09/24/2009 1 COMPLAINT against all defendants
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Doc 1 extract
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
YA GLOBAL INVESTMENTS, LP,
Plaintiff,
v.
BEBIDA BEVERAGE COMPANY, a
Wyoming corporation, and BRIAN
WEBER, Individually,
Defendants.
VERIFIED COMPLAINT
YA Global Investments, LP, complaining of defendants, alleges and says:
1. YA Global Investments, LP ("YA Global") is a Cayman Island exempt limited partnership with an office located at 101 Hudson Street, Suite 3700, Jersey City, New Jersey, 07302. YA Global is a private investment fund.
2. Brian Weber is a citizen and resident the State of North Carolina. Mr. Weber is the CEO of the defendant, Bebida Beverage Company.
3. Bebida Beverage Company is a Wyoming Corporation with its principal place of business in Mooresville, North Carolina.
4. Two other companies are named "Bebida Beverage Company" and are affiliated with the defendants, one a Nevada corporation and one a Delaware corporation. Neither of these two other corporations are parties to this civil action, but as described in detail below, both are relevant to YA Global's claims.
5. On or about April 14, 2004, Bebida Beverage Company, the Nevada corporation ("Bebida--Nevada") and YA Global entered into a securities purchase agreement wherein YA Global agreed to purchase from Bebida--Nevada two Convertible Debentures (the "Debentures") in the aggregate principal amount of $300,000 (the "Transaction"). The Transaction was memorialized by a Securities Purchase Agreement (the "SPA").
6. As part of the Transaction, Bebida--Nevada and YA Global entered into a Security Agreement, whereby Bebida--Nevada pledged certain collateral, including all books, records (including accounts receivable records, and computer records), and all products and proceeds thereof (the "Collateral"), to secure all of Bebida--Nevada's obligations to YA Global. A true and accurate copy of the Security Agreement is attached hereto as Exhibit A.
7. YA Global perfected its interest in the Collateral by filing a UCC Financing Statement with the Nevada Secretary of State's Office. A true and accurate copy of the Financing Statement is attached hereto as Exhibit B.
8. YA Global purchased and paid $300,000 for the Debentures, which were issued on or about April 14, 2004 (Debenture No. 001) and July 7, 2004 (Debenture No. 002).
9. The outstanding amounts due under the Debentures were convertible into shares of Bebida--Nevada's common stock at YA Global's option.
10. On April 8, 2008, YA Global submitted a properly executed conversion notice in the amount of $40,500 (the "April 8 Conversion"). Such conversion entitled YA Global to 45,000,000 shares of Bebida--Nevada common stock.
11. October 15, 2008, YA Global submitted a properly executed conversion notice in the amount of $50,000 (the "October 15 Conversion"). Such conversion entitled YA Global to 41,666,667 shares of Bebida--Nevada common stock.
12. With respect to both the April 8 Conversion and October 15 Conversion, Bebida--Nevada directed its Transfer Agent, Worldwide Stock Transfer, LLC ("Worldwide") not to issue the stock.
13. On or about October 20, 2008, YA Global contacted Bebida--Nevada and demanded that it honor the properly executed conversion notices (the "Demand Letter") and all obligations incurred by Bebida--Nevada pursuant to the Transaction. At that time, YA Global reserved its right to seek legal recourse to enforce the Debentures, the SPA, and the Security Agreement. However, Bebida--Nevada refused to allow Worldwide to issue the common stock to YA Global.
14. Upon information and belief, upon receipt of the Demand Letter, the directors and/or officers of Bebida--Nevada decided to wind down Bebida Beverage Company as a Nevada Corporation and, in an effort to avoid its financial obligations to YA Global, incorporate as a new entity.
15. On or about November 26, 2008, "Bebida Beverage Company" filed a Certificate of Incorporation with the State of Wyoming, creating the Bebida Beverage Company that is the defendant in this civil action ("Defendant Bebida"). Records maintained by the Wyoming Secretary of State's Business Division indicate that Defendant Bebida's principal office is located at 125 F. Trade Ct. #9, Mooresville, North Carolina 28117, which is identical to the "original" Bebida's principal office. Mr. Weber is listed as President and Ms. Daisy Ramirez is listed as Vice President.
16. Upon information and belief, and unbeknownst to YA Global at the time, all the assets of Bebida--Nevada, including shares of common stock and YA Global's Collateral, were transferred to Defendant Bebida. After this transfer, Defendant Bebida continued issuing and transferring stock under the same ticker symbol as the Bebida--Nevada, the stock symbol being BBDA.PK.
