Bebida Beverage Company (BBDA)

[SammyTheBull]

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION CIVIL ACTION NO. 3:07-cv-00320-GCM
YA GLOBAL INVESTMENTS, LP, ) ) Plaintiff, ) ) v. ) ) BEBIDA BEVERAGE COMPANY, a ) Wyoming corporation, and BRIAN ) WEBER, Individually, ) ) Defendants. )

BRIEF IN SUPPORT OF MOTION FOR PRELIMINARY INJUNCTION

Plaintiff, YA Global Investments, LP (“YA Global”), respectfully submits this brief in support of its Motion for Preliminary Injunction.

INTRODUCTION

YA Global seeks a preliminary injunction because Defendants refuse to return YA Global’s collateral, which is subject to a perfected security interest giving YA Global superior right to the collateral over Defendants. Furthermore, Defendant Bebida was incorporated and received assets specifically to deprive YA Global of its contractual rights, and Defendants are continuing in this scheme. Defendants will likely have insufficient assets to satisfy any money judgment rendered by the Court, and YA Global’s collateral and its right to convert certain stock may well be the only remedy available to it. Because this remedy is in jeopardy if Defendants’ conduct is not enjoined prior to judgment, a preliminary injunction is necessary to protect YA Global’s rights.
1
Case 5:09-cv-00107-RLV-DCK Document 4 Filed 09/24/2009 Page 1 of 16

STATEMENT OF FACTS

YE Global is the holder of two convertible debentures issued by Bebida Beverage Company, a Nevada Corporation (“Bebida--Nevada”), which gave YA Global the right to convert the amounts due under the debentures into Bebida--Nevada's common stock. Bebida-- Nevada is an affiliate or subsidiary of the defendant, Bebida Beverage Company, a Wyoming Corporation (“Defendant Bebida”). Defendant Bebida, Bebida--Nevada, and a third affiliated “Bebida Beverage Company,” a Delaware Corporation (“Bebida Delaware”), are all in the “alternative beverage” industry. Defendant Brian Weber (“Mr. Weber”) is the CEO and President of all three entities.

On April 14, 2004, Bebida--Nevada and YA Global entered into a Securities Purchase Agreement (“the SPA”), pursuant to which YA Global purchased and paid $300,000 for two convertible debentures (“the Debentures”). (Verified Compl. ¶ 5). In conjunction with this transaction, and to secure its obligations to YA Global, Bebida--Nevada granted YA Global a security interest in certain collateral, including all goods, inventory, contract rights, accounts or other receivables, and all products or proceeds thereof (“Security Agreement”). (Verified Compl., Ex. A). In April 2008 and again in October 2008, YA Global submitted properly executed conversion notices to Bebida--Nevada’s transfer agent, Worldwide Stock Transfer, LLC (“Worldwide”). (Verified Compl. ¶¶ 10-11). Worldwide, at the instruction of Bebida-- Nevada, refused to honor the conversion notices. Despite YA Global’s repeated demands that Bebida--Nevada honor the properly executed conversion notices, Bebida--Nevada refused to allow Worldwide to issue common stock to YA Global. (Verified Compl. ¶¶ 12-13).
Instead, Bebida--Nevada and its principals engaged in a scheme to deny YA Global the benefit of its contractual rights by incorporating a new “Bebida Beverage Company” in
2
Case 5:09-cv-00107-RLV-DCK Document 4 Filed 09/24/2009 Page 2 of 16

Wyoming, and transferring all assets (including YA Global’s Collateral) to that entity. Defendants have continued this scheme by refusing to return the Collateral and refusing to allow conversion of shares of common stock to which YA Globally is legally entitled.

