Exhibit 10.1 


 





 













 


RBC Capital Markets, LLC

3 World Financial Center

200 Vesey Street

New York, New York 10281

Telephone: (212) 858-7000






 


July 16, 2014


	To:	The KEYW Holding Corporation
	 	7740 Milestone Parkway, Suite 400
	 	Hanover, Maryland 21076
	Attention:	Chief Financial Officer
	Telephone No.:	443-733-1600
	Facsimile No.:	443-733-1601


 





 


 


Re: Base Call Option Transaction


 


The purpose of this
letter agreement (this “Confirmation”) is to confirm the terms and conditions of the call option transaction
entered into between Royal Bank of Canada (“Dealer”) and The KEYW Holding Corporation (“Counterparty”)
as of the Trade Date specified below (the “Transaction”). This letter agreement constitutes a “Confirmation”
as referred to in the ISDA Master Agreement specified below. This Confirmation shall replace any previous agreements and serve
as the final documentation for the Transaction.


 


The definitions and
provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published
by the International Swaps and Derivatives Association, Inc. (“ISDA”), are incorporated into this Confirmation.
In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern. Certain
defined terms used herein are based on terms that are defined in the Prospectus dated May 14, 2014, as supplemented by the Prospectus
Supplement dated July 16, 2014 (as so supplemented, the “Prospectus”) relating to the Convertible Senior Notes
due 2019 (as originally issued by Counterparty, the “Convertible Notes” and each USD 1,000 principal amount
of Convertible Notes, a “Convertible Note”) issued by Counterparty in an aggregate initial principal amount
of USD 130,000,000 (as increased by up to an aggregate principal amount of USD 19,500,000 if and to the extent that the Underwriters
(as defined herein) exercise their option to purchase additional Convertible Notes pursuant to the Underwriting Agreement (as defined
herein)) pursuant to an Indenture to be dated July 21, 2014 (the “Base Indenture”), as supplemented by a Supplemental
Indenture thereto to be dated July 21, 2014 (the “Supplemental Indenture”), between Counterparty and Wilmington
Trust, National Association, as trustee (the Base Indenture as so supplemented, the “Indenture”). In the event
of any inconsistency between the terms defined in the Prospectus, the Indenture and this Confirmation, this Confirmation shall
govern. The parties acknowledge that this Confirmation is entered into on the date hereof with the understanding that (i) definitions
set forth in the Indenture that are also defined herein by reference to the Indenture and (ii) sections of the Indenture that are
referred to herein will conform to the descriptions thereof in the Prospectus. If any such definitions in the Indenture or any
such sections of the Indenture differ from the descriptions thereof in the Prospectus, the descriptions thereof in the Prospectus
will govern for purposes of this Confirmation. The parties further acknowledge that the Supplemental Indenture section numbers
used herein are based on the draft of the Supplemental Indenture last reviewed by Dealer as of the date of this Confirmation, and
if any such section numbers are changed in the Supplemental Indenture as executed, the parties will amend this Confirmation in
good faith to preserve the intent of the parties. Subject to the foregoing, references to the Base Indenture or the Supplemental
Indenture herein are references to the Base Indenture or the Supplemental Indenture, as the case may be, as in effect on the date
of its execution, and if either the Base Indenture or the Supplemental Indenture is amended or supplemented following such date
(other than any amendment or supplement (x) pursuant to Section 10.2(j) of the Supplemental Indenture that, as determined by the
Calculation Agent, conforms the Indenture to the description of Convertible Notes in the Prospectus or (y) pursuant to Section
14.07(a) of the Supplemental Indenture, subject, in the case of this clause (y), to the first proviso to the provision opposite
the caption “Method of Adjustment” in Section ‎3), any such amendment or supplement will be disregarded for purposes
of this Confirmation unless the parties agree otherwise in writing.


 


Each party is hereby
advised, and each such party acknowledges, that the other party has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties’ entry into the Transaction to which this
Confirmation relates on the terms and conditions set forth below.


 






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1.           This Confirmation
evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master
Agreement (the “Agreement”) as if Dealer and Counterparty had executed an agreement in such form (but without
any Schedule except for the election of the laws of the State of New York as the governing law (without reference to choice of
law doctrine)) on the Trade Date. In the event of any inconsistency between provisions of the Agreement and this Confirmation,
this Confirmation will prevail for the purpose of the Transaction to which this Confirmation relates. The parties hereby agree
that no transaction other than the Transaction to which this Confirmation relates shall be governed by the Agreement.


 


2.           The terms of the
particular Transaction to which this Confirmation relates are as follows:


 


	 	General Terms.	 
	 	Trade Date:	July 16, 2014
	 	Effective Date:	The third Exchange Business Day immediately prior to the Premium Payment Date 
	 	Option Style:	“Modified American”, as described under “Procedures for Exercise” below
	 	Option Type:	Call
	 	Buyer:	Counterparty
	 	Seller:	Dealer
	 	Shares:	The common stock of Counterparty, par value USD 0.001 per share (Exchange symbol “KEYW”).
	 	Number of Options:	130,000. For the avoidance of doubt, the Number of Options shall be reduced by any Options exercised by Counterparty. In no event will the Number of Options be less than zero.
	 	Applicable Percentage:	70%
	 	Option Entitlement:	A number equal to the product of the Applicable Percentage and 67.4093.
	 	Strike Price:	USD 14.8348
	 	Cap Price:	USD 19.3760
	 	Premium:	USD 11,202,100.00
	 	Premium Payment Date:	July 21, 2014
	 	Exchange:	The NASDAQ Global Select Market
	 	Related Exchange(s):	All Exchanges



 






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	 	Excluded Provisions:	Section 14.04(i) and Section 14.03 of the Supplemental Indenture.
	 	Procedures for Exercise.	 
	 	Conversion Date:	With respect to any conversion of a Convertible Note
    (other than (x) any conversion of Convertible Notes with a Conversion Date occurring prior to the Free Convertibility Date
    (any such conversion, an “Early Conversion”), to which the provisions of Section ‎9(l)(i) of this Confirmation
    shall apply or (y) any conversion of Convertible Notes that are Make-Whole Convertible Notes (any such conversion, a “Make-Whole
    Conversion”) to which the provisions of Section ‎9(l)(ii) of this Confirmation shall apply), the date on which
    the Holder (as such term is defined in the Indenture) of such Convertible Note satisfies all of the requirements for conversion
    thereof as set forth in Section 14.01 of the Supplemental Indenture.
	 	Make-Whole Convertible Notes:	Convertible Notes as to which the Conversion Rate (as defined in the Indenture) would be increased pursuant to Section 14.03 of the Supplemental Indenture.
	 	Free Convertibility Date:	January 15, 2019
	 	Expiration Time:	The Valuation Time
	 	Expiration Date:	July 15, 2019, subject to earlier exercise.
	 	Multiple Exercise:	Applicable, as described under “Automatic Exercise” below.
	 	Automatic Exercise:	Notwithstanding Section 3.4 of the Equity Definitions,
    on each Conversion Date occurring on or after the Free Convertibility Date, in respect of which a Notice of Conversion (as
    such term is defined in the Indenture) that is effective as to Counterparty has been delivered by the relevant converting
    Holder, a number of Options equal to the number of Convertible Notes in denominations of USD 1,000 as to which such Conversion
    Date has occurred shall be deemed to be automatically exercised; provided that such Options shall be exercised or deemed
    exercised only if Counterparty has provided a Notice of Exercise to Dealer in accordance with “Notice of Exercise”
    below.
	 	 	Notwithstanding the foregoing, in no event shall the number of Options that are exercised or deemed exercised hereunder exceed the Number of Options.



