SETTLEMENT AND POLICY BUYBACK AGREEMENT AND RELEASE

Exhibit 99.1

SETTLEMENT AND POLICY BUYBACK AGREEMENT AND RELEASE

This Settlement and Policy Buyback Agreement and Release ("Settlement and

Buyback Agreement") is made by and among Congoleum Corporation, Congoleum Sales,

Inc. and Congoleum Fiscal, Inc.; upon its creation, the Plan Trust; and Century

Indemnity Company, individually and as successor to CCI Insurance Company, as

successor to Insurance Company of North America.

RECITALS

WHEREAS, asbestos-related Claims including, but not limited to Asbestos

Personal Injury Claims and Asbestos Property Damage Claims, have been asserted

against certain of the Congoleum Entities; and

WHEREAS, certain of the Century Entities issued or allegedly issued one or

more of the Subject Policies; and

WHEREAS, the Congoleum Entities assert that certain of the Century

Entities are obligated to provide coverage under the Subject Policies with

respect to asbestos-related Claims including Asbestos Personal Injury Claims and

Asbestos Property Damage Claims; and

WHEREAS, there is a dispute among certain of the Congoleum Entities and

certain of the Century Entities regarding their respective rights and

obligations with respect to insurance coverage for Claims including Asbestos

Claims; and

WHEREAS, Congoleum Corporation and Century Indemnity Company are parties

to a lawsuit styled Congoleum Corporation v. ACE American Insurance Company, et

al., Docket No. MID-L-8908-01 pending in the Superior Court of New Jersey, Law

Division, Middlesex County (the "Coverage Action") in which Congoleum

Corporation has asserted claims against Century Indemnity Company, among other

insurers; and

WHEREAS, on December 31, 2003, Congoleum Corporation, Congoleum Fiscal,

Inc. and Congoleum Sales, Inc. (collectively, the "Debtors") filed petitions

pursuant to Chapter 11 of the Bankruptcy Code in the United States Bankruptcy

Court for the District of New Jersey (the "Bankruptcy Court"), jointly

administered under Case No. 03-51524 (KCF) (collectively, the "Chapter 11

Cases"); and

WHEREAS, the Debtors continue to operate their businesses as debtors and

debtors-in-possession; and

WHEREAS, Claims including Asbestos Claims have been asserted against

certain of the Congoleum Entities and may be asserted in the future, and certain

of the Congoleum Entities may contend that such Claims are covered under the

Subject Policies; and

WHEREAS, on March 17, 2006, the Debtors filed the Eighth Modified Joint

Plan of Reorganization; and

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WHEREAS, certain of the Century Entities have objected and continue to

object to the plans of reorganization proposed by the Debtors in the Chapter 11

Cases; and

WHEREAS, the Parties now wish to enter into an agreement to settle the

outstanding disputes referred to above, exchange releases as set forth herein

from any further obligations under the Subject Policies that will effect, among

other things, the full and complete release of the Century Entities from any and

all liability of any kind arising from the Congoleum Flooring Business, and

effect the buyback of the Subject Policies thereby terminating all of the

Century Entities' respective obligations under, and the Congoleum Entities'

respective rights in, the Subject Policies;

NOW, THEREFORE, in consideration of the promises and of the mutual

covenants contained herein, and intending to be legally bound hereby, subject to

the satisfaction of all the conditions precedent as set forth in Section II of

this Settlement and Buyback Agreement (where and when applicable), the Parties

do hereby agree as follows:

I. DEFINITIONS

The following definitions apply to the capitalized terms herein wherever

those terms appear in this Settlement and Buyback Agreement, including the

prefatory paragraph, recitals, the Sections below and any exhibits attached

hereto. Capitalized terms in the prefatory paragraph, recitals, and in the

Sections below have the meanings ascribed to them therein to the extent they are

not otherwise defined in this Definitions Section. The capitalized terms that

are not defined in this Settlement and Buyback Agreement but are listed below in

Section I.BB are given the meanings designated in the Eighth Modified Joint Plan

of Reorganization as of March 17, 2006 or the Ninth Modified Joint Plan of

Reorganization as of August 11, 2006, as indicated in Section I.BB. Moreover,

each defined term, whether stated in the singular or the plural, shall include

both the singular and the plural, and pronouns stated in the masculine, feminine

or neuter gender shall include the masculine, feminine and the neuter gender.

The word "including" means "including but not limited to."

A. "ABI" means American Biltrite Inc.

B. "ACC" means the Official Committee of Unsecured Asbestos Claimants

initially appointed by the United States Trustee in the Bankruptcy Case on or

about April 21, 2004 and also sometimes known as the Asbestos Creditors

Committee.

C. "Additional Named Insured" means any other Person, other than Congoleum

Corporation, who or that is or asserts to be a named insured, additional

insured, additional named insured, or is qualified as an insured under any or

all of the policies listed on Exhibit C, and/or who or that otherwise asserts or

claims any right, title or interest of or through an insured, a named insured,

additional insured or additional named insured under (a) any or all of the

policies listed on Exhibit C, including, without limitation, the entity

Congoleum-Nairn, Inc. named in policies XBC-1838 and XBC-40971, the entity

Congoleum Corporation named in policies XCP3904 and XCP3956, the entity

Congoleum Corporation named in policies XBC155083 (incorrectly named Congoleum

Incorporated in policy XBC155083) and XCP GO 7908702, the entity Congoleum

Industries, Inc. named in policies XBC-43099 and XCP3904, the entity Bath

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Industries, Inc. named in = policies XBC-43099, XCP3904 and XCP3956, the

entities Kinder Manufacturing Company, Inc. and Lewis Carpet Mills, Inc. named

in policy XBC-40971, and the entities Bath Iron Works Corp., Kinder

Manufacturing Company, Inc., Lewis Carpet Mills, Inc., Pennsylvania Crusher

Corporation, Mersman Brothers Division, Webb Furniture Corporation, Coronet

Manufacturing Co., Inc., Howard Parlor Furniture Co., Howard Parlor Furniture

Co. of Texas, Inc., Howard Frame Co., Edson, Incorporated, Relax-o-Lounger,

Inc., Tri-State Floors, Inc., and/or J. Isenberg & Son, Inc. named in policies

XCP3904 and XCP3956 (to the extent that any such person asserts such rights

under the Subject Policies).

D. "Approval Order" means an order of the Bankruptcy Court, to be entered

in the Bankruptcy Case, in substantially the form attached hereto as Exhibit A,

with only such modifications as to which the Parties have consented to in

writing, which order shall, among other things: (i) approve this Settlement and

Buyback Agreement, the compromise and settlement memorialized herein and

authorize the Debtors to perform under the Agreement in accordance with its

terms; (ii) authorize and approve the sale, transfer and assignment of the

Subject Policies to Century Indemnity Company, free and clear of all interests,

pursuant to and to the fullest extent permitted by Sections 105 and 363 of the

Bankruptcy Code; (iii) finds that Century Indemnity Company is a good faith

purchaser of the Subject Policies and, as such, is entitled to all protections

provided to a good faith purchaser under Section 363(m) of the Bankruptcy Code;

and (iv) provides that this Settlement and Buyback Agreement shall be fully

binding upon the Parties and their respective successors and assigns, including

the Reorganized Debtors and the Plan Trust, and all other Persons to the fullest

extent permitted by applicable law.

E. "Business Day" means any day other than a Saturday, Sunday or other

"legal holiday" as defined in Federal Bankruptcy Rule 9006(a).

F. "Century Indemnity Company" means Century Indemnity Company,

individually, and as successor to CCI Insurance Company, as successor to

Insurance Company of North America.