Shortly after receiving a formal demand letter from YA Global, and in an effort to avoid its obligations to YA Global, Bebida--Nevada’s principals decided to wind down Bebida Beverage Company as a Nevada Corporation and incorporate as a new entity in Wyoming. (Verified Compl. ¶¶ 14-15). On November 26, 2008, a Certificate of Incorporation was filed with the State of Wyoming, creating Defendant Bebida, which shares the same principal office, operates under the same name, and issues and transfers stock under the same ticker symbol as Bebida--Nevada. (Verified Compl. ¶ 16). Mr. Weber is listed as the President of Defendant Bebida. Id. As a result of this “reorganization”, all shares of Bebida--Nevada stock were automatically converted into shares of Defendant Bebida’s stock on a one-to-one basis. (Kopstick Aff. ¶ 4). While Bebida--Nevada shareholders were thereby entitled to receive an equivalent number of shares in Defendant Bebida, YA Global was denied that opportunity when Mr. Weber and others refused to allow the conversion of shares.

Bebida--Nevada’s refusal to honor the conversion notices constituted an Event of Default under its agreements with YA Global. YA Global therefore accelerated full repayment of all debentures outstanding together with accrued interest, but Bebida--Nevada refused to pay. (Verified Compl. ¶¶ 21-22). On January 22, 2009, YA Global sued Bebida--Nevada in New Jersey State Court, then filed an Amended Complaint on March 5, 2009. Bebida--Nevada did not respond to either pleading, and on August 21, 2009, the New Jersey Court entered a Final Judgment by Default (the “Judgment”) against Bebida—Nevada. (Verified Compl. ¶¶ 22, 27). The Judgment awarded money damages and ordered Bebida--Nevada “to issue to YA Global
3
Case 5:09-cv-00107-RLV-DCK Document 4 Filed 09/24/2009 Page 3 of 16

Investments, L.P. the requisite number of unrestricted, free trading shares of Bebida common stock in order to satisfy the aforementioned $408,728.64...in accordance with the...terms of the Convertible Debentures held by YA Global.” (Verified Compl., Ex. D).

Prior to the entry of default and entry of the Judgment, but after Bebida--Nevada was served YA Global’s original amended complaint, a Certificate of Incorporation was filed with the State of Delaware for yet another “Bebida Beverage Company.” (Verified Compl. ¶¶ 23-25, Ex. C). Mr. Weber is listed as an initial director. Id. Shortly after the time of the Delaware filing and continuing through the date of this brief, Mr. Weber has represented to shareholders and investors of Bebida that he was the CEO of Bebida, the Nevada corporation. See the Affidavit of Maria E. Rudisill attached hereto as Exhibit 1 (“Rudisill Aff.”). Mr. Weber further represented that Bebida was a Nevada corporation and it would increase the stock available for purchase, when in fact all assets had been transferred to Defendant Bebida (the Wyoming Corporation) and all stock was being issued from that company. Id. 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. Mr. Weber, who has the authority to give YA Global possession of its collateral, has continued Bebida--Nevada’s scheme to deprive YA Global of its contractual rights by refusing to turn over the Collateral or otherwise allow YA Global to obtain the converted stocks it is entitled to under the Judgment.

To that end, Mr. Weber instructed Worldwide not to honor any conversion notices submitted by YA Global pursuant to the New Jersey Judgment. (Kopstick Aff. ¶ 3). Specifically, when Mr. Weber found out that YA Global had sent the New Jersey Court’s order to Worldwide to compel the issuance of stock pursuant to the terms of the Judgment, Mr. Weber
4
Case 5:09-cv-00107-RLV-DCK Document 4 Filed 09/24/2009 Page 4 of 16

told Worldwide that the Judgment was against the Nevada corporation, and therefore YA Global was not entitled to shares in Defendant Bebida. (Kopstick Aff. ¶¶ 3, 5). Following Mr. Weber’s instructions, Worldwide refused to honor the conversion notice submitted by YA Global that requested the issuance of 41,666,667 shares of common stock in partial satisfaction of the Judgment. 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. (Kopstick Aff. ¶ 4). YA Global is not aware of any other instance in which the Defendants have instructed Worldwide to dishonor a request to issue or transfer stock in Defendant Bebida.

