Document:

Exhibit 10(42)

                                                                     [Execution]

           AMENDMENT NO. 1 TO RATIFICATION AND AMENDMENT AGREEMENT AND
                 AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT

      AMENDMENT NO. 1 TO RATIFICATION AND AMENDMENT AGREEMENT AND AMENDMENT NO.
3 TO LOAN AND SECURITY AGREEMENT, dated as of December 14, 2004 (this "First
Ratification Amendment"), by and among CONGOLEUM CORPORATION, a Delaware
corporation, as debtor and debtor-in-possession ("Borrower"), CONGOLEUM FISCAL,
INC., a New York corporation, as debtor and debtor-in-possession ("CFI"),
CONGOLEUM SALES, INC., a New York corporation, as debtor and
debtor-in-possession ("CSI" and together with CFI, collectively, "Guarantors"
and each individually, a "Guarantor"), and CONGRESS FINANCIAL CORPORATION, a
Delaware corporation ("Lender").

                              W I T N E S S E T H:
                               - - - - - - - - - -

      WHEREAS, Lender, Borrower and Guarantors have entered into financing
arrangements pursuant to which Lender may make loans and advances and provide
other financial accommodations to Borrower as set forth in the Loan and Security
Agreement, dated December 10, 2001, between Lender and Borrower, as amended by
Amendment No. 1 to Loan and Security Agreement, dated September 29, 2002,
between Lender and Borrower, Amendment No. 2 to Loan and Security Agreement,
dated as of February 27, 2003, among Lender, Borrower and Guarantors, and as
further amended and ratified by the Ratification and Amendment Agreement, dated
as of January 7, 2004 (the "Ratification Agreement"), between Lender and
Borrower, as acknowledged by Guarantors, permitting debtor and
debtor-in-possession financing for Borrower and Guarantors, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced (all of the foregoing, as amended hereby and as the same
may hereafter be further amended, modified, supplemented, extended, renewed,
restated or replaced, collectively, the "Loan Agreement", and together with all
agreements, documents and instruments at any time executed and/or delivered in
connection therewith or related thereto, including the Reaffirmation and
Amendment of Guarantor Documents, dated as of January 7, 2004, between Lender
and Guarantors, as from time to time amended, modified, supplemented, extended,
renewed, restated or replaced, collectively, the "Financing Agreements");

      WHEREAS, Borrower and each Guarantor has commenced a case under Chapter 11
of Title 11 of the United States Code in the United States Bankruptcy Court for
the District of New Jersey and has retained possession of its assets and is
authorized under the Bankruptcy Code to continue the operation of its businesses
as a debtor-in-possession;
<PAGE>

      WHEREAS, Borrower and Guarantors have requested that Lender make certain
amendments to the Loan Agreement, and Lender is willing to agree to such
request, subject to the terms and conditions contained herein;

      WHEREAS, by this First Ratification Amendment, Lender, Borrower and
Guarantors desire and intend to evidence such amendments; and

      WHEREAS, this First Ratification Amendment has been authorized by the
Bankruptcy Court pursuant to an Order entered by the Bankruptcy Court
authorizing Borrower and Guarantors to execute and deliver this First
Ratification Amendment;

      NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lender, Borrower and
Guarantors hereby covenant, warrant and agree as follows:

      1. DEFINITIONS.

      1.1 Additional Definition. "First Ratification Amendment" shall mean this
First Ratification Amendment, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.

      1.2 Amendments to Definitions in Financing Agreements.

            (a) All references to the term "Budget" in the Ratification
Agreement and any of the other Financing Agreements shall be deemed and each
such reference is hereby amended to mean the Budget attached to the Ratification
Agreement as Exhibit A, as supplemented by the Budget attached hereto as Exhibit
A, in each case delivered to Lender pursuant to Section 5.3 of the Ratification
Agreement and setting forth the cash expenditures of Borrower and Guarantors on
a monthly or quarterly basis, as applicable, for the estimated and projected
periods covered thereby, together with any further amendments, modifications and
supplements thereto or any subsequent budget, satisfactory in form and substance
to Lender, setting forth such information for any subsequent period or periods.

            (b) All references to the term "Financing Agreements" in this First
Ratification Amendment and in any of the Financing Agreements shall be deemed
and each such reference is hereby amended to include, in addition and not in
limitation, this First Ratification Amendment, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.

            (c) All references to the term "Ratification Agreement" in this
First Ratification Amendment and in any of the Financing Agreements shall be
deemed and each such reference is hereby amended to mean the Ratification
Agreement, as amended hereby, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.

      1.3 Interpretation. For purposes of this First Ratification Amendment,
unless otherwise defined herein, all capitalized terms used herein, including,

                                        2
<PAGE>

but not limited to, those terms used and/or defined in the recitals above, shall
have the respective meanings assigned to such terms in the Loan Agreement.