17. YA Global did not authorize or otherwise consent to the transfer of its Collateral.
18. Principals of Bebida--Nevada and Defendant Bebida reduced the number of authorized shares of common stock that Bebida--Nevada had available to issue by amending Bebida--Nevada's Articles of Incorporation. Doing so, however, violated Section 1.03 of the Debentures and Section 4 of the SPA.
19. After its principals created Defendant Bebida, Bebida--Nevada instructed Worldwide to honor transfers and issuances of stock by Bebida--Nevada by replacing all such stock certificates with stock in Defendant Bebida. Thus, shareholders of Bebida--Nevada could receive an equivalent number of shares in Defendant Bebida. However, the Defendants in the present action prevented YA Global from receiving stock in Defendant Bebida, a benefit given to all of the other shareholders in Bebida--Nevada.
20. Bebida--Nevada's actions constituted Events of Default pursuant to the Debentures and the Transaction Documents, including the SPA and Security Agreement.
21. Pursuant to the Transaction Documents and Debentures, YA Global accelerated full repayment of all debentures outstanding together with accrued interest. However, Bebida--Nevada failed and refused to pay.
22. On January 22, 2009, YA Global filed a Complaint against Bebida--Nevada in the New Jersey State Court, setting forth claims for breach of contract, breach of fiduciary duty, Securities Exchange Act violations, and tortious interference with contract. YA Global filed an Amended Complaint on March 5, 2009. Bebida--Nevada did not respond to either pleading and default was entered on May 12, 2009.
23. Prior to the entry of default, and after Bebida--Nevada was served YA Global's original and amended Complaints, a Certificate of Incorporation in the name of yet another "Bebida Beverage Company" was filed with the State of Delaware and lists Mr. Weber as an initial director of the corporation. A true and accurate copy of the Certificate of Incorporation filed by "Bebida Beverage Company" on May 4, 2009 is attached hereto as Exhibit C.
24. Upon information and belief, Mr. Weber filed for incorporation in the State of Delaware in an attempt to avoid obligations to YA Global.
25. Upon information and belief, at the time of the Delaware filing, Mr. Weber was the principal shareholder and CEO of Bebida--Nevada and Defendant Bebida. Shortly after the time of the Delaware filing and continuing through the date of this Complaint, Mr. Weber has specifically represented to shareholders and investors of Bebida that he was the CEO of Bebida, the Nevada corporation. Furthermore, Mr. Weber represented that Bebida was a Nevada corporation and that it would increase the stock available for purchase, when in fact all assets had been transferred to Defendant Bebida and all stock was being issued from that company.
26. Mr. Weber has continued the operations of "Bebida Beverage Company," despite the transfer of assets to avoid YA Global's claims, in the identical form as before the incorporation of Defendant Bebida and the transfer of assets. In fact, it appears that "Bebida Beverage Company," is and always was in effect the same organization, with three corporations in three different states bearing the same name and having the same principals.
27. On August 21, 2009, the New Jersey Court entered a Final Judgment by Default (the "Judgment") against Bebida--Nevada in the amount of $408,728.64. The Judgment further ordered Bebida--Nevada "to issue to YA Global Investments, L.P. the requisite number of unrestricted, free trading shares of Bebida common stock (the "Shares") in order to satisfy the aforementioned $408,728.64 Judgment in accordance with the conversion and other terms of the
Convertible Debentures held by YA Global." An exemplified copy of the Judgment shall be filed in Iredell County, North Carolina for domestication as a North Carolina judgment. A true and accurate copy of the Judgment is attached hereto as Exhibit D.
28. As a result of the entry of the Judgment in New Jersey and in accordance with its terms, Troy J. Rillo, Esq. ("Mr. Rillo"), the Senior Managing Director of Yorkville Advisors, LLC ("Yorkville"), the investment manager to YA Global, caused a conversion notice (the "Conversion Notice") to be sent to Worldwide on August 25, 2009. The Conversion Notice requested that Bebida--Nevada issue 41,666,667 shares of its common stock to YA Global in partial satisfaction of the Judgment. A true and accurate copy of the Conversion Notice is attached hereto as Exhibit E.
29. Upon information and belief, Mr. Weber and / or other persons acting on Bebida's behalf informed Worldwide that the Judgment was against the Nevada corporation, i.e. the "original" Bebida Beverage Company, and they instructed Worldwide not to honor the Conversion Notice.
