NON-QUALIFIED STOCK OPTION AGREEMENT

Under The
RINO International Corporation 2009 Stock Incentive Plan

AGREEMENT (“Agreement”), dated August 12, 2010 by and between RINO International
Corporation, a Nevada corporation (the “Company”), and Yi (Jenny) Liu (the
“Participant”).
 
Preliminary Statement
 
WHEREAS, the Board of Directors of the Company (the “Board”) has appointed a
committee (the “Committee”) to administer the RINO International Corporation
2009 Stock Incentive Plan (the “Plan”). The Board has authorized this grant of a
non-qualified stock option (the “Option”) on June 30, 2009 (the “Grant Date”) to
purchase the number of shares of the Company’s common stock, par value $0.0001
per share (the “Common Stock”) set forth below to the Participant, as a Eligible
Employee of the Company (collectively, the Company and all Subsidiaries and
Parents of the Company shall be referred to as the “Company”).
 
Unless otherwise indicated, any capitalized term used but not defined herein
shall have the meaning ascribed to such term in the Plan. For the convenience of
the Participant, capitalized terms used but not defined herein and defined in
the Plan have been set forth hereto in Schedule A. A copy of the Plan has been
delivered to the Participant. By signing and returning this Agreement, the
Participant (i) acknowledges having received and read a copy of the Plan and
this Agreement, (ii) agrees to comply with the Plan, this Agreement and all
applicable laws and regulations, (iii) acknowledges that the Company has not
provided any tax advice to the Participant regarding the grant or future
exercise of the Option or the subsequent sale or transfer of shares of Common
Stock issuable hereunder, and (iv) understands that the Participant should
consult with the Participant’s personal financial, accounting and tax advisors
regarding the same to the extent the Participant deems necessary.
 
WHEREAS, on August 12, 2010, the Company and the Participant entered into a
Separation Agreement, which amended the terms of the Option that was granted on
June 30, 2009 (the “Separation Agreement”).
 
NOW THEREFORE BE IT, the parties hereto agree the terms of the Option be amended
in entirety as follows:
 
1.       Grant of Option. The Company hereby acknowledges the grant of an Option
to Optionee to purchase 10,000 shares (“Shares”) of its Common Stock on June 30,
2009 in the manner and subject to the conditions provided hereinafter.

2.       Vesting and Exercise.

(a) The Shares underlying the Option shall vest upon the execution of this
Agreement and shall have an exercise price of $6.15 per share, which is the Fair
Market Value or higher of a share of Common Stock on the Grant Date, or 110% of
such Fair Market Value in the case of a Ten Percent Stockholder as provided in
Code Section 422 (the “Option Exercise Price”). To the extent that the Option
has become vested and is exercisable as provided herein, the Option may
thereafter be exercised by the Participant, in whole or in part, at any time or
from time to time prior to the expiration of the Option as provided herein and
in accordance with Sections 6.3(c) and 6.3(d) of the Plan, including, without
limitation, by the filing of any written form of exercise notice as may be
required by the Committee and payment in full of the Option Exercise Price
multiplied by the number of shares of Common Stock underlying the portion of the
Option exercised. Upon expiration of the Option, the Option shall be canceled
and no longer exercisable.

(b)        [Intentionally omitted].
 
 
 

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3.       Time of Exercise of Option. Any portion of the Option which has vested
may be exercised; provided, however, such Option shall expire and terminate upon
the first to occur of any of the following events (the “Expiration Date”):

(a)            August 12, 2013;

(b)           the dissolution or liquidation of the Company; or

(c)           at the time of a breach by Optionee of any material provision of
the Optionee’s Separation Agreement with the Company or any other written
agreement between the Optionee and the Company.

4.       Method of Exercise. All or a portion of the Option may be exercised by
payment of the Option Exercise Price in cash by the Optionee, unless another
form of payment is authorized by the Committee. In the event of payment of the
Option Exercise Price by check, the Option shall not be considered exercised
until receipt of cleared funds by the Company upon deposit of the check.