 









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	 	Notice of Exercise:	Notwithstanding anything to the contrary in the Equity
    Definitions or under “Automatic Exercise” above, in order to exercise any Options relating to Convertible Notes
    (other than Convertible Notes being converted upon an Early Conversion or a Make-Whole Conversion), Counterparty must notify
    Dealer in writing before 5:00 p.m. (New York City time) on the second Scheduled Valid Day immediately preceding the Expiration
    Date (the “Exercise Notice Deadline”) of the number of such Options; provided that if the Relevant
    Settlement Method for such Options is (x) Net Share Settlement and the Specified Cash Amount (as defined below) is not USD
    1,000, (y) Cash Settlement or (z) Combination Settlement, Counterparty must provide Dealer a separate notice (the “Notice
    of Final Settlement Method”) in respect of all such Convertible Notes before 5:00 p.m. (New York City time) on the
    Free Convertibility Date specifying (i) the Relevant Settlement Method for such Options and the settlement method for the
    related Convertible Notes, and (ii) if the settlement method for the related Convertible Notes is not Settlement in Shares
    or Settlement in Cash (each as defined below), the fixed amount of cash per Convertible Note that Counterparty has elected
    to deliver to Holders (as such term is defined in the Indenture) of the related Convertible Notes (the “Specified
    Cash Amount”). Counterparty acknowledges its responsibilities under applicable securities laws, and in particular
    Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of
    any election of a settlement method with respect to the Convertible Notes.
	 	Valuation Time:	At the close of trading of the regular trading session
    on the Exchange; provided that if the principal trading session is extended, the Calculation Agent shall determine
    the Valuation Time in its reasonable discretion.
	 	Market Disruption Event:	Section 6.3(a) of the Equity Definitions is hereby replaced in its entirety by the following:
	 	 	“‘Market Disruption Event’ means, in respect of a Share, (i) a failure by the primary U.S. national or regional securities exchange or market on which the Shares are listed or admitted for trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York City time, on any Scheduled Valid Day for the Shares for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Shares or in any options contracts or futures contracts relating to the Shares.”
	 	Settlement Terms.	 
	 	Settlement Method:	For any Option, Net Share Settlement; provided
    that if the Relevant Settlement Method set forth below for such Option is not Net Share Settlement, then the Settlement
    Method for such Option shall be such Relevant Settlement Method, but only if Counterparty shall have notified Dealer of the
    Relevant Settlement Method in the Notice of Final Settlement Method.



 



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	 	Relevant Settlement Method:	In respect of any Option:
	 		(i) if Counterparty has elected (or, in the case
    of (C), is deemed to have elected) to settle its conversion obligations in respect of the related Convertible Note (A) entirely
    in Shares pursuant to Section 14.02(a)(iv)(A) of the Supplemental Indenture (together with cash in lieu of fractional Shares)
    (such settlement method, “Settlement in Shares”), (B) in a combination of cash and Shares pursuant to Section
    14.02(a)(iv)(C) of the Supplemental Indenture with a Specified Cash Amount less than USD 1,000 (such settlement method, “Low
    Cash Combination Settlement”) or (C) in a combination of cash and Shares pursuant to Section 14.02(a)(iv)(C) of
    the Supplemental Indenture with a Specified Cash Amount equal to USD1,000, then, in each case, the Relevant Settlement Method
    for such Option shall be Net Share Settlement;
	 		(ii) if Counterparty has elected to settle its
    conversion obligations in respect of the related Convertible Note in a combination of cash and Shares pursuant to Section
    14.02(a)(iv)(C) of the Supplemental Indenture with a Specified Cash Amount greater than USD 1,000, then the Relevant
    Settlement Method for such Option shall be Combination Settlement; and
	 		(iii) if Counterparty has elected to settle its
    conversion obligations in respect of the related Convertible Note entirely in cash pursuant to Section 14.02(a)(iv)(B) of
    the Supplemental Indenture (such settlement method, “Settlement in Cash”), then the Relevant Settlement
    Method for such Option shall be Cash Settlement.
	 	Net Share Settlement:	If Net Share Settlement is applicable to any Option
    exercised or deemed exercised hereunder, Dealer will deliver to Counterparty, on the relevant Settlement Date for each such
    Option, a number of Shares (the “Net Share Settlement Amount”) equal to the sum, for each Valid Day during
    the Settlement Averaging Period for each such Option, of (i) (a)the Daily Option Value for such Valid Day, divided by
    (b) the Relevant Price on such Valid Day, divided by (ii) the number of Valid Days in the Settlement Averaging Period;
    provided that in no event shall the Net Share Settlement Amount for such Option exceed a number of Shares equal to
    the Applicable Limit for such Option divided by the Applicable Limit Price on the Settlement Date for such Option.
	 	 	Dealer will pay cash in lieu of delivering any fractional Shares to be delivered with respect to any Net Share Settlement Amount valued at the Relevant Price for the last Valid Day of the Settlement Averaging Period.



 






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	 	Combination Settlement:	If Combination Settlement is applicable to any Option exercised or deemed exercised hereunder, Dealer will pay or deliver, as the case may be, to Counterparty, on the relevant Settlement Date for each such Option:





	 	(i)	cash (the “Combination Settlement Cash Amount”)
    equal to the sum, for each Valid Day during the Settlement Averaging Period for such Option, of (A) an amount (the “Daily
    Combination Settlement Cash Amount”) equal to the lesser of (1) the product of (x) the Applicable Percentage and
    (y) the Specified Cash Amount minus USD 1,000 and (2) the Daily Option Value for such Valid Day, divided by
    (B) the number of Valid Days in the Settlement Averaging Period; provided that, if the calculation in clause (A) above
    results in zero or a negative number for any Valid Day, the Daily Combination Settlement Cash Amount for such Valid Day shall
    be deemed to be zero; and
	 	(ii)	Shares (the “Combination Settlement Share
    Amount”) equal to the sum, for each Valid Day during the Settlement Averaging Period for such Option, of a number
    of Shares for such Valid Day (the “Daily Combination Settlement Share Amount”) equal to (A) (1)the Daily
    Option Value for such Valid Day, minus the Daily Combination Settlement Cash Amount for such Valid Day, divided
    by (2) the Relevant Price on such Valid Day, divided by (B) the number of Valid Days in the Settlement Averaging
    Period; provided that, if the calculation in sub-clause (A)(1) above results in zero or a negative number for any Valid
    Day, the Daily Combination Settlement Share Amount for such Valid Day shall be deemed to be zero;





	 	 	provided that in no event shall the sum of
    (x) the Combination Settlement Cash Amount for such Option and (y) the Combination Settlement Share Amount for such Option,
    multiplied by the Applicable Limit Price on the Settlement Date for such Option, exceed the Applicable Limit for such
    Option.
	 	 	Dealer will pay cash in lieu of delivering any fractional Shares to be delivered with respect to any Combination Settlement Share Amount valued at the Relevant Price for the last Valid Day of the Settlement Averaging Period.
	 	Cash Settlement:	If Cash Settlement is applicable to any Option exercised
    or deemed exercised hereunder, in lieu of Section 8.1 of the Equity Definitions, Dealer will pay to Counterparty, on the relevant
    Settlement Date for each such Option, an amount of cash (the “Cash Settlement Amount”) equal to the sum,
    for each Valid Day during the Settlement Averaging Period for such Option, of (i) the Daily Option Value for such Valid Day,
    divided by (ii) the number of Valid Days in the Settlement Averaging Period; provided that in no event shall
    the Cash Settlement Amount for such Option exceed the Applicable Limit for such Option.