30. As a result, Worldwide did not honor the properly executed Conversion Notice.
31. However, during this same time period, Worldwide continued honoring all transfers and issuances of stock by Bebida--Nevada and replacing all such stock certificates with stock in Defendant Bebida. Upon information and belief, YA Global is the only individual or entity for which Bebida--Nevada has instructed Worldwide to refuse to issue shares on this basis.
32. Pursuant to the terms of the Security Agreement, on August 31, 2009, YA Global directed Bebida--Nevada to assemble all of the Collateral at the Company's business premises for collection by YA Global at 10:00 a.m. on September 8, 2009. A true and accurate copy of this demand is attached hereto as Exhibit F.
33. The demand was sent to the address that Bebida--Nevada and Defendant Bebida share, and upon information and belief Defendants received the document. A true and accurate copy of the delivery receipt is attached hereto as Exhibit G.
34. In violation of the Security Agreement and North Carolina law, Defendants and Bebida--Nevada failed and refused to allow YA Global to take possession of the Collateral.
35. On or about September 1, 2009, YA Global filed an application in the New Jersey Court for a temporary restraining order preventing Bebida--Nevada from issuing new shares of stock, from selling shares of stock currently owned by Bebida management, and from engaging in any other act that would dilute the value of Bebida stock currently owned by YA Global. YA Global also requested that a receiver be appointed by the New Jersey court to approve the issuance of the shares of Bebida common stock to YA Global, as set forth in the Judgment.
36. On September 1, 2009, the New Jersey Court issued a temporary restraining order prohibiting Bebida from "engaging in any act that would dilute the value of Bebida common stock" or "[t]ransferring any or all assets outside the ordinary course of business." A true and accurate copy of that order is attached as Exhibit H.
FIRST CAUSE OF ACTION
(Conversion)
37. YA Global realleges and incorporates by reference the allegations of paragraphs 1 through 36 above as through set forth fully herein.
38. Pursuant to the Order of the New Jersey Court and the terms of the Debentures and the Security Agreement, YA Global is entitled to immediate possession of approximately 41,666,667 unrestricted shares of Bebida--Nevada common stock and other Collateral as set forth in the Security Agreement.
39. As the principal owner and CEO of both Bebida--Nevada and Defendant Bebida, Mr. Weber has, upon information and belief, authority to direct Worldwide to issue all shares to which YA Global is legally entitled and to turn over the Collateral.
40. YA Global has demanded that Defendants issue the stock and turn over the Collateral, but Defendants have refused to do so.
41. Defendants' conduct constitutes a conversion of YA Global's Collateral and stock.
42. As a direct and proximate result of Defendants' conversion of property, YA Global has suffered monetary damages.
43. YA Global is entitled to a judgment against Defendants for conversion, compelling the return of YA Global's Collateral and the issuance of all shares to which YA Global is legally entitled or, in the alternative, a money judgment for its actual damages, plus pre- and post-judgment interests and costs.
SECOND CAUSE OF ACTION
(N.C. GEN. STAT. § 39-23.1 et seq. - Avoidance of Fraudulent Transfers)
44. YA Global realleges and incorporates by reference the allegations of paragraphs 1 through 43 above as though set forth fully herein.
45. YA Global had a claim against Bebida--Nevada within the meaning of N.C. GEN. STAT. § 39-23.1(3), which claim arose before the incorporation of Defendant Bebida and the transfer of shares and other assets to Defendant Bebida.
46. YA Global was a creditor of Bebida--Nevada within the meaning of N.C. GEN. STAT. § 39-23.1(4).
47. Defendant Bebida was an insider within the meaning of N.C. GEN. STAT. § 39-23.1(7).
48. The principals of Bebida--Nevada incorporated Defendant Bebida and transferred the shares and other assets to Defendant Bebida with the intent to hinder, delay, and defraud YA Global.
49. The principals of Bebida--Nevada incorporated Defendant Bebida and transferred the shares and other assets to Defendant Bebida receiving no value in exchange therefore.
50. The principals of Bebida--Nevada, Defendant Bebida itself, and Mr. Weber have further acted to hinder, delay, and defraud YA Global by continuing the scheme of transferring and maintaining assets from Bebida--Nevada, and continuing in business as "Bebida Beverage Company," in effect a single organization notwithstanding incorporation in three different states.
51. Bebida--Nevada was insolvent at the time Defendant Bebida was incorporated and the shares and other assets transferred to it, or it became insolvent as a result of these actions.
52. The incorporation of Defendant Bebida and the transfer of shares and other assets was fraudulent pursuant to N.C. GEN. STAT. §§ 39-23.4(a)(1) and 39-23.5(a).