G. "Century Entities" means: (i) Century Indemnity Company, ACE American

Insurance Company (f/k/a CIGNA Insurance Company), and ACE Property and Casualty

Insurance Company (f/k/a CIGNA Property and Casualty Insurance Company); (ii)

the direct or indirect predecessors, successors and assigns of each of the

foregoing Persons described in Section I.G(i), no matter the degree of removal

from the Persons described in Section I.G(i) (which terms shall include any

Person who assumes the liabilities of any of the foregoing Persons described in

Section I.G(i) and (ii) with the approval of the appropriate insurance

commissioner or other official); (iii) the respective officers, directors and

attorneys of each of the foregoing Persons identified in Section I.G(i) but only

when acting in their capacity as such; (iv) the respective past, present and

future, direct and indirect, parents, subsidiaries, and affiliates of the

entities identified in Section I.G(i) and (ii), including the entities listed on

Exhibit B, when acting in their capacity as such and to the extent that Century

Indemnity Company has the power and authority to give the releases set forth in

Section VI on their behalf; and (v) the respective past and present officers,

directors, employees, shareholders, agents, principals, attorneys, and

representatives of the Persons described in Sections I.G(iv), but only when

acting in their capacity as such and to the extent that the Century Indemnity

Company has the power and authority to give the releases set forth in Section VI

on their behalf. Any Person who meets the definition set forth above shall be

individually referred to as a "Century Entity."

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H. "Claim" means:

(i) "Claim" as that term is defined in the Section 101(5) of the

Bankruptcy Code;

(ii) "Demand" as that term is defined in the Section 524(g)(5) of

the Bankruptcy Code; and

(iii) Any past, present or future, known or unknown, asserted or

unasserted, foreseen or unforeseen, matured or unmatured, concealed or

disclosed, fixed or contingent, direct or indirect claim, complaint,

cross-complaint, counterclaim, affirmative defense, writ, demand, inquiry,

request, suit, lawsuit, liability, action, cause of action, administrative

proceeding, governmental action, order, judgment, settlement, lien, loss,

cost or expense, and whether in law, equity, admiralty, or otherwise, and

whether for economic loss, general damages, medical monitoring, punitive

damages, attorneys' fees or otherwise;

I. "Channeling Injunction" means a permanent injunction to be issued by

the Bankruptcy Court and incorporated into the Confirmation Order under Section

524(g), that (a) channels, from and after the Plan Effective Date, (i) all Plan

Trust Asbestos Claims, which shall include, without limitation, any and all such

Claims against any of the Debtors in their individual capacity and as successors

in interest to any Congoleum Entity that engaged at any time in the Congoleum

Flooring Business, whether named as such or by operation of law, and (ii) all

Asbestos Personal Injury Claims, which defined term shall include all Claims

caused or allegedly caused by asbestos for which any predecessor or predecessors

of the Debtors are otherwise liable under applicable law (that are not released

hereunder, if any), of any Person, including ABI (unless such Claims are

otherwise released pursuant to the Plan), against the Century Entities relating

to the Subject Policies that in any way arise out of the manufacture, sale,

distribution, installation, formulation, marketing, transport, handling or any

other activity involving the products or premises of the Congoleum Entities,

including without limitation, any operation claims, contribution claims, direct

action claims, insurance coverage claims, ABI Asbestos Personal Injury Indemnity

Claims (unless such claims are otherwise released pursuant to the Plan) and

Congoleum Derivative Action, into the Trust to be established pursuant to the

Bankruptcy Plan and (b) permanently enjoining the prosecution, continuation or

commencement of any such Claim against, among other Persons, any or all of the

Century Entities. The Channeling Injunction shall not provide injunctive

protection to any other Asbestos Insurance Company that is broader than the

injunctive protection provided to Century Entities; provided, however, that, if

such injunction offers broader protection, the Debtors will use best commercial

efforts to provide comparable protection to the Century Entities.

J. "Confirmation Order" means an order or orders entered by the Bankruptcy

Court in the Chapter 11 Cases, together with any order of the United States

District Court issued pursuant to Section 524(g)(3)(A) of the Bankruptcy Code

confirming or affirming such order, that:

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(i) Confirms the Plan and incorporates the Channeling Injunction;

(ii) Has the effect of providing that the Channeling Injunction

applies in full to the Century Entities with respect to any and all

current and future asbestos claims, Asbestos Claims and Demands, and any

other Claims, which are channeled to the Trust;

(iii) Specifies that: (a) the Century Entities are Settling Asbestos

Insurance Companies or incorporates by reference the schedule referred to

in Section II.B below; (b) any prerequisites to permit the designation of

the Century Entities as Settling Asbestos Insurance Companies under the

terms of the Plan have been satisfied; and (c) Settling Asbestos Insurance

Companies are entitled to all of the benefits of the Asbestos Channeling

Injunction as Protected Parties;

(iv) Contains findings that that Relax-o-Lounger, Inc., Kinder

Manufacturing Company, Inc., Lewis Carpet Mills, Inc., Lewis Carpet Mills,

Inc., Pennsylvania Crusher Corporation, Mersman Brothers Division, Webb

Furniture Corporation, Coronet Manufacturing Co., Inc., Howard Parlor

Furniture Co., Howard Parlor Furniture Co. of Texas, Inc., Howard Frame

Co., Edson, Incorporated, J. Isenberg & Son, Inc. and Bath Iron Works

Corp. have no responsibility for any of the liabilities of the Congoleum

Flooring Business; provided, however, that Century Indemnity Company may

waive this requirement in writing;

(v) Provides that all of the Congoleum Entities' obligations and

rights under this Settlement and Buyback Agreement shall be binding on and

inure to the benefit of the Plan Trust and the Plan Trustee, and each of

the foregoing shall become fully bound to all of the terms and conditions

of this Settlement and Buyback Agreement, including the releases in

Section VI, and of the Approval Order without the need for further act or

documentation of any kind (which may be accomplished by a provision that

makes all Asbestos Insurance Settlement Agreements, including this

Settlement and Buyback Agreement, and related approval orders, including

the Approval Order, binding upon and inure to the benefit of the Plan

Trust and the Plan Trustee);

(vi) Specifies that the Congoleum Entities, the FCR, the Plan

Trustee, the ACC, the Claimants' Representative or anyone else may not

seek to terminate, reduce or limit the scope of the Channeling Injunction

or any other injunction with respect to any Century Entities.

K. "Congoleum Entities" means: (i) the Debtors; (ii) Congoleum Corporation

(the corporate entity incorporated in 1986 in Delaware, Federal Tax ID

#02-0398678) as the parent of Congoleum Fiscal, Inc., Congoleum Sales, Inc. and

Congoleum Pty, and one of the three debtors-in-possession; (iii) the Debtors'

respective present, direct and indirect, subsidiaries and affiliates; (iv) the

officers, directors and attorneys of the entities listed in Section I.K (i)

through (ii) but only when acting in their capacity as such; (v) the entity

Congoleum-Nairn, Inc. named in policies XBC-1838 and XBC-40971, the entity

Congoleum Corporation named in policies XCP3904 and XCP3956, the entity

Congoleum Corporation named in policies XBC155083 and XCP GO 7908702, the entity

Congoleum Industries, Inc. named in policies XBC-43099 and XCP3904, the entity

Bath Industries, Inc. named in policies XBC-43099, XCP3904 and XCP3956, the

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entity Tri-State Flooring, Inc. named in policies XCP3904 and XCP3956, Congoleum

