Document:

Exhibit 10.2

                           COLLATERAL TRUST AGREEMENT

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

                                    RECITALS

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

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

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

<PAGE>

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

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

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

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

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

      NOW, THEREFORE, the Parties hereby agree as follows:

                                    AGREEMENT

I.    Establishment of THE Collateral Trust

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

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<PAGE>

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

II.   Payment of Claims and Collateral Trust Administration

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

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

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<PAGE>

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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<PAGE>

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

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

      D. Trust Assets.

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

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<PAGE>

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

      E. Grant of Security Interest.

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

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<PAGE>

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

      F. Administrative Expenses.

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

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<PAGE>

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

III.  The TrusteeS

            A. Appointment of the Trustees.

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

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

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<PAGE>

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

      B. Term of Service.

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

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

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

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<PAGE>

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

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

      E. Tax Duties of the Collateral Trustee. The Collateral Trustee shall
cause a Federal Employer Identification Number ("FEIN") for the Collateral Trust
to be obtained and shall cause the annual income tax returns to be filed on the
basis of a December 31 year end. The Collateral Trustee shall take all steps
necessary to ensure that all tax obligations of the Collateral Trust are
satisfied and all tax obligations imposed upon the Collateral Trust are paid. To
the extent necessary to satisfy this objective, the Collateral Trustee is hereby
authorized, among other things, to (i) obtain a tax identification number for
the Collateral Trust, (ii) communicate with the Internal Revenue Service and

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<PAGE>

state and local taxing authorities on behalf of the Collateral Trust, (iii) make
payment of taxes on behalf of the Collateral Trust (which taxes will be paid out
of the Trust Assets), (iv) file all applicable tax returns for the Collateral
Trust to the extent permissible under applicable law, and (v) withhold taxes on
payments made pursuant to this Collateral Trust Agreement as required by
applicable law. To the extent permissible under applicable law, the Collateral
Trustee shall jointly with Congoleum prepare and file a "relation-back election"
under Treasury Regulation ss. 1.468B-1(j)(2)(ii), and shall otherwise cooperate
with Congoleum in its efforts to cause the Collateral Trust to qualify as a QSF
for federal income tax purposes.

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

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

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

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<PAGE>

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

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

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

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

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

      J. Compensation and Expenses of the Delaware Trustee. The Delaware Trustee
shall receive compensation from the Trust for its service as Delaware Trustee at
the rates detailed in a mutually acceptable fee agreement. The fee agreement may
be modified with the prior written consent of the Claimants' Counsel and
Congoleum. The Trust shall reimburse the Delaware Trustee as a part of the

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<PAGE>

Administrative Expenses for all reasonable out-of-pocket costs and expenses
incurred by the Delaware Trustee in connection with the performance of its
duties hereunder, at the rates detailed in the fee agreement. To the extent that
Congoleum pays any fees or costs to the Delaware Trustee on behalf of the Trust,
the Trust shall promptly reimburse Congoleum for the fees and costs so paid as
monies are available in the Trust.

IV.   GENERAL PROVISIONS

      A. Irrevocability. The Collateral Trust is irrevocable.

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

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

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

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<PAGE>

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

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

Congoleum:

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

With copies to:

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

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<PAGE>

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

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

Collateral Trustee:

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

Delaware Trustee:

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

Claimants' Counsel:

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

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<PAGE>

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

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

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

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

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

      K. Governing Law. The Collateral Trust Agreement shall in all respects be
governed by, and construed in accordance with, the laws of the State of Delaware
(excluding conflict of law rules), including all matters of construction,
validity and performance; provided, however, that there shall not be applicable
to the Collateral Trust, the Trustees or this Collateral Trust Agreement, any
provisions of the laws (statutory or common) of the State of Delaware, other
than the Delaware Act, pertaining to trusts that relate to or regulate, in a
manner inconsistent with the terms hereof (i) the filing with any court or

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<PAGE>

governmental body or agency of trustee accounts or schedule of trustee fees and
charges, (ii) affirmative requirements to post bonds for trustees, officers,
agents, or employees of a trust, (iii) the necessity for obtaining court or
other governmental approval concerning the acquisition holding or disposition of
real personal property, (iv) fees or other sums payable to trustees, officers,
agents, or employees of a trust, (v) the allocation of receipts and expenditures
to income and principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding or investing trust assets, or
(vii) the establishment of fiduciary or other standards or responsibilities or
limitations on the acts or powers of trustees.