 






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	 	Daily Option Value:	For any Valid Day, an amount equal to (i) the Option
    Entitlement on such Valid Day, multiplied by (ii) (A) the lesser of the Relevant Price on such Valid Day and the Cap
    Price, minus (B) the Strike Price on such Valid Day; provided that, if the calculation contained in clause (ii)
    above results in a negative number, the Daily Option Value for such Valid Day shall be deemed to be zero. In no event will
    the Daily Option Value be less than zero.
	 	Applicable Limit:	For any Option, an amount of cash equal to the Applicable
    Percentage, multiplied by the excess of (i) the aggregate of (A) the amount of cash, if any, paid to the Holder of
    the related Convertible Note upon conversion of such Convertible Note and (B) the number of Shares, if any, delivered to the
    Holder of the related Convertible Note upon conversion of such Convertible Note, multiplied by the Applicable Limit
    Price on the Settlement Date for such Option, over (ii) USD1,000.
	 	Applicable Limit Price:	On any day, the opening price as displayed under the heading “Op” on Bloomberg page KEYW <equity> (or any successor thereto).
	 	Valid Day:	A day on which (i) there is no Market Disruption Event and (ii) trading in the Shares generally occurs on the Exchange or, if the Shares are not then listed on the Exchange, on the principal other U.S. national or regional securities exchange on which the Shares are then listed or, if the Shares are not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Shares are then listed or admitted for trading. If the Shares are not so listed or admitted for trading, “Valid Day” means a Business Day.
	 	Scheduled Valid Day:	A day that is scheduled to be a Valid Day on the principal U.S. national or regional securities exchange or market on which the Shares are listed or admitted for trading. If the Shares are not so listed or admitted for trading, “Scheduled Valid Day” means a Business Day.
	 	Business Day:	Any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.



 






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	 	Relevant Price:	On any Valid Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “KEYW <equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such Valid Day (or if such volume-weighted average price is unavailable, the market value of one Share on such Valid Day, as determined by the Calculation Agent, using, if practicable, a volume-weighted average method). The “Relevant Price” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.
	 	Settlement Averaging Period:	For any Option and regardless of the Settlement Method
    applicable to such Option, the 60 consecutive Valid Days commencing on, and including, the 62nd Scheduled Valid Day immediately
    prior to the Expiration Date; provided that if the Notice of Exercise for such Option specifies that Settlement in
    Shares or Low Cash Combination Settlement applies to the related Convertible Note, the Settlement Averaging Period shall be
    the 120 consecutive Valid Days commencing on, and including, the 122nd Scheduled Valid Day immediately prior to the Expiration
    Date.
	 	Settlement Date:	For any Option, the third Business Day immediately following the final Valid Day of the Settlement Averaging Period for such Option.
	 	Settlement Currency:	USD
	 	Other Applicable Provisions:	The provisions of Sections 9.1(c), 9.8, 9.9 and 9.11 of the Equity Definitions will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Share Settled”. “Share Settled” in relation to any Option means that Net Share Settlement or Combination Settlement is applicable to that Option.
	 	Representation and Agreement:	Notwithstanding anything to the contrary in the Equity
    Definitions (including, but not limited to, Section 9.11 thereof), the parties acknowledge that (i) any Shares delivered to
    Counterparty shall be, upon delivery, subject to restrictions and limitations arising from Counterparty’s status as
    issuer of the Shares under applicable securities laws, (ii) Dealer may deliver any Shares required to be delivered hereunder
    in certificated form in lieu of delivery through the Clearance System and (iii) any Shares delivered to Counterparty may be
    “restricted securities” (as defined in Rule 144 under the Securities Act of 1933, as amended (the “Securities
    Act”)).


 






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		3.	Additional Terms applicable to the Transaction.



 


	 	Adjustments applicable to the Transaction:	 
	 	Potential Adjustment Events:	Notwithstanding Section 11.2(e) of the Equity Definitions, a “Potential Adjustment Event” means an occurrence of any event or condition, as set forth in any Dilution Adjustment Provision, that would result in an adjustment under the Indenture to the “Conversion Rate” or the composition of a “unit of Reference Property” or to any “Last Reported Sale Price,” “Daily VWAP,” “Daily Conversion Value” or “Daily Settlement Amount” (each as defined in the Indenture). For the avoidance of doubt, Dealer shall not have any delivery or payment obligation hereunder, and no adjustment shall be made to the terms of the Transaction, on account of (x) any distribution of cash, property or securities by Counterparty to holders of the Convertible Notes (upon conversion or otherwise) or (y) any other transaction in which holders of the Convertible Notes are entitled to participate, in each case, in lieu of an adjustment under the Indenture of the type referred to in the immediately preceding sentence (including, without limitation, pursuant to the fourth sentence of the first paragraph of Section 14.04(c) of the Supplemental Indenture or the fourth sentence of Section 14.04(e) of the Supplemental Indenture).
	 	Method of Adjustment:	Calculation Agent Adjustment, which means that, notwithstanding Section 11.2(c) of the Equity Definitions, upon any Potential Adjustment Event, the Calculation Agent shall make a corresponding adjustment to any one or more of the Strike Price, Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction;
	 	 	provided that, notwithstanding the foregoing
    and “Consequences of Merger Events / Tender Offers” below, if the Calculation Agent in good faith disagrees with
    any adjustment to the Convertible Notes that involves an exercise of discretion by Counterparty or its board of directors
    (including, without limitation, pursuant to Section 14.05 of the Supplemental Indenture or in connection with any proportional
    adjustment or the determination of the fair value of any securities, property, rights or other assets), then in each such
    case, the Calculation Agent will determine the adjustment to be made to any one or more of the Strike Price, Number of Options,
    Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction in a commercially
    reasonable manner;
	 	 	provided further that, notwithstanding the
    foregoing, if any Potential Adjustment Event occurs during the Settlement Averaging Period but no adjustment was made to any
    Convertible Note under the Indenture because the relevant Holder (as such term is defined in the Indenture) was deemed to
    be a record owner of the underlying Shares on the related Conversion Date, then the Calculation Agent shall make an adjustment,
    as determined by it, to the terms hereof in order to account for such Potential Adjustment Event.



 






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	 	Dilution Adjustment Provisions:	Sections 14.04(a), (b), (c), (d), (e) and (f) and Section 14.05 of the Supplemental Indenture.
	 	Extraordinary Events applicable to the Transaction:	 
	 	Merger Events:	Applicable; provided that (i) notwithstanding
    Section 12.1(b) of the Equity Definitions, a “Merger Event” means the occurrence of a Share Exchange Event (as
    defined in Section 14.07(a) of the Supplemental Indenture) and (ii) solely for purposes of Section ‎9(cc) and “Announcement
    Event” below, (a) as defined under Section 12.1(b) of the Equity Definitions (but, for the avoidance of doubt, determined
    without regard to the language in the definition of “Merger Event” following the definition of “Reverse
    Merger” therein) and (b) any occurrence of the Hexis IPO (as defined under the Indenture) or the Hexis Spin-off (as
    defined under the Indenture).
	 	Tender Offers:	Applicable; provided that notwithstanding Section
    12.1(d) of the Equity Definitions, a “Tender Offer” means the occurrence of any event or condition set forth in
    paragraph (a) of the definition of “Fundamental Change” in Section 1.01 of the Supplemental Indenture and, solely
    for purposes of Section ‎‎9(cc) and “Announcement Event” below, as defined under Section 12.1(d) of the
    Equity Definitions.
	 	Consequences of Merger Events/	 
	 	Tender Offers:	Notwithstanding Section 12.2 and Section 12.3 of the Equity Definitions, upon the occurrence of a Merger Event or a Tender Offer, the Calculation Agent shall make a corresponding adjustment in respect of any adjustment under the Indenture to any one or more of the nature of the Shares (in the case of a Merger Event), Strike Price, Number of Options and the Option Entitlement; provided, however, that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant to any Excluded Provision;
	 	 	provided further that if, with respect to a
    Merger Event or a Tender Offer, (i) the consideration for the Shares includes (or, at the option of a holder of Shares, may
    include) shares of an entity or person that is not a corporation or is not organized under the laws of the United States,
    any State thereof or the District of Columbia or (ii) the Counterparty to the Transaction following such Merger Event or Tender
    Offer will not be a corporation, then, in either case, Cancellation and Payment (Calculation Agent Determination) may apply
    at Dealer’s sole election; and



