ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

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FOAMEX INTERNATIONAL INC. | FMXI, LLC

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Title: ASSET PURCHASE AGREEMENT
Date: 3/31/2009
Industry: Containers and Packaging Law Firm: Cozen O'Connor;Akin Gump;Bracewell Giuliani Sector: Basic Materials

EXECUTION COPY

ASSET PURCHASE AGREEMENT

By and Between

FOAMEX INTERNATIONAL INC., FOAMEX L.P. AND FMXI, LLC

And

THE OTHER ENTITIES IDENTIFIED HEREIN,

as Selling Subsidiaries of Foamex International Inc.

And

MP FOAM DIP LLC,

as Purchaser

Dated as of March 25, 2009

TABLE OF CONTENTS

Page

ARTICLE I

CERTAIN DEFINITIONS

Section 1.1

Certain Definitions

Section 1.2

Headings; Table of Contents

Section 1.3

Singular, plural, gender

Section 1.4

Schedules

Section 1.5

Information

Section 1.6

Interpretation

ARTICLE II

PURCHASED SALE OF ASSETS; ASSUMPTION OF LIABILITIES 19

Section 2.1

Purchase and Sale of Assets

Section 2.2

Excluded Assets

Section 2.3

Assumed Liabilities

Section 2.4

Excluded Liabilities

Section 2.5

Contract Designation Rights

Section 2.6

Transferred Benefit Plans

ARTICLE III

PURCHASE PRICE

Section 3.1

Deposit

Section 3.2

Closing Escrow Agreement

Section 3.3

Purchase Price

Section 3.4

Purchase Price Adjustment

Section 3.5

Allocation of Purchase Price

Section 3.6

Section 22 Canadian Tax Election

Section 3.7

GST and QST Elections

Section 3.8

Subsection 20(24) Canadian Tax Election

Section 3.9

HL Fees, Seller Professional Fees and Wind-Down Amount

ARTICLE IV

CLOSING

Section 4.1

The Closing

Section 4.2

Deliveries at the Closing

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

Section 5.1

Organization, Standing and Corporate Power

Section 5.2

Subsidiaries and Joint Ventures

Section 5.3

Authority; Noncontravention

Section 5.4

SEC Documents; Financial Statements

-i-

TABLE OF CONTENTS

(continued)

Page

Section 5.5

Absence of Certain Changes or Events

Section 5.6

Real Properties

Section 5.7

Tangible Personal Property

Section 5.8

Intellectual Property

Section 5.9

Litigation

Section 5.10

Material Contracts; Debt Instruments

Section 5.11

Employees; Labor Matters

Section 5.12

Benefits Plans and ERISA Compliance

Section 5.13

Licenses

Section 5.14

Restrictions on Business Activities

Section 5.15

[Reserved]

Section 5.16

Insurance

Section 5.17

Environmental Matters

Section 5.18

No Brokers

Section 5.19

Taxes

Section 5.20

Regulated Entities

Section 5.21

No Other Representations

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Section 6.1

Corporate Existence and Qualification

Section 6.2

Corporate Power, Authorization, Enforceable Obligations

Section 6.3

Consents and Approvals

Section 6.4

Financial Ability; Purchaser DIP Claim

Section 6.5

Investment Intention

Section 6.6

No Brokers

Section 6.7

No Plan Assets

Section 6.8

Investigation by Purchaser

Section 6.9

Warranties Exclusive

Section 6.10

Taxes

ARTICLE VII

COVENANTS

Section 7.1

Conduct of Business Pending Closing

Section 7.2

Access to Information

Section 7.3

Consents

-ii-

TABLE OF CONTENTS

(continued)

Page

Section 7.4

[Reserved]

Section 7.5

Further Assurances

Section 7.6

Bankruptcy Covenants

Section 7.7

Employment

Section 7.8

[Reserved]

Section 7.9

[Reserved]

Section 7.10

Mexican APA Assets

Section 7.11

HSR Act Filings; Reasonable Efforts; Notification

Section 7.12

Termination of Tax Sharing Agreements

Section 7.13

Use of Name

Section 7.14

Letters of Credit

ARTICLE VIII

TAX MATTERS

Section 8.1

Transaction Taxes

Section 8.2

Tax Characterization

Section 8.3

Purchased Joint Ventures and Purchased Subsidiaries Taxes and Tax Returns 58

Section 8.4

Straddle Period Returns

Section 8.5

Cooperation on Tax Returns and Tax Proceedings

ARTICLE IX

CONDITIONS

Section 9.1

Conditions to Each Party's Obligations

Section 9.2

Conditions to the Obligations of Purchaser

Section 9.3

Conditions to the Obligations of Sellers

ARTICLE X

TERMINATION PROCEDURES

Section 10.1

Termination

Section 10.2

Fees and Expenses

ARTICLE XI

NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND CERTAIN

COVENANTS

Section 11.1

No Survival of Representations and Warranties and Certain Covenants 63

ARTICLE XII

MISCELLANEOUS

Section 12.1

Governing Law

Section 12.2

Jurisdiction; Forum; Service of Process; Waiver of Jury 64

Section 12.3

Successors and Assigns

-iii-

TABLE OF CONTENTS

(continued)

Page

Section 12.4

Entire Agreement; Amendment

Section 12.5

Notices

Section 12.6

Delays or Omissions

Section 12.7

Counterparts

Section 12.8

Severability

Section 12.9

Titles and Subtitles

Section 12.10

No Public Announcement

Section 12.11

Interpretation

Section 12.12

Action by Sellers

Section 12.13

Third Party Beneficiaries

-iv-

EXHIBIT AND SCHEDULE INDEX

Exhibit A

FORM OF APPROVAL ORDER

Exhibit B

FORM OF BIDDING PROCEDURES

Exhibit C

FORM OF SALE ORDER

Exhibit D

FORM OF DEPOSIT ESCROW AGREEMENT

Exhibit E

FORM OF CLOSING ESCROW AGREEMENT

Exhibit F

FORM OF DIP CLAIM ASSIGNMENT AGREEMENT

-v-

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this " Agreement "), dated as of March 25, 2009, is made by and among MP Foam DIP LLC, a Delaware limited liability company(" Purchaser "), and Foamex International Inc., a Delaware corporation (" Foamex Inc. "), Foamex L.P., a Delaware limited partnership (" Foamex "), FMXI, LLC, a Delaware limited liability company (" FMXI ", together with Foamex Inc. and Foamex, the " Seller Parents "), Foamex Latin America, Inc., a Delaware corporation (" Foamex Latin America "), Foamex Asia, Inc., a Delaware corporation (" Foamex Asia "), Foamex Carpet Cushion LLC, a Delaware limited liability company (" Foamex Carpet "), Foamex Mexico, Inc., a Delawarecorporation (" Foamex Mexico ") and Foamex Canada Inc., a Canadian corporation (" Foamex Canada ") (each a " Selling Subsidiary ", and collectively the " Selling Subsidiaries ", and together with the Seller Parents, " Sellers ").

WHEREAS, on February 18, 2009 (the " Petition Date "), Sellers commenced voluntary cases under chapter 11 of title 11, United States Code, 11 U.S.C. 101 et seq . (the " Bankruptcy Code "), in the United States Bankruptcy Court for the District of Delaware (the " Bankruptcy Court "), which cases are being jointly administered under Chapter 11 Case No. 09-10560 (the " Bankruptcy Case "), and such Bankruptcy Case has been recognized as a "foreign proceeding" by the Canadian Court in the Canadian Proceedings;

WHEREAS, Sellers continue to operate their businesses and manage their properties as debtors and debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code;

WHEREAS, Purchaser desires to purchase and assume from Sellers, and Sellers desire to sell and transfer to Purchaser, pursuant to sections 363 and 365 of the Bankruptcy Code, all of the Purchased Assets and Assumed Liabilities on the terms and subject to the conditions set forth in this Agreement (the " Sale ").

NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

Section 1.1 Certain Definitions . For purposes of this Agreement, the following terms shall have the respective meanings set forth below:

" Accounting Firm " has the meaning set forth in Section_3.3(d)(ii) .

" Accounts Receivables " means as of the Closing Date, all accounts receivables, trade receivables, notes receivables, and other miscellaneous receivables, whether current or overdue, of any Seller or Purchased Subsidiary.

" Action " means any complaint, claim, charge, prosecution, indictment, action, suit, arbitration, audit, hearing, litigation, inquiry, investigation or proceeding (whether civil, criminal, administrative, investigative or informal) commenced, brought or asserted by any Person or group of Persons or Governmental Authority or conducted or heard by or before any Governmental Authority or any arbitration tribunal.

" Affiliate " of any Person means any other Person who either directly or indirectly through one or more intermediaries is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, " control " means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of securities, partnership interests or by contract, assignment, credit arrangement, as trustee or executor, or otherwise, and the terms " controls ," " controlling " and " controlled by " shall have correlative meanings. With respect to Purchaser, the term " Affiliate " shall also include its respective managers or members or similar Persons, and any other entity controlled by the same managers or members or similar Persons as Purchaser (as the case may be), provided that such term shall not include any portfolio companies or managed accounts.

" Agreement " has the meaning set forth in the Preamble.

" Alternative Transaction " means (a) the sale (whether by stock sale, merger, consolidation or otherwise) of all or a substantial portion of the Equity Securities of Sellers, (b) the sale of all or a substantial portion of the Purchased Assets pursuant to the Bidding Procedures to any Person other than Purchaser or its Affiliates or (c) a transaction or series of transactions independent of and not in compliance with the Bidding Procedures involving the sale or transfer of all or a substantial portion of the Purchased Assets to a Person other than Purchaser or its Affiliates, excluding the sale of Inventory in the ordinary course of business consistent with past practice.

" APBO " has the meaning set forth in Section 5.12(j) .

" Approval Motion " has the meaning set forth in Section_7.6(b) .

" Approval Order " shall mean an order approving, among other things, (a) the Bidding Procedures, (b) the right of Purchaser to credit bid the Purchaser DIP Claim (in part or in whole) towards the Purchase Price (to the extent permissible under section 363(k) of the Bankruptcy Code) and (c) the Bidding Incentives, substantially in the form attached hereto as Exhibit A .

" Approval Order Recognition Order " shall mean an order of the Canadian Court recognizing the Approval Order.

" Assumed Liabilities " has the meaning set forth in Section_2.3.

" Auction " has the meaning set forth in the Bidding Procedures.

" Avoidance Actions " means any and all actual or potential actions to avoid a transfer of property or an obligation incurred by the Seller pursuant to any applicable section of the Bankruptcy Code, including sections 544, 545, 547, 548, 549, 550, 551, 553(b), and 724(a) of the Bankruptcy Code.

