Tex.
Bus. Orgs. Code Section 21.168
Stock Rights, Options, and Convertible Indebtedness
(a)
Except as provided by the corporation’s certificate of formation and regardless of whether done in connection with the issuance and sale of any other share or security of the corporation, a corporation may create and issue:(1)
rights or options that entitle the holders to purchase or receive from the corporation shares of any class or series or other securities; and(2)
indebtedness convertible into shares of any class or series of the corporation or other securities of the corporation.(b)
A right, option, or indebtedness described by this section shall be evidenced in the manner approved by the board of directors.(c)
Subject to the certificate of formation, a right or option described by this section must state the terms and conditions on which, the time within which, and any consideration, including a formula by which the consideration may be determined, for which the shares may be purchased or received from the corporation on the exercise of the right or option.(d)
Subject to the certificate of formation, convertible indebtedness described by this section must state the terms and conditions on which, the time within which, and the conversion ratio, which may be stated as a formula by which the conversion ratio may be determined, at which the indebtedness may be converted into shares. The formula may include or be made dependent on facts ascertainable outside the formula, if the manner in which those facts operate on the formula is clearly or expressly provided by the formula or in the authorization approving the formula.(e)
An authorization of the board of directors may delegate to a person or persons, in addition to the board of directors, the authority to enter into one or more transactions to issue rights or options. For a transaction entered into by a person or persons to whom authority was delegated under this subsection, the rights or options may be issued in the number, at the time, and for the consideration as the person or persons may determine if that authorization of the board of directors:(1)
states:(A)
the maximum number of rights or options, and the maximum number of shares issuable on exercise of those rights or options, that may be issued under the authorization;(B)
the period of time during which the rights or options, and the shares issuable on exercise of those rights or options, may be issued; and(C)
the minimum amount of consideration:(i)
if any, for which the rights or options may be issued; and(ii)
for the shares issuable on exercise of the rights or options; and(2)
does not permit the person or persons to whom authority was delegated to issue rights, options, or shares to that person or those persons.(f)
A provision of a right or option or an authorization of a right or option under this section may depend on a fact ascertainable outside of the right, option, or authorization, if the manner in which the fact operates on the right, option, or authorization is clearly and expressly set forth in the right, option, or authorization. In this subsection, “fact” includes the occurrence of any event, including a determination or action by any person or persons.(g)
If the authorization of the board of directors delegates to a person or persons the authority to enter into a transaction to issue rights or options under Subsection (e), the provisions of the authorization under Subsection (e)(1) may not depend on a determination or action by the person or persons to whom authority was delegated.(h)
In this section and notwithstanding Section 1.002 (Definitions), “person” includes a committee of the board of directors.
Source:
Section 21.168 — Stock Rights, Options, and Convertible Indebtedness, https://statutes.capitol.texas.gov/Docs/BO/htm/BO.21.htm#21.168 (accessed Jun. 5, 2024).
