Full opinion text
BENCH OPINION . ALGENON L. MARBLEY, District Judge. I. INTRODUCTION Plaintiff Kent Stuckey (“Plaintiff’ or “Stuckey”) brought this action against Defendant Online Resource Corporation (“Defendant” or “ORC”) in December 2008. Stuckey seeks recovery based on his remaining claims for breaches of a merger agreement, fraud, and breach of an escrow agreement. This Court presided over a bench trial on issues of liability and damages. For the reasons set forth below, the Court finds in Plaintiffs favor, and Plaintiff must submit his election of remedies within 30 days of this Bench Opinion, at which time FINAL JUDGMENT will be entered. II. PROCEDURAL HISTORY Stuckey’s original complaint was filed against ORC on December 19, 2008. ORC filed a motion to dismiss thereafter, which was granted in part and denied in part on December 11, 2009. Stuckey v. Online Res. Corp., No. 2:08-cv-1188, 2009 WL 5030794, at *20 (Dec. 11, 2009) (“Stuckey /”)• With the Court’s consent, Stuckey filed an amended complaint on April 16, 2010, 2010 WL 1610622, alleging: (1) breach of contract arising from failure to file a registration statement, breach of the price protection clause, breach of ORC’s obligation to complete the termination of the Internet Transaction Solutions, Inc. (“ITS”) profit sharing plan, and breach of terms, of the escrow agreement requiring distribution of all funds therein to ITS stockholders (Count I); (2) fraudulent misrepresentation and fraudulent non-disclosure (Count II) ; (3) fraudulent inducement of ITS stockholders to elect price protection on or around May 10, 2008 (Count III); and (4) securities fraud under the Ohio Securities Act, Ohio Revised Code Chapter 1707 (Count IV). ORC again filed a motion to dismiss, this time requesting that the Court dismiss all of Stuckey’s claims except for breach of contract claims arising from breach of the price protection clause and breach of the escrow agreement. This Court granted the second motion to dismiss, in part, on two claims that were not incorporated by Stuckey into the enumerated counts and on the breach of contract claim resulting from ORC’s obligation to terminate ITS’s profit sharing plan (portion of Count I). Stuckey v. Online Res. Corp., 819 F.Supp.2d 673, 693 (2011) (“Stuckey II”). As to the remainder of Stuckey’s claims, the motion to dismiss was denied. Id. Before this Court ruled on the second motion to dismiss, ORC filed a summary judgment motion, asking this Court to grant summary judgment in its favor as to Stuckey’s claims for breach of contract for failure to file a registration statement for ORC stock (part of Count I); breach of contract for failure to terminate the ITS profit sharing plan (part of Count I); common law fraud, including fraudulent misrepresentation, fraudulent non-disclosure, and fraudulent inducement (Counts II and III) ; and securities fraud under the Ohio Securities Act (Count IV). This Court denied ORC’s summary judgment motion in its entirety. Stuckey v. Online Res. Corp., No. 2:08-cv-1188, 2012 WL 468510, at *20 (Feb. 13, 2012) (“Stuckey III”). A seven-day bench trial ensued. This Court now issues the following findings of fact and conclusions of law. III. FINDINGS OF FACT A. The Parties ORC is a publicly traded' corporation that was incorporated in Delaware and has its principal place of business in Virginia. (Stip. 1.) Stuckey brought this case on behalf of the ITS stockholders, as the stockholder representative upon agency and authority established by the parties’ merger agreement. (P Exs. 5, 286.) Stuckey is the stockholder representative for: Internet Transaction Solutions, LLC; Value Recovery Group, Inc.; New Ridge LLC; PWI Inc.; G Tek LLC; Barry H. Fromm; Eben L. Kent; Mark S. Johnson; Robert J. Massey; John G. Ritchey; Sudhir and Anjali Sehgal; Richard and Cheryl Evans CRUT; Scott Evans CRUT; and Scott Evans GRAT (collectively referred to as “ITS Stockholders”). ITS was founded in Columbus, Ohio in May 1999, and provided specialized electronic payment services to accounts receivable management and utilities industries. (Stip. 2; Tr. 11-12.) ITS became cash positive in approximately 2003. (Tr. 20.) It was an industry leader in the accounts receivable management industry for electronic payments in 2006. (Tr. 402, 632-33.) B. The Sale of ITS ITS decided to explore whether to sell the business in 2006. (Tr. 634; Stip. 3.) The company retained . an investment banking firm, Lane Berry, to seek advice on whether it was a good time to sell. (Tr. 21-22.) After consulting with Lane Berry, the ITS board decided to have Lane Berry conduct a competitive bid auction process for potential sale of ITS. (Tr. 23-24.) Forty-five companies expressed interest in ITS, management presentations were made by ITS to eighteen of the forty-five companies, and the sale eventually came down to three bidders: ORC, Jack Henry, and TransFirst. (Tr. 23-25.) ORC initially proposed a merger for $40 million that would allow ITS Stockholders to elect to accept a minimum of 40% and a maximum of 90% of the purchase price in “registered Online common stock with any remainder paid in cash at closing.” (Tr. 32, 756-60; P Ex. 2.) ORC also offered price protection for twelve months after the closing “such that selling shareholders will have the opportunity to achieve at least the cash purchase equivalent price for the stock portion of their consideration.” (P Ex. 2.) In addition to the benefits to the ITS Stockholders in the proposed merger, ORC would benefit from offering ORC stock as part of the consideration because, the more ORC stock the ITS Stockholders took, the less cash drain would be imposed on ORC. (Tr. 255-56, 761.) ORC later increased its offer to $45 million. (Tr. 115; D Ex. 1.) The ITS Stockholder selected ORC as the winning bidder. (Tr. 256-57; P Ex. 5.) Certain ITS Stockholders testified credibly at trial that they liked the upside potential of registered ORC stock, coupled with the downside price protection, and that ORC was willing to agree to impose certain terms and representations contained in the draft stock purchase agreement, subject to necessary changes to convert the deal from a stock purchase to a merger transaction. (Tr. 35-37,117, 635-36.) C. The Merger Agreement Stuckey and ITS Stockholders’ legal counsel, Scot Crow, worked with ORC’s general counsel, Michael Bisignano; chief financial officer, Catherine Graham; and outside counsel, Mark Wishner of Green-berg Traurig, to negotiate and close the transaction. (P Ex. 5; Tr. 256-57.) The merger agreement was entered into and signed on July 26, 2007. (Tr. 145; Stip. 5.) The merger consideration was a combination of cash and shares of ORC’s common stock (“Buyer Stock”) in the amount of $45 million, subject to certain adjustments. (P Ex. 5 § 1.5.) At closing, each ITS share was converted into a right to receive a combination of cash and Buyer Stock in specified amounts and percentages. (P Ex. 5 § 2.3(d).) Section 2.7(a) of the merger agreement set up the procedures by which each ITS Stockholder was entitled to elect what portion of the purchase price to receive in cash or Buyer Stock, but nothing in the merger agreement set forth the 40% to 90% range of Buyer Stock consideration referenced in ORC’s original offer. (P Ex. 5 § 2.7(a); Tr. 115.) A minimum of approximately 40% of Buyer Stock, however, was necessary to achieve tax deferral on the Buyer Stock received. (Tr. 255-56.) The share price to be utilized