      2. AMENDMENTS TO LOAN AGREEMENT

      2.1 Capital Expenditures. Section 9.19 of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:

            "9.19 Capital Expenditures. Borrower and its Subsidiaries shall not,
      directly or indirectly, make any Capital Expenditures in excess of: (i)
      $8,500,000 in fiscal year 2003 and (ii) $7,000,000 in any other fiscal
      year, provided, that, if the aggregate amount of Capital Expenditures made
      by Borrower and its Subsidiaries during fiscal year 2004 is less than
      $5,000,000, then the amount of Capital Expenditures permitted to be made
      by Borrower and its Subsidiaries hereunder during fiscal year 2005 shall
      be increased by $2,000,000."

      2.2 EBITDA. Section 9.23 of the Loan Agreement is hereby amended by adding
the following subsection (c) to the end of such Section:

            "(c) Borrower and its Subsidiaries shall not, as to any fiscal
      quarter during the fiscal year 2005 of Borrower and its Subsidiaries,
      permit EBITDA of Borrower and its Subsidiaries commencing on the first day
      of such fiscal year and ending on the last day of the applicable fiscal
      quarter set forth below on a cumulative year-to-date basis to be less than
      the respective amount set forth below opposite such fiscal quarter end
      year-to-date period:

                 Period                      Minimum EBITDA
                 ------                      --------------

                 January 1, 2005 through     $3,500,000
                 March 31, 2005

                 January 1, 2005 through     $9,500,000"
                 June 30, 2005

      2.3 Term.

            (a) The first sentence of Section 12.1(a) of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:

            "This Agreement and the other Financing Agreements shall become
      effective as of the date set forth on the first page hereof and shall
      continue in full force and effect for a term ending on June 30, 2005 (the
      "Termination Date")."

                                        3
<PAGE>

            (b) Section 12.1(c)(iii) of the Loan Agreement is hereby amended by
deleting the reference to "December 31, 2004" and replacing it with "June 30,
2005".

      3. AMENDMENT FEE. In addition to and not in limitation of all other fees,
costs and expenses payable to Lender under the Financing Agreements, in
consideration of this First Ratification Amendment, Borrower shall pay Lender an
amendment fee in the amount of $150,000, which fee shall be fully earned as of
and payable on the date hereof and may be charged directly to the loan account
of Borrower.

      4. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS. In addition to
the continuing representations, warranties and covenants heretofore made in the
Loan Agreement or otherwise and hereafter made by Borrower and Guarantors to
Lender, whether pursuant to the Financing Agreements or otherwise, and not in
limitation thereof, Borrower and Guarantors hereby represent, warrant and
covenant with, to and in favor of Lender the following (which shall survive the
execution and delivery of this Agreement), the truth and accuracy of which, or
compliance with, to the extent such compliance does not violate the terms and
provisions of the Bankruptcy Code, being a continuing condition of the making of
loans by Lender:

      4.1 The Budget attached hereto as Exhibit A has been thoroughly reviewed
by Borrower and Guarantors and their respective appropriate management and sets
forth, among other things, the actual through September 30, 2004 and the
projected through June 30, 2005 quarterly statements of cash flow, including
cash receipts and cash disbursements, quarterly statements of loan availability
of Borrower on a quarterly "roll-forward" basis and monthly statements of
asbestos/bankruptcy costs. Borrower and Guarantors hereby acknowledge, confirm
and agree that Lender has relied upon the Budget and on the information set
forth therein in determining to enter into this First Ratification Amendment.
Borrower shall furnish to Lender all other financial information, projections,
budgets, business plans, cash flows and such other information as Lender shall
reasonably request from time to time.

      4.2 This First Ratification Amendment has been duly authorized, executed
and delivered by Borrower and Guarantors and the agreements and obligations of
Borrower and Guarantors contained herein constitute legal, valid and binding
obligations of Borrower and Guarantors enforceable against Borrower and
Guarantors in accordance with their respective terms.

      4.3 No Event of Default or act, condition or event which with notice or
passage of time or both would constitute an Event of Default exists or has
occurred as of the date of this First Ratification Amendment.

      5. CONDITIONS PRECEDENT. In addition to any other conditions contained
herein or in the Loan Agreement, as in effect immediately prior to the date
hereof, with respect to the Loans, Letter of Credit Accommodations and other
financial accommodations available to Borrower (all of which conditions, except
as modified or made pursuant to this First Ratification Amendment shall remain
applicable to the Loans and be applicable to Letter of Credit Accommodations and
other financial accommodations available to Borrower), the following are

                                        4
<PAGE>

conditions to Lender's obligation to extend further loans, advances or other
financial accommodations to Borrower pursuant to the Loan Agreement:

      5.1 No trustee, examiner or receiver or the like shall have been appointed
or designated with respect to Borrower or any Guarantor, as debtor and
debtor-in-possession, or its business, properties and assets;

      5.2 Borrower and Guarantors shall execute and/or deliver to Lender this
First Ratification Amendment, and all other Financing Agreements that Lender may
request to be delivered in connection herewith, in form and substance
satisfactory to Lender;

      5.3 Borrower and Guarantors shall execute and/or deliver to Lender all
other Financing Agreements, and other agreements, documents and instruments, in
form and substance satisfactory to Lender, which, in the good faith judgment of
Lender are necessary or appropriate and implement the terms of this First
Ratification Amendment and the other Financing Agreements, as modified pursuant
to this First Ratification Amendment, all of which contains provisions,
representations, warranties, covenants and Events of Default, as are reasonably
satisfactory to Lender and its counsel;

