New York Laws
Article 5 - Corporate Finance
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.