Document:

Exhibit 4.1

 

Innodata Inc.

 

and

 

American Stock Transfer & Trust Company,
LLC, as Rights Agent

 

dated as of December 27, 2012

 

    	 

    	 

    

 

TABLE OF CONTENTS

 

	Section 1	 	Definitions	 	4
	 	 	 	 	 
	Section 2	 	Appointment of Rights Agent	 	10
	 	 	 	 	 
	Section 3	 	Issue of Rights Certificate	 	11
	 	 	 	 	 
	Section 4	 	Form of Rights Certificates	 	12
	 	 	 	 	 
	Section 5	 	Countersignature and Registration	 	12
	 	 	 	 	 
	Section 6	 	Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates	 	13
	 	 	 	 	 
	Section 7	 	Exercise of Rights; Purchase Price; Expiration Date of Rights	 	13
	 	 	 	 	 
	Section 8	 	Cancellation and Destruction of Rights Certificates	 	14
	 	 	 	 	 
	Section 9	 	Status and Availability of Preferred Shares	 	14
	 	 	 	 	 
	Section 10	 	Preferred Shares Record Date	 	15
	 	 	 	 	 
	Section 11	 	Adjustment of Purchase Price, Number of Shares or Number of Rights	 	15
	 	 	 	 	 
	Section 12	 	Certificate of Adjustment	 	21
	 	 	 	 	 
	Section 13	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power	 	22
	 	 	 	 	 
	Section 14	 	Fractional Rights and Fractional Shares	 	22
	 	 	 	 	 
	Section 15	 	Rights of Action	 	23
	 	 	 	 	 
	Section 16	 	Agreements of Rights Holders	 	23
	 	 	 	 	 
	Section 17	 	Rights Certificate Holder Not Deemed a Stockholder	 	24
	 	 	 	 	 
	Section 18	 	Concerning the Rights Agent	 	24
	 	 	 	 	 
	Section 19	 	Merger or Consolidation or Change of Name of Rights Agent	 	24
	 	 	 	 	 
	Section 20	 	Duties of Rights Agent	 	25

 

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	Section 21	 	Change of Rights Agent	 	26
	 	 	 	 	 
	Section 22	 	Issuance of New Rights Certificates	 	27
	 	 	 	 	 
	Section 23	 	Redemption	 	27
	 	 	 	 	 
	Section 24	 	Exchange	 	29
	 	 	 	 	 
	Section 25	 	Notice of Certain Events	 	30
	 	 	 	 	 
	Section 26	 	Notices	 	30
	 	 	 	 	 
	Section 27	 	Supplements and Amendments	 	31
	 	 	 	 	 
	Section 28	 	Successors	 	31
	 	 	 	 	 
	Section 29	 	Benefits of This Agreement	 	31
	 	 	 	 	 
	Section 30	 	Severability	 	32
	 	 	 	 	 
	Section 31	 	Governing Law	 	32
	 	 	 	 	 
	Section 32	 	Counterparts	 	32
	 	 	 	 	 
	Section 33	 	Descriptive Headings	 	32
	 	 	 	 	 
	Section 34	 	Administration	 	32
	 	 	 	 	 
	Signatures	 	 	 	32
	 	 	 	 	 
	Exhibit A	 	Form of Certificate of Designation	 	A-1
	 	 	 	 	 
	Exhibit B	 	Form of Right Certificate	 	B-1
	 	 	 	 	 
	Exhibit C	 	Summary of Rights to Purchase Preferred Stock	 	C-1

 

 

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Exhibit 4.1

 

RIGHTS AGREEMENT dated as of December 27, 2012 (the "Agreement"),
between Innodata Inc., a Delaware corporation (the "Company"), and AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,
a New York limited liability trust company (the "Rights Agent").

 

Preamble

 

On December 27, 2012 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company (the "Board") authorized and declared a dividend distribution of one
preferred share purchase right (a "Right") for each share of common stock, par value $0.01 per share, of the Company
(the "Common Stock") outstanding at the Close of Business on January 14, 2013 (the "Record Date"), and has
authorized the issuance of one Right (as such number may be hereinafter adjusted pursuant to the terms hereof) with respect to
each additional share of Common Stock that shall become outstanding between the Record Date and the earliest of Close of Business
on the Distribution Date, the Redemption Date and Close of Business on the Final Expiration Date, each Right representing the right
to purchase one one-thousandth of a Preferred Share (as hereinafter defined), or such different amount and/or kind of securities
as shall be hereinafter provided.

 

The parties wish to enter into this Agreement in order to set
forth the terms of the Rights. Accordingly, in consideration of the premises and the mutual agreements herein set forth, the parties
hereby agree as follows:

 

Section
1      Definitions. For purposes of this Agreement,
the following terms have the following meanings:

 

(a)          "Acquiring
Person" shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 20% or more of the shares of Common Stock then outstanding, but shall not include (i) the Company, (ii) any Subsidiary
of the Company, (iii) any employee benefit plan of the Company or of any Subsidiary of the Company, (iv) any Person organized,
appointed or established by the Company for or pursuant to the terms of any such plan; provided, however, that the foregoing definition
shall be subject to the following qualifications:

 

(i)          no
Person shall become an "Acquiring Person" as the result of an acquisition of Common Stock by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares beneficially owned by such Person to 20% or more
of the shares of Common Stock of the Company then outstanding; provided, however, that if a Person shall become the Beneficial
Owner of 20% or more of the Common Stock of the Company then outstanding by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the Beneficial Owner of any additional Common Stock of the Company constituting
1% or more of the Common Stock outstanding as of the Close of Business on the date that such Person first becomes the Beneficial
Owner of 20% or more of the Common Stock of the Company, then such Person shall be deemed to be an "Acquiring Person";
and

 

(ii)         if
the Board determines in good faith that a Person who would otherwise be an "Acquiring Person" became such inadvertently
(including, without limitation, because (x) such Person was unaware that it beneficially owned a percentage of Common Stock that
would otherwise cause such Person to be an "Acquiring Person" or (y) such Person was aware of the extent of its Beneficial
ownership of Common Stock but had no actual knowledge of the consequences of such Beneficial ownership under this Agreement) and
without any intention of changing or influencing control of the company, and if such person as promptly as practicable divested
or divests itself of Beneficial Ownership of a sufficient number of shares of Common Stock so that such Person would no longer
be an "Acquiring Person," then such Person shall not be deemed to be or to have become an "Acquiring Person"
for any purposes of this Agreement.

 

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(b)          "Affiliate"
and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the Exchange Act Regulations,
as in effect on the date of this Agreement .

 

(c)          A
Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any securities:

 

(i)          which
such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange rights, other rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," (A)
securities tendered pursuant to a tender or ex-change offer made by such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange, or (B) securities issuable upon exercise of Rights;

 

(ii)         which
such Person or any of such Person's Affiliates or Associates, directly or indirectly, has "beneficial ownership" of or
has the right to vote or dispose of (in each case as determined pursuant to Rule 13d-3 of the Exchange Act Regulations), including
pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, however, that a Person shall not
be deemed the "Beneficial Owner" of, or to "beneficially own," any security under this subparagraph (ii) as
a result of an agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding: (A)
arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance
with, the applicable provisions of the Exchange Act Regulations, and (B) is not also then reportable by such Person on Schedule
13D under the Exchange Act (or any comparable or successor report);

 

(iii)        which
are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to subparagraph
(ii) of this paragraph (c)) or disposing of any voting securities of the Company; provided, however, that nothing in this paragraph
(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of, or to "beneficially
own," any securities that such Person acquires, or has the right to acquire, pursuant to customary agreements with the Company
and/or between underwriters and selling group members with respect to a bona fide public offering of securities. Notwithstanding
anything in the definition of Beneficial Ownership to the contrary, the phrase "then outstanding," when used with reference
to a Person's Beneficial Ownership of securities of the Company, shall mean the number of such securities then issued and outstanding
together with the number of such securities not then actually issued and outstanding which such Person would be deemed to own beneficially
hereunder; or

 

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(iv)        that
are the subject of a derivative transaction entered into by such Person or any of such Person’s Affiliates or Associates,
including, for these purposes, any derivative security acquired by such Person or any of such Person’s Affiliates or Associates
that gives such Person or any of such Person’s Affiliates or Associates the economic equivalent of ownership of an amount
of securities due to the fact that the value of the derivative security is explicitly determined by reference to the price or value
of such securities, or that provides such Person or any of such Person’s Affiliates or Associates an opportunity, directly
or indirectly, to profit or to share in any profit derived from any change in the value of such securities, in any case without
regard to whether (A) such derivative security conveys any voting rights in such securities to such Person or any of such Person’s
Affiliates or Associates; (B) the derivative security is required to be, or capable of being, settled through delivery of such
securities; or (C) such Person or any of such Person’s Affiliates or Associates may have entered into other transactions
that hedge the economic effect of such derivative security. In determining the number of Common Stock that are Beneficially Owned
by virtue of the operation of this Section 1(c)(iv), the subject Person will be deemed to Beneficially Own (without duplication)
the notional or other number of Common Stock that, pursuant to the documentation evidencing the derivative security, may be acquired
upon the exercise or settlement of the applicable security or as the basis upon which the value or settlement amount of such security,
or the opportunity of the holder of such derivative security to profit or share in any profit, is to be calculated, in whole or
in part, and in any case (or if no such number of Common Stock is specified in such documentation or otherwise) as determined by
the Board in good faith to be the number of Common Stock to which the derivative security relates.

 

(d)          "Business
Day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.

 

(e)          "Close
of Business" on any given date shall mean 5:00 P.M., New York City time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., New York City time, on the next succeeding Business Day.

 

(f)          "Common
Stock" when used with reference to the Company shall mean the shares of common stock, par value $0.01 per share, of the Company.

 

(g)          "Common
Stock" when used with reference to any Person other than the Company shall mean the capital stock (or equity interest) with
the greatest voting power of such other Person or, if such other Person is a Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person.

 

(h)          "Common
Stock Equivalents" shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(i)          "Company"
shall have the meaning set forth in the introductory paragraph to this Agreement.

 

(j)          “Current
per Share Market Price” and "current per share market price" shall have the meaning set forth in Section 11(d)(i)
hereof.

 

(k)          "Current
Value" shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(l)          "Definitive
Acquisition Agreement" shall mean any agreement entered into by the Company that is conditioned on the approval by the holders
of not less than a majority of the outstanding Common Stock of the Company and is with respect to (i) a share exchange, merger,
consolidation, recapitalization, reorganization, business combination or similar transaction involving the Company or (ii) the
acquisition, directly or indirectly, of assets or earning power aggregating 50% or more of the consolidated assets or earning power
of the Company and its Subsidiaries (taken as a whole).

 

(m)          "Distribution
Date" shall have the meaning set forth in Section 3(a) hereof.

 

(n)          "Equivalent
Preferred Shares" shall have the meaning set forth in Section 11(b) hereof.

 

(o)          "Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended.

 

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(p)          "Exchange
Act Regulations" shall mean the General Rules and Regulations under the Exchange Act.

 

(q)          "Expiration
Date" shall mean the Close of Business on January 13, 2016

 

(r)          "Final
Expiration Date" shall mean the earlier to occur of (A) the Close of Business on the day following the certification of the
voting results of the Company’s 2013 annual meeting of stockholders, if at such stockholder meeting there was no proposal
to approve the Rights Agreement or if a proposal to approve the Rights Agreement did not receive the affirmative vote of the holders
of a majority of the Company’s Common Stock present in person or represented by proxy, entitled to vote and actually voted
on such proposal and (B) the Expiration Date.

 

(s)          "Person"
shall mean any individual, firm, corporation, partnership, limited partnership, limited liability partnership, business trust,
limited liability company, unincorporated association or other entity, and shall include any successor (by merger or otherwise)
of such entity.