Pursuant to the terms of the Security Agreement, on August 31, 2009, YA Global again attempted to repossess its Collateral by directing Bebida--Nevada to assemble all of the Collateral at the company’s business premises for collection by YA Global. (Verified Compl., Ex. F). The demand was sent to and received at the address utilized by Bebida—Nevada, Defendant Bebida, and Mr. Weber. (Verified Compl. ¶ 33, Ex. G). However, in violation of the Security Agreement and North Carolina law, Bebida--Nevada and Defendants refused to allow YA Global to take possession of the Collateral.

Bebida--Nevada is currently without sufficient assets to pay its obligations to YA Global and was, or became, insolvent as a result of the transfer of assets to Defendant Bebida. Importantly, in a message to Bebida shareholders, Mr. Weber stated that those investors who thought the company was “a lot of paper, a propped-up management team” were “almost completely right” and that the company could only show that it was a legitimate company once it could show “two consecutive quarters of reported audited financials[.]” (Rudisill Aff., Ex. A).
5
Case 5:09-cv-00107-RLV-DCK Document 4 Filed 09/24/2009 Page 5 of 16

ARGUMENT

YA Global sues for conversion, avoidance of a fraudulent transfer, and unfair and deceptive trade practices, because Defendants are wrongfully in possession of and withholding YA Global’s Collateral. Defendants, who have no legal right to the Collateral, have retained it in an effort to deprive YA Global of its contractual rights. YA Global seeks is the surrender of this Collateral and YA Global needs preliminary injunctive relief because it is likely that Defendants will act in a manner that would place the Collateral beyond YA Global’s reach, thereby rendering any judgment in this action meaningless. Further, Defendants appear to have no ability to satisfy the money judgment requested in YA Global’s Complaint. Under these circumstances, the Court’s equitable powers are needed to secure the Collateral and ensure that an effective remedy is available upon final disposition of this case.

The purpose of a preliminary injunction is to preserve the status quo, prevent irreparable harm during the pendency of a lawsuit, and, ultimately, “to preserve the court’s ability to render a meaningful judgment on the merits.” Wheelihan v. Bingham, 345 F. Supp. 2d 550, 553 (M.D.N.C. 2004)(citation and quotation marks omitted). A preliminary injunction is particularly appropriate where the movant makes a strong showing of irreparable harm in the absence of an injunction, establishes a likelihood of success on the merits, and seeks “intermediate relief of the same character as that which may be granted finally.” United States ex rel. Rahman v. Oncology Assocs., P.C., 198 F.3d 489, 495 (4th Cir. 1999)(quoting DeBeers Consol. Mines, Ltd. v. United States, 325 U.S. 212, 89 L.Ed. 1566, 65 S.Ct. 1130 (1945)). YA Global sets forth sufficient facts to establish that a preliminary injunction is reasonable and necessary to protect it from irreparable harm and to preserve the status quo in aid of the relief sought in this action.
6
Case 5:09-cv-00107-RLV-DCK Document 4 Filed 09/24/2009 Page 6 of 16

I. YA Global satisfies the applicable standard for injunctive relief.
“A plaintiff seeking a preliminary injunction must establish [1] that he is likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest.” Winter v. Natural Resources Defense Council, Inc., 129 S. Ct. 365, 374-76, 172 L.Ed.2d 249 (2008).

A. YA Global sets forth a prima facie case for conversion and avoidance of a fraudulent transfer, and it presents competent evidence to establish a strong likelihood of success on the merits.

1. Conversion
YA Global’s conversion claim is established by evidence showing that Defendant Bebida is wrongfully in possession of property in which YA Global has a superior ownership interest. Conversion requires proof that (1) the plaintiff has an ownership interest in the property and (2) the defendant wrongfully converted the property to its own use and to the exclusion of the rights of the rightful owner. See, e.g., Wall v. Colvard, Inc., 268 N.C. 43, 149 S.E.2d 559, 564 (1966). A presumption of conversion arises where the rightful owner demands a return of the property and the defendant refuses to surrender it. See Hoch v. Young, 63 N.C. App. 480, 483, 205 S.E.2d 201, 203 (1983).