Company, Inc., Fibic Corporation, and C.C. Liquidating Corp., to the full extent

but only to the extent such entities conducted, managed, operated or were in any

way involved in the Congoleum Flooring Business; (vi) the respective past and

future, direct and indirect, parents, subsidiaries and affiliates of the Persons

described in Sections I.K(i) and (ii), inclusive, in their capacities as such

and to the full extent but only to the extent that the Debtors have the power

and authority to give the releases set forth in Section VI on their behalf;

(vii) any other Additional Named Insureds under the Subject Policies, to the

extent such entities conducted and operated, or otherwise have any liability

for, the Congoleum Flooring Business and to the full extent but only to the

extent that the Debtors have the power and authority to give the releases set

forth in Section VI on their behalf; (viii) the direct and indirect

predecessors, successors and assigns of each of the foregoing Persons, in their

capacities as such and to the full extent but only to the extent that the

Debtors have the power and authority to give the releases set forth in Section

VI on their behalf; and (ix) the past and present respective officers,

directors, employees, shareholders, agents, principals, attorneys and

representatives of the Persons described in Sections I.K(i),(iii) and (v)

through I.K(viii), inclusive, but only when acting in their capacity as such and

to the extent that the Debtors have the power and authority to give the releases

set forth in Section VI on their behalf. Notwithstanding anything above to the

contrary and for the avoidance of doubt, ABI shall not be deemed "Congoleum

Entities." Any Person who meets the definition set forth above shall be

individually referred to as a "Congoleum Entity."

L. "Congoleum Flooring Business" means the business involved in the

manufacture, sale, distribution, installation, formulation, marketing,

transport, handling or any other activity involving in any way flooring, vinyl

sheeting flooring or floor tile products of any kind (including, but not limited

to, battleship linoleum, resilient sheet vinyl flooring and tile flooring) as

such activities may have been engaged in by any one or more of the Congoleum

Entities; provided, however, that Congoleum Flooring Business does not include

carpets within its definition or the definition of flooring and does not include

the shipbuilding operations of Bath Iron Works Corp., or of Bath Industries,

Inc., if any, (it being understood that such operations exclude the products of

the Congoleum Flooring Business). Solely for informational purposes and to

assist the parties, but not to restrict or limit the definition of the term

"Congoleum Flooring Business," the Debtors represent that the above defined

business was headquartered continuously in Kearny, New Jersey, from before 1965

to 1987 and none of the Congoleum Entities conducted a Congoleum Flooring

Business from a headquarters other than in Kearny, New Jersey, during this

period.

M. "Court" means the Bankruptcy Court or the United States District Court

for the District of New Jersey or other court of competent jurisdiction. The

"Bankruptcy Court" shall mean the United States Bankruptcy Court for the

District of New Jersey and, to the extent it exercises jurisdiction over the

Bankruptcy Case, the United States District Court for the District of New

Jersey.

N. "Coverage Action" means the action pending in the Superior Court of New

Jersey, Law Division, Middlesex County, captioned, Congoleum Corporation v. ACE

American Insurance Company, et al., Docket No. MID-L-8908-01.

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O. "Execution Date" means the earliest date on which this Settlement and

Buyback Agreement has been signed by all of the signatories hereto as reflected

by the last dated signature entered on the signature page.

P. "FCR" means the Futures Claims Representative appointed pursuant to the

Bankruptcy Court's February 18, 2004 Order in the Chapter 11 Cases, solely in

his capacity as such, together with his successors and assigns, solely in their

respective capacities.

Q. "Final Order" means an order as to which the time to appeal, petition

for certiorari, or move for reargument or rehearing has expired and as to which

no appeal, petition for certiorari, or other proceedings for reargument or

rehearing shall then be pending or as to which any right to appeal, to petition

for certiorari, to reargue, to rehear or to reconsider shall have been waived in

writing by the Person possessing such right, or, in the event that an appeal,

writ of certiorari, or reargument, rehearing or reconsideration thereof has been

sought, such order shall have been affirmed by the highest court to which such

order was appealed, or certiorari has been denied or from which reargument,

rehearing or reconsideration was sought, and the time to take any further

appeal, petition for certiorari, or move for reargument, rehearing or

reconsideration shall have expired, and no such further appeal, petition for

certiorari, or motion for reargument, rehearing or reconsideration shall have

been filed.

R. "Interest" means, with respect to the Subject Policies, any Claim,

encumbrance, pledge, option, charge, easement, security interest, lien, deed of

trust, or other right or interest of any nature, whether voluntarily incurred or

arising by operation of law or in equity, and shall include any agreement to

give any of the foregoing in the future, and any contingent or conditional sale

agreement or other title retention agreement or lease in the nature thereof.

S. "Motion" means the motion and supporting declarations and exhibits

attached thereto, to be filed by the Debtors with the Bankruptcy Court for

approval of this Settlement and Buyback Agreement and entry of the Approval

Order, which Motion and supporting declarations shall be shared with the Parties

in advance of filing and be in form and substance reasonably acceptable to the

Parties.

T. "Parties" means the signatories to this Settlement and Buyback

Agreement.

U. "Person" means any natural or legal entity or person, including an

individual, a corporation, a partnership, an association, a trust, a joint

venture, a union, any other entity or organization, and any federal, state or

local government or any governmental or quasi-governmental body or political

subdivision or any agency, department, board or instrumentality thereof.

V. "Plan" shall mean a plan of reorganization for the Debtors to be filed

in the Bankruptcy Case pursuant to Sections 1121 and 524(g) of the Bankruptcy

Code, as such plan may be modified or amended from time to time in accordance

with its terms, which plan shall (among other things), provide for: (a) the

Channeling Injunction; (b) the creation of the Trust; (c) the undertaking and

assumption by the Trust of its obligations as set forth in this Settlement and

Buyback Agreement; (d) the granting to the Century Entities of any additional

release, injunction, injunctive protection, covenant not to sue, bar, or defense

against and from any Claims of any Person that may be granted Pursuant to the

Plan to any other insurer that settles with the Debtors, and (e) the granting to

the Century Entities of all the benefits and protections as are provided for

under Section II.E(i). The terms of such Plan shall be consistent with the

rights and benefits provided to the Century Entities under this Settlement and

Buyback Agreement and with the duties and obligations of, and releases provided

by, the Congoleum Entities under this Settlement and Buyback Agreement. The

terms of the Plan may not otherwise have a material adverse effect on the

interests of the Century Entities under this Settlement and Buyback Agreement.

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W. "Plan Effective Date" means the earlier of: (i) the "Effective Date" as

that term is defined in the Plan; or (ii) the first Business Day after the date

on which all of the conditions precedent to the effectiveness of the Plan

specified in the Plan have been satisfied or waived, or, if a stay of the

Confirmation Order is in effect on such date, the first Business Day after the

expiration, dissolution, or lifting of such stay.

X. "Settlement and Buyback Amount" means the sum of Sixteen Million Nine

Hundred and Fifty U.S. Dollars ($16,950,000) in cash, certified or cashiers

check, or wire transfer, at the option of Century Indemnity Company.

Y. "Subject Policies" means (a) the policies of insurance listed on

Exhibit C; and (b) all other policies of insurance, whether the policies are

primary, umbrella, excess or otherwise, and whether called liability, first

party, third party, property, environmental impairment, employer liability or

otherwise and whether known or unknown, issued by any Century Entity listed on

Exhibit B prior to the Execution Date: (i) to any Congoleum Entity; and/or (ii)

under which any Congoleum Entity claims to be entitled to insurance, rights or

benefits, except for the statutory portion of any workers' compensation policy.