to determine the number of shares issued to those ITS Stockholders who elected Buyer Stock in lieu of cash was the volume weighted average price (“VWAP”) per share, calculated as of the date of the merger agreement, July 26, 2007. (P Ex. 5 § 1.5.) The VWAP of the Buyer Stock as of the date of the merger agreement was $11.1488 per share. (Stip. 7.) Under section 10.6 of the merger agreement, ORC unconditionally promised to “file with Securities and Exchange Commission (the ‘SEC’) a registration statement covering the resale of the Buyer Stock (the ‘Registration Statement ’) within 90 days after the Closing and to have the Registration Statement declared effective by the SEC as soon as practicable thereafter.” (P Ex.' 5 § 10.6; Tr. 764) (emphasis in original). The merger agreement transaction closed on August 10, 2007, and 90 days from August 10 was November 8, 2007. (Stip. 6, 9.) ORC’s promise to register the Buyer Stock was important to the ITS Stockholders, as was made evident by testimony from Stuckey (owner of ITS Stockholder New Ridge LLC), Gregory Salvato (owner of ITS Stockholder GTek LLC), and Fromm at the trial. (Tr. 38, 637, 690-91.) It was an important factor in the ITS Stockholder’s decision to enter into the merger agreement with ORC, rather than take an all-cash offer from one of the other bidders. (Tr. 39.) Registered Buyer Stock gave ITS Stockholders control and discretion as to when to sell their Buyer Stock and for what price. (Tr. 39.) Graham knew that ORC’s promise to register Buyer Stock was an important and material provision of the merger agreement, and that the ITS Stockholders were relying on ORC’s promise to register. (Tr. 764-65, 769-70.) Section 2.6 of the merger agreement contains the price protection provisions, which gave any ITS Stockholder who had not sold any of his or her Buyer Stock the right to put it all back to ORC six, nine, or twelve months after closing. (P Ex. 5 § 2.6.) When an ITS Stockholder exercised his or her put right, ORC would, at its option, either (a) buy the Buyer Stock back for cash at the VWAP per share .on the closing date, or (b) issue additional Buyer Stock to make up for the intervening price decline. (P Ex. 5; Tr. 257-58.) Under the merger agreement, any additional Buyer Stock obtained when exercising price protection rights was to be registered by November 8, 2007 as well. (P. Ex. 5 §§ 1.5, 2.6, 10.6.) Six months, nine months, and twelve months after the closing were February 10, May 10, and August 10, 2008, respectively. (Tr. 40.) Price protection was, as ORC described it in its 2007 10-K, a “standalone derivative,” meaning that it is considered to be a separate security from the ORC shares themselves. (Tr. 867-68.) Price protection was carried as a separate liability on ORC’s balance sheet and was marked to market each quarter to reflect changes in the value of ORC’s price protection obligation driven by share price, share price volatility, and time to maturity. (Tr. 867-69.) The price protection obligation was valued at $2.8 million at closing, which increased the value of the total consideration for ITS to approximately $48.1 million. (Leaverton Dep. 130-31; P Ex. 227.) ORC also made various representations and warranties in the mergér agreement. (P Ex. 5.) In section 4.2(d), ORC represented that “performance of this Agreement by [ORC] ... does not and will not ... require any approval, consent, order, authorization, declaration or filing with any person, entity or body, private or governmental, which failure to obtain would have a Material Adverse Effect on the consummation of the transactions contemplated hereby.” (P Ex. 5 § 4.2(d).) In section 4.2(b), ORC represented that the execution and delivery of the merger agreement was not a “violation of ... any material government law, rule, or regulation ... having applicability to [ORC] which would have a material adverse effect on [ORC].or the transaction contemplated hereby.” (P Ex. 5 § 4.2(b).) In section 4.5, ORC represented that there was no “action, suit, investigation, subpoena or proceeding pending against Buyer.” (P Ex. 5 § 4.5.) Finally, section 10.1 provided that “all representations and warranties contained ... in Sections 4.1 through 4.6 hereof, inclusive ... shall be deemed to have been relied upon by the other party, shall survive .the execution and delivery of this Agreement and payment of the Merger Consideration therefor.” (P Ex. 5 § 10.1.) Prior to closing, ORC emailed ITS Stockholders documents to be considered in connection with their election to receive Buyer Stock, including, ORC’s 2006 Form 10-K, proxy statement filed on April 17, 2007, Form 10-Q on May 10, 2007, and Forms 8-K filed on May 17, 2007, July 26, 2007, and August 1, 2007. (P Ex. 14.) ORC did not disclose any document or reference to the ongoing non-public SEC comment letter and review of ORC’s 2006 10-K, discussed infra Part III.E. (P Ex. 14.) The ITS Stockholders elected to accept $24,713,061.00 of the merger consideration in the form of Buyer Stock in lieu of cash, which resulted in 2,216,653 shares of Buyer Stock being issued to the ITS Stockholders. (Tr. 38, 43; P Ex. 40 at ORC 1-003911.) D. ORC’s Stock Transfer Agent Although the 2,216,653 shares of Buyer Stock were issued, they were retained in the possession of American Stock Transfer & Trust Company (“AS & T”). (Bisignano Dep. 237-40.) AS & T was instructed by ORC on September 21, 2007, to issue the Buyer Stock with a restrictive legend and that the “restricted shares should be issued in book entry form only and may not be transferred in the absence of an effective registration statement covering such transfer or an opinion from us [ORC] or our counsel that such transfer is exempt from registration.” (Bisignano Dep. 237-41; P Ex. 31.) Greenberg Traurig was ORC’s legal counsel responsible for issuing such an opinion. (Bisignano Dep. 240411.) E. The SEC Comment Letter On June 14, 2007, ORC received an SEC comment letter initiating a review of ORC’s 2006 10-K. (P Ex. 9; Tr. 770-71.) All.of the SEC’s comments and questions in the letter had to be responded to and resolved prior to the.. SEC issuing, a “no further comment” letter. (Leaverton Dep. 61.) Graham and Bisignano knew that the SEC would not allow the Buyer Stock to be declared effective until the SEC issued a “no further comment” letter. (Tr. 772-73, 778; Bisignano Dep. 75-76, 114-15.) KPMG, ORC’s independent auditor, described the SEC comment letter as a “significant issue” for ORC. (Leaverton Dep. 21, 59; P Ex. 204.) ORC could not file a 10-K, 10-Q, S-l or S-3 without KPMG’s consent and sign off. (Leaverton Dep. 21, 59; P Ex. 204.) Graham knew an accounting firm would almost never consent to the filing of a registration statement while an open SEC comment letter was pending. (Tr. 801.) Graham and Bisignano testified that at the time of the closing, they did not know when the SEC comment letter would be cleared. (Tr. 773-74, 800; Bisignano Dep. 75-76, 114-15; P Ex. 27.) ORC and Graham also knew that neither the SEC comment letter, nor the SEC review that it initiated, was publicly known or available at the time the merger agreement was executed and closed. (Tr. 772-73; P Ex. 24.) No one at ORC disclosed the SEC comment letter or related review to the ITS Stockholders or their legal counsel prior to signing the merger agreement or the closing of the merger. (Tr. 263, 272, 822-23; Bisignano Dep. 115.) Crow testified that he would