 






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	 	 	provided further that, for the avoidance of
    doubt, adjustments shall be made pursuant to the provisions set forth above regardless of whether any Merger Event or Tender
    Offer gives rise to an Early Conversion.
	 	Announcement Event:	If an Announcement Date occurs in respect of a Merger
    Event or Tender Offer (such occurrence, an “Announcement Event”), then on the earliest of the Exercise
    Date, Early Termination Date or other date of cancellation (the “Announcement Event Adjustment Date”) in
    respect of each Option, the Calculation Agent will determine the economic effect on such Option of the relevant event (regardless
    of whether the Announcement Event actually results in a Merger Event or Tender Offer, and taking into account such factors
    as the Calculation Agent may determine, including, without limitation, changes in volatility, expected dividends, stock loan
    rate or liquidity relevant to the Shares or the Transaction whether prior to or after the Announcement Event or for any period
    of time, including, without limitation, the period from the Announcement Event to the relevant Announcement Event Adjustment
    Date). If the Calculation Agent determines that such economic effect on any Option is material, then on the Announcement Event
    Adjustment Date for such Option, the Calculation Agent may make such adjustment to the Cap Price as the Calculation Agent
    determines appropriate to account for such economic effect, which adjustment shall be effective immediately prior to the exercise,
    termination or cancellation of such Option, as the case may be; provided that in no event shall the Cap Price be less
    than the Strike Price.
	 	Announcement Date:	The definition of “Announcement Date” in Section 12.1 of the Equity Definitions is hereby amended by (i) replacing the words “a firm” with the word “any” in the second and fourth lines thereof, (ii) replacing the word “leads to the” with the words “, if completed, would lead to a” in the third and the fifth lines thereof, (iii) replacing the words “voting shares” with the word “Shares” in the fifth line thereof, and (iv) inserting the words “by any entity” after the word “announcement” in the second and the fourth lines thereof.
	 	Nationalization, Insolvency or Delisting:	Cancellation and Payment (Calculation Agent Determination);
    provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute
    a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted
    on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors);
    if the Shares are immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select
    Market or The NASDAQ Global Market (or their respective successors), such exchange or quotation system shall thereafter be
    deemed to be the Exchange.



 






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	 	Additional Disruption Events:	 
	 	Change in Law:	Applicable; provided that Section 12.9(a)(ii)
    of the Equity Definitions is hereby amended by (i) replacing the word “Shares” with the phrase “Hedge
    Positions” in clause (X) thereof and (ii) inserting the parenthetical “(including, for the avoidance of doubt
    and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” at
    the end of clause (A) thereof.
	 	Failure to Deliver:	Applicable
	 	Hedging Disruption:	Applicable; provided that:





	 	(i)	Section 12.9(a)(v) of the Equity Definitions is
    hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by
    the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section:
	 		“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and
	 	(ii)	Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.





	 	Increased Cost of Hedging:	Applicable
	 	Hedging Party:	For all applicable Additional Disruption Events, Dealer.
	 	Determining Party:	For all applicable Extraordinary Events, Dealer.
	 	Non-Reliance:	Applicable
	 	Agreements and Acknowledgments	 
	 	Regarding Hedging Activities:	Applicable
	 	Additional Acknowledgments:	Applicable







 


		4.	Calculation Agent.                     Dealer



 






    	12



    	 



    

 


 


		5.	Account Details.



 


		(a)	Account for payments to Counterparty:



 


	Bank:	Citibank
	ABA#:	[____________]
	Acct No.:	[____________]
	Beneficiary:	The KEYW Corporation Operating
	Ref:	 KEYW Capped Call


 


Account for delivery of Shares to Counterparty:


 


David Rillera
Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016-3572
(800) 866-1340 Ext 2612
Account # [__________]


 


		(b)	Account for payments to Dealer:



 


JP Morgan Chase NY (CHASUS33)


ABA#: [____________]


Royal Bank of Canada (ROYCUS3X)


A/C#: [____________]

A/C [____________]

Reference: The KEYW Holding Corporation


 


Account for delivery of Shares from Dealer:


 


To be provided by Dealer.


 


		6.	Offices.



 


		(a)	The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is not a Multibranch
Party.



 


		(b)	The Office of Dealer for the Transaction is: New York



 


Royal Bank of Canada

c/o RBC Capital Markets, LLC

3 World Financial Center

200 Vesey Street

New York, New York 10281



	Attention:	Structured Derivatives Documentation
	Telephone:	(212) 858-7000
	Facsimile:	(212) 428-3053
	 	 


 





		7.	Notices. 



 


		(a)	Address for notices or communications to Counterparty:



 


The KEYW Holding Corporation


7740 Milestone Parkway, Suite 400


Hanover, Maryland 21076


	Attention:	Chief Financial Officer
	Telephone No.:	443-733-1600
	Facsimile No.:	443-733-1601


 





		(b)	Address for notices or communications to Dealer:



 


Royal Bank of Canada

c/o RBC Capital Markets, LLC

3 World Financial Center

200 Vesey Street

New York, New York 10281





	Attention:	Structured Derivatives Documentation
	Telephone:	(212) 858-7000
	Facsimile:	(212) 428-3053
	Email:	SEDDOC@rbccm.com


 






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		8.	Representations and Warranties.



 


Each of the representations and
warranties of Counterparty set forth in Section 1 of the Underwriting Agreement (the “Underwriting Agreement”)
dated as of July 16, 2014 between Counterparty, RBC Capital Markets, LLC, and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as representatives of the several Underwriters party thereto (the “Underwriters”) are true and correct and are
hereby deemed to be repeated to Dealer as if set forth herein. Counterparty hereby further represents and warrants to Dealer on
the date hereof and on and as of the Premium Payment Date that:


 


		(a)	Counterparty is duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization or incorporation and has all necessary corporate power and authority to execute, deliver and perform its obligations
in respect of the Transaction; such execution, delivery and performance have been duly authorized by all necessary corporate action
on Counterparty’s part; and this Confirmation has been duly and validly executed and delivered by Counterparty and constitutes
its valid and binding obligation, enforceable against Counterparty in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith
and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that rights to indemnification
and contribution hereunder may be limited by federal or state securities laws or public policy relating thereto.



 


		(b)	Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations
of Counterparty hereunder will conflict with or result in a breach of the certificate of incorporation or by-laws (or any equivalent
documents) of Counterparty, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental
authority or agency, or any agreement or instrument to which Counterparty or any of its subsidiaries is a party or by which Counterparty
or any of its subsidiaries is bound or to which Counterparty or any of its subsidiaries is subject, or constitute a default under,
or result in the creation of any lien under, any such agreement or instrument.



