trust has liability for such ABI Asbestos Personal Injury Indemnity Claim,
ABI, Reorganized Congoleum and the Plan Trustee shall endeavor to resolve
consensually whether the Plan Trust has liability in respect of such ABI
Asbestos Personal Injury Indemnity Claim and if so, the amount of such
liability, for a period of 15 days (the "Negotiation Period").

            (c) If upon the conclusion of the Negotiation Period, ABI,
Reorganized Congoleum and the Plan Trustee have not resolved all outstanding
issues related to the ABI Personal Injury Indemnity Claim and the Reorganization
Case of Congoleum remains open, ABI may file in the Bankruptcy Court an
application for allowance of such ABI Personal Injury Indemnity Claim, which
application shall be treated as a proof of claim filed under section 501 of the


                                       35
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


Bankruptcy Code, and deemed allowed pursuant to section 502 of the Bankruptcy
Code unless the Plan Trust files an objection to the application within 30 days
following receipt of notice of the filing thereof. The Bankruptcy Court shall
adjudicate an ABI application for allowance of an ABI Personal Injury Indemnity
Claim that is subject to objection by the Plan Trust as a contested matter, with
each party bearing its own costs and expenses, including attorneys' fees.

            (d) If upon the conclusion of the Negotiation Period, ABI,
Reorganized Congoleum and the Plan Trustee have not resolved all outstanding
issues related to the ABI Personal Injury Indemnity Claim and the Reorganization
Case of Congoleum is closed, such issues shall be submitted to binding
arbitration and shall be finally settled under the Commercial Arbitration Rules
of the American Arbitration Association (the "AAA") by an arbitrator appointed
by agreement of ABI and the Plan Trust in accordance with such rules of the AAA.
In the event ABI and the Plan Trust fail to agree upon an arbitrator, the AAA
shall select an arbitrator in accordance with such rules of the AAA. Any such
arbitration will be conducted in New York, New York. Any party to an arbitration
may be represented by its attorney or other representative selected by such
party. Each party shall be responsible for its own costs and expenses, including
attorneys' fees, and the arbitrator shall issue a final ruling within one
hundred and twenty (120) days of the commencement of the arbitration proceeding.

            (e) If at any time following ABI's assertion of an ABI Asbestos
Personal Injury Indemnity Claim in accordance with this Section 7.5, the Plan
Trust notifies ABI that it accepts liability for such ABI Asbestos Personal
Injury Indemnity Claim and ABI and the Plan Trust agree on the amount of such
liability, or if the Bankruptcy Court or an arbitrator determines the amount of
such ABI Asbestos Personal Injury Indemnity Claim, such ABI Asbestos Personal
Injury Indemnity Claim shall be Allowed in the amount so agreed or determined,
and, notwithstanding any provision of the Joint Venture Agreement to the
contrary, the Plan Trust shall only be obligated to pay the portion of the
Allowed Amount of such ABI Asbestos Personal Injury Indemnity Claim as is
determined in accordance with the TDP.

                                  ARTICLE VIII

                        TREATMENT OF EXECUTORY CONTRACTS,
                        UNEXPIRED LEASES AND SETTLEMENTS

      8.1 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 5.2, 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


                                       36
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


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.

            (b) Rejection. Notwithstanding subpart (a) of this Section 8.1, 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, and the obligations of Reorganized Congoleum to ABI thereunder shall
be subject to the provisions set forth in the Plan.

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

      8.2 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.

      8.3 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 8.3 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.

      8.4 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 8.4, 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.


                                       37
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      8.5 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 8.5, the Plan Trust shall have no liability to any Entity with
respect to the Pension Plans.

      8.6 Retiree Benefits. Notwithstanding any other provisions of the Plan
(other than the last sentence of this Section 8.6), 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.

      8.7 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.


                                       38
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                                   ARTICLE IX

                       ACCEPTANCE OR REJECTION OF THE PLAN

      9.1 Classes Entitled to Vote. The holders of Claims or Interests in each
Impaired Class of Claims or Interests, i.e., Classes 6, 9, 12, 13, 15 and 16,
whose Claims or Interests are Allowed or temporarily allowed for voting
purposes, are entitled to vote to accept or reject the Plan.

      9.2 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.

      9.3 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.

      9.4 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.

      9.5 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.

      9.6 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 X

                  CONDITIONS TO CONFIRMATION AND EFFECTIVENESS

      10.1 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 10.3 below. These conditions to Confirmation, which are
designed, among other things, to ensure that the Injunctions, releases, and
discharges set forth in Article XI shall be effective, binding and enforceable,
are as follows:


                                       39
<PAGE>

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

                  (vii) 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;

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

                  (ix) 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;

                  (x) 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;

                  (xi) 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;


                                       40
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                  (xii) 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;

                  (xiii) 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;

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

                  (xv) Congoleum's contribution 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;

                  (xvi) 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;

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

                  (xviii) 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 Trustee, 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; and

                  (xix) After Confirmation, none of the Debtors, ABI, the
Futures Representative, the Plan Trustee, 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.

            (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 and ABI and,
insofar as such findings and determinations affect the Financing Order or the
rights of Wachovia thereunder, Wachovia.


                                       41
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      10.2 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 10.3 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 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 and all
documents to be executed in connection with the Amended Credit Agreement, in
form and substance reasonably satisfactory to the Debtors, shall not restrict
Reorganized Congoleum's obligations to make scheduled dividend or interest
payments (as applicable) on the New Convertible Security except as provided in
the Amended and Restated Certificate of Incorporation or Promissory Note, as
applicable, and shall have been executed and delivered and all conditions
precedent to effectiveness thereof shall have been satisfied or waived by the
parties thereto.

            (d) Plan Documents. The Plan Documents necessary or appropriate to
implement the Plan (which shall include without limitation, the Amended and
Restated Certificate of Incorporation, 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.

            (e) 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.

            (f) 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.


                                       42
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      10.3 Waiver of Conditions. Each of the conditions set forth in Sections
10.1 and 10.2 above may be waived in whole or in part by the Debtors, with the
written consent of ABI and, solely with respect to Section 10.2(e) above, the
Asbestos Claimants' Committee and the Futures Representative, 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.

                                   ARTICLE XI

                       INJUNCTIONS, RELEASES AND DISCHARGE

      11.1 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 11.1
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.


                                       43
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      11.2 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.

      11.3 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, each of the Reorganized Debtors, the Debtors,
the Futures Representative, the Pre-Petition Asbestos Claimants' Committee, the
Asbestos Claimants' Committee, the Bondholders' Committee, the Plan Trustee, ABI
and any of their respective Representatives (a) 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 or the administration of the Plan or the
property to be distributed under the Plan, provided, however, that this
exculpation provision shall not apply to Asbestos Insurer Coverage Defenses; and
(b) 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 11.3 for
any relief granted or any costs or expenses incurred in connection with the
Avoidance Actions and in no event shall this Section 11.3 exculpate any party
from liability for any claim asserted in the Avoidance Actions. For the
avoidance of doubt, in no event shall any such party be exculpated from
liability under this Section 11.3 in the case of the gross negligence or willful
misconduct of such party.

      11.4 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 IV 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
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


                                       44
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


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 11.4 release any party from liability for any claim
asserted in the Avoidance Actions. For the avoidance of doubt, in no event shall
any such party be released under this Section 11.4 in the case of the gross
negligence or willful misconduct of such party.

      11.5 Discharge Injunction. Except as specifically provided in the Plan
Documents to the contrary, the satisfaction, release, and discharge set forth in
Section 11.1 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 11.5.

      11.6 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;

            (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;


                                       45
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (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. 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.

      11.7 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 XI, 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 5.2 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.

      11.8 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).


                                       46
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      11.9 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.

      11.10 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.

      11.11 Anti-Suit Injunction. With respect to any Settling Asbestos
Insurance Company, this Section 11.11 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.

      11.12 Reservation of Asbestos Insurance Company Rights. Nothing in the
Plan Documents shall preclude any Entity from asserting in any proceeding any
and all claims, defenses, rights or causes of action that it has or may have
under or in connection with any Asbestos Insurance Policy or any Asbestos
Insurance Settlement Agreement. Nothing in the Plan, the Plan Documents, the
Confirmation Order, any finding of fact and/or conclusion of law with respect to
Confirmation of the Plan or any order or opinion entered on appeal of the
Confirmation Order shall be deemed to waive any claims, defenses, rights or
causes of action that any Entity has or may have under the provisions, terms,
conditions, defenses and/or exclusions contained in the Asbestos Insurance
Policies and the Asbestos Insurance Settlement Agreements, including, but not
limited to, any and all such claims, defenses, rights or causes of action based


                                       47
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


upon or arising out of Plan Trust Asbestos Claims that are liquidated, resolved,
discharged, channeled, or paid in connection with the Plan. Notwithstanding
anything to the contrary in the Plan, the Plan Documents, the Confirmation
Order, any finding of fact and/or conclusion of law with respect to Confirmation
of the Plan or any order or opinion entered on appeal of the Confirmation Order,
nothing in the Plan, the Plan Documents, the Confirmation Order, any finding of
fact and/or conclusion of law with respect to Confirmation of the Plan or any
order or opinion entered on appeal of the Confirmation Order (including any
other provision that purports to be preemptory or supervening), shall in any way
operate to, or have the effect of, impairing the insurers' legal, equitable or
contractual rights, if any. The rights of insurers shall be determined under the
Asbestos Insurance Policies or Asbestos Insurance Settlement Agreements.

                                  ARTICLE XII

                      MATTERS INCIDENT TO PLAN CONFIRMATION

      12.1 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.

      12.2 No Successor Liability. Except as otherwise expressly provided in the
Plan, the Debtors, the Reorganized Debtors, ABI, their Affiliates, Asbestos
Claimants' Committee, the Pre-Petition Asbestos Claimants' Committee 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.

      12.3 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.


                                       48
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      12.4 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.

      12.5 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. 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.

      12.6 Bankruptcy Causes of Action. On the Effective Date, all Bankruptcy
Causes of Action shall be preserved for enforcement solely by the Debtors;
provided, however, that the 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 XIII

                                  MISCELLANEOUS

      13.1 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.


                                       49
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      13.2 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.

      13.3 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;

            (c) to assure the performance by the Disbursing Agent and the Plan
Trustee 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;


                                       50
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


            (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 Trustee, 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;

            (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 Trustee to amend, modify, alter, waive, or repeal any provision of the Plan
Trust Agreement or the TDP; and

            (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.

      13.4 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.


                                       51
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      13.5 The Asbestos Claimants' Committee and the Futures Representative. 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,
any committee that may have been appointed in the Reorganization Cases other
than the TAC, but including 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; and (c) prosecuting applications for compensation for the
professionals retained by such committee, 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.

      13.6 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.

      13.7 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 Trustee 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 Trustee, 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,
supplementation, change, or amendment impairs or affects the rights of ABI, or
the Affiliates under the Plan), the Futures Representative 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.


                                       52
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      13.8 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 Trustee.

      13.9 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.

      13.10 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.

      13.11 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 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.

      13.12 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.

      13.13 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.

      13.14 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.

      13.15 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
Trustee 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.


                                       53
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


      13.16 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 against any claim that
Reorganized Congoleum may have against the Plan Trust.

      13.17 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.

      13.18 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.

      13.19 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.

      13.20 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:

      13.21 Duty to Cooperate. Notwithstanding anything herein to the contrary,
nothing in the Plan 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 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 of any Asbestos Personal Injury Claims asserted against any of the
Debtors or Reorganized Debtors.

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


                                       54
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


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

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

If to the Asbestos Claimants' Committee:

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

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


                                       55
<PAGE>

                                           EXHIBIT A TO THE DISCLOSURE STATEMENT


                               CONGOLEUM CORPORATION

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


                               CONGOLEUM SALES, INC.

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


                               CONGOLEUM FISCAL, INC.

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


                                       56
<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


                           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
<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."


                                       2
<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.


                                       3
<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.


                                       4
<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.


                                       5
<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.


                                       6
<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.


                                       7
<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.


                                       8
<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.


                                       9
<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.


                                       10
<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.


                                       11
<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;


                                       12
<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.


                                       13
<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:


                                       14
<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.


                                       15
<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.


                                       16
<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.


                                       17
<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.


                                       18
<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


                                       19
<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.

<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


                                       3
<PAGE>

                                                           EXHIBIT B TO THE PLAN


      the Perpetuities Period is defined with reference to a given date or the
      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


                 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 Eighth 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.


                                       1
<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.


                                       2
<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]


                                       3
<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: /s/ Howard N. Feist
                                    ----------------------------------------
                                Its: Chief Financial Officer and Secretary
                                     ---------------------------------------


                                CONGOLEUM SALES, INC.


                                By: /s/ Howard N. Feist
                                    ----------------------------------------
                                Its: Vice President, Treasurer and Secretary
                                     ---------------------------------------


                                CONGOLEUM FISCAL, INC.


                                By: /s/ Howard N. Feist
                                    ----------------------------------------
                                Its: Vice President, Treasurer and Secretary
                                     ---------------------------------------


                                CONGOLEUM PLAN TRUST


                                By: /s/ Howard N. Feist
                                    ----------------------------------------
                                Trustee: Vice President, Treasurer and Secretary
                                         ---------------------------------------

                                By:       _____________________
                                Trustee:  _____________________

                                By:       _____________________
                                Trustee:  _____________________



                                       4
<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

<PAGE>

                              Exhibit G to the Plan
                        ["Trust Distribution Procedures"]
                                   [TO FOLLOW]
<PAGE>

                        Exhibit C to Disclosure Statement

             "Audited Financial Statements of Congoleum Corporation
                      for the Year Ended December 31, 2005"
                                   [To Follow]
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


  Unaudited Financial Statements of Congoleum Corporation for the Quarter Ended
                               September 30, 2005


                                      D-1
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


                              CONGOLEUM CORPORATION
                           Consolidated Balance Sheets
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                  September 30,  December 31,
                                                                                      2005          2004
                                                                                   (unaudited)
-------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>          <C>
ASSETS
Current assets:
  Cash and cash equivalents .....................................................   $  17,658    $  29,710
  Restricted cash ...............................................................      11,334       15,682
  Accounts receivable, less allowances of $1,509 and $1,174 as of
    September 30, 2005 and December 31, 2004, respectively ......................      26,159       17,621
  Inventories ...................................................................      37,065       39,623
  Prepaid expenses and other current assets .....................................       7,302        5,124
  Deferred income taxes .........................................................      10,678       10,678
-------------------------------------------------------------------------------------------------------------
       Total current assets .....................................................     110,196      118,438
Property, plant, and equipment, net .............................................      75,107       79,550
Other assets, net ...............................................................      14,642       14,894
-------------------------------------------------------------------------------------------------------------
       Total assets .............................................................   $ 199,945    $ 212,882
-------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Accounts payable ..............................................................   $   9,583    $  10,296
  Accrued liabilities ...........................................................      22,694       26,395
  Asbestos-related liabilities ..................................................      18,771       21,079
  Revolving credit loan .........................................................      12,595        9,500
  Accrued taxes .................................................................       1,282        1,670
Liabilities subject to compromise - current .....................................      21,377       14,225
-------------------------------------------------------------------------------------------------------------
       Total current liabilities ................................................      86,302       83,165
Asbestos-related liabilities ....................................................       2,738        2,738
Deferred income taxes ...........................................................      10,678       10,678
Liabilities subject to compromise - long term ...................................     135,841      137,290
-------------------------------------------------------------------------------------------------------------
       Total liabilities ........................................................     235,559      233,871
-------------------------------------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY (DEFICIT)
Class A common stock, par value $0.01; 20,000,000 shares authorized; 4,736,950
  shares issued and 3,652,190 shares outstanding as of September 30, 2005 and
  December 31, 2004 .............................................................          47           47
Class B common stock, par value $0.01; 4,608,945 shares authorized, issued and
  outstanding at September 30, 2005 and December 31, 2004 .......................          46           46
Additional paid-in capital ......................................................      49,106       49,106
Retained deficit ................................................................     (58,455)     (43,830)
Accumulated other comprehensive loss ............................................     (18,545)     (18,545)
                                                                                    ---------    ---------
                                                                                      (27,801)     (13,176)
Less Class A common stock held in treasury, at cost; 1,085,760 shares at:
  September 30, 2005 and December 31, 2004  .....................................       7,813        7,813
-------------------------------------------------------------------------------------------------------------
     Total stockholders' equity (deficit) .......................................     (35,614)     (20,989)
                                                                                    ---------    ---------
-------------------------------------------------------------------------------------------------------------
     Total liabilities and stockholders' equity .................................   $ 199,945    $ 212,882
-------------------------------------------------------------------------------------------------------------
</TABLE>


                   The accompanying notes are an integral part
               of the condensed consolidated financial statements.


