Exhibit
99(16)





PUT/CALL
AGREEMENT




This
PUT/CALL AGREEMENT (the “Agreement”), dated as
of _____________ (the “Agreement Date”), is
made and entered into by and between Congoleum Corporation, a Delaware
corporation (as a debtor
in possession and a reorganized debtor, as applicable, the “Company”), [Congoleum
Plan Trust to be formed on Effective Date of Plan] (the “Trust”),  Plainfield
Special Situations Master Fund Limited (“Plainfield”), DWS High Income Fund, DWS
High Income VIP and DWS High Income Plus Fund, DWS High Income Trust, DWS
Balanced Fund, DWS Strategic Income Fund, DWS Multi Market Income Trust, DWS
Balanced VIP, DWS Strategic Income VIP and DWS Strategic Income Trust
(collectively, “DWS” and each an “Initial Backstop
Participant” and collectively, the “Initial Backstop
Participants”), and any otherEligible Bondholder (as defined below) that elects to become a party
hereto prior to the Election Deadline (as defined below), if any, by executing a
counterpart signature page in the form of Exhibit
A attached hereto (each an “Additional Backstop
Participant” and collectively, the “Additional Backstop
Participants” and together with the Initial Backstop Participants, the
“Backstop
Participants”).




W
I T N E S S E T H




WHEREAS,
pursuant to the Joint Plan of Reorganization under Chapter 11 of the Bankruptcy
Code of theFutures
Representative, the Debtors, the Official Asbestos Claimants’ Committee and the
Official Committee of Bondholders for Congoleum Corporation et al.dated as of February 5,
2008(the “Plan”), which is
subject to the approval by the Court the “Bankruptcy Court”)
administering the Company’s proceedings under the United States Bankruptcy Code,
11 U.S.C, §§ 101, et seq. (the “Bankruptcy Code”),
the Trust will be issued shares of the Company’s Common Stock, $.001 par value
per share (the “New
Common Stock”), which when issued by the Company to the Trust will
represent 50.1% of the outstanding Common Stock of the Company (all such shares
issued to the Trust being referred to herein as the “Trust
Shares”);




WHEREAS,
pursuant to the Plan, the Trust will be given the opportunity to elect to cause
the Backstop Participants to purchase the Trust Shares on the terms and subject
to the conditions set forth herein;




WHEREAS,
pursuant to the Plan, the Backstop Participants will be given the opportunity to
elect to cause the Trust to sell the Trust Shares on the terms and subject to
the conditions set forth herein;




NOW,
THEREFORE, in consideration of the mutual promises and agreements contained
herein, it is hereby agreed as follows:




ARTICLE
I




DEFINITIONS




1.01           Definitions.  As
used in the Agreement the following terms shall have the meanings set forth
below:













“ABC” shall
have the meaning ascribed to such term in the Preamble hereto.




“Additional
Backstop Participant” shall have the meaning ascribed to such term in the
Preamble hereto.




“Agreement”
shall have the meaning ascribed to such term in the Preamble
hereto.




“Agreement
Date” shall have the meaning ascribed to such term in the Preamble
hereto.




“Agreement
Motion” shall have the meaning ascribed to such term in Section 8.01(b)
hereof.




“Agreement
Order” the order of the Bankruptcy Court approving this Agreement,
together with the exhibits attached hereto, and authorizing and directing the
Company to execute and deliver it and to pay the Commitment Fee as provided
hereunder.




“Backstop
Participant” shall have the meaning ascribed to such term in the Preamble
hereto.




“Bankruptcy
Code” shall have the meaning ascribed to such term in the Preamble
hereto.




“Bankruptcy
Court” shall have the meaning ascribed to such term in the Preamble
hereto.




“Bondholders”
means each holder of the 8.625% Senior Notes Due 2008 issued by Congoleum
Corporation, as of the Effective Date of the Plan.




“Bondholders
Committee” shall have the meaning ascribed to such term in the Preamble
hereto.




“Business
Day” means a day other than Saturday, Sunday or any day on which
commercial banks located in New York are authorized or obligated by Law to
close.




“Call Backstop
Participants” shall have the meaning ascribed to such term in Section
3.02(b) hereof.




“Call Closing
Date” shall have the meaning ascribed to such term in Section 3.03
hereof.




“Call
Participant” means an Exercising Bondholder and each other Electing
Participant.




“Call
Period” means the period beginning on the Effective Date and ending at
5:00 p.m., Eastern Standard Time, on the date that is 90 days after the
Effective Date.




“Call Purchase
Price” shall have the meaning ascribed to such term in Section 3.01(a)
hereof.




“Call
Right” shall have the meaning ascribed to such term in Section 3.01(a)
hereof.




“Company”
shall have the meaning ascribed to such term in the Preamble
hereto.







-2-





“Commitment
Fee” shall have the meaning ascribed to such term in Section 4.01
hereof.




“Confirmation
Order” shall mean entry of an order confirming and approving the Plan
pursuant to Section 1129 of the Bankruptcy Code by the Bankruptcy Court prior to
any review by the District Court.




“Court
Orders” means the Agreement Order and the Confirmation Order taken
together.




“Disclosure
Statement” means the disclosure statement relating to the
Plan.




“Dispose”
means any sale, assignment, transfer, exchange, mortgage, pledge, grant,
hypothecation or other transfer, whether absolute or as security or encumbrance
(including dispositions by operation of law).




“Effective Date of
the Plan” shall have the same meaning ascribed to such term in the
Plan.




“Electing
Participant” means any Backstop Participant delivering a Call
Participation Notice.




“Election
Deadline” means the deadline established by the Bankruptcy Court for
voting to approve the Plan following approval of the Disclosure
Statement.




“Eligible
Bondholder”means any Bondholder who is a
“qualified institutional buyer” as defined in Rule 144A promulgated under the
Securities Act.




“Exercising
Bondholder” means any party electing to exercise the Call Right pursuant
to 3.01(a) or (b).




“FCR” shall
have the meaning ascribed to such term in the Preamble hereto.




“Final
Order” means an order of judgment of the Bankruptcy Court as entered on
the docket, which is immediately appealable and that (i) has not been reversed,
stayed, modified, or amended and as to which the time to appeal, seek certiorari
or move for reargument or rehearing has expired, and no appeal, petition for
certiorari, or motion for reargument or rehearing has been timely taken, or (ii)
as to which any appeal has been taken, any petition for certiorari or motion for
reargument or rehearing has been filed, and such appeal, petition or motion has
been conclusively withdrawn or resolved by the highest court to which the order
or judgment was appealed or from which certiorari, reargument or rehearing was
sought.




“Indemnitees”
shall have the meaning ascribed to such term in Section 10.02(a)
hereof.




“Initial Backstop
Participant(s)” shall have the meaning ascribed to such term in the
Preamble hereto.




“Initial Call
Backstop Participants” shall have the meaning ascribed to such term in
Section 3.02(a) hereof.







-3-





“Losses”
shall have the meaning ascribed to such term in Section 10.02(a)
hereof.




“New Common
Stock” shall have the meaning ascribed to such term in the Preamble
hereto.




“Plan”
shall have the meaning ascribed to such term in the Preamble
hereto.




“Plan
Proponents” means, the FCR, the Debtors, the Official Asbestos Claimants
Committee and the Official Committee of Bondholders as joint proponents of the
Plan and any other person, entity or Committee constituted in the Company’s
bankruptcy proceeding which becomes a proponent of the Plan.




