10.

Stock Options

On June 7, 2016 stockholders of the Company approved amendments to the Innodata Inc. 2013 Stock Plan. The Innodata Inc. 2013 Stock Plan as amended and restated effective June 7, 2016 is referred to herein as the “Plan.” The number of shares of common stock of Innodata Inc. (“Stock”) that may be delivered, purchased or used for reference purposes (with respect to stock appreciation rights or stock units) for awards granted under the Plan after June 7, 2016 is 5,858,892 (the “Share Reserve”). Shares subject to an option or stock appreciation right granted under the Plan after June 7, 2016 shall count against the Share Reserve as one share for every share granted, and shares subject to any other type of award granted under the Plan after June 7, 2016 shall count against the Share Reserve as two shares for every share granted. Any award, or portion of an award, under the Plan or under the 2009 Stock Plan (as amended and restated (the “Prior Plan”)) that expires or terminates unexercised, becomes unexercisable or is forfeited or otherwise terminated, surrendered or canceled as to any shares without delivery of shares or other consideration shall be added back to the Share Reserve as one share for each such share that was subject to an option or stock appreciation right granted under the Plan or the Prior Plan, and two shares for each such share that was subject to an award other than an option or stock appreciation right granted under the Plan or the Prior Plan. If any shares are withheld, tendered or exchanged by a participant in the Plan as full or partial payment to Innodata of the exercise price under an option under the Plan or the Prior Plan or in satisfaction of a participant’s tax withholding obligations with respect to any award under the Plan or the Prior Plan, there shall be added back to the Share Reserve one share for each such share that was withheld, tendered or exchanged in respect of an option or stock appreciation right granted under the Plan or the Prior Plan, and two shares for each such share that was withheld, tendered or exchanged in respect of an award other than an option or stock appreciation right granted under the Plan or the Prior Plan.

The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. The weighted average fair values of the options granted and weighted average assumptions are as follows:

	For the Years Ended December 31,
	2016		2015			2014
Weighted average fair value of options granted	$	1.11	$	1.36		$	1.35

Risk-free interest rate		1.26%-1.93%		1.73	%		1.68	%
Expected life (years)		5 - 6		5 - 6			5
Expected volatility factor		47%-49%		49	%		55	%
Expected dividends		None		None			None

The Company estimates the risk-free interest rate using the U.S. Treasury yield curve for periods equal to the expected term of the options in effect at the time of grant. The expected term of options granted is based on a combination of vesting schedules, term of the options and historical experience. Expected volatility is based on historical volatility of the Company’s common stock. The Company uses an expected dividend yield of zero since it has never declared or paid any dividends on its capital stock.

A summary of option activity under the Plans as of December 31, 2016, and changes during the year then ended, is presented below:

					Weighted-Average
			Weighted -		Remaining		Aggregate
	Number of		Average Exercise		Contractual Term		Intrinsic
	Options		Price		(years)		Value
Outstanding at January 1, 2016		3,970,146	$	3.02
Granted		1,470,000		2.55
Exercised		-		-
Forfeited/Expired		(270,977)		3.10
Outstanding at December 31, 2016		5,169,169	$	2.88		5.76	$	38,000

Exercisable at December 31, 2016		2,689,943	$	3.06		4.39	$	7,887

Vested and Expected to Vest at December 31, 2016		5,169,169	$	2.88		5.76	$	38,000

The total compensation cost related to non-vested stock options not yet recognized as of December 31, 2016 totaled approximately $1.8 million. The weighted-average period over which these costs will be recognized is twenty-seven months.

There were no option exercises during the years ended December 31, 2016 and 2015. The total intrinsic value of options exercised amounted to $0.6 million for the year ended December 31, 2014.