have altered his recommendation that Buyer Stock was a viable alternative to cash because the lack of liquidity put the ITS Stockholders at risk. (Tr. 263.) The ITS Stockholders were relying on Crow, who would have advised them against accepting the Buyer Stock had the SEC comment letter been disclosed. (Tr. 272-73.) F. ORC’s Communication Regarding the S-S Bisignano communicated to Crow that ORC’s plan was to file a short form S-3 registration statement within a week or two after closing. (Tr. 259-60.) In an August 30, 2007 email responding to Salvato, Bisignano explained: We have the S-3 ready to file, but our 2006 10-K is under regular review by the SEC (they do a standard review every 2 years — they last looked at our 10-K in 2004), and regulations do not allow an S-3 to become effective while there is an open comment letter on our 10-K (which is the primary document incorporated by reference in the S-3). ■ (Tr. 643-44; Bisignano Dep. 186; P Ex. 22.) This was the first that Sálvato had heard of the SEC review. (Tr. 644.) The review was concluded by the SEC on October 11, 2007, about a month prior to the Buyer Stock registration deadline November 8, 2007. (P.Ex. 36.) The first time ORC emailed Crow with a draft Form S-3 for registration of Buyer Stock, however, was five days after the contractual deadline to register on November 13, 2007. (Tr. 278, 826-27; P Ex. 39.) ORC asked Crow to review a portion of the draft and “let us know if you have any comments,” adding that “[w]e intend to send this draft to the printers shortly.” (Tr. 278; P Ex. 39.) Crow responded on November 16, 2007 with minimal edits. (Tr. 279-80; P Ex. 41.) ORC did not send the draft S-3 to its auditors, KPMG and Crowe Chizek, however, until December 6, 2007. (Tr. 827-28.) Crowe Chizek’s role is explained further infra, Part III.I. Email correspondence indicates that December 6, 2007 was the first time KPMG had heard of ORC S-3 draft. (Leaverton Dep. 22-23,148-49; P Ex. 236.) On the same day, Crow emailed Graham indicating that he was hoping to hear back regarding the status of the stock registration because “[s]everal of the shareholders are becoming increasingly concerned.” (Tr. 282; P Ex. 82.) Crow asked for a written summary as to when the S-3 would be filed, but a summary was never provided by ORC. (Tr. 282, 838; P Ex. 82; Graham Dep. 282-83.) Graham circulated another draft S-3 dated November 20, 2007, via email, to a number of parties on January 18, 2008, including ORC’s auditors, and explained that “after much circling and discussion, we are ready to file the S-3 registering the shares we issued in the acquisition of ITS.” (Tí. 838-39.) Graham also noted that, because the price protection provision in the merger agreement would be exercisable on February 10, 2008, “it is important for us to make every effort to get this filed by Friday, January 25th.” (Tr. 841.) KPMG responded that filing on January 25 was realistic for KPMG. (P Ex. 94.) The registration was not filed January 25, 2008, however; rather, on January 23, 2008, Graham sent an e-mail to the auditors with a copy .to Bisignano, saying “after talking with each of you about the timing for your processes, we are shooting for filing the S-3 to register the ITS acquisition shares on Wednesday, January 30.” (Tr. 845; P Ex. 44.) Again, the registration statement was not filed on January 30, 2008. Despite the fact that Graham herself set these filing deadlines as chief financial officer at ORC, she testified at trial that she has no recollection as to why the S-3 was not filed on January 30, 2008, nor of who made the decision not to file. (Tr. 853-56.) On March 12, 2008, Crow emailed Bisignano stating: I am writing to confirm that ORCC is still pursuing the S-3 filing. While I appreciate the relaxed 144 rules, they still come with limitations and not equivalent to having the shares registered as required under the Merger Agreement. Could you please provide me with a quick status update on the filing of the S-3? (Tr. 290-91; Bisignano Dep. 380-81; P Ex. 99.) Bisignano responded: “We are still pursuing it. The 144 rule change is a stopgap that hopefully alleviates some’ pressure, but we are not viewing it as a permanent solution and have not reduced our intensity.” (Tr. 291; Bisignano Dep. 380-81; P Ex. 99.) Crow communicated Bisignano’s response to the ITS Stockholders. (Tr. 291.) G. Registered v. Unregistered Shares & Rule Ikl Registration of Buyer Stock would have made the Buyer Stock freely tradable. (Tr. 1082.) If the Buyer Stock were registered, the ITS Stockholders could have sold shares individually at different prices and different times; they could have sold different amounts of shares at different times; and they could freely determine how many shares to sell, when to sell, and at what price. (Tr. 1084-85.) They could make a decision to sell some of their shares at a particular time on a particular day at a particular price and execute the trade almost instantly with the push of a button on their computer. (Tr. 81.) ORC’s own expert witness conceded that registering Buyer Stock would have made those shares freely tradable, and that the Buyer Stock was not freely tradable between August 10, 2007 through August 10, 2008. (Tr. 1082-83.) As this Court explained in Stuckey III, when the merger agreement was closed on August 10, 2007, Rule 144 required a one-year holding period before restricted securities could . be sold. 17 C.F.R. § 230.144(d)(1) (1997 Amendments); see 2012 WL 468510 at *3. Amendments to Rule 144 became effective February 15, 2008, changing the one-year holding period to six months. 17- C.F.R. § 230.144(d)(1)®; see Stuckey III, 2012 WL 468510, at *3. As of February 15, 2008, the ITS Stockholders had been holding the Buyer Stock for more than six months, and therefore, they could sell that Stock pursuant to the newly amended Rule 144. See Stuckey III, 2012 WL 468510, at *3. Unregistered shares sold under amended Rule 144, however, are not freely tradable. Under amended Rule 144, every time an ITS Stockholder wanted to sell any shares of Buyer Stock, the Stockholder would have to communicate that desire to Greenberg Traurig or ORC. (Bisignano Dep. 347-48; Tr. 81, 1122; P Ex. 52.) Then ORC would have to communicate to Greenberg Traurig that a legal opinion was needed to authorize that sale, and Greenberg Traurig would have to issue the opinion letter. (Bisignano Dep. 347-48; Tr. 858-59; P Ex. 52.) The process would have to be repeated and a separate legal opinion obtained for each intended sale. (Bisignano Dep. 347-48; Tr. 81, 1122; P Ex. 52.) It would take days for Greenberg Traurig to issue a legal opinion, and during that time, ORC’s stock price could change. (Bisignano Dep. 341-42; Tr. 1123.) For example, when Fromm sought an opinion letter from Greenberg Traurig, he had to submit a “representation letter” to ORG, and then it took Greenberg Traurig 10 days to issue its opinion letter. (Tr. 694, 1124-25; D Ex. 13.) An SEC publication entitled “Rule 144: Selling Restricted and Control Securities,” provides information about selling restricted securities using Rule 144: Even if you have met the conditions of Rule 144, you can’t sell your restricted securities to the public until you’ve gotten the legend removed from the certifícate. Only a transfer agent can remove a restrictive legend. But the transfer agent won’t remove the legend unless you’ve obtained the consent of the issuer — usually in the form of an opinion letter from the issuer’s counsel — that the restricted legend can be removed. Unless this happens, the transfer agent doesn’t have the authority to remove the legend and execute the trade in the marketplace. To begin the process, an investor should contact the company that issued the securities, or the transfer agent of the company’s securities, to ask about the procedures for removing a legend. Since removing the legend can be a complicated process, if you’re considering buying or selling a restricted security, it would be wise for you to consult an attorney who specializes in securities laiu. (P Ex. 347) (emphasis added). Moreover, to sell unregistered shares using Rule 144, “adequate current public information with respect to the issuer of the securities must be available.” 