      5.4 Each of Borrower and Guarantors shall comply in full with the notice
and other requirements of the Bankruptcy Code and the applicable Federal Rules
of Bankruptcy Procedure with respect to any relevant Order approving this First
Ratification Amendment in a manner acceptable to Lender and its counsel, and an
Order shall have been entered by the Bankruptcy Court authorizing Borrower and
Guarantors to execute and deliver this First Ratification Amendment; and

      5.5 No Event of Default shall be continuing under any of the Financing
Agreements, as of the date hereof.

      6. MISCELLANEOUS.

      6.1 Amendments and Waivers. Neither this First Ratification Amendment nor
any other instrument or document referred to herein or therein may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought.

      6.2 Further Assurances. Each of Borrower and Guarantors shall, at its
expense, at any time or times duly execute and deliver, or shall cause to be
duly executed and delivered, such further agreements, instruments and documents,
including, without limitation, additional security agreements, collateral
assignments, Uniform Commercial Code financing statements or amendments or
continuations thereof, landlord's or mortgagee's waivers of liens and consents
to the exercise by Lender of all the rights and remedies hereunder, under any of
the other Financing Agreements, any Financing Order or applicable law with
respect to the Collateral, and do or cause to be done such further acts as may
be necessary or proper in Lender's opinion to evidence, perfect, maintain and
enforce the security interests of Lender, and the priority thereof, in the
Collateral and to otherwise effectuate the provisions or purposes of this First
Ratification Amendment, any of the other Financing Agreements or the Financing
Order. Upon the request of Lender, at any time and from time to time, Borrower
and Guarantors shall, at its cost and expense, do, make, execute, deliver and

                                        5
<PAGE>

record, register or file, financing statements, mortgages, deeds of trust, deeds
to secure debt, and other instruments, acts, pledges, assignments and transfers
(or cause the same to be done) and will deliver to Lender such instruments
evidencing items of Collateral as may be requested by Lender.

      6.3 Headings. The headings used herein are for convenience only and do not
constitute matters to be considered in interpreting this First Ratification
Amendment.

      6.4 Counterparts. This First Ratification Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which shall together constitute one and the same agreement.

      6.5 Additional Events of Default. The parties hereto acknowledge, confirm
and agree that the failure of Borrower or any Guarantor to comply with any of
the covenants, conditions and agreements contained herein or in any other
agreement, document or instrument at any time executed by Borrower or any
Guarantor in connection herewith shall constitute an Event of Default under the
Financing Agreements.

      6.6 Effectiveness. This First Ratification Amendment shall become
effective upon the execution hereof by Lender.

                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

                                        6
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this First Ratification
Amendment to be duly executed as of the day and year first above written.

                         CONGRESS FINANCIAL CORPORATION

                         By: /s/ Dionne S. Rice
                             ---------------------------------------

                         Title: Vice President
                                ------------------------------------

                         CONGOLEUM CORPORATION, as Debtor and
                         Debtor-in-Possession

                         By:
                             ---------------------------------------

                         Title:
                                ------------------------------------

                         CONGOLEUM SALES, INC.,
                         as Debtor and Debtor-in-Possession

                         By:
                             ---------------------------------------

                         Title:
                                ------------------------------------

                         CONGOLEUM FISCAL, INC.,
                         as Debtor and Debtor-in-Possession

                         By:
                             ---------------------------------------

                         Title:
                                ------------------------------------

                                        7
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this First Ratification
Amendment to be duly executed as of the day and year first above written.

                         CONGRESS FINANCIAL CORPORATION

                         By:
                             ---------------------------------------

                         Title:
                                ------------------------------------

                         CONGOLEUM CORPORATION, as Debtor and
                         Debtor-in-Possession

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

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

                         CONGOLEUM SALES, INC.,
                         as Debtor and Debtor-in-Possession

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

                         Title: Vice President
                                ------------------------------------

                         CONGOLEUM FISCAL, INC.,
                         as Debtor and Debtor-in-Possession

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

                         Title: Vice President
                                ------------------------------------

                                        8
<PAGE>

                                    EXHIBIT A
                                       TO
           AMENDMENT NO. 1 TO RATIFICATION AND AMENDMENT AGREEMENT AND
                 AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT

                                     Budget

                                  See attached

                                        9
<PAGE>

                                                                          Page 1
                              CONGOLEUM CORPORATION
                           Quarterly Operating Results
                                  ($ in 000's)

<TABLE>
<CAPTION>
                                        Actual        Est        Actual        Est       Actual      Proj.                  Total
                                       March 31,   March 31,    June 30,    June 30,    Sept 30,    Dec 31,     Total      1st Half
                                         2004         2005        2004        2005        2004       2004*       2004        2005
                                      ---------------------------------------------------------------------------------------------