5.       Restrictions on Exercise and Delivery. Exercise of the Option, or any
portion thereof, shall be subject to the conditions set forth below as
determined by the Committee in its sole and absolute discretion:

(a)                the satisfaction of any withholding tax or other withholding
liabilities, is necessary or desirable as a condition of, or in connection with,
such exercise or the delivery or purchase of Shares pursuant thereto,

(b)                the listing, registration, or qualification of any Shares
deliverable upon such exercise is desirable or necessary, under any state or
federal law, as a condition of, or in connection with, such exercise or the
delivery or purchase of Shares pursuant thereto, or
 
(c)                the consent or approval of any regulatory body is necessary
or desirable as a condition of, or in connection with, such exercise or the
delivery or purchase of any Shares pursuant thereto,

then in any such event, such exercise shall not be effective unless such
withholding, listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Committee. Optionee shall execute such documents and take such other actions as
are required by the Committee to enable it to effect or obtain such withholding,
listing, registration, qualification, consent or approval. Neither the Company
nor any officer or director, or member of the Committee, shall have any
liability with respect to the non-issuance of any portion of the Shares on
exercise or failure to sell any Shares as the result of any suspensions of
exercisability imposed pursuant to this Section.

6.       [Intentionally omitted].

7.       [Intentionally omitted].

8.           Assignability. This Option may not be sold, pledged, assigned or
transferred (except by will or the laws of descent and distribution) unless with
the written consent of the Company.

9.           Representation Letter. Upon exercise of all or any part of the
Option, the Optionee will deliver to the Company the Exercise Representation
Letter substantially the same as the one set forth on Exhibit A hereto, as such
Exhibit may be amended by the Committee from time to time. Optionee also agrees
to make such other representations as are deemed necessary or appropriate by the
Company and its counsel.
 
 
 

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10.         Rights as Shareholder. Neither Optionee nor his or her executor,
administrator, heirs or legatees, shall be, or have any rights or privileges of
a shareholder of the Company in respect of the Shares unless and until
certificates representing such Shares shall have been issued in Optionee's name.

11.         No Right of Employment. Neither the grant nor exercise of any Option
nor anything in the Plan or this Agreement shall impose upon the Company any
obligation to employ or continue to employ any Optionee. The right of the
Company to terminate any employee shall not be diminished or affected because an
Option has been granted to such employee.
 
12.         Mandatory Arbitration. In the event of any dispute between the
Company and Optionee regarding this Agreement, the dispute and any issue as to
the arbitrability of such dispute, shall be settled to the exclusion of a court
of law, by arbitration in New York City, New York by a panel of three
arbitrators (each party shall choose one arbitrator and the third shall be
chosen by the two arbitrators so selected) in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect. The
decision of a majority of the arbitrators shall be final and binding upon the
parties. All costs of the arbitration and the fees of the arbitrators shall be
allocated between the parties as determined by a majority of the arbitrators, it
being the intention of the parties that the prevailing party in such a
proceeding be made whole with respect to its expenses.

13.          The Company’s Rights. The existence of the Option shall not affect
in any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
other stocks with preference ahead of or convertible into, or otherwise
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of the
Company's assets or business, or any other corporate act or proceeding, whether
of a similar character or otherwise.

14.          Optionee. Whenever the word “Optionee” is used in any provision of
this Agreement under circumstances where the provision should logically be
construed, as determined by the Committee, to apply to the estate, personal
representative, beneficiary to whom the Option or Shares may be transferred by
will or by the laws of descent and distribution, or another permitted
transferee, the word “Optionee” shall be deemed to include such person.

15.          Conformity with Plan. This Agreement is intended to conform in all
respects with, and is subject to all applicable provisions of, the Plan.
Inconsistencies between this Agreement and the Plan shall be resolved in
accordance with the terms of the Plan. In the event of any ambiguity in this
Agreement or any matters as to which this Agreement is silent, the Plan shall
govern. A copy of the Plan is provided to Optionee with this Agreement as
Exhibit B.

16.          Section 409A Compliance. To the extent applicable, the Board or the
Committee may at any time and from time to time amend, in whole or in part, any
or all of the provisions of this Agreement (in a manner determined by the Board
or Committee in its sole discretion) solely to comply with Section 409A of the
Code and the regulations promulgated thereunder, subject to the terms and
conditions of the Plan.