                                      D-2
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


                              CONGOLEUM CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                    Three Months Ended       Nine Months Ended
                                                                       September 30,            September 30,
                                                                   --------------------    ----------------------
                                                                     2005        2004         2005         2004
                                                                      (In thousands, except per share amounts)

<S>                                                                <C>         <C>         <C>          <C>
Net sales ......................................................   $ 60,507    $ 58,871    $ 176,245    $ 173,822
Cost of sales ..................................................     47,270      41,812      135,577      126,326
Selling, general and administrative expenses ...................     10,556      12,959       48,416       37,961
                                                                   --------    --------    ---------    ---------
   Income (loss) from operations ...............................      2,681       4,100       (7,748)       9,535
Other income (expense):
   Interest income .............................................         91          26          273           26
   Interest expense ............................................     (2,670)     (2,417)      (7,788)      (6,976)
   Other income ................................................        223         212          638          877
                                                                   --------    --------    ---------    ---------
   Income (loss) before taxes ..................................        325       1,921      (14,625)       3,462

Provision for income taxes .....................................         --         768           --        1,384
                                                                   --------    --------    ---------    ---------

Net income (loss) ..............................................   $    325    $  1,153    $ (14,625)   $   2,078
                                                                   ========    ========    =========    =========

Net income (loss) per common share, basic ......................   $   0.04    $   0.14    $   (1.77)   $    0.25
                                                                   ========    ========    =========    =========

Net income (loss) per common share, diluted ....................   $   0.04    $   0.13    $   (1.77)   $    0.25
                                                                   ========    ========    =========    =========

Weighted average number of common shares outstanding, basic ....      8,261       8,260        8,261        8,260
                                                                   ========    ========    =========    =========

Weighted average number of common shares outstanding, diluted ..      8,642       8,583        8,261        8,422
                                                                   ========    ========    =========    =========
</TABLE>


                   The accompanying notes are an integral part
               of the condensed consolidated financial statements.


                                      D-3
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


                              CONGOLEUM CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                    Nine Months Ended
                                                                                      September 30,
                                                                                   --------------------
                                                                                      2005       2004
                                                                                      (In thousands)

<S>                                                                                <C>         <C>
Cash flows from operating activities:
   Net (loss) income ...........................................................   $(14,625)   $  2,078
   Adjustments to reconcile net (loss) income to net cash (used in) provided
   by Operating activities:
       Depreciation ............................................................      8,083       8,126
       Amortization ............................................................        288         419
       Asbestos-related charge .................................................     15,454          --
       Deferred income taxes ...................................................         --         550
       Changes in certain assets and liabilities:
            Accounts receivable ................................................     (8,538)     (5,009)
            Inventories ........................................................      2,558       1,899
            Prepaid expenses and other assets ..................................        577       3,498
            Accounts payable ...................................................       (712)      8,990
            Accrued expenses ...................................................      3,415      14,526
            Asbestos-related expenses ..........................................    (20,819)     (4,500)
            Asbestos-related expense reimbursements from insurance settlement ..      6,091          --
            Other liabilities ..................................................     (1,838)        504
                                                                                   --------    --------
                 Net cash (used in) provided by operating activities ...........    (10,066)     31,081
                                                                                   --------    --------
Cash flows from investing activities:
       Capital expenditures ....................................................     (3,640)     (2,246)
       Proceeds from asset retirement ..........................................         --          30
                                                                                   --------    --------
                 Net cash used in investing activities .........................     (3,640)     (2,216)
Cash flows from financing activities:
       Net short-term borrowings ...............................................      3,095      (1,594)
       Net change in restricted cash ...........................................     (1,441)     (1,854)
                                                                                   --------    --------
                 Net cash provided by financing activities .....................      1,654      (3,448)
                                                                                   --------    --------
Net (decrease) increase in cash and cash equivalents ...........................    (12,052)     25,417
Cash and cash equivalents:
     Beginning of period .......................................................     29,710       2,169
                                                                                   --------    --------
     End of period .............................................................   $ 17,658    $ 27,586
                                                                                   ========    ========
</TABLE>


                   The accompanying notes are an integral part
               of the condensed consolidated financial statements.


                                      D-4
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


                              CONGOLEUM CORPORATION
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2005
                                   (Unaudited)


1.    Basis of Presentation

      The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States for interim financial information and with Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements. In the opinion of management, all
adjustments (consisting of normal and recurring adjustments as well as
provisions to effect its plan to settle asbestos liability) considered necessary
for a fair presentation of Congoleum Corporation's (the "Company" or
"Congoleum") condensed consolidated financial position, results of operations
and cash flows have been included. Operating results for the three and nine
months period ended September 30, 2005 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2005. For further
information, refer to the consolidated financial statements and related
footnotes included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2004.

      Based upon the nature of the Company's operations, facilities and
management structure, the Company considers its business to constitute a single
segment for financial reporting purposes.

      Certain amounts appearing in the prior period's condensed consolidated
financial statements have been reclassified to conform to the current period's
presentation.

      The financial statements of Congoleum have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. Accordingly, the financial
statements do not include any adjustments that might be necessary should the
Company be unable to continue as a going concern. As described more fully below
and in Note 6 of the Notes to Unaudited Condensed Consolidated Financial
Statements, there is substantial doubt about the Company's ability to continue
as a going concern unless it obtains relief from its substantial asbestos
liabilities through a successful reorganization under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code").

      On December 31, 2003, Congoleum filed a voluntary petition with the United
States Bankruptcy Court for the District of New Jersey (the "Bankruptcy Court")
(Case No. 03-51524) seeking relief under Chapter 11 of the Bankruptcy Code as a
means to resolve claims asserted against it related to the use of asbestos in
its products decades ago. During 2003, Congoleum obtained the requisite votes of
asbestos personal injury claimants necessary to seek approval of a proposed,
pre-packaged Chapter 11 plan of reorganization. In January 2004, the Company
filed its proposed plan of reorganization and disclosure statement with the
Bankruptcy Court. In November 2004, Congoleum filed a modified plan of
reorganization and related documents with the Bankruptcy Court reflecting the
result of further negotiations with representatives of the Asbestos Claimants'
Committee, the Future Claimants' Representative and other asbestos claimant
representatives. The Bankruptcy Court approved the disclosure statement and plan
voting procedures in December 2004 and Congoleum obtained the requisite votes of
asbestos personal injury claimants necessary to seek approval of the modified


                                      D-5
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


plan. In April 2005, Congoleum announced that it had reached an agreement in
principle with representatives of the Asbestos Claimants' Committee and the
Future Claimants' Representative to make certain modifications to its proposed
plan of reorganization and related documents governing the settlement and
payment of asbestos-related claims against Congoleum. Under the agreed-upon
modifications, asbestos claimants with claims settled under Congoleum's
pre-petition settlement agreements would agree to forbear from exercising the
security interest they were granted and share on a pari passu basis with all
other present and future asbestos claimants in insurance proceeds and other
assets of the trust to be formed upon confirmation of the plan under Section
524(g) of the Bankruptcy Code (the "Plan Trust") to pay asbestos claims against
Congoleum. In July 2005, Congoleum filed an amended plan of reorganization (the
"Sixth Plan") and related documents with the Bankruptcy Court which reflected
the result of these negotiations, as well as other technical modifications. The
Bankruptcy Court approved the disclosure statement and voting procedures and
Congoleum commenced solicitation of acceptances of the Sixth Plan in August
2005. In September 2005, Congoleum learned that certain asbestos claimants were
unwilling to agree to forbear from exercising their security interest as
contemplated by the Sixth Plan. In October 2005, Congoleum sought and obtained
an extension of the voting deadline to December 14, 2005 to allow time to
address this issue. Congoleum is presently in negotiations with these claimants,
as well as other constituencies, to determine the modifications of the Sixth
Plan and other steps that may be appropriate for the implementation of the plan.
The Bankruptcy Court has given Congoleum permission to file a new amended plan
and disclosure statement by December 2, 2005. On November 7, 2005, the
Bankruptcy Court denied a request to extend Congoleum's exclusive right to file
a plan of reorganization and solicit acceptances thereof. The Bankruptcy Court
ruled that other parties may file proposed reorganization plans by December 2,
2005. It is unclear whether any person other than Congoleum will attempt to
propose a plan or what any such plan would provide or propose.

      There can be no assurance that the Company will finalize the terms of a
new amended plan by that date, that the Company will receive the acceptances
necessary for confirmation of a new amended plan of reorganization, that a new
amended plan will not be modified further, that a new amended plan will receive
necessary court approvals from the Bankruptcy Court or the Federal District
Court, or that such approvals will be received in a timely fashion, that a new
amended plan will be confirmed, or that a new amended plan, if confirmed, will
become effective.

      Congoleum is presently involved in litigation with certain insurance
carriers related to disputed insurance coverage for asbestos related
liabilities, and certain insurance carriers filed various objections to
Congoleum's previously proposed plans of reorganization and related matters and
may file objections to any new amended plan. Certain other parties have also
filed various objections to Congoleum's previously proposed plans of
reorganization and may file objections to any new amended plan.

      Although the terms of a new amended plan have not been determined, the
Company is negotiating amendments and modifications with reference to the terms
of the Sixth Plan. Any descriptions of the Sixth Plan provided in these Notes to
Unaudited Condensed Consolidated Financial Statements are provided to assist the
reader in understanding the basis from which any further amended plan may be
negotiated. There can be no assurance that the terms of any new amended plan
will not materially differ from the terms of the Sixth Plan or that Congoleum
will reach agreement on a new amended plan on or before December 2, 2005.


                                      D-6
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


      The Sixth Plan would leave the Company's non-asbestos creditors unimpaired
and would resolve all pending and future asbestos claims against the Company.
The Sixth Plan provides, among other things, for an assignment of certain rights
in, and proceeds of, Congoleum's applicable insurance to the Plan Trust that
would fund the settlement of all pending and future asbestos claims and protect
the Company from future asbestos-related litigation by channeling all asbestos
claims to the Plan Trust under Section 524(g) of the Bankruptcy Code. The
Bankruptcy Court has authorized the Company to pay its trade creditors in the
ordinary course of business. The Company expects that it will take until some
time in the second or third quarter of 2006 at the earliest to obtain
confirmation of any new amended plan of reorganization.

      Based on the Sixth Plan, the Company has made provision in its financial
statements for the minimum amount of the range of estimates for its contribution
to effect its plan to settle asbestos liabilities through the Plan Trust. The
Company recorded charges aggregating approximately $26 million in prior years
and a further approximately $15.5 million in the second quarter of 2005, to
provide for the estimated minimum costs of completing its reorganization given
the revised timeline then assumed in the second quarter of 2005 for anticipated
confirmation and as based on the Sixth Plan. The Company is not yet able to
determine the additional costs that may be required to effect a new amended
plan, and actual amounts that will be contributed to the Plan Trust and costs
for pursuing and implementing any plan of reorganization could be materially
higher than currently recorded. Delays in proposing, filing and obtaining
approval of any new amended plan of reorganization could result in a proceeding
that takes longer and is more costly than the Company has estimated. The Company
may record significant additional charges should the minimum estimated cost
increase.

      For more information regarding the Company's asbestos liability and plan
for resolving that liability, please refer to Note 6 of the Notes to Unaudited
Condensed Consolidated Financial Statements.

      AICPA Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code" ("SOP 90-7") provides financial
reporting guidance for entities that are reorganizing under the Bankruptcy Code.
The Company implemented this guidance in consolidated financial statements for
periods after December 31, 2003.

      Pursuant to SOP 90-7, companies are required to segregate pre-petition
liabilities that are subject to compromise and report them separately on the
balance sheet. Liabilities that may be affected by a plan of reorganization are
recorded at the amount of the expected allowed claims, even if they may be
settled for lesser amounts. Substantially all of the Company's liabilities at
December 31, 2003 have been reclassified as liabilities subject to compromise.
Obligations arising post-petition, and pre-petition obligations that are
secured, are not classified as liabilities subject to compromise.

      Additional pre-petition claims (liabilities subject to compromise) may
arise due to the rejection of executory contracts or unexpired leases, or as a
result of the allowance of contingent or disputed claims.


                                      D-7
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


2.    Recent Accounting Principles:

      Stock Based Compensation

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123 (revised 2004), Share-Based Payment. SFAS No. 123(R) replaces SFAS
No. 123, Accounting for Stock-Based Compensation, supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees and amends SFAS No. 95, Statement of
Cash Flows. SFAS No. 123(R) requires all share-based payments to employees,
including grants of employee stock options, to be recognized in the financial
statements based on their fair values. Pro forma disclosure is no longer an
alternative to financial statement recognition. SFAS No. 123(R) was originally
effective for public companies at the beginning of the first interim or annual
period beginning after June 15, 2005. In April 2005, the Securities and Exchange
Commission ("SEC") provided for a phased-in implementation process for public
companies. Based on the Company's year end of December 31, the Company must
adopt SFAS No. 123(R) on January 1, 2006.

      SFAS No. 123(R) allows for either prospective recognition of compensation
expense or retrospective recognition, which may be back to the original issuance
of SFAS No. 123 or only to interim periods in the year of adoption. The Company
is currently evaluating these transition methods and determining the effect on
the Company's consolidated results of operations and whether the adoption will
result in amounts that are similar to the current pro forma disclosures under
SFAS No. 123. For 2005, the Company will continue to disclose stock-based
compensation information in accordance with FASB Statement No. 148 ("SFAS 148"),
"Accounting for Stock-Based Compensation--Transition and Disclosure--an
Amendment of FASB Statement No. 123," and Statement No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation."

      A reconciliation of consolidated net income (loss), as reported, to pro
forma consolidated net income (loss) including compensation expense for the
Company's stock-based plans as calculated based on the fair value at the grant
dates for awards made under these plans in accordance with the provisions of
SFAS 123 as amended by SFAS 148, as well as a comparison of as reported and pro
forma basic and diluted earnings per share, follows:

<TABLE>
<CAPTION>
                                                            For the Three Months     For the Nine Months
                                                             Ended September 30,      Ended September 30,
                                                              2005        2004         2005       2004
                                                              ----        ----         ----       ----
                                                          (Dollars in thousands, except per share amounts)
<S>                                                         <C>         <C>         <C>         <C>
Net income (loss):
   As reported                                              $    325    $  1,153    $(14,625)   $  2,078
   Deduct: Total stock-based employee compensation
     expense determined under fair value based method for
     all awards, net of related tax effects                      (59)        (57)       (173)       (161)
                                                            --------    --------    --------    --------
   As adjusted                                              $    266    $  1,096    $(14,798)   $  1,917
                                                            ========    ========    ========    ========
Net Income (loss) per share:
   As reported basic                                        $    .04    $   0.14    $  (1.77)   $   0.25
   Pro forma compensation expense                               (.01)      (0.01)       (.02)      (0.02)
                                                            --------    --------    --------    --------
   Pro forma basic                                          $    .03    $   0.13    $  (1.79)   $   0.23
                                                            ========    ========    ========    ========
Net Income / (Loss) per share:
   As reported diluted                                      $   0.04    $   0.13    $  (1.77)   $   0.25
   Pro forma compensation expense                              (0.01)      (0.01)      (0.02)      (0.02)
                                                            --------    --------    --------    --------
   As adjusted diluted                                      $   0.03    $   0.12    $  (1.79)   $   0.23
                                                            ========    ========    ========    ========

</TABLE>


                                      D-8
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


3.    Inventories

      A summary of the major components of inventories is as follows (in
thousands):

                                                  September 30,    December 31,
                                                      2005             2004
                                                  -------------    ------------

      Finished goods                               $  28,126        $  32,811
      Work-in-process                                  2,041            1,415
      Raw materials and supplies                       6,898            5,397
      -------------------------------------------------------------------------
      Total inventories                            $  37,065        $  39,623
      -------------------------------------------------------------------------

4.    Income / (Loss) Per Share

      Basic net income (loss) per share is calculated by dividing net income
(loss) by the weighted average number of common shares outstanding during the
period. Diluted net income (loss) per share is calculated by dividing net income
(loss) by the weighted average number of shares of common stock and common stock
equivalents outstanding during the period, unless their effect is anti-dilutive.