“Pro Rata Portion
of the Trust Shares” for purposes of Article II shall have the meaning
ascribed to such term in Section 2.02 hereof and for purposes of Article III
shall have the meaning ascribed to such term in Section 3.02(a)
hereof.




“Pro Rata Portion
of the Unallocated Trust Shares” for purposes of Article
II  shall have the meaning ascribed to such term in Section 2.02
hereof and for purposes of Article III shall have the meaning ascribed to such
term in Section 3.02(a) hereof.




“Put Closing
Date” shall have the meaning ascribed to such term in Section 2.03
hereof.




“Put
Period” shall have the meaning ascribed to such term in Section 2.01
hereof.




“Put Purchase
Price” shall have the meaning ascribed to such term in Section 2.01
hereof.




“Put Right”
shall have the meaning ascribed to such term in Section 2.01
hereof.




“Securities
Act” means the Securities Act of 1933, as amended.




“Stockholders
Agreement” means that certain Stockholders Agreement that will be
approved in connection with the Plan, effective as of the Effective Date of the
Plan and binding on all stockholders.




“Trust”
shall have the meaning ascribed to such term in the Preamble
hereto.




“Trust
Agreement” means the Plan Trust Agreement of the Trust as defined in the
Plan.




“Trust
Shares” shall have the meaning ascribed to such term in the Preamble
hereto.




“Unallocated Trust
Shares” for purposes of Article  II shall have the meaning
ascribed to such term in Section 2.02 hereof and for purposes of Article III
shall have the meaning ascribed to such term in Section 3.02(a)
hereof.







-4-







ARTICLE
II




PUT
RIGHT




2.01           Put
Right.  The parties hereto agree and acknowledge that the Trust
shall have the right (the “Put Right”) to elect
to cause the Backstop Participants to purchase all, but not less than all, of
the Trust Shares for an aggregate purchase price equal to $5.25 million (the
“Put Purchase
Price”) provided that it delivers the Put Exercise Notice attached as
Exhibit
B hereto in accordance with the provisions of Section 12.01 hereof to the
Backstop Participants at any time during the period beginning on the Effective
Date and ending at 5:00 p.m., Eastern Standard Time, on the date that is 60 days
after the Effective Date (the “Put
Period”).




2.02           Purchase and Sale Pursuant
to Exercise of Put Right.  In the event the Trust elects to
exercise the Put Right by delivering the Put Exercise Notice to the Backstop
Participants prior to the expiration of the Put Period, each of the Additional
Backstop Participants will be obligated to purchase their Pro Rata Portion of
the Trust Shares and to pay their corresponding portion of the Put Purchase
Price and each of the Initial Backstop Participants will be obligated to
purchase their Pro Rata Portion of the Unallocated Trust Shares (as defined
below) and to pay their corresponding portion of the Put Purchase Price as
calculated below.  For purposes of this Article II, (i) an Additional
Backstop Participant’s “Pro Rata Portion of the
Trust Shares” shall be determined by multiplying the number of Trust
Shares by a fraction, the numerator of which shall be the number of shares of
New Common Stock then held by such Additional Backstop Participant and the
denominator of which shall be the aggregate number of shares of  New
Common Stock issued under the Plan to all Bondholders on the Effective Date of
the Plan, (ii) the term “Unallocated Trust
Shares” shall mean the difference between (X) the total number of Trust
Shares and, (Y) the sum of the Pro Rata Portion of the Trust Shares of each
Additional Backstop Participant, and (iii) unless otherwise determined by each
of the Initial Backstop Participants, the Initial Backstop Participant’s “Pro Rata Portion of the
Unallocated Trust Shares” shall be determined by multiplying the number
of Unallocated Trust Shares by seventy six percent (76%) in the case of
Plainfield and twenty four percent (24%) in the case of DWS.  Each
Backstop Participant’s corresponding portion of the Put Purchase Price shall be
determined by multiplying (x) the quotient derived by dividing $5.25 million by
the total number of Trust Shares, by (Y) the number of Trust Shares to be
purchased by such Backstop Participant.




2.03           Closing.  The
delivery of the Trust Shares will be made by the Trust to the Backstop
Participants on the fifth Business Day following the receipt by the Backstop
Participants of the Put Election Notice (the “Put Closing Date”)
against payment of the Put Purchase Price for the Trust Shares by wire transfer
of federal (same day) funds to the account specified by the Trust on the
signature page attached hereto.  The Trust shall execute stock powers
on behalf of each of the Backstop Participants in order to effect the transfer
of the Trust Shares from the Trust to the Backstop Participants and the Company
shall, upon receipt of such stock powers, record the transfer of the Trust
Shares on its stock record books.  If any Additional Backstop
Participant fails to deliver such Additional Backstop Participant’s portion of
the Put Purchase Price on the Put Closing Date, the Initial Backstop
Participants shall purchase and pay for any Trust Shares that were to be
purchased by such Additional Backstop Participant treating







-5-





such
unpurchased Trust Shares as Unallocated Trust Shares with such shares to be
divided among and purchased by the Initial Backstop Participants in accordance
with Section 2.02 above within two Business Days of the Put Closing
Date.  All Trust Shares will be delivered by the Trust with any and
all issue, stamp, transfer or similar taxes or duties payable in connection with
such delivery duly paid by the Trust.




ARTICLE
III




CALL
RIGHT




3.01           Call
Right.




(a)           Exercise During the Put
Period.  The parties hereto agree and acknowledge that during
the Put Period each of the Initial Backstop Participants shall have the right
(the “Call
Right”) to elect to cause the Trust to sell all, but not less than all,
of the Trust Shares to the Call Participants for an aggregate purchase price
equal to $7.5 million (the “Call Purchase Price”)
provided that such Initial Backstop Participant delivers the Call Exercise
Notice in the form attached as Exhibit
C hereto in accordance with the provisions of Section 12.01 hereof to the
Trust at any time during the Put Period.




(b)           Exercise After Expiration of
the Put Period.  The parties hereto agree and acknowledge that
if the Put Right has not been exercised by the Trust and the Call Right has not
been exercised by an Initial Backstop Participant prior to the expiration of the
Put Period, from and after the expiration of the Put Period until the expiration
of the Call Period, any Backstop Participant shall have the right to exercise
the Call Right and thereby cause the Trust to sell all, but not less than all,
of the Trust Shares to the Call Participants for the Call Purchase Price
provided that such Exercising Bondholder delivers the Call Exercise Notice in
the form attached as Exhibit
C hereto in accordance with the provisions of Section 12.01 hereof to the
Trust at any time during the period from and after the expiration of the Put
Period until the expiration of the Call Period.




