Texas Business Organizations Code - BUS ORG § 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:

(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 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.  A formula by which the consideration may be determined 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 set forth in the formula or in the authorization approving the formula.

(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 at which the indebtedness may be converted into shares.