<S>                                    <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
Net sales                              $ 52,000    $ 54,411    $ 62,951    $ 64,000    $ 58,871    $ 52,410    $226,232    $118,411
Cost of sales                            38,450      39,971      46,064      46,940      41,812      38,792     165,118      86,911
Selling, general and
  administrative expenses                11,985      12,274      13,017      13,050      12,959      10,814      48,775      25,324
                                      ---------------------------------------------------------------------------------------------
      Income (loss) from operations       1,565       2,166       3,870       4,010       4,100       2,804      12,339       6,176
Other income (expense):
  Interest income                            --          15          --          15          26          --          26          30
  Interest expense                       (2,244)     (2,400)     (2,315)     (2,400)     (2,417)     (2,443)     (9,419)     (4,800)
  Other income /(expense):                  244         250         421         460         212         125       1,002         710
  Other expense                              --          --          --          --          --          --          --          --
                                      ---------------------------------------------------------------------------------------------
      Income (loss) before
        income taxes                       (435)         31       1,976       2,085       1,921         486       3,948       2,116
  Provision (benefit) for
    income taxes                             --          12         616         834         768         194       1,578         846
                                      ---------------------------------------------------------------------------------------------

      Net income(loss) *               $   (435)   $     19    $  1,360    $  1,251    $  1,153    $    292       2,370       1,270
                                      =============================================================================================

  Net Income (Loss)                    $   (435)   $     19    $  1,360    $  1,251    $  1,153    $    292    $  2,370    $  1,270
    Interest Expense                      2,244       2,400       2,315       2,400       2,417       2,443       9,419       4,800
    Depreciation                          2,752       2,700       2,659       2,700       2,684       2,646      10,741       5,400
    Amortization                            138         138         138         138         138         138         552         276
    Taxes                                    --          12         616         834         768         194       1,578         846
                                      ---------------------------------------------------------------------------------------------
  EBITDA                               $  4,699    $  5,269    $  7,088    $  7,323    $  7,160    $  5,713    $ 24,660    $ 12,592
                                      =============================================================================================
</TABLE>

* excludes any asbestos related charges

<PAGE>

                                                                          Page 2
                              CONGOLEUM CORPORATION
                                  Balance Sheet
                              Dollars in thousands

<TABLE>
<CAPTION>
                                                    Actual        Actual       Actual       Proj         Proj          Proj
                                                   March 31,     June 30,     Sept 30,     Dec 31,     March 31,     June 30,
                                                     2004          2004         2004        2004         2005          2005
                                                  ---------------------------------------------------------------------------

<S>                                                <C>          <C>          <C>          <C>          <C>          <C>
ASSETS
Current assets:
   Cash and cash equivalents, including
      restricted cash                              $  11,835    $  27,523    $  45,663    $  34,851    $  26,459    $  26,815
   Accounts and notes receivable, net                 19,092       24,204       18,569       14,177       20,048       21,487
   Receivable-coverage costs & claims fee              3,587        3,587        5,513       10,715        8,840        9,153
   Inventories                                        44,670       43,191       43,096       42,075       44,255       46,135
   Prepaid expenses and other current assets           3,831        3,393        2,576        2,719        3,717        5,137
   Deferred income taxes                               8,752        8,457        8,456        8,456        8,457        8,457
                                                  ---------------------------------------------------------------------------
      Total current assets                            91,767      110,355      123,873      112,993      111,776      117,184

Property, plant and equipment, net                    85,101       82,949       81,125       80,783       79,536       77,991
Other noncurrent assets                                7,832        7,680        7,552        7,426        7,300        7,174
                                                  ---------------------------------------------------------------------------
      Total assets                                 $ 184,700    $ 200,984    $ 212,550    $ 201,202    $ 198,612    $ 202,348
                                                  ===========================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                $  11,962    $  12,361    $  13,534    $  10,327    $  12,827    $  12,927
   Accrued expenses                                   31,215       42,183       46,205       42,025       44,148       51,558
   Asbestos-related liabilities                        8,678        8,435        7,246        3,529          723       (1,310)
   Insurance recoveries payable to Trust                  --           --       14,466       13,939        9,699        7,334
   Revolver Borrowings                                11,157       15,262        8,638        8,638        8,638        8,638
                                                  ---------------------------------------------------------------------------
      Total current liabilities                       63,012       78,241       90,089       78,458       76,035       79,148

Long-term debt                                        99,786       99,798       99,810       99,822       99,834       99,846
Note to asbestos Trust                                    --           --           --           --           --           --
Other liabilities                                     11,465       11,782       11,603       11,585       11,567       11,549
Deferred taxes                                         4,376        3,900        3,900        3,900        3,900        3,900
Noncurrent pension liability                          23,865       23,259       22,105       22,072       21,906       21,300
Accrued postretirement benefit obligation              8,413        8,309        8,195        8,225        8,210        8,195
                                                  ---------------------------------------------------------------------------
      Total liabilities                              210,917      225,289      235,702      224,062      221,452      223,938

STOCKHOLDERS' EQUITY

Class A common stock, par value $0.01 per                 47           47           47           47           47           47

Class B common stock, par value $0.01 per
   share; 4,608,945 shares authorized, issued             46           46           46           46           46           46