17.          Notices. All notices and other communications made or given
pursuant to this Agreement shall be in writing and shall be sufficiently made or
given if hand delivered or mailed by certified mail, addressed to the Optionee
at the address contained in the records of the Company, or addressed to the
Committee, care of the Company to the attention of its Corporate Secretary at
its principal office or, if the receiving party consents in advance, transmitted
and received via telecopy or via such other electronic transmission mechanism as
may be available to the parties.

18.         Binding Effect. This Agreement shall be binding upon and inure to
the benefit of Optionee, his heirs and successors, and of the Company, its
successors and assigns.
 
 
 

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19.         Governing Law. This Agreement shall be governed by the laws of the
State of New York, without giving effect to principles of conflicts of laws.

20.         Descriptive Headings. Titles to Sections are solely for
informational purposes.
 
 
 

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IN WITNESS WHEREOF, this Agreement is effective as of, and the date of grant
shall be August 12, 2010.
 

 
RINO INTERNATIONAL
CORPORATION
   
a Nevada corporation
         
By:  
/s/ Dejun Zou    
Its: 
President and Chief Executive Officer
         
OPTIONEE
             
/s/ Yi (Jenny) Liu
     
Print Name Yi (Jenny) Liu
 

 
 
 

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EXHIBIT A

______________, 20___

RINO International Corporation

Re: Stock Option Exercise

To Whom It May Concern:

I (the “Optionee”) hereby exercise my right to purchase ________ shares of
common stock (the “Shares”) of RINO International Corporation, a Nevada Company
(the “Company”), pursuant to, and in accordance with, an option agreement dated
_______________, 20__ (the “Agreement”). As provided in such Agreement, I
deliver herewith payment as set forth in the Agreement in the amount of the
aggregate option exercise price. Please deliver to me at my address as set forth
above stock certificates representing the subject shares registered in my name.

The Optionee hereby represents and agrees as follows:

1. The Optionee acknowledges receipt of a copy of the Agreement. The Optionee
has carefully reviewed the Agreement.

2. The Optionee is a resident of __________.

3. The Optionee represents and agrees that if the Optionee is an “affiliate” (as
defined in Rule 144 under the Securities Act of 1933) of the Company at the time
the Optionee desires to sell any of the Shares, the Optionee will be subject to
certain restrictions under, and will comply with all of the requirements of,
applicable federal and state securities laws.

The foregoing representations and warranties are given on ________ at
_____________________.

___ Optionee encloses a check in the amount of $ ______________ for the payment
of the aggregate amount of the Option Exercise Price.

___ Optionee elects a Cashless Exercise for __________Option Shares.

OPTIONEE: 

_____________________________
 
 
 

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Exhibit B
 
RINO International 2009 Stock Incentive Plan
 
SCHEDULE A
 
The following terms used but not defined in the Agreement and defined in the
Plan have been provided below for the convenience of the Participant but are
qualified in their entirety by the full text of such terms in the Plan.
 
A.         “Acquisition Event” means a merger or consolidation in which the
Company is not the surviving entity, any transaction that results in the
acquisition of all or substantially all of the Company’s outstanding Common
Stock by a single person or entity or by a group of persons and/or entities
acting in concert, or the sale or transfer of all or substantially all of the
Company’s assets.
 
B.         “Affiliate” means each of the following: (a) any Subsidiary; (b) any
Parent; (c) any corporation, trade or business (including, without limitation, a
partnership or limited liability company) which is directly or indirectly
controlled 50% or more (whether by ownership of stock, assets or an equivalent
ownership interest or voting interest) by the Company; (d) any corporation,
trade or business (including, without limitation, a partnership or limited
liability company) which directly or indirectly controls 50% or more (whether by
ownership of stock, assets or an equivalent ownership interest or voting
interest) of the Company; and (e) any other entity in which the Company or any
of its Affiliates has a material equity interest and which is designated as an
“Affiliate” by resolution of the Committee; provided that the Common Stock
subject to any Award constitutes “service recipient stock” for purposes of
Section 409A of the Code or otherwise does not subject the Award to Section 409A
of the Code.
 