" Bankruptcy Case " has the meaning set forth in the Recitals.

" Bankruptcy Code " has the meaning set forth in the Recitals.

" Bankruptcy Court " has the meaning set forth in the Recitals.

" Benefit Plan Liabilities " shall have the meaning set forth in Section_2.3(g) hereof.

" Benefit Plans " means, collectively, any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, stock appreciation

right, retirement, vacation, severance, pay in lieu of notice, change-of-control, disability, death benefit, hospitalization, medical, worker's compensation, supplementary unemployment benefits, or other plan, arrangement, program or practice (whether or not written) or any employment agreement providing compensation or benefits to any current or former employee, officer, director or independent contractor of Sellers, Purchased Subsidiaries or any beneficiary thereof or entered into, maintained or contributed to, as the case may be, by Sellers, any Purchased Subsidiaries or with respect to which any of Sellers, any Purchased Subsidiaries have or could have any obligation or liability other than government sponsored workers compensation, pension, health insurance, parental insurance, prescription drugs, and employment insurance plans, including, (i) any " employee welfare benefit plan " (as defined in Section 3(2) of ERISA), whether or not terminated and (ii) " employee pension benefit plan " (as defined in Section 3(1) of ERISA), whether or not terminated.

" BIA " has the meaning set forth in Section 10.1(f) .

" Bidding Incentives " means, collectively, the Break-Up Fee and the Reimbursable Expenses.

" Bidding Procedures " means those bidding procedures set forth on Exhibit B hereof.

" Books and Records " means all books, records, data, and files (in any form or medium, including computerized or electronic) of the Business or of Sellers or the Purchased Subsidiaries, including (i) all books and records of account and other financial records; (ii) all catalogues, brochures, advertising materials, forms of purchase orders, sales orders and invoices and similar sales or marketing materials; (iii) all price lists, customer lists, supplier lists, mailing lists and credit records; (iv) all manuals pertaining to software, products, operations, research, development or maintenance; (v) all records or lists pertaining to supply, production or distribution; (vi) all engineering reports and studies, industrial hygiene surveys, medical monitoring records, permitting documents, environmental reports and studies, surveys, engineering, construction and design schematics, plans and drawings, site plans, maps, blueprints, title reports, title abstracts, title commitments and title policies (including copies of documents relating to exceptions contained therein), zoning/use restriction rulings or certifications, appraisals, bills, invoices or receipts relating to any Taxes and vesting deeds relating to the Real Estate; (vii) all operating records and operating, safety and maintenance manuals; and (viii) all personnel files of all employees other than Excluded Employees in each case, to the extent relating to the Business.

" Break-Up Fee " means $2,000,000.

" Business " means the business of the Sellers and the Purchased Subsidiaries of manufacturing and distributing flexible polyurethane and advanced polymer foam products.

" Business Day " shall have the meaning provided in the Bankruptcy Code.

" Canadian Court " means the Quebec Superior Court (Commercial Division) or, such other court of competent jurisdiction in Canada administering the Canadian Proceedings.

" CCAA " means the Companies' Creditors Arrangement Act, R.S.C. 1985, c.C-36, as heretofore or hereafter amended.

" Canadian Proceedings " means the proceedings commenced by the Sellers in the Canadian Court on March 3, 2009 to recognize the Bankruptcy Case as a "foreign proceeding" pursuant to Section 18.6 of the CCAA.

" CERCLA " means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601 et_seq .)

" Closing " has the meaning set forth in Section_4.1 .

" Closing Date " has the meaning set forth in Section_4.1 .

" Closing Escrow Agreement " means that certain closing escrow agreement, dated as of the Closing Date, by and among the Escrow Agent, Sellers and Purchaser, substantially in the form attached hereto as Exhibit E .

" Closing Statement " has the meaning set forth in Section_3.3(d) .

" Collective Bargaining Agreements " means all the collective bargaining agreements between any Seller or any Purchased Subsidiary and any labor union or other representative of current employees of any Seller or any Purchased Subsidiary (including material local agreements, amendments, supplements, letters and memoranda of understanding of any kind), each as listed in Section 5.10(a) of the Seller Disclosure Schedule, save and except for the Mexican Collective Bargaining Agreements.

" Confidentiality Agreement " means the confidentiality agreement dated March 27, 2008, between MatlinPatterson Global Advisers LLC and Foamex, as may be amended, modified or supplemented by the parties thereto.

" Consent " means any consent, approval, franchise, order, License, Permit, waiver or authorization, or registration, declaration or filing with or exemption, notice, application, or certification, including all Regulatory Approvals.

" Contract " means any contract, purchase order, lease or sublease, License or sublicense, agreement to settle litigation or claims, or other agreement or instrument, including, but not limited to, the Leases and any agreement or any contract related to the use, ownership or operation of the Owned Real Estate.

" Controlled Group Liability " means any and all liabilities under (i) Title IV of ERISA, (ii) Section 302 of ERISA, and (iii) Sections 412 and 4971 of the IRC.

" Copyright Licenses " means any written agreement naming a Seller or a Purchased Subsidiary as licensor or licensee, granting any right under any Copyright.

" Copyrights " means all of the following now owned or hereafter adopted or acquired by any Seller or Purchased Subsidiary: (a) all copyrights (whether registered or unregistered), all registrations thereof; and all applications in connection therewith, including all registrations, and applications in the United States Copyright Office, the Canadian Intellectual Property Office or in any similar office or agency of any other country or any political subdivision thereof, and (b) all extensions or renewals thereof. “Copyrights” expressly excludes copyrights in commercially available computer software licensed under a shrink wrap, click wrap or other similar commercial license.

" Cure Costs " means all cash amounts that, pursuant to section 365 of the Bankruptcy Code, will be required to be paid as of the Closing Date to cure any monetary defaults on the part of Sellers under the Purchased Contracts, in each case to the extent such Contract was entered into prior to the commencement of the Bankruptcy Cases and as a prerequisite to the assumption of such Purchased

Contracts under section 365 of the Bankruptcy Code; provided, however, in the case of any Contract, such Contract is executory and, in the case of any Lease, such Lease is unexpired.

" Current Assets "means the consolidated current Purchased Assets, as determined in accordance with GAAP on the basis of the same accounting principles, policies, methods and procedures, consistently applied, as those used in the Unaudited Financial Statements, but in any event consisting of and limited to the accounts identified as “Current Assets” (and sub-accounts of such accounts which have projected balances as of May 2009) in the illustrative calculation of Working Capital set forth in Section 1.1(a) of the Seller Disclosure Schedule, including (i) Accounts Receivable (net of reserves for doubtful accounts), (ii) Inventories (net of obsolete, excess or discontinued inventory), and (iii) other current Purchased Assets, but excluding (x) any current Tax assets and (y) any assets that would be Excluded Assets if the measurement date were the Closing Date.

" Current Liabilities " means (a) the consolidated current Assumed Liabilities, as determined in accordance with GAAP on the basis of the same accounting principles, policies, methods and procedures, consistently applied, as those used in the Unaudited Financial Statements, but in any event consisting of and limited to the accounts identified as “Current Liabilities” (and sub-accounts of such accounts which have projected balances as of May 2009) in the illustrative calculation of Working Capital set forth in Section 1.1(a) of the Seller Disclosure Schedule, including (i) trade accounts payable and (ii) any other current Assumed Liabilities, but in any event including Cure Costs and any settlement payments to be made in connection with the Closing, but excluding (x) any current Tax Liabilities and (y) any liabilities that would be Excluded Liabilities if the measurement date were the Closing Date plus (b) the estimated or actual Tax Amount, determined as of the relevant date.

" Deposit Amount " has the meaning set forth in Section_3.1 .

" Deposit Escrow Agreement " means that certain deposit escrow agreement, dated as of the date hereof, by and among the Escrow Agent, Sellers and Purchaser, in the form attached hereto as Exhibit D .

" DIP Claim Assignment Agreement " means that certain DIP Claim Assignment Agreement, dated as of the Closing Date, by and among the Sellers and the DIP Lender attached hereto as Exhibit F .

" DIP Financing " means the senior secured superpriority debtor in possession term loan and letter of credit facility in an aggregate principal amount up to $95,000,000, as amended, modified or otherwise in effect from time to time, provided to Sellers by the DIP Lender, as approved by the DIP Order.

" DIP Lender " means MP Foam DIP LLC, a Delaware limited liability company, in its capacity as lender under the DIP Loan Agreement.

" DIP Loan Agreement " means the Debtor-in-Possession Credit Agreement, dated as of February 24, 2009, among Foamex, as borrower, Foamex Inc., FMXI, Foamex Latin America, Foamex Asia, Foamex Carpet, Foamex Mexico and Foamex Canada, as guarantors, the lenders thereunder and Bank of America, N.A. as agent, as amended, modified supplemented or restated from time to time.

" DIP Order " means the Final Order Authorizing Post Petition Financing, entered by the Bankruptcy Court on March 18, 2009, and recognized by the Canadian Court in the Canadian Proceedings.

" Employees " has the meaning set forth in Section 5.11(a) .

" Environmental Laws " means all federal, state, provincial, local and foreign administrative, civil and criminal laws, Permits, statutes, ordinances, codes, rules, standards, decrees, injunctions, directives and regulations, and any legally binding judicial or administrative interpretation thereof including any applicable judicial or administrative order, consent decree, order or judgment and all common and civil law theories (at law or in equity), arising from or relating to pollution, protection, remediation or preservation of human health and safety, the environment, or natural resources, including the regulation of discharges, Releases or threatened Releases of noxious odors or any Hazardous Substances into ambient air, water or land, or otherwise relating to the manufacture, processing, generation, distribution, use, importation, treatment, storage, disposal, cleanup, transport or handling of Hazardous Substances. Environmental Laws include CERCLA; the Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101 et seq .); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq .); the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq .); the Toxic Substance Control Act (15 U.S.C. §§ 2601 et seq .); the Clean Air Act (42 U.S.C. §§ 7401 et seq .); the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq .); the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq .); and the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq .), and any and all regulations promulgated thereunder, and all analogous state, provincial, local and foreign counterparts or equivalents and any transfer of ownership environmental notification or approval statutes.

" Environmental Liability " means any direct, indirect, pending or threatened indebtedness, liability, claim, loss, damage, fine, penalty, cost, expense, deficiency or responsibility, whether known or unknown, arising under or relating to any Environmental Law, Environmental Permit, or Release, whether based on negligence, strict liability or otherwise, including costs and liabilities for investigation, removal, remediation, restoration, abatement, monitoring, personal injury, property damage, natural resource damages, court costs, and reasonable attorneys' fees.