 

(t)          "Preferred
Shares" shall mean shares of Series C Participating Preferred Stock, par value $0.01 per share, of the Company having such
rights and preferences upon adoption as are set forth in Certificate of Designation filed with the Secretary of State of Delaware
on December 30, 2002 and set forth as Exhibit A hereto.

 

(u)          "Purchase
Price" shall have the meaning set forth in Section 7(b) hereof.

 

(v)         “Qualifying
Offer” shall mean an offer determined by the Board of Directors of the Company to have each of the following characteristics:

 

(i)          a
fully financed all-cash tender offer or an exchange offer offering shares of common stock of the offeror, or a combination thereof,
in each such case for all of the outstanding Common Stock of the Company at the same per share consideration;

 

(ii)         an
offer that has commenced within the meaning of Rule 14d-2(a) under the Exchange Act;

 

(iii)        an
offer that, within twenty (20) Business Days after commencement (or within ten (10) Business Days after any increase in the offer
consideration), does not result in a nationally recognized investment banking firm retained by the Board rendering an opinion to
the Board that the consideration being offered to the holders of the Common Stock of the Company is either inadequate or unfair;

 

(iv)        an
offer whose per share offer price and consideration (x) is not less than $17.00, subject to adjustment as provided in this Agreement,
and (y) also represent a reasonable premium over the highest reported market price of the Common Stock of the Company in the immediately
preceding 24 months prior to the date on which the offer is commenced; provided that to the extent that an offer includes
common stock of the offeror, such per share offer price with respect to such common stock of the offeror will be determined for
purposes of the foregoing provision using the lowest reported market price for common stock of the offeror during the five Trading
Days immediately preceding and the five Trading Days immediately following the date on which the Qualifying Offer is commenced;

 

(v)         an
offer pursuant to which the Company has received an irrevocable written commitment of the offeror that the offer will remain open
for at least 120 Business Days and, if a Special Meeting is duly requested in accordance with Section 23(b), for at least ten (10)
Business Days after the date of the Special Meeting or, if no Special Meeting is held within the Special Meeting Period, for at
least ten (10) Business Days following the last day of such Special Meeting Period;

 

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(vi)        an
offer that is conditioned on a minimum of at least two-thirds of the outstanding Common Stock of the Company not held by the offeror
(and such Person’s Affiliates and Associates) being tendered and not withdrawn as of the offer’s expiration date, which
condition shall not be waivable;

 

(vii)       an
offer that is subject only to the minimum tender condition described in Section 1(v)(vi) and other customary terms and conditions,
which conditions shall not include any financing, funding or similar conditions or any requirements with respect to the offeror
or its agents or any other Person being permitted any due diligence with respect to the books, records, management, accountants
and other outside advisors of the Company;

 

(viii)      an
offer pursuant to which the Company has received an irrevocable written commitment of the offeror that, in addition to the minimum
time periods specified above in Section 1(v)(v), the offer, if it is otherwise to expire prior thereto, will be extended for at
least twenty (20) Business Days after any increase in the consideration being offered or after any bona fide alternative
offer is commenced; provided, however, that such offer need not remain open, as a result of Section 1(v)(v) and this
Section 1(v)(viii), beyond (A) the time that any other offer satisfying the criteria for a Qualifying Offer is then required to
be kept open under such Section 1(v)(v) and this Section 1(v)(viii), (B) the expiration date, as such date may be extended by public
announcement (with prompt written notice to the Rights Agent) in compliance with Rule 14e-1 under the Exchange Act, of any other
tender offer for the Common Stock of the Company with respect to which the Board has agreed to redeem the Rights immediately prior
to acceptance for payment of the Common Stock of the Company thereunder (unless such other offer is terminated prior to its expiration
without any of the Common Stock of the Company having been purchased thereunder) or (C) one (1) Business Day after the stockholder
vote with respect to approval of any Definitive Acquisition Agreement has been officially determined and certified by the inspectors
of election;

 

(ix)         an
offer pursuant to which the Company has received an irrevocable written commitment by the offeror to consummate as promptly as
practicable upon successful completion of the offer a second-step transaction whereby all of the Common Stock of the Company not
tendered into the offer will be acquired at the same consideration per share actually paid pursuant to the offer, subject to stockholders’
statutory appraisal rights, if any;

 

(x)          an
offer pursuant to which the Company and its stockholders have received an irrevocable, legally binding written commitment of the
offeror that no amendments will be made to the offer to reduce the consideration being offered or to otherwise change the terms
of the offer in a way that is adverse to a tendering stockholder;

 

(xi)         an
offer (other than an offer consisting solely of cash consideration) pursuant to which the Company has received the written representation
and certification of the offeror and the written representations and certifications of the offeror’s Chief Executive Officer
and Chief Financial Officer, acting in such capacities, that (A) all facts about the offeror that would be material to making an
investor’s decision to accept the offer have been fully and accurately disclosed as of the date of the commencement of the
offer, (B) all such new facts will be fully and accurately disclosed on a prompt basis during the entire period during which the
offer remains open and (C) all required Exchange Act reports will be filed by the offeror in a timely manner during such period;

 

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(xii)        if
the offer includes shares of common stock of the offeror, (A) the non-cash portion of the consideration offered must consist solely
of common stock of an offeror that is a publicly-owned United States corporation, (B) such common stock must be freely tradable
and listed or admitted to trading on either the New York Stock Exchange or The NASDAQ Stock Market LLC ("Nasdaq"), (C)
no stockholder approval of the issuer of such common stock may be required to issue such common stock, or, if such approval may
be required, such approval must have already been obtained, (D) there must be no Person (including such Person’s Affiliates
and Associates) that Beneficially Owns 20% or more of the shares of common stock of the offeror then outstanding at the time of
commencement of the offer or at any time during the term of the offer, (E) no other class of voting stock of the offeror is outstanding,
and the offeror meets the registrant eligibility requirements for use of Form S-3 for registering securities under the Securities
Act of 1933, as amended, including the filing of all required Exchange Act reports in a timely manner during the twelve (12) calendar
months prior to the date of commencement of such offer; and

 

(xiii)       if
the offer includes shares of common stock of the offeror, an offer pursuant to which (A) the offeror shall permit representatives
of the Company (including a nationally-recognized investment banking firm retained by the Board and legal counsel and an accounting
firm designated by the Company) to have access to such offeror’s books, records, management, accountants, financial advisors,
counsel and any other appropriate outside advisors for the purposes of permitting such representatives to conduct a due diligence
review of the offeror in order to permit the Board to evaluate the offer and make an informed decision and, if requested by the
Board, to permit such investment banking firm (relying as appropriate on the advice of such legal counsel) to be able to render
an opinion to the Board with respect to whether the consideration being offered to the stockholders of the Company is fair from
a financial point of view and (B) within ten (10) Business Days after such representatives of the Company (including a nationally-recognized
investment banking firm retained by the Board and legal counsel and an accounting firm designated by the Company) shall have notified
the Company and the offeror that it has completed such due diligence review to its satisfaction (or, following completion of such
due diligence review, within ten (10) Business Days after any increase in the consideration being offered), such investment banking
firm does not render an opinion to the Board that the consideration being offered to the stockholders of the Company is either
unfair or inadequate and such investment banking firm does not, after the expiration of such ten (10) Business Day period, render
an opinion to the Board that the consideration being offered to the stockholders of the Company has become either unfair or inadequate
based on a subsequent disclosure or discovery of a development or developments that have had or are reasonably likely to have an
adverse effect on the value of the common stock of the offeror.

 

For purposes of this definition, “fully
financed” shall mean that the offeror has sufficient funds for the offer and related expenses which shall be evidenced by
(i) firm, unqualified, binding written commitments from responsible financial institutions having the necessary financial capacity,
accepted by the offeror, to provide funds for such offer subject only to customary terms and conditions, which conditions shall
not include any requirements with respect to such financial institutions or any other Person being permitted any due diligence
with respect to the books, records, management, accountants and other outside advisors of the Company, (ii) cash or cash equivalents
then available to the offeror, set apart and maintained solely for the purpose of funding the offer with an irrevocable written
commitment being provided by the offeror to the Board to maintain such availability until the offer is consummated or withdrawn,
or (iii) a combination of the foregoing; which evidence has been provided to the Company prior to, or upon, commencement of the
offer. If an offer becomes a Qualifying Offer in accordance with this definition, but subsequently ceases to be a Qualifying Offer
as a result of the failure at a later date to continue to satisfy any of the requirements of this definition, such offer shall
cease to be a Qualifying Offer and the provisions of Section 23(b) shall no longer be applicable to such offer.

 

(w)          “Qualifying
Offer Resolution” shall have the meaning set forth in Section 23(b).

 

(x)          "Record
Date" shall have the meaning set forth in the Preamble to this Agreement.

 

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(y)          "Redemption
Date" shall have the meaning set forth in Section 23(c) hereof.

 

(z)          "Redemption
Price" shall have the meaning set forth in Section 23(a) hereof.

 

(aa)         "Right"
shall have the meaning set forth in the Preamble to this Agreement.

 

(bb)         "Right
Certificate" shall mean a certificate evidencing a Right in substantially the form of Exhibit B hereto.

 

(cc)         "Rights
Agent" shall have the meaning set forth in the introductory paragraph to this Agreement.

 

(dd)         "Section
11(a)(ii) Trigger Date" shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(ee)         "Shares
Acquisition Date" shall mean the earlier of the date of (i) the public announcement by the Company or an Acquiring Person
that an Acquiring Person has become such or (ii) the public disclosure of facts by the Company or an Acquiring Person indicating
that an Acquiring Person has become such.

 

(ff)         "Spread"
shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(gg)         "Subsidiary"
of any Person shall mean any Person of which a majority of the voting power of the voting equity securities or equity interest
is owned, directly or indirectly, by such Person.

 

(hh)         "Substitution
Period" shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(ii)         "Summary
of Rights" shall mean the Summary of Rights to Purchase Preferred Shares in substantially the form of Exhibit C hereto.

 

(jj)         "Trading
Day" shall have the meaning set forth in Section 11(d)(i) hereof.

 

(kk)         "Voting
Stock," as of the date of any determination, shall mean the shares of Common Stock then outstanding and any other shares of
capital stock of the Company then outstanding which are entitled to vote upon matters submitted to the stockholders of the Company
for a vote.

 

Section
2      Appointment of Rights Agent.

 

The Company hereby appoints the Rights Agent to act as agent
for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as it may deem necessary or desirable. In the event
the Company appoints one or more co-Rights Agents, the respective duties of the Rights Agent and any co-Rights Agent shall be as
the Company shall determine. Contemporaneously with such appointment, if any, the Company shall notify the Rights Agent thereof.
The Rights Agent shall have no duty to supervise, and shall in no event be liable for, the acts or omissions of any such co-Rights
Agent.

 

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Section
3      Issue of Right Certificates.

 

(a)          Until
the earlier of (i) the Close of Business on the tenth calendar day after the Shares Acquisition Date or (ii) the tenth Business
Day (or such later date as may be determined by action of the Board of Directors prior to such time as any Person becomes an Acquiring
Person) after the date of the commencement by any Person (other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan) of, or of the first public announcement of the intention of any Person (other than any
of the Persons referred to in the preceding parenthetical) to commence, a tender or exchange offer the consummation of which would
result in any Person becoming an Acquiring Person (such date being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof) by the certificates for Common Stock registered
in the names of the holders thereof (which certificates shall also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the Rights will be transferable only in connection with the transfer of Common Stock. As soon as practicable
after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign, and the Company will send
or cause to be sent (and the Rights Agent will, if requested, send) by first-class, insured, postage-prepaid mail, to each record
holder of Common Stock as of the Close of Business on the Distribution Date, at the address of such holder shown on the records
of the Company, a Right Certificate evidencing one Right for each share of Common Stock so held. From and after the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.