17 C.F.R. § 230.144(c). Under Rule 144, adequate current public information “will be deemed to be available only if the issuer has filed all required reports under section 13 or 15(d) of the Exchange Act, as applicable, during the 12 months preceding such sale ... other than Form 8-K reports.” 17 C.F.R. § 230.144(c)(1). ORC’s 2007 10-K, however, indicated that it had not “filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.” (P Ex. 166.) ORC’s Form 10-Q for March 31, 2008 also indicated that ORC had not “filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.” (P Ex. 167.) H. The 8-05 Calculation Before closing the merger agreement, ORC performed a Rule 3-05 calculation, which it was required to do to determine whether its acquisition of ITS was material to ORC’s financial statements. (Tr. 806-07.) If it was, ORC was legally obligated under the securities laws to file audited financial statements for ITS with the 8-K filing relating to the acquisition. (Tr. 807.) Three weeks after the closing, ORC controllers informed Graham, incorrectly, that the transaction was not material to ORC’s financial statement under Rule 3-05. (Tr. 806-08.) ORC discovered its mistake in its 3-05 calculation in September 2007, and determined then that it was required to file standalone financial statements for ITS with ORC’s Form 8-K filing relating to its acquisition of ITS. (Tr. 809-12.) ORC had to create standalone audited ITS financial statements rather than use the financial statements submitted by ITS in connection with the merger agreement because the ITS audited financial statements provided in connection with the merger agreement were consolidated statements of both ITS and ITS’ then wholly-owned subsidiary, QuanComm. (Tr. 56-57, 808.) QuanComm was not part of the acquisition; rather, it was “spun off’ to the ITS Stockholders by agreement. (Tr. 41-42, 809.) Thus, when ORC discovered that its Rule 3-05 calculation was erroneous and that it needed to file audited financial statements for ITS, the ITS audited statements had to be “carved out” of the consolidated audited statements of ITS and QuanComm. (Tr. 56-57,131, 928-29; P Ex. 64.) ORC hired Crowe Chizek in September 2007 to prepare standalone financial statements for ITS. (Tr. 810-12.) ORC’s erroneous 3-05 calculation delayed ORC’s retention of Crowe Chizek and the start of Crowe Chizek’s work by a month. (Tr. 812-13.) The standalone ITS financial statements were filed by means of an amended Form 8-K/A on October 25, 2007. (Tr. 815-16.) I. ITS Revenue Recognition Issue On October 25, 2007, in conjunction with filing a Form 8-K/A with standalone ITS financial statements, Graham signed a letter on behalf of ORC to Crowe Chizek, representing that “the Company [ITS] has properly recorded revenue in accordance with SAB No. 104, Revenue Recognition.” (P Ex. 191A ¶ 5.) SAB is an accounting rule. (Tr. 817.) Sometime prior to October 29, 2007, KPMG had identified an issue with the manner in which ITS had recognized revenue. (P Ex. 229.) Graham confirmed, however, in an email to Stuckey on November 6, 2007 that the ITS revenue recognition issue was resolved. (Tr. 971-72; P Ex. 291.) Discussions of an ITS revenue recognition issue again occurred in mid-December 2007 between ORC and Crowe Chizek, but no adjustments were made to ITS’s financial statements or to the audit reports. (Baer Dep. 73-75.) Mark Baer, the lead accountant from Crowe Chizek, testified at his deposition that he was never told of a delay in filing the registration statement that was caused by the revenue recognition issue, nor was he aware of any such delay. (Baer Dep. 86, 103.) The audited ITS financial statement filed on October 25, 2007 was never amended or restated in any way. Graham signed another management representation letter on January 4, 2008, representing that, to the best of her knowledge and belief, “the representations previously made to you in our letter dated October 25, 2007, are still valid” and that “no events have occurred subsequent to the balance sheet date that would require adjustment to, or disclosure in, the financial statements [of ITS].” (Tr. 831; P Ex. 90-2.) Graham testified at trial that the management representation letters were “the accounting firm’s way of getting management to say we’ve given you everything you need, we haven’t misled you, we haven’t lied to you.” (Tr. 931.) J. ORC’s Failure to Timely File 2007 10-K & Resulting Loss of Ability to File an S-3 ORC failed to file timely its 2007 10-K by the March 17, 2008, deadline. (Tr. 862; P Ex. 155.) ORC requested an extension of the filing deadline on March 17, 2008 until April 1, 2008, which was granted, but ORC then failed to meet the extended filing deadline. (Tr. 862-64; P Ex. 100.) The failure to file was the result of an ongoing dispute between KPMG and Ernst & Young (“EY”), ORC’s former auditor, regarding EY’s accounting for ORC’s taxes. (Tr. 864; P Ex. 100.) As a result of having missed the extended deadline, ORC lost S-3 eligibility for a period of one year. (Tr. 864.) To register any ORC shares after April 1, 2008, ORC would have to file a Form S-l registration statement. (Tr. 864.) ORC filed its 2007 10-K on April 9, 2008. (Tr. 866; P.Ex. 166.) K. ORC’s Representations Regarding the Filing of an S-l On May 2, 2008, prior to advising the ITS Stockholders, Crow inquired of Bisignano as to the status of the Buyer Stock registration. (Bisignano Dep. 413; P Ex. 106.) Bisignano replied that ORC thought “the best approach forward is to file an S-1 prospectus” and that “[t]he goal would be to file the S-l right after we file our 10-Q, which is scheduled for May 10 at the latest.” (Bisignano Dep. 412-15; P Ex. 106.) When Crow inquired again on May 6, 2008 as to the time frame in which ORC was planning to filing the S-l, Bisignano responded the same day, stating: We are planning to file within the next couple of weeks. S-ls frequently take a long time to prepare from scratch. Fortunately, we have nearly all the material we need from our 10-K, proxy and 10-Q, so it should not take long to prepare. The SEC has a right to review, but that is usually a brief period, and given that it will be based on already filed disclosures, it is unlikely they will have many (if any objections) [sic], (P Ex. 107.) There is no evidence that a draft S-l existed on May 6, 2008, however, and Bisignano had no recollection of a draft S-l existing at that time. (Bisignano Dep. 421-22.) The earliest reference to a draft S-l registration statement for the Buyer Stock is in an email dated June 30, 2008, from Bisignano to Graham asking her to review the draft S-l because ORC needs to “get it over to the accountants.” (Tr. 879.) Graham testified at trial that getting an S-l through the accountants is a time consuming task. (Tr. 879.) The evidence indicates that ORC did not advise KPMG that it was considering filing an S-1 for Buyer Stock until July 15, 2008. (Tr. 886; Leaverton Dep. 297; P Ex. 126.) Moreover, a draft S-l, dated July 14, 2008, was not sent to KPMG until July 17, 2008. (Leaverton Dep. 298; P Exs. 127, 127A; Tr. 887-88.) No S-l registration form for the ITS shareholders shares of ORC was ever filed. (Stip. 10.) Graham testified that she did not recall why. (Tr. 886.) ORC never filed a registration statement for the Buyer Stock. (Stip. 10.) L. Exercise of Price Protection Rights in May 2008 All of the ITS Stockholders who had not exercised price protection in February 2008 exercised their price protection rights effective May 10, 2008. Thus, as of May 10, 2008, all ITS Stockholders had exercised price protection. (Stip. 16.) There was testimony at trial that on behalf of their respective companies — New Ridge LLC and GTek LLC — Stuckey and Salvato sought Crow’s advice on whether to exercise price protection, and there was consensus that it made sense to do so based on the representation that the S-l was going to be filed shortly. (Tr. 87-89, 296, 302, 648; P Ex. 111.) ORC’s price protection obligation was treated as a liability worth $2.8 million on its financial statements and balance sheets. (Leaverton Dep. 98; P Ex. 218.) If ORC’s stock price went up, the amount of the price protection liability went down, and the change would be shown as a positive on ORC’s income statement. (P Ex. 78.) Conversely, the amount of ORC’s price protection liability would increase as ORC’s stock price declined. (Tr. 870; P.Ex. 166.) If the remaining ITS Stockholders exercised price protection in May 2008 (which they did), ORC would be able to eliminate that $2.8 million liability completely, with no cash drain to ORC, by opting to issue additional Buyer Stock to the ITS Stockholders rather than paying cash for those shares. (P Ex. 5 § 2.6(b).) In an ORC management presentation, ORC listed among its “Financial Challenges” the fact that “[fjinancial statements continue to be challenging to understand because of complex acquisition-related accounting,” and one of the two examples was “[p]rice protection provided to ITS shareholders.” (Tr. 873-74; P Ex. 169, slide 16.) In May 2008, when all the remaining ITS Stockholders exercised price protection, ORC’s price protection liability dropped from $2.8 million to zero. (Tr. 869-70.) M. Sale of Fromm and Evans’s Buyer Stock ITS Shareholders Fromm and Evans both sold Buyer Stock using Rule 144 during the period from May 2008 through July 2008. (Tr. 413, 695.) It took ten days for Fromm to get an opinion letter from Greenberg Traurig for his shares and the shares held by his company, Value Recovery Group, Inc. (D. Ex. 13; Tr. 711-12.) Evans had to engage a personal CFO financial team, who in turn engaged a broker, to assist with appropriate documentation and to execute trades under Rule 144. (Tr. 428-29.) Both Fromm and Evans testified at trial that they were unaware whether such sales were legal or compliant with Rule 144. (Tr. 417, 699.) N. “Grey-Out” Period There was limited evidence presented at trial that certain senior employees at ORC, including Stuckey and Kent, were subject to “grey-out” periods during which they could not trade ORC shares. (Tr. 140-41; D Ex. 57.) The “grey-out” period was an internal ORC policy rather than a legal restriction. (P Ex. 350.) O. Issuance of Price Protection Shares in May 2008 Section 2.6 of the merger agreement requires price protection shares to be calculated using the VWAP, which is defined as “the volume weighted average price of Buyer Stock for the ten (10) trading days ending two (2) Business Days preceding an indicated date.” (P Ex. 5 § 2.6.) A “trading day” is defined under the merger agreement as “a day that the shares can be traded on the NASDAQ global select market or such other market upon which shares of Buyer Stock are hereafter listed for trading.” (P Ex. 5 § 2.6(a).) Moreover, “business day” means “a day other than Saturday, Sunday or a day on which banking institutions located in New York City, New York are permitted or required by law to be closed.” (P Ex. 5 § 2.1.) May 10, 2008, which was a Saturday, was one of the indicated dates for the exercise of price protection. Two business days preceding May 10, 2008 would be Thursday, May 8, 2008. ORC mistakenly used May 7, 2008 as the ending day of the ten trading day period. (P Exs. 112, 285 (Ex. 16 to Robak Report).) Had ORC used the correct May 8 end date, the VWAP would have been $9.5941 per share, which would have resulted in additional shares being issued. (Tr. 529-30; P Ex. 285 (Ex. 17 to Robak Report).) P. Escrow Agreement As part of the acquisition transaction, Plaintiff, ORC, and Wilmington Trust Company executed and entered into an agreement pursuant to which a portion of the purchase price was placed in escrow to cover claims for indemnification or other relief made by the first anniversary of the closing of the merger agreement. (P Ex. 141.) According to the terms of the escrow agreement, ORC had to provide notice of any claims by the first anniversary of the closing using the delivery methods set forth in the escrow agreement. (P Ex. 141 § III(b)(i).) Section V of the escrow agreement provides that: [A]ny notice, instruction or instrument to be delivered hereunder shall be in writing and shall be effective upon receipt at the addresses set forth on the signature page hereof or at such other address specified in writing by the addressee, or if to the Escrow Agent [Wilmington Trust Company], upon receipt via facsimile or telecopier transmission, at the number set forth on the signature page hereof, or at-such other number specified by Escrow Agent. (P Ex. 141 § V.) The escrow agent received notice from ORC by email on August 8, 2008 and by courier on August 11, 2008, in which ORC claimed entitlement to $760,890.89 comprised of a net working capital adjustment. (Stip. 19; Tr. 380-31.) Notice was sent to Stuckey through FedEx on “MON — 11 AUG” and was sent “PRIORITY OVERNIGHT.” (P Ex. 142 at ORC 1-000020.) Stuckey responded to ORC claiming that ORC’s notice was deficient and untimely under the terms of the escrow agreement and merger agreement, and demanded disbursement of the escrowed funds. (Stip. 20.) ORC objected to Plaintiffs demand for disbursement, and because of the objection, the escrow agent continues to hold funds in the escrow account. (Stip. 21.) Q. Plaintiffs Expert Witness Plaintiff retained an expert witness, Es-pen Robak, to calculate ITS Stockholders’ damages in this case. Robak is a nationally recognized expert on valuation of restricted and illiquid securities, who frequently speaks on the topic at national conferences and writes articles for publication in industry magazines and journals. (Tr. 490-91.) His is a chartered financial analyst (“CFA”), which is a designation issued by the CFA Institute. (Tr. 491.) Robak’s education, experience, and expertise in valuation of restricted stock and illiquid securities qualify him as an expert to offer his opinion in this case. (P Ex. 285 (Ex. 18 to Robak Report); Tr. 496-92; 502-03.) Robak calculated ITS Stockholders’ damages under Duncan v. TheraTx, Inc., which this Court held provides the applicable measure of damages in this case. 775 A.2d 1019 (Del.2001); Stuckey III, 2012 WL 468510, at *7. IV. CONCLUSIONS OF LAW A. Breach of the Merger Agreement for Failure to Register Delaware law applies to the terms of the merger agreement. (P Ex. 5 § 14.9.) Under Delaware law, the elements of a breach of contract claim are: (1) a contractual obligation; (2) a breach of that obligation by the defendant; and (3) resulting damages to the plaintiff. Stuckey III, 2012 WL 468510, at *6 (citing H-M Wexford LLC v. Encorp, Inc., 832 A.2d 129, 140 (Del.Ch.2003); Interim Healthcare, Inc. v. Spherion Corp., 884 A.2d 513, 548 (Del.Super.Ct.2005)). Stuckey has satisfied each element of his breach of contract claim for failure to register. 