(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.