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privatization of First Niles (“Privatization Proposal”). That Proposal recommended reclassifying the shares of hold-
ers of 300 or fewer shares of First Niles common stock into a new issue of Series A Preferred Stock on a one-to-one
20290, at *10-11; see generally Kahn v. MSB Bancorp, Inc., 1998 WL 409355 (Del.Ch. July 16, 1998),
sumption, both questions must be answered affirmatively.
FN30. TW Servs., 1989 WL 20290, at *10-11.
We consider first whether Count I alleges a cognizable claim that the Board breached its duty of loyalty. In TW Ser-
vices v. SWT Acquisition Corporation, the Court of Chancery recognized that a board's decision to decline a merger
[10] Here, the plaintiffs allege that the Director Defendants had a disqualifying self-interest because they were fi-
nancially motivated to maintain the status quo. A claim of this kind must be viewed with caution, because to argue
that directors have an entrenchment motive solely because they could lose their positions following an acquisition is,
to an extent, tautological. By its very nature, a board decision to reject a merger proposal could always enable a
plaintiff to assert that a majority of the directors had an entrenchment motive. For that reason, the plaintiffs must
argument would condemn any board, which successfully avoided a takeover, regardless of whether that
board properly determined that it was acting in the best interests of the shareholders.”).
[11] The plaintiffs have done that here. At the time the Sales Process was terminated, the Board members were Ste-
phens, Kramer, Eddy, Zuzolo and Gantler. Only Gantler voted to accept the First Place merger bid. The pled facts
Stephens: Aside from Stephens losing his long held positions as President, Chairman and CEO of First Niles and the
Bank, the plaintiffs have alleged specific conduct from which a duty of loyalty violation can reasonably be inferred.
Stephens never responded to Cortland's due diligence request. The Financial Advisor noted that Stephens' failure to
respond had caused Cortland to withdraw its bid. Even after Cortland had offered First Niles an extension, Stephens
20290, at *10-11; see generally Kahn v. MSB Bancorp, Inc., 1998 WL 409355 (Del.Ch. July 16, 1998),
sumption, both questions must be answered affirmatively.
FN30. TW Servs., 1989 WL 20290, at *10-11.
We consider first whether Count I alleges a cognizable claim that the Board breached its duty of loyalty. In TW Ser-
vices v. SWT Acquisition Corporation, the Court of Chancery recognized that a board's decision to decline a merger
[10] Here, the plaintiffs allege that the Director Defendants had a disqualifying self-interest because they were fi-
nancially motivated to maintain the status quo. A claim of this kind must be viewed with caution, because to argue
that directors have an entrenchment motive solely because they could lose their positions following an acquisition is,
to an extent, tautological. By its very nature, a board decision to reject a merger proposal could always enable a
plaintiff to assert that a majority of the directors had an entrenchment motive. For that reason, the plaintiffs must
argument would condemn any board, which successfully avoided a takeover, regardless of whether that
board properly determined that it was acting in the best interests of the shareholders.”).
[11] The plaintiffs have done that here. At the time the Sales Process was terminated, the Board members were Ste-
phens, Kramer, Eddy, Zuzolo and Gantler. Only Gantler voted to accept the First Place merger bid. The pled facts
Stephens: Aside from Stephens losing his long held positions as President, Chairman and CEO of First Niles and the
Bank, the plaintiffs have alleged specific conduct from which a duty of loyalty violation can reasonably be inferred.
Stephens never responded to Cortland's due diligence request. The Financial Advisor noted that Stephens' failure to
respond had caused Cortland to withdraw its bid. Even after Cortland had offered First Niles an extension, Stephens