1. Contractual Obligation Section 10.6 of the merger agreement imposes an unconditional obligation on ORC to file “a registration statement covering the resale of the Buyer Stock” with the SEC no later than November 8, 2007, and “to have the Registration Statement declared effective by the SEC as soon as practicable thereafter.” (P Ex. 5.) Stuckey has satisfied the first element of his breach of contract claim. ORC does not dispute this conclusion of law. 2. Breach of the Contractual Obligation ORC breached its obligation to file a registration statement with the SEC by November 8, 2007. (Stip. 10.) Stuckey has satisfied the second element of his breach of contract claim, and again, ORC does not dispute this conclusion of law. 3. Resulting Damages to Plaintiff In Stuckey III, this Court held Duncan provides the applicable measure of damages in this case. 2012 WL 468510, at *7; see 775 A.2d 1019. As in Duncan, this Court concludes, as a matter of law, that the ITS Stockholders “reasonably expected to have the maximum freedom to choose when to trade their shares during this period and at what price,” as of November 8, 2007 at the latest, and ORC’s breach of its unconditional obligation in the merger agreement to register the Buyer Stock “caused this expectation to be disappointed.” See 775 A.2d at 1022. The rule established in Duncan, which this Court held is applicable in this case, is that contract damages are measured by calculating the difference between: (1) the highest intermediate price of the shares during a reasonable time at the beginning of the restricted period, which functions as an estimate of the price that the stockholders would have received if they had been able to sell their shares, and [“first selling period”] (2) the average market price of the shares during a reasonable period after the restrictions were lifted [“second selling period”]. Id. at 1020, 1029; Stuckey III, 2012 WL 468510, at *7. This Court adopts the reasoning behind this rule, as established by the Duncan court: The intuition behind this rule is that the issuer-defendant should bear the risk of uncertainty in the share price because the “defendant’s acts prevent a court from determining with any degree of certainty what the plaintiff would have done with his securities had they been freely alienable.” But the issuer should not bear the risk of all subsequent share price increases because it is impossible to know whether and when the stockholders actually would have sold their shares during the restricted period. We find that this method of calculating damages provides a satisfactory estimate of the sale price that the Duncan Group [here, ITS Stockholders] would have obtained absent the breach by TheraTx [here, ORC] and, thus, the value of the opportunity lost by the Duncan Group [ITS Stockholders] as a result of the restriction. 775 A.2d at 1023. The sales in the first and second selling periods upon which the damages formula rely are “necessarily hypothetical.” Id. at 1022. The injury “is not the loss of a specific transaction but the loss of the ability to trade the shares as desired.” Id. at 1022 n. 7. As such, the ITS Stockholders are not required to show that they actually would have sold during the restrictive period “because the primary effect of the breach is to cause a ‘deprivation of [the ITS Stockholder’s] range of elective action.’ ” Id. (citing Am. Gen. Corp. v. Cont’l Airlines Corp., 622 A.2d 1, 10 (Del.Ch.1992), aff'd, 620 A.2d 856 (1992)). This Court finds, as a matter of law, that ITS Stockholders were damaged from ORC’s breach of the merger agreement by failure to register Buyer Stock. A calculation of Duncan damages is provided infra Part V.A. 4. ORC’s Defenses to Plaintiffs Claim for Breach of Merger Agreement for Failure to Register Are Without Merit a. Impossibility of Performance Plaintiff filed a “Motion to Strike Defendant’s Unpled new Affirmative Defense of ‘Impossibility of Performance’ ” the morning of the first day of trial. (Doc. 116.) This Court has not yet ruled on that motion. Plaintiff argues that ORC’s impossibility of performance defense must be stricken because it is an affirmative defense that must have been raised, pursuant to Federal Rule of Civil Procedure 8(c)(1), in a responsive pleading or is waived, and ORC failed to assert it in any responsive pleading. ÓRC raised its impossibility of performance defense, for the first time, five days prior to trial. Relying on Mitchell v. Thompson, ORC retorts that a party may amend pleadings at any time, even after trial, to conform to the evidence presented. See No. 06CA8, 2007 WL 2897752, at *5-6 (Ohio Ct.App. Oct. 1, 2007). The issue of impossibility of performance was sufficiently presented at trial, ORC argues, and therefore, Plaintiff is not prejudiced by ORC bringing this defense. Under Federal Rule Civil Procedure 8(c)(1), when “responding to a pleading, a party must affirmatively state any avoidance or affirmative defense.” State law governs whether a defense is an affirmative defense under Rule 8(c)(1), Roush v. Stone, Case No. 2:08-cv-141, 2010 WL 3037003, at *2, 2010 U.S. Dist. LEXIS 89593, at *5-6 (S.D.Ohio Aug. 2, 2010), and Ohio courts have established that impossibility of performance is an affirmative defense, Skilton v. Perry Local Schl. Dist. Bd. of Educ., No. 2001-L-140, 2002 WL 31744700, at *5 (Ohio Ct.App. Dec. 6, 2002); Mitchell, 2007 WL 2897752, at *4. Although the question of whether a defense is an affirmative defense under Rule 8(e)(1) is a matter of state law, the question of whether an affirmative defense has been waived due to failure to assert that defense in a timely manner, is governed by federal law. See Roush, 2010 WL 3037003, at *2, 2010 U.S. Dist. LEXIS 89593, at *5-6 (explaining that “[a]s a federal court exercising diversity jurisdiction, this Court is bound to apply state law to substantive issues and federal law to procedural issues,” and the question of whether an affirmative defense had been waived “by failing to assert it in a timely manner is governed by federal law”). This Circuit has held that a “[f]ailure to plead an affirmative defense in the first responsive pleading to a complaint generally results in a waiver of that defense.” Horton v. Potter, 369 F.3d 906, 911 (6th Cir.2004). The rule is not absolute, however, and “[a] defendant does not waive an affirmative defense if the defense is raised at a time when plaintiffs ability to respond is not prejudiced” since the purpose of Rule 8(c) is to give notice, and opportunity to respond. R.H. Cochran & Assocs. v. Sheet Metal Workers Int’l Ass’n Local Union No. 33, 335 Fed.Appx. 516, 519 (6th Cir.2009). In Roush, a defendant who waited until 31 days prior to trial was barred from raising an affirmative defense of statutory immunity. 