53. Upon information and belief, Mr. Weber and other individuals participated and continue to participate personally and substantially in the acts that constitute the scheme to defraud YA Global.
54. YA Global is entitled to avoid incorporation of Defendant Bebida and the transfer of shares and any other assets transferred to Defendant Bebida.
55. In the alternative, YA Global is entitled to a judgment against Defendant Bebida and Mr. Weber for any monetary damages suffered as a result of the scheme to defraud YA Global.
56. YA Global is entitled to all other remedies authorized under N.C. GEN. STAT. §39-23.7.
THIRD CAUSE OF ACTION
(Unfair and Deceptive Trade Practices)
57. YA Global realleges and incorporates by reference the allegations of paragraphs 1 through 55 above as though set forth fully herein.
58. Defendant Bebida and Mr. Weber engaged in unfair and deceptive acts and practices, which include:
(a) Furthering the scheme to defraud YA Global;
(b) Converting YA Global's Collateral;
(c) Secreting Collateral that is subject to YA Global's security agreement;
(d) Causing Bebida--Nevada to breach the parties' contracts in a substantially aggravating manner, as described hereinabove; and
(e) Other unfair and deceptive acts and practices, to be proven at trial.
59. Defendant Bebida and Mr. Weber were engaged in commerce at all times relevant to this action, their conduct occurred in commerce and affected commerce.
60. As a direct and proximate result of the unfair and deceptive acts and practices, YA Global has suffered monetary damages. YA Global is entitled to an award of its actual damages, to have its actual damages trebled pursuant to N.C. GEN. STAT. § 75-16, and to be awarded its attorney fees pursuant to N.C. GEN. STAT. § 75-16.1.
FOURTH CAUSE OF ACTION
(Preliminary Injunction)
61. YA Global realleges and incorporates by reference the allegations of paragraphs 1 through 60 above as though set forth fully herein.
62. YA Global seeks a preliminary injunction with at least the following terms:
(a) an order prohibiting Defendants from transferring, disposing of, selling, hypothecating or pledging, or otherwise encumbering any assets of Defendant Bebida outside the ordinary course of business;
(b) an order requiring Defendants to issue to YA Global the requisite number of unrestricted, free trading shares of Bebida common stock, in accordance with the terms of the Debentures, in order to satisfy the $408,728.64 obligation owed to YA Global.
(c) an order prohibiting Defendants from engaging in any act that would dilute the value of Bebida--Nevada, Defendant Bebida, or Bebida Delaware stock, including issuing new shares of stock, selling shares of stock currently owned by Bebida management, issuing splits or reverse splits of stock, entering into any agreements to merge, reincorporate, or sell in whole or in part its assets, or those of any affiliate or subsidiary;
(d) an order requiring Defendants to provide an accounting of all activities related to Defendant Bebida stock ownership since November 1, 2008 including the identification of all: (1) issuances of new stock; (2) sales of stock; (3) redemption or restrictions of stock;
(e) an order requiring Defendants to provide an accounting of all asset transfers between or among Bebida--Nevada, Defendant Bebida, or Bebida Delaware;
(f) using Bebida, the Delaware corporation, for any purpose.
63. YA Global seeks a preliminary injunction because, as set forth above, Defendant Bebida was incorporated and assets transferred to it with the intent to hinder, delay, and defraud YA Global and deprive YA Global of its rights under Bebida-Nevada's contracts with YA Global, and Defendants are continuing this scheme. Further, Defendants will have insufficient assets to satisfy any money judgment rendered by the Court, and YA Global's right to convert certain stock and its right to its Collateral will be the only remedy available to it.
64. Pursuant to the terms of the Security Agreement, YA Global has demanded access to and possession of all Collateral, but Defendants have unjustifiably failed and refused to produce it.
65. Based on the foregoing, it is likely that the Collateral and socks will be transferred, concealed, destroyed, or otherwise placed beyond YA Global's reach as a secured party if it is not secured immediately.
66. Based on the foregoing, a substantial likelihood exists that YA Global will prevail on the merits of this action; that YA Global would be irreparably harmed if the injunction is not entered because its property will be lost; that any harm suffered by Defendants is far outweighed by the potential harm to YA Global; and the public interest is served by the injunction.
FIFTH CAUSE OF ACTION
(Appointment of Receiver for Defendant Bebida)
67. YA Global reallages and incorporates by reference the allegations of paragraphs 1 through 66 as though set forth fully herein.