C.         “Appreciation Award” means any Award under this Plan of any Stock
Option, Stock Appreciation Right or Other Stock-Based Award, provided that such
Other Stock-Based Award is based on the appreciation in value of a share of
Common Stock in excess of an amount equal to at least the Fair Market Value of
the Common Stock on the date such Other Stock-Based Award is granted.
 
D.         “Award” means any award under this Plan of any Stock Option, Stock
Appreciation Right, Restricted Stock, Performance Share, Other Stock-Based Award
or Performance-Based Cash Awards. All Awards shall be granted by, confirmed by,
and subject to the terms of, a written agreement executed by the Company and the
Participant.
 
E.         “Board” means the Board of Directors of the Company.
 
F.         “Cause” means with respect to a Participant’s Termination of
Employment or Termination of Consultancy from and after the date hereof, the
following: (a) in the case where there is no employment agreement, consulting
agreement, change in control agreement or similar agreement in effect between
the Company or an Affiliate and the Participant at the time of the grant of the
Award (or where there is such an agreement but it does not define “cause” (or
words of like import)), termination due to: (i) a Participant’s conviction of,
or plea of guilty or nolo contendere to, a felony; (ii) perpetration by a
Participant of an illegal act, or fraud which could cause significant economic
injury to the Company; (iii) continuing willful and deliberate failure by the
Participant to perform the Participant’s duties in any material respect,
provided that the Participant is given notice and an opportunity to effectuate a
cure as determined by the Committee; or (iv) a Participant’s willful misconduct
with regard to the Company that could have a material adverse effect on the
Company; or (b) in the case where there is an employment agreement, consulting
agreement, change in control agreement or similar agreement in effect between
the Company or an Affiliate and the Participant at the time of the grant of the
Award that defines “cause” (or words of like import), “cause” as defined under
such agreement; provided, however, that with regard to any agreement under which
the definition of “cause” only applies on occurrence of a change in control,
such definition of “cause” shall not apply until a change in control actually
takes place and then only with regard to a termination thereafter. With respect
to a Participant’s Termination of Directorship, “cause” means an act or failure
to act that constitutes cause for removal of a director under applicable Nevada
law.
 
 
 

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G.         “Change in Control” has the meaning set forth in Section 13.2 of the
Plan.
 
H.         “Change in Control Price” has the meaning set forth in Section 13.1
of the Plan.
 
I.          “Code” means the Internal Revenue Code of 1986, as amended. Any
reference to any section of the Code shall also be a reference to any successor
provision and any Treasury Regulation promulgated thereunder.
 
J.         “Committee” means: (a) with respect to the application of this Plan
to Eligible Employees and Consultants, a committee or subcommittee of the Board
appointed from time to time by the Board, which committee or subcommittee shall
consist of two or more non-employee directors, each of whom shall be (i) a
“non-employee director” as defined in Rule 16b-3; (ii) to the extent required by
Section 162(m) of the Code, an “outside director” as defined under Section
162(m) of the Code; and (iii) an “independent director” for purposes of the
applicable stock exchange rules; and (b) with respect to the application of this
Plan to Non-Employee Directors, the Board. To the extent that no Committee
exists that has the authority to administer this Plan, the functions of the
Committee shall be exercised by the Board. If for any reason the appointed
Committee does not meet the requirements of Rule 16b-3 or Section 162(m) of the
Code, such noncompliance shall not affect the validity of Awards, grants,
interpretations or other actions of the Committee.
 
K.         “Common Stock” means the common stock, $0.0001 par value per share,
of the Company.
 
L.         “Company” means RINO International Corporation, a Nevada Corporation,
and its successors by operation of law.
 
M.        “Consultant” means any individual or entity who provides bona fide
consulting or advisory services to the Company or its Affiliates pursuant to a
written agreement, which are not in connection with the offer and sale of
securities in a capital-raising transaction.
 
N.         “Disability” means with respect to a Participant’s Termination, a
permanent and total disability as defined in Section 22(e)(3) of the Code. A
Disability shall only be deemed to occur at the time of the determination by the
Committee of the Disability. Notwithstanding the foregoing, for Awards that are
subject to Section 409A of the Code, Disability shall mean that a Participant is
disabled under Section 409A(a)(2)(C)(i) or (ii) of the Code.
 