3.02           Purchase and Sale Pursuant
to Exercise of Call Right.




(a)           Call Right Exercised by an
Initial Backstop Participant.  In the event that an Initial
Backstop Participant is the Exercising Bondholder pursuant to Section 3.01(a) or
3.01(b), such Initial Backstop Participant shall be obligated to purchase its
Pro Rata Portion of the Trust Shares and shall also deliver a copy of the Call
Exercise Notice to each other Backstop Participant concurrently with the
delivery of the Call Exercise Notice to the Trustee.  Upon receipt of
the Call Exercise Notice from an Exercising Bondholder that is an Initial
Backstop Participant, each Additional Backstop Participant shall have a period
of five (5) Business Days to elect to return to the Exercising Bondholder a Call
Participation Notice in the form attached as Exhibit
D-1 hereto, and each Initial Backstop Participant (other than the
Exercising Bondholder) shall have a period of five (5) Business Days to elect to
return to the Exercising Bondholder a Call Participation Notice in the form
attached as Exhibit
D-2, in each case in accordance with the provisions of Section 12.01
hereof.  Each Additional Backstop Participant shall have the right to
elect to either (i) participate in the Call Right by purchasing its Pro Rata
Portion of the Trust Shares (determined in accordance with Section 3.02(a)), or
(ii) refuse to participate in the Call







-6-





Right in
any capacity.  Each Initial Backstop Participant (other than the
Exercising Bondholder) shall have the right to elect to (i) participate in the
Call Right by purchasing its Pro Rata Portion of the Trust Shares (determined in
accordance with Section 3.02(a)), (ii) not only purchase its Pro Rata Portion of
the Trust Shares but also its Pro Rata Portion of the Unallocated Trust Shares,
or (iii) refuse to participate in the Call Right in any
capacity.  Each Electing Participant will be obligated to purchase
their Pro Rata Portion of the Trust Shares and to pay their corresponding
portion of the Call Purchase Price.  Additionally, the Exercising
Bondholder together with the other Initial Backstop Participant that elects to
purchase its Pro Rata Portion of the Unallocated Trust Shares (determined in
accordance with Section 3.02(a)) (collectively, the “Initial Call Backstop
Participants”), will each be obligated to purchase their Pro Rata Portion
of the Unallocated Trust Shares (or the Exercising Bondholder will be obligated
to purchase all of the Unallocated Trust Shares if the Initial Backstop
Participant other than the Exercising Bondholder does not elect to purchase its
Pro Rata Portion of the Unallocated Trust Shares) and to pay their corresponding
portion of the Call Purchase Price.  For purposes of this Article III,
(i) an Electing Participant’s “Pro Rata Portion of the
Trust Shares” shall be determined by multiplying the number of Trust
Shares by a fraction, the numerator of which shall be the number of shares of
Common Stock then held by such Electing Participant and the denominator of which
shall be the aggregate number of shares of New Common Stock issued under the
Plan to all Bondholders, (ii) the term “Unallocated Trust
Shares” shall mean the difference between the total number of Trust
Shares and the sum of the Pro Rata Portion of the Trust Shares of each Electing
Participant, and (iii) unless otherwise determined by the Exercising Bondholder
and any Initial Backstop Participant that elects to purchase their Pro Rata
Portion of the Unallocated Trust Shares, an Initial Call Backstop Participant’s
“Pro Rata Portion of
the Unallocated Trust Shares” shall be determined by multiplying the
number of Unallocated Trust Shares by seventy six percent (76%) in the case of
Plainfield and twenty four percent (24%) in the case of DWS.  The
corresponding portion of the Call Purchase Price to be paid by each Call
Participant shall be determined by multiplying (x) the quotient derived by
dividing $7.5 million by the total number of Trust Shares, by (Y) the number of
Trust Shares to be purchased by such Call Participant.




(b)           Call Right Exercised by an
Additional Backstop Participant.  In the event that an
Additional Backstop Participant is the Exercising Bondholder pursuant to Section
3.01(b), such Additional Backstop Participant shall be obligated to purchase its
Pro Rata Portion of the Trust Shares and shall also deliver a copy of the Call
Exercise Notice to each Initial Backstop Participant and to each other
Additional Backstop Participant concurrently with the delivery of the Call
Exercise Notice to the Trustee.  Upon receipt of the Call Exercise
Notice from an Additional Backstop Participant, each Backstop Participant (other
than the Exercising Bondholder) shall have a period of five Business Days to
elect to return a Call Participation Notice in the form attached as Exhibit
D-2 hereto in accordance with the provisions of Section 12.01 hereof to
the Exercising Bondholder.  Each Backstop Participant shall have the
right to elect to (i) participate in the Call Right by purchasing its Pro Rata
Portion of the Trust Shares (determined in accordance with Section 3.02(a)),
(ii) not only purchase its Pro Rata Portion of the Trust Shares but also its Pro
Rata Portion of the Unallocated Trust Shares; provided, however, that no
Additional Backstop Participant (including any Exercising Bondholder that is an
Additional Backstop Participant) may purchase its Pro Rata Portion of the
Unallocated Trust Shares if any Initial Backstop Participant has elected to
purchase its Pro Rata Portion of the Unallocated Trust Shares, or (iii) refuse
to participate in the Call Right in any capacity.  Each Electing
Participant will be obligated to purchase their Pro Rata Portion of the Trust
Shares and












-7-





to pay
their corresponding portion of the Call Purchase Price.  Additionally,
the Exercising Bondholder shall be solely responsible for purchasing all of the
Unallocated Trust Shares unless (x) any Initial Backstop Participant has elected
to purchase its Pro Rata Portion of the Unallocated Trust Shares in which case
all of the Unallocated Trust Shares shall be purchased by such Initial Backstop
Participants so electing (in accordance with Section 3.02(a)), or (y) if no
Initial Backstop Participant elects to purchase its Pro Rata Portion of the
Unallocated Trust Shares, the Exercising Bondholder together with any other
Additional Backstop Participant that has elected to purchase their Pro Rata
Portion of the Unallocated Trust Shares (collectively, any party entitled to
participate in the purchase of Unallocated Trust Shares being referred to the
“Additional Call
Backstop Participants”, and together with the Initial Call Backstop
Participants, the “Call Backstop
Participants”) will each be obligated to purchase their Pro Rata Portion
of the Unallocated Trust Shares and to pay their corresponding portion of the
Call Purchase Price.  It is expressly understood that regardless of
whether the Exercising Bondholder is an Additional Backstop Participant, the
Initial Backstop Participants shall have the first option to purchase all of the
Unallocated Trust Shares and if any of them elect to purchase the Unallocated
Trust Shares, no Additional Participant (including any Additional Backstop
Participant which may be the Exercising Bondholder) shall have any right to
purchase the Unallocated Trust Shares.




3.03           Closing.  The
delivery of the Trust Shares will be made by the Trust to the Call Participants
on the tenth Business Day following the receipt by the Trust of the Call
Election Notice (the “Call Closing Date”)
against payment of the Call Purchase Price for the Trust Shares by wire transfer
of federal (same day) funds to the account specified by the Trust on the
signature page attached hereto.  The Trust shall execute stock powers
on behalf of each of the Call Participants in order to effect the transfer of
the Trust Shares from the Trust to the Call Participants and the Company shall,
upon receipt of such stock powers, record the transfer of the Trust Shares on
its stock record books.  If any Electing Participant fails to deliver
such Electing Participant’s portion of the Call Purchase Price on the Call
Closing Date, the Call Backstop Participants shall each purchase and pay for
their Pro Rata Portion of any Trust Shares that were to be purchased by such
Electing Participant treating such unpurchased Trust Shares as Unallocated Trust
Shares with such shares to be divided among and purchased by the Call Backstop
Participants in accordance with Section 3.02(a) and 3.02(b) above within two
Business Days of the Call Closing Date.  All Trust Shares will be
delivered by the Trust with any and all issue, stamp, transfer or similar taxes
or duties payable in connection with such delivery duly paid by the
Trust.