" Environmental Permit " means all Consents issued or granted by any public or private entity or Person pursuant to or in relation to Environmental Law or Releases of Hazardous Substances.

" Equity Securities " means (i) with respect to any corporation, all shares, interests, participations or other equivalents of capital stock of such corporation (however designated), and any warrants, options or other rights to purchase or acquire any such capital stock and any securities convertible into or exchangeable or exercisable for any such capital stock, (ii) with respect to any partnership, all partnership interests, participations or other equivalents of partnership interests of such partnership (however designated), and any warrants, options or other rights to purchase or acquire any such partnership interests and any securities convertible into or exchangeable or exercisable for any such partnership interests and (iii) with respect to any limited liability company, all membership interests, participations or other equivalents of membership interests of such limited liability company (however designated), and any warrants, options or other rights to purchase or acquire any such membership interests and any securities convertible into or exchangeable or exercisable for any such membership interests.

" ERISA " means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto, and any regulations promulgated thereunder.

" ERISA Affiliate " shall mean any corporation, trade, business or entity under common control with any of Sellers or any Purchased Subsidiary within the meaning of Section 414(b), (c), (m), or (o) of the IRC or Section 4001 of ERISA.

" Escrow Agent " means Wilmington Trust Company.

" Escrow Amount " means $5,000,000.

" Estimated Cash Purchase Price " has the meaning set forth in Section_3.3(a) .

" Estimated Working Capital " has the meaning given in Section_3.3(c) .

" Exchange Act " means the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder.

" Excluded Assets " has the meaning set forth in Section_2.2 .

" Excluded Liabilities " has the meaning set forth in Section_2.4 .

" Excluded Employees " has the meaning set forth in Section_2.4(d) .

" Final Cash Purchase Price " has the meaning set forth in Section_3.3(b) .

" Final Order " means any order, ruling or judgment of the Bankruptcy Court, the Canadian Court, or any other court of competent jurisdiction, as to which the time to file an appeal, a motion for rehearing or a petition for writ of certiorari has expired and no such appeal, motion or petition is pending.

" Final Working Capital " has the meaning set forth in Section_3.3(d) .

" Financial Statements " means the consolidated balance sheets, statements of operations and statements of cash flows of Foamex Inc. and subsidiaries included in the SEC Documents.

" Foamex " has the meaning set forth in the Preamble.

" Foamex Asia " has the meaning set forth in the Preamble.

" Foamex Canada " has the meaning set forth in the Preamble.

" Foamex Carpet " has the meaning set forth in the Preamble.

" Foamex Inc. " has the meaning set forth in the Preamble.

" Foamex Latin America " has the meaning set forth in the Preamble.

" Foamex Mexico " has the meaning set forth in the Preamble.

" FMXI " has the meaning set forth in the Preamble.

" Fundamental Documents " means the documents of a Person (other than a natural person) by which such Person establishes its legal existence or which govern its internal corporate affairs. For example, the Fundamental Documents of a corporation would be its charter and bylaws and the Fundamental Documents of a limited liability company would be its certificate of formation and operating agreement.

" GAAP " means generally accepted accounting principles in the United States.

" General Intangibles " means all intangible assets now owned or hereafter acquired by any Seller or any Purchased Subsidiary, including all right, title and interest that such Seller may now or hereafter have in or under any Contract, all payment intangibles, rights in customer lists, Intellectual Property, interest in business associations, Licenses, permits, proprietary or confidential information, technical

information, procedures, designs, knowledge, know-how, software, data bases, data, skill, expertise, experience, processes, rights in models, rights in drawings, goodwill, all rights and claims in or under insurance policies (including insurance for fire, damage, loss and casualty, whether covering personal property, real property, tangible rights or intangible rights, all liability, life and business interruption insurance, and all unearned premiums), uncertificated securities, checking and other bank accounts, rights to receive Tax refunds and other payments, rights to receive dividends, distributions, cash, Instruments and other property in respect of or in exchange for pledged Equity Securities and investment property, and rights of indemnification.

" Governmental Authority " shall mean any (a) nation, state, province, tribal, county, city, town, village, district, or other jurisdiction of any nature; (b) federal, state, local, provincial, municipal, foreign, or other government; (c) governmental or quasi-governmental authority of any nature (including any government agency, ministry, branch, department, official, or entity and any court or other tribunal); (d) multi-national organization or body; or (e) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

" GST " has the meaning set forth in Section 3.7 .

" Hazardous Substance " means any substance, material or waste that is regulated by, or forms the basis of liability under, any Environmental Laws, including, but not limited to, any material or substance that is (a) defined as a "hazardous waste," "hazardous material," "'hazardous substance," "extremely hazardous waste," "restricted hazardous waste," "pollutant," "contaminant," "hazardous constituent," "special waste," "toxic substance" or other similar term or phrase under any Environmental Laws, or (b) petroleum or any fraction or by-product thereof, asbestos, asbestos-containing materials, polychlorinated biphenyls (PCBs), any radioactive substance, polyvinyl chloride, radon, lead-based paint or toxic mold.

" HL Fee Amount " has the meaning set forth in Section 3.9(a) .

" HL Fee Escrow " has the meaning set forth in Section 3.9(a) .

" HL Escrow Agreement " has the meaning set forth in Section 3.9(a) .

" HL Fees " means the fees and expenses of Houlihan Lokey Howard & Zukin, Inc. pursuant to the engagement letter between Houlihan Lokey Howard & Zukin, Inc. and Foamex International, Inc., dated January 1, 2009, including the Monthly Fee and the M&A Transaction Fee (each as defined in such agreement), but solely to the extent that such fees and expenses become allowed administrative expense claims of Sellers' estates pursuant to Section 503(b) of the Bankruptcy Code.

" HSR Act " means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

" Income Tax " means any Tax based upon, measured by, or calculated with respect to (i) net income, profits, sales, use or similar measures (including margin tax, flat Taxes, value added Taxes, customs, profit sharing Taxes, CUFIN, capital gains taxes and minimum taxes) or (ii) multiple bases (including corporate franchise, business and occupation, business license or similar taxes) if one or more of the bases on which such Tax is based upon, measured by or calculated with respect to that which is described in clause (i), in each case together with any interest, penalties, or additional to such Tax.

" Indebtedness " shall mean, with respect to any Person, without duplication:

(a) obligations of such Person for borrowed money, or otherwise evidenced by bonds, debentures, notes or similar instruments;

(b) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person, other than any such obligation made in the ordinary course of business;

(c) all obligations of such Person issued or assumed as the deferred purchase price of property or services (excluding obligations of such Person to creditors for raw materials, inventory, services and supplies incurred in the ordinary course of such Person's business);

(d) all obligations of such Person under leases which have been or should be treated, in accordance with GAAP, as capitalized lease obligations of such Person;

(e) all obligations of others secured by any Lien on property or assets owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, other than any such obligation made in the ordinary course of business;

(f) all obligations of such Person under interest rate or currency swap transactions (valued at the termination value thereof);

(g) all letters of credit issued for the account of such Person (excluding letters of credit issued for the benefit of suppliers to support accounts payable to suppliers incurred in the ordinary course of business); and

(h) all guarantees and arrangements having the economic effect of a guarantee of such Person of any Indebtedness of any other Person.

" Indemnification Claims " means claims for indemnification of any present or former officer, director, employee, partner or member of any Seller or Purchased Subsidiary whether arising under bylaws, certificates of formation or other formation documents, or Contract arising prior to the Closing Date.

" Industrial Revenue Bond " means the industrial revenue bonds issued pursuant to the Santa Teresa Indenture with respect to Sellers' Santa Teresa, Dona Ana County, New Mexico site, which bonds are secured by certain equipment and a portion of the real estate located at 2500 Airport Road, Santa Teresa, New Mexico.

" Initial Purchase Price " means $105,000,000 consisting of a combination of $78,400,000 in cash and Purchaser DIP Claim and the value of the Assumed Liabilities. The parties estimate that the value of the Assumed Liabilities as of the date hereof is $26,600,000.

" Instruments " means all "instruments," as such term is defined in the UCC, now owned or hereafter acquired by any Seller or Purchased Subsidiary, wherever located, and, in any event, including all certificated securities, all certificates of deposit, and all promissory notes and other evidences of indebtedness, other than instruments that constitute, or are a part of a group of writings that constitute, chattel paper.

" Intellectual Property " means any and all Patents, Copyrights, Trademarks, Trade Secrets, and internet domain names, and other intellectual property, owned by any Seller or any Purchased Subsidiary

and used or held for use in connection with, all goodwill associated with the Business, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

" Intellectual Property Agreements " means all Copyright Licenses, Patent Licenses, Trademark Licenses and all other agreements, permits, consents, orders, and franchises relating to the license, development or use of any Intellectual Property (expressly excluding shrink wrap, click wrap and other similar commercial technology licenses).

" Inventory " means all "inventory," as such term is defined in the UCC, now owned or hereafter acquired by any Seller or any Purchased Subsidiary, wherever located, and, without limiting the foregoing, all (i) inventory, (ii) merchandise, (iii) goods and other personal property, (iv) raw materials, work or construction in process, (v) finished goods, returned goods, or materials or supplies of any kind, nature or description and (vi) products, equipment, and appliances, whether owned or on order, including all embedded software.

" IRC " means the Internal Revenue Code of 1986, as amended.

" IRS " means the Internal Revenue Service.

" Knowledge of Sellers " means the actual knowledge of the officers of Sellers identified in Section 1.1(b) of the Seller Disclosure Schedule.

" Laws " means any federal, state, provincial, local, foreign, international or supranational law (including common law), statute, treaty, ordinance, rule, regulation, Order, code, or other similar authority enacted, adopted, promulgated, or applied by any Governmental Authority.

" Leases " has the meaning set forth in Section_5.6(d) .

" Leased Real Estate " has the meaning set forth in Section_5.6(d) .

" Letters of Credit " means the letters of credit that are outstanding under the DIP Loan Agreement as of any relevant time.

" Letters of Credit Amount " means the amount required to cash collateralize the Letters of Credit as of the Closing Date pursuant to the DIP Loan Agreement and/or any agreements or documents related thereto, if required pursuant to Section 7.14 .

" Liabilities " means any and all debts, losses, liabilities, claims, damages, fines, costs, royalties, proceedings, deficiencies or obligations of any nature, whether known or unknown, absolute, accrued, contingent or otherwise and whether due or to become due and any out-of-pocket costs and expenses (including reasonable attorneys', accountants' or other fees and expenses).