In October 2008, YA Global had a perfected, first-priority security interest in the Collateral and any proceeds thereof. (Verified Compl., Exs. A, B). Under the Uniform Commercial Code (“UCC”), that interest “continues in [the] collateral notwithstanding sale, lease, license, exchange or other disposition thereof unless the secured party authorized the disposition[.]” N.C. Gen. Stat. § 25-9-315. In other words, a transferee takes subject to the security interest, and YA Global may repossess the Collateral from him, or “in an appropriate
7
Case 5:09-cv-00107-RLV-DCK Document 4 Filed 09/24/2009 Page 7 of 16

case, maintain an action for conversion.” Id., cmt. 2. YA Global did not consent to, nor was it given notice of, the transfer of assets from Bebida--Nevada to Defendant Bebida. (Verified Compl. ¶¶ 16-17). As such, its security interest continues in all Collateral transferred to Defendant Bebida, and YA Global has a superior right to the Collateral over Defendants. See, e.g., Bartlett Milling Co., LP v. Walnut Grove Auction & Realty Co., __ N.C. App. __, 665 S.E.2d 478, 489 (2008)(plaintiff can demonstrate a sufficient ownership interest “by proving that it possessed a perfected security interest in the collateral”); In re Neatex, Inc., 77 Bankr. 808 (D. Nev. 1987)(where creditor did not consent to sale of collateral free of the security interest, it continued in the collateral notwithstanding the sale).

Further, because Bebida--Nevada refused to honor the April and October Conversion Notices and failed to repay the outstanding debentures, Bebida--Nevada defaulted on its agreements with YA Global prior to Defendant Bebida’s incorporation, (Verified Compl. ¶¶ 10- 11, 20), and that default entitled YA Global to immediate possession of all collateral. (Id., Ex. A, § 5.1). On August 31, 2009, YA Global directed Bebida--Nevada to assemble the Collateral at the company’s business premises, which, incidentally, Bebida--Nevada shares with Defendant Bebida and Mr. Weber. (Verified Compl. ¶ 32). Although Mr. Weber has the authority, as President of Bebida--Nevada and Defendant Bebida, to surrender the Collateral to YA Global, Bebida--Nevada did not allow YA Global to take possession of the Collateral in derogation of YA Global’s rights. (Verified Compl. ¶ 34).
Simply put, YA Global has presented sufficient evidence to establish that the Collateral was wrongfully converted by the Defendant Bebida when it took possession of YA Global’s collateral with notice of YA Global’s properly perfected security interest. Defendants’ subsequent refusal to turn the property over to YA Global upon demand constitutes “a denial or
8
Case 5:09-cv-00107-RLV-DCK Document 4 Filed 09/24/2009 Page 8 of 16

violation of the plaintiff’s dominion over or rights in the property”—the very hallmark of conversion. See, e.g., Lake Mary Ltd. P’ship v. Johnston, 145 N.C. App. 525, 532, 551 S.E.2d 546, 552, rev. denied, 354 N.C. 363, 557 S.E.2d 539 (2001).

2. Avoidance of a Fraudulent Transfer.
Under North Carolina’s Fraudulent Transfer Act, which is based on the Uniform Fraudulent Transfer Act (“UFTA”), YA Global is entitled to void Bebida--Nevada’s transfer of the collateral and all common shares of Bebida--Nevada to Defendant Bebida, because the transfers were made with intent to hinder, delay, or defraud its creditors. See N.C. Gen. Stat. § 39-15, et seq.

To prove a fraudulent transfer under the UFTA, a creditor must prove that: (1) the debtor transferred property; (2) to another; (3) with the intent to hinder, delay, or defraud any of its creditors. N.C. Gen. Stat. § 39-23.4. Where a transfer is deemed fraudulent under the UFTA, the creditor may avoid “the transfer or obligation to the extent necessary to satisfy the creditor’s claim.” N.C. Gen. Stat. § 39-23.7. It is undisputed that Bebida--Nevada transferred assets to Defendant Bebida and that YA Global qualifies as a “creditor” under N.C. Gen. Stat. § 39- 23.1(3) and (4). The issue, is whether the assets were transferred with the intent to hinder, delay, or defraud YA Global.