 


		(c)	No consent, approval, authorization, or order of, or filing with, any governmental agency or body
or any court is required in connection with the execution, delivery or performance by Counterparty of this Confirmation, except
such as have been obtained or made and such as may be required under the Securities Act or state securities laws.



 


		(d)	Counterparty is not and, after consummation of the transactions contemplated hereby, will not be
required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.



 


		(e)	Counterparty is an “eligible contract participant” (as such term is defined in Section
1a(18) of the Commodity Exchange Act, as amended, other than a person that is an eligible contract participant under Section 1a(18)(C)
of the Commodity Exchange Act).



 


		(f)	Each of it and its affiliates is not, on the date hereof, in possession of any material non-public
information with respect to Counterparty or the Shares.



 


		(g)	No state or local (including any non-U.S. jurisdiction’s) law, rule, regulation or regulatory
order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without
limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or
holding (however defined) Shares.



 






    	14



    	 



    

 


		(h)	Counterparty (A) is capable of evaluating investment risks independently, both in general and with
regard to all transactions and investment strategies involving a security or securities; (B) will exercise independent judgment
in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer
in writing; and (C) has total assets of at least USD 50 million.



 


		(i)	Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges
that Dealer is not making any representations or warranties with respect to the treatment of the Transaction under any accounting
standards including FASB Statements 128, 133, 149 (each as amended), or 150, EITF Issue No. 00-19, 01-6, 03-6 or 07-5 (or any successor
issue statements) or under FASB’s Liabilities & Equity Project.



 


		(j)	Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not
violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.



 


		(k)	(A) Counterparty is acting for its own account, and it has made its own independent decisions to
enter into the Transaction and as to whether the Transaction is appropriate or proper for it based upon its own judgment and upon
advice from such advisers as it has deemed necessary, (B) Counterparty is not relying on any communication (written or oral) of
Dealer or any of its affiliates as investment advice or as a recommendation to enter into the Transaction (it being understood
that information and explanations related to the terms and conditions of the Transaction shall not be considered investment advice
or a recommendation to enter into the Transaction) and (C) no communication (written or oral) received from Dealer or any of its
affiliates shall be deemed to be an assurance or guarantee as to the expected results of the Transaction.



 


Dealer hereby
represents and warrants to Counterparty on the date hereof and on and as of the Premium Payment Date, that Dealer is an “eligible
contract participant” (as such term is defined in Section 1a(18) of the Commodity Exchange Act, other than a person that
is an eligible contract participant under Section 1a(18)(C) of the Commodity Exchange Act).


 


		9.	Other Provisions.



 


		(a)	Opinions. Counterparty shall deliver to Dealer an opinion of counsel, dated as of
the Trade Date, with respect to the matters set forth in Sections 8(a) through (c) of this Confirmation. Delivery of such opinion
to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation
of Dealer under Section 2(a)(i) of the Agreement.



 






    	15



    	 



    

 


		(b)	Repurchase and Conversion Rate Adjustment Notices. Counterparty shall, at least 10
Scheduled Valid Days prior to effecting any repurchase of Shares or consummating or otherwise executing or engaging in any transaction
or event (a “Conversion Rate Adjustment Event”) that would lead to an increase in the Conversion Rate (as such
term is defined in the Indenture), give Dealer a written notice of such repurchase or Conversion Rate Adjustment Event (a “Repurchase
Notice”) on such day if following such repurchase or Conversion Rate Adjustment Event, the Notice Percentage as determined
on the date of such Repurchase Notice is (i) greater than 4.5% and (ii) greater by 0.5% than the Notice Percentage included in
the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater than the Notice Percentage
as of the date hereof). The “Notice Percentage” as of any day is the fraction, expressed as a percentage, the
numerator of which is the Number of Shares and the denominator of which is the number of Shares outstanding on such day. Counterparty
agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates,
advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all losses
(including losses relating to Dealer’s hedging activities as a consequence of becoming, or of the risk of becoming, a Section
16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities
and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and expenses (including
reasonable attorney’s fees), joint or several, which an Indemnified Person may become subject to, as a result of Counterparty’s
failure to provide Dealer with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse,
within 30 days, upon written request, each of such Indemnified Persons for any reasonable legal or other expenses incurred in connection
with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing.
If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted
against the Indemnified Person as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice in accordance
with this paragraph, such Indemnified Person shall promptly notify Counterparty in writing, and Counterparty, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person
and any others Counterparty may designate in such proceeding and shall pay the fees and expenses of such counsel related to such
proceeding. Counterparty shall not be liable for any settlement of any proceeding contemplated by this paragraph that is effected
without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, Counterparty agrees
to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Counterparty
shall not, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding
contemplated by this paragraph that is in respect of which any Indemnified Person is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Indemnified
Person. If the indemnification provided for in this paragraph is unavailable to an Indemnified Person or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then Counterparty, in lieu of indemnifying such Indemnified
Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities. The remedies provided for in this paragraph ‎(b) are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any Indemnified Person at law or in equity. The indemnity and contribution agreements
contained in this paragraph shall remain operative and in full force and effect regardless of the termination of the Transaction.



 


		(c)	Regulation M. Counterparty is not on the Trade Date, and will not be during any “Observation
Period” (as defined in the Indenture) in respect of any conversion of a Convertible Note that is not an Early Conversion,
engaged in a distribution, as such term is used in Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), of any securities of Counterparty, other than (i) a distribution meeting the requirements of the exception set
forth in Rules 101(b)(10) and 102(b)(7) of Regulation M and (ii) the distribution of the Convertible Notes. Counterparty shall
not, until the second Scheduled Valid Day immediately following the Trade Date, and from the beginning of such “Observation
Period” until the second Scheduled Valid Day immediately following the relevant Settlement Date, engage in any such distribution.



 






    	16



    	 



    

 


		(d)	Rule 10b-18. On the Trade Date and during any “Observation Period” (as
defined in the Indenture) in respect of any conversion of a Convertible Note that is not an Early Conversion, neither Counterparty
nor any “affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“Rule
10b-18”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative
instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer
relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or
a depository share) or any security convertible into or exchangeable or exercisable for Shares.



 


		(e)	Resolutions. Prior to the Trade Date, Counterparty shall deliver to Dealer a resolution
of Counterparty’s board of directors authorizing the Transaction and such other certificate or certificates as Dealer shall
reasonably request.



 


		(f)	Solvency. On each of the Trade Date and the Premium Payment Date, Counterparty is
not, or will not be, “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title
11 of the United States Code) (the “Bankruptcy Code”)), and Counterparty would be able to purchase a number
of Shares equal to the Number of Shares in compliance with the corporate laws of the jurisdiction of its incorporation.



 


		(g)	Private Placement. Counterparty acknowledges that the offer and sale of the Transaction
to it is intended to be exempt from registration under the Securities Act, by virtue of Section 4(a)(2) thereof. Accordingly, Counterparty
represents and warrants to Dealer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction
and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in
Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without
a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not
been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state
securities laws.



 


		(h)	No Manipulation. Counterparty is not entering into the Transaction to create actual
or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress
or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise
in violation of the Exchange Act.



 


		(i)	Transfer or Assignment.



 


		(i)	Counterparty may not transfer any of its rights or obligations under the Transaction without the
prior written consent of Dealer.