5.    Environmental and Other Liabilities

      The Company records a liability for environmental remediation claims when
a cleanup program or claim payment becomes probable and the costs can be
reasonably estimated. As assessments and cleanup programs progress, these
liabilities are adjusted based upon the progress in determining the timing and
extent of remedial actions and the related costs and damages. The recorded
liabilities, totaling $4.6 million at September 30, 2005 and at December 31,
2004, are not reduced by the amount of insurance recoveries. Such estimated
insurance recoveries approximated $2.1 million at September 30, 2005 and at
December 31, 2004, and are reflected in other noncurrent assets and are
considered probable of recovery.

      The Company is named, together with a large number (in most cases,
hundreds) of other companies, as a potentially responsible party ("PRP") in
pending proceedings under the federal Comprehensive Environmental Response,
Compensation and Liability Act, as amended ("CERCLA"), and similar state laws.
In addition, in four other instances, although not named as a PRP, the Company
has received a request for information. The pending proceedings relate to eight
disposal sites in New Jersey, Pennsylvania, and Maryland in which recovery from
generators of hazardous substances is sought for the cost of cleaning up the
contaminated waste sites. The Company's ultimate liability and funding


                                      D-9
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


obligations in connection with those sites depends on many factors, including
the volume of material contributed to the site, the number of other PRPs and
their financial viability, the remediation methods and technology to be used and
the extent to which costs may be recoverable from insurance. However, under
CERCLA, and certain other laws, the Company as a PRP, can be held jointly and
severally liable for all environmental costs associated with a site.

      The most significant exposure to which the Company has been named a PRP
relates to a recycling facility site in Elkton, Maryland. The PRP group at this
site is made up of 81 companies, substantially all of which are large
financially solvent entities. Two removal actions were substantially complete as
of December 31, 1998 and a groundwater treatment system was installed
thereafter. EPA recently selected a remedy for the soil and shallow groundwater;
however, the remedial investigation/feasibility study related to the deep
groundwater has not been completed. The PRP group estimates that future costs of
the remedy recently selected by EPA based on engineering estimates would be
approximately $11 million. Congoleum's proportionate share, based on waste
disposed at the site, is estimated to be approximately 5.7%, or $0.7 million.
The majority of Congoleum's share of costs is presently being paid by one of its
insurance carriers, whose remaining policy limits for this claim will cover
approximately half this amount. Congoleum expects the balance to be funded by
other insurance carriers and the Company.

      The Company also accrues remediation costs for certain of the Company's
owned facilities on an undiscounted basis. The Company has entered into an
administrative consent order with the New Jersey Department of Environmental
Protection and has established a remediation trust fund of $100 thousand as
financial assurance for certain remediation funding obligations. Estimated total
cleanup costs of $ 1.7 million, including capital outlays and future maintenance
costs for soil and groundwater remediation, are primarily based on engineering
studies. Of this amount, $0.3 million is included in current liabilities subject
to compromise and $1.4 million is included in non-current liabilities subject to
compromise.

      The Company anticipates that these matters will be resolved over a period
of years and that after application of expected insurance recoveries, funding
the costs will not have a material adverse impact on the Company's liquidity or
financial position. However, unfavorable developments in these matters could
result in significant expenses or judgments that could have a material adverse
effect on the financial position of the Company.

6.    Asbestos Liabilities

      Claims Settlement and Chapter 11 Reorganization

      In early 2003, the Company announced a strategy for resolving current and
future asbestos claims liability through confirmation of a pre-packaged plan of
reorganization under Chapter 11 of the Bankruptcy Code. Later in 2003, the
Company entered into a settlement agreement with various asbestos personal
injury claimants (the "Claimant Agreement"). As contemplated by the Claimant
Agreement, the Company also entered into agreements establishing a pre-petition
trust (the "Collateral Trust") to distribute funds in accordance with the terms
of the Claimant Agreement and granting the Collateral Trust a security interest
in the Company's rights under its applicable insurance coverage and payments
from the Company's insurers for asbestos claims. Under the terms of the Sixth
Plan, participants in the Claimant Agreement who vote in favor of the plan agree
to forbear from exercising the security interest in and priority rights to


                                      D-10
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


distributions from the Collateral Trust. As discussed below, in September 2005
certain asbestos claimants indicated that they are not willing to agree to
forbear from exercising their security interest as contemplated by the Sixth
Plan. The Company is presently in negotiations with these claimants, as well as
other constituencies, to determine the modifications of the Sixth Plan and other
steps that may be appropriate for the implementation of the plan. Although the
terms of any new amended plan have not been determined, the Company is
negotiating amendments and modifications with reference to the terms of the
Sixth Plan. There can be no assurance that the terms of any new amended plan
will not materially differ from the terms of the Sixth Plan.

      The Claimant Agreement established a compensable disease valuation matrix
(the "Matrix") and allowed claimants who qualified to participate in the
Claimant Agreement (the "Qualifying Claimants") to settle their claims for the
Matrix value, secured in part (75%) by a security interest in the collateral
granted to the Collateral Trust. The Collateral Trust provides for distribution
of trust assets according to various requirements that give priority (subject to
aggregate distribution limits) to participating claimants who had pre-existing
unfunded settlement agreements ("Pre-Existing Settlement Agreements") with the
Company and participating claimants who qualified for payment under unfunded
settlement agreements entered into by the Company with plaintiffs that had
asbestos claims pending against the Company and which claims were scheduled for
trial after the effective date of the Claimant Agreement but prior to the
commencement of the Company's anticipated Chapter 11 reorganization case
("Trial-Listed Settlement Agreements").

      The Claimant Agreement incorporated Pre-Existing Settlement Agreements and
the settlement of certain Trial-Listed Settlement Agreement claims for a fully
secured claim against the Collateral Trust, and it settled all other claims for
a secured claim against the Collateral Trust equal to 75% of the claim value and
an unsecured claim for the remaining 25%. Under the Sixth Plan, after the
establishment of the Plan Trust, the assets in the Collateral Trust would be
transferred to the Plan Trust and any claims subject to the Claimant Agreement
would be channeled to the Plan Trust and paid in accordance with the terms of
the Sixth Plan, which incorporates the forbearance.

      In October 2003, the Company began soliciting acceptances for its proposed
pre-packaged plan of reorganization and the Company received the votes necessary
for acceptance of the plan in late December 2003. On December 31, 2003,
Congoleum filed a voluntary petition with the United States Bankruptcy Court for
the District of New Jersey (Case No. 03-51524) seeking relief under Chapter 11
of the Bankruptcy Code. In January 2004, the Company filed its proposed plan of
reorganization and disclosure statement with the Bankruptcy Court.

      In November 2004, Congoleum filed a modified plan of reorganization and
related documents with the Bankruptcy Court reflecting the result of further
negotiations with representatives of the Asbestos Claimants' Committee, the
Future Claimants' Representative and other asbestos claimant representatives.
The Bankruptcy Court approved the disclosure statement and plan voting
procedures in December 2004 and Congoleum obtained the requisite votes of
asbestos personal injury claimants necessary to seek approval of the modified
plan.


                                      D-11
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


      In April 2005, Congoleum announced that it had reached an agreement in
principle with representatives of the Asbestos Claimants' Committee and the
Future Claimants' Representative to make certain modifications to its proposed
plan of reorganization and related documents governing the settlement and
payment of asbestos-related claims against Congoleum. Under the agreed-upon
modifications, asbestos claimants with claims settled under Congoleum's
pre-petition settlement agreements would agree to forbear from exercising the
security interest they were granted and share on a pari passu basis with all
other present and future asbestos claimants in insurance proceeds and other
assets of the Plan Trust.

      In July 2005, Congoleum filed the Sixth Plan and related documents with
the Bankruptcy Court which reflected the result of these negotiations, as well
as other technical modifications. The Bankruptcy Court approved the disclosure
statement and voting procedures and Congoleum commenced solicitation of
acceptances of the Sixth Plan in August 2005. In September 2005, Congoleum
learned that certain asbestos claimants were unwilling to agree to forbear from
exercising their security interest as contemplated by the Sixth Plan.

      In October 2005, Congoleum sought and obtained an extension of the voting
deadline to December 14, 2005 to allow time to address this issue. Congoleum is
presently in negotiations with these claimants, as well as other constituencies,
to determine the modifications of the Sixth Plan and other steps that may be
appropriate for the implementation of the plan. The Bankruptcy Court has given
Congoleum permission to file a new amended plan and disclosure statement by
December 2, 2005. On November 7, 2005, the Bankruptcy Court denied a request to
extend Congoleum's exclusive right to file a plan of reorganization and solicit
acceptances thereof. The Bankruptcy Court ruled that other parties may file
proposed reorganization plans by December 2, 2005. It is unclear whether any
person other than Congoleum will attempt to propose a plan or what any such plan
would provide or propose.

      There can be no assurance that the Company will finalize the terms of a
new amended plan by that date, that the Company will receive the acceptances
necessary for confirmation of a new amended plan of reorganization, that a new
amended plan will not be modified further, that a new amended plan will receive
necessary court approvals from the Bankruptcy Court or the Federal District
Court, or that such approvals will be received in a timely fashion, that a new
amended plan will be confirmed, or that a new amended plan, if confirmed, will
become effective.

      Congoleum is presently involved in litigation with certain insurance
carriers related to disputed insurance coverage for asbestos related
liabilities, and certain insurance carriers filed various objections to
Congoleum's previously proposed plans of reorganization and related matters and
may file objections to any new amended plan. Certain other parties have also
filed various objections to Congoleum's previously proposed plans of
reorganization and may file objections to any new amended plan.

      During 2005, the Company has entered into a number of settlement
agreements with excess insurance carriers over coverage for asbestos-related
claims. In May 2005, certain AIG companies agreed to pay approximately $103
million over ten years to the Plan Trust. This settlement resolves coverage
obligations of policies with a total of $114 million in liability limits for
asbestos bodily injury claims, and is subject to the effectiveness of a plan of
reorganization that provides AIG with certain specified relief including a
channeling injunction pursuant to Section 524(g) of the Bankruptcy Code. An
insurer has appealed the approval order granted by the Bankruptcy Court to the
U.S. District Court, where it is pending. In June 2005, the Company entered into
a settlement agreement with certain underwriters at Lloyd's, London, pursuant to


                                      D-12
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


which the certain underwriters paid approximately $20 million into an escrow
account in exchange for a release of insurance coverage obligations. The escrow
agent will transfer the funds to the Plan Trust once a plan of reorganization
with the Section 524(g) protection specified in the settlement agreement goes
effective and the Bankruptcy Court approves the transfer of the funds. In August
2005, the Company entered into a settlement agreement with Federal Insurance
Company pursuant to which Federal will pay $4 million to the Plan Trust once a
plan of reorganization with the Section 524(g) protection specified in the
settlement agreement goes effective and the Bankruptcy Court approves the
transfer of the funds. A motion to reconsider the Bankruptcy Court's approval of
the settlement with Federal is scheduled to be heard by the Bankruptcy Court on
November 21, 2005. In October 2005, Congoleum entered into a settlement
agreement with Mt. McKinley Insurance Company and Everest Reinsurance Company
pursuant to which Mt. McKinley and Everest has paid $21.5 million into an escrow
account. The escrow agent will transfer the funds to the Plan Trust once a plan
goes effective and the Bankruptcy Court approves the transfer of the funds.
Court approval of these settlement agreements may be appealed by other insurance
carriers who are not party to the agreements, or by other parties. It also is
possible that a settling insurer may argue that any new amended plan is not
substantially similar to the Sixth Plan and therefore is relieved of its
settlement obligation.

      Although the terms of a new amended plan have not yet been determined, the
Company is negotiating amendments and modifications with reference to the terms
of the Sixth Plan. There can be no assurance that terms of any new amended plan
will not materially differ from the terms of the Sixth Plan or that the Company
will reach agreement on a new amended plan before December 2, 2005. The
following description of the Sixth Plan is provided to assist the reader in
understanding the basis from which any further amended plan may be negotiated.
There can be no assurance that the terms of any new amended plan will not
materially differ from the terms of the Sixth Plan or that the Company will
reach agreement on a new amended plan on or before December 2, 2005. The Company
expects that it will take until some time in the second or third quarter of 2006
at the earliest to obtain confirmation of any new amended plan of
reorganization.

      Under the Sixth Plan and related documents, Congoleum's assignment of
insurance recoveries to the Plan Trust is net of costs incurred by Congoleum in
connection with insurance coverage litigation. Congoleum is entitled to withhold
from recoveries, or seek reimbursement from the Plan Trust, for coverage
litigation costs incurred after January 1, 2003 in excess of $6 million.
Furthermore, once insurance recoveries exceed $375 million, Congoleum is
entitled to withhold from recoveries, or seek reimbursement from the Plan Trust,
for the first $6 million of such costs for which it could not presently seek
reimbursement due to the above items of the Sixth Plan. Congoleum also paid $1.3
million in claims processing fees in connection with claims settled under the
Claimant Agreement. Under the Sixth Plan, Congoleum is entitled to withhold from
recoveries, or seek reimbursement from the Plan Trust, for the $1.3 million
claims processing fee once insurance recoveries exceed $375 million. There can
be no assurance that any future plan will provide for Congoleum to recover any
coverage litigation costs or claims processing fees.

      In connection with modifications to the Sixth Plan and certain prior
proposed plans and to the Collateral Trust, Congoleum agreed to indemnify the
Claimants Counsel and the trustee of the Collateral Trust for all acts relating
to the modifications of such plan, and the Collateral Trust made on or after
April 1, 2005, including attorneys' fees, up to a maximum of $3 million.


                                      D-13
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


      The Sixth Plan provides for the channeling of asbestos property damage
claims in addition to asbestos personal injury claims to the Plan Trust. There
were no property damage claims asserted against the Company at the time of its
bankruptcy filing. The Bankruptcy Court approved an order establishing a bar
date of May 3, 2004 for the filing of asbestos property damage claims. The
claims agent appointed in the Company's bankruptcy proceeding advised the
Company that, as of the bar date, it received 35 timely filed asbestos property
damage claims asserting liquidated damages in the amount of approximately $0.8
million plus additional unspecified amounts. The Company objected to certain
claims on various grounds, and the Bankruptcy Court ultimately allowed 19 claims
valued at $133 thousand.

      The Sixth Plan provides that the Company will issue a promissory note (the
"Company Note") to the Plan Trust. Under the terms of the Sixth Plan, the
original principal amount of the Company Note will be $2,738,234.75 (the
"Original Principal Amount") and will be subject to increase as of the last
trading day of the 90 consecutive trading day period commencing on the first
anniversary of the effective date of the Company's confirmed Chapter 11 plan of
reorganization (the "Principal Adjustment Date") in an amount equal to the
excess, if any, of the amount by which 51% of the Company's market
capitalization as of the Principal Adjustment Date (based upon (subject to
certain exceptions) the total number of shares of the Company's common stock
outstanding as of such date multiplied by the average of the closing trading
prices of the Company's Class A common stock for the 90 consecutive trading days
ending on the Principal Adjustment Date) exceeds the Original Principal Amount
(the "Additional Principal Amount"), plus any accrued but unpaid interest or
other amounts that may be added to such principal amount pursuant to the terms
of the Company Note. This adjustment amount could result in the principal amount
of the note increasing materially. For example, if the adjustment amount were
calculated during the 90 consecutive day trading period ended September 30,
2005, the resulting adjustment amount would be $14.9 million. Under the terms of
the Sixth Plan, interest on the outstanding principal of the Company Note will
accrue at a rate of 9% per annum, with interest on the Original Principal Amount
payable quarterly and interest on the Additional Principal Amount added to the
Additional Principal Amount as additional principal. Upon the earlier of August
1, 2008 and the date that all of the Company's outstanding 8-5/8% Senior Notes
due 2008 (the "Senior Notes") are repaid in full, interest on the then
outstanding Additional Principal Amount will become payable quarterly.