The UFTA lists thirteen specific factors that may be considered in determining whether the transferor possessed actual fraudulent intent. N.C. Gen. Stat. § 39-23.4(b). These factors include: (a) whether the transfer was to an “insider” (which includes an affiliate); (b) whether the transferor retained possession or control of the property after the transfer; (c) whether the transferor had been sued or threatened with suit prior to the transfer; (d) whether the transfer was of substantially all of the transferor’s assets; (e) whether the transferor received less than the
9
Case 5:09-cv-00107-RLV-DCK Document 4 Filed 09/24/2009 Page 9 of 16

reasonably equivalent value for the property; and (f) whether the transferor was insolvent or became insolvent as a result of the transfer. Id.; see also Triangle Bank v. Eatmon, 143 N.C. App. 521, 526 (2001). YA Global sets forth evidence establishing each of these factors.

Where the debtor transferor is a corporation, the UFTA’s definition of “insider” includes any affiliate and any person in control of the debtor. N.C. Gen. Stat. § 39-23.1(7)(c)-(d). Here, both Defendants qualify as insiders. Mr. Weber, who is president of both Defendant Bebida and Bebida--Nevada, runs each of the companies as if they were the same entity, utilizing the same name, the same mailing address and principal office, and trading under the same stock ticker symbol. (Verified Compl. ¶¶ 25-26). Both Mr. Weber and Worldwide, Bebida’s transfer agent, have represented to Bebida’s shareholders that the companies are affiliated. (Rudisill Aff., Ex. A; Kopstick Aff. ¶ 4). These facts affirmatively establish that Defendants are “insiders” under the UFTA.

The evidence also establishes that Bebida--Nevada and its principals retained possession or control of YA Global’s collateral after the transfer. As noted above, Mr. Weber operates both companies as if they were the same entity. In shareholder presentations, for example, Mr. Weber holds himself out to be the president of Bebida Beverage Company, a Nevada corporation, even as all Bebida stock was being converted to stock in Defendant Bebida. (Rudisill Aff , Ex. A ). Further, Mr. Weber informed Worldwide that the New Jersey Judgment was against Bebida-- Nevada and not Defendant Bebida. Knowing that Worldwide would not issue any stock without Bebida’s authorization, Mr. Weber thereafter instructed Worldwide not to honor the conversion notice submitted by YA Global in August 2009. (Kopstick Aff. ¶¶ 3, 5).

Furthermore, Bebida--Nevada received no value for the transfer. Bebida--Nevada’s principals wound down Bebida Beverage Company as a Nevada Corporation and incorporated as
10
Case 5:09-cv-00107-RLV-DCK Document 4 Filed 09/24/2009 Page 10 of 16

a new Wyoming entity upon receipt of YA Global’s October 20, 2008 demand letter, (Verified Compl. ¶ 14), reflecting a simple transfer to another entity, not an exchange.

Finally, Mr. Weber’s own words demonstrate that Bebida--Nevada is without sufficient assets to pay its obligations to YA Global and was, or became, insolvent as a result of the transfers to Defendant Bebida. In a message to Bebida shareholders, Mr. Weber stated that those investors who thought the company was “a lot of paper, a propped-up management team” were “almost completely right” and that the company could only show that it was a legitimate company once it could show “two consecutive quarters of reporting audited financials[.]” (Rudisill Aff., Ex. A). Mr. Weber’s words, standing alone, create a presumption of fraudulent intent. See, e.g., Butler v. NationsBank, N.A., 58 F.3d 1022, 1026 (4th Cir. 1995)(“‘If the conveyance is voluntary and the grantor does not retain property fully sufficient and available to pay his debts then existing, it is invalid as to creditors...’”)(quoting Aman v. Waller, 165 N.C. 224, 227, 81 S.E.162, 164 (1914)); Chrysler Credit Corp. v. Burton, 599 F. Supp. 1313, 139 (M.D.N.C. 1984) (fraudulent intent will be presumed where “the grantor did not retain sufficient assets (insolvency) at the time of the conveyance”); Edwards v. Northwestern Bank, 39 N.C. App. 261, 250 S.E.2d 651 (1979)(intent to defraud may be presumed when debtor does not retain property sufficient to pay its then-existing debts).