 






    	17



    	 



    

 


		(ii)	Dealer may, without Counterparty’s consent, transfer or assign all or any part of its rights
or obligations under the Transaction (A) to any affiliate of Dealer (1) that has a long-term issuer rating that is equal to or
better than Dealer’s credit rating at the time of such transfer or assignment, or (2) whose obligations hereunder will be
guaranteed, pursuant to the terms of a customary guarantee in a form used by Dealer generally for similar transactions, by Dealer
or Dealer’s ultimate parent, or (B) to any other third party with a long-term issuer rating equal to or better than the credit
rating of Dealer at the time of the transfer. If at any time at which (A) the Section 16 Percentage exceeds 7.5%, (B) the Option
Equity Percentage exceeds 13.0% or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition
described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using its commercially
reasonable efforts to effect a transfer or assignment of Options to a third party on pricing terms reasonably acceptable to Dealer
and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists, then Dealer may designate
any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “Terminated Portion”),
such that following such partial termination no Excess Ownership Position exists. In the event that Dealer so designates an Early
Termination Date with respect to a portion of the Transaction, a payment shall be made pursuant to Section 6 of the Agreement as
if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and
a Number of Options equal to the number of Options underlying the Terminated Portion, (2) Counterparty were the sole Affected Party
with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance
of doubt, the provisions of Section ‎9(o) shall apply to any amount that is payable by Dealer to Counterparty pursuant to this
sentence as if Counterparty was not the Affected Party). The “Section 16 Percentage” as of any day is the fraction,
expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and each person subject to aggregation
of Shares with Dealer under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder directly or indirectly
beneficially own (as defined under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder) and (B) the denominator
of which is the number of Shares outstanding. The “Option Equity Percentage” as of any day is the fraction,
expressed as a percentage, (A) the numerator of which is the sum of (1) the product of the Number of Options and the Option Entitlement
and (2) the aggregate number of Shares underlying any other call option transaction sold by Dealer to Counterparty, and (B) the
denominator of which is the number of Shares outstanding. The “Share Amount” as of any day is the number of
Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such person,
a “Dealer Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts
of Counterparty that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns,
beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership
under any Applicable Restriction, as determined by Dealer in its reasonable discretion. The “Applicable Share Limit”
means a number of Shares equal to (A) the minimum number of Shares that could give rise to reporting or registration obligations
or other requirements (including obtaining prior approval from any person or entity) of a Dealer Person, or could result in an
adverse effect on a Dealer Person, under any Applicable Restriction, as determined by Dealer in its reasonable discretion, minus
(B) 1% of the number of Shares outstanding.



 


		(iii)	Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing
Dealer to purchase, sell, receive or deliver any Shares or other securities, or make or receive any payment in cash, to or from
Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities,
or to make or receive such payment in cash, and otherwise to perform Dealer’s obligations in respect of the Transaction and
any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any
such performance.



 


		(j)	Staggered Settlement. If upon advice of counsel with respect to applicable legal
and regulatory requirements, including any requirements relating to Dealer’s hedging activities hereunder, Dealer reasonably
determines that it would not be practicable or advisable to deliver, or to acquire Shares to deliver, any or all of the Shares
to be delivered by Dealer on any Settlement Date for the Transaction, Dealer may, by notice to Counterparty on or prior to any
Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a “Staggered
Settlement Date”) as follows:



 


		(i)	in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (the
first of which will be no earlier than the twentieth (20th) Exchange Business Day immediately preceding such Nominal Settlement
Date such Nominal Settlement Date and the last of which will be no later than the twentieth (20th) Exchange Business
Day following such Nominal Settlement Date) and the number of Shares that it will deliver on each Staggered Settlement Date;



 


		(ii)	the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered
Settlement Dates will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement
Date; and



 


		(iii)	if the Net Share Settlement terms or the Combination Settlement terms set forth above were to apply
on the Nominal Settlement Date, then the Net Share Settlement terms or the Combination Settlement terms, as the case may be, will
apply on each Staggered Settlement Date, except that the Shares (or Share Termination Delivery Units) otherwise deliverable on
such Nominal Settlement Date will be allocated among such Staggered Settlement Dates as specified by Dealer in the notice referred
to in clause (i) above.



 






    	18



    	 



    

 


		(k)	Role of Agent. Dealer has appointed, as its agent, its indirect wholly-owned subsidiary,
RBC Capital Markets, LLC (“RBCCM”), for purposes of conducting, on Dealer’s behalf, a business in privately
negotiated transactions in options and other derivatives. Counterparty hereby is advised that Dealer, the principal and stated
counterparty in such transactions, duly has authorized RBCCM to market, structure, negotiate, document, price, execute and hedge
transactions in over-the-counter derivative products. RBCCM does not act as agent of Counterparty. For the avoidance of doubt,
any performance by Dealer of its obligations hereunder solely to RBCCM shall not relieve Dealer of such obligations. RBCCM’s
performance to Counterparty of Dealer’s obligations hereunder shall relieve Dealer of such obligations to the extent of such
performance. Any performance by Counterparty of its obligations (including notice obligations) through or by means of RBCCM’s
agency for Dealer shall constitute good performance of Counterparty’s obligations hereunder to Dealer.



 


		(l)	Additional Termination Events.



 


		(i)	Notwithstanding anything to the contrary in this Confirmation, upon any Early Conversion in respect
of which a Notice of Conversion (as such term is defined in the Indenture) that is effective as to Counterparty has been delivered
by the relevant converting Holder:



 


		(A)	Counterparty shall, within one Scheduled Valid Day of the Conversion Date for such Early Conversion,
provide written notice (an “Early Conversion Notice”) to Dealer specifying the number of Convertible Notes surrendered
for conversion on such Conversion Date (such Convertible Notes, the “Affected Convertible Notes”),
and the giving of such Early Conversion Notice shall constitute an Additional Termination Event as provided in this clause
‎(i);



 


		(B)	upon receipt of any such Early Conversion Notice, Dealer shall designate an Exchange Business Day
as an Early Termination Date (which Exchange Business Day shall be no earlier than one Scheduled Valid Day following the Conversion
Date for such Early Conversion) with respect to the portion of the Transaction corresponding to a number of Options (the “Affected
Number of Options”) equal to the lesser of (x) the number of Affected Convertible Notes and (y) the Number of Options
as of the Conversion Date for such Early Conversion;



 


		(C)	any payment hereunder with respect to such termination shall be calculated pursuant to Section
6 of the Agreement as if (x) an Early Termination Date had been designated in respect of a Transaction having terms identical to
the Transaction and a Number of Options equal to the Affected Number of Options, (y) Counterparty were the sole Affected Party
with respect to such Additional Termination Event and (z) the terminated portion of the Transaction were the sole Affected Transaction;
provided that the amount payable with respect to such termination shall not be greater than (1) the Applicable Percentage,
multiplied by (2) the Affected Number of Options, multiplied by (3) (x) the sum of (i) the amount of cash paid (if
any) and (ii) the number of Shares delivered (if any) to the Holder (as such term is defined in the Indenture) of an Affected Convertible
Note upon conversion of such Affected Convertible Note, multiplied by the fair market value of one Share as determined by
the Calculation Agent, minus (y) USD 1,000;



 






    	19



    	 



    

 


		(D)	for the avoidance of doubt, in determining the amount payable
in respect of such Affected Transaction pursuant to Section 6 of the Agreement, the Calculation Agent shall assume that (x) the
relevant Early Conversion and any conversions, adjustments, agreements, payments, deliveries or acquisitions by or on behalf of
Counterparty leading thereto had not occurred, (y) no adjustments to the Conversion Rate have occurred pursuant to any Excluded
Provision and (z) the corresponding Convertible Notes remain outstanding; and



 


		(E)	the Transaction shall remain in full force
and effect, except that, as of the Conversion Date for such Early Conversion, the Number of Options shall be reduced by the Affected
Number of Options.