With respect to any policy of insurance encompassed by Section I.Y(b), such

policy shall be deemed to be a Subject Policy only to the extent of any

Congoleum's Entity's rights and interests therein. For the purposes of this

Settlement and Buyback Agreement, the Parties agree that "Subject Policies"

shall not include: (w) any policy of insurance issued by a Person that is not a

Century Entity as of the Execution Date that acquires, is merged into, or is

acquired by a Century Entity on or after the Execution Date; (x) any policy of

insurance issued to a Person that was not a Congoleum Entity on or before the

Execution Date, except to the extent that a Congoleum Entity had rights

thereunder which arose on or before the Execution Date; (y) the policies listed

on Exhibit E and/or (z) the policies listed on Exhibit F, except to the extent

that such policies would provide coverage to the Congoleum Entities for asbestos

related Claims, including Plan Trust Claims.

Z. "Trigger Date" means the date on which all of the conditions precedent

set forth in Section II of this Settlement and Buyback Agreement have occurred.

AA. "Trust" or "Plan Trust" means a trust to be established, on or before

the Effective Date, in accordance with the terms of the Plan (and the

Confirmation Order), for the payment of, and into which shall be channeled, all

Plan Trust Asbestos Claims against the Congoleum Entities which shall include,

without limitation, (a) any and all such Claims against any of the Debtors in

their capacity as the successor in interest to the Congoleum Entities that

engaged at any time in the Congoleum Flooring Business, whether named as such or

by operation of law, and, (b) in accordance with the Channeling Injunction and

this Agreement, all, such Claims of any Person against any or all of the Century

Entities relating to or arising out of the Subject Policies or any Asbestos

Personal Injury Claim, including any Contribution Claim, Direct Action Claim, or

Insurance Coverage Claim.

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BB. The following Capitalized terms that are not defined in this

Settlement and Buyback Agreement are given the meanings designated in the Eighth

Modified Joint Plan of Reorganization as of March 17, 2006: Asbestos Claims,

Asbestos Claims and Demands, Asbestos Channeling Injunction, Asbestos Insurance

Company, Asbestos Insurance Settlement Agreements, Asbestos Property Damage

Claims, Claimants' Representative, Settling Asbestos Insurance Companies,

Protected Parties, Plan Trustee, Plan Trust Asbestos Claims, and Reorganized

Debtors. The following Capitalized terms that are not defined in this Settlement

and Buyback Agreement are given the meanings designated in the Ninth Modified

Joint Plan of Reorganization as of August 11, 2006: ABI Asbestos Personal Injury

Indemnity Claims, Congoleum Derivative Action and Asbestos Personal Injury

Claims.

II. CONDITIONS PRECEDENT

The obligations of Century Indemnity Company set forth in Section III and

the obligations of and releases of the Congoleum Entities and Century Entities

set forth in any other provision in this Settlement and Buyback Agreement made

subject to this Section II are subject to and made expressly contingent upon the

satisfaction of each of the following conditions precedent:

A. The Approval Order shall have become a Final Order;

B. A schedule shall have been filed with the Bankruptcy Court prior to the

conclusion of the Confirmation Hearing, listing the Century Entities as Settling

Asbestos Insurance Companies and such schedule shall not have been amended to

remove the Century Entities from such schedule;

C. If and to the extent required under the terms of the Plan, any

necessary prerequisites to permit the designation of the Century Entities as

Settling Asbestos Insurance Companies, entitled to all of the benefits and

protections of the Asbestos Channeling Injunction as Protected Parties, under

the terms of the Plan have been satisfied;

D. The Confirmation Order shall: (i) be in conformity with the definition

of Confirmation Order in Section I.J above; (ii) be in form and substance

reasonably acceptable to Century Indemnity Company and otherwise consistent with

the terms of, this Settlement and Buyback Agreement; and (iii) shall have become

a Final Order;

E. The Debtors: (i) shall have filed a modified Plan which (a) provides

the Century Entities with the benefits and protections of the Channeling

Injunction, which benefits and protections are no less favorable to the Century

Entities than those provided under the Eighth Modified Plan of Reorganization

and are in form and substance acceptable to the Century Entities, (b) provides,

in a form reasonably acceptable to Century Indemnity Company, for an injunction

pursuant to Section 105(a) of the Bankruptcy Code that permanently enjoins all

holders of Claims not channeled by the Channeling Injunction from asserting

against the Century Entities any such Claims, provided that they arise out of or

relate to the Subject Policies or the insuring relationship of the Century

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Entities with the Congoleum Entities, (c) provides, in a form reasonably

acceptable to Century Indemnity Company, for the granting of a full and complete

release by each claimant that receives a distribution under the Plan from the

Trust of all Claims (including without limitation any and all claims against the

Century Entities, the Congoleum Entities and the Additional Named Insureds),

arising from, relating to, or involving the manufacture, sale, distribution,

installation, formulation, marketing, transport, handling or any other activity

involving any asbestos containing products of the Congoleum Entities or their

premises to the extent such Claim arises from, relates to or involves exposure

to asbestos, including without limitation, any operation claims, contribution

claims, direct action claims, insurance coverage claims and that such

modifications as are necessary are made to the Disclosure Statement and

otherwise to cause such consent to be effective; provided, however, that any

Person who files an objection to the Section 363 sale provisions of the Approval

Order shall be denied the benefits of the release otherwise to be conferred by

this Section II.E(c) with Century Indemnity Company and the Debtors having the

joint right to waive this requirement; (d) provides that the Reorganized Debtors

will not in any way voluntarily assist any person or entity in the establishment

of any right, action, cause of action or claim against the Century Entities in

anyway relating to any Asbestos Claim or other Claim released under this

Settlement and Buyback Agreement; and (e) the terms of which Plan shall be

consistent with the rights and benefits provided to the Century Entities under

this Settlement and Buyback Agreement and with the duties and obligations of,

and releases provided by, the Congoleum Entities under this Settlement and

Buyback Agreement; (ii) Congoleum shall use reasonable best efforts to obtain

entry of an order confirming such modified Plan which provides all of the

benefits and protections described in this Section II.E(i) to the Century

Entities; and (iii) an order confirming such modified Plan providing all such

benefits and protections under this Section II.E(i) to the Century Entities

shall have become a Final Order, which Final Order, as it pertains to such

benefits and protections, is in conformity with this Section II.E(i) and is

acceptable in form and substance to the Century Entities as to those benefits

and protections and which Final Order, as it pertains to such benefits and

protections, cannot be modified, limited or terminated without the consent of

the Century Entities; and (iv) the Effective Date of such modified Plan as

described in this Section II.F shall have occurred;

F. The Plan Effective Date shall have occurred; and

G. The Debtors or the Plan Trust shall have notified the Century Entities

that all of the conditions precedent described in Sections II.A through II.F,

inclusive, have occurred and in fact they have occurred.

Century Indemnity Company, at its sole option and in its sole discretion, shall

have the right to waive the satisfaction of any or all of the conditions

precedent described in Sections II.B through II.G, inclusive, including any

subsection(s) thereof, by delivery of written notice thereof to Congoleum

Corporation pursuant to Section XVI below, and any condition so waived shall be

deemed irrevocably waived and satisfied for all purposes of this Settlement and

Buyback Agreement.

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III. PAYMENT

A. Century Indemnity Company shall pay the Settlement and Buyback Amount,

on behalf of the Century Entities, to the Plan Trust, or as otherwise directed

by the Court consistent with the terms of this Settlement and Buyback Agreement,

on the following payment schedule:

(i) Within sixty (60) calendar days following the Trigger Date,

Century Indemnity Company shall pay, on behalf of the Century Entities,

Five Million Dollars ($5,000,000) (the date on which such funds are

actually paid shall be referred to herein as the "First Payment Date");

(ii) One year after the First Payment Date, Century Indemnity

Company shall pay, on behalf of the Century Entities, Five Million Dollars

($5,000,000) (the "Second Payment Date");

(iii) Two years after the First Payment Date, Century Indemnity

Company shall pay, on behalf of the Century Entities, Five Million Dollars

($5,000,000) (the "Third Payment Date") and

(iv) Three years after the First Payment Date, Century Indemnity

Company shall pay, on behalf of the Century Entities, the remaining One

Million Nine Hundred and Fifty Thousand Dollars ($1,950,000) (the "Fourth

Payment Date") of the Settlement and Buyback Amount.

