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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND NEUBERGER BERMAN REAL ESTATE INCOME FUND, INC., Plaintiff : : : : v. : : LOLA BROWN TRUST NO. 1B, : ERNEST HOREJSI TRUST NO. 1B, : BADLANDS TRUST COMPANY, : SUSAN L. CICIORA, LARRY L. : DUNLAP, and STEWART R. : HOREJSI, : Defendants : ...o0o...

Civil No. AMD 04-3056

AMENDED MEMORANDUM OPINION This securities case involves a partial tender offer by two trusts intended to effect the acquisition of just over 50% of the outstanding shares of an investment company, and the investment company's defensive actions taken in response, including its board's resolution opting in to the Maryland Control Share Acquisition Act ("MCSAA") and the board's adoption of a "poison pill." Defendants/counter-claimants Lola Brown Trust No. 1B and Ernest Horejsi Trust No. 1B (collectively, "the Trusts"), and Badlands Trust Company, as trustee of the Trusts, moved for a speedy declaratory judgment hearing under Federal Rule of Civil Procedure 571 on issues related to the defensive actions undertaken by plaintiff/counter-defendant, Neuberger Berman Real Estate Income Fund, Inc. ("NRL" or

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Federal Rule of Civil Procedure 57 provides, in pertinent part: The court may order a speedy hearing of an action for a declaratory judgment and may advance it on the calendar.

the "Fund"). Specifically, the Trusts seek a declaration that the poison pill violates the Investment Company Act of 1940 and that the Trusts are "grandfathered" as owners of control shares and therefore not subject to voting restrictions imposed by the MCSAA. Alternatively, the Trusts moved for a preliminary injunction enjoining the NRL Board from invoking either the MCSAA or the poison pill against the Trusts. I held a hearing on the Trusts' motion for a declaratory judgment and/or a preliminary injunction on October 13, 2004. In an oral ruling, I denied injunctive relief, finding no danger of irreparable harm to the Trusts. For the reasons explained below, I am persuaded that the poison pill does not violate the Investment Company Act of 1940. Consequently, in view of the poison pill's validity, and the effect of its validity on the Trusts' tender offer,2 I need not decide whether the voting restrictions imposed by the MCSAA are valid against the Trusts. I. NRL is a closed-end investment company incorporated in Maryland. It invests primarily in real estate securities and is subject to the Investment Company Act of 1940, 15 U.S.C.

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Maryland Law