" License " means any licenses, franchises, Consents, approvals and any Permits, including Permits of or registrations with any Governmental Authority; but expressly excluding any license or sublicense of Intellectual Property.

" Liens " means any mortgage, pledge, hypothecation, security interest, encumbrance, easement, license, encroachment, servitude, consent, option, lien, put or call right, right of first refusal, voting right, charge, lease, sublease, right to possession or other restrictions or encumbrances of any nature whatsoever.

" Material Adverse Effect " means (i) any event, occurrence, fact, condition, change or effect (any such item, an " Effect ") that is materially adverse to the Business, the Purchased Assets, the Assumed Liabilities or the results of operations or condition (financial or otherwise) of the Business, taken as a whole, (ii) any impairment of the ability of any Seller to perform its obligations under this Agreement or (iii) any Effect that prevents or materially delays the consummation of any of the transactions contemplated by this Agreement, but excluding (A) Effects resulting from changes in the United States, Mexican, Canadian or general economic conditions, except to the extent such Effects disproportionately affect the Business taken as a whole, (B) Effects arising out of the execution or delivery of this Agreement or the transactions contemplated by this Agreement or the public announcement thereof, (C) Effects that result from any action required to be taken pursuant to this Agreement or any action taken pursuant to the written request or with the prior written consent of Purchaser, and (D) Effects arising out of the pendency of any Bankruptcy Cases and any action approved by, or motion made before, the Bankruptcy Court.

" Material Contract " and " Material Contracts " has the meaning set forth in Section_5.10(a) .

" Mexican APA " has the meaning set forth in Section_7.10(a) .

" Mexican Collective Bargaining Agreements " means all the collective bargaining agreements between any Seller or any Purchased Subsidiary and any Mexican labor union or other Mexican representative of current employees of any Seller or any Purchased Subsidiary (including material local agreements, amendments, supplements, letters and memoranda of understanding of any kind) that covers employees working in Mexico, each as listed in Section 5.10(a) of the Seller Disclosure Schedule.

" Mexican GAAP " means the applicable generally accepted accounting principles or Norms of Financial Information in force in Mexico upon execution of the Mexican Transfer Documents.

“ Mexican MAE ” means (i) any event, occurrence, fact, condition, change or effect (any such item, an " Effect ") that is materially adverse to the Business of the Purchased Subsidiaries or the results of operations or condition (financial or otherwise) of the Business of the Purchased Subsidiaries, taken as a whole, (ii) any impairment of the ability of any Seller to perform its obligations under this Agreement or (iii) any Effect that prevents or materially delays the consummation of any of the transactions contemplated by this Agreement, but excluding (A) Effects resulting from changes in the United States, Mexican, Canadian or general economic conditions, except to the extent such Effects disproportionately affect the Business of the Purchased Subsidiaries taken as a whole, (B) Effects arising out of the execution or delivery of this Agreement or the transactions contemplated by this Agreement or the public announcement thereof, (C) Effects that result from any action required to be taken pursuant to this Agreement or any action taken pursuant to the written request or with the prior written consent of Purchaser, and (D) Effects arising out of the pendency of any Bankruptcy Cases and any action approved by, or motion made before, the Bankruptcy Court.

“ Mexican Taxes ” means the applicable provisions of the Income Tax Law ( Ley del Impuesto Sobre la Renta ), the Value Added Tax Law ( Ley del Impuesto al Valor Agregado) and any other applicable tax law in force in Mexico upon execution of the Mexican Transfer Documents, including, without limitation, income Taxes, flat Taxes, profit sharing Taxes, and Taxes assessed as a result of net operating loss, asset Tax or CUFIN recapture.

" Mexican Assets " has the meaning set forth in Section 7.10(a) .

" Mexican Services Agreement " has the meaning set forth in Section_7.10(a) .

" Mexican Transfer Documents " has the meaning set forth in Section_7.10(a) .

“ Mexico ” means the United Mexican States.

" Multiemployer Plan " shall have the meaning as such term is defined in Section 3(37) or Section 4001(a)(3) of ERISA or, for Benefit Plans for Canadian employees, former employees or beneficiaries, the meanings set forth in applicable Laws.

" Non-Solicitation Period " has the meaning set forth in Section_7.6(c)(i) .

" Notice of Disagreement " has the meaning set forth in Section 3.3(d)(i) .

" Offered Employees " has the meaning set forth in Section 7.7(a) .

" Order " means any judgment, order, administrative order, writ, stipulation, injunction (whether permanent or temporary), award, decree or similar legal restraint of, or binding settlement having the same effect with, any governmental Action.

" OSHA " means the Occupational Safety and Health Act of 1970, as amended.

" Owned Real Estate " have the meanings set forth in Section 5.6(c) .

" Patent Licenses " means all agreements, whether written or oral, providing for the grant by or to a Seller or a Purchased Subsidiary of any right to manufacture, use or sell any invention covered in whole or in part by a Patent.

" Patents " means all of the following now owned or hereafter acquired by any Seller or any Purchased Subsidiary: (a) all letters patent, inventions, patents and patent rights of the United States, Canada or of any other country, all registrations thereof, and all applications for letters patent, inventions, patents and patent rights of the United States, Canada or of any other country, including registrations and applications in the United States Patent and Trademark Office, the Canadian Intellectual Property Office or in any similar office or agency of the United States, any State, or any other country, and (b) all reissues, continuations, continuations-in-part or extensions thereof.

" PBGC " means the Pension Benefit Guaranty Corporation.

" Permits " means all approvals, authorizations, certificates, consents, franchises, variances, licenses, and permits issued by or in favor of any Seller, any Purchased Subsidiary or any Purchased Joint Venture by any federal, state, provincial, local, municipal or other governmental, quasi-governmental, or private authorities, districts or jurisdictions (including all applications, renewal applications, and/or documents filed, and/or fees paid, in connection therewith).

" Permitted Liens " means (i) any Liens specifically set forth in Section 5.6(a) of the Seller Disclosure Schedule, (ii) statutory Liens for current and future Taxes, assessments or other governmental charges, including water and sewage charges, not yet due and payable, or being contested in good faith, (iii) mechanic's, materialman's, warehouseman's, carrier's and similar liens for labor, materials or supplies arising by operation of Law in the ordinary course of business or which could not, individually or in the aggregate, have a Material Adverse Effect on the Business, (iv) purchase money security interests arising in the ordinary course of business, (v) rights of landlords or grantees in respect of any Leased Real Estate pursuant to the terms and conditions of the Leases in effect as of the date hereof, as may be modified by the Sale Order, (vi) present and future zoning, building codes and other land use Laws regulating the use

or occupancy of any Real Estate or the activities conducted thereon which are imposed by any Governmental Authority having jurisdiction over such Real Estate which are not violated by (A) the current use or occupancy of such Real Estate, (B) the proposed use, occupancy or development thereof by the Business as currently contemplated or (C) the operation of the Business, or any violation of which could not have a Material Adverse Effect on the Business, (vii) easements, covenants, conditions, restrictions and other similar matters affecting title to such Real Estate and other title encumbrances which encumber the Real Estate as of the date hereof and which do not, individually or in the aggregate, materially impair the use, occupancy, maintenance, repair or development of such Real Estate or the operation of the Business, (viii) any Lien incurred under or pursuant to the DIP Financing, (ix) any Lien that, pursuant to Section 363(f) of the Bankruptcy Code, will be released pursuant to the Sale Order (and/or the Sale Order Recognition Order, as applicable), (x) any lien constituting or arising in connection with an Intellectual Property license or sublicense, (xi) with respect to the Owned Real Estate only, any title matters which would be reflected on an accurate, current survey of the Real Estate and which do not, individually or in the aggregate, materially impair the use, occupancy, maintenance, repair or development of such Real Estate or the operation of the Business, (xii) consents by Seller or any former owner of the Real Estate for the erection of any structure or structures on, under or above any street or streets on which the Real Estate may abut, (xiii) non-material variations between tax lot lines and lines of record title, (xiv) with respect to the Owned Real Estate only, encumbrances to title to the Real Estate which are reflected in the official public real property records of the county in which the applicable Real Estate is located but only to the extent such encumbrances are valid and subsisting and affect the Real Estate as of the date hereof and which do not, individually or in the aggregate, materially impair the use, occupancy, maintenance, repair or development of such Real Estate or the operation of the Business, but not monetary Liens (unless otherwise expressly permitted pursuant to the other clauses of this definition of Permitted Liens) and (xv) with respect to the Leased Real Estate, the terms and conditions of the Leases with respect to encumbrances to title or limitation on the tenants right to use of such Leased Real Estate.

" Person " shall be construed broadly and means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or other business entity or a Governmental Authority.

" Petition Date " has the meaning set forth in the Recitals.

" Pre-Closing Straddle Period Taxes " means the amount of Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days in the Straddle Period ending on and including the Closing Date and the denominator is the number of days in the entire Straddle Period.

" Prime Rate " means the rate of interest published in the Wall Street Journal from time to time as the prime rate in the United States.

" Purchase Price " means the Initial Purchase Price, as adjusted prior to and after the Closing in accordance with Section_3.3 .

" Purchased Assets " has the meaning set forth in Section_2.1 .

" Purchased Contracts " means the Contracts designated as such in accordance with Section_2.5 .

" Purchased Joint Venture " and " Purchased Joint Ventures " each have the meaning set forth in Section 2.1(m) .

" Purchased Subsidiary " and " Purchased Subsidiaries " each have the meanings set forth in Section 2.1(n) .

" Purchaser " has the meaning set forth in the Preamble.

" Purchaser Advisors " has the meaning set forth in Section 7.2 .

" Purchaser DIP Claim " means (i) the claims of Purchaser arising under or in connection with the DIP Financing, including the principal amount thereof, and all accrued, but unpaid interest or fees thereunder (for the purpose of clarity excluding the Letters of Credit) less (ii) the amount of cash and cash equivalents of Sellers and the Purchased Subsidiaries, in each case as determined as of the Closing Date.

" QST " has the meaning set forth in Section 3.7 .

" Real Estate " means the Owned Real Estate and the Leased Real Estate.

" Registered Intellectual Property " has the meaning set forth in Section 5.8(c) .

" Regulatory Approvals " means all Consents and other authorizations reasonably required to be obtained from, or any filings required to be made with, any Governmental Authority that are necessary to consummate the transactions contemplated by this Agreement and the other Transaction Documents.