B. The Parties agree that the payments made pursuant to this Settlement

and Buyback Agreement and the other consideration provided are for Claims

against the Congoleum Entities, including Asbestos Claims.

C. The obligation to pay the Settlement and Buyback Amount is several, not

joint and several, to the Century Entities, and, without waiver of that

understanding, Century Indemnity Company is the only entity assuming the payment

obligation, which it assumes in full.

IV. LITIGATION AND BANKRUPTCY OBLIGATIONS

A. No later than five (5) Business Days following the Execution Date, the

Debtors shall:

(i) File, and take all steps to pursue granting of, a motion

pursuant to Federal Rule of Bankruptcy Procedure 2002, 6004 and 9019 and

Sections 105, 363 and 1142 of the Bankruptcy Code, in a form that is

reasonably acceptable to the Century Entities, seeking the Bankruptcy

Court's entry of the Approval Order;

(ii) Serve the motion and notice of a hearing on such motion in a

form, manner and scope that is in compliance with all applicable

Bankruptcy Rules upon: (a) the "Core Service List" and the "Master Service

List," each as defined in the Order Establishing Case Management and

Administrative Procedures, dated February 25, 2004, and the "Master E-Mail

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Service List," as defined in the Order (1) Amending The Order Establishing

Case Management and Administrative Procedures Entered On February 25, 2004

And The Order Establishing Procedures For Interim Compensation And

Reimbursement Of Expenses Of Professionals Entered On February 10, 2004

And (2) Allowing Notice By E-Mail And Establishing Procedures Therefor,

dated September 6, 2005; (b) the Claimants' Representative; (c) the Office

of the United States Trustee; (d) the FCR and counsel to the FCR; (e) the

ACC's members and its counsel; (f) parties who have filed a notice of

appearance in these Chapter 11 Cases; (g) the Collateral Trustee (the

"Collateral Trustee") of the Congoleum Collateral Trust (the "Collateral

Trust") established pursuant to a Collateral Trust Agreement dated August

16, 2003; (h) ABI and counsel to ABI; (i) counsel to all known holders of

Asbestos Claims as reflected in the Rule 2019 Statements and proofs of

claim filed in these Chapter 11 Cases, claims submitted in connection with

the Settlement Between Congoleum Corporation and Various Asbestos

Claimants attached as Exhibit E to the Disclosure Statement with respect

to the Plan (the "Claimant Agreement"), and ballots submitted in

connection with these Chapter 11 Cases; (j) all known holders of Asbestos

Claims whose counsel is not included within the preceding clause who, as

of at least ten (10) Business Days prior to the Hearing, became known

through filing of a proof of claim or Rule 2019 Statement; (k) counsel to

the Official Bondholders' Committee; (l) all Additional Named Insureds

whose addresses are reasonably known to Debtors unless otherwise agreed

upon by the Parties; and (m) any notice in addition to that described in

Sections IV.A (i) through IV.A(ii), inclusive, in such other manner as the

Century Entities may reasonably direct, with any such additional service

to be at the cost of the Century Entities. Congoleum shall file in the

Bankruptcy Case a certification of such service no later than two days

after completing service.

(iii) Seek a hearing on the motion no later than September 11, 2006

(the "Settlement Hearing Date"), provided, however, that the Debtors will

use reasonable best efforts to file by the filing deadline for the

September 11, 2006, hearing date and, should they fail to meet the

deadline after using reasonable best efforts, Century Indemnity Company

shall join in any motion by the Debtors to seek a hearing on shortened

notice necessary to achieve the Settlement Hearing Date.

The Debtors shall use their reasonable best efforts to have the Bankruptcy Court

enter the Approval Order as soon as reasonably possible. The Century Entities

shall support the Debtors' efforts to obtain such approval. The Century Entities

shall provide the Debtors with such declarations in support of the Motion as the

Debtors may reasonably request, and the Debtors shall provide such declarations

in support of the Motion that the Congoleum Entities may reasonably request.

B. Following the Execution Date but before the Settlement Hearing Date,

the Debtors shall file modifications to the Plan, in a form reasonably

acceptable to Century Indemnity Company, pursuant to Section 1127 of the

Bankruptcy Code, which provide all of the benefits and protections described in

Section II.E(i) to the Century Entities, but are made expressly subject to the

Approval Order becoming a Final Order. Subject to any applicable privilege, the

Debtors shall provide Century Indemnity Company with drafts of the plan

documents, and Century Indemnity Company shall provide timely written

suggestions in response thereto on matters relevant to compliance with the

requirements of this Settlement and Buyback Agreement; provided, however, that

the Parties' rights and obligations under this Settlement and Buyback Agreement

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shall not be limited by the Parties cooperating in such manner. The Debtors

shall use their reasonable best efforts to obtain Bankruptcy Court approval of

the Plan as so modified to incorporate such benefits and protections. From and

after the Execution Date, the Debtors and the Century Entities shall file no

further discovery, motions, objections and/or Claims against each other;

provided, however, that the Century Entities shall have the right to file their

own objections and to join in objections to confirmation filed by other parties,

and to prosecute all such objections and oppose confirmation of the Plan as

currently filed if the Approval Order has not been entered by the date when such

action is required by the Court, and the Debtors shall be free to oppose any

such objections and related activities. The Parties fully reserve all of their

rights pertaining to discovery, motions, objections and Claims made prior to the

Execution Date in the Chapter 11 Cases until such time as the Approval Order

becomes a Final Order. Within three (3) Business Days of the Approval Order

becoming a Final Order, the Century Entities shall withdraw, stay, adjourn or

suspend all objections to the Debtors' motions or applications pending in the

Bankruptcy Case (including any appeals of decisions in the Bankruptcy Case) in

accord with terms to be agreed upon that reasonably preserves the parties

respective interests and serves the overall intent of the Settlement and Buyback

Agreement, and shall take no action (including, without limitation, initiating

discovery) that may hinder, delay or oppose actions of the Debtors in the

Chapter 11 Cases, provided that such actions by the Debtors are consistent with

this Settlement and Buyback Agreement. Subject to Section V, upon the Court's

entry of the Approval Order, the Century Entities shall not object to or oppose

confirmation of the Plan and shall not appeal the Confirmation Order. Subject to

Section IX, prior to the First Payment Date, no provisions of the Plan or the

Plan Documents, findings of fact in the Confirmation Order, conclusions of law

in the Confirmation Order, or other rulings of the Court in the context of the

proceedings on confirmation of the Plan shall be used by the Plan Trust or any

other Person as evidence in any way in any proceeding involving a Century

Entity, nor shall they have any evidentiary, res judicata, collateral estoppel

or other preclusive or other effect against any of the Century Entities in any

proceeding (the "No Use/No Effect Restriction"); provided, however, that this No

Use/No Effect Restriction shall not apply after the Trigger Date except with

respect to any order approving any settlement with Gilbert, Heintz & Randolph

LLP, The Kenesis Group or their principals, partners and employees and any

findings of fact or conclusions of law involving such Persons.

C. The Debtors shall communicate with Century Indemnity Company and its

representatives at their reasonable request concerning the status of the Motion,

the Plan, the disclosure statement and confirmation and, subject to any

applicable privilege, shall provide Century Indemnity Company and its

representatives with copies of requested pleadings, notices, the Plan, proposed

orders and other documents relating to the Motion, the Approval Order and the

Channeling Injunction.