 


		(ii)	Notwithstanding anything to the contrary in this Confirmation, upon any Make-Whole Conversion in
respect of which a Notice of Conversion (as such term is defined in the Indenture) that is effective as to Counterparty has been
delivered by the relevant converting Holder:



 


		(A)	Counterparty shall, within one Scheduled Valid Day of the Conversion Date for such Make-Whole Conversion,
provide written notice (a “Make-Whole Conversion Notice”) to Dealer specifying the number of Convertible Notes
surrendered for conversion on such Conversion Date (such Convertible Notes, the “Make-Whole Convertible Notes”),
and the giving of such Make-Whole Conversion Notice shall constitute an Additional Termination Event as provided in this clause
‎‎(ii);



 


		(B)	upon receipt of any such Make-Whole Conversion Notice, Dealer shall designate an Exchange Business
Day as an Early Termination Date (which Exchange Business Day shall be no earlier than one Scheduled Valid Day following the Conversion
Date for such Make-Whole Conversion) with respect to the portion of the Transaction corresponding to a number of Options (the “Make-Whole
Number of Options”) equal to the lesser of (x) the number of Affected Convertible Notes and (y) the Number of Options
as of the Conversion Date for such Make-Whole Conversion;



 


		(C)	any payment hereunder with respect to such termination shall be calculated pursuant to Section
6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to
the Transaction and a Number of Options equal to the number of Make-Whole Number of Options, (2) Counterparty were the sole Affected
Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected
Transaction (and, for the avoidance of doubt, in determining the amount payable pursuant to Section 6 of the Agreement, the Calculation
Agent shall not take into account any adjustments to the Option Entitlement that result from corresponding adjustments to the Conversion
Rate pursuant to Section 14.03 of the Supplemental Indenture); provided that the payment in respect of such early termination
by Dealer to Counterparty shall not be greater than the product of (x) the Applicable Percentage and (y) the excess of (I) (1)
the number of Make-Whole Conversion Options, multiplied by (2) the Conversion Rate (after taking into account any applicable
adjustments to the Conversion Rate pursuant to Section 14.03 of the Supplemental Indenture), multiplied by (3) a price per
Share determined by the Calculation Agent over (II) the aggregate principal amount of such Convertible Notes, as determined by
the Calculation Agent in a commercially reasonable manner;



 






    	20



    	 



    

 


		(D)	for the avoidance of doubt, in determining the amount payable in respect of such Affected Transaction
pursuant to Section 6 of the Agreement, the Calculation Agent shall assume that (x) the relevant Make-Whole Conversion and any
conversions, adjustments, agreements, payments, deliveries or acquisitions by or on behalf of Counterparty leading thereto had
not occurred, (y) no adjustments to the Conversion Rate have occurred pursuant to any Excluded Provision and (z) the corresponding
Convertible Notes remain outstanding; and



 


		(E)	the Transaction shall remain in full force and effect, except that, as of the Conversion Date for
such Make-Whole Conversion, the Number of Options shall be reduced by the Make-Whole Number of Options.



 


		(iii)	Notwithstanding anything to the contrary in this Confirmation, if an event of default with respect
to Counterparty occurs under the terms of the Convertible Notes as set forth in Section 6.02 of the Supplemental Indenture, then
such event of default shall constitute an Additional Termination Event applicable to the Transaction and, with respect to such
Additional Termination Event, (A) Counterparty shall be deemed to be the sole Affected Party, (B) the Transaction shall be the
sole Affected Transaction and (C) Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section
6(b) of the Agreement.



 


		(m)	Amendments to Equity Definitions.



 


		(i)	Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “a
diluting or concentrative effect on the theoretical value of the relevant Shares” and replacing them with the words “an
economic effect on the Transaction”.



 


		(ii)	Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth
line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the
semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or at Dealer’s option,
(C) the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect
to that Issuer.”



 


		(iii)	Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing “either party
may elect” with “Dealer may elect” and (2) replacing “notice to the other party” with “notice
to Counterparty” in the first sentence of such section.



 


		(n)	No Collateral, Netting or Setoff. Notwithstanding any provision of the Agreement
or any other agreement between the parties to the contrary, the obligations of Counterparty hereunder are not secured by any collateral.
Obligations under the Transaction shall not be netted or set off against any other obligations of the parties, whether arising
under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise,
and no other obligations of the parties shall be netted or set off against obligations under the Transaction, whether arising under
the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise, and each
party hereby waives any such right of setoff.



 






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		(o)	Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events.
If (a) an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with
respect to the Transaction or (b) the Transaction is cancelled or terminated upon the occurrence of an Extraordinary Event (except
as a result of (i) a Nationalization, Insolvency or Merger Event in which the consideration to be paid to holders of Shares consists
solely of cash, (ii) a Merger Event or Tender Offer that is within Counterparty’s control, or (iii) an Event of Default in
which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party other than an Event
of Default of the type described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a Termination Event of the
type described in Section 5(b) of the Agreement, in each case that resulted from an event or events outside Counterparty’s
control), and if Dealer would owe any amount to Counterparty pursuant to Section 6(d)(ii) of the Agreement or any Cancellation
Amount pursuant to Article 12 of the Equity Definitions (any such amount, a “Payment Obligation”), then Dealer
shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below), unless (a) Counterparty gives
irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Valid Day, no later than 12:00 p.m. (New York
City time) on the Merger Date, Tender Offer Date, Announcement Date (in the case of a Nationalization, Insolvency or Delisting),
Early Termination Date or date of cancellation, as applicable, of its election that the Share Termination Alternative shall not
apply and (b) Counterparty remakes the representation set forth in Section ‎8(f) as of the date of such election, in which
case the provisions of Section 12.7 or Section 12.9 of the Equity Definitions, or the provisions of Section 6(d)(ii) of the Agreement,
as the case may be, shall apply.



 


	 	Share Termination Alternative:	If applicable, Dealer shall deliver to Counterparty the Share Termination Delivery Property on, or within a commercially reasonable period of time after, the date when the relevant Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) and 6(e) of the Agreement, as applicable, in satisfaction of such Payment Obligation in the manner reasonably requested by Counterparty free of payment.
	 	Share Termination Delivery Property:	A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
	 	Share Termination Unit Price:	The value to Dealer of property contained in one Share Termination Delivery Unit, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer at the time of notification of the Payment Obligation. For the avoidance of doubt, the parties agree that in determining the Share Termination Delivery Unit Price the Calculation Agent may consider the purchase price paid in connection with the purchase of Share Termination Delivery Property.
	 	Share Termination Delivery Unit:	One Share or, if the Shares have changed into cash or any other property or the right to receive cash or any other property as the result of a Nationalization, Insolvency or Merger Event (any such cash or other property, the “Exchange Property”), a unit consisting of the type and amount of such Exchange Property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Nationalization, Insolvency or Merger Event, as determined by the Calculation Agent.



 






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	 	Failure to Deliver:	Applicable
		Other applicable provisions:	If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9 and 9.11 (as modified above) of the Equity Definitions and the provisions set forth opposite the caption “Representation and Agreement” in Section 2 will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Share Termination Settled” and all references to “Shares” shall be read as references to “Share Termination Delivery Units”. “Share Termination Settled” in relation to the Transaction means that Share Termination Alternative is applicable to the Transaction.