 

(b)          On
the Record Date, or as soon as practicable thereafter, the Company will send a copy of the Summary of Rights by first-class, postage-prepaid
mail, to each record holder of Common Stock as of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for Common Stock outstanding as of the Record Date, until the Close
of Business on the Distribution Date, the Rights will be evidenced by such certificates registered in the names of the holders
thereof together with a copy of the Summary of Rights. Until the Close of Business on the Distribution Date (or, if earlier the
Redemption Date or the Close of Business on the Final Expiration Date), the surrender for transfer of any certificate for Common
Stock outstanding on the Record Date, with or without a copy of the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Stock evidenced thereby.

 

(c)          Certificates
for Common Stock which become outstanding (including, without limitation, reacquired Common Stock referred to in the last sentence
of this paragraph (c)) after the Record Date but prior to the earliest of the Close of Business on the Distribution Date, the Redemption
Date or the Close of Business on the Final Expiration Date shall have impressed on, printed on, written on or otherwise affixed
to them the following legend:

 

This certificate also evidences
and entitles the holder hereof to certain Rights as set forth in a Rights Agreement between Innodata Inc. and American Stock Transfer
& Trust Company, LLC, dated as of December 27, 2012 (the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal executive offices of Innodata Inc. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by
this certificate. Innodata Inc. will mail to the holder of this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances, as set forth in the Rights Agreement, Rights that are or were
acquired or beneficially owned by Acquiring Persons (as defined in the Rights Agreement) may become null and void.

 

With respect to such certificates containing the foregoing legend,
until the Close of Business on the Distribution Date, the Rights associated with the Common Stock represented by certificates shall
be evidenced by such certificates alone, and the surrender for transfer of any such certificate shall also constitute the transfer
of the Rights associated with the Common Stock represented thereby.

 

    	11

    	 

    

 

In the event that the Company purchases or acquires any Common
Stock after the Record Date but prior to the Close of Business on the Distribution Date, any Rights associated with such Common
Stock shall be deemed canceled and retired so that the Company shall not be entitled to exercise any Rights associated with the
shares of Common Stock which are no longer outstanding.

 

Notwithstanding this Section 3, neither the omission of the
legend required hereby, nor the failure to provide the notice thereof, shall affect the enforceability of any part of this Agreement
or the rights of any holder of the Rights.

 

Section
4      Form of Right Certificates.

 

The Right Certificates (and the forms of election to purchase
Preferred Shares and of assignment to be printed on the reverse thereof) shall be substantially the same as Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company
may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or transaction
reporting system on which the Rights may from time to time be listed, or to conform to usage. Subject to the other provisions of
this Agreement, the Right Certificates shall entitle the holders thereof to purchase such number of one one-thousandths of a Preferred
Share as shall be set forth therein at the Purchase Price, but the number of one one-thousandths of a Preferred Share and the Purchase
Price shall be subject to adjustment as provided herein.

 

Section
5      Countersignature and Registration.

 

(a)          The
Right Certificates shall be executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President,
any of its Vice Presidents, or its Chief Financial Officer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the Secretary or any Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned, either manually or by facsimile. In case any officer of the Company who shall have signed
any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance
and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date
of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate, although at
the date of the execution of this Agreement any such person was not such an officer.

 

(b)          Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at its principal office, books for registration of the transfer
of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced by each of the Right Certificates and the date of each of the Right Certificates.

 

    	12

    	 

    

 

		Section 6	Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.

 

(a)          Subject
to the provisions of Section 14 hereof, at any time after the Close of Business on the Distribution Date, and prior to the earlier
of the Redemption Date or the Close of Business on the Final Expiration Date, any Right Certificate or Right Certificates (other
than Right Certificates representing Rights that have become void pursuant to Section 11(a)(ii) hereof or that have been exchanged
pursuant to Section 24 hereof) may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-thousandths of a Preferred Share as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be transferred, split up, combined or exchanged at the principal
office of the Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the person entitled thereto a Right Certificate
or Right Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient for any tax or
governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates.

 

(b)          Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and,
at the Company's request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will make and deliver a
new Right Certificate of like tenor to the Rights Agent for delivery to the registered holder in lieu of the Right Certificate
so lost, stolen, destroyed or mutilated.

 

Section
7        Exercise of Rights; Purchase Price; Expiration Date of Rights.

 

(a)          The
registered holder of any Right Certificate (other than a holder whose Rights have become void pursuant to Section 11(a)(ii) hereof
or have been redeemed pursuant to Section 23 hereof) may exercise the Rights evidenced thereby in whole or in part at any time
after the Distribution Date and prior to the Final Expiration Date upon surrender of the Right Certificate, with the form of election
to purchase on the reverse side thereof duly executed, to the Rights Agent at its principal office, together with payment of the
Purchase Price for each one one-thousandth of a Preferred Share as to which the Rights are exercised, at or prior to the earliest
of (i) the Final Expiration Date, (ii) the time at which the Rights are redeemed as provided in Section 23 hereof, (iii) the time
at which such Rights are exchanged as provided in Section 24 hereof, or (iv) the time at which the Rights expire in connection
with the consummation of a Qualifying Offer as provided in Section 23 hereof.

 

(b)          The
purchase price for each one one-thousandth of a Preferred Share to be purchased upon the exercise of a Right shall initially be
Fourteen Dollars ($14.00) (the "Purchase Price"), shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof and shall be payable in lawful money of the United States of America in accordance with paragraph (c) below.

 

(c)          Upon
receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase and certificate duly executed,
accompanied by payment of the Purchase Price for the number of one one-thousandths of a Preferred Share to be purchased, and an
amount equal to any applicable transfer tax required to be paid by the holder of such Right Certificate in accordance with Section
9 hereof, in cash or by certified check, cashier's check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Preferred Shares certificates for the number of one one-thousandths
of a Preferred Share to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests,
(ii) when appropriate, requisition from the Company the amount of cash to be paid in lieu of issuance of fractional Preferred Shares
in accordance with Section 14 hereof, (iii) after receipt of such certificates, cause the same to be delivered to or upon the order
of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder and (iv)
when appropriate, after receipt, deliver such cash to or upon the order of the registered holder of such Right Certificate.

 

    	13

    	 

    

 

(d)          In
case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of
such Right Certificate or to such registered holder's duly authorized assigns, subject to the provisions of Section 14 hereof.

 

(e)          Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action
with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the form of election to purchase set forth on the reverse
side of the Right Certificate surrendered for such exercise and (ii) provided such additional evidence of the identity of the Beneficial
Owner (and/or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request.

 

Section
8      Cancellation and Destruction of Right Certificates.

 

All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it, and no Right Certificates
shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written request of the Company, destroy such canceled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to the Company.

 

Section
9      Status and Availability of Preferred Shares.

 

(a)          The
Company covenants and agrees that it will take all such action as may be necessary to ensure that all Preferred Shares delivered
upon exercise of Rights shall, at the time of delivery of the certificates for such Preferred Shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and non-assessable shares.

 

(b)          The
Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right Certificates or of any Preferred Shares upon the exercise
of Rights. The Company shall not, however, be required to pay any transfer tax which may be payable in respect of any transfer
or delivery of Right Certificates to a Person other than, or the issuance or delivery of certificates in a name other than that
of, the registered holder of the Right Certificate evidencing Rights surrendered for exercise or to issue or to deliver any certificates
for Preferred Shares upon the exercise of any Rights until any such tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or until it has been established to the Company's reasonable satisfaction
that no such tax is due.

 

    	14

    	 

    

 

(c)          The
Company shall use its best efforts to (i) file, as soon as practicable following the first occurrence of a Section 11(a)(ii) Trigger
Date, or as soon as is required by law following the Distribution Date, as the case may be, a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the securities purchasable upon exercise of
the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements
of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable, and (B) the Final Expiration
Date. The Company will also take such action as may be appropriate under, or to ensure compliance with, the securities or "blue
sky" laws of the various states in connection with the exercisability of the Rights. The Company may temporarily suspend,
for a period of time not to exceed ninety (90) days after the date on which it first becomes obligated to file a registration statement
as described above, the exercisability of the Rights in order to prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained or the exercise thereof shall not be permitted under
applicable law or a registration statement shall not have been declared effective.

 

(d)          The
Company covenants and agrees that it will use its best efforts to cause to be reserved and kept available, out of its authorized
and unissued Preferred Shares or any Preferred Shares held in its treasury, the number of Preferred Shares that will be sufficient
to permit the exercise in full of all outstanding Rights in accordance with Section 7 hereof. Upon the occurrence of any events
resulting in an increase in the aggregate number of shares of Preferred Stock (or other equity securities of the Company) issuable
upon exercise of all outstanding Rights above the number then reserved, the Company shall make appropriate increases in the number
of shares so reserved.

 

Section
10      Preferred Shares Record Date.

 

Each person in whose name any certificate for Preferred Shares
is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Preferred Shares
represented thereby on, and such certificate shall be dated, the date upon which the Right Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a holder of Preferred Shares for which
the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions
or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.

 

Section
11      Adjustment of Purchase Price, Number of Shares or Number of Rights.

 

The Purchase Price, the number of Preferred Shares covered by
each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.

 

(a)          

 

(i)          In
the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Preferred Shares payable
in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the outstanding Preferred Shares into a smaller
number of Preferred Shares or (D) issue any shares of its capital stock in a reclassification of the Preferred Shares (including
any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of capital stock
issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled
to receive the aggregate number and kind of shares of capital stock which, if such Right had been exercised immediately prior to
such date, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right. If
an event occurs which would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made prior, to any adjustment required pursuant to Section 11(a)(ii).

 

    	15

    	 

    

 

(ii)         Subject
to Section 23 and Section 24, and further subject to the following paragraph of this subparagraph (ii), in the event any Person
shall become an Acquiring Person, each holder of a Right shall thereafter have a right to receive, upon exercise thereof at a price
equal to the then current Purchase Price multiplied by the number of one one-thousandths of a Preferred Share for which a Right
is then exercisable, in accordance with the terms of this Agreement and in lieu of Preferred Shares, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x) multiplying the then current Purchase Price by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable and dividing that product by (y) 50% of the then current
per share market price of the Company's Common Stock (determined pursuant to Section 11(d) hereof) on the date such Person became
an Acquiring Person. In the event that any Person shall become an Acquiring Person and the Rights shall then be outstanding, the
Company shall not take any action that would eliminate or diminish the benefits intended to be afforded by the Rights.

 

From and after the occurrence of such an
event, any Rights that are or were beneficially owned or acquired by such Acquiring Person (or any Associate or Affiliate of such
Acquiring Person) on or after the earlier of (x) the date of such event and (y) the Distribution Date shall be void and any holder
of such Rights shall thereafter have no right to exercise such Rights under any provision of this Agreement. No Right Certificate
shall be issued pursuant to Section 3 that represents Rights beneficially owned by an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate thereof; no Right Certificate shall be issued at any time upon
the transfer of any Rights to an Acquiring Person whose Rights would be void pursuant to the preceding sentence or any Associate
or Affiliate thereof or to any nominee of such Acquiring Person, Associate or Affiliate; and any Right Certificate delivered to
the Rights Agent for transfer to an Acquiring Person whose Rights would be void pursuant to the preceding sentence or any Associate
or Affiliate thereof shall be canceled.

