Exhibit 10.2
May 25, 2015
Via Overnight Courier
Corporate Secretary
c/o Donald Maj
The Depository Trust Company
55 Water Street
New York, NY 10041
| Re: | Objection to the Imposition of the Deposit Lock on CUSIP No. 45684G508 | |
| Ingen Technologies, Inc., a Georgia corporation |
Dear Mr. Maj,
Please be advised that this firm represents Ingen Technologies, Inc., a Georgia corporation (the "Issuer"). This correspondence shall serve as the Issuer's formal objection to the continuing imposition of a deposit "lock" upon the Issuer's common equity securities. Respectfully, the Issuer is of the opinion and belief that the continued restriction placed upon the Issuer's securities is unwarranted, unfairly affects the private interests of its shareholders and fails in all material respects to dissuade or otherwise protect the either the Issuer or the securities industry as a whole as contemplated in the Bank Secrecy Act, 31 U.S.C. § 5311, et seq.
As you are aware, Section 17A(b)(3)(H) of the Exchange Act of 1934 (the "Act") requires that the DTC, as a clearing agency, provide "fair procedures" when it prohibits or limits access to its services. Moreover, while DTC is not an arm of the government, the United States appellate court has interpreted the Act's fairness requirements in accordance with traditional interpretations of the Fifth Amendment's Due Process Clause. Gold v. Securities and Exchange Commission, 48 F.3d 987, 991 (7th Cir. 1995). As with well-established principles of Due Process, Section 17A(b)(5)(B) of the Act likewise provides for a statutory right to be heard.
In relying upon the Mathews decision, the factors to be considered with respect to the continued imposition of a deposit lock include that: (a) a private interest will be affected; (b) there exists the risk of erroneous deprivation and the value of additional procedural safeguards; and (c) a weighing of DTC's interest in its role as a gatekeeper for the securities industries versus the additional administrative burden contemplated in such proceedings. Mathews v. Eldridge, 424 U.S. 319 (1976). Here, the analysis weighs heavily in favor of the Issuer. While the Issuer was not provided with a full opportunity to be heard, the Mathews factors clearly indicate that the far-reaching impact upon innocent shareholders are tantamount to a complete loss of their property. Likewise, the Issuer, in its current iteration, is a viable business without suitable access to the capital markets because of the ongoing restriction. Those two considerations, coupled with the length of time since the imposition of the deposit lock and the fact that then-controlling actors of the Issuer have been removed, combine to offer no compelling mechanism to further DTC's public policy obligations.
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Accordingly, this correspondence shall further serve as the Issuer's request for a hearing with respect to the continuing imposition of the deposit "lock" in accordance with Rule 22 of the Depository Trust Company Rules. In support of such request, the Issuer has attached as an Annex hereto a proposed opinion letter addressing those deposits which are alleged to have brought about the imposition of the restriction. The Issuer is willing to cooperate fully and in a timely manner with DTC in addressing this most serious matter in an effort to preclude the need for what the Issuer would otherwise characterize as unnecessary procedural action.
We trust that DTC will agree with the Issuer's position and evaluate the removal of the deposit lock. Thank you for your time and consideration.
Yours very truly,
Adam S. Tracy, Esq.
Attorney for Ingen Technologies, Inc.
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May 25, 2015
Via Overnight Courier
The Depository Trust Company
55 Water Street
New York, New York 10041
U.S.A.
Attn: Underwriting Department
RE: Ingen Technologies, Inc., Common Stock, CUSIP 45684G508
Ladies and Gentlemen:
We are counsel for Ingen Technologies, Inc. (the "Company") and are providing this opinion letter to The Depository Trust Company ("DTC") at the request of the Company. Securities issued by the Company, CUSIP 45684G508 (the "Subject CUSIP") have been deposited for book-entry delivery, settlement and depository services (the "Services") at DTC, registered in the nominee name of DTC, Cede & Co. (the "Subject Securities"), which include, without limitation the deposits identified in Exhibit 2 and Exhibit 3 to the notice letter sent by DTC to the Company dated September 24, 2013 (the "Notice Securities") and attached again hereto. We are providing this opinion at the request of the Company to confirm that each of the Subject Securities, including the Notice Securities, were, at the date of deposit at DTC, eligible under the Rules and Procedures of DTC to be deposited for the Services.