D. Prior to the conclusion of the Confirmation Hearing, (i) the Debtors

shall have designated the Century Entities as Settling Asbestos Insurance

Companies on the schedule of Settling Asbestos Insurance Companies filed by the

Debtors; and (ii) any necessary prerequisites under the terms of the Plan have

been satisfied so as to permit the designation of the Century Entities as

Settling Asbestos Insurance Companies, entitled to all of the benefits and

protections of the Asbestos Channeling Injunction as Protected Parties,

provided, however, that such provisions may be made subject to the Approval

Order becoming a Final Order.

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E. The Congoleum Entities and the Plan Trustee shall not seek to

terminate, or reduce or limit the scope of the Asbestos Channeling Injunction,

with respect to the Century Entities after the Confirmation Order becomes a

Final Order.

F. The Debtors shall use their reasonable best efforts to obtain in the

Approval Order the protection of a sale free and clear pursuant to Section

363(f) of the Bankruptcy Code for the buyback of the Subject Policies.

G. The Parties agree that no Party will seek to reject this Settlement and

Buyback Agreement as an executory contract in the Chapter 11 Cases or any other

bankruptcy case.

H. Within three (3) Business Days of the Execution Date, Congoleum

Corporation and Century Indemnity Company shall submit a Consent Order to the

court in the Coverage Action seeking a dismissal without prejudice of all of the

Claims each has asserted against the other in the Coverage Action. The Consent

Order shall provide that, on the First Payment Date, such dismissals shall

convert, without any need for further act or deed, to dismissals with prejudice.

The Consent Order shall further provide that, in the event that the Settlement

and Buyback Agreement becomes null and void pursuant to its terms, then any

Congoleum Entity and any Century Entity, to the extent it has the right to do

so, may re-institute litigation against each other, in accordance with Section

V.B(viii) below, and that neither the "Entire Controversy Doctrine" nor New

Jersey Rule 4:30A nor any analogous doctrine or rule shall bar any such

Congoleum Entity and any such Century Entity from asserting, in such litigation,

the same or substantially similar Claims and/or defenses to those asserted in

the Coverage Action. Any such Congoleum Entity or any such Century Entity may

also file and/or assert any Claims and/or defenses which have arisen since the

Execution Date . In any event, the Parties agree that any such Congoleum Entity

and any such Century Entity will not be bound by any rulings and or decision in

the Coverage Action made after Execution Date. The Congoleum Entities and the

Century Entities will each bear their own fees and costs in the Coverage Action

and in the Chapter 11 Cases.

I. Between the time that the Approval Order becomes a Final Order and the

effective date of the releases under Section VI, the Congoleum Entities and the

Century Entities covenant not to sue one another or take any action that would

adversely affect such releases.

J. The Debtors shall not seek to set a bar date or take such other action

as would have the cause or effect of releasing any Claims that were or could

have been brought by the Century Entities in the Chapter 11 Cases, including any

claim for substantial contribution, before the First Payment Date.

V. TERMINATION OF SETTLEMENT AND BUYBACK AGREEMENT

A. After the Execution Date, this Settlement and Buyback Agreement shall

become null and void upon the occurrence of any of the following contingencies:

(i) The failure of the Coverage Court to enter the Consent Order

described in Section IV.H above;

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(ii) The entry by the Court of an order confirming a Chapter 11 plan

of reorganization for the Debtors other than the Plan;

(iii) The entry by the Court of an order that states that the

Century Entities are not Settling Asbestos Insurance Companies;

(iv) The entry of a Final Order denying approval of the Settlement

and Buyback Agreement;

(v) The entry of an order by the Court converting the Chapter 11

Cases into Chapter 7 cases or dismissing the Chapter 11 Cases; and

(vi) The proposal or filing of a plan of reorganization by the

Debtors that: (a) is inconsistent with the rights and benefits provided to

the Century Entities under this Settlement and Buyback Agreement and/or

with the duties and obligations of, and releases provided by, the

Congoleum Entities under this Settlement and Buyback Agreement; and/or (b)

otherwise has a material adverse effect on the interests of the Century

Entities under this Settlement and Buyback Agreement.

Century Indemnity Company, in its sole option and in its sole discretion, shall

have the right to waive, in writing, any of the contingencies set forth in

Sections V.A(i) through V.A(iii), inclusive, and V.A (vi) by notice to the

Persons described in the notice provisions in Section XVI below within thirty

(30) Business Days of the occurrence of any such contingency(ies), and any such

contingency(ies) so waived shall be deemed irrevocably waived and satisfied. If

all such contingencies are so waived or are satisfied, then this Settlement and

Buyback Agreement shall continue in full force and effect.

B. Notwithstanding anything in this Settlement and Buyback Agreement to

the contrary, in the event that this Settlement and Buyback Agreement becomes

null and void pursuant to Section V.A above:

(i) The Settlement and Buyback Agreement, except for Sections I,

IV.H, V, IX, XII, XVI and XVII (which Sections shall remain in full force

and effect), shall be vitiated and shall be a nullity;

(ii) None of the Century Entities shall be obligated to pay the

Settlement and Buyback Amount pursuant to this Settlement and Buyback

Agreement;

(iii) None of the Century Entities and none of the Congoleum

Entities shall be bound by the terms of any Approval Order;

(iv) None of the Century Entities shall be designated as, and none

of the Century Entities shall receive the benefits or protections of, a

Settling Asbestos Insurance Company, including, without limitation, any

injunctive or related benefit provided for in the Plan, Confirmation

Order, or otherwise in the Chapter 11 Cases, including any injunction or

benefit provided under the authority of Sections 105, 363, or 524(g) of

the Bankruptcy Code;

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(v) The Century Entities and the Congoleum Entities shall have all

the rights, defenses and obligations under or with respect to any Subject

Policies that they would have had absent this Settlement and Buyback

Agreement;

(vi) Any otherwise applicable statutes of limitations or repose, or

other time-related limitation, shall be deemed to have been tolled for the

period from the Execution Date through the thirtieth day after receipt of

notice by any of the Parties that any of the contingencies listed in

Sections V.A(i) through V.A(vi), inclusive, has/have occurred so that the

Settlement and Buyback Agreement becomes null and void, and no Party shall

assert or rely on any time-related defense to any Claim by any Century

Entity or Congoleum Entity related to such period;

(vii) The releases set forth in Section VI below shall become null

and void ab initio;

(viii) Any Party who was a party in the Coverage Action may elect to

re-file a coverage action against any other party in the Coverage Action.

Such a new coverage action shall be called the "New Coverage Action." All

discovery taken in the Coverage Action or in relationship to any of the

Plan's previous versions, and any and all evidence admitted, testimony

taken, and rulings of the Court entered in the trial of the Coverage

Action between August 2, 2005 and the Execution Date may be used in the

New Coverage Action, subject to any applicable rules of admissibility. No

rulings of the court, conclusions of law, or findings of fact entered in

the Coverage Action after the Execution Date, shall be used as evidence in

any way in any proceeding involving a Century Entity or Congoleum Entity

or have any evidentiary, res judicata, collateral estoppel or preclusive

or other effect against any such Century Entity or Congoleum Entity in the

New Coverage Action. The Parties agree that neither the "Entire

Controversy Doctrine" of New Jersey nor New Jersey Rule 4:30A nor any

analogous doctrine or rule shall bar any such Congoleum Entity and any

such Century Entity from asserting, in such litigation, the same or

substantially similar Claims and/or defenses to those asserted in the

Coverage Action or any other claims. Additionally, any such Century Entity

or any such Congoleum Entity may file and/or assert any Claims and/or

defenses which have arisen since the date the trial of the Coverage Action

began, on August 2, 2005. In the event of a New Coverage Action, the

Century Entities shall have the right to examine or cross-examine any

witnesses designated by any of the Parties in the New Coverage Action who

were not examined or cross-examined by Century Indemnity Company prior to

the closing of the trial in the Coverage Action before any such testimony

or evidence adduced from or introduced through such witnesses can be used

in any way in the New Coverage Action by any Congoleum Entity; and

(ix) The Century Entities may pursue any and all objections, whether

to confirmation of a Chapter 11 plan of reorganization for the Congoleum

Entities, or otherwise and assert any and all available Claims.