 

    	16

    	 

    

 

(iii)        In
the event that the number of shares of Common Stock which are authorized by the Company's certificate of incorporation and not
outstanding or subscribed for, or reserved or otherwise committed for issuance for purposes other than upon exercise of the Rights,
are not sufficient to permit the holder of each Right to purchase the number of shares of Common Stock to which he would be entitled
upon the exercise in full of the Rights in accordance with the foregoing subparagraph (ii) of paragraph (a) of this Section 11,
or should the Board of Directors so elect, the Company shall: (A) determine the excess of (1) the value of the Common Stock issuable
upon the exercise of a Right (calculated as provided in the last sentence of this subparagraph (iii)) pursuant to Section 11(a)(ii)
hereof (the "Current Value") over (2) the aggregate Purchase Price that would be payable upon full exercise of a Right
(such excess, the "Spread"), and (B) with respect to each Right, make adequate provision to substitute for such Common
Stock, upon payment of the applicable Purchase Price, any one or more of the following having an aggregate value determined by
the Board of Directors to be equal to the Current Value: (1) cash, (2) a reduction in the Purchase Price, (3) Common Stock or other
equity securities of the Company (including, without limitation, shares, or units of shares, of preferred stock which the Board
of Directors of the Company has determined to have the same value as shares of Common Stock (such shares of preferred stock, "Common
Stock Equivalents")), (4) debt securities of the Company, (5) other assets , or any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value has been determined by the Board of Directors of the Company
based upon the advice of an investment banking firm selected by the Board of Directors of the Company; provided, however, if the
Company shall not have made adequate provision to deliver value pursuant to clause (B) above within thirty (30) days following
the first occurrence of an event triggering the rights to purchase Common Stock described in Section 11(a)(ii) (the "Section
11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the extent available) and then, if necessary, cash, which shares
and cash have an aggregate value equal to the Spread. If the Board of Directors of the Company shall determine in good faith that
it is likely that sufficient additional shares of Common Stock could be authorized for issuance upon exercise in full of the Rights,
the thirty (30) day period set forth above may be extended to the extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval for the authorization of such additional
shares (such period, as it may be extended, the "Substitution Period"). To the extent that the Company determines that
some action need be taken pursuant to the first and/or second sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to the last paragraph of Section 11(a)(ii) hereof, that such action shall apply uniformly to all outstanding Rights, and
(y) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek any authorization
of additional shares and/or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine
the value thereof. In the event of any such suspension, the Company shall make a public announcement, and shall deliver to the
Rights Agent a statement, stating that the exercisability of the Rights has been temporarily suspended. At such time as the suspension
is no longer in effect, the Company shall make another public announcement, and deliver to the Rights Agent a statement so stating.
For purposes of this Section 11(a)(iii), the value of the Common Stock shall be the current per share market price (as determined
pursuant to Section 11(d)(i) hereof) of the Common Stock on the Section 11(a)(ii) Trigger Date and the value of any Common Stock
Equivalent shall be deemed to have the same value as the Common Stock on such date.

 

(b)          In
the event that the Company shall fix a record date for the issuance of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Preferred
Shares (or shares having the same rights, privileges and preferences as the Preferred Shares ("Equivalent Preferred Shares"))
or securities convertible into Preferred Shares or Equivalent Preferred Shares at a price per Preferred Share or Equivalent Preferred
Share (or having a conversion price per share, if a security convertible into Preferred Shares or Equivalent Preferred Shares)
less than the then current per share market price of the Preferred Shares (as defined in Section 11(d)) on such record date, the
Purchase Price to be in effect after such record date shall be adjusted by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the number of Preferred Shares outstanding on such record
date plus the number of Preferred Shares which the aggregate offering price of the total number of Preferred Shares and/or Equivalent
Preferred Shares so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered)
would purchase at such current market price and the denominator of which shall be the number of Preferred Shares outstanding on
such record date plus the number of additional Preferred Shares and/or Equivalent Preferred Shares to be offered for subscription
or purchase (or into which the convertible securities so to be offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. In case such subscription price may be paid in a consideration part or
all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent. Preferred Shares
owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the event that such rights, options or warrants are not
so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had
not been fixed.

 

    	17

    	 

    

 

(c)          In
case the Company shall fix a record date for the making of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation)
of evidences of indebtedness or assets (other than a regular quarterly cash dividend or a dividend payable in Preferred Shares)
or subscription rights or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the then current per share market price of the Preferred Shares on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share and the denominator of which shall be such current per share
market price of the Preferred Shares; provided, however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock of the Company to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.

 

(d)          

 

(i)          For
the purpose of any computation hereunder, the "current per share market price" of any security (a "Security"
for the purpose of this Section 11(d)(i)) on any date shall be deemed to be the average of the daily closing prices per share of
such Security for the 30 consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current per share market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or distribution on such Security payable in shares of such Security
or securities convertible into such shares, or (B) any subdivision, combination or reclassification of such Security and prior
to the expiration of 30 Trading Days after the ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the current per share market price shall be appropriately
adjusted by the Board of Directors to take into account ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular
way, in either case, as reported in the principal consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted
to trading on the Nasdaq or, if the Security is not listed or admitted to trading on the Nasdaq, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal national securities exchange on which the Security
is listed or admitted to trading or, if the Security is not listed or admitted to trading on any national securities exchange,
the last sale price or, if such last sale price is not reported, the average of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Company. If on any such date no market maker is making a market in the Security,
the fair value of such shares on such date as determined in good faith by the Board of Directors of the Company shall be used.
The term "Trading Day" shall mean a day on which the principal national securities exchange on which the Security is
listed or admitted to trading is open for the transaction of business, or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.

 

    	18

    	 

    

 

(ii)         For
the purpose of any computation hereunder, the "current per share market price" of the Preferred Shares shall be determined
in accordance with the method set forth in Section 11(d)(i). If the Preferred Shares are not publicly traded, the "current
per share market price" of the Preferred Shares shall be conclusively deemed to be the current per share market price of the
Common Stock as determined pursuant to Section 11(d)(i) (appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by 1,000. If neither the shares of Common Stock nor the Preferred Shares
are publicly held or so listed or traded, "current per share market price" shall mean the fair value per share as determined
in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights
Agent.

 

(e)          No
adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least 1%
in the Purchase Price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one ten-millionth of a Preferred Share or one ten-thousandth of any other share or security
as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three years from the date of the transaction which requires such adjustment or (ii) the
date of the expiration of the right to exercise any Rights.

 

(f)          If
as a result of an adjustment made pursuant to Section 11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred Shares, the number of such other shares so receivable
upon exercise of any Right shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Preferred Shares contained in Section 11(a), (b),(c), (h), (i), (j), (k),
(l), (m) and (n) and the provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Shares shall apply on like terms
to any such other shares.

 

(g)          all
Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right
to purchase, at the adjusted Purchase Price, the number of one one-thousandths of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.

 

(h)          Unless
the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price as a result
of the calculations made in Sections 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one one-thousandths of a Preferred Share
(calculated to the nearest one ten-millionth of a Preferred Share) obtained by (i) multiplying (x) the number of one one-thousandths
of a share covered by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.

 

    	19

    	 

    

 

(i)          The
Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights in substitution for
any adjustment in the number of one one-thousandths of a Preferred Share purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of one one-thousandths of
a Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one hundred-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Right Certificates
have been distributed, shall be at least 10 days later than the date of the public announcement. If Right Certificates have been
distributed, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates
held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates to be so distributed
shall be issued, executed and countersigned in the manner provided for herein and shall be registered in the names of the holders
of record of Right Certificates on the record date specified in the public announcement.

 

(j)          Irrespective
of any adjustment or change in the Purchase Price or the number of one one-thousandths of a Preferred Share issuable upon the exercise
of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price and the number
of one one-thousandths of a Preferred Share which were expressed in the initial Right Certificates issued hereunder.

 

(k)          Before
taking any action that would cause an adjustment reducing the Purchase Price below one one-thousandth of the then par value of
the Preferred Shares issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and legally issue fully paid and non-assessable Preferred Shares
at such adjusted Purchase Price.

 

(l)          In
any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence of such event the issuing to the holder of any Right
exercised after such record date of the Preferred Shares and other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the Preferred Shares and other capital stock or securities of the Company, if any, issuable upon
such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.

 

    	20

    	 

    

   

(m)          Anything
in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11, as and to the extent that it in its sole discretion shall
determine to be advisable in order that any (i) combination or subdivision of the Preferred Shares, (ii) issuance wholly for cash
of any Preferred Shares at less than the current market price, (iii) issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for Preferred Shares, (iv) dividends on Preferred Shares payable in Preferred
Shares or (v) issuance of any rights, options or warrants referred to hereinabove in Section 11(b), hereafter made by the Company
to holders of its Preferred Shares shall not be taxable to such stockholders.

 

(n)          In
the event that the Company shall at any time after the date of this Agreement (A) declare a dividend on the Common Stock payable
in Common Stock shares, (B) subdivide the outstanding Common Stock, (C) combine the outstanding Common Stock (by reverse stock
split or otherwise) into a smaller number of Common Stock shares, or (D) issue any shares of its capital stock in a reclassification
of the Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then, in each such event: (1) each share of Common Stock (or shares of capital stock issued
in such reclassification of the Common Stock) outstanding immediately following such time shall have associated with it the number
of Rights as were associated with one share of Common Stock immediately prior to the occurrence of the event described in clauses
(A)-(D) above; (2) the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that the Purchase Price thereafter shall equal the result obtained
by multiplying the Purchase Price in effect immediately prior to such time by a fraction, the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to the event described in clauses (A)-(D) above, and the denominator
of which shall be the total number of shares of Common Stock outstanding immediately after such event; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Company issuable upon exercise of such Right; and (3) the number of one one-thousandth of a Preferred Share
(or shares of such other capital stock) issuable upon the exercise of each Right outstanding after such event shall equal the number
of one one-thousandth of a Preferred Share (or shares of such other capital stock) as were issuable with respect to one Right immediately
prior to such event. Each share of Common Stock that shall become outstanding after an adjustment has been made pursuant to this
Section 11(n) shall have associated with it the number of Rights, exercisable at the Purchase Price and for the number of one one-thousandth
of a Preferred Share (or shares of such other capital stock) as one share of Common Stock has associated with it immediately following
the adjustment made pursuant to this Section 11(n). If an event occurs which would require an adjustment under both this Section
11(n) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(n) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.

 

Section
12     Certificate of Adjustment.

 

Whenever an adjustment is made as provided in Section 11 or
13 hereof, the Company shall promptly (a) prepare a certificate setting forth such adjustment, and a brief statement of the facts
accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent for the Common Stock or the Preferred
Shares a copy of such certificate and (c) mail a brief summary thereof to each holder of a Right Certificate in accordance with
Section 25 hereof. Notwithstanding the foregoing sentence, the failure by the Company to make such certification or give such notice
shall not affect the validity of or the force or effect of the requirement for such adjustment. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein contained.

 

    	21

    	 

    

 

Section
13     Consolidation, Merger or Sale or Transfer of Assets or Earning Power.

