N.Y. Business Corporation Law § 519: Convertible or exchangeable shares and bonds

§ 519. Convertible or exchangeable shares and bonds.

(a) Unless otherwise provided in the certificate of incorporation, and

subject to the restrictions in section 513 (Purchase, redemption and

certain other transactions by a corporation with respect to its own

shares) and paragraphs (c) and (d) of this section, a corporation may

issue shares or bonds convertible into or exchangeable for, at the

option of the holder, the corporation or another person, or upon the

happening of a specified event, shares of any class or shares of any

series of any class or cash, other property, indebtedness or other

securities of the same or another corporation.

(b) If there is shareholder approval for the issue of bonds or shares

convertible into, or exchangeable for, shares of the corporation, such

approval may provide that the board is authorized by certificate of

amendment under section 805 (Certificate of amendment; contents) to

increase the authorized shares of any class or series to such number as

will be sufficient, when added to the previously authorized but unissued

shares of such class or series, to satisfy the conversion or exchange

privileges of any such bonds or shares convertible into, or exchangeable

for, shares of such class or series.

(c) No issue of bonds or shares convertible into, or exchangeable for,

shares of the corporation shall be made unless:

(1) A sufficient number of authorized but unissued shares, or treasury

shares, of the appropriate class or series are reserved by the board to

be issued only in satisfaction of the conversion or exchange privileges

of such convertible or exchangeable bonds or shares when issued;

(2) The aggregate conversion or exchange privileges of such

convertible or exchangeable bonds or shares when issued do not exceed

the aggregate of any shares reserved under subparagraph (1) and any

additional shares which may be authorized by the board under paragraph

(b); or

(3) In the case of the conversion or exchange of shares of common

stock other than into other shares of common stock, there remains

outstanding a class or series of common stock not subject to conversion

or exchange other than into other shares of common stock, except in the

case of corporations of the type described in the exceptions to the

provisions of paragraph (b) of section 512 (Redeemable shares).

(d) No privilege of conversion may be conferred upon, or altered in

respect to, any shares or bonds that would result in the receipt by the

corporation of less than the minimum consideration required to be

received upon the issue of new shares. The consideration for shares

issued upon the exercise of a conversion or exchange privilege shall be

that provided in paragraph (g) of section 504 (Consideration and payment

for shares).

(e) When shares have been converted or exchanged, they shall be

cancelled. When bonds have been converted or exchanged, they shall be

cancelled and not reissued except upon compliance with the provisions

governing the issue of convertible or exchangeable bonds.