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VI. BUYBACK AND TERMINATION OF POLICY RIGHTS AND RELEASE

A. Effective upon the First Payment Date, the Congoleum Entities remise,

release, acquit and forever discharge the Century Entities from any Claims

arising from, relating to or involving the Subject Policies, including, but not

limited to (i) any Claims arising from, relating to or involving

asbestos-related Claims, including, but not limited to, Plan Trust Asbestos

Claims, and (ii) any Claims that were or could have been brought in the Coverage

Action.

B. For the avoidance of doubt, the Parties hereby confirm that the

releases granted by the Congoleum Entities to the Century Entities as set forth

in Section VI.A are intended to include and do include releases from any and all

Claims that any Congoleum Entity ever had, now has or may in the future have

against any of the Century Entities arising from or related to what is commonly

referred to as bad faith or insurer misconduct and which includes: (i) the

insurance relationship between any Century Entity and any Congoleum Entity and

any obligations of any Century Entity under or in connection with such

relationship; (ii) the obligations of any Century Entity to any Congoleum Entity

as a result of (a) issuance of the Subject Policies, (b) the handling of Claims

against any Congoleum Entity, (c) the defense or trial of Claims against any

Congoleum Entity, or (d) the settlement of Claims against any Congoleum Entity;

(iii) any and all acts or omissions by any Century Entity in connection with

Claims made against any Congoleum Entity; (iv) any and all Claims arising from

or relating to loss prevention or engineering acts or omissions by any Century

Entity performed in connection with the insurance relationship between any

Century Entity and any Congoleum Entity; (v) any Claims with respect to payments

made or not made by any Century Entity to or on behalf of any Congoleum Entity

prior to the Execution Date; and (vi) any actual or alleged bad faith, fraud,

unfair competition, breach of contract, breach of duty of good faith and fair

dealing, violation of insurance statute or regulation or extra-contractual

liability of any kind, type or description, including any and all Claims that

arise under or from the laws, whether statutory, common or otherwise, of one or

more of the fifty (50) states or any other jurisdiction.

C. Effective upon the First Payment Date, the Century Entities remise,

release, acquit and forever discharge the Congoleum Entities from any Claims

arising from, relating to or involving the Subject Policies, including, but not

limited to: (i) any Claims arising from, relating to or involving

asbestos-related Claims, including, but not limited to, Plan Trust Asbestos

Claims; (ii) any Claims that were or could have been brought in the Coverage

Action; and (iii) any Claims that were or could have been brought in the Chapter

11 Cases, including any claim for substantial contribution.

D. For the avoidance of doubt, the Parties hereby confirm that the

releases granted by the Century Entities to the Congoleum Entities as set forth

in Section VI.C are intended to include and do include releases from any and all

Claims that any Century Entity ever had, now has or may in the future have

against any of the Congoleum Entities arising from or related to what is

commonly referred to as reverse bad faith or policyholder misconduct and which

includes: (i) the insurance relationship between any Century Entity and any

Congoleum Entity and any obligations of any Congoleum Entity under or in

connection with such relationship; (ii) the obligations of any Congoleum Entity

to any Century Entity as a result of (a) issuance of the Subject Policies, (b)

the handling of Claims against any Congoleum Entity, (c) the defense or trial of

Claims against any Congoleum Entity, or (d) the settlement of Claims against any

Congoleum Entity; (iii) any and all acts or omissions by any of the Congoleum

Entities in connection with Claims made against any Century Entity; and (iv) any

actual or alleged bad faith, fraud, unfair competition, breach of contract,

breach of duty of good faith and fair dealing, violation of insurance statute or

regulation or extra-contractual liability of any kind, type or description,

including any and all Claims that arise under or from the laws, whether

statutory, common or otherwise, of one or more of the fifty (50) states or any

other jurisdiction.

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E. For the avoidance of doubt, none of the releases set forth herein shall

release: (i) any of the Congoleum Entities' or any of the Century Entities'

respective obligations under this Settlement and Buyback Agreement, and the

Parties hereby reserve and retain all rights in connection with the enforcement

of this Settlement and Buyback Agreement; and/or (ii) any reinsurance policy,

contract or certificate issued by any Century Entity and/or any reinsurance

treaty in which any Century Entity participates.

F. In consideration of the promises contained in this Settlement and

Buyback Agreement and consistent with the scope of the releases given in Section

VI, effective immediately upon the First Payment Date, but subject to the

satisfaction of the conditions precedent, as set forth in Section II above: (i)

the limits of liability of all of the Subject Policies are hereby deemed by the

Parties to be fully extinguished for all Claims; (ii) any and all purported

rights, duties, responsibilities and obligations of any Century Entity alleged

to have been created or that may be created by the Subject Policies and that

have been released pursuant to Section VI are hereby deemed extinguished,

terminated, canceled and otherwise fully satisfied; and (iii) any and all rights

under the Subject Policies that have been released pursuant to Section VI shall

be and are extinguished, terminated and voided, subject to the terms and

conditions of this Settlement and Buyback Agreement.

G. In addition, as of the First Payment Date, the Debtors shall be and are

deemed to have sold, transferred and conveyed the Subject Policies to Century

Indemnity Company pursuant to Section 363 of the Bankruptcy Code, free and clear

of all Claims, liens, encumbrances and/or interests of any kind and/or nature

whatsoever, to the extent permitted under Section 363(f) of the Bankruptcy Code.

The Parties further agree that the Settlement and Buyback Amount is at least

equal to the fair value of the Subject Policies, and that upon the First Payment

Date, Century Indemnity Company shall be deemed to own the Subject Policies free

and clear of all Interests of any Person. As of the First Payment Date, none of

the Century Entities shall have a duty or obligation to defend, pay defense

costs, indemnify or otherwise to provide defense, indemnity, coverage, services

or benefits of any kind whatsoever released pursuant to Section VI under the

Subject Policies. To the extent requested by the Century Entities, on (or as

soon as practicable after) the Trigger Date, the Debtors shall execute and

deliver to the Century Entities a bill of sale, in form and substance acceptable

to the Parties, evidencing such sale of the Subject Policies to the Century

Entities.

H. The Debtors agree and jointly represent that the promises and

consideration given by any of the Century Entities pursuant to this Settlement

and Buyback Agreement, including, but not limited to the payment of the

Settlement and Buyback Amount by Century Indemnity Company on behalf of the

Century Entities pursuant to this Settlement and Buyback Agreement, constitute a

fair and reasonable exchange for: (i) the releases granted to Century Entities

in this Settlement and Buyback Agreement; (ii) the sale, transfer, conveyance

and buyback of the rights and interests of the Congoleum Entities in the Subject

Policies; and (iii) the designation of the Century Entities as Settling Asbestos

Insurance Companies, entitled to the rights and benefits afforded to Settling

Asbestos Insurance Companies under the Plan and as set forth in the Approval

Order and the Confirmation Order, including the rights and benefits of the

Asbestos Channeling Injunction and any other Section 105(a) and 524(g)

injunctions that may be granted under the Plan, Approval Order and the

Confirmation Order with respect to all Claims, including all Plan Trust Asbestos

Claims and Indirect Asbestos Claims. The Debtors further acknowledge and agree

that the Century Entities have provided consideration for the buyback of the

non-asbestos coverage under the Subject Policies.