2010 WL 3037003, at *2-3, 2010 U.S. Dist. LEXIS 89593, at *7, The court explained that “[a]t this point, the prejudice to the plaintiff, who has already waited more than two years to try this case and has expended a great deal of time and money preparing for trial, cannot be .seriously disputed.” Id. at *3, 2010 U.S. Dist. LEXIS 89593 at *9. Similar to the plaintiff in Roush, Stuckey would be prejudiced if this Court allowed ORC to assert its affirmative defense of impossibility of performance a mere five days before trial, in a case that has been pending more than three years. ORC’s reliance on Mitchell is unpersuasive because that- was a state case where state law applied, not only to the substantive issues, but also to the procedural issues. Additionally, the appellees in Mitchell had raised issues related their affirmative defense in their counterclaim. Thus, Plaintiffs motion to strike is GRANTED. Even if it was necessary for this Court to address the merits of ORC’s impossibility of performance defense, ORC would be unsuccessful. Under Ohio law, “[i]mpossibility of performance occurs where, after the contract is entered into, an unforeseen event arises rendering impossible the performance of one of the contracting parties.” Truetried Serv. Co. v. Hager, 118 Ohio App.3d 78, 691 N.E.2d 1112, 1118 (1997). ORC argues that it was impossible to file a registration statement because Crowe Chizek needed to file unforeseen ITS financial statements. This assertion fails for two reasons. First, the ITS financial statements prepared by Crowe Chizek were completed and filed on October 25, 2007, which was two weeks prior to the registration filing deadline on November 8, 2007. Second, as explained in this Court’s findings of fact, supra, ORC had to hire Crowe Chizek to prepare standalone financial statements for ITS was because ORC initially performed the 3-05 calculation erroneously. Under the doctrine of impossibility of performance, the “performance must be rendered impossible without fault of the party asserting the defense.” United Steelworkers of Am., AFL-CIO, CLC v. Metro. Distrib. Co., No. 3:03CV7589, 2005 WL 2233477, at *4 (N.D.Ohio Sept. 13, 2005). Next, ORC argues that issues identified by KPMG regarding the manner in which ITS recognized revenue delayed Crowe Chizek’s work on the registration statement. Crowe Chizek’s work — which ORC argues had to be completed before Crowe Chizek could consent to the filing of the registration statement — was not completed until late January 2008, purportedly as a result of the revenue recognition issue. Stuckey has presented persuasive evidence, however, that refutes ORC’s assertion. First, as explained in this Court’s findings of fact, both before and after the revenue recognition issues arose, Graham signed management representation letters that were sent to Crowe Chizek and which represented that ITS had properly recorded revenue in accordance with SAB No. 104. Despite an attempt to downplay the importance of the management representation letters at trial, Graham testified that management representation letters were “the accounting firm’s way of getting management to say we’ve given you everything you need, we haven’t misled you, we haven’t lied to you.” (Tr. 931.) Thus, the evidence shows that Graham represented to Crowe Chizek that ITS had properly recorded its revenue. Furthermore, the dialogue between ORC and Crowe Chizek regarding revenue recognition in December 2007 did not re* suit in any change to Crowe Chizek’s audit report. Baer testified at his deposition that he was never told of a delay in filing the registration statement that was caused by the revenue recognition issue, nor was he aware of any such delay. The audited ITS financial statement filed on October 25, 2007 were never amended or restated in anyway. ORC’s final impossibility of performance argument is that it could not file a timely registration statement because of issues that arose between EY and KPMG, which delayed the filing of its 2007 10-K in March and then again in April 2008 (the extended filing deadline), and ultimately caused ORC to lose S-3 eligibility for one year. This argument also fails on its merits. Ohio courts have declined to find impossibility of performance where a defendant claims he was unable to perform due to the actions of a third party, or where it was foreseeáble at the time a defendant entered into a contract, that he or she might encounter certain issues involving third parties. See, e.g., J.J.O. Constr. v. Baljak, No. 06AP-1300, 2007 WL 2309741, at *4 (Ohio Ct.App. Aug. 14, 2007) (explaining that “one who makes a promise that cannot be performed without the cooperation of a third person, is not excused from liability, even if cooperation from that third person cannot be secured”); Truetried, 691 N.E.2d at 1117 (rejecting defendant’s claim of impossibility where it was foreseeable at the time defendants entered into the lease contract that they may encounter zoning and licensure issues). ORC knew at the time it entered-into the merger agreement that in order to file a registration statement, it would need consent of its auditors. The necessity of obtaining consent to file a registration statement was reasonably foreseeable. ORC’s final impossibility of performance arguments are not well-taken. b. Any Harm to the ITS Stockholders Was the Result of Their Own Decisions ORC argues that any harm to the ITS Stockholders was the result of their own decisions and was not caused by ORC. First, ORC argues that no ITS Stockholders would have sold Buyer Stock until after January 1, 2008, because the ITS Stockholders could defer paying taxes on Buyer Stock until filing their 2008 tax returns in 2009. More specifically, ORC argues that, when Buyer Stock reached a high of $12.21 per share on December 27, 2007, ITS Stockholders would not have sold because they had an incentive to hold onto their shares until 2008 so that they could delay paying taxes on the gain. As explained above, under Duncan, the “issuer-defendant should bear the risk of uncertainty in the share price because the ‘defendant’s acts prevent a court from determining with any degree of certainty what the plaintiff would have done with his securities had they been freely alienable.’ ” 775 A.2d at 1023 (citing Am. Gen. Corp., 622 A.2d at 10). The injury is “not the loss of a specific transaction but the loss of the ability to trade the shares as desired.” Id. at 1023 n. 7. A “plaintiff is not required to show that she actually would have sold the shares during the restricted period,” “because the primary effect of the breach is to cause a ‘deprivation of [the stockholder’s] range of elective action.’ ” Id. (citing Am. Gen. Corp., 622 A.2d at 10). Thus, whether an ITS Stockholder would have sold his or her shares before January 1, 2008 is unknowable because those shares were not registered. It is also irrelevant under Duncan. ORC’s tax deferral argument is unpersuasive. Next, ORC argues Stuckey and Kent could not sell Buyer Stock during certain “grey-out” periods that affected certain senior employees at ORC. ORC contends the “grey-out” period was from December 10 or 11, 2007 until April 11, 2008. The evidence presented indicates, however, that the “grey-out period” was an internal ORC policy, not a legal restriction. (P Ex. 350.) There was no contract or statute binding Stuckey, Kent, and/or their respective companies to any “grey-out” period, and therefore, ORC’s “grey-out” period arguments are unconvincing. Third, ORC again attempts to argue that the ITS Stockholders had no intent to trade Buyer Stock by highlighting the following: (1) Crow took three business days to review the draft registration statement provided to him by ORC on November 13, 2007; and (2) Stuckey did not begin the process of opening an account in the name of his single member LLC until August 2008, which ORC argues indicates he did not have any intention of trading in 2007. ORC’s contentions are unpersuasive. Again, the ITS Stockholders are not required to show that they would have actually sold their Buyer Stock during the restricted period under Duncan. See 775 A.2d at 1023 n. 7. Moreover, this Court finds unpersuasive ORC’s argument that Crow’s taking three days to review a draft registration statement somehow shows a lack of urgency — particularly in light of the fact that ORC never filed a registration statement for Buyer Stock. Fourth, ORC argues that the evidence presented at trial indicates that the ITS Shareholders could have had “freely tradable shares in accounts of their choosing shortly after February 15, 2008, and specifically by March 12, 2008, the date the last of Mr. Fromm’s shares were received in his FBR account.” (Doc. 124 at 39.) The failure to move or trade Buyer Stock after March 12, 2008, ORC contends, was the result of individual decisions by the ITS Stockholders, not the result of any action or inaction by ORC. Defendant argues that the evidence shows the actions of Fromm and Evans indicate that no ITS Stockholder would have sold Buyer Stock prior to exercising their price protection rights. Stuckey counters that there was no onus on ITS Stockholders to take the risks that Fromm and Evans took when selling their Buyer Stock pursuant to Rule 144. In Stuckey III, this Court addressed ORC’s contention that, after February 15, 2008, the ITS Stockholders could freely trade their Buyer Stock under Rule 144 just as if it were registered. The Court rejected this argument, stating that the ITS Stockholders bargained for registered shares of Buyer Stock and that Rule 144 was not the equivalent of registered shares: As the Duncan court explained, the remedy for breach of contract is based upon the reasonable expectation of the parties, and is measured by damages that would put the promisee back into a position that he or she would have been had the promisor not breached the contract. [775 A.2d] at 1022. Both the Duncan shareholders and the '[ITS Stockholders] here contracted for the right to registered shares in the respective merger agreements, and did not receive that bargained-for right. It does not matter whether Rule 144’s prohibition period was one year or six months because, ... the ability to trade registered stock is different from the ability to trade stock using Rule 144. The Stuckey I Court in this case already explained that “[t]he availability to plaintiffs of Rule 144 ... did not dispense with the harm suffered as a result of ORC’s refusal to file a registration statement.... While Rule 144 has greatly aided the resale of restricted and control securities .... numerous requirements and conditions remain.” Stuckey I, 2009 WL 5030794, at *8. Furthermore, [ITS Stockholders] “would not have had to ensure compliance with the requirements of Rule 144, with the potential for liability associated with Rule 144 resales, had a registration statement been in effect.” Id. at *9. Duncan is not distinguishable because Rule 144’s prohibition period has since been reduced. Stuckey III, 2012 WL 468510, at *8. Moreover, this Court held that a reasonable fact finder could determine “it was unnecessary — even incorrect in light of Duncan’s precedent — for Robak to take into account Rule 144 when computing damages in this case because Plaintiff has presented evidence demonstrating that trading unregistered stock under Rule 144 is not the equivalent of trading stock that has been registered.” Id. at *10. Based upon all of the evidence, and the Court’s findings of fact, supra Part III.G, the Court concludes that Buyer Stock held subject to Rule 144 was not the equivalent of registered stock. Robak rightly excluded sales under Rule 144 from his analysis and rightly began the second selling period after the point at which the Rule 144 holding period had expired and the ITS Stockholders reasonably would have received de-legended stock in their brokerage accounts. Fifth, ORC argues that the fact that ITS Stockholder Kent never attempted to sell his Buyer Stock shows he was not harmed. Kent may have chosen not to sell his" Buyer Stock for a number of different reasons. A plaintiff is not required to show he or she would have actually sold his or her shares during the restricted period because the primary effect of the breach is that it caused s “deprivation of [the stockholder’s] range of elective action.” Duncan, 775 A.2d at 1022 n. 7 (citing Am. Gen. Corp., 622 A.2d at 10). ORC’s fifth argument is unpersuasive. Finally, ORC highlights various testimony in trial in an attempt to support its argument that no ITS Stockholder was actually harmed by ORC’s failure to register the Buyer Stock. This Court has already made findings of fact that ITS chose ORC during the bidding process because ITS Stockholders, liked the upside potential of registered ORC stock, coupled with the downside price protection. Yet, the ITS Stockholders never received the registered stock for which they bargained. The testimony cited by ORC is unpersuasive. Plaintiff has clearly demonstrated that ITS Stockholders were damaged, and that such damage was caused not by the ITS Stockholders, but by ORC. B. Breach of Merger Agreement for Failure to Provide the Correct Number of Price Protection Shares As indicated in this Court’s findings of fact, ORC mistakenly used May 7, 2008 as the ending day for the ten trading day period when calculating the VWAP for issuance of price protection shares in May 2008. ORC should have used May 8, 2008 as the end date. ORC argues that Plaintiffs breach of contract claim is refuted by a statement Crow made in May 2008 that the price protection calculation had been done .. correctly. Stuckey replies that Crow’s position in May 2008 was incorrect. This Court finds the evidence supports Stuckey’s claim for breach of merger agreement for miscalculating price protection in May 2008. Plaintiff has shown that ORC had a contractual obligation to calculate the VWAP according to the terms of the merger agreement, that ORC did so incorrectly, thus breaching its obligation, and that the ITS Stockholders were damaged as a result because they should have received additional shares. See H-M Wexford, 832 A.2d at 140; Interim Healthcare, 884 A.2d at 548. C. Violations of Ohio Securities Act Stuckey brings a claim against ORC for Ohio securities fraud based on misrepresentations in the merger agreement and the failure to disclose the existence of the SEC comment letter and corresponding review at the time of the merger transaction. The Court makes the following conclusions of law with respect to Plaintiffs third claim. The Buyer Stock shares were “securities” under the Ohio Securities Act. Ohio Rev. Code § 1707.01(B). The Ohio Securities Act defines a “sale” of securities to include “every disposition ... of a security or of an interest in a security.” Ohio Rev. Code § 1707.01(C)