      Under the terms of the Sixth Plan, all principal on the Company Note then
outstanding together with any accrued but unpaid interest will be payable in
full on the tenth anniversary of the date of the Company Note, subject to the
right of the Plan Trust to accelerate all amounts then owed on the Company Note
following an uncured event of default under the Company Note. Events of default
under the Company Note would include the failure to pay interest and principal
prior to the expiration of a 10-day grace period following the applicable due
date, the occurrence of an event of default under the indenture governing the
Senior Notes, the breach by the Company of any covenant or agreement contained
in the Company Note which remains uncured 30 days following notice by the Plan
Trust to the Company and its controlling shareholder, American Biltrite Inc.
("ABI"), of the breach and a material breach of the pledge agreement (the "ABI
Pledge Agreement") by ABI (which agreement is discussed below) which remains
uncured 30 days following notice by the Plan Trust to ABI and the Company of the
breach. The terms of the Company Note would provide that, upon the occurrence of
an event of default under the Company Note, the Company and ABI would have 10
days from the date they receive notice that an event of default has occurred to
cure the event of default. If the event of default remains uncured after the


                                      D-14
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


10-day cure period, the aggregate outstanding principal amount of the Company
Note together with any accrued but unpaid interest thereon would become
immediately due and payable if the event of default relates to an uncured event
of default under the indenture governing the Senior Notes, and with regard to
other events of default under the Company Note, the Plan Trust may, upon notice
to the Company and ABI, declare the aggregate outstanding principal amount of
the Company Note together with any accrued but unpaid interest thereon to be
immediately due and payable. The Plan Trust's rights to payment under the
Company Note will be subordinate and subject in right of payment to the prior
payment in full of all amounts owing and payable pursuant to the Senior Notes
and the Company's credit facility, except that regularly scheduled interest
payments under the Company Note are expected to be payable by the Company so
long as no default or event of default has occurred or is continuing under the
indenture governing the Senior Notes or the Company's credit facility.

      The Sixth Plan contemplates that, pursuant to the ABI Pledge Agreement,
ABI will pledge all of the shares of the Company's common stock that ABI owns,
together with any other equity interests and rights ABI may own or hold in the
Company, as of the date of the Company Note, as collateral for the Company's
obligations under the Company Note. As additional security for the Company Note,
the ABI Pledge Agreement and the terms of the Sixth Plan provide that any
amounts that the Company would be obligated to pay ABI pursuant to any rights of
indemnity that ABI may have against the Plan Trust for asbestos-related claims
pursuant to the Sixth Plan or a certain Joint Venture Agreement, entered into in
1992, to which both the Company and ABI are parties (as amended, the "Joint
Venture Agreement"), will not be paid by the Plan Trust until after any amounts
due and payable to the Plan Trust under the Company Note have been paid in full
to the Plan Trust. Until such time, any such indemnity payments that would
otherwise have been payable by the Plan Trust to ABI would be set aside by the
Plan Trust and held in escrow by the Plan Trust for ABI's benefit and pledged by
ABI as additional collateral securing the Company's obligations under the
Company Note until released from such escrow and paid to ABI, as further
provided under the Sixth Plan, the Company Note and the ABI Pledge Agreement.

      The Company Note, the ABI Pledge Agreement and the Sixth Plan also provide
that the Company would be prohibited from making any payments to ABI pursuant to
any rights of indemnity that ABI may have against the Company for claims
pursuant to the Joint Venture Agreement until after any amounts due and payable
to the Plan Trust under the Company Note have been paid in full to the Plan
Trust. Until such time, any such indemnity payments that would otherwise have
been payable to ABI by the Company will be paid by the Company to the Plan Trust
and the Plan Trust will set aside and hold in escrow such amounts for ABI's
benefit and ABI will pledge such amounts as additional collateral securing the
Company's obligations under the Company Note until released from such escrow and
paid to ABI, as further provided under the Sixth Plan, the Company Note and the
ABI Pledge Agreement.

      Under the Sixth Plan, ABI would be permitted to prepay the principal
amount of the Company Note, in whole but not in part, without any penalty or
premium at any time following the Principal Adjustment Date and any interest
that may have accrued but not yet paid at the time of any principal repayment
would be due and payable at the time of the principal repayment. The Company
would be obligated to repay ABI for any amounts paid by ABI pursuant to the
Company Note, which repayment obligation would by evidenced by a promissory note
or notes to be issued by the Company to ABI. Any such note would have similar
payment terms as those expected to be afforded to the Plan Trust with regard to
the Company Note, which rights of repayment are expected to be subordinate and
subject in right of payment to the prior payment in full of all amounts owing


                                      D-15
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


and payable to the Plan Trust with regard to the Company Note and with regard to
amounts owing and payable pursuant to the Senior Notes and credit facility,
except that the right of full subordination with regard to the Senior Notes and
credit facility would contain an exception that would allow the Company to make
regularly scheduled interest payments to ABI pursuant to any such note so long
as no default or event of default has occurred or is continuing under the
indenture governing the Senior Notes or the Company's credit facility.

      The Sixth Plan also provides that if ABI prepays the Company Note and ABI
sells all or substantially all of the shares of the Company's stock that it
holds as of the Principal Adjustment Date during the three-year period following
such date, ABI would be obligated to make a contribution to the Plan Trust if
the equity value of the Company implied by the price paid to ABI for the shares
of the Company's stock exceeded the greater of $2,738,234.75 or 51% of the
Company's market capitalization as of the Principal Adjustment Date (based upon
(subject to certain exceptions) the total number of shares of the Company's
common stock outstanding as of such date multiplied by the average of the
closing trading prices of the Company's Class A common stock for the 90
consecutive trading days ending on the Principal Adjustment Date). In such
instance, the Sixth Plan would obligate ABI to pay to the Plan Trust an amount
equal to 50% of such excess amount. Under the terms of the Sixth Plan, the
Company would be obligated to repay ABI for any amounts paid by ABI to the Plan
Trust pursuant to this obligation. In satisfaction of this repayment obligation,
the Company would issue a promissory note to ABI in a principal amount equal to
the amount of any such payments made by ABI plus any accrued but unpaid interest
or other amounts that may be added to such principal amount pursuant to the
terms of the promissory note which would be subordinate and subject in right of
payment to the prior payment in full of all amounts owing and payable pursuant
to the Senior Notes and credit facility, except that regularly scheduled
interest payments could be paid on such note so long as no default or event of
default has occurred or is continuing under the indenture governing the Senior
Notes or the Company's credit facility.

      The Sixth Plan provides that the Plan Trust would be able to transfer the
Company Note, in whole but not in part, at any time following the Principal
Adjustment Date. Upon any transfer of the Company Note, the amounts pledged by
ABI and held in escrow by the Plan Trust for ABI's benefit with regard to ABI's
indemnity rights discussed above will be paid by the Plan Trust, first, to the
Plan Trust in repayment of principal then outstanding on the Company Note
together with any accrued but unpaid interest thereon and, second, any amounts
remaining would be distributed by the Plan Trust to ABI.

      Under the Sixth Plan and related documents, ABI has agreed to make a cash
contribution in the amount of $250 thousand to the Plan Trust upon the formation
of the Plan Trust. Under the Sixth Plan, ABI would receive certain relief as may
be afforded under Section 524(g)(4) of the Bankruptcy Code from asbestos claims
that derive from claims made against the Company, which claims are expected to
be channeled to the Plan Trust. However, the Sixth Plan does not provide that
any other asbestos claims that may be asserted against ABI would be channeled to
the Plan Trust.


                                      D-16
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


      While the Company believes that it will be able to negotiate a new amended
plan which is feasible and should be confirmed by the Bankruptcy Court, there
are sufficient risks and uncertainties such that no assurances of the outcome
can be given. In addition, the remaining costs to effect the reorganization
process, consisting principally of legal and advisory fees and contributions to
the Plan Trust, including one or more notes expected to be contributed to the
Plan Trust by the Company, are expected to be approximately $12.7 million at a
minimum, not including any Additional Principal Amount arising from revaluation
of the Company Note, and could be materially higher. The Company is not yet able
to determine the additional costs that may be required to effect a new amended
plan, and actual amounts that will be contributed to the Plan Trust and costs
for pursuing and implementing any plan of reorganization could be materially
higher.

      Based on the Sixth Plan, the Company has made provision in its financial
statements for the minimum amount of the range of estimates for its contribution
to effect its plan to settle asbestos liabilities through the Plan Trust. The
Company recorded charges aggregating approximately $26 million in prior years
and a further approximately $15.5 million in the second quarter of 2005, to
provide for the estimated minimum costs of completing its reorganization given
the revised timeline then assumed in the second quarter of 2005 for anticipated
confirmation and as based on the Sixth Plan. The Company is not yet able to
determine the additional costs that may be required to effect a new amended
plan, and actual amounts that will be contributed to the Plan Trust and costs
for pursuing and implementing any plan of reorganization could be materially
higher than currently recorded. Delays in proposing, filing and obtaining
approval of any new amended plan of reorganization could result in a proceeding
that takes longer and is more costly than the Company has estimated. The Company
may record significant additional charges should the minimum estimated cost
increase.

      Pending Asbestos Claims

      In 2003, the Company was one of many defendants in approximately 22
thousand pending lawsuits (including workers' compensation cases) involving
approximately 106 thousand individuals, alleging personal injury or death from
exposure to asbestos or asbestos-containing products. Claims involving
approximately 80 thousand individuals have been settled pursuant to the Claimant
Agreement and litigation related to unsettled or new claims is presently stayed
by the Bankruptcy Code. The Company expects unsettled and future claims to be
handled in accordance with the terms of a plan of reorganization and the Plan
Trust.

      Nearly all asbestos-related claims that have been brought against the
Company to date allege that various diseases were caused by exposure to
asbestos-containing products, including resilient sheet vinyl and tile
manufactured by the Company (or, in the workers' compensation cases, exposure to
asbestos in the course of employment with the Company). The Company discontinued
the manufacture of asbestos-containing sheet products in 1983 and
asbestos-containing tile products in 1974. In general, governmental authorities
have determined that asbestos-containing sheet and tile products are nonfriable
(i.e., cannot be crumbled by hand pressure) because the asbestos was
encapsulated in the products during the manufacturing process. Thus,
governmental authorities have concluded that these products do not pose a health
risk when they are properly maintained in place or properly removed so that they
remain nonfriable. The Company has issued warnings not to remove
asbestos-containing flooring by sanding or other methods that may cause the
product to become friable.


                                      D-17
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


      Status of Insurance Coverage

      During the period that Congoleum produced asbestos-containing products,
the Company purchased primary and excess insurance policies providing in excess
of $1 billion of coverage for general and product liability claims. Through
August 2002, substantially all asbestos-related claims and defense costs were
paid through primary insurance coverage. In August 2002, the Company received
notice that its primary insurance limits had been paid in full. The payment of
limits in full by one of the primary insurance companies was based on its
contention that limits in successive policies were not cumulative for asbestos
claims and that Congoleum was limited to only one policy limit for multiple
years of coverage. Certain excess insurance carriers claimed that the
non-cumulation provisions of the primary policies were not binding on them and
that there remained an additional $13 million in primary insurance limits plus
related defense costs before their policies were implicated. There is insurance
coverage litigation currently pending between Congoleum and its excess insurance
carriers, and the guaranty funds and associations for the State of New Jersey.
The litigation was initiated in September 2001, by one of Congoleum's excess
insurers (the "Coverage Action"). In April 2003, the New Jersey Supreme Court
ruled in another case involving the same non-cumulation provisions as in the
Congoleum primary policies (the "Spaulding Case") that the non-cumulation
provisions are invalid under New Jersey law and that the primary policies
provide coverage for the full amount of their annual limits for all successive
policies. Congoleum has reached a settlement agreement ("Insurance Settlement")
with the insurance carrier whose policies contained the non-cumulation
provisions, pursuant to which the insurance carrier will pay Congoleum $15.4
million in full satisfaction of the applicable policy limits, of which $14.5
million has been paid to date. Pursuant to the terms of the Security Agreement,
the Company is obligated to pay any insurance proceeds it receives under the
Insurance Settlement, net of any fees and expenses it may be entitled to deduct,
to the Collateral Trust. Payment of such fees and expenses are subject to
Bankruptcy Court order or approval. The Company does not expect the Insurance
Settlement to have a material effect on its financial condition or results of
operations. As of December 31, 2002, the Company had entered into additional
settlement agreements with asbestos claimants exceeding the amount of previously
disputed coverage. The excess carriers have objected to the reasonableness of
several of these settlements, and Congoleum believes that they will continue to
dispute the reasonableness of the settlements and contend that their policies
still are not implicated and will dispute their coverage for that and other
various reasons in ongoing coverage litigation. The excess insurance carriers
have also raised various objections to the Company's previously proposed plans
of reorganization and may raise objections to any new amended plan that is
proposed.

      The excess insurance carriers have objected to the global settlement of
the asbestos claims currently pending against Congoleum as contemplated by the
Claimant Agreement on the grounds that, among other things, the negotiations
leading to the settlement and the Claimant Agreement violate provisions in their
insurance policies, including but not limited to the carriers' right to
associate in the defense of the asbestos cases, the duty of Congoleum to
cooperate with the carriers and the right of the carriers to consent to any
settlement. The excess insurance carriers also contend the Claimant Agreement is
not fair, reasonable or in good faith. Congoleum disputes the allegations and
contentions of the excess insurance carriers. In November 2003, the Court denied
a motion for summary judgment by the excess insurance carriers that the Claimant
Agreement was not fair, reasonable or in good faith, ruling that material facts
concerning these issues were in dispute. In April 2004, the Court denied motions
for summary judgment by the excess carriers that the Claimant Agreement was not
binding on them because Congoleum had breached the consent and cooperation
clauses of their insurance policies by, among other things, entering into the
Claimant Agreement without their consent. Congoleum argues, among other things,
that it was entitled to enter into the Claimant Agreement and/or the Claimant


                                      D-18
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


Agreement was binding on the excess insurance carriers because they were in
breach of their policies and/or had denied coverage and/or had created a
conflict with Congoleum by reserving rights to deny coverage and/or the Claimant
Agreement was fair, reasonable and in good faith and/or there was and is no
prejudice to the excess insurance carriers from the Claimant Agreement and/or
the excess insurance carriers had breached their duties of good faith and fair
dealing.

      In August 2004, the Court entered a case management order that divides the
trial into three phases. A new judge was assigned to the case effective February
23, 2005 and the schedule was modified as a result.

      In February 2005, the Court ruled on a series of summary judgment motions
filed by various insurers. The Court denied a motion for summary judgment filed
by certain insurers, holding that there were disputed issues of fact regarding
whether the Claimant Agreement and other settlement agreements between Congoleum
and the claimants had released Congoleum and the insurers from any liability for
the asbestos bodily injury claims of the claimants who signed the Claimant
Agreement and the other settlement agreements.

      The Court also denied another motion for summary judgment filed by various
insurers who argued that they did not have to cover the liability arising from
the Claimant Agreement because they had not consented to it.

      The Court granted summary judgment regarding Congoleum's bad faith claims
against excess insurers (other than first-layer excess insurers), holding that
the refusal of these excess insurers to cover the Claimant Agreement was at
least fairly debatable and therefore not in bad faith.