ARTICLE
IV




COMMITMENT
FEE




4.01           Commitment
Fee.  In consideration of the agreements of the Initial
Backstop Participants contained herein, and subject only to the Agreement Order
(as defined herein) becoming a Final Order (as defined herein), the Company will
pay to the Initial Back Stop Participants a commitment fee of $262,500 (the
“Commitment
Fee”).  Such Commitment Fee will be paid in U.S. dollars on the
Business Day after the Agreement Order is entered by the Bankruptcy
Court.  The Commitment Fee will be nonrefundable when paid and shall
be deemed earned whether or not the Confirmation Order is entered or becomes a
Final Order or any of the other conditions precedent contemplated in Section
9.01 hereof are satisfied.  The Commitment







-8-





Fee shall
be shared seventy six percent (76%) by Plainfield and twenty four percent (24%)
by DWS.  Simultaneously with the entry of the Agreement Order, and
thereafter on demand, the Company will reimburse or pay, as the case may be, the
standard fees and out-of-pocket expenses of one law firm retained by the Initial
Backstop Participants for purposes of negotiating and drafting this Agreement
and consummating the transactions contemplated hereby and incurred since
December 1, 2007 within 10 days of the presentation of an invoice approved by
the Initial Backstop Participants, without Bankruptcy Court review or further
Bankruptcy Court order, provided, however, that  the amount of such
reimbursement shall not exceed $150,000 in the aggregate and, provided, further,
however that if the Initial Backstop Participant’s fees and expenses for such
purposes exceed $150,000 due to delays in the process of confirming the Plan or
other causes beyond the control of the Initial Backstop Participants, the
Initial Backstop Participants may request reimbursement for such additional fees
and expenses and in such event, the Plan Proponents and the Initial Backstop
Participants shall negotiate with each other in good faith regarding whether
reimbursement of any such additional fees and expenses is reasonable and
appropriate under the facts and circumstances.




ARTICLE
V




REPRESENTATIONS
AND WARRANTIES OF THE TRUST





5.01           Representations and
Warranties of the Trust.  The Trust represents and warrants to
the Company and to each of the Backstop Participants as set forth
below.  Each representation, warranty and agreement is made only as of
Effective Date of the Plan and as of the Put Closing Date or the Call Closing
Date as applicable:




(a)           The
Trust has been duly created and is validly existing and in good standing as a
statutory trust under the laws of the State of Delaware, and all filings
required under the laws of the State of Delaware with the respect to the
creation and valid existence of the Trust as a statutory trust have been
made.




(b)           The
Trust has the power and authority to own its properties and to conduct its
business as currently conducted.




(c)           The
Trust has the requisite power and authority to enter into, execute and deliver
this Agreement and to perform its obligations hereunder, including, without
limitation, the obligation of the Trust to convey and assign the Trust Shares to
the Backstop Participants upon the exercise of the Put Right or the Call Right,
as applicable. The Trust has taken all necessary action required for the due
authorization, execution, delivery and performance by it of this
Agreement.




(d)           The
Trust is the sole record and beneficial owner of all of the Trust Shares and has
good and marketable title to the Trust Shares, free and clear of any and all
liabilities, liens, security interests, pledges, restrictions on transfer
(except for those restrictions on transfer set forth in that certain
Stockholders Agreement), claims, charges or other encumbrances or equities of
any kind, nature, or description.  The Trust Shares consist of all of
the shares of the Common Stock of the Company issued to the Trust pursuant to
the Plan.







-9-





(e)           This
Agreement has been, and any Put Exercise Notice executed and delivered by Trust
in accordance with the provisions of Article II hereof will be, duly and validly
executed and delivered by the Trust, and, upon the entry of the Agreement Order,
the Confirmation Order becoming a Final Order and the occurrence of the
Effective Date of the Plan, this Agreement will constitute the valid and binding
obligations of the Trust, enforceable against the Trust in accordance with its
terms.




(f)           Subject
to the entry of the Court Orders and occurrence of the Effective Date of the
Plan, the execution and delivery by the Trust of this Agreement and the
compliance by the Trust with all of the provisions hereof and the consummation
of the transactions contemplated herein and therein (i) will not conflict with
or result in a breach or violation of, any of the terms or provisions of, or
constitute a default under (with or without notice or lapse of time, or both),
or result in the acceleration of, or the creation of any lien under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Trust is a party or to which any of the property or
assets of the Trust is subject, (ii) will not result in any violation of the
provisions of the Trust Agreement, (iii) will not result in any violation of, or
any termination or material impairment of any rights under, any statute or any
license, authorization, injunction, judgment, order, decree, rule or regulation
of any court or governmental agency or body having jurisdiction over the Trust
or any of its properties.




(g)           No
consent, approval, authorization, order, registration or qualification of or
with any court or governmental agency or body having jurisdiction over the Trust
or any of its properties is required for the execution and delivery by the
Company of this Agreement or the performance of and compliance by the Trust with
all of the provisions hereof, except the entry of the Court Orders and the
expiration, or waiver by the Bankruptcy Court, of the 10-day period set forth in
Bankruptcy Rules 6004(h) and 3020(e), as applicable.







ARTICLE
VI




REPRESENTATIONS
AND WARRANTIES OF THE COMPANY





6.01           Representations and
Warranties of the Company.  The Company represents and warrants
to the Trust and to each of the Backstop Participants as set forth
below.  Each representation, warranty and agreement is made only as of
the date the Confirmation Order becomes a Final Order and as of the Put Closing
Date or the Call Closing Date as applicable:




(a)           The
Company has the requisite corporate power and authority to enter into, execute
and deliver this Agreement and to perform its obligations hereunder. The Company
has taken all necessary corporate action required for the due authorization,
execution, delivery and performance by it of this Agreement.




(b)           This
Agreement has been duly and validly executed and delivered by the Company, and,
upon the entry of the Agreement Order, this Agreement will constitute the valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to Section 12.09 hereof.







-10-





(c)           Prior
to the entry of the Agreement Order, the Company or the applicable Plan
Proponent will have the requisite power and authority to execute the Plan and to
file the Plan with the Bankruptcy Court and, subject to entry of the
Confirmation Order and the Confirmation Order becoming a Final Order, to perform
its obligations thereunder, and will have taken all necessary corporate actions
required for the due authorization, execution, delivery and performance by it of
the Plan.




(d)           The
Plan has been duly and validly filed with the Bankruptcy Court and, upon the
Confirmation Order becoming a Final Order and the occurrence of the Effective
Date of the Plan, will constitute the valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms.




(e)           All
of the issued shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable, and none of them
has been issued in violation of preemptive or similar rights. As of the date the
Confirmation Order becomes a Final Order, there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights or other agreements or rights to purchase or otherwise acquire
shares of capital stock of the Company except that pursuant to the Plan up to 5%
of the authorized Common Stock may be issued to the Company’s management at the
discretion of the Company’s board of directors.




(f)           Subject
to the entry of the Court Orders and the occurrence of the Effective Date of the
Plan, the execution and delivery (or, with respect to the Plan, the filing) by
the Company of this Agreement and compliance by the Company with all of the
provisions hereof and thereof and the consummation of the transactions
contemplated herein and therein (i) will not conflict with or result in a breach
or violation of, any of the terms or provisions of, or constitute a default
under (with or without notice or lapse of time, or both), or result, except to
the extent provided in or contemplated by the Plan, in the acceleration of, or
the creation of any lien under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject, (ii) will not result in any violation of the provisions
of the Certificate of Incorporation or By-laws of the Company, (iii) will not
result in any violation of, or any termination or material impairment of any
rights under, any statute or any license, authorization, injunction, judgment,
order, decree, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their
properties.




(g)           No
consent, approval, authorization, order, registration or qualification of or
with any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties is required for
the execution and delivery by the Company of this Agreement and performance of
and compliance by the Company with all of the provisions hereof and of the Plan
and the consummation of the transactions contemplated herein and therein, except
the entry of the Court Orders and the occurrence of the Effective Date of the
Plan.