Additional paid-in capital                            49,105       49,105       49,105       49,105       49,105       49,105
Retained deficit                                     (47,218)     (45,857)     (44,704)     (44,412)     (44,393)     (43,142)
Minimum pension liability adjustment                 (20,384)     (19,833)     (19,833)     (19,833)     (19,833)     (19,833)
                                                  ---------------------------------------------------------------------------

Less common stock held in Treasury, at cost            7,813        7,813        7,813        7,813        7,813        7,813
                                                  ---------------------------------------------------------------------------
      Total stockholders' equity                     (26,217)     (24,305)     (23,152)     (22,860)     (22,841)     (21,590)

      Total liabilities and stockholders' equity   $ 184,700    $ 200,984    $ 212,550    $ 201,202    $ 198,612    $ 202,348
                                                  ===========================================================================

-----------------------------------------------------------------------------------------------------------------------------

Gross availability (net of $6mm holdback)          $  16,449    $  17,915    $  12,651    $   8,945    $  15,731    $  16,499
Revolver Borrowing                                    11,157       15,262        8,638        8,638        8,638        8,638
                                                  ---------------------------------------------------------------------------
Additional Credit Line Available                       5,292        2,653        4,013          307        7,093        7,861
  Cash on Hand, excluding restricted amounts          11,835       27,523       31,197       20,912       16,760       19,481
                                                  ---------------------------------------------------------------------------
Cash plus available borrowing                      $  17,127    $  30,176    $  35,210    $  21,219    $  23,852    $  27,342
                                                  ===========================================================================
</TABLE>

<PAGE>

                                                                          Page 3
                              CONGOLEUM CORPORATION
                             Statement of Cash Flows
                                ($ In thousands)

<TABLE>
<CAPTION>
                                                     March        June    September    December      Total       March       June
                                                     2004         2004       2004        2004        2004         2005       2005
                                                  ---------------------------------------------------------------------------------

<S>                                                <C>         <C>         <C>         <C>         <C>         <C>         <C>
Cash flows from operating activities:
  Net income (loss)                                $   (440)   $  1,361    $  1,153    $    292    $  2,366    $     19    $  1,251
    Adjustments to reconcile net income to net
    cash used by operating activities:
      Deferred taxes                                     --       1,167       2,561         195       3,923          12         804
      Depreciation                                    2,753       2,660       2,684       2,646      10,743       2,646       2,646
      Amortization                                      139         139         139         138         555         138         138

      Changes in certain assets and liabilities:
        Accounts and notes receivable                (5,533)     (5,111)      5,635       4,392        (617)     (5,871)     (1,439)
        Inventories                                     326       1,479          95       1,021       2,921      (2,180)     (1,880)
        Accounts payable                              7,418         400       1,173      (3,207)      5,784       2,500         100
        Other Working Capital                         4,280      10,243         829      (4,539)     10,813         914       4,547
                                                  ---------------------------------------------------------------------------------
          Net cash provided (used) by
            operating activities                      8,943      12,338      14,269         938      36,488      (1,822)      6,167

    Cash flows from investing activities:
      Capital expenditures                             (819)       (509)       (858)     (2,304)     (4,490)     (1,400)     (1,100)
                                                  ---------------------------------------------------------------------------------
          Net cash provided (used) by
            investing activities                       (819)       (509)       (858)     (2,304)     (4,490)     (1,400)     (1,100)

-----------------------------------------------------------------------------------------------------------------------------------
          Free cash flow from operations              8,124      11,829      13,411      (1,366)     31,998      (3,222)      5,067
-----------------------------------------------------------------------------------------------------------------------------------

      Asbestos Reorganization Expenditures           (1,141)       (243)     (1,189)     (3,717)     (6,290)     (2,806)     (2,033)
      Insurance recoveries, net of coverage
        litigation payments                              --          --      12,540      (5,729)      6,811      (2,365)     (2,678)
      Borrowings - Revolver                             925       4,105      (6,624)         --      (1,594)         --          --
                                                  ---------------------------------------------------------------------------------
Net increase (decrease) in cash and
  cash equivalents                                    7,908      15,691      18,138     (10,812)     30,925      (8,393)        356
Cash and cash equivalents:
  Beginning of period                                 3,926      11,834      27,525      45,663       3,926      34,852      26,459
                                                  ---------------------------------------------------------------------------------
  End of period                                    $ 11,834    $ 27,525    $ 45,663    $ 34,851    $ 34,852    $ 26,459    $ 26,815
                                                  =================================================================================

Cash balance                                       $ 11,834    $ 27,525    $ 45,663    $ 34,851    $ 34,852    $ 26,459    $ 26,815
Less restricted amounts                                  --          --     (14,466)    (13,939)    (13,939)     (9,699)     (7,334)
Additional revolver borrowing available               5,292       2,653       4,013         307         307       7,093       7,861
                                                  ---------------------------------------------------------------------------------
  Net Cash plus revolver available                 $ 17,126    $ 30,178    $ 35,210    $ 21,219    $ 21,220    $ 23,853    $ 27,342
                                                  =================================================================================
</TABLE>

<PAGE>

                                                                          Page 4
                 Monthly Statement of Asbestos/Bankruptcy Costs

<TABLE>
<CAPTION>
($ in Thousands)
Reorganization Expenses

Cash basis activity                 Oct-04      Nov-04      Dec-04      Jan-05     Feb-05     Mar-05     Apr-05     May-05    Jun-05