Thus, the evidence establishes that Bebida--Nevada acted with the specific intent to hinder, delay, or defraud YA Global, and YA Global is thereby entitled to void the transfers and recover its collateral.

B. YA Global will be irreparably harmed in the absence of preliminary injunctive relief.

YA Global will be irreparably harmed without an injunction because Defendants will likely have insufficient assets to satisfy any money judgment rendered by the Court, YA
11
Case 5:09-cv-00107-RLV-DCK Document 4 Filed 09/24/2009 Page 11 of 16

Global’s collateral and its right to convert certain stock will probably be the only remedy available to it, and Defendants have shown that they will thwart YA Global’s attempts to secure its collateral. Under such circumstances, the power of the Court is needed to security the Collateral until this case can be decided.
Defendants have engaged in a pattern of transferring and refusing to surrender assets that could be utilized to fulfill any potential judgment in this action, thereby rendering any such judgment inadequate. For example, Defendant Bebida was incorporated and received assets rightfully belonging to Bebida--Nevada at a time when Bebida--Nevada was significantly indebted to YA Global. (Verified Compl. ¶¶ 13, 15-16). Defendant Bebida did not provide reasonably equivalent value in exchange for the transfer. Following the transfer, the YA Global obligations were not paid by either Bebida--Nevada, Defendant Bebida, or Mr. Weber, and they remain unsatisfied. Bebida--Nevada has been closed down and is listed as “inactive” on the company’s website, (Rudisill Aff. ¶ 3), despite the fact that Mr. Weber continues to represent that he is the president of Bebida Beverage Company, the Nevada corporation. (Rudisill Aff., Ex. A). Finally, Defendant Bebida’s financial condition is uncertain at best, with Mr. Weber admitting that those shareholders who believed the company “was a lot of paper, a propped-up management team” were “almost completely right.” (Id.)

YA Global seeks surrender of its Collateral and an injunction requiring that Defendants refrain from doing anything to diminish or imperil its value. If Defendant Bebida is no longer a going concern at the close of litigation, an injunction ordering the delivery of Bebida stock would be pointless, and YA Global would be left without the converted shares and without the option of obtaining a money judgment for the outstanding debt amount, thus suffering irreparable injury. See Castle Creek Technology Partners, LLC v. Cellpoint, Inc., 2002 U.S. Dist. LEXIS
12
Case 5:09-cv-00107-RLV-DCK Document 4 Filed 09/24/2009 Page 12 of 16

23760, No. 02 Civ. 6662 (S.D.N.Y. 2002)(finding irreparable harm where defendant’s financial condition would prevent plaintiffs from recovering any value for stock sought pursuant to fully executed convertible debentures).
In such circumstances, a preliminary injunction is appropriate to prevent the further dissipation of assets and to preserve the possibility of equitable remedies. See Quantum Corp. Funding, Ltd. v. Assist You Home Health Care Servs. of VA, 144 F. Supp. 2d 241 (S.D.N.Y 2001)(irreparable harm established where defendant failed to pay creditors of a previous company it owned, had closed down the previous company leaving judgments against it unsatisfied, and was otherwise evasive about the current corporation’s financial conditions). See also Republic of the Phillipines v. Marcos, 862 F.2d 1355, 1364 (9th Cir. 1988), cert. denied, 490 U.S. 1035, 109 S.Ct. 1933, 104 L.Ed.2d 404 (1989)(“A court has the power to issue a preliminary injunction to prevent a defendant from dissipating assets in order to preserve the possibility of equitable remedies.”); Federal Savings & Loan Ins. Corp. v. Dixon, 835 F.2d 554, 560 (5th Cir. 1987)(same).

