- 14 -
It further [sic] recognized that, for Cascade to
market its products competitively, there needs to be a
reasonable limit as to percentage of the selling price
which can be allocated to royalty payments or the like.
Accordingly, Cascade shall have the right to review on
an annual basis the patents and patent applications
sold by Lea to Cascade along with such other
improvements which might be incorporated in its product
line, to determine if there should be any reallocation
of the five percent (5%) payments which are to be made
to Lea for the following calendar year. If Cascade
determines that such other improvements have
substantial merit and make a significant contribution
to the technology incorporated in Cascade's products or
in the process for making the products, then Cascade
may, in its discretion, make a reallocation of the five
percent (5%) payments to be made Lea, * * * .
On April 20, 1983, in accordance with the 1982 agreement,
Cascade delivered to Lea an installment note for $259,128.03, the
amount of the payments delinquent under the 1979 sales agreement.
The note required quarterly interest payments and two equal
principal payments on December 31, 1983 and 1984.
Improved Cash-flow and Prosperity
Cascade made several changes that improved its cash-flow.
First, instead of contracting out the manufacturing operation,
Cascade began to manufacture the mattresses itself. This change
allowed Cascade to retain the contractor's profit, which it
estimated was approximately $100,000. Cascade also improved the
manufacturing operation by changing from a cut-out method to a
peel-out method of removing the mattresses from the presses.
Once the workers became proficient at using the new method, each
mattress was manufactured more quickly and, therefore, at a lower
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011