<S>                                <C>        <C>         <C>         <C>         <C>        <C>        <C>        <C>        <C>
Accrual-opening balance            $(7,246)   $ (5,811)   $ (4,375)   $ (3,529)   $(1,864)   $(1,336)   $  (723)   $   (58)   $  625
Charges
Spending                             1,435       1,435         846       1,665        528        613        665        684       684
                                  --------------------------------------------------------------------------------------------------
Ending balance                     $(5,811)   $ (4,375)   $ (3,529)   $ (1,864)   $(1,336)   $  (723)   $   (58)   $   625    $1,309
                                  ==================================================================================================

<CAPTION>
Insurance Coverage Litigation Costs and Claims Handling Fee (Reimbursable from Insurance Recoveries)

<S>                                <C>        <C>         <C>         <C>         <C>        <C>        <C>        <C>        <C>
Receivable-opening balance         $ 5,513    $  7,903    $ 10,293    $ 10,716    $ 9,226    $ 8,874    $ 8,841    $ 9,089    $9,138
Spending                             2,390       2,390       1,004         900        652        867        900        916       916
Receipts                                                       581       2,390      1,004        900        652        867       900
                                  --------------------------------------------------------------------------------------------------
Ending balance                     $ 7,903    $ 10,293    $ 10,716    $  9,226    $ 8,874    $ 8,841    $ 9,089    $ 9,138    $9,154
                                  ==================================================================================================
</TABLE>

<PAGE>

Congoleum Corporation                                                     Page 5

<TABLE>
<CAPTION>
Collateral and Borrowing Availability calculation

Description                                     Limits        3/31/2004   6/30/2004   09/30/04    12/31/04     03/31/05    06/30/05
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>         <C>         <C>         <C>         <C>          <C>
Accounts Receivable:                                          $ 20,560    $ 25,766    $ 19,924    $ 15,378    $  21,500    $ 23,000

Less Ineligibles:                                               10,493      13,545      12,985      12,733       10,533      12,262

Net Eligible Accounts Receivable:                               10,067      12,221       6,939       2,645       10,967      10,738

            Advance Rate:                                           85%         85%         85%         85%          85%         85%

Accounts Receivable Availability:               $30,000       $  8,557    $ 10,388    $  5,898    $  2,249    $   9,322    $  9,128

Inventory:
      Raw Materials                                           $  4,527    $  3,957    $  4,381    $  4,700    $   4,700    $  4,700
      Resin                                                        593         434         716         600          600         600
      WIP                                                        2,429       2,493       2,420       1,500        2,300       2,300
      Finished Goods                                            35,025      33,249      32,863      32,680       34,180      36,180
                                                              ---------------------------------------------------------------------
      Total Inventory                                         $ 42,574    $ 40,133    $ 40,380    $ 39,480    $  41,780    $ 43,780

Less Ineligibles-
      Raw Material                                            $    554    $    471    $    553    $    500    $     500    $    500
      Resin                                                         --          --          --          --           --          --
      WIP                                                        2,429       2,493       2,420       1,500        2,300       2,300
      Finished Goods(incl Laminates)                             2,527       2,242       2,107       2,182        2,257       2,332
                                                              ---------------------------------------------------------------------
Total Ineligibles:                                            $  5,510    $  5,206    $  5,080    $  4,182    $   5,057    $  5,132

      Net Eligible:
      Raw Material                                            $  3,973    $  3,486    $  3,828    $  4,200    $   4,200    $  4,200
            Advance Rate:                                           35%         35%         35%         35%          35%         35%
                                                              ---------------------------------------------------------------------
Raw Material Avail:                             $3,000    A   $  1,391    $  1,220    $  1,340    $  1,470    $   1,470    $  1,470
                                                              ---------------------------------------------------------------------

      Resin                                                   $    593    $    434    $    716    $    600    $     600    $    600
            Advance Rate:                                           50%         50%         50%         50%          50%         50%
                                                              ---------------------------------------------------------------------
Resin Availability                              $3,000    A   $    297    $    217    $    358    $    300    $     300    $    300
                                                              ---------------------------------------------------------------------

WIP Availability                                                          $     --    $     --    $     --    $      --    $     --

      Finished Goods                                          $ 32,498    $ 31,007    $ 30,756    $ 30,498    $  31,923    $ 33,848
            Advance Rate:                                           50%         50%         50%         50%          50%         50%
                                                              ---------------------------------------------------------------------
Finished Goods Availability                     $20,000       $ 16,249    $ 15,503    $ 15,378    $ 15,249    $  15,961    $ 16,924
                                                              ---------------------------------------------------------------------

Inventory Availability:                         $23,000       $ 17,936    $ 16,941    $ 17,076    $ 17,019    $  17,731    $ 18,694

TOTAL AVAILABILITY                                            $ 26,493    $ 27,328    $ 22,974    $ 19,268    $  27,054    $ 27,822
                                                              ---------------------------------------------------------------------