O.         “Effective Date” means the effective date of this Plan as defined in
Article XVII.
 
P.         “Eligible Employees” means each employee of the Company or an
Affiliate.
 
Q.         “Exchange Act” means the Securities Exchange Act of 1934, as amended.
Any references to any section of the Exchange Act shall also be a reference to
any successor provision.
 
 
 

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R.         “Fair Market Value” means, unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, as of any
date and except as provided below, the last sales price reported for the Common
Stock on the applicable date: (a) as reported on the principal national
securities exchange in the United States on which it is then traded, or (b) if
the Common Stock is not traded, listed or otherwise reported or quoted, the
Committee shall determine in good faith the Fair Market Value in whatever manner
it considers appropriate taking into account the requirements of Section 409A of
the Code. For purposes of the grant of any Award, the applicable date shall be
the trading day immediately prior to the date on which the Award is granted. For
purposes of the exercise of any Award, the applicable date shall be the date a
notice of exercise is received by the Committee or, if not a day on which the
applicable market is open, the next day that it is open.
 
S.         “Family Member” means “family member” as defined in Section A.1.(5)
of the general instructions of Form S-8.
 
T.         “GAAP” has the meaning set forth in Section 11.2(c)(ii).
 
U.         “Incentive Stock Option” means any Stock Option awarded to an
Eligible Employee of the Company, its Subsidiaries and its Parent (if any) under
this Plan intended to be and designated as an “Incentive Stock Option” within
the meaning of Section 422 of the Code.
 
V.         “Non-Employee Director” means a director of the Company who is not an
active employee of the Company or an Affiliate.
 
W.       “Non-Qualified Stock Option” means any Stock Option awarded under this
Plan that is not an Incentive Stock Option.
 
X.         “Other Stock-Based Award” means an Award under Article X of this Plan
that is valued in whole or in part by reference to, or is payable in or
otherwise based on, Common Stock, including, without limitation, a restricted
stock unit or an Award valued by reference to an Affiliate.
 
Y.         “Parent” means any parent corporation of the Company within the
meaning of Section 424(e) of the Code.
 
Z.         “Participant” means an Eligible Employee, Non-Employee Director or
Consultant to whom an Award has been granted pursuant to the Plan.
 
AA.         “Performance-Based Cash Award” means a cash Award under Article XI
of this Plan that is payable or otherwise based on the attainment of certain
pre-established performance goals during a Performance Period.
 
BB.         “Performance Goals” mean such performance goals as determined in
writing by the Committee.
 
CC.         “Performance Period” means the duration of the period during which
receipt of an Award is subject to the satisfaction of performance criteria, such
period as determined by the Committee in its sole discretion.
 
DD.         “Performance Share” means an Award made pursuant to Article IX of
this Plan of the right to receive Common Stock or cash of an equivalent value at
the end of a specified Performance Period.

EE.           “Person” means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock company, trust,
incorporated organization, governmental or regulatory or other entity.
 
 
 

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FF.           “Plan” means this RINO International Corporation 2009 Stock
Incentive Plan, as amended from time to time.
 
GG.         “Reference Stock Option” has the meaning set forth in Section 7.1 of
the Plan.
 
HH.         “Restricted Stock” means an Award of shares of Common Stock under
this Plan that is subject to restrictions under Article VIII.
 
II.             “Restriction Period” has the meaning set forth in Subsection
8.3(a) of the Plan.
 
JJ.          “Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Exchange
Act as then in effect or any successor provision.
 
KK.         “Section 162(m) of the Code” means the exception for
performance-based compensation under Section 162(m) of the Code and any
applicable Treasury regulations thereunder.
 
LL.          “Section 409A of the Code” means the nonqualified deferred
compensation rules under Section 409A of the Code and any applicable Treasury
regulations thereunder.
 
MM.        “Securities Act” means the Securities Act of 1933, as amended and all
rules and regulations promulgated thereunder. Any reference to any section of
the Securities Act shall also be a reference to any successor provision.
 