68. YA Global is entitled to appointment of a receiver prior to judgment on the following grounds:
(a) The Security Agreement provides that YA Global is entitled to immediate possession of the Collateral upon default. As set forth hereinabove, Bebida--Nevada defaulted under the terms of the parties' contract and YA Global thereafter demanded immediate possession of all Collateral. However, Defendants have failed and refused to surrender the Collateral to YA Global, and in fact continue to use the Collateral after its wrongful transfer to Defendant Bebida.
(b) Pursuant to the Judgment entered by the New Jersey Court on August 21, 2009, YA Global is entitled to immediate possession of unrestricted, free trading shares of Bebida common stock sufficient to satisfy the aforementioned $408,728.64 Judgment. YA Global has submitted a properly executed Conversion Notice, but Defendants have failed and refused to instruct Worldwide to release the shares.
(c) Defendants have furthered the fraudulent transfer of property rightfully belonging to Bebida--Nevada with the intent to hinder, delay and defraud YA Global.
(d) Defendant Bebida was incorporated and assets transferred to it for no other reason than to further this scheme.
(e) Upon information and belief, Defendant Bebida is an insolvent foreign corporation with property located in the State of North Carolina and, as described hereinabove, has concealed, and/or conspired with others to conceal, destroy, or impair the value of its assets in an attempt to avoid obligations owed to YA Global.
69. In order to avoid further diminution in value of YA Global's Collateral and rights to unrestricted common shares, a receiver may be necessary manage and operate Defendant Bebida, as well as collect its revenues pending a final judgment in this proceeding.
70. Unless this Court immediately and prior to judgment appoints a receiver to manage and operate Defendant Bebida and collect its revenues, or otherwise prevent the dissipation of Defendant Bebida's assets, the value of Defendant Bebida and YA Global's security are in danger of being materially impaired and / or lost.
71. Based on the foregoing, a substantial likelihood exists that YA Global will prevail on the merits of this action; and the damage to YA Global from denying the appointment of receivership in this case greatly outweighs any potential harm to Defendant Bebida.
72. YA Global also is entitled to appointment of a receiver post-judgment, because the Defendants' actions following the rendering of Judgment by the New Jersey Court demonstrates that a receivership will be necessary to carry into effect any judgment that may be rendered in this case. Unless the court appoints a receiver to manage and operate Defendant Bebida post-judgment, the value of the company and YA Global's interest therein are in danger of being materially impaired and / or lost.
WHEREFORE, YA Global Investments, LP prays:
1. That the Court order surrender of all Collateral to YA Global and the issuance of all shares to which YA Global is legally entitled.
2. That the Court void the transfer of shares and other assets from Bebida--Nevada to Defendant Bebida.
3. That the Court award a monetary judgment against Defendants in the amount of YA Global's actual damages;
4. That YA Global's actual damages be trebled;
5. That the Court award punitive damages in an amount to be specifically determined at trial;
6. That the Court enter a preliminary injunction with the following terms:
(a) an order prohibiting Defendants from transferring, disposing of, selling, hypothecating or pledging, or otherwise encumbering any assets of Defendant Bebida outside the ordinary course of business;
(b) an order requiring Defendants to issue to YA Global the requisite number of unrestricted, free trading shares of Bebida common stock, in accordance with the terms of the Debentures, in order to satisfy the $408,728.64 obligation owed to YA Global.
(c) an order prohibiting Defendants from engaging in any act that would dilute the value of Bebida--Nevada, Defendant Bebida, or Bebida Delaware stock, including issuing new shares of stock, selling shares of stock currently owned by Bebida management, issuing splits or reverse splits of stock, entering into any agreements to merge, reincorporate, or sell in whole or in part its assets, or those of any affiliate or subsidiary;
(d) an order requiring Defendants to provide an accounting of all activities related to Defendant Bebida stock ownership since November 1, 2008 including the identification of all: (1) issuances of new stock; (2) sales of stock; (3) redemption or restrictions of stock;
(e) an order requiring Defendants to provide an accounting of all asset transfers between or among Bebida--Nevada, Defendant Bebida, or Bebida Delaware;
(f) using Bebida, the Delaware corporation, for any purpose.
7. That the Court tax the costs of this action against the Defendants, including an award of reasonable attorney fees; and
8. That the Court award such other relief as the Court may deem just and proper.
This, the 24th day of September, 2009.
WILLIAMS MULLEN
By: /s/ Camden R. Webb
Camden R. Webb
N.C. State Bar No. 22374
By: /s/ Elizabeth Connolly Stone
Elizabeth Connolly Stone
N.C. State Bar No. 36690
Attorneys for Plaintiff
P.O. Drawer 1000
Raleigh, NC 27602
Telephone: (919) 981-4000