Primary Uses:
            Letters of Credit from First Union                $  4,044    $  3,413    $  4,323    $  4,323    $   5,323    $  5,323

TOTAL USES:                                                   $  4,044    $  3,413    $  4,323    $  4,323    $   5,323    $  5,323
                                                              ---------------------------------------------------------------------

                                                              ---------------------------------------------------------------------
Gross Availability:                                           $ 22,449    $ 23,915    $ 18,651    $ 14,945    $  21,731    $ 22,499
less $3,000 limit                                               (6,000)     (6,000)     (6,000)     (6,000)      (6,000)     (6,000)
                                                              ---------------------------------------------------------------------
NET AVAILABILITY:                                               16,449      17,915      12,651       8,945       15,731      16,499
Borrowings Outstanding                                          11,157      15,262       8,638       8,638        8,638       8,638
                                                              ---------------------------------------------------------------------
Unused Availability                                              5,292       2,653       4,013         307        7,093       7,861
Cash, excluding restricted cash                                 11,835      27,523      31,197      20,912       16,760      19,481
                                                              ---------------------------------------------------------------------
Cash plus unused availability                                 $ 17,127    $ 30,176    $ 35,210    $ 21,219    $  23,852    $ 27,342
                                                              =====================================================================
</TABLE>Exhibit 10.28

                                 PROMISSORY NOTE

euro 98,094,875.00               November 26, 2004                 Dallas, Texas

     FOR VALUE RECEIVED,  the undersigned,  Kronos  Worldwide,  Inc., a Delaware
corporation,   unconditionally   promises   to  pay  to  the   order  of  Kronos
International, Inc., a corporation duly organized under the laws of the state of
Delaware  in the  United  States of  America,  with its seat of  management  and
principal  place of business in Germany,  at its address  Peschstrasse  5, 51373
Leverkusen,  Germany and  offices in Dallas,  Texas at 5430 LBJ  Freeway,  Suite
1700,  Dallas,  Texas  75240-2697,  in lawful money of the European  Union,  the
principal sum of NINETY EIGHT MILLION NINETY FOUR THOUSAND EIGHT HUNDRED SEVENTY
FIVE and NO/100ths  EUROS (euro  98,094,875.00)  together with interest from the
date of this Note on the unpaid principal  balance from time to time pursuant to
the terms of this Note.  This Note shall be unsecured  and will bear interest on
the terms set forth in Section 4 below.  Capitalized terms not otherwise defined
shall have the meanings given to such terms in Section 14 of this Note.

     Section 1. Place of Payment.  All payments will be made at Payee's  address
at Peschstrasse 5, 51373 Leverkusen,  Germany,  or such other place as the Payee
may from time to time  designate in writing,  in  immediately  available  funds,
without setoff or counterclaim.

     Section 2. Payment.  The principal  balance of this Note and any unpaid and
accrued  interest  thereon shall be due and payable on the Maturity Date or upon
acceleration  as provided  herein.  Prior to the Maturity Date or  acceleration,
unpaid and accrued  interest on the outstanding  principal  balance of this Note
shall be due and  payable  quarterly  on March  31,  June 30,  September  30 and
December 31 of each year;  provided,  however,  that such day is a business day,
and if such day is not a business day, the quarterly  interest  payment shall be
due the next successive business day.

     Section 3.  Prepayment.  This Note may be prepaid in part or in full at any
time without penalty; provided,  however,  prepayments shall be first applied to
accrued and unpaid interest and then to principal.

     Section 4. Interest. The unpaid balance of this Note (exclusive of any past
due  principal)  shall bear  interest  at an annual rate of nine and one quarter
percent  (9.25%).  Ten business days after the Maturity Date or  acceleration as
provided in this Note,  all past due  principal and past due interest owed under
this Note will bear interest at an annual rate of twelve percent (12%).  Accrued
interest on the unpaid  principal of this Note shall be computed on the basis of
a 365 or 366-day year, as the case may be, for actual days elapsed. In no event,
however,  shall such  computation  result in an amount of accrued  interest that
would exceed accrued  interest on the unpaid  principal  balance during the same
period at the Maximum Rate.  Notwithstanding anything to the contrary, this Note
is expressly  limited so that in no  contingency or event  whatsoever  shall the
amount paid or agreed to be paid to the Payee exceed the Maximum Rate.  If, from
any circumstances whatsoever, the Payee shall ever receive as interest an amount
that would exceed the Maximum Rate, such amount received that would be in excess
of the Maximum Rate shall be applied to the  reduction  of the unpaid  principal
balance and not to the payment of interest,  and if the principal amount of this
Note is paid in full, any remaining  excess shall be paid to Maker,  and in such
event, the Payee shall not be subject to any penalties  provided by any laws for
contracting for, charging,  taking, reserving or receiving interest in excess of
the highest lawful rate permissible under applicable law.

