Sawyer Sued By Ex-Exec p.6

By: John Consoli RETIRED SAWYER Ferguson Walker president and board chairman Roy Blackfield has quietly filed suit in U.S. District Court against his former employer and the company's new owner, Berkeley Acquisition Corp., charging them with violating the terms of his supplemental pension and stock sale agreements.
Blackfield contends that Sawyer, the newspaper representative firm based in New York City, has not paid his supplemental pension since November 1995 ? an amount totaling approximately $8,000 monthly or $64,000 as of the date the lawsuit was filed in July 1996.
Although the lawsuit was dated July 16, 1996, the papers were not served until Sept. 10, 1996.
Blackfield's court papers also charge that Sawyer stopped making annual payments for 63,000 shares of company stock which it purchased from him in 1992 for $2.3 million. Blackfield contends Sawyer failed to make a stock redemption payment to him due Jan. 31, 1996, totaling $273,351, and that Sawyer still owes him some $1.5 million for the stock he sold them.
In addition to the money Blackfield contends he's owed, he is seeking unspecified compensatory damages, punitive damages, attorneys' fees, and "other and further relief as to the court seems just and proper."
Berkeley, which acquired Sawyer in May 1995, says its not liable for the contractual obligations of Sawyer, specifically Blackfield's stock agreement and supplemental pension agreement.
But Blackfield contends in his court papers that a letter from Sawyer chairman Daniel Tomlinson dated in May 1995 states that Berkeley was to assume all obligations and debts of Sawyer that existed on the books at the time of its acquisition by Berkeley.
The papers quote the letter from Tomlinson as stating, "As far as our financial commitment to you ? nothing will change. Our new owners recognize that we have an important obligation to the past, of which you were an integral and invaluable part. Thus, our financial and moral obligations to you will be honored completely."
Court papers filed in response by Sawyer and Berkeley on Dec. 2, 1996, further contend that Blackfield's agreements are "improper and unenforceable." The defendants state that the agreements were the result of "self-dealing" by Blackfield and that his "self-dealing was improper." As a result, the defendants contend, the agreements are "null and void."
Sawyer and Berkeley contend that the Blackfield agreements are "improper and unenforceable" because they are both "unconscionable."
The defendants also filed a counterclaim declaring that moneys from the agreements already paid to Blackfield ? in excess of $250,000 ? be returned to Sawyer, along with punitive damages, attorneys' fees and other relief.
Blackfield joined Sawyer in 1954 and served in various capacities until his retirement in January 1992. According to his court papers, in April 1985, after having completed 30 years with the company, Blackfield, then 55, completed the service requirement for full benefits under the company's pension plan which would be paid upon his retirement at age 65.
Under Sawyer's regular pension plan, an employee turning 65 with 30 years of service is entitled to receive a lifetime annual pension benefit of 45% of his "Final Average Compensation," reduced by Social Security benefits.
But regular pension plans face limits under the Tax Equity and Fiscal Responsibility Acts of 1982 (TEFRA).
As an incentive to keep him from leaving the company, since remaining would not add to his pension, Blackfield says the company entered into a Supplemental Pension Benefits Agreement with him. In exchange for the added pension benefits, Blackfield agreed not to "acquire an interest in or accept employment or compensation from any newspaper represented by the company or from anyone which competes with the company" without written consent from the company. He also was bound to a confidentiality clause in the agreement.
The agreement also states that Sawyer agrees "not to merge or consolidate with any other corporation unless such corporation shall expressly assume the duties to pay obligations of the company" agreed to in the pension pact.
That clause seems to conflict with the contention by Berkeley that it is not liable for the obligations Sawyer had prior to its acquiring the company.
The Supplemental Pension Benefits Agreement was signed by Blackfield and then Sawyer chairman C. Richard Splittorf.
The 1992 Stock Redemption Agreement was entered into by Blackfield, who had succeeded Splittorf, and Daniel Tomlinson, who succeeded Blackfield.
Under this agreement, Sawyer agreed to pay Blackfield $38 per share of common stock, although each was valued at only $2 per share. Blackfield was paid $239,000 on the closing date and under the agreement was to be paid $239,000, plus 7% interest in January of each year after that. The final payment was to be in January 2001. This agreement also was to be binding upon all future owners of Sawyer.
In March 1993, Blackfield was notified by lawyers representing Sawyer that because of a "severe downtrend" in business resulting from: (1) "continuing adverse economic conditions in the print media business"; (2) "large operating expenses coupled with severe competition at lower commission rates"; (3) "sizable stock redemption funding requirements, including interest costs"; and (4) "the loss of newspaper clients," the company had retained a consulting firm to help it "survive."
While it was contemplated that the Sawyer pension plan for current employees would be "frozen," Blackfield was told that pension plan benefits for retirees would not be affected.
Blackfield was also notified that the payments under the stock redemption plan would be reduced annually, but extended by three and a half years and the interest rate payable on each installment was being reduced to 6% annually, from 7%.
In January 1996, Blackfield was notified by Sawyer that payments to him under the agreements were being suspended.
In a March 21, 1996 letter to Blackfield, John Power, president of Berkeley, acknowledged this, blaming it on the deteriorating financial condition of Sawyer.
At that time, Power said the company had taken a close look at Blackfield's past financial dealings with Sawyer. It was then that he told Blackfield that based on conversations with the company's attorney and accounting firm, Blackfield had been overpaid in excess of $250,000 on a "totally illegal basis."
"It also appears the supplemental pension was completely illegal and something engineered to circumvent the IRS," Power wrote, adding, "If you [Blackfield] proceed against SFW, Berkeley Acquisition Corporation will pursue the return of the $250,000 owed by you."
?(Roy Blackfield in a 1988 photo. Blackfield is suing his former company, Sawyer Ferguson Walker, charging that it has stopped making supplemental pension and stock sale payments owed to him under two separate agreements) [Photo & Caption]
?(C. Richard Splittofr in a 1988 photo, Splittorf was the Sawyer Ferguson Walker chairman who signed Roy Blackfield's Supplemental Pension Benefits Agreements. Sawyer and its new owner Berkley Acquisition Corp. are now contending that the agreement was "illegal" and "something engineered to circumvent the IRS.") [Caption & Photo]