NN.         “Stock Appreciation Right” means the right pursuant to an Award
granted under Article VII. A Tandem Stock Appreciation Right shall mean the
right to surrender to the Company all (or a portion) of a Stock Option in
exchange for cash or a number of shares of Common Stock (as determined by the
Committee, in its sole discretion, on the date of grant) equal to the difference
between (a) the Fair Market Value on the date such Stock Option (or such portion
thereof) is surrendered, of the Common Stock covered by such Stock Option (or
such portion thereof), and (b) the aggregate exercise price of such Stock Option
(or such portion thereof). A Non-Tandem Stock Appreciation Right shall mean the
right to receive cash or a number of shares of Common Stock (as determined by
the Committee, in its sole discretion, on the date of grant) equal to the
difference between (i) the Fair Market Value of a share of Common Stock on the
date such right is exercised, and (ii) the aggregate exercise price of such
right, otherwise than on surrender of a Stock Option.
 
OO.        “Stock Option” or “Option” means any option to purchase shares of
Common Stock granted to Eligible Employees, Non-Employee Directors or
Consultants granted pursuant to Article VI of the Plan.
 
PP.          “Subsidiary” means any subsidiary corporation of the Company within
the meaning of Section 424(f) of the Code.
 
QQ.        “Ten Percent Stockholder” means a person owning stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company, its Subsidiaries or its Parent.
 
RR.         “Termination” means a Termination of Consultancy, Termination of
Directorship or Termination of Employment, as applicable.

SS.          “Termination of Consultancy” means: (a) that the Consultant is no
longer acting as a consultant to the Company or an Affiliate; or (b) when an
entity which is retaining a Participant as a Consultant ceases to be an
Affiliate unless the Participant otherwise is, or thereupon becomes, a
Consultant to the Company or another Affiliate at the time the entity ceases to
be an Affiliate. In the event that a Consultant becomes an Eligible Employee or
a Non-Employee Director upon the termination of his or her consultancy, unless
otherwise determined by the Committee, in its sole discretion, no Termination of
Consultancy shall be deemed to occur until such time as such Consultant is no
longer a Consultant, an Eligible Employee or a Non-Employee Director.
Notwithstanding the foregoing, the Committee may, in its sole discretion,
otherwise define Termination of Consultancy in the Award agreement or, if no
rights of a Participant are reduced, may otherwise define Termination of
Consultancy thereafter.
 
 
 

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TT.          “Termination of Directorship” means that the Non-Employee Director
has ceased to be a director of the Company; except that if a Non-Employee
Director becomes an Eligible Employee or a Consultant upon the termination of
his or her directorship, his or her ceasing to be a director of the Company
shall not be treated as a Termination of Directorship unless and until the
Participant has a Termination of Employment or Termination of Consultancy, as
the case may be.
 
UU.          “Termination of Employment” means: (a) a termination of employment
(for reasons other than a military or personal leave of absence granted by the
Company) of a Participant from the Company and its Affiliates; or (b) when an
entity which is employing a Participant ceases to be an Affiliate, unless the
Participant otherwise is, or thereupon becomes, employed by the Company or
another Affiliate at the time the entity ceases to be an Affiliate. In the event
that an Eligible Employee becomes a Consultant or a Non-Employee Director upon
the termination of his or her employment, unless otherwise determined by the
Committee, in its sole discretion, no Termination of Employment shall be deemed
to occur until such time as such Eligible Employee is no longer an Eligible
Employee, a Consultant or a Non-Employee Director. Notwithstanding the
foregoing, the Committee may, in its sole discretion, otherwise define
Termination of Employment in the Award agreement or, if no rights of a
Participant are reduced, may otherwise define Termination of Employment
thereafter.
 
VV.         “Transfer” means: (a) when used as a noun, any direct or indirect
transfer, sale, assignment, pledge, hypothecation, encumbrance or other
disposition (including the issuance of equity in a Person), whether for value or
no value and whether voluntary or involuntary (including by operation of law),
and (b) when used as a verb, to directly or indirectly transfer, sell, assign,
pledge, encumber, charge, hypothecate or otherwise dispose of (including the
issuance of equity in a Person) whether for value or for no value and whether
voluntarily or involuntarily (including by operation of law). “Transferred” and
“Transferrable” shall have a correlative meaning
 
 
 

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