      The first phase of the trial began on August 2, 2005 and will address all
issues and claims relating to whether the insurers are obligated to provide
coverage under the policies at issue in this litigation for the global Claimant
Agreement entered into by Congoleum, including but not limited to all issues and
claims relating to both Congoleum's decision and conduct in entering into the
Claimant Agreement and filing a pre-packaged bankruptcy and the insurance
company defendants' decisions and conduct in opposing the Claimant Agreement and
Congoleum's pre-packaged bankruptcy, the reasonableness and good faith of the
Claimant Agreement, whether the Claimant Agreement breached any insurance
policies and, if so, whether the insurance companies suffered any prejudice, and
whether the insurance companies' opposition to the Claimant Agreement and
bankruptcy and various other conduct by the insurers has breached their duties
of good faith and fair dealing such that they are precluded from asserting that
Congoleum's decision to enter into the Claimant Agreement constitutes any
breach(es) on the part of Congoleum. The Company believes, however, that even if
the insurers were to succeed in the first phase of the Coverage Action, such
result would not deprive individual claimants of the right to seek payment from
the insurers who issued the affected insurance policies. Additionally, Congoleum
could negotiate settlements with some or all of the signatories to the Claimant
Agreement and seek payment from its insurers for such settlements. Such result
would not preclude the Company from attempting to amend the Claimant Agreement
and thereafter seek recovery under the Claimant Agreement as amended; moreover,
the Company does not believe that it would be deprived of coverage-in-place
insurance for future obligations of or demands upon the insurers under the
applicable insurance policies. However, there can be no assurances of the
outcome of these matters or their potential effect on the Company's ability to
obtain approval of its plan of reorganization.


                                      D-19
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


      The second phase of the trial will address all coverage issues, including
but not limited to trigger and allocation. The final phase of the trial will
address bad faith punitive damages, if appropriate.

      In March 2005, the Company filed a motion in the Bankruptcy Court asking
the Bankruptcy Court to vacate its prior order lifting the automatic stay in
bankruptcy to permit the Coverage Action to proceed. The Company requested that
the Coverage Action proceedings be stayed until the Company has completed its
plan confirmation process in the Bankruptcy Court. A hearing on the Company's
motion was held in April 2005 and the motion was denied.

      In October 2005, a federal appeals court ruled that the law firm of
Gilbert Heintz & Randolph, which had been acting as the Company's insurance
co-counsel in the Coverage Action, had other representations which were in
conflict with its representation of Congoleum. As a result of this ruling,
Gilbert Heintz & Randolph has filed a motion to withdraw as coverage counsel and
Congoleum retained the firm of Covington & Burling to represent it as co-counsel
with Dughi & Hewit in the insurance coverage litigation and insurance settlement
matters previously handled by Gilbert Heintz. The retention of Covington &
Burling is subject to Bankruptcy Court approval. A Bankruptcy Court hearing on
Covington & Burling's retention was held on November 7, 2005 and has been
adjourned to November 29, 2005, pending certain additional disclosures requested
by the Bankruptcy Court.

      Given the actions of its excess insurance carriers, the Company believes
it likely that it would currently have to fund any asbestos-related expenses for
defense expense and indemnity itself. However, litigation by asbestos claimants
against the Company is stayed pursuant to the Company's bankruptcy proceedings,
and the Company does not anticipate its future expenditures for defense and
indemnity of asbestos-related claims, other than expenditures pursuant to a plan
of reorganization, will be significant.

      Accounting for Asbestos-Related Claims

      Under the terms of the Claimant Agreement, the Company's claims processing
agent processed 79,630 claims meeting the requirements of the Claimant Agreement
with a settlement value of approximately $466 million. In addition, Pre-Existing
Settlement Agreements and Trial-Listed Settlement Agreements with claims secured
by the Collateral Trust total approximately $25 million. As a result of
tabulating ballots on its fourth amended plan, the Company is also aware of
claims by claimants whose claims were not determined under the Claimant
Agreement but who have submitted claims with a value of approximately $512
million based on the settlement values applicable in the Sixth Plan.

      The Company's gross liability of approximately $491 million for these
settlements and contingent liability for the additional approximately $512
million in unsettled claims is substantially in excess of the total assets of
the Company. The Company believes that it does not have the necessary financial
resources to litigate and/or fund judgments and/or settlements of the asbestos
claims in the ordinary course of business. Therefore, the Company believes the
most meaningful measure of its probable loss due to asbestos litigation is the
amount it will have to contribute to the Plan Trust plus the costs to effect its
reorganization under Chapter 11. At September 30, 2005, the Company estimates
the minimum remaining amount of the contributions and costs to be $12.7 million,


                                      D-20
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


of which it has recorded $10.0 million as a current liability and $2.7 million
as a non-current liability. These amounts do not include the liability
associated with a $14.5 million insurance settlement recorded as restricted
cash, which the Company expects to contribute, less any amounts withheld
pursuant to reimbursement arrangements, to the Plan Trust. At September 30, 2005
this liability (comprised of the original settlement plus interest to date, less
$6.1 million in reimbursements approved by the bankruptcy court) amounted to
$8.7 million and is included in current asbestos-related liabilities. The
Company is not yet able to determine the additional costs that may be required
to effect a new amended plan, and actual amounts that will be contributed to the
Plan Trust and costs for pursuing and implementing any plan of reorganization
could be materially higher.

      The Company recorded charges aggregating approximately $26 million in
prior years and a further approximately $15.5 million in the second quarter of
2005, to provide for the estimated minimum costs of completing its
reorganization given the revised timeline then assumed in the second quarter of
2005 for anticipated confirmation and based on the Sixth Plan. Additional
charges may be required in the future should the minimum estimated cost
increase. The maximum amount of the range of possible asbestos-related losses is
limited to the going concern or liquidation value of the Company, an amount
which the Company believes is substantially less than the minimum gross
liability for the known claims against it.

      The Company has not attempted to make an estimate of its probable
insurance recoveries for financial statement purposes given the accounting for
its estimate of future asbestos-related costs. Substantially all future
insurance recoveries have been assigned to the Collateral Trust or Plan Trust.

      Amounts Recorded in Financial Statements

      The table below provides an analysis of changes in the Company's asbestos
reserves and related receivables from December 31, 2004 to September 30, 2005:

<TABLE>
<CAPTION>
                                                                     Reimbursement
                                                                         From
                           Balance at                      Reserve     Insurance       Balance at
(In thousands)              12/31/04       Spending       Addition    Settlements        9/30/05
                           ----------------------------------------------------------------------

Reserves
--------
<S>                         <C>            <C>            <C>                          <C>
    Current                 $  6,550       $ (9,610)      $13,092            --        $ 10,032
    Long-Term                  2,738             --            --            --           2,738

Receivables
-----------
    Current                   (1,509)       (11,209)        2,362        $6,091          (4,265)
    Long-Term                 (7,300)            --            --            --          (7,300)

                            ---------------------------------------------------------------------
Net Asbestos Liability      $    479       $(20,819)      $15,454        $6,091        $  1,205
----------------------      ========       ========       =======        ======        ========

Restricted Cash
---------------
    Insurance Proceeds      $ 14,530         (6,091)          302            --        $  8,741
</TABLE>


                                      D-21
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


7.    Product Warranties

      The Company provides product warranties for specific product lines and
accrues for estimated future warranty cost in the period in which the revenue is
recognized. The following table sets forth activity in the Company's warranty
reserves (in millions) for the:

                                      Nine Months Ended     Nine Months Ended
                                        September 30,         September 30,
                                            2005                  2004
                                            ----                  ----

      Beginning balance                     $ 2.8                 $ 2.7

      Accruals                                2.5                   4.4

      Charges                                (3.2)                 (4.2)
                                            -----                 -----

      Ending balance                        $ 2.1                 $ 2.9
                                            =====                 =====

8.    Liabilities Subject to Compromise

      As a result of the Company's Chapter 11 filing (see Notes 1 and 6 to the
Unaudited Condensed Consolidated Financial Statements), pursuant to SOP 90-7,
the Company is required to segregate pre-petition liabilities that are subject
to compromise and report them separately on the consolidated balance sheet.
Liabilities that may be affected by a plan of reorganization are recorded at the
amount of the expected allowed claims, even if they may be settled for lesser
amounts. Substantially all of the Company's pre-petition debt is recorded at
face value and is classified within liabilities subject to compromise. In
addition, the Company's accrued interest expense on its Senior Notes is also
recorded in liabilities subject to compromise.

      Liabilities subject to compromise at September 30, 2005 and December 31,
2004 are as follows:

                                                          (In thousands)
                                                   September 30,    December 31,
                                                       2005             2004
--------------------------------------------------------------------------------
Current
-------
Other pre-petition payables and accrued interest    $   21,377      $   14,225

Non-current
-----------
Debt (at face value)                                   100,000         100,000
Pension liability                                       15,490          16,936
Other post-retirement benefit obligation                 8,067           8,303
Other pre-petition liabilities                          12,284          12,051
                                                     ---------       ---------
--------------------------------------------------------------------------------
Non-current                                            135,841         137,290
-----------
--------------------------------------------------------------------------------

Total liabilities subject to compromise              $ 157,218       $ 151,515
                                                     =========       =========
--------------------------------------------------------------------------------

      Additional pre-petition claims (liabilities subject to compromise) may
arise due to the rejection of executory contracts or unexpired leases, or as a
result of the allowance of contingent or disputed claims.


                                      D-22
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


9.    Accrued Liabilities

      A summary of the significant components of accrued liabilities consists of
the following:

                                                           (In thousands)
                                                     September 30,  December 31,
                                                         2005           2004
--------------------------------------------------------------------------------

Accrued warranty, marketing and sales promotion         $17,864       $18,487
Employee compensation and related benefits                3,576         4,735
Other                                                     1,254         3,173
--------------------------------------------------------------------------------
Total accrued liabilities                               $22,694       $26,395
--------------------------------------------------------------------------------

      As a result of the Company's Chapter 11 bankruptcy filing and in
accordance with SOP 90-7, certain liabilities are included in liabilities
subject to compromise on the balance sheet as of September 30, 2005 (see Note
8).

10.   Pension Plans

      The Company sponsors several non-contributory defined benefit pension
plans covering most of the Company's employees. Benefits under the plans are
based on years of service and employee compensation. Amounts funded annually by
the Company are actuarially determined using the projected unit credit and unit
credit methods and are equal to or exceed the minimum required by government
regulations. The Company also maintains health and life insurance programs for
retirees (reflected in the table below in "Other Benefits").

      The following summarizes the components of the net periodic benefit cost
for the Pension and Other Benefit Plans for the three months ended September 30,
2005 and 2004:

<TABLE>
<CAPTION>
                                                                   (In thousands)
                                                    Three Months Ended        Three Months Ended
                                                    September 30, 2005        September 30, 2004
                                                    ------------------        ------------------
                                                                Other                     Other
                                                  Pension      Benefits     Pension      Benefits
                                                  -------      --------     -------      --------
<S>                                               <C>           <C>         <C>           <C>
Components of Net Periodic Benefit Cost:
    Service cost ...........................      $   285       $  46       $   312       $  50
    Interest cost ..........................        1,092         130         1,052         140
    Expected return on plan assets .........         (976)         --          (842)         --
    Recognized net actuarial loss ..........          280          15           349          11
    Amortization of transition obligation ..           (9)         --           (18)         --
    Amortization of prior service cost .....          (72)        (47)          (72)       (116)
                                                  -------       -----       -------       -----
Net periodic benefit cost ..................      $   600       $ 144       $   781       $  85
                                                  =======       =====       =======       =====
</TABLE>


                                      D-23
<PAGE>

                                           EXHIBIT D TO THE DISCLOSURE STATEMENT


      The weighted average assumptions used to determine net periodic benefit
cost were as follows:

<TABLE>
<CAPTION>
                                                    September 30, 2005        September 30, 2004
                                                    ------------------        ------------------
                                                                Other                     Other
                                                  Pension      Benefits     Pension      Benefits
                                                  -------      --------     -------      --------
<S>                                                <C>           <C>          <C>          <C>
Discount rate.................................     6.25%         6.25%        6.25%        6.75%
Expected long-term return on plan assets......     7.00%           --         7.00%          --
Rate of compensation increase.................     4.00%           --         4.00%          --
                                                   5.50%                      5.50%
</TABLE>

      The following summarizes the components of the net periodic benefit cost
for the Pension and Other Benefit Plans for the nine months ended September 30,
2005 and 2004:

<TABLE>
<CAPTION>
                                                                  (In thousands)
                                                     Nine Months Ended         Nine Months Ended
                                                    September 30, 2005        September 30, 2004
                                                    ------------------        ------------------
                                                                Other                     Other
                                                  Pension      Benefits     Pension      Benefits
                                                  -------      --------     -------      --------
<S>                                               <C>           <C>         <C>           <C>
Components of Net Periodic Benefit Cost:
    Service cost ...........................      $   995       $ 138       $   982       $ 150
    Interest cost ..........................        3,280         390         3,212         420
    Expected return on plan assets .........       (2,738)         --        (2,538)         --
    Recognized net actuarial loss ..........        1,049          45         1,098          33
    Amortization of transition obligation ..          (45)                      (54)         --
    Amortization of prior service cost .....         (216)       (141)         (214)       (348)
                                                  -------       -----       -------       -----
Net periodic benefit cost ..................      $ 2,325       $ 432       $ 2,486       $ 255
                                                  =======       =====       =======       =====
</TABLE>

      The weighted average assumptions used to determine net periodic benefit
cost were as follows:

<TABLE>
<CAPTION>
                                                    September 30, 2005        September 30, 2004
                                                    ------------------        ------------------
                                                                Other                     Other
                                                  Pension      Benefits     Pension      Benefits
                                                  -------      --------     -------      --------
<S>                                                <C>           <C>          <C>          <C>
Discount rate.................................     6.25%         6.25%        6.25%        6.75%
Expected long-term return on plan assets......     7.00%           --         7.00%          --
Rate of compensation increase.................     4.00%           --         4.00%          --
                                                   5.50%                      5.50%
</TABLE>


                                      D-24
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


             SETTLEMENT AGREEMENT BETWEEN CONGOLEUM CORPORATION AND
                           VARIOUS ASBESTOS CLAIMANTS


      This settlement agreement (the "Claimant Agreement") is entered into by,
between and among Congoleum Corporation, its predecessors, successors,
distributors and assigns (collectively, "Congoleum"), and the Participating
Asbestos Claimants (as defined below), by and through representative plaintiffs'
counsel, Perry Weitz, Esq. and Joseph F. Rice, Esq. ("Claimants' Counsel").

                                    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; and

      WHEREAS, Congoleum is unable to meet its liability with respect to the
Asbestos Claims absent prompt payment from its insurers of their obligations
under the Policies, (as defined in the Collateral Trust Agreement referenced to
below); and

      WHEREAS, Congoleum believes that substantial insurance coverage is
available under the Policies for asbestos-related bodily injury claims and
Congoleum intends vigorously to pursue such insurance coverage; and

      WHEREAS, Congoleum, contemporaneously herewith, is executing an agreement,
titled Collateral Trust Agreement, establishing a trust (the "Collateral Trust")
for, among other lawful purposes not inconsistent with this Claimant Agreement,
distributing certain proceeds of the Policies in accordance with the Collateral
Trust Agreement and this Claimant Agreement; and

<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


      WHEREAS, Congoleum, contemporaneously herewith, is executing an agreement
titled Security Agreement ("Security Agreement"), granting to the Collateral
Trust a present and continuing security interest in Congoleum's rights to
receive payment under and in certain insurance proceeds relating to the
Policies; and

      WHEREAS, Congoleum entered into settlement agreements prior to this
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

      WHEREAS, Congoleum and Claimants' Counsel, on behalf of Participating
Asbestos Claimants (as defined below), wish to resolve and settle, in the
amounts set forth in the compensable disease matrix attached hereto as Appendix
A ("Compensable Disease Matrix"), all of the Asbestos Claims asserted by
Asbestos Claimants who qualify as Participating Asbestos Claimants (as defined
below) and to secure, in part, payment of the amounts for which such Asbestos
Claims are settled by the grant of a security interest in the Collateral (as
defined in the Security Agreement); and

      WHEREAS, Congoleum wishes to settle the Asbestos Claims asserted by
Asbestos Claimants in order to attain certainty as to its asbestos-related
liability to Participating Asbestos Claimants so that it may concentrate its
attention on the operation of its business; and

      WHEREAS, Congoleum anticipates that it will commence a reorganization case
under chapter 11 of the U.S. Bankruptcy Code; and


                                       2
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


      WHEREAS, Congoleum intends to incorporate the terms of this Claimant
Agreement in a "pre-packaged" plan of reorganization that Congoleum shall seek
to confirm in its anticipated chapter 11 case (assuming the requisite
acceptances are obtained).