In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the following documents:
| · | the orders and instructions of the Company for the issuance and delivery of the Subject Securities, |
| · | copies of duly executed securities purchase agreements and debt instruments involved in each sale of the Subject Securities, |
| · | prior legal opinions submitted to the Company or its transfer agent in connection with the issuance of the Subject Securities, and/or the resale of the Subject Securities, by the initial purchasers, | |
| · | accredited investor certifications for each accredited investor who invested in any private placement of the Subject Securities, |
| · | relevant books and records of the Company's transfer agent, |
| · | a copy of a Certificate of Good Standing of the Company dated as of May 25, 2015 | |
| · | any additional documentation or materials used to form a basis for the opinions herein or deemed relevant to DTC's determination regarding the subject securities. |
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We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Company and such agreements, certificates of public officials, certificates of officers or other representatives of the Company and others and such other statements, documents, certificates and corporate or other records as we have deemed necessary or appropriate as a basis for the opinion set forth herein.
Based on the foregoing, and our independent legal analysis, we are of the opinion that the Notice Securities when issued by the Company, and all other shares of the Subject CUSIP when issued by the Company beginning from the date that is five years prior to the date of this letter, either:
(1) were not "restricted securities" under Rule 144(a)(3) following their issuance, or
(2) those securities that were "restricted securities" under Rule 144(a)(3) following their issuance are listed on Appendix 1 hereto, and with respect to such securities: (a) all certificates or electronic records evidencing such restricted securities bore appropriate restrictive legends or the electronic equivalents effecting such restrictions under the Securities Act of 1933, as amended; (b) such restrictive legends or electronic equivalents were not removed therefrom except by reasonable and customary procedures designed to verify the proper legal basis for such removal, including, where appropriate, verification by valid legal opinions from independent counsel to the Company in support of such removal.
No Notice Securities issued by the Company nor any other shares of the Subject CUSIP issued by the Company beginning from the date that is five years prior to the date of this letter, were issued in reliance on Rule 504(b)(i),(ii) or (iii) under the Securities Act.:
This opinion is rendered to you and is solely for your benefit to be used only in connection with the matters stated herein, except that you may deliver copies of this opinion to your professional advisors, to any governmental agency or regulatory authority or if otherwise required by law.
Yours very truly,
Adam S. Tracy, Esq.
Attorney for Ingen Technologies, Inc.
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FURTHER EXPLANATION FOR THE NOTICE SECURITIES
With the exception of the transactions listed below, all of the transactions listed on the attached Appendix 1 were issuances of free trading common stock in exchange for debt or preferred shares that had been held for over a year and sufficiently aged under Rule 144. One year or more after the nonpublic issuance of debt in individual transactions (exempt under §4(a)(2)), free trading securities were issued in exchange for those debt or preferred shares based on Rule 144(b)(1)(ii) and Rule 144(d)(1)(ii).
The Notice Securities are comprised of those listed on Exhibits 2 and 3 to the notice letter. Those listed in Exhibit 2 were issued to Watson Investment Enterprises, and many were identified in a FINRA order as having been sold and resold without registration under the Securities Act. This statement, while correct on its face, is incorrect in that it omits to state all relevant facts, which include the fact that ostensibly the shares did not require registration because they were issued to an accredited investor in non public issuances that were exempt under §4(a)(2). These shares were purchased from the original holder thereof who held $275,000 debt of the Company since March 20, 2004. Tacking the holding period of original holder to that of Watson resulted in shares being issued without restrictive legend pursuant to Rule 144(b)(1)(ii) and Rule 144(d)(1)(ii). An opinion of counsel was provided by Watson's attorney to support this issuance. I have determined this opinion was incorrect and the shares were improperly issued. Nevertheless, with the passage of time since this transaction, it would appear no benefit could be achieved through any further restriction on these shares. The DTC’s recent position paper ("DTC Service Restrictions On Certain Book-Entry Securities - Procedures For Affected Issuers" September 2013) and the SEC's current rulemaking (Release No. 34-71745; March 19, 2014) indicate that this would be the correct position for DTC to take.
Regarding the issuances listed on Exhibit 3 to the notice letter, these shares were issued pursuant to a Settlement and Forbearance Agreement of August 24, 2009 (the "SFA"). The SFA settled claims that had arisen at or before June 16, 2008. An appropriate opinion of counsel supported these issuances as well.
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APPENDIX 1
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