 

In the event that, at any time after a Person becomes an Acquiring
Person, directly or indirectly, (i) the Company shall consolidate with, or merge with and into, any other Person, (ii) any Person
shall consolidate with the Company, or merge with and into the Company and the Company shall be the continuing or surviving corporation
of such merger and, in connection with such merger, all or part of the shares of Common Stock shall be changed into or exchanged
for stock or other securities of any other Person (or the Company) or cash or any other property, or (iii) the Company shall sell
or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one or more transactions, assets
or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person other than the Company or one or more of its wholly-owned Subsidiaries, then, and in each such case, proper
provision shall be made so that (A) each holder of a Right (except as otherwise provided herein) shall thereafter have the right
to receive, upon the exercise thereof at a price equal to the then current Purchase Price multiplied by the number of one one-thousandths
of a Preferred Share for which a Right is then exercisable, in accordance with the terms of this Agreement and in lieu of Preferred
Shares, such number of shares of Common Stock of such other Person (including the Company as successor thereto or as the surviving
corporation) as shall equal the result obtained by (x) multiplying the then current Purchase Price by the number of one one-thousandths
of a Preferred Share for which a Right is then exercisable and dividing that product by (y) 50% of the then current per share market
price of the Common Stock of such other Person (determined pursuant to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (B) the issuer of such Common Stock shall thereafter be liable for, and shall assume,
by virtue of such consolidation, merger, sale or transfer, all the obligations and duties of the Company pursuant to this Agreement;
(C) the term "Company" shall thereafter be deemed to refer to such issuer; and (D) such issuer shall take such steps
(including, but not limited to, the reservation of a sufficient number of its shares of Common Stock in accordance with Section
9 hereof) in connection with such consummation as may be necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the Common Stock thereafter deliverable upon the exercise of the Rights. The Company
covenants and agrees that it shall not consummate any such consolidation merger, sale or transfer unless prior thereto the Company
and such issuer shall have executed and delivered to the Rights Agent a supplemental agreement so providing. The Company shall
not enter into any transaction of the kind referred to in this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or arrangements which, as a result of the consummation of such
transaction, would eliminate or substantially diminish the benefits intended to be afforded by the Rights. The provisions of this
Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. For purposes hereof, the
"earning power" of the Company and its Subsidiaries shall be determined in good faith by the Company's Board of Directors
on the basis of the operating earnings of each business operated by the Company and its Subsidiaries during the three fiscal years
preceding the date of such determination (or, in the case of any business not operated by the Company or any Subsidiary during
three full fiscal years preceding such date, during the period such business was operated by the Company or any Subsidiary).

 

Section
14     Fractional Rights and Fractional Shares.

 

(a)          The
Company shall not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered holders of the Right Certificates with regard to which
such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of
a whole Right. For the purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of
the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable.
The closing price for such Trading Day shall be determined in accordance with the method set forth in Section 11(d)(i).

 

    	22

    	 

    

 

(b)          The
Company shall not be required to issue fractions of Preferred Shares (other than fractions which are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or to distribute certificates which evidence fractional Preferred
Shares (other than fractions which are integral multiples of one one-thousandth of a Preferred Share). Fractions of Preferred Shares
in integral multiples of one one-thousandth of a Preferred Share may, at the election of the Company, be evidenced by depository
receipts, pursuant to an appropriate agreement between the Company and a depository selected by it; provided, that such agreement
shall provide that the holders of such depository receipts shall have all the rights, privileges and preferences to which they
are entitled as beneficial owners of the Preferred Shares represented by such depository receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-thousandth of a Preferred Share, the Company shall pay to each registered holder
of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of
the current market value of one Preferred Share as the fraction of one Preferred Share that such holder would otherwise receive
upon the exercise of the aggregate number of rights exercised by such holder. For the purposes of this Section 14(b), the current
market value of a Preferred Share shall be the closing price of a Preferred Share (as determined pursuant to Section 11(d) hereof)
for the Trading Day immediately prior to the date of such exercise

 

(c)          The
holder of a Right by the acceptance of the Right expressly waives any right to receive fractional Rights or fractional shares upon
exercise of a Right (except as provided above).

 

Section
15     Rights of Action.

 

All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under Section 18 hereof, are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the Common Stock); and any registered
holder of any Right Certificate (or, prior to the Distribution Date, of the Common Stock) may, without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the Common Stock), on his own behalf
and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce,
or otherwise act in respect of, his right to exercise the Rights evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights,
it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.

 

Section
16     Agreement of Right Holders.

 

Every holder of a Right, by accepting the
same, consents and agrees with the Company and the Rights Agent and with every other holder of a Right that:

 

(a)          prior
to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Common Stock;

 

(b)          after
the Distribution Date, the Right Certificates are transferable only on the registry books maintained by the Rights Agent if surrendered
at the principal office of the Rights Agent, duly endorsed or accompanied by a proper instrument of transfer with a completed form
of certification; and

 

    	23

    	 

    

 

(c)          the
Company and the Rights Agent may deem and treat the person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding
any notations of ownership or writing on the Right Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected
by any notice to the contrary.

 

Section
17     Right Certificate Holder Not Deemed a Stockholder.

 

No holder, as such, of any Right Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the holder of the Preferred Shares or any other securities of the Company
which may at any time be issuable on the exercise of the Rights represented thereby nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders
(except as provided in Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with the provisions hereof.

 

Section
18     Concerning the Rights Agent.

 

(a)          The
Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without gross negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with
the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim or liability
in connection therewith.

 

(b)          The
Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right Certificate or certificate for Preferred Shares
or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed
and, where necessary, verified or acknowledged, by the proper Person or Persons.

 

Section
19     Merger or Consolidation or Change of Name of Rights Agent.

 

(a)          Any
corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party,
or any corporation succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent, shall be the successor
to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions
of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any
of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature
of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this Agreement.

 

    	24

    	 

    

 

(b)          In
case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such
Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Agreement.

 

Section
20     Duties of Rights Agent.

 

The Rights Agent undertakes the duties and obligations expressly
set forth in this Agreement and no implied duties or obligations shall be read into this Agreement against the Rights Agent. The
Rights Agent shall perform those duties and obligations upon the following terms and conditions, by all of which the Company and
the holders of Right Certificates, by their acceptance thereof, shall be bound:

 

(a)          The
Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.

 

(b)          Whenever
in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, but not limited to, the identity of any Acquiring Person, the determination of the current market price of any security
and the existence of a Qualifying Offer) be proved or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of the Board, the President, a Vice President, the Treasurer
or the Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.

 

(c)          The
Rights Agent shall be liable hereunder only for its own gross negligence, bad faith or willful misconduct.

 

(d)          The
Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in
the Right Certificates (except as to its countersignature thereof) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.

 

(e)          The
Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except
its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Right Certificate; nor shall it be responsible for any adjustment required under the provisions of
Section 11 or 13 hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence
of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice of any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of Preferred Shares to be issued pursuant to this Agreement or any Right Certificate
or as to whether any Preferred Shares will, when so issued, be validly authorized and issued, fully paid and nonassessable.

 

    	25

    	 

    

 

(f)          The
Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.

 

(g)          The
Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the President, a Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered
to be taken by it in good faith in accordance with instructions of any such officer.

 

(h)          The
Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal
entity.

 

(i)          The
Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect
or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and continued employment thereof.

 

Section
21     Change of Rights Agent.

 

The Rights Agent or any successor Rights Agent may resign and
be discharged from its duties under this Agreement upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock and the Preferred Shares by registered or certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon 30 days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock and the Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the registered holder
of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the
laws of the United States or of any state of the United States, in good standing, which is authorized under such laws to exercise
corporate trust or stockholder services powers and is subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and surplus of at least $100 million. After appointment,
the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed
necessary for the purpose. Not later than the effective date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock and the Preferred Shares, and mail a notice thereof
in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however,
or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.

 

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Section
22     Issuance of New Right Certificates.

 

Notwithstanding any of the provisions of this Agreement or of
the Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may
be approved by its Board of Directors to reflect any adjustment or change in the Purchase Price and the number or kind or class
of shares or other securities or property purchasable under the Rights made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the
Final Expiration Date, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to the exercise
of stock options or under any employee benefit plan or arrangement or upon the exercise, conversion or exchange of securities of
the Company currently outstanding or issued at any time in the future by the Company and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights Certificates representing the appropriate number
of Rights in connection with such issuance or sale; provided, however, that (i) no such Rights Certificate shall be issued and
this sentence shall be null and void ab initio if, and to the extent that, such issuance or this sentence would create a significant
risk of or result in material adverse tax consequences to the Company or the Person to whom such Rights Certificate would be issued
or would create a significant risk of or result in such options' or employee plans' or arrangements' failing to qualify for otherwise
available special tax treatment and (ii) no such Rights Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.

 

Section
23     Redemption.

 

(a)          The
Board of Directors of the Company may, at its option, at any time prior to the earlier of (i) the Close of Business on the tenth
calendar date following the Shares Acquisition Date, or (ii) the Final Expiration Date, redeem all but not less than all of the
then outstanding Rights at a redemption price of $0.001 per Right, appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the "Redemption
Price"). The redemption of the Rights by the Board of Directors may be made effective at such time, on such basis and subject
to such conditions as the Board of Directors in its sole discretion may establish.

 

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(b)          In
the event the Company receives a Qualifying Offer and the Board has not redeemed the outstanding Rights or exempted such offer
from the terms of this Agreement or called a special meeting of stockholders by the end of the ninetieth (90th) Business Day following
the commencement (or, if later, the first existence) of such Qualifying Offer, for the purpose of voting on whether or not to exempt
such Qualifying Offer from the terms of this Agreement, holders of record (or their duly authorized proxy) of at least 10% of the
outstanding Common Stock of the Company (excluding Common Stock Beneficially Owned by the offeror and the offeror’s Affiliates
and Associates) may submit to the Board, not earlier than ninety (90) Business Days nor later than 120 Business Days following
the commencement (or, if later, the first existence) of such Qualifying Offer, a written demand complying with the terms of this
Section 23(b) (the “Special Meeting Demand”) directing the Board to submit to a vote of stockholders at a special meeting
of the stockholders of the Company (a “Special Meeting”) a resolution exempting such Qualifying Offer from the provisions
of this Agreement (the “Qualifying Offer Resolution”). For purposes of a Special Meeting Demand, the record date for
determining holders of record eligible to make a Special Meeting Demand shall be the ninetieth (90th) Business Day following commencement
(or, if later, the first existence) of a Qualifying Offer. The Board shall take such actions as are necessary or desirable to cause
the Qualifying Offer Resolution to be so submitted to a vote of stockholders at a Special Meeting to be convened within ninety
(90) Business Days following the Special Meeting Demand (the “Special Meeting Period”); provided, however, that if
the Company at any time during the Special Meeting Period and prior to a vote on the Qualifying Offer Resolution enters into a
Definitive Acquisition Agreement, the Special Meeting Period may be extended by the Board (and any special meeting called in connection
therewith may be cancelled) if the Qualifying Offer Resolution will be separately submitted to a vote at the same meeting as the
Definitive Acquisition Agreement. A Special Meeting Demand must be delivered to the Secretary of the Company at the principal executive
offices of the Company and must set forth as to the stockholders of record making the request (x) the names and addresses of such
stockholders, as they appear on the Company’s books and records, (y) the number of the Common Stock of the Company which
are owned of record by each of such stockholders, and (z) in the case of the Common Stock of the Company that are Beneficially
Owned by another Person, an executed certification by the holder of record that such holder has executed such Special Meeting Demand
only after obtaining instructions to do so from such Beneficial Owner and attaching evidence thereof. Subject to the requirements
of applicable law, the Board may take a position in favor of or opposed to the adoption of the Qualifying Offer Resolution, or
no position with respect to the Qualifying Offer Resolution, as it determines to be appropriate in the exercise of its duties.
In the event that the Qualifying Offer continues to be a Qualifying Offer and either (i) the Special Meeting is not convened on
or prior to the last day of the Special Meeting Period (the “Outside Meeting Date”), or (ii) if, at the Special Meeting
at which a quorum is present, a majority of the outstanding Common Stock of the Company as of the record date for the Special Meeting
selected by the Board shall vote in favor of the Qualifying Offer Resolution, then the Qualifying Offer shall be deemed exempt
from the application of this Agreement to such Qualifying Offer so long as it remains a Qualifying Offer, such exemption to be
effective on the Close of Business on the tenth (10th) Business Day after (A) the Outside Meeting Date or (B) the date on which
the results of the vote on the Qualifying Offer Resolution at the Special Meeting are certified as official by the appointed inspectors
of election for the Special Meeting, as the case may be (the “Exemption Date”). Notwithstanding anything herein to
the contrary, no action or vote, including action by written consent, by stockholders not in compliance with the provisions of
this Section 23(b) shall serve to exempt any offer from the terms of this Agreement. The Company shall promptly notify the Rights
Agent in writing upon the occurrence of the Exemption Date and, if such notification is given orally, the Company shall confirm
same in writing on or prior to the Business Day next following. Until such notice is received by the Rights Agent, the Rights Agent
may presume conclusively for all purposes that the Exemption Date has not occurred.