-11-






ARTICLE
VII




REPRESENTATIONS
AND WARRANTIES OF THE BACKSTOP PARTICIPANTS





7.01           Representations and
Warranties of the Backstop Participants.  Each Backstop
Participant severally, but not jointly, represents and warrants on its own
behalf to, and agrees on its own behalf with, the Trust, the Company, and each
other Backstop Participant as set forth below.  Each representation,
warranty and agreement below shall be deemed to have been made by a Backstop
Participant as of the date such Backstop Participant becomes a party to this
Agreement and as of the Put Closing Date and the Call Closing Date, as
applicable:




(a)           The
Backstop Participant has the requisite power and authority to enter into,
execute and deliver this Agreement and to perform its obligations hereunder. The
Backstop Participant has taken all necessary action required for the due
authorization, execution, delivery and performance by it of this
Agreement.




(b)           The
Backstop Participant has been duly incorporated or formed and is validly
existing as a corporation, limited liability company or partnership in good
standing under the laws of the jurisdiction of its incorporation or
formation.




(c)           This
Agreement has been duly and validly executed and delivered by the Backstop
Participant, and, upon the entry of the Agreement Order, the Confirmation Order
becoming a Final Order and the occurrence of the Effective Date of the Plan,
this Agreement will constitute the valid and binding obligations of the Backstop
Participant, enforceable against it in accordance with its terms.




(d)           The
Trust Shares, if any, to be acquired under this Agreement by the Backstop
Participant are being acquired solely for its own account, for investment and
not with a view toward resale or other distribution within the meaning of the
Securities Act.  Any Trust Shares acquired by the Backstop Participant
will not thereafter be offered for sale, sold or otherwise transferred by the
Backstop Participant except pursuant to a registration statement or in a
transaction exempt from or not subject to registration under the Securities Act
and any applicable state securities laws.




(e)           The
Backstop Participant has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its investment
in the Trust Shares to be acquired hereunder, if any.  The Backstop
Participant is a “qualified institutional buyer”
as defined in Rule 144A promulgated
under the Securities Act.  The Backstop Participant understands and is
able to bear any economic risks associated with such investment (including,
without limitation, the necessity of holding the Trust Shares for an indefinite
period of time).




(f)           The
Backstop Participant acknowledges that it has been afforded the opportunity to
ask questions and receive answers concerning the Company and to obtain
additional information that it has requested to verify the accuracy of the
information contained herein.







-12-





ARTICLE
VIII


COVENANTS





8.01           Covenants of the Company and
Plan Proponents.  The Plan Proponents agree with the Trust and
the Backstop Participants as follows:




(a)           To
promptly after the Disclosure Statement is approved by the Bankruptcy
Court  and the Agreement Order is entered by such Court, distribute a
copy of this Agreement and each of the exhibits hereto to each Bondholder who notifies the Company that it is an Eligible
Bondholder,informing such EligibleBondholder that if it desires to become a party to this Agreement as an
Additional Backstop Participant theEligible Bondholder must return a copy of the Counterpart Signature Page
attached hereto as Exhibit
A to counsel to the Company, Kerry A. Brennan, Esq., Pillsbury Winthrop
Shaw Pittman LLP, 1540 Broadway, New York NY  10036-4039, with copies
to counsel for the Initial Backstop Participants, Steven Levine, Esq. c/o Brown
Rudnick Berlack Israels LLP, One Financial Center, Boston, Massachusetts, 02111
and the Bondholders’ Committee, James Savin, Esq. c/o Akin Gump Strauss Hauer
& Feld, LLP., 1333 New Hampshire Avenue NW, Washington, DC 20036 prior to
the Election Deadline.




(b)           To
file a motion and supporting papers (the “Agreement Motion”) in
the form attached hereto as Exhibit E (including
an order) seeking entry of the Agreement Order.  The Plan Proponents
shall use their reasonable efforts to have the Agreement Order become a Final
Order concurrently with the entry of the order approving the disclosure
statement, and in any event by March 31, 2008.  The Plan Proponents
will give appropriate notice, including such notice as the Bankruptcy Court may
direct, and provide appropriate opportunity for hearing, to all parties entitled
thereto, of all motions, orders, hearings or other proceedings relating to this
Agreement or the transactions contemplated hereby.




(c)           To
file the Plan in a form that is consistent in all material respects with this
Agreement, and contains only such amendments to the material terms and
conditions thereof from the version of the Plan currently on file with the
Bankruptcy Court as may be permitted under Subparagraph (d) of this Section 8.01
and to use reasonable efforts to obtain the entry of the Confirmation Order by
the Bankruptcy Court and to insure that the Confirmation Order becomes a Final
Order.  The Plan Proponents will use reasonable efforts to adopt a
Plan that (i) is consistent in all respects with this Agreement, (ii) provides
for the release and exculpation of the Backstop Participants, their respective
affiliates, representatives and advisors to the fullest extent permitted under
applicable law, and (iii) has conditions to confirmation and the Effective Date
of the Plan (and to what extent any such conditions can be waived and by whom)
that are reasonably acceptable to the Initial Backstop Participants and
consistent with this Agreement and (iv) otherwise contains only such amendments
to the material terms and conditions embodied in the form of Plan currently on
file with the Bankruptcy Court as may be permitted under subparagraph (d) of
this Section 8.01.  At least one week prior to the hearings on
approval of the Disclosure Statement, the Plan Proponents will (A) provide a
copy of the Plan and the Disclosure Statement to the Initial Backstop
Participants and their counsel; and (B) incorporate any reasonable comments of
the Initial Backstop Participants and its counsel into such
documents.  In addition, the Plan Proponents will provide to the
Initial Backstop Participants and its counsel a copy of the proposed
Confirmation Order and a reasonable opportunity to review and comment on such
order prior to such proposed order being filed with the Bankruptcy Court and
incorporate any reasonable comments of the Initial Backstop Participants and its
counsel into the proposed Confirmation Order.







-13-





(d)           Without
the written consent of the Initial Backstop Participants, except for the
issuance of up to 5% of the issued and outstanding Common Stock to members of
the Company’s management as contemplated by the Plan, not to amend any material
provision of the Plan in a manner adverse to the Initial Backstop Participants
(either in their capacity as such or as Bondholders) or inconsistent with this
Agreement and not to amend the Plan to provide for the issuance of any
additional shares of capital stock of the Company, or options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights,
securities convertible into or exchangeable for capital stock of the Company, or
other agreements or rights to purchase or otherwise acquire capital stock of the
Company on or after the date of this Agreement until the earlier to occur of (i)
the Put Closing Date, (ii) the Call Closing Date or (iii) the expiration of the
Call Period.




8.02           Covenants of the
Trust. Without the written consent of the Initial Backstop Participants,
dispose of any shares of capital stock of the Company received by the Trust
pursuant to the Plan, on or after the date of this Agreement until the earlier
to occur of (i) the Put Closing Date, (ii) the Call Closing Date or (iii) the
expiration of the Call Period.




8.03           Covenants of All
Parties.  The parties hereto agree:




(a)           To
use their respective reasonable efforts to facilitate the entry of the Agreement
Order as soon as practicable following the filing of the Agreement
Motion.




(b)           To
use reasonable efforts to facilitate the entry of the Confirmation Order as soon
as practicable following the filing of the Plan.




(c)           To
not file any pleading or take any other action in the Bankruptcy Court with
respect to this Agreement, the Plan, the Disclosure Statement or the
Confirmation Order or the consummation of the transactions contemplated hereby
or thereby that is inconsistent with this Agreement or the Plan Proponents’
efforts to obtain the entry of the Court Orders consistent with this
Agreement.