" Reimbursable Expenses " means the reasonable, documented out-of-pocket fees and expenses incurred by Purchaser and its Affiliates prior to termination of this Agreement in connection with this Agreement, the other Transaction Documents, the Sale Order, and the transactions contemplated hereby and thereby, including the reasonable fees and expenses of legal counsel, financial advisors, consultants and any other advisors that Purchaser engages in its reasonable discretion. Reimbursable Expenses shall not exceed $2,500,000 and shall be payable in cash pursuant to Section 10.2 , to the extent applicable.

" Rejection Damages Claims " means all claims arising from or related to the rejection of a Contract under section 365 of the Bankruptcy Code, including any administrative expense claims arising from the rejection of Contracts previously assumed.

" Release " means any discharge, emission, spilling, leaking, pumping, pouring, injecting, dumping, burying, leaching, migrating, abandoning or disposing into or through the environment of any Hazardous Substance including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Substance.

" Responsible Officer " means, with respect to any Person, the chief executive officer, president, chief operating officer, chief financial officer, controller and chief accounting officer, vice president of finance or treasurer of such Person.

" Restructuring Transaction " means (a) a recapitalization transaction involving, in whole or in part, Sellers and its existing security holders or creditors, or (b) a transaction or series of transactions, including by way of a plan of reorganization or plan of arrangement or compromise, in connection with a liquidation or reorganization or other continuation of Sellers' Business relating to all or a substantial portion of the Purchased Assets.

" Sale " has the meaning set forth in the Recitals.

" Sale Hearing " means the hearing scheduled by the Bankruptcy Court to approve the Sale.

" Sale Order " means the order of the Bankruptcy Court approving the Sale substantially in the form attached hereto as Exhibit C .

" Sale Order Recognition Order " shall mean the order of the Canadian Court recognizing the Sale Order.

" Santa Teresa Indenture " means that certain Indenture of Trust dated as of November 1, 1985, by and between the County of Dona Ana, New Mexico, and Bankers Trust Company.

" Santa Teresa Lease " means that certain Lease Agreement dated as of November 1, 1985, by and between the County of Dona Ana, New Mexico and Foamex Products, Inc.

" SEC " means the United States Securities and Exchange Commission and any successor Governmental Authority.

" SEC Documents " has the meaning set forth in Section 5.4(a) .

" Securities Act " means the Securities Act of 1933, as amended.

" Selected Courts " has the meaning set forth in Section 12.2(a) .

" Seller Disclosure Schedule " has the meaning set forth in Article V .

" Seller Parents " has the meaning set forth in the Preamble.

" Seller Professionals " means Akin Gump Strauss Hauer & Feld LLP, Cozen O'Connor LLP and any other professionals that are retained by Sellers during the Bankruptcy Case.

" Seller Professional Fee Amount " has the meaning set forth in Section 3.9(b) .

" Seller Professional Fee Escrow " has the meaning set forth in Section 3.9(b) .

" Seller Professional Fee Escrow Agreement " has the meaning set forth in Section 3.9(b) .

" Seller Professional Fees " means the fees and expenses of Seller with respect to the fees and expenses of the Sellers Professionals, but solely to the extent that such fees and expenses become allowed administrative expense claims of Sellers' estates pursuant to Section 503(b) of the Bankruptcy Code.

" Sellers " has the meaning set forth in the Preamble.

" Seller Representatives " has the meaning set forth in Section 7.6(c)(i) .

" Selling Subsidiaries " has the meaning set forth in the Preamble.

" Straddle Period " means any Tax period beginning on or before and ending after the Closing Date.

" Subsidiary " or " Subsidiaries " means for any Person, any other Person or Persons of which a majority of the outstanding voting securities or other voting equity interests are owned, directly or indirectly, by such first Person.

" Target Working Capital " means $86,600,000.

" Tax " or " Taxes " means (i) any federal, state, provincial, county, local or foreign taxes, charges, fees, levies or other assessments, including all net income, gross income, sales and use, goods and services, ad valorem, transfer, gains, profits, excise, franchise, real and personal property, gross receipt, value added, capital stock, production, business and occupation, disability, employment, payroll, license, estimated, stamp, custom duties, severance, unemployment, social security, Medicare, alternative minimum or withholding taxes or charges imposed by any Governmental Authority, and includes any interest and penalties (civil or criminal) on or additions to any such taxes and (ii) liability for items in (i) of any other person by Contract, operation of Law (including Treasury Regulation 1.1502-6) or otherwise.

" Tax Amount " means the sum of (i) Transaction Taxes (including any GST or QST owing), (ii) Tax Liabilities of the Sellers, Purchased Subsidiaries and the Purchased Joint Ventures for periods on or before the Closing Date determined in accordance with Article VIII of this Agreement and (iii) any Tax Liabilities payable by Purchaser, Sellers or the Purchased Subsidiaries in connection with Purchaser’s (or its Affiliate’s) acquisition of the Mexican Assets or the Equity Securities of the Purchased Subsidiaries, including, without limitation, any Mexican Taxes assessed after the acquisition as a result of deconsolidation, including loss, asset tax and CUFIN recapture, in each case, only to the extent not paid by Sellers, the Purchased Subsidiaries or the Purchased Joint Ventures prior to Closing.

" Tax Proceeding " has the meaning set forth in Section 8.5 .

" Tax Returns " means any return, report, election, declaration, statement, information return, schedule, or other document (including any related or supporting information) filed or required to be filed with any Governmental Authority in connection with the determination, assessment, collection or administration of any Taxes or the administration of any laws, regulations or administrative requirements relating to any Taxes or any amendment thereof.

" Taxing Authority " means, with respect to any Tax, a Governmental Authority that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity, including, without limitation, any Governmental Authority that imposes, or is charged with collecting, Social Security or similar charges or premiums.

" Termination Date " means the Termination Date as defined in the DIP Loan Agreement.

" Title IV Plan " means each Benefit Plan subject to Title IV of ERISA, Section 302 of ERISA or Sections 412 or 4971 of the IRC.

" Trademark Licenses " means any agreement, written or oral, providing for the grant by or to a Seller or a Purchased Subsidiary of any right to use any Trademark.

" Trademarks " means all of the following now owned or hereafter acquired by any Seller or any Purchased Subsidiary: (a) all trademarks, trade names, corporate names, business names, trade styles, service marks, logos, slogans, brand names, and other source or business identifiers (whether registered or unregistered), all registrations thereof, and all applications in connection therewith, including registrations and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state or territory thereof, or any other country or any political subdivision thereof; (b) all reissues, extensions or renewals thereof; and (c) all goodwill of the Business associated with or symbolized by any of the foregoing.

" Trade Secrets " means all confidential and proprietary information now owned or hereafter acquired by any Seller or any Purchased Subsidiary, used in the Business for commercial advantage and not generally known or reasonably ascertainable, including, without limitation, know-how, trade secrets,

manufacturing and production processes and techniques, research and development information, databases and data, including, without limitation, technical data, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information.

" Transaction Documents " means this Agreement, the DIP Claim Assignment Agreement, the Deposit Escrow Agreement, the Closing Escrow Agreement and any other agreements, documents and instruments to be executed and delivered pursuant to this Agreement.

" Transaction Taxes " has the meaning set forth in Section 8.1 .

" Transferred Benefit Plans " has the meaning set forth in Section 2.6 .

" Transferred Employees " has the meaning set forth in Section 7.7(a) .

" Treasury Regulations " means one or more Treasury regulations promulgated under the IRC by the Treasury Department of the United States.

" Tupelo Indenture " means that certain Trust Indenture dated as of July 1, 1973 by and between Foamex L.P., successor in interest to ‘21’ International Holdings, Inc., and Board of Supervisors of Lee County, Mississippi, relating to the Leased Property located in Tupelo, MS, including any amendments, supplements or modifications thereto.

" UCC " means the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of New York.

" Unaudited Financial Statements " has the meaning set forth in Section 5.4(d) .

" WARN Act " means the Worker Adjustment and Retraining Notification Act or any similar state, local, provincial or foreign law.

" Wind-Down Amount " means the aggregate amount anticipated to be necessary to wind down Sellers’ bankruptcy estates after the Closing, as set forth in the Wind-Down Budget.

" Wind-Down Budget " means a budget for the post-Closing wind-down of the Sellers’ bankruptcy estates to be prepared by Sellers and delivered to Purchaser no later than five (5) days prior to the Closing Date.

" Wind-Down Escrow " has the meaning set forth in Section 3.9(c) .

" Wind-Down Escrow Agreement " has the meaning set forth in Section 3.9(c) .

" Working Capital " means Current Assets minus Current Liabilities, in accordance with GAAP on the basis of the same accounting principles, policies, methods and procedures, consistently applied, as those used in the preparation of the Unaudited Financial Statements ( provided, however , that Taxes and the Tax Amount shall not be computed in accordance with GAAP), an illustrative calculation of which is set forth in Section 1.1(a) of the Seller Disclosure Schedule.

Section 1.2 Headings; Table of Contents . Headings and table of contents should be ignored in constructing this Agreement.

Section 1.3 Singular, plural, gender . References to one gender include all genders and references to the singular include the plural and vice versa.

Section 1.4 Schedules . References to this Agreement shall include any Exhibits, Schedules and Recitals to it and references to Sections, Exhibits and Schedules are to Sections of, Exhibits to and Schedules to, this Agreement.

Section 1.5 Information . References to books, records or other information mean books, records or other information in any form including paper, electronically stored data, magnetic media, film and microfilm.

Section 1.6

Interpretation .

(a) In this Agreement, unless the context otherwise requires, any references to "including" or "in particular" shall be illustrative only and without limitation.

(b) For purposes of any assets, liabilities or entities located in the Province of Quebec and for all other purposes pursuant to which the interpretation or construction of this Agreement may be subject to the laws of the Province of Quebec or a court or tribunal exercising jurisdiction in the Province of Quebec, any common law words or terms shall be deemed to have their correlative meaning under the Civil Code of Quebec, including, without limitation, (a) "personal property" shall include "movable property"; (b) "real property" or "real estate" shall include "immovable property"; (c) "tangible property" shall include "corporeal property"; (d) "intangible property" shall include "incorporeal property"; (e) "security interest", "mortgage" and "lien" shall include a "hypothec", "right of retention", "prior claim", and a resolutory clause; (f) all references to filing, perfection, priority, remedies, registering or recording under the UCC shall include publication under the Civil Code of Quebec; (g) all references to "perfection" of or "perfected" liens or security interest shall include a reference to an "opposable" or "set up" lien or security interest as against third parties; (h) any "right of offset", "right of setoff" or similar expression shall include a "right of compensation"; (i) "common law" shall include "civil law"; (j) "tort" shall include "delict"; (k) "bailor" shall include "depositor" and "bailee" shall include "depository; (l) "goods" shall include "corporeal movable property" other than chattel paper, documents of title, instrument, money and securities; (m) an "agent" shall include a "mandatary"; (n) "construction liens" shall include "legal hypothecs"; (o) "joint and several" shall include "solidary"; (p) "jointly and severally" shall include "solidarily"; (q) "gross negligence or wilful misconduct" shall be deemed to be "intentional or gross fault"; (r) "beneficial ownership" shall include "ownership on behalf of another as mandatary"; (s) "easement" shall include "servitude"; (t) "priority" shall include "prior claim"; (u) "survey" shall include "certificate of location and plan"; (v) "state" shall include "province"; (w) "fee simple title" shall include "absolute ownership"; (x) "accounts" shall include "claims".

