Folder 137

NYC 9/11 Public Portal Document

hearing.)

All of the individuals involved in Omega held membership in the committee that declared the 79-year-old Cantor incapacitated in early January. The declaration allowed the 34-year-old Lutnick to assume the full powers of Managing General Partner, over the objections of Iris Cantor.

The terms of the settlement, announced Tuesday, stem from the Omega negotiations. The Cantors have agreed to convert a portion of their ownership in Cantor Fitzgerald into a new limited partner interest that will eventually be redeemed by the partnership.

The ownership situation sits like this: Both Iris Cantor and Howard Lutnick control about 20 percent of the firm. The remaining amount of the Cantor controlling block was converted into a limited status and will be paid out over time. Meanwhile Iris Cantor, who stands to receive an annual consulting fee of $5 million a year upon Bernie's death, has agreed to take the position of vice-chairman of Cantor in charge of charitable activities.

As part of the agreement, Cantor Fitzgerald has agreed to provide the Iris and B. Gerald Cantor Foundation with 5% of the firm's annual profits—an amount the firm traditionally had provided. Iris manages the foundation.

Laying the firm out

Both Iris Cantor and Lutnick came to court prepared to lay the inner workings of Cantor Fitzgerald bare, with dozens of boxes of prepared exhibits and videotaped testimony of the doctors' examinations of the ailing founder.

In the moments before testifying, Lutnick sat calmly talking with his wife, sipping a bottle of Pure Spring water. Iris Cantor, dressed in a dark striped suit, grimly conferred with eight corporate attorneys huddled around her. Her attorneys unsuccessfully attempted to have the courtroom cleared for testimony about her husband's condition.

Lutnick's testimony made clear the difficulty of operating the company with Berrie Cantor in failing health. He described a birthday party last December 17 at the Cantors' Park Avenue apartment, where the Cantor relatives assembled to celebrate the founder's birthday. The ailing bond maven sat with arms crossed and head drooping, oblivious to the proceedings.

Lutnick told the court that since 1995, Bennie had lost most of his interest in the business, and often had difficulty recognizing people, even those closest to him.

Lutnick also told the court about liabilities that failed to show up on the balance sheet, issues that would undoubtedly affect the purchase price of the firm for a third party. For example, Lutnick said Reuters Inc. has sued for repayment of $45 million from obligations involving European operations.

Why did Iris settle?

The secret sale proceedings became public in open court last Monday, just before the afternoon break. But the court proceedings amounted to background music for the negotiations on a settlement. The court proceedings halted at the break, and the two sides started negotiating through the night, arriving at a settlement early Tuesday morning.

Tuesday. September 1e, 2001 gmmlca attune: RGtb Papa: 3

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