 

    	28

    	 

    

 

(c)          Immediately
upon the time of the effectiveness of the redemption of the Rights pursuant to paragraph (a) of this Section 23 or such earlier
time as may be determined by the Board of Directors of the Company in the action ordering such redemption (although not earlier
than the time of such action) (such time the "Redemption Date"), and without any further action and without any notice,
the right to exercise the Rights shall terminate and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. The Company shall promptly give public notice of any such redemption; provided, however, that the failure to
give, or any defect in, any such notice shall not affect the validity of such redemption. Within 10 days after such action of the
Board of Directors ordering the redemption of the Rights pursuant to paragraph (a), the Company shall mail a notice of redemption
to all the holders of the then outstanding Rights at their last addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. If the payment of the
Redemption Price is not included with such notice, each such notice shall state the method by which the payment of the Redemption
Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights
at any time in any manner other than that specifically set forth in this Section 23 or in Section 24 hereof, other than in connection
with the purchase of Common Stock.

 

(d)          Immediately
upon the Close of Business on the Exemption Date, if any, without any further action and without any notice, the right to exercise
the Rights with respect to the Qualifying Offer will terminate.

 

Section
24     Exchange.

 

(a)          The
Board may, at its option, at any time after any Person becomes an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 11(a)(ii) hereof)
for Common Stock at an exchange ratio of one Common Share per Right, appropriately adjusted to reflect any adjustment in the number
of Rights pursuant to Section 11(i) (such exchange ratio being hereinafter referred to as the “Exchange Ratio”). Notwithstanding
the foregoing, the Board shall not be empowered to effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such Subsidiary, or any entity holding Common Stock
for or pursuant to the terms of any such plan), together with all Affiliates and Associates of such Person, becomes the Beneficial
Owner of 50% or more of the Common Stock of the Company then outstanding.

 

(b)          Immediately
upon the action of the Board ordering the exchange of any Rights pursuant to paragraph (a) of this Section 24 and without any further
action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Common Stock of the Company equal to the number of such Rights held by such holder multiplied
by the Exchange Ratio. The Company shall promptly give public notice of any such exchange; provided, however, that the failure
to give, or any defect in, such notice shall not affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of exchange will state the method by which the exchange of the Common Stock for Rights will be effected,
and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 11(a)(ii)
hereof) held by each holder of Rights.

 

(c)          In
the event that there shall not be sufficient Common Stock issued but not outstanding or authorized but unissued to permit any exchange
of Rights as contemplated in accordance with this Section 24, the Company shall take all such action as may be necessary to authorize
additional Common Stock for issuance upon exchange of the Rights. In the event the Company shall, after good faith effort, be unable
to take all such action as may be necessary to authorize such additional Common Stock, the Company shall substitute, for each Common
Share that would otherwise be issuable upon exchange of a Right, a number of Preferred Shares or fraction thereof such that the
current per share market price of one Preferred Share multiplied by such number or fraction is equal to the current per share market
price of one Common Share as of the date of issuance of such Preferred Shares or fraction thereof.

 

    	29

    	 

    

 

(d)          The
Company shall not be required to issue fractions of Common Stock or to distribute certificates which evidence fractional Common
Stock. In lieu of such fractional Common Stock, the Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional Common Stock would otherwise be issuable an amount in cash equal to the same fraction of the current
market value of a whole Common Share. For the purposes of this paragraph (d), the current market value of a whole Common Share
shall be the closing price of a Common Share (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this Section 24.

 

Section
25     Notice of Certain Events.

 

(a)          In
case the Company shall after the Distribution Date propose (i) to pay any dividend payable in stock of any class to the holders
of its Preferred Shares or to make any other distribution to the holders of its Preferred Shares (other than a regular quarterly
cash dividend), (ii) to offer to the holders of its Preferred Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification
of its Preferred Shares (other than a reclassification involving only the subdivision of outstanding Preferred Shares), (iv) to
effect any consolidation or merger into or with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or more transactions, of 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the liquidation, dissolution or winding up of the Company,
or (vi) to declare or pay any dividend on the Common Stock payable in shares of Common Stock or to effect a subdivision, combination
or consolidation of the Common Stock (by reclassification or otherwise than by payment of dividends in shares of Common Stock),
then, in each such case, the Company shall give to each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, or distribution of
rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution,
or winding up is to take place and the date of participation therein by the holders of the Common Stock and/or Preferred Shares,
if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above
at least 10 days prior to the record date for determining holders of the Preferred Shares for purposes of such action, and in the
case of any such other action, at least 10 days prior to the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Stock and/or Preferred Shares, whichever shall be the earlier.

 

(b)          In
case any event set forth in Section 11(a)(ii) hereof shall occur, then the Company shall as soon as practicable thereafter give
to each holder of a Right Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such event, which notice
shall describe such event and the consequences of such event to holders of Rights under Section 11(a)(ii) hereof.

 

Section
26     Notices.

 

(a)          Notices
or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or
on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Rights Agent) as follows:

 

    	30

    	 

    

 

 

Innodata Inc.

Three University Plaza

Hackensack, NJ 07601

Attention: Office of the General Counsel

 

Copy to:

Oscar D. Folger, Esq.

151 W. 46th Street, 4th floor

NY, NY 10036-8512

 

Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:

 

American Stock Transfer & Trust Company, LLC

6201 15th Avenue

Brooklyn, NY 11219

Attention: Relationship Manager

 

Notices or demands authorized by this Agreement
to be given or made by the Company or the Rights Agent to the holder of any Right Certificate shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books
of the Company.

 

Section
27     Supplements and Amendments.

 

The Company may from time to time, and the Rights Agent shall,
if the Company so directs, supplement or amend this Agreement without the approval of any holders of Right Certificates in order
to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any change to or delete any provision hereof or to adopt any other provisions with respect
to the Rights which the Company may deem necessary or desirable; provided, however, that from and after such time as any Person
becomes an Acquiring Person, this Agreement shall not be amended or supplemented in any manner which would adversely affect the
interests of the holders of Rights (other than an Acquiring Person and its Affiliates and Associates). Any supplement or amendment
authorized by this Section 27 will be evidenced by a writing signed by the Company and the Rights Agent. Upon the delivery of a
certificate from an officer of the Company which states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent will execute such supplement or amendment.

 

Section
28     Successors.

 

All the covenants and provisions of this Agreement by or for
the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.

 

Section
29     Benefits of this Agreement.

 

Nothing in this Agreement shall be construed to give to any
person or entity other than the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Stock).

 

    	31

    	 

    

 

Section
30     Severability.

 

If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.

 

Section
31     Governing Law.

 

This Agreement and each Right Certificate issued hereunder shall
be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State.

 

Section
32     Counterparts.

 

This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.

 

Section
33     Descriptive Headings.

 

Descriptive headings of the several Sections of this Agreement
are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

 

Section
34     Administration.

 

The Board of Directors of the Company shall have the exclusive
power and authority to administer and interpret the provisions of this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or the Company or as may be necessary or advisable in the administration of this Agreement. All
such actions, calculations, determinations and interpretations which are done or made by the Board of Directors in good faith shall
be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties and shall not
subject the Board of Directors to any liability to the holders of the Rights.

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of the day and year first above written.

 

	Innodata Inc.	 	 
	 	 	 	 
	By: 	/s/ Amy R. Agress	 	 
	 	Name: Amy R. Agress	 	 
	 	Title: VP, General Counsel and Secretary	 
	 	 	 
	American Stock Transfer & Trust Company, LLC
	 	 	 
	By:	/s/ Paula Caroppoli	 	 
	 	Name: Paula Caroppoli	 	 
	 	Title: Senior Vice President

  

    	32

    	 

    

 

EXHIBIT A

 

CERTIFICATE OF DESIGNATION OF

SERIES C PARTICIPATING PREFERRED STOCK

OF

INNODATA INC.

————————————

Pursuant to Section 151 of the

General Corporation Law of the State of
Delaware

————————————

 

Innodata Inc., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in its Restated Certificate of Incorporation, and in accordance with the provisions
of Section 151 of the General Corporation Law of the State of Delaware, the Board of Directors of the Company duly approved and
adopted the following resolution, which resolution remains in full force and effect on the date hereof:

 

RESOLVED, that pursuant to the authority vested in the Board
of Directors by the Certificate of Incorporation, the Board of Directors does hereby designate, create, authorize and provide for
the issue of a series of preferred stock having a par value of $0.01 per share, which shall be designated as Series C Participating
Preferred Stock (the "Series C Preferred Stock"), consisting of 100,000 shares having the following voting powers, preferences
and relative, participating, optional and other special rights, and qualifications, limitations and restrictions:

 

1.          Designation
and Amount. There is hereby created a series of the Preferred Stock of the Corporation. The shares of
this series shall be designated as "Series C Participating Preferred Stock" (the "Series C Preferred Stock").
The number of shares constituting the Series C Preferred Stock shall be One Hundred Thousand (100,000). Such number of shares may
be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares
of Series C Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued
by the Corporation convertible into Series C Preferred Stock.

 

2.          Proportional
Adjustment. In the event that the Corporation shall at any time after the issuance of any share or shares
of Series C Preferred Stock (i) declare any dividend on Common Stock of the Corporation ("Common Stock") payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the Corporation shall simultaneously effect a proportional adjustment to the number of outstanding
shares of Series C Preferred Stock.

 

    	A-1

    	 

    

 

3.          Dividends
and Distributions.

 

3.1.   Subject
to the rights of the holders of any shares of any series of Preferred Stock (or any other stock) ranking
prior and superior to the Series C Preferred Stock with respect to dividends, the holders of shares of Series C Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the last day of March, June, September and December in each year (each such date being referred
to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series C Preferred Stock, in an amount (if any) per share (rounded to the nearest
cent), equal to 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or
a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since
the first issuance of any share or fraction of a share of Series C Preferred Stock.

 

3.2.   The
Corporation shall declare a dividend or distribution on the Series C Preferred Stock as provided in
subsection 3.1 above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable
in shares of Common Stock).

 

3.3.   Dividends
due pursuant to subsection 3.1 shall begin to accrue on outstanding shares of Series C Preferred Stock
from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series C Preferred Stock, unless the
date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of the first issuance of any share or fraction of a share of Series C Preferred,
or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders
of shares of Series C Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue from such Quarterly Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the shares of Series C Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares
at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series C Preferred
Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.

 

4.          Voting
Rights. The holders of shares of Series C Preferred Stock shall have the following voting rights:

 

4.1.   Each
share of Series C Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted
to a vote of the stockholders of the Corporation.

 

4.2.   Except
as otherwise provided herein or by law, the holders of shares of Series C Preferred Stock and the holders
of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

 

4.3.   Except
as required by law, the holders of Series C Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent that they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.

 

    	A-2

    	 

    

 

5.          Certain
Restrictions.

 

5.1.   The
Corporation shall not declare any dividend on, make any distribution on, or redeem or purchase or otherwise
acquire for consideration any shares of Common Stock after the first issuance of a share or fraction of a share of Series C Preferred
Stock unless concurrently therewith it shall declare a dividend on the Series C Preferred Stock as required by Section 3 hereof.

 

5.2.   Whenever
quarterly dividends or other dividends or distributions payable on the Series C Preferred Stock as provided
in Section 3 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared,
on shares of Series C Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

 

(i) declare or pay dividends on,
make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock;

 

(ii) declare or pay dividends on,
or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series C Preferred Stock, except dividends paid ratably on the Series C Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are
then entitled;

 

(iii) redeem or purchase or otherwise
acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding
up) with the Series C Preferred Stock;

 

(iv) purchase or otherwise acquire
for consideration any shares of Series C Preferred Stock, or any shares of stock ranking on a parity with the Series C Preferred
Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates
and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.