      NOW, THEREFORE, in consideration of the mutual covenants below contained
and intending to be legally bound hereby, Congoleum and each of the Asbestos
Claimants agree as follows:

                                    AGREEMENT

I.    ASBESTOS CLAIM SETTLEMENT AND QUALIFICATION

      A. Upon the terms and conditions herein, Congoleum and each Asbestos
Claimant who submits the information and documentation satisfactory to the
Claims Reviewer (as defined below) as required under Section I.B (such Asbestos
Claimant, together with any successor or assign, a "Participating Asbestos
Claimant"), hereby compromise and settle the Asbestos Claim of such
Participating Asbestos Claimant. The amount for which an Asbestos Claim is
liquidated, compromised and settled (the "Participating Asbestos Claimant's
Settlement Amount") shall be the respective amount set forth in the Compensable
Disease Matrix applicable to the particular Participating Asbestos Claimant's
disease category.

      B. To qualify as a Participating Asbestos Claimant, each Asbestos
Claimant, or his counsel, must

            1. On or before May 15, 2003, submit in an electronic form
      reasonably satisfactory to the Claims Reviewer the following documents and
      information in form and substance satisfactory to the Claims Reviewer: (1)
      the Asbestos Claimant's name and social security number; (2) the Asbestos
      Claimant's alleged disease or injury; (3) a statement that his or her
      Asbestos Claim was filed in a court of competent jurisdiction on or before
      the Effective Date (as defined below); and (4) a statement that the
      Asbestos Claimant is interested in participating in this Claimant
      Agreement; and


                                       3
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


            2. On or before July 1, 2003, submit in writing the following
      documents and information in form and substance satisfactory to the Claims
      Reviewer: (1) evidence of bodily injury, sickness or disease consistent
      with the terms and meaning of the Compensable Disease Matrix however, if
      such Asbestos Claimant was qualified as a Participating Category D
      Claimant under the Settlement Agreement Between ACandS, Inc. and Various
      Asbestos Claimants, dated April 17, 2002 (the "ACandS Claimant
      Agreement"), a notice indicating that the claimant will rely upon the
      evidence submitted to the Claims Reviewer in connection with the ACandS
      Claimant Agreement will satisfy this requirement; (2) a verified statement
      that the Asbestos Claimant was exposed to an asbestos-containing product
      manufactured, sold, or distributed by Congoleum or for which Congoleum has
      legal liability; (3) a claim form that will indicate the Asbestos
      Claimant's name, address, social security number, exposure date and
      diagnosis date; (4) proof that the Asbestos Claimant had filed a claim in
      a court of competent jurisdiction against Congoleum on or before the
      Effective Date (as defined below); and (5) a release in the form of
      Appendix B hereto or another form acceptable to Congoleum (collectively
      "Claim Documentation"). Asbestos Claimants should note that if they were
      qualified under the ACandS Claimant Agreement as a Non-Malignant
      Participating Category D Claimant, reliance on the submission in
      connection with the ACandS Claimant Agreement will mean qualification here
      as a Level 1 Non-Malignant disease category pursuant to the attached
      Compensable Disease Matrix.


                                       4
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


            3. If the Asbestos Claimant's claim was first filed after January
      13, 2003, the Asbestos Claimant shall submit a sworn affidavit or other
      evidence satisfactory to the Claims Reviewer in order to satisfy the
      requirements of I.B.2.(2).

      C. A claims reviewer (the "Claims Reviewer") shall review the Claim
Documentation provided by an Asbestos Claimant and shall notify the Collateral
Trustee (as defined below) in writing that a particular Asbestos Claimant has
satisfied the Claim Documentation requirements. The Claims Reviewer shall
provide Congoleum and Claimants' Counsel with a copy of any such notices
provided to the Collateral Trustee. The initial Claims Reviewer shall be the
Kenesis Group. Should the Claims Reviewer identify deficiencies in the Claim
Documentation submitted by an Asbestos Claimant, the Claims Reviewer shall
notify Claimants' Counsel of such deficiencies. Any Asbestos Claimant who is
subject to a notice of Claim Documentation deficiency shall have a period of
sixty (60) days from the date of mailing of notice of deficiency to remedy such
deficiencies. The Claims Reviewer and the Asbestos Claimant shall confer in good
faith for fifteen (15) days in order to resolve such deficiencies. If the
deficiencies identified by the Claims Reviewer are not remedied within the
fifteen (15) day meet and confer period, such Asbestos Claimant will not become
a Participating Asbestos Claimant and such Asbestos Claimant will be allowed to
withdraw its claim.

      D. Any Asbestos Claimant may appeal a disallowance pursuant to Section
I.C. by having the court in which the claim is pending determine on summary
judgment basis whether the documentation satisfies the standards of allowance,
and no appeal of the court's determination shall be allowed. Congoleum,
Claimants' Counsel or the Plan Trustee may oppose the Asbestos Claimant's
appeal.


                                       5
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


      E. As to any Asbestos Claimant who submits Claim Documentation on or
before May 20, 2003, the Claims Reviewer will mail any notice of deficiencies in
Claim Documentation within forty (40) days after receipt of the Claims
Documentation. As to any Asbestos Claimant who submits Claim Documentation after
May 20, 2003, the Claims Reviewer will mail any notice of deficiencies in Claim
Documentation within sixty (60) days after receipt of the Claims Documentation.
If the Claims Reviewer does not mail notices of deficiencies within the time
period set forth above to a particular Asbestos Claimant, that Asbestos
Claimant's Claim Documentation shall be deemed satisfactory.

      F. Should the Claims Reviewer be unable or unwilling at any time to serve
in the above-described capacity, Claimants' Counsel and Congoleum shall agree on
an acceptable replacement. The Claims Reviewer shall provide periodic reports to
Congoleum and Claimants' Counsel as they may reasonably request, at the expense
of Congoleum.

      G. An Asbestos Claimant shall not qualify as a Participating Asbestos
Claimant hereunder if the Asbestos Claimant's cause of action has been dismissed
with prejudice by a court of competent jurisdiction on or before the Effective
Date.

      H. Upon the Effective Date, a Participating Asbestos Claimant shall be
deemed to have fully and finally liquidated, compromised and settled any and all
of his or her Asbestos Claims in accordance with the terms of this Claimant
Agreement.

II.   SECURED RIGHTS OF PARTICIPATING ASBESTOS CLAIMANTS

      A. On the Effective Date of this Claimant Agreement, Congoleum shall grant
to the collateral trustee of the Collateral Trust (the "Collateral Trustee") for
the benefit of each Participating Asbestos Claimant, a security interest (the
"Security Interest") in the Collateral (as defined in the Security Agreement),
as provided in and subject to the terms and conditions of the Security
Agreement.


                                       6
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


      B. The Security Interest shall secure an amount equal to seventy-five
percent (75%) of the aggregate of all Participating Asbestos Claimants'
Settlement Amounts (the "Secured Amount") as provided in the Collateral Trust
Agreement and the Security Agreement. Congoleum's obligation to pay each
Participating Asbestos Claimant its pro rata share of the Secured Amount shall
be referred to herein as the "Secured Asbestos Claims."

      C. Until all of the Secured Asbestos Claims for all Participating Asbestos
Claimants are paid in full, Congoleum shall evaluate, bring, prosecute,
litigate, defend and settle any claim against its insurers to obtain Insurance
Proceeds. Congoleum shall consult with Claimants' Counsel in order to retain a
mutually acceptable counsel to prosecute any claim against its insurers to
obtain Insurance Proceeds. Congoleum agrees to obtain the consent of Claimants'
Counsel prior to entering into settlement of any claim against its insurers to
obtain Insurance Proceeds, which consent shall not be unreasonably withheld,
conditioned or delayed.

III.  TRUST ACCOUNT FOR INSURANCE PROCEEDS

      A. Payment of Secured Asbestos Claims shall be made from the Collateral
Trust in accordance with the provisions of Section IV below and in accordance
with the Collateral Trust Agreement.

      B. Congoleum may qualify the Collateral Trust 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").

      C. It is the expectation of Congoleum and Participating Asbestos Claimants
that the Secured Asbestos Claims shall be paid entirely out of the Insurance
Proceeds (as defined in the Security Agreement). Until such time as the Secured
Asbestos Claims have been paid in full, Congoleum shall direct that payment of
all Insurance Proceeds be made to the Collateral Trust and, in the event
Congoleum receives any Insurance Proceeds, Congoleum, no later than five (5)
business days after its receipt of any Insurance Proceeds, shall remit such
Insurance Proceeds to the Collateral Trust.


                                       7
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


IV.   PAYMENT OF SECURED ASBESTOS CLAIMS

      A. The Collateral Trustee shall make payments to each Participating
Asbestos Claimant up to the amount of such Participating Asbestos Claimant's
Secured Asbestos Claim, by payment to the respective Claimants' Counsel for such
Participating Asbestos Claimant, in accordance with the terms of the Collateral
Trust Agreement.

      B. The portion of Congoleum's obligation to a Participating Asbestos
Claimant to pay in excess of such Participating Asbestos Claimant's Secured
Asbestos Claim shall constitute an unsecured claim (an "Unsecured Asbestos
Claim"). Such an Unsecured Asbestos Claim shall be treated in accordance with
the terms of a confirmed plan of reorganization in the event Congoleum files a
chapter 11 case. If unpaid and if Congoleum does not commence a chapter 11 case
within 24 months of the Effective Date, the Unsecured Asbestos Claim shall
become immediately due and payable.

V.    LITIGATION MORATORIUM

      Congoleum and each Asbestos Claimant that has submitted the documents and
information pursuant to Section I.B.1 agree to a 150-day litigation moratorium,
commencing from the Effective Date, during which such Asbestos Claimant shall
not pursue any lawsuit or other legal process with respect to any claim against
Congoleum or any parent, subsidiary, distributor, or affiliate of Congoleum
other than the claims process set forth in Section I above. Congoleum and each
such Asbestos Claimant agree to toll all time-related affirmative defenses
(including statute of limitation defenses) applicable to the respective Asbestos
Claims during the period of the 150-day litigation moratorium.


                                       8
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


VI.   PAYMENT TO CLAIMANTS COUNSEL

      Promptly on or as soon as practicable after the Effective Date of this
Claimant Agreement, Congoleum will pay $1,000,000 to each Claimants' Counsel
("Expense Payments"). Expense Payments will be used by Claimants' Counsel to pay
all out-of-pocket expenses, reasonable professionals' fees and expenses, and
other costs that Claimants' Counsel may have incurred or may incur (i) in
connection with the negotiation and implementation of this Claimant Agreement
and the related Collateral Trust Agreement and Security Agreement, (ii) in
connection with the negotiation of a possible "pre-packaged" chapter 11 plan of
reorganization for Congoleum, and/or (iii) in connection with due diligence
investigations related to a possible chapter 11 plan of reorganization.

VII.  CONSTRUCTION, ENTIRE AGREEMENT, DURATION

      A. This Claimant Agreement was negotiated between the parties hereto at
arm's length, with each party receiving advice from independent legal counsel.
It is the intent of the parties that no part of this Claimant Agreement be
construed against any other party because of the identity of the drafter.

      B. This Claimant Agreement constitutes a single integrated written
contract expressing the entire agreement among the parties hereto. This Claimant
Agreement supersedes any prior understandings and agreements between or among
the parties with respect to the subject matter of the Claimant Agreement. There
are no representations, agreements, arrangements or understandings between or
among the parties, oral or written, relating to the subject matter of this
Claimant Agreement that are not fully expressed herein. Any statements, promises
or inducements, whether made by any party or any agents of any party, that are
not contained in this written Claimant Agreement shall not be valid or binding.
The failure or invalidation of any provision of this Claimant Agreement shall
not in any way affect the validity, or performance of any party pursuant to, any
other provision of this Claimant Agreement.


                                       9
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


      C. The effective date of this Claimant Agreement shall be the date on
which the Claimant Agreement has been signed and delivered by Congoleum and
Claimants' Counsel ("Effective Date"). This Claimant Agreement shall have
perpetual existence and may not be enlarged, modified or altered except by a
written agreement signed by Congoleum and Claimants' Counsel.

      D. The signatory who has executed this Claimant Agreement on behalf of
Congoleum expressly represents and warrants that he or she is fully authorized
to sign on behalf of Congoleum for the purpose of duly binding Congoleum to this
Claimant Agreement. The Claimant Agreement shall be binding upon the parties and
their respective successors and assigns.

VIII. BANKRUPTCY OBLIGATIONS

      Congoleum shall incorporate substantially all of the material terms of
this Claimant Agreement in any plan of reorganization that it may file or
support in any chapter 11 case that Congoleum may commence as a debtor

IX.   AGREEMENT TO MEET AND CONFER

      To the extent any dispute arises over the application, interpretation or
performance of this Claimant Agreement, Congoleum and Claimants' Counsel, on
behalf of Participating Asbestos Claimants, agree to meet and confer for the
purpose of attempting to resolve amicably any such dispute. To the extent any
dispute cannot be resolved amicably by negotiation, Congoleum and Claimants'
Counsel, on behalf of the Participating Asbestos Claimants, agree that they
shall attempt to agree on an alternative dispute resolution mechanism before
initiating any lawsuit; provided, however, that nothing contained herein shall
obligate either Congoleum or Claimants' Counsel to agree to any alternative
dispute resolution mechanism.


                                       10
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


X.    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:

Congoleum:

Roger Marcus
Congoleum Corporation
3500 Quakerbridge Road
P.O. Box 3127
Mercerville, NJ 08619
(609) 584-3000 - Telephone No.
(609) 584-3685 - 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.


                                       11
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


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.

Collateral Trustee:

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

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.


                                       12
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


XI.   GOVERNING LAW

      All disputes concerning the validity, interpretation and application of
the Claimant Agreement or the Appendices hereto, or any provision thereof, and
disputes concerning issues within the scope of the Claimant Agreement shall be
determined in accordance with the law of the State of Delaware, excluding any
conflict of law provisions.

XII.  MISCELLANEOUS

      A. Each party shall take such steps and shall execute such documents as
reasonably may be necessary or proper to effectuate the purpose and intent of
this Claimant Agreement.

      B. This Claimant Agreement shall be executed in duplicate originals and
signed by or on behalf of the parties hereto.

      C. This Claimant 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
Claimant Agreement.

      IN WITNESS WHEREOF, the parties have caused this Claimant Agreement to be
duly executed this 10th day of April 2003.

                                    CONGOLEUM CORPORATION

                                    By  /s/ Howard N. Feist III
                                        --------------------------

                                    Title  Chief Financial Officer
                                          ------------------------


                                    PARTICIPATING ASBESTOS CLAIMANTS

                                    By Claimants' Counsel

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

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


                                       13
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


APPENDIX A

                           Compensable Disease Matrix
                           --------------------------

--------------------------------------------------------------------------------
      Disease Category                           Settlement Amount*
--------------------------------------------------------------------------------
        Mesothelioma                                 $100,000
--------------------------------------------------------------------------------
        Lung Cancer                                   $30,000
--------------------------------------------------------------------------------
        Other Cancer                                  $10,000
--------------------------------------------------------------------------------
   Level II Non-Malignant                              $3,000
--------------------------------------------------------------------------------
   Level I Non-Malignant                               $1,000
--------------------------------------------------------------------------------

*     Settlement Amounts do not include Extraordinary Claim Settlement Amounts,
      if any (as defined below)

                                Medical Criteria
                                ----------------

      To satisfy the requirements of Section I.B.2(1) of the Settlement
Agreement Between Congoleum Corporation and Various Asbestos Claimants (the
"Claimant Agreement"), a Participating Asbestos Claimant (as defined in the
Claimant Agreement) must submit the evidence listed below for his or her
applicable disease category.

XIII. GENERAL PROVISIONS

      For purposes of this Appendix, the following terms shall have the meanings
set forth below. Terms used in singular shall be deemed to include the plural,
and vice versa.