 


		(p)	Registration. Counterparty hereby agrees that if, in the good faith reasonable judgment
of Dealer, the Shares (“Hedge Shares”) acquired by Dealer for the purpose of hedging its obligations pursuant
to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall,
at its election, either (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer
an effective registration statement under the Securities Act and enter into an agreement, in form and substance satisfactory to
Dealer, substantially in the form of an underwriting agreement for a registered secondary offering; provided, however, that
if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence
investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii)
of this paragraph shall apply at the election of Counterparty, (ii) in order to allow Dealer to sell the Hedge Shares in a private
placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for
private placements of equity securities, in form and substance satisfactory to Dealer (in which case, the Calculation Agent shall
make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any
discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement), or (iii) purchase
the Hedge Shares from Dealer at the Relevant Price on such Exchange Business Days, and in the amounts, requested by Dealer.



 


		(q)	Notice of Certain Other Events. Counterparty covenants and agrees that:



 


		(i)	promptly following the public announcement of the results of any election by the holders of Shares
with respect to the consideration due upon consummation of any Merger Event, Counterparty shall give Dealer written notice of (x)
the weighted average of the types and amounts of consideration that holders of Shares have elected to receive upon consummation
of such Merger Event or (y) if no holders of Shares affirmatively make such election, the types and amounts of consideration actually
received by holders of Shares (the date of such notification, the “Consideration Notification Date”); provided
that in no event shall the Consideration Notification Date be later than the date on which such Merger Event is consummated; and



 






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		(ii)	promptly following any adjustment to the Convertible Notes in connection with any Potential Adjustment
Event, Merger Event or Tender Offer, Counterparty shall give Dealer written notice of the details of such adjustment.



 


		(r)	Tax Disclosure. Effective from the date of commencement of discussions concerning
the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including
opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.



 


		(s)	Right to Extend. Dealer may postpone or add, in whole or in part, any Valid Day or
Valid Days during the Settlement Averaging Period or any other date of valuation, payment or delivery by Dealer, with respect to
some or all of the Options hereunder, if Dealer reasonably determines, in its discretion, that such action is reasonably necessary
or appropriate to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions
or to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder
in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable
legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.



 


		(t)	Status of Claims in Bankruptcy.  Dealer acknowledges and agrees that this
Confirmation is not intended to convey to Dealer rights against Counterparty with respect to the Transaction that are senior to
the claims of common stockholders of Counterparty in any United States bankruptcy proceedings of Counterparty; provided
that nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by
Counterparty of its obligations and agreements with respect to the Transaction; provided, further, that nothing herein
shall limit or shall be deemed to limit Dealer’s rights in respect of any transactions other than the Transaction.



 


		(u)	Securities Contract; Swap Agreement. The parties hereto intend for (i) the Transaction
to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code, and the parties
hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555
and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate the Transaction and to exercise any other remedies upon
the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a “contractual right”
as described in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to constitute
a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy Code.



 


		(v)	Wall Street Transparency and Accountability Act. In connection with Section 739 of
the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), the parties hereby agree that neither
the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall
limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement
this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs,
regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including,
but not limited to, rights arising from Change in Law, Hedging Disruption, Increased Cost of Hedging, an Excess Ownership Position,
or Illegality (as defined in the Agreement)).



 


		(w)	Agreements and Acknowledgements Regarding Hedging. Counterparty understands, acknowledges
and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other
securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its
hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other
than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether,
when or in what manner any hedging or market activities in securities of Issuer shall be conducted and shall do so in a manner
that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities
of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant
Prices, each in a manner that may be adverse to Counterparty.



 






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		(x)	Early Unwind. In the event the sale of the “Initial Securities” (as defined
in the Underwriting Agreement) is not consummated with the Underwriters for any reason, or Counterparty fails to deliver to Dealer
opinions of counsel as required pursuant to Section ‎9(a), in each case by 5:00 p.m. (New York City time) on the Premium Payment
Date, or such later date as agreed upon by the parties (the Premium Payment Date or such later date the “Early Unwind
Date”), the Transaction shall automatically terminate (the “Early Unwind”), on the Early
Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Counterparty under the Transaction
shall be cancelled and terminated and (ii) each party shall be released and discharged by the other party from and agrees not to
make any claim against the other party with respect to any obligations or liabilities of the other party arising out of and to
be performed in connection with the Transaction either prior to or after the Early Unwind Date. Each of Dealer and Counterparty
represents and acknowledges to the other that, subject to the proviso included in this Section ‎9(x), upon an Early Unwind,
all obligations with respect to the Transaction shall be deemed fully and finally discharged.



 


		(y)	Payment by Counterparty. In the event that, following payment of the Premium, (i)
an Early Termination Date occurs or is designated with respect to the Transaction as a result of a Termination Event or an Event
of Default (other than an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result, Counterparty
owes to Dealer an amount calculated under Section 6(e) of the Agreement, or (ii) Counterparty owes to Dealer, pursuant to Section
12.7 or Section 12.9 of the Equity Definitions, an amount calculated under Section 12.8 of the Equity Definitions, such amount
shall be deemed to be zero.



 


		(z)	Severability; Illegality. If compliance by either party with any provision of the
Transaction would be unenforceable or illegal, (a) the parties shall negotiate in good faith to resolve such unenforceability
or illegality in a manner that preserves the economic benefits of the transactions contemplated hereby and (b) the other provisions
of the Transaction shall not be invalidated, but shall remain in full force and effect.



 


		(aa)	Waiver of Jury Trial. EACH OF COUNTERPARTY AND Dealer
HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.



 


		(bb)	Governing Law; Jurisdiction. THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE
ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY
SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF
INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.



 






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		(cc)	Other Adjustments Pursuant to the Equity Definitions. Notwithstanding anything to
the contrary in this Confirmation, solely for the purpose of adjusting the Cap Price, the terms “Potential Adjustment Event,”
“Merger Event,” and “Tender Offer” shall each have the meanings assigned to such term in the Equity Definitions
(in the case of a Potential Announcement Event, as amended by Section ‎9(m)(i), and in the case of a Merger Event, as amended
by the provisions opposite the caption “Merger Events” in Section ‎3), and upon the occurrence of a Merger Date,
the occurrence of a Tender Offer Date, or declaration by Counterparty of the terms of any Potential Adjustment Event, respectively,
as such terms are defined in the Equity Definitions, the Calculation Agent may, in its sole discretion, adjust the Cap Price to
preserve the fair value of the Options to Dealer; provided that in no event shall the Cap Price be less than the Strike
Price.



 


		(dd)	FATCA: Withholding Tax imposed on payments to non-US counterparties under the United States
Foreign Account Tax Compliance Act. “Tax” as used in Part 2(a) of the Schedule (Payer Tax Representations)
and “Indemnifiable Tax” as defined in Section 14 of the Agreement shall not include any U.S. federal withholding tax
imposed or collected pursuant to Sections 1471 through 1474 of the Code, any current or future regulations or official interpretations
thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or
practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections
of the Code (a “FATCA Withholding Tax”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction
or withholding of which is required by applicable law for the purposes of Section 2(d) of this Agreement.



 






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Please confirm that
the foregoing correctly sets forth the terms of our agreement by executing this Confirmation and returning it to Dealer.


 





 


	 	Very truly yours,
	 	 	 
	 	 	
        ROYAL BANK OF CANADA

        by its agent

        RBC Capital Markets, LLC

         

         

	 	 	By:	/s/ Makone Touré
	 	 	Authorized Signatory
	 	 	Name: Makone Touré
	 	 	Title: Managing Director


 


 


Accepted and confirmed

as of the Trade Date:


 


	THE KEYW HOLDING CORPORATION	 
	By:	/s/ Philip L. Calamia	 
	Authorized Signatory	 
	Name: Philip L. Calamia	 


 




 


 





  


[Signature Page to Capped Call Confirmation]