     Section 5. Remedy.  Upon the occurrence and during the  continuation  of an
Event of Default,  Payee may, at its option, declare the entire unpaid principal
of this Note,  and all accrued  interest and other  amounts  payable  hereunder,
immediately due and payable without presentment, demand, protest or other notice
of any  kind,  all of which  are  expressly  waived  by  Maker,  and  upon  such
declaration, such amounts shall become and shall be immediately due and payable.
The Payee shall have all of the rights and remedies  provided in the  applicable
Uniform Commercial Code or in this Note or any other agreement between Maker and
in favor of the Payee,  as well as those  rights and  remedies  provided  by any
other  applicable law, rule or regulation.  All rights and remedies of the Payee
are cumulative and may be exercised singly or concurrently.  The exercise of any
right or remedy  will not be a waiver of any other  right or remedy.  Failure to
exercise any right or remedy upon the  occurrence  of an Event of Default  shall
not  constitute a waiver of the right to exercise  such right or remedy upon the
occurrence of a subsequent Event of Default.

     Section  6.  Right of  Offset.  The  Payee  shall  have the right of offset
against  amounts  that may be due by the  Payee  now or in the  future  to Maker
against amounts due under this Note.

     Section 7.  Record of  Outstanding  Principal.  The date and amount of each
repayment of principal outstanding under this Note shall be recorded by Payee in
its records.  The aggregate unpaid principal  balance so recorded by Payee shall
be the best evidence of the principal  balance owing and unpaid under this Note;
provided that the failure of Payee to so record any such balance or any error in
so  recording  any  such  balance  shall  not  limit  or  otherwise  affect  the
obligations of Maker under this Note to repay the principal balance  outstanding
and all accrued or accruing interest.

     Section 8. Waiver. Maker and each surety,  endorser,  guarantor,  and other
party now or  subsequently  liable for  payment of this  Note,  severally  waive
demand, presentment for payment, notice of dishonor, protest, notice of protest,
diligence in  collecting or bringing suit against any party liable on this Note,
and further agree to any and all extensions,  renewals,  modifications,  partial
payments,  substitutions of evidence of indebtedness,  and the taking or release
of any collateral with or without notice before or after demand by the Payee for
payment under this Note.

     Section 9. Costs and  Attorneys'  Fees. In the event the Payee incurs costs
in collecting on this Note, this Note is placed in the hands of any attorney for
collection,  suit is filed on this Note or if proceedings are had in bankruptcy,
receivership,  reorganization,  or other legal or judicial  proceedings  for the
collection, Maker and any guarantor jointly and severally agree to pay on demand
to the Payee all expenses and costs of  collection,  including,  but not limited
to,  attorneys' fees incurred in connection with any such  collection,  suit, or
proceeding, in addition to the principal and interest then due.

     Section 10. Time of Essence.  Time is of the essence with respect to all of
Maker's obligations and agreements under this Note.

     Section 11.  Applicable  Law,  Jurisdiction  and Venue.  This Note shall be
governed by and construed in  accordance  with the domestic laws of the state of
Delaware,  without  giving  effect  to any  choice  of law  or  conflict  of law
provision or rule  (whether of the state of Delaware or any other  jurisdiction)
that would cause the application of the laws of any jurisdiction  other than the
state of  Delaware.  Maker  consents  to  jurisdiction  and venue in the  courts
located in Dallas, Texas.

     Section  12.  Notice.  Any notice or demand  required by this Note shall be
deemed to have been given and  received on the earlier of (i) when the notice or
demand is actually  received by the  recipient or (ii) 72 hours after the notice
is deposited in the mail,  certified or registered,  with postage  prepaid,  and
addressed to the  recipient.  The address for giving notice or demand under this
Note (i) to the Payee  shall be the place of payment  specified  in Section 1 or
such  other  place as the Payee may  specify in writing to the Maker and (ii) to
the Maker shall be the address  below the Maker's  signature or such other place
as the Maker may specify in writing to the Payee.

     Section 13.  Successors  and Assigns.  All of the  covenants,  obligations,
promises  and  agreements  contained in this Note made by Maker shall be binding
upon its successors and assigns;  notwithstanding the foregoing, Maker shall not
assign this Note or its  performance  under this Note without the prior  written
consent of the Payee.

     Section 14.  Definitions.  For purposes of this Note,  the following  terms
shall have the following meanings:

(a)  "Event  of  Default"  shall  mean the  failure  by Maker to make when due a
     punctual  payment of principal  of, or interest on, this Note within thirty
     (30) days  following  the date  such  amount  becomes  due and  payable  in
     accordance with the terms of this Note.

(b)  "Maker" shall mean Kronos Worldwide, Inc., a corporation incorporated under
     the laws of the state of Delaware in the United States of America.

(c)  "Maturity Date" shall mean December 31, 2010.

(d)  "Maximum  Rate"  shall  mean the  highest  lawful  rate  permissible  under
     applicable law for the use, forbearance or detention of money.

(e)  "Note" shall mean this Promissory Note.

(f)  "Payee" shall mean Kronos International, Inc., or subsequent holder of this
     Note.

     EXECUTED effective November 26, 2004.

                                    MAKER:

                                    Kronos Worldwide, Inc.

                                   By:   /s/ John St. Wrba
                                         -----------------------------
                                         John St. Wrba
                                         Vice President & Treasurer

                                   Address:     Three Lincoln Centre
                                                5430 LBJ Freeway, Suite 1700
                                                Dallas, Texas   75240-2697

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