(d)           To
keep confidential the identity of any EligibleBondholder that either elects to become an Additional Backstop
Participant or an Electing Participant.




ARTICLE
IX





CONDITIONS





9.01           Condition to the Obligations
of the Backstop Participants.  The obligation of the Initial
Backstop Participants and any Additional Backstop Participants to purchase any
Trust Shares pursuant to the terms hereof are subject to the following
conditions:







-14-





(a)           The
Agreement Order shall have been entered by the Bankruptcy Court in the form
attached hereto as Exhibit E with no
modifications thereto without the consent of Initial Backstop Participants and
the Agreement Order shall have become a Final Order.




(b)           The
Initial Backstop Participants shall have approved in writing (i) by the earlier
of the hearing on the Agreement Motion or the Disclosure Statement, the Plan
that (A) is consistent in all respects with this Agreement, (B) provides for the
release and exculpation of the Backstop Participants and their respective
affiliates, representatives and advisors to the fullest extent permitted under
applicable law, and (C) has conditions to confirmation and the effective date of
the Plan (and to what extent any such conditions can be waived and by whom) that
are reasonably acceptable to Initial Backstop Participants and consistent with
this Agreement; (ii) by the earlier of the hearing on the Agreement Motion or
the Disclosure Statement, a Disclosure Statement that is consistent in all
material respects with the Plan as described herein; (iii) prior to filing with
the Bankruptcy Court, a draft of the Confirmation Order, that is consistent in
all respects with the provisions of this Agreement and the Plan; and (iv) prior
to filing with the Bankruptcy Court, drafts of any amendments or supplements to
any of the foregoing, to the extent any such amendment or supplement effects a
material change to the Plan or any other document or agreement described herein
or any change to the total amount of or conditions to the payments made or to be
made under this Agreement or any change inconsistent with this
Agreement.




(c)           Neither
the Company nor any Plan Proponent shall have made a public announcement,
entered into an agreement or filed any pleading or document with the Bankruptcy
Court evidencing its intention to support, or otherwise supported, any
transaction inconsistent with the Plan approved by the Initial Backstop
Participants in accordance with Section 9.01(b) of this Agreement.




(d)           The
Confirmation Order shall have been entered by the Bankruptcy Court and shall
have become a Final Order.




(e)           The
Plan, as approved, and the Confirmation Order as entered, by the Bankruptcy
Court, shall be in the form approved by the Initial Backstop Participants in
accordance with Section 9.01(b) of this Agreement, with such amendments,
modifications or changes that (i) are consistent in all respects with this
Agreement, (ii) are consistent in all material respects with the form of the
Plan and the Confirmation Order approved by the Initial Backstop Participants in
accordance with Section 9.01(b) of this Agreement, (iii) provide for the release
and exculpation of the Backstop Participants and their respective affiliates,
representatives and advisors to the fullest extent permitted under applicable
law, (iv) do not change the total amount of or conditions to the payments made
or to be made under this Agreement, and (v) otherwise are consistent in all
material respects with this Agreement and reasonably acceptable to the Initial
Backstop Participants.




(f)           The
conditions to confirmation and the conditions to the effective date of the Plan
have been satisfied or waived by the Company or the Plan Proponents in
accordance with the Plan, and the effective date of the Plan shall have
occurred.







-15-





(g)           No
judgment, injunction, decree or other legal restraint shall prohibit the
consummation of the Plan or the transactions contemplated by this
Agreement.




(h)           The
Initial Backstop Participants shall have received payment of the Commitment Fee,
and the Commitment Fee shall not have been required to be repaid to the
Company.




(i)           The
Company and all Plan Proponents shall agree in the Plan not to object to the
substantial contribution claim of the Ad Hoc Committee of Bondholders in a
maximum amount not to exceed $281,000, which claim shall be paid, to the extent
allowed, upon the Effective Date if allowed prior to such date or within ten
(10) days after entry of an order allowing such claim.




(j)           This
Agreement shall be valid and enforceable against the Company and the Trust and
neither the Company nor the Trust shall be in breach of this
Agreement.




ARTICLE
X




SURVIVAL,
INDEMNIFICATION





10.01          Survival of Representations
and Warranties, Etc.  Notwithstanding any investigation at any
time made by or on behalf of any party hereto, all representations and
warranties made in this Agreement will survive the execution and delivery of
this Agreement.




10.02          Indemnification.





(a)           Whether
or not the Put Right is exercised by the Trust and whether or not the Call Right
is exercised by any Initial Backstop Participant, the Company will indemnify,
defend, protect, save and hold harmless the Backstop Participants, their
affiliates and their respective officers, directors, employees, advisors,
shareholders, members, managers, partners, attorneys, agents and representatives
(the “Indemnitees”), from
and against all losses, claims, damages, liabilities, costs (including, without
limitation, the costs of investigation and attorneys’ fees) and expenses
(collectively, “Losses”) to which any
of the Indemnitees becomes subject arising out of or in connection with any
third-party claim, challenge, litigation, investigation or proceedings with
respect to the exercise of the Put Right, the exercise of the Call Right, the
sale by the Trust of the Trust Shares, this Agreement, or the transactions
contemplated by the foregoing, including, without limitation, payment of the
Commitment Fee, and to reimburse each of the Indemnitees for any legal or other
costs and expenses incurred in connection with investigating or defending,
participating or testifying in any of the foregoing; provided, however, that the
foregoing indemnity will not apply to Losses to the extent that they are found
by a final, non-appealable judgment of a court of competent jurisdiction to have
resulted from (A) a breach by any Indemnitee of this Agreement or (B) bad faith,
the willful misconduct or gross negligence of any Indemnitee.  Such
legal or other expenses shall be promptly reimbursed as and when they are
incurred.  The Company acknowledges and agrees that if either the
Commitment Fee, once paid, if required to be refunded to the Company or
otherwise, at any time or for any reason other than as a result of clauses (A)
or (B) above, the amount so refunded shall constitute an indemnifiable Loss
under this Agreement.  This indemnification provision will be in
addition to the rights of each and all of the Indemnitees to bring an action
against the Company for breach of any term of this Agreement.  None of
the Indemnitees shall be liable to the Company for any special, indirect,
consequential, incidental or punitive damages.





-16-





(b)           In
case any proceeding shall be instituted in respect of which indemnity may be
sought pursuant to the paragraph above, the Indemnitee shall promptly notify the
Company.  In any event, failure to notify the Company will not relieve
the Company from any liability which it may have on account of this indemnity or
otherwise, except to the extent the Company is materially prejudiced by such
failure.  Upon the Company’s prompt written notice to the Backstop
Participants, the Company may retain counsel reasonably satisfactory to the
Backstop Participants to represent the Backstop Participants and any Indemnitee
and will pay the fees and disbursements of such counsel related to such
proceeding.  In any such proceeding, any Indemnitee will have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnitee unless (i) the Company and the Backstop
Participants have mutually agreed to the retention of such counsel or (ii) the
Indemnitee has been advised by counsel that there are actual or potential
conflicting interests between the Company and the Indemnitee, including
situations in which there are one or more legal defenses available to the
Indemnitee that are different from or additional to those available to the
Company.  It is understood that the Company shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm (in addition to any
local counsel) for all such Indemnitees in any matter or series of related
matters.