      A.    "Basilar Crackles," sometimes called "rales," shall mean those
            sounds described in American Thoracic Society, "The Diagnosis of
            Nonmalignant Diseases Related to Asbestos," 134 American Review of
            Respiratory Disease 363(1986), and shall be observed in accordance
            with the criteria set forth therein.

      B.    "Board-certified Internist" shall mean a physician licensed to
            practice medicine in the District of Columbia or in one or more U.S.
            states or territories and certified by the American Board of
            Internal Medicine in internal medicine at the time of that
            physician's relevant medical report or document.

      C.    "Board-certified Pathologist" shall mean a physician licensed to
            practice medicine in the District of Columbia or in one or more U.S.
            states or territories and certified in anatomic pathology, or
            combined anatomic and clinical pathology, from the American Board of
            Pathology, and whose professional practice includes the field of
            pathology and involves regular evaluation of pathological materials
            obtained from surgical and post-mortem specimens.

<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


      D.    "Board-certified Pulmonary Specialist" shall mean a physician
            licensed to practice medicine in the District of Columbia or in one
            or more U.S. states or territories and certified by the American
            Board of Internal Medicine in the sub-specialty of pulmonary disease
            at the time of the relevant medical report.

      E.    "Certified B-reader" shall mean an individual who has successfully
            completed the x-ray interpretation course sponsored by the National
            Institute of Occupational Safety and Health (NIOSH) and passed the
            NIOSH examination for certification as a B-reader and whose NIOSH
            certification is up to date at the time of his or her interpretation
            of the x-rays. Certified B-reader shall also include an individual
            who was at one time a certified B-reader and who has not
            subsequently failed the exam for certification or recertification as
            a B-reader.

      F.    "Chest x-rays" shall mean chest radiographs taken in at least one
            view (Posterior-Anterior and Lateral) and graded quality 1 or 2 for
            reading according to the criteria established by the ILO.
            Notwithstanding the foregoing, in cases in which no quality 1 or 2
            radiographs are available, radiographs of poorer quality shall not
            be automatically rejected but shall be evaluated for acceptability
            on a case-by-case basis.

      G.    "ILO Grade" shall mean the radiology ratings for the presence of
            pleural or parenchymal lung changes by chest x-rays as established
            from time to time by the International Labour Office (ILO) and as
            set forth in "Guidelines for the Use of ILO International
            Classification of Radiographs of Pneumoconioses" (1980).

      H.    "Occupational Physician" shall mean a physician specializing in the
            diagnosis and treatment of lung disease who is currently licensed to
            practice medicine in any state of the United States, the District of
            Columbia or any U.S. territory.

      I.    "Predicted Values" for spirometry and lung volumes shall be those
            published by Morris, Clinical Pulmonary Function Testing, 2d
            Edition, Intermountain Thoracic Society (1984), or by Crapo, et al.,
            "Reference Spirometric Values Using Techniques and Equipment That
            Meet ATS Recommendations," 123 American Review of Respiratory
            Diseases 659-64 (1981), or others that are substantially equivalent.
            "Predicted Values" for diffusing capacity shall be those published
            by Miller, et al., 127 American Review of Respiratory Disease 270-77
            (1983), or others that are substantially equivalent.

      J.    "Pulmonary Function Testing" shall mean spirometry [forced vital
            capacity ("FVC"), the ratio of forced expiratory volume exhaled in
            one second over forced vital capacity ("FEV-1/FVC"), and vital
            capacity ("VC")], lung volume [total lung capacity ("TLC")], and
            diffusing capacity ("DLCO") 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,
            all as set forth in 20 C.F.R. 718.103 and Appendix B thereto or in
            the ATS guidelines in 144 American Review of Respiratory Disease


                                       2
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


            1202-18 (1991), and 152 American Review of Respiratory and Critical
            Care Medicine 1107-36 (1995), or other standards for technical
            quality and calibration that are substantially equivalent to the ATS
            standards. The Claims Reviewer may examine all back-up data
            (including, without limitation, flow volume loops and spirographs)
            pertaining to Pulmonary Function Testing of a Participating Asbestos
            Claimant to ensure that these quality criteria and standards have
            been satisfied in all material respects.

      K.    "Qualified Physician" shall mean any physician as defined in Section
            I.B to D, and H and for purposes of x-ray interpretation any
            individual as defined in Section I.E.

XIV.  MESOTHELIOMA

      In order for a Participating Asbestos Claimant to satisfy the requirements
of Section I.B.2(1) of the Claimant Agreement for the Mesothelioma disease
category, the Participating Asbestos Claimant must submit a report by a
Board-certified Pathologist, or another competent physician acceptable to the
Claims Reviewer, supporting the Participating Asbestos Claimant's diagnosis of a
malignant mesothelioma.

XV.   LUNG CANCER

      In order for a Participating Asbestos Claimant to satisfy the requirements
of Section I.B.2(1) of the Claimant Agreement for the Lung Cancer disease
category, the Participating Asbestos Claimant must submit:

      A.    A report by a Qualified Physician establishing that the
            Participating Asbestos Claimant has a primary carcinoma of the lung;
            and

      B.    Either one of the following:

            1.    A statement from a Qualified Physician that the carcinoma in
                  question is causally related to Participating Asbestos
                  Claimant's asbestos exposure; or

            2.    A report by a Certified B-reader showing that the
                  Participating Asbestos Claimant has a Chest X-ray reading of
                  1/0 or higher on the ILO scale and/or bilateral pleural
                  plaques, bilateral pleural thickening, or bilateral pleural
                  calcification.

XVI.  OTHER CANCER

      In order for a Participating Asbestos Claimant to satisfy the requirements
of Section I.B.2(1) of the Claimant Agreement for the Other Cancer disease
category, the Participating Asbestos Claimant must submit:


                                       3
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


      A.    A report by a Board-certified Pathologist establishing the
            Participating Asbestos Claimant with a primary colorectal,
            esophageal, laryngeal, pharyngeal or gastric carcinoma; and

      B.    Either one of the following:

            1.    A statement by a Qualified Physician that the carcinoma in
                  question is causally related to Participating Asbestos
                  Claimant's asbestos exposure; or

            2.    A report by a Certified B-reader showing that the
                  Participating Asbestos Claimant has a Chest X-ray reading of
                  1/0 or higher on the ILO scale and/or bilateral pleural
                  plaques, bilateral pleural thickening, or bilateral pleural
                  calcification. No other asbestos-related cancer shall be
                  compensable as an Other Cancer under this Claimant Agreement.

XVII. LEVEL II NON-MALIGNANT

      In order for a Participating Asbestos Claimant to satisfy the requirements
of Section I.B.2(1) of the Claimant Agreement for the Level II Non-Malignant
disease category, the Participating Asbestos Claimant must submit:

      A.    Clinical Evidence of Asbestosis: A diagnosis of pulmonary asbestosis
            by a Qualified Physician based upon either or the following two sets
            of minimum objective criteria:

            1.    Chest x-rays which, in the opinion of a Certified B-reader,
                  show small irregular opacities of ILO Grade 1/0; and Pulmonary
                  Function Testing and physical examination that show either:

                  a.    FVC <80% of Predicted Value with FEV-1/FVC>/= 65%
                        (actual value) if the individual tested is at least 75
                        years old at the date of testing, >/= 70% (actual value)
                        if the individual tested is at least 65 years old but
                        less than 75 years old at the date of testing, and >/=
                        75% (actual value) if the individual tested is less than
                        65 years old at the date of testing; or

                  b.    TLC <80% of Predicted Value; or

                  c.    Bilateral Basilar Crackles, and also the absence of any
                        more probable explanation for the crackles other than
                        the presence of asbestos-related lung disease; or

            2.    Chest x-rays which, in the opinion of a Certified B-reader
                  show small irregular opacities of ILO grade 1/1 or greater;
                  and Pulmonary Function Testing that shows either:


                                       4
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                                               EXHIBIT E TO DISCLOSURE STATEMENT


                  a.    FVC <80% of Predicted Value with FEV-1/FVC>/= 65%
                        (actual value) if the individual tested is at least 70
                        years old at the date of testing, >/= 70% (actual value)
                        if the individual tested is at least 60 years old but
                        less than 70 years old at the date of testing, and >/=
                        75% (actual value) if the individual tested is less than
                        60 years old at the date of testing; or

                  b.    TLC <80% of Predicted Value.

      B.    Pathological Evidence of Asbestosis: A statement by a
            Board-certified Pathologist that more than one representative
            section of lung tissue otherwise uninvolved with any other process
            (e.g., cancer or emphysema) demonstrates a pattern of
            peribronchiolar or parenchymal scarring in the presence of
            characteristic asbestos bodies, and also that there is no other more
            probable explanation for the presence of the fibrosis.

      C.    Bilateral Pleural Thickening: Chest x-rays demonstrating bilateral
            pleural thickening of ILO Grade B2 or greater that (1) has not been
            followed by a malignancy; and (2) is not explained by any other
            condition in the subject's history; and Pulmonary Function Testing
            that, in the opinion of a Board-certified Internist, Pulmonary
            Specialist, or Occupational Physician shows:

            1.    TLC <80% of Predicted Value; or

            2.    FVC <80% of Predicted Value; and in either case

            3.    A statement by the Board-certified Internist, Pulmonary
                  Specialist, or Occupational Physician that the
                  asbestos-related changes are substantial contributing factors
                  in causing the pulmonary function changes.

XVIII. LEVEL I NON-MALIGNANT

      In order for a Participating Asbestos Claimant to satisfy the requirements
of Section I.B.2(1) of the Claimant Agreement for the Level I Non-Malignant
disease category, the Participating Asbestos Claimant must submit either:

      A.    A report by a Qualified Physician stating that the Participating
            Asbestos Claimant has or had a Chest X-ray reading of 1/0 or higher
            on the ILO scale, or a CT scan read by a Qualified Physician showing
            bilateral pleural plaques, bilateral pleural thickening, or
            bilateral pleural calcification or if an ILO reading is not
            available, a Chest X-Ray reading or CT scan read by a Qualified
            Physician showing bilateral interstitial fibrosis, bilateral
            interstitial markings, bilateral pleural plaques, bilateral pleural
            thickening, or bilateral pleural calcification consistent with, or
            compatible with, a diagnosis of asbestos-related disease, or such
            other competent evidence acceptable to the Claims Reviewer with
            medical evidence such as a diagnosis of an asbestos-related
            condition by a Qualified Physician, showing that the Participating
            Asbestos Claimant's non-malignant condition is causally related to
            asbestos exposure; or


                                       5
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


      B.    A statement by a Board-certified Pathologist that:

            1.    More than one representative section of lung tissue otherwise
                  uninvolved with any other process (e.g. cancer, emphysema)
                  demonstrates a pattern of per bronchiolar or parenchymal
                  scarring in the presence of characteristic asbestos bodies;
                  and

            2.    There is no other more likely explanation for the presence of
                  the fibrosis.


                              Extraordinary Claims
                              --------------------

      The Claims Reviewer may award a settlement amount to a Participating
Asbestos Claimant up to five (5) times the Settlement Amount for the Disease
Category in question ("Extraordinary Claim Settlement Amount"). The procedures
relating to any such award are as follows:

      At the same time that an Asbestos Claimant submits the documentation
      required under Section I.B.2 of the Claimant Agreement, an Asbestos
      Claimant may request in writing to the Claims Reviewer that his or her
      Asbestos Claim be considered for an Extraordinary Claim Settlement Amount.

      A Participating Asbestos Claimant may be entitled to an Extraordinary
      Claim Settlement Amount only if he or she:

            Satisfies the requirements to the Medical Criteria above for the
            Disease Category in question; and

            Demonstrates that his or her exposure to asbestos was greater than
            40% the result of exposure to an asbestos-containing product
            manufactured, sold, or distributed by Congoleum or for which
            Congoleum otherwise may have legal liability; and

            Demonstrates that there is little likelihood of a successful
            recovery elsewhere.

      C.    The Claims Reviewer shall consider simultaneously all requests for
            an Extraordinary Claim Settlement Amount no later than ninety (90)
            days from the deadline to submit Claim Documentation under Section
            I.B.2 of the Claimant Agreement. The Claims Reviewer shall notify
            the Participating Asbestos Claimants in writing as to whether the
            Participating Asbestos Claimants is entitled to the requested
            Extraordinary Claims Settlement Amount and the amount of the
            Extraordinary Claims Settlement Amount, if any.


                                       6
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


      D.    Appeal Procedures

            1.    A Participating Asbestos Claimant may appeal a Claims
                  Reviewer's determination by requesting arbitration in writing
                  to the Claims Reviewer within ten (10) days of receipt of the
                  Claims Reviewer's determination.

            2.    The neutral arbitrator shall be Michael Rozen from The
                  Feinberg Group, LLP (the "Arbitrator"). Should Mr. Rozen be
                  unable or unwilling at any time to serve as the Arbitrator,
                  Claimants' Counsel and Congoleum shall agree on an acceptable
                  replacement.

            3.    The Arbitrator shall consider the positions of the parties as
                  set forth in written submissions to be filed with the
                  Arbitrator within sixty (60) days after the written request
                  for arbitration.

            4.    The Arbitrator shall make a final decision within sixty (60)
                  days of the date set for submission. The Arbitrator is not
                  empowered to award damages in excess of the maximum amount of
                  the Extraordinary Claims Settlement Amount for the Disease
                  Category in question and the Participating Asbestos Claimant
                  expressly waives and foregoes any right to punitive, exemplary
                  or similar damages. The decision of the Arbitrator shall be
                  final and binding.

            5.    The Participating Asbestos Claimant shall bear its own costs.
                  The reasonable fees and costs of the Arbitrator and the
                  reasonable costs incurred by the Claims Reviewer shall be paid
                  by the Collateral Trust, Plan Trust or any successor trust (as
                  defined in Collateral Trust Agreement).


                                       7
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


APPENDIX B


                              RELEASE AND INDEMNITY

STATE OF _____________________

COUNTY OF ____________________

      KNOW ALL MEN BY THESE PRESENTS THAT the Undersigned, [Executor],
individually and as [Capacity] of the Estate of _______________, deceased
(Social Security No. __________) ("Decedent"), on behalf of himself or herself
and the heirs, administrators, executors, personal representatives, and assigns
of Decedent, hereinafter collectively referred to as "Releasors," for
consideration of the sum of One Dollar and other good and valuable
consideration, do hereby forever release and discharge Congoleum Corporation,
all of its present and former shareholders, directors, officers, employees,
agents and servants, and all of its present and former divisions and subsidiary
corporations, and any and all predecessors, successors, distributors, and
assigns, and their insurance carriers to the extent of coverage provided to any
of the foregoing, hereinafter collectively referred to as "Releasees," from any
and all claims, causes or rights of action, demands and damages of every kind
and nature whatsoever, including but not limited to, any and all present claims
relating to asbestos-related diseases, injuries, cancers, and/or malignancies,
including, but not limited to, loss of consortium, companionship, service,
support, pain and suffering, medical expenses, injury and damage of any kind,
including the wrongful death of Decedent, which any of the Releasors now has
that is in any way related to the possible exposure of Decedent to asbestos or
asbestos-containing products manufactured, sold, supplied, distributed,
installed, handled, or removed by any of the Releasees, which may have caused
injuries or damages to any of the Releasors or for which Releasees may bear
legal responsibility. The undersigned reserve all rights to proceed at law
and/or in equity against any person, corporation and/or association other than
Releasees for harmful exposure to asbestos or asbestos- containing products.

      The Releasors agree that this is a compromise of doubtful and disputed
claims and that the payment of the consideration for this Release is not to be
considered as an admission of liability on the part of any person or entity
released hereby. It is further understood that this Release is not intended to
relinquish any claim the Releasees may have against any party or any claim the
Releasors have against any party that is not a Releasee. The parties further
agree that this Agreement shall not be admissible in any suit or proceeding
whatsoever as evidence or admission of any liability.

