10.

Stock Options

The Company adopted, with stockholder approval, amendments to the Innodata Inc. 2013 Stock Plan. The maximum number of shares of common stock that may be delivered, purchased or used for reference purposes (with respect to stock appreciation rights or stock units) with respect to awards granted under the Innodata Inc. 2013 Stock Plan, as amended and restated (the “2013 Plan”) is 2,138,655 shares of common stock of Innodata (“Stock”), plus (i) 41,096 shares of Stock that were available for issuance under the Innodata Isogen, Inc. 2009 Stock Plan, as amended and restated (the “Prior Plan”) as of June 4, 2013, plus (ii) any shares subject to an award or portion of any award under the Prior Plan that were outstanding as of June 4, 2013 that expire or terminate unexercised, become unexercisable or are forfeited or otherwise terminated, surrendered or canceled as to any shares without the delivery of shares of stock or other consideration. Shares of stock subject to options or stock appreciation rights granted under the 2013 Plan count against the share reserve as one share for every one share subject to such option or stock appreciation right and shares subject to any other type of award granted under the 2013 Plan count against the share reserve as two shares for every one share subject to such award. If any award, or portion of an award, under the 2013 Plan or Prior Plan expires or terminates unexercised, becomes unexercisable or is forfeited or otherwise terminated, surrendered or canceled as to any shares without the delivery of shares of Stock or other consideration, the shares subject to such award will thereafter be available for further awards under the 2013 Plan as provided in the next sentence. Shares of Stock that again become available for awards pursuant to the expiration, termination, forfeiture or cancellation of any award (other than an option or stock appreciation right) granted under the 2013 Plan, or of any award (other than an option or stock appreciation right) granted after March 31, 2011 under the Prior Plan, will be added back as two shares for every one share subject to such award or Prior Plan award. All other awards under the 2013 Plan and all other awards under the Prior Plan will be added back as one share for every one share subject to such award or Prior Plan award. The number of shares used for reference purposes in connection with these awards will be considered "delivered" for purposes of computing the maximum number of shares that may be delivered under the 2013 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,
	2015			2014			2013
Weighted average fair value of options granted	$	1.36		$	1.35		$	1.89

Risk-free interest rate		1.73	%		1.68	%		0.76	%
Expected life (years)		5 - 6			5			5 - 7
Expected volatility factor		49	%		55	%		67	%
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, 2015, 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, 2015		3,641,857	$	3.05
Granted		785,000		2.85
Exercised		-		-
Forfeited/Expired		(456,711)		2.97
Outstanding at December 31, 2015		3,970,146	$	3.02		5.31	$	322,925

Exercisable at December 31, 2015		1,420,482	$	3.07		4.03	$	215,225

Vested and Expected to Vest at December 31, 2015		3,970,146	$	3.02		5.31	$	322,925

The total compensation cost related to non-vested stock options not yet recognized as of December 31, 2015 totaled approximately $1.6 million. The weighted-average period over which these costs will be recognized is twenty-five months.

Because of the Company’s net operating loss carryforwards, no tax benefits resulting from the exercise of stock options have been recorded, thus there was no effect on cash flows from operating or financing activities.

The total intrinsic value of options exercised amounted to $ 0.6 million and $ 0.5 million for the years ended December 31, 2014 and 2013, respectively. There were no option exercises during the year ended December 31, 2015.

A summary of restricted shares under the Company’s stock option plans as of December 31, 2015, and changes during the period then ended, are presented below:

			Weighted-Average
			Grant Date Fair
	Number of Shares		Value
Unvested at January 1, 2015		7,500	$	2.59
Vested		(7,500)		2.59
Unvested at December 31, 2015		-	$	2.59