(c) For purposes of any Equity Securities of the Purchased Subsidiaries or any assets, liabilities or entities located in Mexico and for all other purposes pursuant to which the interpretation or construction of this Agreement may be subject to the laws of Mexico (including Mexican Taxes) or a court or tribunal exercising jurisdiction in Mexico, any common law words or terms shall be deemed to have their correlative meaning under the applicable Federal, local or municipal laws as set forth in the Mexican Transfer Documents as applicable.

ARTICLE II

PURCHASED SALE OF ASSETS;

ASSUMPTION OF LIABILITIES

Section 2.1 Purchase and Sale of Assets . On the terms and subject to the conditions set forth in this Agreement, at the Closing, Purchaser shall (or shall cause its designated Affiliate or Affiliates to) purchase, acquire and accept from Sellers, and Sellers shall sell, transfer, assign, convey and deliver to Purchaser (or its designated Affiliate or Affiliates) all of Sellers' right, title and interest in, to and under the Purchased Assets, free and clear of all Liens, claims (as defined in section 101(5) of the Bankruptcy Code) and interests other than the Permitted Liens and Assumed Liabilities. " Purchased Assets " means all of the Sellers' assets (other than the Excluded Assets), including, without limitation, the assets set forth as follows:

(a) cash, cash equivalents, all prepayments (including all prepayments made to third party vendors), deferred assets, refunds, credits or overpayments, other than as set forth in Section 2.2(j) ;

(b) all Accounts Receivables;

(d) all Leases (subject to any Leases being deemed Excluded Assets in accordance with Section 2.5 );

(e) all Owned Real Estate;

(f) all personal property of the Sellers;

(g) all Intellectual Property;

(h) all rights of Sellers under the Purchased Contracts and Intellectual Property Agreements;

(i) all General Intangibles associated with the Business;

(j) all guarantees, representations, warranties and indemnities associated with the Business, including in respect of any Assumed Liabilities;

(k) all insurance policies of Sellers and any claims thereunder to the extent such policies relate to the Business or to any Assumed Liabilities, other than any directors and officers (or similar) insurance policies and any claims thereunder;

(l) any properties, rights and assets under any Transferred Benefit Plans;

(m) Equity Securities in any joint venture of the Sellers listed in Section 2.1(m) of the Seller Disclosure Schedule (each a " Purchased Joint Venture " and collectively, the " Purchased Joint Ventures ");

(n) subject to the mutual agreement of the Sellers and Purchasers in accordance with Section 7.10 , Equity Securities of any direct or indirect Subsidiary of Foamex Inc. listed in Section 2.1(n) of the Seller Disclosure Schedule (each a " Purchased Subsidiary " and collectively, the " Purchased Subsidiaries ");

(o) all goodwill associated with the Purchased Assets;

(p) the properties, rights or assets listed in Section 2.1(p) of the Seller Disclosure Schedule;

(q) any rights under the Collective Bargaining Agreements to the extent such Collective Bargaining Agreements are assumed by Purchaser in accordance with Section 7.7 of this Agreement;

(r) all claims, causes of action, choses in action, rights of recovery, rights of set off, and rights of recoupment (including any such item relating to the payment of taxes) relating to the Purchased Assets set forth in Sections 2.1(a)-(q) , other than any Avoidance Actions; and

(s) rights with respect to proofs of claim filed in the bankruptcy cases of others.

Section 2.2 Excluded Assets . Notwithstanding anything in this Agreement to the contrary, Purchaser shall not assume and shall not be deemed to have assumed, any Excluded Assets relating to the Business of Sellers or any Affiliates of Sellers and Sellers and their Affiliates shall retain all right, title and interest to, in and under the Excluded Assets. " Excluded Assets " means the Sellers' properties and assets set forth as follows:

(a) each Seller's Fundamental Documents and stock and minute books;

(b) Equity Securities in any Seller Parents or Selling Subsidiaries;

(d) except as otherwise provided in Section 7.7 , any properties, rights and assets under any Benefit Plan that is not a Transferred Benefit Plan;

(e) amounts owing to Sellers from Excluded Employees;

(f) any Contracts of Sellers that are not Purchased Contracts;

(g) any directors and officers (or similar) insurance policies and any claims thereunder;

(h) rights of Sellers under this Agreement (including the Purchase Price) or the DIP Loan Agreement;

(i) all assets set forth in Section 2.2(i) of the Seller Disclosure Schedule;

(j) all deferred assets, refunds, credits or overpayments or other receivables for Taxes that may be due for pre-Closing periods including the pre-Closing portion of the Straddle Period, other than with respect to (x) the Purchased Subsidiaries or Mexican Assets or (y) the Purchased Joint Ventures;

(k) absent the mutual agreement of the Sellers and Purchasers in accordance with Section 7.10 to include the Equity Securities of the Purchased Subsidiaries in the Purchased Assets, the Equity Securities of the Purchased Subsidiaries; and

(l) any Avoidance Actions.

Section 2.3 Assumed Liabilities . On the terms and subject to the conditions set forth in this Agreement, at the Closing, Purchaser shall (or shall cause its designated Affiliate or Affiliates to) assume and be responsible for, effective as of the Closing, and thereafter pay, honor, perform and discharge as and when due, all of the Assumed Liabilities. " Assumed Liabilities " means the liabilities and obligations of the Sellers set forth as follows:

(a) all post-Petition Date current Liabilities of Sellers, as determined in accordance with GAAP on the basis of the same accounting principles, policies, methods and procedures, consistently applied, as those used in the Unaudited Financial Statements, including (i) all post Petition Date trade accounts payable and (ii) any post Petition Date other current liabilities, but excluding any Liabilities that would be or are Excluded Liabilities;

(b) all Liabilities of Sellers relating to or arising under Purchased Contracts, including all Cure Costs;

(c) all Liabilities of Sellers (other than in respect of Taxes) relating to, or arising in respect of, the Purchased Assets accruing, arising out of or relating to events, occurrences, acts or omissions occurring or existing after the Closing Date or the operation of the Business or the Purchased Assets after the Closing Date;

(d) all Liabilities for Taxes arising solely from and attributable to the ownership of any portion of the Purchased Assets after the Closing Date;

(e) the Tax Amount;

(f) all Liabilities of Sellers relating to (i) Transferred Employees (A) accruing prior to the Closing Date, relating to accrued vacation, sick days and personal days and (B) accruing from and after the Closing Date, in the case of this clause (B), to the extent arising out of or relating to their employment by Purchaser or any of its Affiliates and (ii) any Liabilities for which Purchaser is responsible pursuant to Section 7.7(f) of this Agreement;

(g) all Liabilities relating to Transferred Benefit Plans (" Benefit Plan Liabilities ");

(h) the Environmental Liabilities of Sellers as set forth in Section 2.3(h) of the Seller Disclosure Schedule;

(i) to the extent lawfully transferable, all obligations, commitments and Liabilities under any Permits assigned to Purchaser hereunder;

(j) all Liabilities of Sellers relating to the Industrial Revenue Bond;

(k) all Liabilities of Sellers arising from or relating to claims eligible for coverage under the Sellers' workers' compensation insurance; and

(l) the respective other Liabilities set forth in Section 2.3(l) of the Seller Disclosure Schedule.

Section 2.4 Excluded Liabilities . Notwithstanding anything in this Agreement to the contrary, Purchaser shall not assume, and shall be deemed not to have assumed, any Liabilities relating to

the Business of Sellers or any Affiliate of Sellers and Sellers and their Affiliates shall be solely and exclusively liable with respect to all such Liabilities, other than the Assumed Liabilities (collectively, the " Excluded Liabilities "), including without limitation, those Liabilities set forth as follows:

(a) any Liability of any Seller relating primarily to any Excluded Asset;

(b) all Liabilities under Indebtedness for borrowed money of Sellers (including any Indebtedness or accounts payable owing from any Seller to any Affiliate of such Seller);

(c) all Tax Liabilities of Sellers, the Purchased Joint Ventures and the Purchased Subsidiaries arising prior to or on the Closing Date, and any Tax Liabilities of Sellers, Purchased Joint Ventures or Purchased Subsidiaries arising from the transactions contemplated by this Agreement, other than the Tax Amount;

(d) all Liabilities of Sellers relating primarily to employees of Sellers that are not Transferred Employees (" Excluded Employees ");

(e) except as set forth in Sections 2.3(f), 2.3(g) and 2.3(l) , all Liabilities of Sellers arising out of, relating to or with respect to (1) the employment or performance of services, or termination of employment or services by any Seller of any employee, or independent contractor on or before the close of business on the Closing Date, (2) employment or labor Actions accruing either directly or indirectly against Seller that relate to the period on or before the close of business on the Closing Date, irrespective of whether such claims are made prior to or after the Closing and (3) all Liabilities (including, without limitation, all Liabilities to the PBGC, IRS or Department of Labor) with respect to any Benefit Plan that is not a Transferred Benefit Plan.

(f) all Rejection Damages Claims;

(g) any and all customer claims against Sellers, whether known or unknown, including product warranties and any Actions related to product liability claims relating to, resulting from, caused by or arising out of ownership, operation or control of the Business, to the extent accruing, arising out of or relating to events, occurrences, acts or omissions occurring or existing prior to the Closing Date;

(h) except as set forth in Section 2.3(h), all Environmental Liabilities relating to, resulting from, caused by or arising out of ownership, operation or control of the Business, to the extent accruing, arising out of or relating to events, occurrences, acts or omissions occurring or existing prior to the Closing Date;

(i) all Actions against each Seller, any of their respective assets, the Business and any of their past or present operations or activities;

(j) all Indemnification Claims; and

(k) those other Liabilities set forth in Section 2.4(k) of the Seller Disclosure Schedule.

Section 2.5

Contract Designation Rights .