 

5.3.   The
Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the Corporation could, under subsection 5.2, purchase or otherwise
acquire such shares at such time and in such manner.

 

6.         Reacquired
Shares. Any shares of Series C Preferred Stock purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created
by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein
and in the Certificate of Incorporation, as then amended.

 

7.          Liquidation,
Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, the holders
of shares of Series C Preferred Stock shall be entitled to receive an aggregate amount per share equal to 1,000 times the aggregate
amount to be distributed per share to holders of shares of Common Stock plus an amount equal to any accrued and unpaid dividends
on such shares of Series Preferred Stock.

 

    	A-3

    	 

    

 

8.          Consolidation,
Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Series C Preferred Stock shall at the same time be similarly exchanged or changed
in an amount per share equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged.

 

9.         No
Redemption. The shares of Series C Preferred Stock shall not be redeemable.

 

10.       Ranking.
The Series C Preferred Stock shall rank junior to all other series of the Corporation's Preferred Stock
as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise.

 

11.       Amendment.
The Certificate of Incorporation of the Corporation shall not be further amended in any manner which
would materially alter or change the powers, preference or special rights of the Series C Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of a majority of the outstanding shares of Series C Preferred Stock, voting
separately as a series.

 

12.       Fractional
Shares. Series C Preferred Stock may be issued in fractions of a share which shall entitle the holder,
in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and
to have the benefit of all other rights of holders of Series C Preferred Stock.

 

In Witness Whereof, the undersigned has
executed this Certificate as of December 30, 2002.

 

Innodata Corporation

 

By: /s/ Jack Abuhoff

Name: Jack Abuhoff

Title: Chief Executive Officer and President

 

    	A-4

    	 

    

 

EXHIBIT B

Form of Right Certificate

 

	Certificate No. R- _______	Rights

 

NOT EXERCISABLE AFTER THE FINAL
EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT) OR EARLIER IF REDEMPTION, EXCHANGE OR TERMINATION OCCURS. THE RIGHTS ARE SUBJECT
TO REDEMPTION AT $0.001 PER RIGHT AND TO EXCHANGE OR TERMINATION ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS THAT ARE OR WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY ASSOCIATES OR AFFILIATES THEREOF
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.

 

Right Certificate

 

Innodata Inc.

 

This certifies that _______________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of December 27, 2012 (the "Rights Agreement"), between Innodata
Inc., a Delaware corporation (the "Company"), and American Stock Transfer & Trust Company, LLC (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M., New York time, on January 13, 2016 (or earlier under certain circumstances set forth in the Rights Agreement),
at the principal office of the Rights Agent, or at the office of its successor as Rights Agent, one one-thousandth of a fully paid
non-assessable share of Series C Participating Preferred Stock, par value $0.01 per share (the "Preferred Shares"), of
the Company, at a purchase price of $14.00 per one one-thousandth of a Preferred Share (the "Purchase Price"), upon presentation
and surrender of this Right Certificate with the certification and the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of one one-thousandths of a Preferred Share which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of December 27,
2012, based on the Preferred Shares as constituted at such date. As provided in the Rights Agreement, the Purchase Price and the
number of one one-thousandths of a Preferred Share which may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of certain events.

 

From and after the occurrence of an event described in Section
11(a)(ii) of the Rights Agreement, if the Rights evidenced by this Right Certificate are or were at any time on or after the earlier
of (x) the date of such event and (y) the Distribution Date (as such term is defined in the Rights Agreement) beneficially owned
or acquired by an Acquiring Person or an Associate or Affiliate of an Acquiring Person (as such terms are defined in the Rights
Agreement), such Rights shall become void, and any holder of such Rights shall thereafter have no right to exercise such Rights.

 

    	B-1

    	 

    

 

This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the principal executive offices of the Company and the offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon surrender at the principal office of the Rights Agent, may
be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate number of Preferred Shares as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not
exercised.

 

Subject to the provisions
of the Rights Agreement, at the Company's option, the Rights evidenced by this Certificate may be redeemed by the Company at a
redemption price of $0.001 per Right or (ii) may be exchanged in whole or in part for Preferred Shares or shares of the Company’s
Common Stock, par value $0.01 per share. Also subject to the provisions of the Rights Agreement, if the Company receives a Qualifying
Offer (as defined in the Rights Agreement, which includes certain all-cash fully financed tender offers or exchange offers offering
shares of the offeror’s common stock, or a combination thereof, for all of the outstanding shares of the Company’s
common stock), holders of 10% of the Company’s outstanding shares of common stock (excluding shares held by the offeror and
its Affiliates and Associates (in each case, as defined in the Rights Agreement) may direct the board of directors of the Company
to call a special meeting of stockholders to consider a resolution exempting
such Qualifying Offer from the provisions of the Rights Agreement.

 

No fractional Preferred Shares will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depository receipts), but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.

 

No holder of this
Right Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the Preferred Shares
or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained
in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders
at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised
as provided in the Rights Agreement.

 

This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.

 

    	B-2

    	 

    

 

WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal. Dated as of:

 

Attest:

 

	By:            :_____________________	Innodata Inc.
	Name:         :_____________________	By:   _____________________
	 	Name:_____________________
	 	Title: _____________________
	Countersigned:	 
	 	 
	AMERICAN STOCK TRANSFER & TRUST

 COMPANY, LLC	 
	By:   _____________________	 
	Name:_____________________	 
	Title: _____________________	 

 

    	B-3

    	 

    

 

Form of Reverse Side of Right Certificate

 

FORM OF ASSIGNMENT

(To be executed by the registered holder
if such

holder desires to transfer the Right Certificate.)

 

FOR VALUE RECEIVED _________________________________
hereby sells, assigns and transfers unto

__________________________________________

(Please print name and address of transferee)

 

this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint ____________________________, Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power of substitution.

 

Dated: _____________ __, ____

 

	 	 	 
	 	Signature	 

 

Signature Guaranteed:

 

Signatures must be guaranteed by an eligible
guarantor institution (a bank, stockbroker, savings and loan association or credit union with membership in an approved signature
guarantee medallion program) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934.

 

CERTIFICATION

 

The undersigned hereby certifies that the
Rights evidenced by this Right Certificate are not, and to the knowledge of the undersigned have never been, beneficially owned
by an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement).

 

	 	 	 
	 	Signature	 

 

Form of Reverse Side of Right Certificate-
continued

 

    	B-4

    	 

    

 

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise
the Right Certificate.)

 

To: Innodata Inc.

 

The undersigned hereby irrevocably elects
to exercise ________________ Rights represented by this Right Certificate to purchase the Preferred Shares issuable upon the exercise
of such Rights and requests that certificates for such Preferred Shares be issued in the name of:

_______________________________________________________________

(Please insert social security or other identifying number)

_______________________________________________________________________
(Please print name and address)

 

If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered in the name of
and delivered to:

 

_______________________________________________________________

 

(Please insert social security or other identifying number)

_______________________________________________________________________
(Please print name and address)

 

Dated: _____________ ___,

 

	 	 	 
	 	Signature	 

 

Signature Guaranteed:

Signatures must be guaranteed by an eligible guarantor institution
(a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion
program) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934.

 

CERTIFICATION

 

The undersigned hereby certifies that the
Rights evidenced by this Right Certificate are not, and to the knowledge of the undersigned have never been, beneficially owned
by an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement).

 

NOTICE

 

The signature in the foregoing Forms of
Assignment and Election must conform to the name as written upon the face of this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.

 

In the event the certification set forth
above in the Form of Assignment or the Form of Election to Purchase, as the case may be, is not completed, the Company and the
Rights Agent will deem the beneficial owner of the Rights evidenced by this Right Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and such Assignment or Election to Purchase will not be honored.

 

    	B-5

    	 

    

 

EXHIBIT C

 

Summary of Rights to Purchase Preferred
Stock

 

Introduction

 

On December 27, 2012, the Board of Directors of our Company,
Innodata Inc., a Delaware corporation, declared a dividend of one preferred share purchase right (a "Right") for each
outstanding share of common stock, par value $0.01 per share. The dividend is payable on January 14, 2013 to the stockholders of
record as of the Close of Business on January 14, 2013. The Rights are governed by a Rights Agreement dated as of December 27,
2012 (the "Rights Agreement"), that we entered into with American Stock Transfer & Trust Company, LLC, as the Rights
Agent.

 

Our Board has adopted this Rights Agreement to protect stockholders
from coercive or otherwise unfair takeover tactics. In general terms, it works by imposing a significant penalty upon any person
or group that acquires 20% or more of our outstanding common stock without the approval of our Board. The Rights Agreement should
not interfere with any merger or other business combination approved by our Board.

 

We have provided below a summary description of certain terms
of the Rights Agreement. Please note this summary is not complete, and should be read together with the entire Rights Agreement.
A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an exhibit to a Report on Form 8-K
dated January 2, 2013. A copy of the Rights Agreement is available free of charge from our Company. If there is a conflict between
the summary below and the Rights Agreement, the Rights Agreement will govern.

 

THE RIGHTS

 

Our Board authorized the issuance of a Right with respect to
each outstanding share of common stock on January 14, 2013. The Rights will initially trade with, and will be inseparable from,
the common stock.

 

Until the Distribution Date described below, the Rights will
be evidenced only by certificates that represent shares of common stock. New Rights will accompany any new shares of common stock
we issue after January 14, 2013 until the Distribution Date described below.

 

PURCHASE PRICE

 

Each Right will allow its holder to purchase from our Company
one one-thousandth of a share of Series C Participating Preferred Stock ("Preferred Stock") for $14.00 once the Rights
become exercisable. This portion of a share of Preferred Stock will give the stockholder approximately the same dividend, voting,
and liquidation rights as would one share of common stock. Prior to exercise, the Right does not give its holder any dividend,
voting, or liquidation rights as a stockholder of our Company.

 

EXERCISABILITY

 

The Rights will not be exercisable until:

 

10 days after the public announcement
that a person or group has become an "Acquiring Person" by obtaining beneficial ownership of 20% or more of our outstanding
common stock, or, if earlier,

 

    	C-1

    	 

    

 

10 business days (or a later date
determined by our Board before any person or group becomes an Acquiring Person) after a person or group begins a tender or exchange
offer which, if completed, would result in that person or group becoming an Acquiring Person.

 

For purposes of the Rights Agreement,
beneficial ownership is defined to include the ownership of derivative securities.

 

We refer to the date when the Rights become exercisable as the
"Distribution Date." Until that date, the common stock certificates will also evidence the Rights, and any transfer of
shares of common stock will constitute a transfer of Rights. After that date, the Rights will separate from the common stock and
be evidenced by Rights certificates that we will mail to all eligible holders of common stock.

 

Any Rights held by an Acquiring Person are void and may not
be exercised.

 

CONSEQUENCES OF A PERSON OR GROUP BECOMING AN ACQUIRING PERSON

 

If a person or group becomes an Acquiring Person, all holders
of Rights, except the Acquiring Person, may, for a purchase price of $14.00, acquire shares of our common stock having a market
value of $28.00 based on the market price of the common stock prior to such person or group becoming an Acquiring Person.

 

If our Company is later acquired in a merger or similar transaction
after the Distribution Date, all holders of Rights, except the Acquiring Person, may, for a purchase price of $14.00, purchase
shares of the acquiring corporation having a market value of $28.00 based on the market price of the acquiring corporation's stock,
prior to such merger.