      In order to induce the payment of the aforesaid consideration, the
Releasors, jointly and severally, do covenant and agree to defend, hold harmless
and indemnify all Releasees from any and all claims, actions, and suits of every
nature whatsoever, including without limitation any and all claims (i) of any
Worker's Compensation carrier, any employer who is self-insured for Worker's
Compensation purposes, any governmental Worker's Compensation funds, and/or
arising under any state Worker's Compensation law, (ii) arising under the
Federal Longshoremen's and Harbor Workers' Act, (iii) of any health care
provider (including all medical, hospital, ambulance and/or drug bills or
related expenses), and (iv) of any insurance carrier or other party who has, or
claims to have, a lien against the aforesaid consideration, and all such claims

<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


APPENDIX B

as may now be pending or which may heretofore have been made, against any or all
of the Releasees, which may be brought and/or made on account of any claimed
injuries and/or damages arising from or relating to the exposure of Decedent to
asbestos or asbestos-containing products, and to indemnify them in legal tender
and/or by offset, up to the full extent of the compensation paid or to be paid
pursuant to the Claimant Agreement (defined below). The Release and Indemnity
provisions contained herein are specifically intended to operate and be
applicable even if it is alleged, charged or proven that all or some of the
claims released or damages sought are caused in whole or in part by the sole,
concurrent or contributory negligence or other conduct of any type by any of the
Releasees.

      It is further agreed that this Release and that certain Settlement
Agreement between Congoleum Corporation. and Various Asbestos Claimants (the
"Claimant Agreement"), in which Releasors have joined, set forth the entire
agreement between the parties and there is no other promise, agreement or
inducement other than that as expressed herein and in the Settlement Agreement.

      The undersigned further states:

      1.    That he or she is of legal age, with no mental disability of any
            kind, and is fully and completely competent to execute this Release
            and Indemnity on his or her own behalf and on behalf of the Estate
            of Decedent and the other Releasors. The undersigned certifies that
            he or she is the duly appointed [Capacity] of the Estate of
            Decedent, having been appointed to that position by order of a court
            of competent jurisdiction;

      2.    That the above Release and Indemnity has been explained to the
            undersigned and he or she knows the contents as well as the effect
            thereof;

      3.    That he or she understands that Congoleum has made a settlement
            offer to pay approximately _______ claims and the amount of
            compensation paid with respect to Decedent is based on the
            application of a matrix value to Decedent's medical diagnosis; and

      4.    That Decedent was exposed to an asbestos-containing product
            manufactured, sold, or distributed by Congoleum or for which
            Congoleum has legal liability.

      The undersigned further states that he or she executed this instrument
after consultation with his or her attorney or the opportunity to consult with
an attorney.

      The undersigned hereby declares under penalty of perjury, pursuant to 28
U.S.C ss. 1746, that the foregoing is true and correct,

_____________________________________
[Executor's Name]

Date: _______________________________


                                        2
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


APPENDIX B

                              RELEASE AND INDEMNITY

      STATE OF _____________________

      COUNTY OF ____________________

      KNOW ALL MEN BY THESE PRESENTS THAT WE, [Name], (Social Security No.
__________) ("Claimant"), individually, and, if he/she is married, his/her
spouse, [Spouse] ("Spouse"), Social Security No. _____________, as husband and
wife, on behalf of themselves, their heirs, administrators, executors, personal
representatives, and assigns, hereinafter collectively referred to as
"Releasors," for consideration of the sum of One Dollar and other good and
valuable consideration, do hereby forever release and discharge Congoleum
Corporation, all of its present and former shareholders, directors, officers,
employees, agents and servants, and all of its present and former divisions and
subsidiary corporations, and any and all predecessors, successors, distributors
and assigns, and their insurance carriers to the extent of coverage provided to
any of the foregoing, hereinafter collectively referred to as "Releasees," from
any and all claims, causes or rights of action, demands and damages of every
kind and nature whatsoever, including but not limited to, any and all present
claims relating to asbestos-related diseases, injuries, cancers, and/or
malignancies, including, but not limited to, loss of consortium, companionship,
service, support, pain and suffering, medical expenses, injury and damage of any
kind, including the wrongful death of Claimant, which any of the Releasors now
has that is in any way related to the possible exposure of Claimant to asbestos
or asbestos-containing products manufactured, sold, supplied, distributed,
installed, handled, or removed by any of the Releasees, which may have caused
injuries or damages to any of the Releasors or for which Releasees may bear
legal responsibility. The undersigned reserve all rights to proceed at law
and/or in equity against any person, corporation and/or association other than
Releasees for harmful exposure to asbestos or asbestos- containing products.

      It is the intent of this Release not to release, and the Releasors
specifically do not release, claims for lung cancer, mesothelioma, primary
colon-rectal, laryngeal, esophageal or stomach cancer, or death resulting from
lung cancer, mesothelioma, primary colon-rectal, laryngeal, esophageal or
stomach cancer, not diagnosed as of the date hereof and allegedly resulting or
alleged to result from Claimant's exposure to asbestos or asbestos-containing
products.

      The parties to this Release further understand and agree that nothing in
this Release is intended to settle, waive or relinquish any claim that Spouse
individually may have today or in the future against Releasees or any other
entity for an asbestos-related injury or disease that results from his/her
personal exposure to asbestos-fibers and/or products manufactured, sold or
distributed by Releasees or any other manufacturer, supplier or distributor of
asbestos-containing products. The Releasors further agree that this is a
compromise of doubtful and disputed claims and that the payment of the
consideration for this Release is not to be considered as an admission of
liability on the part of any person or entity released hereby. It is further
understood that this Release is not intended to relinquish any claim the
Releasees may have against any party or any claim the Releasors have against any
party that is not a Releasee. The parties further agree that this Agreement
shall not be admissible in any suit or proceeding whatsoever as evidence or
admission of any liability.

      In order to induce the payment of the aforesaid consideration, the
Releasors, jointly and severally, do covenant and agree to defend, hold harmless
and indemnify all Releasees from any and all claims, actions, and suits of every
nature whatsoever, including without limitation any and all claims (i) of any
Worker's Compensation carrier, any employer who is self-insured for Worker's

<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


APPENDIX B

Compensation purposes, any governmental Worker's Compensation funds, and/or
arising under any state Worker's Compensation law, (ii) arising under the
Federal Longshoremen's and Harbor Workers' Act, (iii) of any health care
provider (including all medical, hospital, ambulance and/or drug bills or
related expenses), and (iv) of any insurance carrier or other party who has, or
claims to have, a lien against the aforesaid consideration, and all such claims
as may now be pending or which may heretofore have been made against any or all
of the Releasees, which may be brought and/or made on account of any claimed
injuries and/or damages arising from or relating to the exposure of Claimant to
asbestos or asbestos-containing products, and to indemnify them in legal tender
and/or by offset, up to the full extent of the compensation paid or to be paid
pursuant to the Settlement Agreement. The Release and Indemnity provisions
contained herein are specifically intended to operate and be applicable even if
it is alleged, charged or proven that all or some of the claims released or
damages sought are caused in whole or in part by the sole, concurrent or
contributory negligence or other conduct of any type by any of the Releasees.

      It is further agreed that this Release and that certain Settlement
Agreement between Congoleum Corporation and Various Asbestos Claimants (the
"Claimant Agreement"), in which Releasors have joined, set forth the entire
agreement between the parties and there is no other promise, agreement or
inducement other than that as expressed herein and in the Claimant Agreement.

      The undersigned further state:

      1.    That each of them is of legal age, with no mental disability of any
            kind, and is fully and completely competent to execute this Release
            and Indemnity on his or her own behalf;

      2.    That the above Release and Indemnity has been explained to them and
            they know the contents as well as the effect thereof;

      3.    That they understand that Congoleum Corporation made a settlement
            offer to pay approximately ______ claims and the amount of
            compensation paid to Claimant is based on the application of a
            matrix value to Claimant's medical diagnosis; and

      4.    That Claimant was exposed to an asbestos-containing product
            manufactured, sold, or distributed by Congoleum or for which
            Congoleum has legal liability.

      The undersigned further state that they executed this instrument after
consultation with their attorney or the opportunity to consult with an attorney.

      Each of the undersigned hereby declares under penalty of perjury, pursuant
to 28 U.S.C ss. 1746, that the foregoing is true and correct,

      _______________________________
      [Name]

      Social Security No. ___________

      Date: _________________________


      _______________________________
      [Spouse]

      Social Security No. ___________

      Date: _________________________


                                        2
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


                 FIRST AMENDMENT TO SETTLEMENT AGREEMENT BETWEEN
              CONGOLEUM CORPORATION AND VARIOUS ASBESTOS CLAIMANTS

      This first amendment to the Settlement Agreement Between Congoleum
Corporation And Various Asbestos Claimants ("Amendment to the Claimant
Agreement") is entered into by, between and among Congoleum Corporation, its
predecessors, successors, distributors and assigns (collectively, "Congoleum"),
and the Participating Asbestos Claimants, by and through representative
plaintiffs' counsel, Perry Weitz, Esq. and Joseph F. Rice, Esq. ("Claimants'
Counsel").

                                    RECITALS

      WHEREAS, Congoleum and Participating Asbestos Claimants entered into an
agreement titled Settlement Agreement Between Congoleum Corporation And Various
Asbestos Claimants (the "Claimant Agreement") dated April 10, 2003; and

      WHEREAS, Congoleum and Participating Asbestos Claimants wish to extend the
time within which Asbestos Claimants may accept the terms of the Claimant
Agreement and agree to be bound by the Claimant Agreement and to extend the time
for such Asbestos Claimants to be eligible to provide Claim Documentation and to
qualify as a Participating Asbestos Claimant; and

      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 (the
"Collateral Trust Agreement"); and

      WHEREAS, Congoleum, the Collateral Trustee, and the Delaware Trustee, with
the consent of Claimants' Counsel, contemporaneously herewith are executing that
certain first amendment to the Collateral Trust Agreement (the "Amendment to the
Collateral Trust Agreement"); and

<PAGE>

      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

      WHEREAS, Congoleum and the Collateral Trustee have contemporaneously
herewith terminated the Security Agreements and entered into a subsequent
security agreement ("Superceding Security Agreement") to eliminate any confusion
as to the effective date of the grant of the Security Interest; and

      WHEREAS, the Parties desire to enter into this Amendment to the Claimant
Agreement to confirm their agreement with respect to (i) the amendment of
certain deadlines related to qualification as Participating Claimants; (ii) the
termination of the Security Agreements; (iii) the execution of the Superceding
Security Agreement; and (iv) certain other matters relating to the foregoing, as
hereafter provided;

      NOW, THEREFORE, intending to be legally bound hereby, Congoleum and each
of the Participating Asbestos Claimants agree that the Claimant Agreement shall
be amended as follows:

                                    AGREEMENT

      1. Section I.B.1 and I.B.2 of the Claimant Agreement shall be replaced in
its entirety with:

            B. To qualify as a Participating Asbestos Claimant, each Asbestos
Claimant, or his counsel, must


                                       2
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


      1. On or before July 1, 2003, submit in an electronic form reasonably
satisfactory to the Claims Reviewer the following documents and information in
form and substance satisfactory to the Claims Reviewer: (1) the Asbestos
Claimant's name and social security number; (2) the Asbestos Claimant's alleged
disease or injury; (3) for all cases filed after February 14, 2003, a statement
by counsel of record that the claimant can comply with exposure requirements of
the Agreement; (4) a statement that his or her Asbestos Claim was filed in a
court of competent jurisdiction on or before July 1, 2003; and (5) a statement
that the Asbestos Claimant is interested in participating in this Claimant
Agreement; and

      2. On or before August 15, 2003, submit in writing the following documents
and information in form and substance satisfactory to the Claims Reviewer: (1)
evidence of bodily injury, sickness or disease consistent with the terms and
meaning of the Compensable Disease Matrix; however, if such Asbestos Claimant
was qualified as a Participating Category D Claimant under the Settlement
Agreement Between ACandS, Inc. and Various Asbestos Claimants, dated April 17,
2002 (the "ACandS Claimant Agreement"), a notice indicating that the claimant
will rely upon the evidence submitted to the Claims Reviewer in connection with
the ACandS Claimant Agreement will satisfy this requirement; (2) a statement
swearing under penalty of perjury or witnessed by a notary, that the Asbestos
Claimant was exposed to an asbestos-containing product manufactured, sold, or
distributed by Congoleum or for which Congoleum has legal liability; (3) a claim
form that will indicate the Asbestos Claimant's name, social security number,
exposure date and diagnosis date; (4) proof that the Asbestos Claimant had filed
a claim in a court of competent jurisdiction against Congoleum on or before July
1, 2003; and (5) a release in the form of Appendix B hereto or another form
acceptable to Congoleum (collectively "Claim Documentation"). Asbestos Claimants
should note that if they were qualified under the ACandS Claimant Agreement as a
Non-Malignant Participating Category D Claimant, reliance on the submission in
connection with the ACandS Claimant Agreement will mean qualification here as a
Level 1 Non-Malignant disease category pursuant to the attached Compensable
Disease Matrix.


                                       3
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


      2. Section I.E of the Claimant Agreement shall be replaced in its entirety
with:

            E. As to any Asbestos Claimant who submits Claim Documentation on or
before July 7, 2003, the Claims Reviewer will mail any notice of deficiencies in
Claim Documentation within thirty (30) days after receipt of the Claims
Documentation. As to any Asbestos Claimant who submits Claim Documentation after
July 7, 2003, the Claims Reviewer will mail any notice of deficiencies in Claim
Documentation within sixty (60) days after receipt of the Claims Documentation.
If the Claims Reviewer does not mail notices of deficiencies within the time
period set forth above to a particular Asbestos Claimant, that Asbestos
Claimant's Claim Documentation shall be deemed satisfactory.

      3. Sections II.A and II.B of the Claimant Agreement shall be replaced in
their entirety with:

II.   SECURED RIGHTS OF PARTICIPATING ASBESTOS CLAIMANTS

      A. The Security Interest contemplated by the Superceding Security
Agreement shall secure an amount equal to seventy-five percent (75%) of the
aggregate of all Participating Asbestos Claimants' Settlement Amounts (the
"Secured Amount") as provided in the Collateral Trust Agreement and the
Superceding Security Agreement. Congoleum's obligation to pay each Participating
Asbestos Claimant its pro rata share of the Secured Amount shall be referred to
herein as the "Secured Asbestos Claims."

      B. Until all of the Secured Asbestos Claims for all Participating Asbestos
Claimants are paid in full, Congoleum shall evaluate, bring, prosecute,
litigate, defend and settle any claim against its insurers to obtain Insurance
Proceeds. Congoleum shall consult with Claimants' Counsel in order to retain a
mutually acceptable counsel to prosecute any claim against its insurers to
obtain Insurance Proceeds. Congoleum agrees to obtain the consent of Claimants'
Counsel prior to entering into settlement of any claim against its insurers to
obtain Insurance Proceeds, which consent shall not be unreasonably withheld,
conditioned or delayed.


                                       4
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


      4. Section II.C of the Claimant Agreement shall be deleted.

      5. The paragraph below shall be added to the Claimant Agreement as Section
III.D:

            D. 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 a Participating Asbestos Claimant pursuant to a will or the
law applicable to the decendent's estate. The beneficial interests in the
Collateral Trust shall not be evidenced by a separate certificate. Nothing in
this paragraph III.D shall in any way restrict the ability of the Collateral
Trust to transfer the Trust Assets (as defined in the Collateral Trust
Agreement) to any trust established pursuant to a plan of reorganization for
Congoleum under chapter 11 of the United States Bankruptcy Code.

      6. Other than expressly provided for herein, the terms of the Claimant
Agreement shall remain in full force and effect.

      7. The Claimant Agreement and this Amendment to the Claimant 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.


                                       5
<PAGE>

                                               EXHIBIT E TO DISCLOSURE STATEMENT


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

      9. This Amendment to the Claimant 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 Claimant Agreement.

      IN WITNESS WHEREOF, the parties have caused this First Amendment to the
Claimant Agreement to be duly executed this 6th day of June 2003.

                                    CONGOLEUM CORPORATION


                                    By  /s/ Howard N. Feist III
                                        -----------------------------

                                    Title  Chief Financial Officer
                                          ---------------------------


                                    PARTICIPATING ASBESTOS CLAIMANTS

                                    By Claimants' Counsel

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

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


                                        6

<PAGE>