(a) On or prior to the date hereof, Sellers shall have delivered to Purchaser a list of (i) all Material Contracts to which any Seller is a party, (ii) the amount of the Cure Costs associated with each Material Contract identified in Section 5.10(a) of the Seller Disclosure Schedule and (iii) any

Material Contracts entered into by Sellers during the pendency of the Bankruptcy Case. To the Knowledge of Sellers, such list shall also contain a list of all other Contracts to which Sellers are a party, other than such Contracts that are immaterial to the Business. Sellers shall cooperate with and provide such additional information to Purchaser in order to identify and provide to Purchaser as promptly as practicable all Material Contracts related to the Business (and the related Cure Costs), as well as Cure Costs of non-Material Contracts, and subject to assumption or rejection hereunder.

(b) Any motions filed by Sellers with, and any proposed orders submitted by Sellers to, the Bankruptcy Court seeking authorization after the date hereof to assume or reject any Contracts, or any notices of disclaimer, resiliation, or repudiation given by any Seller in the Canadian Proceeding shall be satisfactory in form and substance to Purchaser in its reasonable discretion. As set forth in the Approval Order, no later than twenty (20) days prior to the Sale Hearing, the Sellers shall cause notice to be provided to all counterparties to the Contracts, substantially in the form annexed to the Approval Motion as Exhibit D regarding the (i) assumption and assignment to Purchaser all of the Contracts, except for any such Contracts which Purchaser previously has advised Sellers in writing that it does not wish to assume (and Sellers shall thereupon be under no obligation to seek assumption and assignment to Purchaser of any such Contracts), and (ii) fixing of the Cure Costs associated with each Contract as of the Sale Hearing (or as of such later date reasonably acceptable to Purchaser and Sellers). Sellers shall consult with, and give due consideration to the views and concerns of, Purchaser prior to compromising or commencing any Action with respect to any material payment required to be made under the Bankruptcy Code to effectuate the assumption of any such Contract, including using commercially reasonable efforts to provide five (5) days notice of any such compromise or Action to Purchasers.

(c) For the purpose of determining whether a Contract of Sellers shall be included as a Purchased Contract or an Excluded Asset, from and after the filing of the Approval Motion all such Contracts shall be treated as follows:

(i) no later than three (3) days prior to the day of the Auction, Purchaser shall notify Sellers in writing of those Contracts which Purchaser desires to be designated to be assumed by Sellers and assigned to Purchaser on the Closing Date, with Purchaser responsible for all Cure Costs associated therewith; provided, however , each such Contract identified in Section 5.10(a) of the Seller Disclosure Schedule as a Material Contract shall be designated to be assumed by Sellers and assigned to Purchaser, with Purchaser responsible for all Cure Costs associated therewith, unless otherwise specifically noted in such Section of the Seller Disclosure Schedule (in which case each such Contract shall be deemed rejected and shall not be purchased by Purchaser as a Purchased Contract);

(ii) each of such Contracts entered into during the pendency of the Bankruptcy Case shall be designated to be assigned to Purchaser, unless Purchaser notifies Sellers in writing that it will not purchase such Contract, in which case such Contract shall not be assigned to Purchaser and shall be included as an Excluded Asset; provided, however, if such Contract was required to be identified in Section 5.10(a) of the Seller Disclosure Schedule as a Material Contract and was not identified or was entered into on or after the date hereof in breach of this Agreement then such Contract shall not be assigned to or purchased by Purchaser; and

(iii) after the Auction but in any event no later than two (2) Business Days prior to the Closing Date, Purchaser shall notify Sellers in writing of any Contracts which Purchaser does not desire to be assumed by Sellers and assigned to Purchaser, in which case any such Contracts shall not be assigned to Purchaser and shall be included as Excluded Assets and may be rejected by Sellers.

Any Contract designated to be assumed and assigned hereunder shall be accompanied by such information or documentation related to "adequate assurance of future performance" as shall be reasonably required in connection with the assumption and assignment of such Contract, and upon Bankruptcy Court approval for the assumption and assignment thereof to Purchaser, shall constitute a Purchased Asset hereunder. Any Contract that is not assumed as provided above shall be an Excluded Asset, and shall not constitute a Purchased Asset hereunder. Notwithstanding anything to the contrary set forth in this Agreement, to the extent that, prior to Closing, any Purchased Contract is not subject to an order of the Bankruptcy Court with respect to the assumption and assignment of such Purchased Contract, any Liabilities of Sellers related to such Purchased Contract shall be the responsibility of Sellers until such Purchased Contract is either assumed by Sellers and assigned to Purchaser or rejected by Sellers.

(d) At Closing, to the extent not previously paid, Purchaser shall pay or cause to be paid (and shall reimburse or cause to be reimbursed to Sellers on an after-Tax basis any amounts paid after the date hereof in respect of) any and all Cure Costs in respect of all prepetition Contracts that are Purchased Contracts.

(e) Nothing in this Agreement shall be construed as an attempt by Sellers to assign any Contract to the extent that such Contract is not assignable under the Bankruptcy Code or the CCAA or otherwise without the consent of the other party or parties thereto, and the consent of such other party has not been given or received, as applicable. With respect to any Contract for which the consent of a party thereto to the assignment thereof shall not have been obtained at Closing and any claim, right or benefit arising thereunder or resulting therefrom, to the extent Purchaser waives the condition set forth in Section_9.2(f) (to the extent applicable), Sellers and Purchaser shall use their reasonable good faith efforts to obtain as expeditiously as possible the written consent of the other party or parties to such Contract necessary for the assignment thereof to Purchaser. Unless and until any such consent, waiver, confirmation, novation or approval is obtained, Sellers and Purchaser shall cooperate to establish an arrangement reasonably satisfactory to Purchaser under which Purchaser would obtain the claims, rights and benefits and assume the corresponding Liabilities and obligations thereunder (including by means of any subcontracting, sublicensing or subleasing arrangement) or under which Sellers would enforce for the benefit of Purchaser, with Purchaser assuming and agreeing to pay Sellers' obligations (other than any related Cure Costs), any and all claims, rights and benefits of Sellers against a third party thereto. In such event, (i) Sellers will hold in trust for and promptly pay to Purchaser, when received, all moneys received by them under any such Contract or any claim, right or benefit arising thereunder and (ii) Purchaser will promptly pay, perform or discharge, when due, any and all obligations and Liabilities arising thereunder (other than any related Cure Costs), other than those being contested in good faith. Purchaser acknowledges that no adjustment to the Purchase Price shall be made for any such Contracts that are not assigned and that Purchaser shall have no claim against Sellers in respect of such unassigned Contracts. Nothing in this paragraph shall be deemed a waiver of Purchaser's right to receive an effective assignment of all of the Purchased Assets at Closing nor shall any Contracts covered by this paragraph be deemed to constitute Excluded Assets solely by virtue of this paragraph. Sellers' obligations under this paragraph shall terminate on the date that is ninety (90) days after the Closing Date.

Section 2.6 Transferred Benefit Plans . On or prior to the date hereof, Sellers have delivered to Purchaser Section 2.6 of the Seller Disclosure Schedule, which includes a list of all Benefit Plans currently anticipated to be assumed by and assigned to Purchaser on the Closing Date. Purchaser shall have the right to add or remove any Benefit Plans from Section 2.6 of the Seller Disclosure Schedule, until three (3) days prior to the date of the Auction. Those Benefit Plans set forth in Section 2.6 of the Seller Disclosure Schedule on such date shall be assumed by and assigned to Purchaser on the Closing Date (the " Transferred Benefit Plans ").

ARTICLE III

PURCHASE PRICE

Section 3.1 Deposit . Simultaneous with the execution of this Agreement, Sellers and Purchaser shall execute the Deposit Escrow Agreement, pursuant to which Purchaser shall deposit with the Escrow Agent $10,000,000 in cash (the " Deposit Amount "), by wire transfer of immediately available funds, to be applied as provided in the following two sentences. The Deposit Amount shall be retained by Sellers in the following circumstances: (i) at the Closing, at which time such Deposit Amount shall be credited against the Purchase Price; or (ii) if this Agreement is terminated under the circumstances set forth in Section 10.2(c). Except as described in the previous sentence, the Deposit Amount shall be returned to Purchaser after termination of this Agreement.

Section 3.2 Closing Escrow Agreement . On the Closing Date, Foamex Inc., Purchaser and the Escrow Agent shall execute the Closing Escrow Agreement and Purchaser shall deposit (or cause to be deposited) the Escrow Amount with the Escrow Agent.

Section 3.3

Purchase Price .

(a) On the terms and subject to the conditions hereof, at the Closing, Purchaser shall (i) pay or cause to be paid the Estimated Cash Purchase Price, by wire transfer of immediately available funds to an account designated by Sellers at least three (3) Business Days prior to the Closing Date; and (ii) assume the Assumed Liabilities as provided in Section_2.3 , which are estimated as of the date hereof to be $26,600,000. The " Estimated Cash Purchase Price " shall be a cash amount equal to $78,400,000 less the Escrow Amount, the Deposit Amount, the HL Fee Amount, the Seller Professional Fee Amount, the Wind-Down Amount and the remaining portion of the Purchaser DIP Claim, (x) plus the Letters of Credit Amount, (y) minus the amount, if any, by which Estimated Working Capital is less than Target Working Capital or (z) plus the amount, if any, by which Estimated Working Capital exceeds Target Working Capital, provided that no such adjustment shall be made pursuant to the foregoing clauses (y) and (z) unless the positive or negative difference between Estimated Working Capital and Target Working Capital exceeds $2,000,000. The procedure for determining Estimated Working Capital is set forth in Section_3.3(c) .

(b) The " Final Cash Purchase Price " shall be a cash amount equal to $78,400,000 less the Escrow Amount, the Deposit Amount, the HL Fee Amount, the Seller Professional Fee Amount, the Wind-Down Amount and the remaining portion of the Purchaser DIP Claim, (x) plus the Letters of Credit Amount, (y) minus the amount, if any, by which Final Working Capital is less than Target Working Capital or (z) plus the amount, if any, by which Final Working Capital exceeds Target Working Capital, provided that no such adjustment shall be made pursuant to the foregoing clauses (y) and (z) unless the positive or negative difference between Final Working Capital and the Target Working Capital exceeds $2,000,000. The procedure for determining Final Working Capital is set forth in Section_3.3(d) .