C. Defendants will not be harmed by the entry of a preliminary injunction.
In determining whether injunctive relief is proper, the courts “must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief.” Winters at 376 (internal quotations omitted). Here, the balance of harm decidedly weighs in favor of YA Global because Defendants simply will not be harmed by the entry of a preliminary injunction in this matter.

YA Global only seeks an injunction that prevents Defendants from dissipating, transferring, or otherwise taking any action outside the ordinary course of business that would have a detrimental effect on the value of the Collateral. Therefore, if this relief is granted,
13
Case 5:09-cv-00107-RLV-DCK Document 4 Filed 09/24/2009 Page 13 of 16

Defendants will retain complete control over the company and its day-to-day operations. Only extraordinary actions must first be noticed and approved by the Court, thereby ensuring that the relief sought is appropriate and narrowly tailored to limit any harm to Defendants while protecting YA Global’s interest in the collateral. See, e.g., United States ex rel. Taxpayers Against Fraud v. Singer, 889 F.2d 1237, 1334 (4th Cir. 1989)(upholding preliminary injunction that required the defendant corporation to seek court approval of all actions outside the ordinary course of business on the basis that it left the corporation in control of its day to day operations).

D. Issuance of the injunction is within the public’s interest.

Defendants are currently operating Defendant Bebida and Bebida--Nevada as if they were a single entity. The companies both operate out of the same principal office, under the same name, and issue and transfer stock under the same ticker symbol. (Verified Compl. ¶¶ 25- 26). Both companies are operated by Mr. Weber, who continues to represent that he is the president of Bebida--Nevada even as all shares in Bebida--Nevada are exchanged for Defendant Bebida on a one-for-one basis. Id. In fact, Mr. Weber only seems to acknowledge that there are two separate entities when it is convenient for him to do so—i.e. to avoid repayment of all obligations owed to YA Global. Under these circumstances, the public could be harmed by Defendants’ misrepresentations, and injunctive relief would therefore be appropriate to ensure the vitality and reliability of all securities trading.
Furthermore, if Defendants continue to have unfettered access to and control over YA Global’s Collateral, nothing prevents them from utilizing the Collateral for any purpose. Not only does this harm YA Global, this could harm third parties, who might be recipients of fraudulent transfers. Under such circumstances, the public interest is served by securing the property and containing this dispute.
14
Case 5:09-cv-00107-RLV-DCK Document 4 Filed 09/24/2009 Page 14 of 16

CONCLUSION

Over the course of the previous two years, one thing has remained constant: the principals of Bebida--Nevada and Defendant Bebida, including Defendant Weber, have at every turn acted in a manner intended to delay, hinder or impair YA Global’s rights to its collateral and its right to convert certain stock. There is substantial reason to believe that this pattern or practice of evasion will continue. In the absence of preliminary injunctive relief, Defendants will not have the resources to satisfy any money judgment ultimately entered by this Court and YA Global will thereby be denied any remedy under the law. As such, the entry of a preliminary injunction is a reasonable measure to preserve the status quo and ensure the satisfaction of any potential future judgment.

Respectfully submitted, 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: [phone]
15
Case 5:09-cv-00107-RLV-DCK
Document 4 Filed 09/24/2009 Page 15 of 16

CERTIFICATE OF SERVICE

I hereby certify that on September 24, 2009, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following:

[e-mail] [e-mail] and I hereby certify that pursuant to Rule 4(e)(1) of the Federal Rules of Civil Procedure, the
foregoing document will be served by either certified mail or the sheriff’s department to the following non-CM/ECF participants:
Bebida Beverage Company c/o Brian Weber 125F Trade Court #9 Mooresville, NC 28117
Brian Weber 125F Trade Court #9 Mooresville, NC 28117
Case 5:09-cv-00107-RLV-DCK
Document 4 Filed 09/24/2009 Page 16 of 16

WILLIAMS MULLEN

By: /s/ Camden R. Webb Camden R. Webb N.C. State Bar No. 22374 Attorneys for Plaintiff Post Office Drawer 1000 Raleigh, North Carolina 27602 Telephone: [phone] Fax: [phone]
Email: [e-mail]
16