TargetOpportunity EmployeeTier Position (AsaPercentofSalary) Tier 1 President and Chief Executive Officer 75 % Tier 2 Chief Financial Officer 50 % Chief Impact Officer 50 % Chief Development Officer 50 % Chief Strategy Officer 50 % Division Vice President 50 % Chief Administrative Officer & Corporate Secretary 50 % Chief Compliance Officer 50 % General Counsel 50 % Tier 3 Program Vice Presidents 30 %

 

1.

Plan Name:  KEYW Annual Incentive Plan (“the Plan”).

 

2.

Effective Date and Plan Duration:  The Plan will be effective as of January 1, 2010 (“Effective Date”).

 

3.

Plan Objectives:  The Plan has been designed to:

 

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Motivate employees to achieve KEYW’s established financial targets.

 

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Reward employees for achievement of financial targets, business unit targets (if applicable) and individual performance that contribute to the creation of long-term shareholder value.

 

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Provide maximum flexibility to reward employee performance and innovation.

 

4.

Performance Period: Award opportunities under the Plan are granted each year; the performance period coincides with the company’s fiscal year (January 1st through December 31st). For terminated employees, the performance period ends on the date of termination.

 

5.

Eligibility:  Individuals eligible to participate in this Plan include all employees.  Participants must be hired prior to October 1st of the Plan year to be eligible for a payout.

 

6.

Participation: The President and Chief Executive Officer will retain discretion to select individuals to participate in the Plan but subject to Compensation Committee approval for certain covered executives.

 

7.

Individual Annual Incentive Awards:  Annual incentive opportunities are based on a percentage of salary and have been developed based on competitive and internal equity considerations.

 

8.

Funding: The financial targets set for each performance period will include the expected aggregate incentive payouts of annual incentives identified above so that the plan is self-funded.

 

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Funding for lower employee tiers will be given priority and sequenced as follows: rank-and-file, Tier 3, Tier 2, and Tier 1.  In other words, the sequence of payouts can be structured such that a higher corporate performance level is required before funding bonuses for higher management tiers.  For example, the target award opportunity is funded for a “rank-and-file” employee if 90% of target corporate performance is achieved.  Below is an illustration of this concept.

 

9.

Determining Individual Plan Payouts: Plan payouts will be determined by actual performance against predetermined goals on a sliding scale up to the maximum award opportunity based on actual performance vs. target goals.

 

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For example, if KEYW achieves 110% of target performance (which represents the middle point of performance between target and maximum), the plan will pay out incentives which are 125% of target payouts.  Similarly, if KEYW achieves 90% of target performance, the plan will pay out incentives at 75% of target.

10.  

Payment of Award: Annual Incentive awards will be paid in cash to eligible participants within two and half months following the end of the performance period or the date of participant’s termination (See “Termination” section below).

11.

Termination: In the event a participant is terminated by the company for other than cause or by the employee due to retirement, the annual incentive will be prorated based on actual performance.

12.

Plan Administration:  The Plan will be administered by the Compensation Committee, which reserves the right at any time to amend, interpret or terminate the Plan, in whole or in part.