ARTICLE
XI




TERMINATION




11.01          Termination.




(a)           The
Initial Backstop Participants may terminate this Agreement, if the Bankruptcy
Court has not entered the Agreement Order approving this Agreement, the exhibits
attached hereto, and the payment of the Commitment Fee and such order has not
become a Final Order by March 31, 2008.




(b)           Any
Initial Backstop Participant may terminate this Agreement if on or after the
third (3rd)
Business Day following the date the Commitment Fee has become payable, the
portion of the Commitment Fee due to such Initial Backstop Participant has not
been received by such Initial Backstop Participant.




(c)           In
no event will the Commitment Fee be refundable upon termination of this
Agreement pursuant to this Section 11.




(d)           Any
Initial Backstop Participant may terminate this Agreement if (i) the Bankruptcy
Court has not entered the Confirmation Order, (ii) such Confirmation Order has
not become a Final Order, and (iii) the Effective Date have not all occurred by
June 30, 2008, provided, however, that , the June 30, 2008 deadline for the
Confirmation Order to become a Final Order and the Effective Date to occur shall
be automatically extended through September 5, 2008  so long as (x)
the Bankruptcy Court has entered the Confirmation Order by June 30, 2008; (y)
the Plan Proponents are proceeding in good faith and using their best efforts to
cause the Confirmation Order to become a Final Order and/or to cause the
Effective Date to occur and (z) no material adverse change has occurred to the
Company’s business, financial condition or financial prospects.







-17-





(e)           Upon
termination under this Section 11, the covenants and agreements made by the
parties herein under Sections 8.03(d), 10.02, 12.01, 12.04 and 12.08 will
survive indefinitely in accordance with their terms.




(f)           The
deadlines specified in subparagraphs (a) or (d) above may be extended with the
written consent of the Plan Proponents and the Initial Backstop Participants
without any further approval of the Bankruptcy Court or any other party in
interest in the Bankruptcy Cases.




ARTICLE
XII




MISCELLANEOUS





12.01          Notices.  All
notices and other communications in connection with this Agreement will be in
writing and will be deemed given (and will be deemed to have been duly given
upon receipt) if delivered personally, sent via electronic facsimile (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as will be specked by
like notice):




If to
Congoleum Corporation, to:





Pillsbury
Winthrop Shaw Pittman LLP


1540
Broadway


New York,
NY  10033-4039


Attention:
Richard L. Epling


Robin L.
Spear


Kerry A.
Brennan


Fax:





with a
copy to:





Okin,
Hollander & DeLuca, LLP


Parker
Plaza


400 Kelby
Street


Fort Lee,
NJ  07024


Attention:
Paul S. Hollander


James J.
DeLuca


Fax:








-18-





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


1152 15th Street,
N.W.


Washington,
DC  20005


Attention: Roger Frankel


Richard
Wyron


Jonathan
Guy





If to the Asbestos Claimants’
Committee:





Calpin & Drysdale,
Chtd.


One Thomas Circle, N.W.


Washington,
D.C.  20005


Attention:  Peter Van N.
Lockwood


Ronald
Reinsel





If to Claimants’ Counsel:





Stutzman, Bromberg, Esserman &
Plifka


2323 Bryan Street, Suite
2000


Dallas,
TX  75201


Attention:  Sander
Esserman





If to the
Trust, to:




Attention:


Fax:





with a
copy to:





Attention:


Fax:





If to the
FCR:





With a
copy to:





If to the
ABC:





With a
copy to:





-19-




If to the
Bondholders’ Committee:





Akin Gump Strauss Hauer & Feld
LLP


590 Madison Avenue


New York,
NY  10022


Attention: Michael S.
Stamer





With a
copy to





Akin Gump Strauss Hauer & Feld
LLP


1333 New Hampshire Avenue,
N.W.


Washington,
D.C.  20036


Attention: James R. Savin





If to any
Backstop Participant, to the address set forth on the signature page or any
counterpart signature page attached hereto.





with a
copy to:





Brown
Rudnick Berlack Israels LLP One
Financial Center Boston,
Massachusetts 02111 Attention:  Steven
B. Levine Fax:
(617) 289-0418




12.02          Assignment; Third Party
Beneficiaries.  Neither this Agreement nor any of the rights,
interests or obligations under this Agreement will be assigned by any of the
parties (whether by operation of law or otherwise) without the prior written
consent of the other party.  Notwithstanding the previous sentence,
this Agreement, or any Backstop Participants’ obligations hereunder, may be
assigned, delegated or transferred, in whole or in part, by any Backstop
Participant to any Affiliate (as defined in Rule 12b-2 under the Exchange Act)
of such Backstop Participant over which the Backstop Participant or any of its
Affiliates exercises investment authority, including, without limitation, with
respect to voting and dispositive rights; provided, that any
such assignee assumes the obligations of the Backstop Participant hereunder and
agrees in writing to be bound by the terms of this Agreement in the same manner
as the Backstop Participant.  Notwithstanding the foregoing or any
other provisions herein, no such assignment will relieve a Backstop Participant
of its obligations hereunder if such assignee fails to perform such
obligations.  This Agreement will be binding upon, inure to the
benefit of and be enforceable by each of the parties and their respective
successors and assigns.  This Agreement (including the documents and
instruments referred to in this Agreement) is not intended to and does not
confer upon any person other than the parties hereto any rights or remedies
under this Agreement.




12.03          Prior Negotiations; Entire
Agreement.  This Agreement (including the agreements attached
as exhibits to and the documents and instruments referred to in this Agreement)
constitutes the entire agreement of the parties and supersedes all prior
agreements and understandings, whether written or oral, between the parties with
respect to the subject matter of







-20-





this
Agreement, except that the parties hereto acknowledge that any confidentiality
agreements heretofore executed among the parties will continue in full force and
effect.




12.04          GOVERNING LAW;
VENUE.  THIS AGREEMENT WILL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO
ANY APPLICABLE CONFLICT OF LAWS PRINCIPLES.




12.05          Counterparts.  This
Agreement may be executed in any number of counterparts, all of which will be
considered one and the same agreement and will become effective when
counterparts have been signed by each of the parties and delivered to the other
party (including via facsimile or other electronic transmission), it being
understood that each party need not sign the same counterpart.




12.06          Waivers and
Amendments.  This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions of this
Agreement may be waived, only by a written instrument signed by the parties or,
in the case of a waiver, by the party waiving compliance.  No delay on
the part of any party in exercising any right, power or privilege pursuant to
this Agreement will operate as a waiver thereof, nor will any waiver on the part
of any party of any right, power or privilege pursuant to this Agreement, nor
will any single or partial exercise of any right, power or privilege pursuant to
this Agreement, preclude any other or further exercise thereof or the exercise
of any other right, power or privilege pursuant to this
Agreement.  The rights and remedies provided pursuant to this
Agreement are cumulative and are not exclusive of any rights or remedies which
any party otherwise may have at law or in equity.




12.07          Headings.  The
headings in this Agreement are for reference purposes only and will not in any
way affect the meaning or interpretation of this Agreement.




12.08          Specific
Performance.  The parties acknowledge and agree that any breach
of the terms of this Agreement would give rise to irreparable harm for which
money damages would not be an adequate remedy, and, accordingly, the parties
agree that, in addition to any other remedies, each will be entitled to enforce
the terms of this Agreement by a decree of specific performance without the
necessity of proving the inadequacy of money damages as a remedy and without the
necessity of posting bond.