 

PREFERRED STOCK PROVISIONS

 

Each share of Preferred Stock, if issued:

 

will not be redeemable;

 

will be junior to any other series
of preferred stock we may issue;

 

will entitle the holder to quarterly
dividend payments in an amount equal to 1,000 times the dividend, if any, paid on one share of common stock (so that one one-thousandth
of a share of Preferred Stock would entitle the holder to receive a quarterly dividend payment that is the same as any dividend
paid on one share of common stock);

 

will entitle the holder upon liquidation
to receive 1,000 times the payment made on one share of common stock (so that one one-thousandth of a share of Preferred Stock
would entitle the holder to receive the same payment as is made on one share of common stock);

 

will entitle the holder, if common
stock is exchanged via merger, consolidation or a similar transaction, to a per share payment equal to 1,000 times the payment
made on one share of common stock (so that one one-thousandth of a share of Preferred Stock would entitle the holder to receive
the same payment as is made on one share of common stock); and

 

will have the same voting power
as 1,000 shares of common stock (so that one one-thousandth of a share of Preferred Stock would have the same voting rights as
one share of common stock).

 

The value of one one-thousandth interest in a share of Preferred
Stock should approximate the value of one share of common stock.

 

    	C-2

    	 

    

 

EXPIRATION

 

If the Rights Agreement is approved by the stockholders at the
2013 annual meeting, the Rights will expire on January 13, 2016 or on an earlier date if we redeem or exchange them, as discussed
below. If stockholders do not approve the Rights Agreement, or if at the
stockholder meeting there was no proposal to approve the Rights Agreement, it will expire immediately following certification of
the vote at the 2013 annual meeting.

 

REDEMPTION

 

Our Board may redeem the Rights for $0.001 per Right at any
time prior to the earlier of (i) the Close of Business on the tenth calendar day following the Shares Acquisition Date, or (ii)
the Final Expiration Date. If our Board redeems any Rights, it must redeem all of the Rights. Once the Rights are redeemed, the
only right of the holders of Rights will be to receive the redemption price of $0.001 per Right, in cash, common stock or other
securities, as determined by our Board.

 

EXCHANGE

 

After a person or group becomes an Acquiring Person, but before
an Acquiring Person owns 50% or more of the outstanding common stock of the Company, the Board of Directors may extinguish the
Rights by exchanging one share of common stock or an equivalent security for each Right (subject to adjustment), other than Rights
held by the Acquiring Person.

 

QUALIFYING OFFER PROVISION.

 

If the Company receives a “qualifying offer” (that
has not been terminated and continues to be a qualifying offer for the period hereinafter described) and the Board of Directors
has not redeemed the outstanding Rights, exempted such qualifying offer from the terms of the Rights Agreement or called a special
meeting for stockholders to vote on whether to exempt the qualifying offer from the terms of the Rights Agreement within 90 business
days following the commencement of such offer, and if, 90 to 120 business days following commencement, the Company receives notice
from holders of at least 10% of the Company’s outstanding shares of common stock (excluding shares beneficially owned by
the offeror and its affiliates and associates) requesting a special meeting of the Company’s stockholders to vote on a resolution
to exempt the qualifying offer, then the Board of Directors must call and hold such a special meeting by the 90th business day
following receipt of the stockholder notice (the “Outside Meeting Date”).

 

If prior to holding a vote on the qualifying offer, the Company
enters into an agreement conditioned on the approval by holders of a majority of the Company’s outstanding shares of common
stock with respect to a share exchange, merger, consolidation, recapitalization, reorganization, business combination or a similar
transaction involving the Company or the direct or indirect acquisition of more than 50% of the Company’s consolidated total
assets or earning power, the Outside Meeting Date may be extended by the Board of Directors so that stockholders vote on whether
to exempt the qualifying offer at the same time as they vote on such agreement.

 

If the Board of Directors does not hold a special meeting by
the Outside Meeting Date to vote on the exemption of the qualifying offer, the qualifying offer will be deemed exempt from the
Rights Agreement 10 business days after the Outside Meeting Date. If the Board of Directors does hold a special meeting and stockholders
vote at such meeting in favor of exempting the qualifying offer, the qualifying offer will be deemed exempt from the Rights Agreement
10 business days after the votes are certified as official by the inspector of elections.

 

A “qualifying offer,” in summary terms, is an offer
determined by the Board of Directors to have the following characteristics:

 

    	C-3

    	 

    

 

a fully financed all-cash tender
offer or an exchange offer offering shares of common stock of the offeror, or a combination thereof, in each such case for all
of the Company’s outstanding shares of common stock at the same per share consideration;

 

an offer that has commenced within
the meaning of Rule 14d-2(a) under the Securities Exchange Act of 1934, as amended;

 

an offer that, within 20 business
days after commencement (or within 10 business days after any increase in the offer consideration), does not result in a nationally
recognized investment banking firm retained by the Board of Directors rendering an opinion to the Board of Directors that the consideration
being offered to the holders of the Company’s common stock is either inadequate or unfair;

 

an offer whose per share offer
price and consideration (x) is not less than $17.00, subject to adjustment as provided in the Rights Agreement, and (y) also represent
a reasonable premium over the highest reported market price of the common stock of the Company in the immediately preceding 24
months prior to the date on which the offer is commenced; provided that to the extent that an offer includes common stock of the
offeror, such per share offer price with respect to such common stock of the offeror will be determined for purposes of the foregoing
provision using the lowest reported market price for common stock of the offeror during the five Trading Days immediately preceding
and the five Trading Days immediately following the date on which the Qualifying Offer is commenced;

 

an offer pursuant to which the
Company has received an irrevocable written commitment of the offeror that the offer will remain open for at least 120 business
days and, if a special meeting is duly requested, for at least 10 business days after the date of the special meeting or, if no
special meeting is held within 90 business days following receipt of the special meeting request (subject to extension in certain
circumstances), for at least 10 business days following such period;

 

an offer that is conditioned on
a minimum of at least two-thirds of the outstanding shares of the Company’s common stock not held by the offeror (and its
affiliates and associates) being tendered and not withdrawn as of the offer’s expiration date;

 

an offer that is subject only to
the minimum tender condition described above and other customary terms and conditions, which conditions shall not include any due
diligence, financing, funding or similar conditions;

 

an offer pursuant to which, subject
to certain exceptions, the Company has received an irrevocable written commitment of the offeror that, in addition to the minimum
time periods specified above, the offer, if it is otherwise to expire prior thereto, will be extended for at least 20 business
days after any increase in the consideration being offered or after any bona fide alternative offer is commenced;

 

an offer pursuant to which the
Company has received an irrevocable written commitment by the offeror to consummate as promptly as practicable upon successful
completion of the offer a second-step transaction whereby all of the Company’s shares of common stock not tendered into the
offer will be acquired at the same consideration per share actually paid pursuant to the offer, subject to stockholders’
statutory appraisal rights, if any;

 

    	C-4

    	 

    

 

an offer pursuant to which the
Company and its stockholders have received an irrevocable, legally binding written commitment of the offeror that no amendments
will be made to the offer to reduce the consideration being offered or to otherwise change the terms of the offer in a way that
is adverse to a tendering stockholder;

 

an offer (other than an offer consisting
solely of cash consideration) pursuant to which the Company has received the written representation and certification of the offeror
and the written representations and certifications of the offeror’s Chief Executive Officer and Chief Financial Officer,
acting in such capacities, that (a) all facts about the offeror that would be material to making an investor’s decision to
accept the offer have been fully and accurately disclosed as of the date of the commencement of the offer, (b) all such new facts
will be fully and accurately disclosed on a prompt basis during the entire period during which the offer remains open and (c) all
reports required under the Securities Exchange Act of 1934, as amended, will be filed by the offeror in a timely manner during
such period; and

 

if the offer includes the offeror’s
common stock as all or part of the offered consideration, (A) the non-cash portion of the consideration offered must consist solely
of common stock of the offeror, which must be a publicly-owned U.S. corporation, (B) such common stock must be freely tradable
and listed or admitted to trading on either the New York Stock Exchange or The NASDAQ Stock Market LLC, (C) no stockholder approval
of the issuer of such common stock may be required to issue such common stock, or, if such approval may be required, such approval
must have already been obtained, and (D) there must be no beneficial owner of 20% or more of the offeror’s common stock outstanding
at the time of commencement or at any time during the term of the offer.

 

ANTI-DILUTION PROVISIONS

 

The Rights will have the benefit of certain customary anti-dilution
provisions.

 

AMENDMENTS

 

The terms of the Rights Agreement may be amended by our Board
without the consent of the holders of the Rights. However, after a person or group becomes an Acquiring Person, our Board may not
amend the Rights Agreement in a way that adversely affects holders of the Rights.

 

    	C-5November 29, 2012

 

Dear 22nd Century Convertible Note Holder:

 

As you know, everyone here at 22nd Century (the “Company”)
has been working hard to make our Company a success. We are confident that our technology has tremendous merit and we are very
optimistic about our prospects in the marketplace. As publically disclosed, management has invested more than $310,000 to purchase
shares of the Company’s Common Stock over the past three weeks.

 

We write to you regarding your investment in the Company’s
December 2011 Convertible Notes (the “Notes”). Importantly, the Notes are only convertible into shares of the Company’s
Common Stock prior to December 14, 2012 (Maturity Date of the Notes). The conversion price of the Notes is currently $0.7121
per share (the “Conversion Price”), reduced from $0.75 per share, due to the anti-dilution provisions of the Notes.

 

In the event of conversion of your Note into shares of Common
Stock, then at such time you will also receive Warrants equal to 120% of the number of shares of Common Stock. These Warrants will
have a 5-year life with an exercise price per share of Common Stock equal to $1.50 and will also have a “cashless”
exercise provision. The closing price of our Common Stock today was $0.40 per share.

 

We are writing to you at this time to request that you agree
to amend your Note to extend the Maturity Date by four months until April 14, 2013. In consideration for this amendment, we would:

 

		·	Pay 15% interest (per annum) that accrues over the 120-day extension, which interest may be converted into our Common Stock
and Warrants

 

		·	Allow the Notes to be converted into Common Stock and Warrants until April 14, 2013

 

We hope that you will consider agreeing to amend your Note as
described above. By doing so, you will also be extending the prepayment, Qualified Subsequent Financing, and conversion option
of the Notes to April 14, 2013. Thus, you will have an extended period of time for conversion of the Notes into Common Stock
and Warrants.

 

The below chart demonstrates, assuming (i) an original investment
of $100,000 and (ii) the full amount of the accrued interest of $5,000 for the 120 day extension period of the Maturity Date,
the resulting amounts of shares of Common Stock and Warrants that would be issuable in the event of conversion:

 

	Maturity Date:  December 14, 2012	 	Maturity Date:  April 14, 2012	 
	Due at Maturity	$115,000	 	Due at Maturity	$120,000	 
	Conversion @ $0.7121	161,494	 shares	Conversion @ $0.7121	168,516	shares
	Warrants (120%)	193,793	 	Warrants (120%)	202,219	 

 

    	 

    	 

    
 

If you agree to amend your Notes, please execute this letter
agreement in the space provided below and return it to me as promptly as possible.

 

Please do not hesitate to contact me with any questions and
we thank you for your continued support!

 

Very sincerely,

 

/s/ Henry Sicignano III

Henry Sicignano III

President

*********

The undersigned Lender hereby agrees to
the amendment of the terms of the above-referenced Notes held by such Lender to now provide (i) that the new Maturity Date is April
14, 2013 and (ii) that the Company shall pay interest to the Lender at the rate of 15.0% per annum on the amount that you invested
that accrues for the period beginning on December 14, 2012 and ending on April 14, 2013. Other than the amendments set forth in
the immediately preceding sentence, which shall be effective immediately, all other terms of the Notes shall remain unchanged and
continue in full force and effect.

 

 

	 	Agreed and accepted by:	 
	 	 	 
	 	 	“Lender”
	 	 	 	 
	 	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	Date:	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	Agreed and accepted by:	 
	 	 	 
	 	 	“Borrower”
	 	 	 	 
	 	 	22nd Century Group, Inc.
	 	 	 	 
	 	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	Date:

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