The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 26, 32, 33, 34, 35, 36, 37, 38, 39, 58, 59, 61, 65, 66, 67, 68, 69, 84 were read on this motion to/for INJUNCTION/RESTRAINING ORDER. The following e-filed documents, listed by NYSCEF document number (Motion 003) 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82 were read on this motion to/for DISMISS. DECISION + ORDER ON MOTION This litigation involves plaintiffs DBI Lease Buyback Servicing LLC and Drawbridge Investments LLC’s assertion that defendant Mullen Automotive, Inc. improperly refused to issue to plaintiffs an option for the purchase of up to $25 million in defendant’s convertible Series E Preferred Stock and an attendant warrant. Now pending is plaintiffs’ motion for a preliminary injunction (MS 001), which defendant opposes, and defendant’s motion to dismiss (MS 003), which plaintiffs oppose. Background Plaintiffs initiated this action with a complaint, as well as an order to show cause seeking equitable relief. By order of March 3, 2023, this court entered a temporary restraining order enjoining defendant from “(i) increasing the number of designated shares for any outstanding stock or agreeing to issue new preferred stock; and (ii) failing to maintain at least 500 million in authorized common shares” (NYSCEF # 26). In between the imposition of that order and oral argument, plaintiffs moved for contempt due to certain of defendant’s actions taken on its corporate capital structure (MS 002). During oral argument, and by interim order entered on March 15, the court denied plaintiffs’ motion for contempt, lifted and vacated the temporary restraining order, and denied without prejudice plaintiffs’ demand for defendant to advance costs and expenses (NYSCEF # 58). The pending preliminary injunction plaintiffs now seek mirrors the relief sought in the temporary restraining order and would also require defendant “to execute the Final Series E Purchase Option” (NYSCEF # 26 at 2). Plaintiffs’ initial request for an order requiring defendant “to file a certificate of designation for the Series E Preferred Stock” was withdrawn at oral argument (NYSCEF # 70 — Apr 18, 2023 Tr at 37:7-10). Plaintiffs point to the June 17, 2022 sale of note letter agreement (the Agreement) as the basis for their right to the Series E option (NYSCEF # 8). According to the Agreement, plaintiffs sold to non-party Esousa Holdings LLC a note representing defendant’s debt of over $25 million. The Agreement indicates that plaintiffs accepted a $3.5 million discount in the sale to Esousa in exchange for defendant’s “obligation to execute and deliver definitive transaction documents providing for [plaintiffs'] Series E Purchase Option” (id. at 2). The parties agreed that the terms of the option would be “consistent, in all material respects” with the Schedule B attached to the Agreement (id.). Schedule B provides that an “[i]nitial draft Option Agreement documenting the Series E transaction reflecting the foregoing terms, including the terms of the Series E Preferred Shares, must be provided within 1 month of the purchase of the Note pursuant to the Agreement” (id. at 1 of Schedule B). Hence, the initial draft of the option agreement was due on July 17, 2022. Defendant delivered a draft Option Agreement on July 22, 2022 (NYSCEF # 67 — MS 001 Opp at 14). Plaintiffs modified the draft and returned it to defendant on August 12, 2022 (NYSCEF # 1 — Verified Complaint,
44, 45). After that, plaintiffs heard and received nothing from defendant about the Agreement despite plaintiffs’ several inquiries (id., 46). Thus, on January 3, 2023, plaintiffs advised defendant that it was in breach of the Agreement. On January 13, 2023, defendant “finally returned a markup of the Series E Purchase Option,” but, plaintiffs assert, “the markup retraded several material terms” (id.,