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I. The Parties expressly agree that, upon the Trigger Date, the Settlement

and Buyback Amount is the total amount that any of the Century Entities is

obligated to pay on account of any and all Claims of any kind made under or

relating to the Subject Policies. Other than payment by Century Indemnity

Company of the Settlement and Buyback Amount, under no circumstances will any of

the Century Entities ever be obligated to make any additional payments to the

Debtors, the Trust, or any other Person on account of any and all Claims of any

kind in connection with the Subject Policies or for any asbestos-related Claim

relating to the Congoleum Entities under the policies listed in Exhibit F.

J. Except to the extent set forth in Section VI.L and VI.M, the release

provisions of this Section VI are not intended to release and shall not be

construed deemed to effect a release of any Claims arising from, relating to or

involving any policy of insurance or portion thereof that is not a Subject

Policy.

K. Each Party expressly assumes the risk that acts, omissions, matters,

causes or things may have occurred that they do not know or do not suspect to

exist. Each Party hereby waives the terms and provisions of any statute, rule or

doctrine of common law that either: (i) narrowly construes releases purporting

by their terms to release claims, in whole or in part based upon, relating to or

arising from such acts, omissions, matters, causes or things; or (ii) restricts

or prohibits releasing of such claims. Without limitation, each Party

acknowledges that it has been advised by its attorneys concerning, and is

familiar with, the California Civil Code Section 1542. Section 1542 of the

California Civil Code provides as follows:

a general release does not extend to claims which the creditor does

not know or suspect to exist in his or her favor at the time of the

executing of the release, which if known by him or her must have

materially affected his or her settlement with the debtor.

Each Party expressly waives any and all rights under California Civil Code

Section 1542 and under any other federal or state statute or law of similar

effect. The Parties further agree that this reference to the California Civil

Code shall not give rise to any argument that California law applies to this

Settlement and Buyback Agreement or the disputes resolved pursuant hereto.

L. The Congoleum Entities do not have and are not entitled to insurance,

rights or benefits, under the policy set forth in Exhibit D hereto (the "Listed

Policy") for any Plan Trust Claim or other Claim arising from, relating to, or

involving the manufacture, sale, distribution, installation, formulation,

marketing, transport, handling or any other activity involving any asbestos

containing flooring products of the Congoleum Entities or their premises, to the

extent such Claim arises from, relates to or involves exposure to asbestos

associated in any way with the products or operations of the Congoleum Flooring

Business, including without limitation, any operation claims, contribution

claims, direct action claims, or insurance coverage claims, and in fact, to the

extent that they had or have any interest, expressly renounce any such interest

in the Listed Policy and agree that they have no right to assert any such Claims

under the Listed Policy and that there is no coverage available to them under

the Listed Policy for such Claims. If, after the Execution Date, a court of

competent jurisdiction were to rule, after a final order on appeal, that a

Congoleum Entity has an interest or right in a Listed Policy as defined above,

or if, after the Execution Date, new information were to reveal that a Congoleum

Entity has an interest in a Listed Policy as defined above, then such Listed

Policy will be deemed a Subject Policy.

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M. The Congoleum Entities agree that the policies listed in Exhibit F do

not provide coverage for asbestos-related Claims against the Congoleum Entities.

N. Notwithstanding the foregoing, any Claims that the Century Entities may

have against ABI and its predecessors and successors and their officers,

directors and employees, but only when acting in their capacity as such, shall

be fully preserved regardless of any contrary terms that may be included in the

Plan or Confirmation Order.

VII. DEFENSE OF THE CHANNELING INJUNCTION

A. The Trust will cooperate with the Century Entities in the defense of

the Channeling Injunction.

B. The Parties agree that, to the extent any defense or cooperation

provisions of the Travelers settlement with the Debtors are approved by the

Court, the Century Entities shall share in such rights consistent with the

Travelers settlement.

VIII. REDUCTION OF JUDGMENT

In the event that any insurer of the Debtors either: (i) obtains a final

binding award (whether by judgment, arbitration award, or other judicial or

quasi-judicial proceeding) against a Century Entity after a contested

proceeding; or (ii) agrees to a settlement with a Century Entity with the

consent of the Debtors prior to the Plan Effective Date or with the consent of

the Plan Trust following said Plan Effective Date (which consent in either case

shall not be unreasonably withheld) entitling such insurer to obtain a sum

certain from such Century Entity as a result of such insurer's claim for

contribution, subrogation, indemnification, reimbursement or other similar claim

against such Century Entity for such Century Entity's alleged share or equitable

share of the defense and/or indemnity of a Congoleum Entity, the Congoleum

Entity shall voluntarily reduce or return to such insurer an amount of any such

final award (whether by judgment, arbitration award or other judicial or

quasi-judicial proceeding) or settlement payment that they obtained or may

obtain from such other insurer for Claims released pursuant to this Settlement

and Buyback Agreement, which amount shall be sufficient to eliminate the Century

Entity's obligation to satisfy the award against it.

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IX. NO ADMISSIONS BY THE PARTIES; RIGHTS OF THIRD PARTIES

A. Nothing contained herein is or shall be deemed to be:

(i) An admission by the Century Entities that any Congoleum Entity

or any other Person was or is entitled to any insurance coverage under the

Subject Policies, or as to the validity of any of the positions that have

been or could have been asserted by any Congoleum Entity;

(ii) An admission by the Congoleum Entities as to the validity of

any of the positions or defenses to coverage that have been or could have

been asserted by Century Entities with respect to the Subject Policies;

(iii) An admission by any Party of any liability whatsoever with

respect to asbestos-related Claims including, but not limited to Plan

Trust Asbestos Claims, Indirect Asbestos Claims or other Claims or

Demands;

(iv) A waiver by the Century Entities of any position that they may

adopt or already have adopted concerning the appropriateness of any

bankruptcy process or procedure or any other issue or matter in any other

case or proceeding;

(v) An admission by any Century Entity as to the validity of

anything with respect to the Plan, including, without limitation, any

claim allowance process or criteria, medical criteria, exposure criteria,

disease matrices, claim values, or trust distribution procedures that have

been or will be adopted, used or applied or any aspects of the Plan that

may implicate the rights and duties of the Century Entities; or

(vi) An admission by any Congoleum Entity or any Century Entity as

to the manner in which the other may allocate the Settlement and Buyback

Amount for its own purposes between and among the Subject Policies.

In entering into this Settlement and Buyback Agreement, no Party has waived, nor

shall be deemed to have waived, modified, or retracted any rights, obligations,

privileges or positions it has asserted or might in the future assert in

connection with any Claim, matter, insurance policy or Person outside the scope

of this Settlement and Buyback Agreement.

B. Except as expressly provided in this Settlement and Buyback Agreement,

the Parties specifically disavow any intention to create rights in third parties

under or in relation to this Settlement and Buyback Agreement.

C. The Parties agree that no part of this Settlement and Buyback Agreement

may be used in any proceeding as an admission by or evidence against or for any

other purpose as evidence of the Parties' respective rights, duties or

obligations under and in relation to any policy of insurance, including the

Subject Policies; provided, however, that this restriction shall not apply to

any proceeding in connection with or related to the interpretation, validity,

enforcement or breach of this Settlement and Buyback Agreement. The Parties

further agree that no part of this Settlement and Bu