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

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<PAGE>

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

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

                                    CONGOLEUM CORPORATION

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

                                    Title  CFO
                                          -------------------------

                                    COLLATERAL TRUSTEE

                                    By
                                       ----------------------------
                                           Arthur J. Pergament

                                    DELAWARE TRUSTEE

                                    By
                                       ----------------------------
                                           James J. McGinley
                                           Vice President and Sales Manager
                                           Wilmington Trust Company

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<PAGE>

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

      IN WITNESS WHEREOF, the parties have caused this Collateral Trust
Agreement to be duly executed this 11th day of April 2003

                                    CONGOLEUM CORPORATION

                                    By
                                       ----------------------------

                                    Title
                                          -------------------------

                                    COLLATERAL TRUSTEE

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

                                    DELAWARE TRUSTEE

                                    By
                                       ----------------------------
                                           James J. McGinley
                                           Vice President and Sales Manager
                                           Wilmington Trust Company

                                       19
<PAGE>

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

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

                                    CONGOLEUM CORPORATION

                                    By
                                       ----------------------------

                                    Title
                                          -------------------------

                                    COLLATERAL TRUSTEE

                                    By
                                       ----------------------------
                                           Arthur J. Pergament

                                    DELAWARE TRUSTEE

                                    By /s/ JRH
                                       ----------------------------
                                           James J. McGinley
                                           Vice President and Sales Manager
                                           Wilmington Trust Company

                                       19Exhibit 10.2.1

                  FIRST AMENDMENT TO COLLATERAL TRUST AGREEMENT

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

                                    RECITALS

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

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

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

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

<PAGE>

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

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

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

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

                                        AGREEMENT

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

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

                                       2
<PAGE>

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

      E. Enforcement of Security Interest.

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

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

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

                                       3
<PAGE>

      to be valid when created. The Perpetuities Period includes any period in
      gross permitted by the Applicable Rule, such as twenty-one (21) years. If
      the Perpetuities Period is defined with reference to a given date or the
      death of the last survivor of a class of individuals living on a given
      date (the "Measuring Lives"), the date shall be the date prescribed by the
      Applicable Rule and the Measuring Lives shall be the members of the class
      of persons living on that date who are authorized to receive any payment
      from the Collateral Trust prior to its termination. If the Applicable Rule
      applies differently to different kinds of Trust Assets, a direction to
      terminate the Collateral Trust upon the expiration of the Perpetuities
      Period shall be applied separately to the different kinds of property. If
      Trust Assets transferred to the Collateral Trustee at different times have
      different Perpetuities Periods, a direction to terminate the Collateral
      Trust upon the expiration of the Perpetuities Period shall be applied
      separately to the different Trust Assets, provided that (i) Trust Assets
      for which no sufficient record exists to determine the date of transfer
      shall be deemed for this purpose to have been transferred on the earliest
      possible date, and (ii) an insurance policy or the proceeds of an
      insurance policy shall be deemed transferred on the date the policy is
      acquired by the Collateral Trust regardless of the dates on which premiums
      are subsequently paid. If the Collateral Trust suspends the power of
      alienation or permits accumulations within the meaning of any Applicable
      Rule limiting the period for such suspension or accumulations then this
      provision shall apply to such suspension or accumulations as if they were
      non-vested interests. Upon the termination of the Collateral Trust
      pursuant to the application of any Perpetuities Period, the Collateral
      Trustee shall pay the remaining principal to Congoleum.

                                       4
<PAGE>

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

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

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

                                       5
<PAGE>

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

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

                                       6
<PAGE>

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

                                    CONGOLEUM CORPORATION

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

                                    Title CFO
                                          ------------------------------

                                    COLLATERAL TRUSTEE

                                    By
                                       ---------------------------------
                                          Arthur J. Pergament

                                    DELAWARE TRUSTEE

                                    By
                                       ---------------------------------

                                    Title
                                          ------------------------------
                                          Wilmington Trust Company

CONSENT:

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

                                     --------------------------------
                                             Perry Weitz, Esq.

                                     --------------------------------
                                           Joseph F. Rice, Esq.

                                       7
<PAGE>

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

                                    CONGOLEUM CORPORATION

                                    By
                                       ---------------------------------

                                    Title
                                          ------------------------------

                                    COLLATERAL TRUSTEE

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

                                    DELAWARE TRUSTEE

                                    By
                                       ---------------------------------

                                    Title
                                          ------------------------------
                                          Wilmington Trust Company

CONSENT:

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

                                     --------------------------------
                                             Perry Weitz, Esq.

                                     --------------------------------
                                           Joseph F. Rice, Esq.

                                       7
<PAGE>

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

                                    CONGOLEUM CORPORATION

                                    By
                                       ---------------------------------

                                    Title
                                          ------------------------------

                                    COLLATERAL TRUSTEE

                                    By
                                       ---------------------------------
                                          Arthur J. Pergament

                                    DELAWARE TRUSTEE

                                    By /s/ Rosemary Pantano
                                       ---------------------------------

                                    Title Assistant Vice President
                                          ------------------------------
                                          Wilmington Trust Company

CONSENT:

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

                                     --------------------------------
                                             Perry Weitz, Esq.

                                     --------------------------------
                                           Joseph F. Rice, Esq.

                                       7
<PAGE>

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

                                    CONGOLEUM CORPORATION

                                    By
                                       ---------------------------------

                                    Title
                                          ------------------------------

                                    COLLATERAL TRUSTEE

                                    By
                                       ---------------------------------
                                          Arthur J. Pergament

                                    DELAWARE TRUSTEE

                                    By
                                       ---------------------------------

                                    Title
                                          ------------------------------
                                          Wilmington Trust Company

CONSENT:

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

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

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

                                       7

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