(c) Not less than five (5) Business Days prior to the Closing Date, Sellers shall prepare and deliver to Purchaser: (i) its estimate of Working Capital as of the close of business on the Closing Date (the " Estimated Working Capital ") and (ii) its calculation of the Estimated Cash Purchase Price, each of which shall be certified as prepared in accordance with this Agreement by Foamex Inc.'s chief financial officer. Within two (2) Business Days after such delivery, if Purchaser has any objections to Sellers' calculation of the Estimated Cash Purchase Price, Purchaser shall provide a written statement of its objections to Sellers; provided that such objections shall be limited to mathematical errors or the failure to include a material component of Current Assets or Current Liabilities in the calculation of Working Capital. The parties shall use their respective good faith efforts to resolve any dispute regarding the calculation of the Estimated Cash Purchase Price as promptly as practicable. Sellers shall prepare and

deliver to Purchaser, no later than one (1) Business Day prior to the Closing Date, Sellers' final calculation of Estimated Working Capital and the Estimated Cash Purchase Price, which shall be conclusive for purposes of Section 3.3(a) .

(d) Not more than forty-five (45) days following the Closing Date, Purchaser shall prepare and deliver to the Sellers: (i) a statement (the " Closing Statement ") of its calculation of the Working Capital (the " Final Working Capital ") and (ii) its calculation of the Final Cash Purchase Price, each of which shall be certified as prepared in accordance with this Agreement by Purchaser's chief financial officer.

(i) The Closing Statement shall become final and binding upon the parties unless Sellers give written notice of their disagreement with any component of the Closing Statement (the " Notice of Disagreement ") to Purchaser within fifteen (15) Business Days following Sellers' receipt thereof. The Notice of Disagreement shall specify in reasonable detail the nature of any such disagreement. If a Notice of Disagreement complying with the preceding sentence is received by Purchaser in a timely manner, then the Closing Statement (as revised in accordance with clause (x) or (y) below) shall become final, binding and non-appealable (after complying with Section 3.3(d)(ii) ) upon the earlier of (x) the date on which the parties resolve in writing any disputes with respect to the matters specified in the Notice of Disagreement or (y) the date on which any such disputes are finally resolved in writing by the Accounting Firm.

(ii) During the thirty (30) day period following the delivery of a Notice of Disagreement in compliance with paragraph (i) above, the parties shall seek in good faith to resolve any disputes with respect to the matters specified in the Notice of Disagreement. If, at the end of such thirty (30) day period, the parties have not resolved such disputes, the parties shall submit to the national office of a mutually acceptable "big four" accounting firm (the " Accounting Firm ") for review and resolution of any and all matters that remain in dispute. The parties shall use their respective good faith efforts to cause the Accounting Firm to render a decision resolving the matters in dispute within thirty (30) days following the submission of such matters to the Accounting Firm. The Accounting Firm's determination shall be set forth in a written statement delivered to the parties and shall be final, binding and non-appealable, absent manifest or mathematical errors. All fees and expenses of the Accounting Firm shall be borne equally by Sellers and Purchaser.

Section 3.4 Purchase Price Adjustment . As soon as practicable after the Final Cash Purchase Price has been determined pursuant to Section 3.3 (but in any event, within five (5) Business Days after such determination):

(a) If the Target Working Capital exceeds the Final Working Capital by more than $2,000,000, then Foamex Inc. and Purchaser shall jointly instruct the Escrow Agent to disburse (1) to Purchaser from the Escrow Amount, by wire transfer of immediately available funds to an account designated by Purchaser, the amount by which the Estimated Working Capital exceeds the Final Working Capital, together with interest earned thereon and (2) to Foamex Inc., the remaining portion of the Escrow Amount (if any), together with interest earned thereon, after the payment to Purchaser in accordance with the foregoing clause (1), by wire transfer of immediately available funds to an account designated by Sellers; or

(b) If the Final Working Capital equals or exceeds the Estimated Working Capital, then Foamex Inc. and Purchaser shall jointly instruct the Escrow Agent to disburse (1) to Foamex Inc. all of the Escrow Amount, by wire transfer of immediately available funds to an account designated by Sellers, together with interest earned thereon and (2) if the Final Working Capital exceeds the Target

Working Capital by more than $2,000,000, Purchaser shall pay to Foamex Inc., by wire transfer of immediately available funds to an account designated by Foamex Inc., an amount equal to the amount by which the Final Working Capital exceeds the Estimated Working Capital, together with interest thereon between the Closing Date and the date of such payment at the Prime Rate.

Purchaser and Sellers agree and acknowledge that, notwithstanding anything to the contrary set forth in this Agreement, the Escrow Amount shall be the sole source of recovery for any purchase price adjustments in favor of Purchaser pursuant to this Section 3.4 and any adjustments to the Purchase Price in favor of Purchaser as a result of the application of this Section 3.4 shall not exceed the Escrow Amounts.

Section 3.5 Allocation of Purchase Price . As soon as practicable after the Final Cash Purchase Price has been determined pursuant to Section 3.3 (but in any event, within ten (10) Business Days after such determination), Purchaser shall provide Sellers with an allocation of the Purchase Price as determined for Tax purposes among the Purchased Assets on a Seller-by-Seller basis. Such allocation schedule shall be prepared in accordance with Section 1060 of the IRC for U.S. federal income Tax purposes (or in accordance with other Tax Laws, as applicable) and shall be binding on Purchaser and Sellers. The parties shall cooperate with each other and provide such information as any of them shall reasonably request in connection with this Section 3.5. The parties will each report the federal, state and local and other Tax consequences of the purchase and sale contemplated hereby (including the filing of IRS Form 8594) in a manner consistent with such allocation schedules.

Section 3.6 Section_22 Canadian Tax Election . Purchaser and Foamex Canada shall elect jointly in the prescribed form under section 22 of the Income Tax Act (Canada), section 184 of the Taxation Act (Quebec), and the corresponding provisions of any other applicable Tax statute as to the sale of the Accounts Receivable of Foamex Canada and designate in such election an amount equal to the portion of the Purchase Price allocated to such Accounts Receivable pursuant to Section 3.5. This election, or these elections, shall be made within the prescribed time for such elections.

Section 3.7 GST and QST Elections . At the Closing, Foamex Canada and Purchaser shall jointly execute an election under section 167 of the Excise Tax Act (Canada) and an election under section 75 of an Act Respecting the Québec Sales Tax following the prescribed form and including the prescribed information, such that no goods and services tax (" GST ") or Québec sales tax (" QST ") shall be payable in connection with the purchase and sale of the Purchased Assets of Foamex Canada pursuant to the provisions of this Agreement. Purchaser shall file the joint elections with the returns required to be filed by Purchaser under the Excise Tax Act (Canada) and an Act Respecting the Québec Sales Tax for the Purchaser's reporting periods in which the sale was made, in compliance with the requirements of the Excise Tax Act (Canada) and an Act Respecting the Québec Sales Tax.

Section 3.8 Subsection 20(24) Canadian Tax Election . Purchaser and Foamex Canada shall, if applicable, jointly execute and file an election under subsection 20(24) of the Income Tax Act (Canada) in the manner required by subsection 20(25) of the Income Tax Act (Canada), Sections 157.10 and 157.11 of the Taxation Act (Québec) and under the equivalent or corresponding provisions of any other applicable provincial or territorial statute, in the prescribed forms and within the time period permitted under the Income Tax Act (Canada), the Taxation Act (Québec) and under any other applicable provincial or territorial statute, as to such amount paid by Foamex Canada to Purchaser for assuming future obligations. In this regard, Purchaser and Sellers acknowledge that a portion of the Purchased Assets transferred by Foamex Canada pursuant to this Agreement and having a value equal to the amount elected under subsection 20(24) of the Income Tax Act (Canada), Sections 157.10 and 157.11 of the Taxation Act (Québec) and the equivalent provisions of any applicable provincial or territorial statute, is being transferred by Foamex Canada as a payment for the assumption of such future obligations by

Purchaser. Notwithstanding such elections, in the event it is determined by the Canada Revenue Agency or Revenu Québec, as the case may be, that there is a liability of Purchaser to pay, or of Foamex Canada to collect and remit, the GST or QST on all or part of the Purchased Assets, such GST or QST shall be paid in accordance with Section 8.1 and Purchaser shall pay all interest and penalties relating thereto.

Section 3.9

HL Fees, Seller Professional Fees and Wind-Down Amount .

(a) HL Fees . On the Closing Date, Purchaser shall pay an amount equal to the invoiced but unpaid amount of the HL Fees (the " HL Fee Amount ") as of such date into an escrow account (the " HL Fee Escrow ") pursuant to an escrow agreement by and among Purchaser, HL and the Escrow Agent, in form and substance reasonably satisfactory to the parties thereto (the " HL Escrow Agreement "). The HL Escrow Agreement shall provide that within one (1) Business Day of receipt by the Escrow Agent of an order of the Bankruptcy Court allowing any or all of the HL Fee Amount, the Escrow Agent shall distribute to HL such allowed HL Fee Amount. Within one (1) Business Day of payment in full of the HL Fee Amount, the Escrow Agent shall disburse any remaining amounts held in the HL Fee Escrow to Sellers. Within one (1) Business Day of receipt by the Escrow Agent of a final and non-appealable order of the Bankruptcy Court (or such other court) disallowing any or all of the HL Fee Amount, the Escrow Agent shall disburse such disallowed HL Fee Amount to Sellers.

(b) Seller Professional Fees . On the Closing Date, Purchaser shall pay an amount equal to the invoiced but unpaid amount of the Seller Professional Fees (the " Seller Professional Fee Amount ") as of such date into an escrow account (the " Seller Professional Fee Escrow ") pursuant to an escrow agreement by and among Purchaser, the Seller Professionals and the Escrow Agent, in form and substance reasonably satisfactory to the parties thereto (the " Seller Professional Fee Escrow Agreement "). The Seller Professional Escrow Agreement shall provide that within one (1) Business Day of receipt by the Escrow Agent of an order of the Bankruptcy Court allowing any or all of the Seller Professional Fee Amount, the Escrow Agent shall distribute to the applicable Seller Professional such allowed Seller Professional Fee Amount. Within one (1) Business Day of payment in full of the Seller Professional Fee Amount, the Escrow Agent shall disburse any remaining amounts held in the Seller Professional Fee Escrow to Sellers. Within one (1) Business Day of receipt by the Escrow Agent of a final and non-appealable order of the Bankruptcy Court (or such other court) disallowing any or all of the Seller Professional Fee Amount, the Escrow Agent shall disburse such disallowed Seller Professional Fee Amount to Sellers.

(c) Wind-Down Amount . On the Closing Date, Purchaser shall pay an amount equal to the Wind-Down Amount into an escrow account (the " Wind-Down Escrow ") pursuant to an escrow agreement by and among Purchaser, Sellers and the Escrow Agent in form and substance reasonably satisfactory to th

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