12.09          Effectiveness.  The
parties acknowledge that except for the provisions of Sections 8.01 hereof,
which shall be binding upon the Company, Plan Proponents and Initial Backstop
Participants upon their execution hereof prior to the entry of the Agreement
Order, neither the Company nor any other party hereto shall be bound under this
Agreement until the Agreement Order has been entered by the Bankruptcy
Court.  The parties further acknowledge that (i) the Trust shall have
no obligations hereunder unless and until the Confirmation Order has been
entered, the Effective Date has occurred and the Trust has been organized and
funded pursuant to the Plan and (ii) the provisions of Articles II and III
hereof shall have no force or effect unless and until the Confirmation Order has
been entered and the Effective Date has occurred.  On the Effective
Date, the Trust shall execute and deliver this Agreement and take all steps
necessary to become a party to this Agreement on such date.







-21-










[Signature
Page Follows]







-22-





IN
WITNESS WHEREOF, the parties’ duly authorized representatives have hereby
executed this Agreement as of the date first above written.




CONGOLEUM
CORPORATION






By:


Name:


Title:






Address
at which to receive communications:


_________________________________________________ _______________________________________________ ________________________________________________________________________________________________




[TRUST]


By:
 Name:
 Title:
   Address
at which to receive communications:
 ________________________________________________
 ________________________________________________ ________________________________________________________________________________________________




WIRE
FUNDS TO:




ACCOUNT
NAME:




ACCOUNT
NUMBER:




ABA
ROUTING NUMBER:




ADDITIONAL
INSTRUCTIONS:







-23-






INITIAL
BACKSTOP PARTICIPANTS:




PLAINFIELD
SPECIAL SITUATIONS MASTER FUND LIMITED


By:
 Name:
 Title:
  Address
at which to receive communications:
 ________________________________________________
 ________________________________________________ ________________________________________________________________________________________________




DWS HIGH INCOME
FUND


By:
 Name:
 Title:


DWS HIGH INCOME
VIP


By:
 Name:
 Title:


DWS HIGH INCOME PLUS
FUND


By:
 Name:
 Title:


DWS HIGH INCOME
TRUST


By:
 Name:
 Title:


DWS BALANCED
FUND


By:
 Name:
 Title:





-24-






DWS STRATEGIC INCOME
FUND


By:
 Name:
 Title:


DWS MULTI MARKET INCOME
TRUST


By:
 Name:
 Title:


DWS BALANCED
VIP


By:
 Name:
 Title:


DWS STRATEGIC INCOME
VIP


By:
 Name:
 Title:


DWS STRATEGIC INCOME
TRUST


By:
 Name:
 Title:
  Address
at which to receive communications:
 _________________________________________________ _______________________________________________ ________________________________________________________________________________________________







-25-







The undersigned hereby
acknowledge and agree to undertake their obligations as Plan Proponents under
this Put/Call Agreement including, but not limited to, those contained in
Section 8.01 thereof:





FUTURE
      REPRESENTATIVE
            ASBESTOS CLAIMANTS’
      COMMITTEEBy:
              Name:R. Scott
      Williams
              Title:Future
      Representative
            By:
              Name:Roland
      Reinsel
              Title:Counsel
      for the Asbestos Claimants’ CommitteeOFFICIAL
      BONDHOLDERS’ COMMITTEEBy:
              Name:
              Title:





[Signature
Page to Put/Call Agreement]







-26-





EXHIBIT
A




COUNTERPART SIGNATURE PAGE
TO PUT/CALL AGREEMENT




By
execution of this Counterpart Signature Page to that certain Put/Call Agreement
dated as of ___________ by and between Congoleum Corporation, the Trust, the
Initial Backstop Participants and the other parties named therein (the “Put/Call Agreement”),
the undersigned does hereby agree as of the date written below under the name of
the undersigned to become a party to the Put/Call Agreement and in so doing to
become an “Additional Backstop Participant” for all purposes thereunder, and to
be bound by the provisions of the Put/Call Agreement to which this Counterpart
Signature Page is appended, a counterpart of which has been furnished to the
undersigned.  The undersigned hereby acknowledges and agrees that this
Counterpart Signature Page will be appended to the Put/Call Agreement as
evidence thereof.  By signing below, the undersigned further confirms
that the representations and warranties in Section 7.01 of the Put/Call
Agreement are true, accurate and complete as applied to the undersigned as of
the date hereof.  WITHOUT LIMITATION OF THE GENERALITY OF THE
FOREGOING, THE UNDERSIGNED FURTHER CONFIRMS THAT IT IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES
ACT.





ADDITIONAL
BACKSTOP PARTICIPANT








Name of
Backstop Participant:___________________________


By:


Title:





Date:_______________________________________________





Address
at which to receive
communications:______________________________________


___________________________________________________





___________________________________________________





___________________________________________________





-27-





EXHIBIT
B




PUT EXERCISE
NOTICE




The
undersigned, on behalf of the Trust, hereby notifies the Backstop Participants
that it elects to exercise the Put Right described in that certain Put/Call
Agreement dated __________ (the “Put/Call Agreement”),
and by delivery of this notice in accordance with the provisions of Section
12.01 of the Put/Call Agreement, directs the Backstop Participants to purchase
the Trust Shares for an aggregate purchase price of $5.25
million.  Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Put/Call
Agreement.




.




[TRUST]




By:______________________________




Name:




Title:












-28-





EXHIBIT
C




CALL EXERCISE
NOTICE




The
undersigned hereby notifies the Trust that it elects, on behalf of itself and
each other Call Participant to exercise the Call Right described in that certain
Put/Call Agreement dated __________ (the “Put/Call Agreement”),
and by delivery of this notice to the Trust in accordance with the provisions of
Section 12.01 of the Put/Call Agreement, hereby agrees on its own behalf, and on
behalf of each other Call Participant to purchase the Trust Shares for an
aggregate purchase price of $7.5 million.  Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to such
terms in the Put/Call Agreement.









By:______________________________




Name:




Title:







-29-





EXHIBIT
D-1




CALL PARTICIPATION
NOTICE




The
undersigned hereby notifies the Exercising Bondholder that it elects to
participate in the exercise of the Call Right and hereby elects to purchase and
pay for the undersigned’s Pro Rata Portion of the Trust Shares to be purchased
pursuant to the exercise of the Call Right as determined by reference to Section
3.02(a) of the Put/Call Agreement dated __________ (the “Put/Call
Agreement”).  Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Put/Call
Agreement.









By:______________________________




Name:




Title:












-30-





EXHIBIT
D-2




CALL PARTICIPATION
NOTICE




The
undersigned hereby notifies the Exercising Bondholder that it elects to
participate in the exercise of the Call Right as follows (check applicable
participation level):




_______
            The
      undersigned hereby elects to purchase and pay for the undersigned’s Pro
      Rata Portion of the Trust Shares to be purchased pursuant to the exercise
      of the Call Right as determined by reference to Section 3.02(a) of the
      Put/Call Agreement dated __________ (the “Put/Call
      Agreement”)._______
            The
      undersigned hereby elects to purchase and pay for the undersigned’s Pro
      Rata Portion of the Trust Shares to be purchased pursuant to the exercise
      of the Call Right as determined by reference to Section 3.02(a) of the
      Put/Call Agreement as well as the undersigned’s Pro Rata Portion of
      the Unallocated Trust Shares as determined by reference to Section
      3.02(a) of the Put/Call Agreement._______
            The
      undersigned hereby elects NOT to purchase and pay for the undersigned’s
      Pro Rata Portion of the Trust
Shares.







Capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Put/Call Agreement.









By:______________________________




Name:




Title:












-31-





EXHIBIT
E




FORM OF AGREEMENT
MOTION


































-32-