Annual Executive Bonus Plan- Individual Performance



 EXHIBIT 10.7 
 MERCURY COMPUTER SYSTEMS, INC. 
 ANNUAL EXECUTIVE BONUS PLAN—INDIVIDUAL PERFORMANCE

 SECTION 1 
 BACKGROUND, PURPOSE, AND DURATION 
 1.1 Effective Date. The Plan is effective as of July 28, 2009.

 1.2 Purpose of the Plan. The Plan is intended to increase shareholder value and the success of the Company by motivating
Participants to (a) perform to the best of their abilities, and (b) achieve the Company’s objectives. The Plan’s goals are to be achieved by providing Participants with the opportunity to earn incentive bonuses for the
achievement of “management by results” individual performance goals. 
 1.3 Documents Constituting the Company’s Annual
Executive Bonus Plan. There are two separate components of the Company’s Annual Executive Bonus Plan: (i) this Plan, and (ii) the Company’s plan titled “Annual Executive Bonus Plan—Corporate Financial
Performance.” 
 SECTION 2 
 DEFINITIONS 
 The following words and phrases shall have the following meanings unless a different meaning is plainly
required by the context: 
 “Actual Bonus” means, as to any Performance Period, the actual annual bonus (if any) payable to a
Participant for the Performance Period pursuant to Section 4.3. 
 “Affiliate” means any corporation or other entity
controlled by the Company. 
 “Board” means the Board of Directors of the Company. 
 “Cause” means (a) the willful and continued failure by the Participant (other than any such failure resulting from (i) the
Participant’s incapacity due to physical or mental illness, (ii) any such actual or anticipated failure after the issuance of a notice of termination by the Participant for Good Reason, or (iii) the Company’s active or passive
obstruction of the performance of the Participant’s duties and responsibilities) to perform substantially the duties and responsibilities of the Participant’s position with the Company after a written demand for substantial performance is
delivered to the Participant by the Board, which demand specifically identifies the manner in which the Board believes that the Participant has not substantially performed such duties or responsibilities, (b) the conviction of the Participant
by a court of competent jurisdiction for felony criminal conduct or a plea of nolo contendere to a felony, or (c) the willful engaging by the Participant in fraud, dishonesty or other misconduct which is demonstrably and materially
injurious to the Company or its reputation, monetarily or otherwise. No act, or failure to act, on the Participant’s part shall be deemed “willful” unless committed or omitted by the Participant in bad faith and without a reasonable
belief that the Participant’s act or failure to act was in, or not opposed to, the best interest of the Company. 
 “Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated thereunder, and any
comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation. 
 “Committee” means the Compensation Committee of the Board or any successor committee to the Compensation Committee. 
  

 1 








 “Company” means Mercury Computer Systems, Inc., a Massachusetts corporation, or any
successor thereto. 
 “Disability” means total and permanent disability as defined in section 22(e)(3) of the Code,
provided that the Committee, in its sole discretion, may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Company from time to time. 
 “Employee” means any employee of the Company or an Affiliate, whether such employee is so employed at the time that the Plan is adopted
or becomes so employed subsequent to the adoption of the Plan. 
 “Fiscal Year” means the fiscal year of the Company.

 “Good Reason” for termination by the Participant of the Participant’s employment means the Participant has complied
with the Good Reason Process following the occurrence (without the Participant’s express written consent) of any one of the following events: 
 a. a material adverse change in the Participant’s status or position with the Company, including without limitation any adverse change in the Participant’s status or position as a result of a material diminution of the
Participant’s duties or responsibilities, or the assignment to the Participant of any duties or responsibilities which are inconsistent with such status or position, or any removal of the Participant from, or any failure to reappoint or reelect
the Participant to, such position; 
 b. a material reduction in the Participant’s base salary; or 
 c. the Company requiring the Participant to be based at an office that is greater than fifty (50) miles from where the Participant’s office is
currently located, except for required travel on the Company’s business to an extent substantially consistent with the business travel obligations that the Participant undertook on behalf of the Company prior to such change in office location.

 If the Participant has a change-in-control agreement with the Company, Good Reason shall have the meaning assigned to such term in the
change-in-control agreement. 
 “Good Reason Process” shall mean that (a) the Participant reasonably determines in good
faith that a “Good Reason” event has occurred; (b) the Participant notifies the Company in writing of the first occurrence of the Good Reason event within sixty (60) days of the first occurrence of such event; (c) the
Participant cooperates in good faith with the Company’s efforts, for a period not less than thirty (30) days following such notice (the “Cure Period”), to remedy the event; (d) notwithstanding such efforts, the Good Reason
event continues to exist; and (e) the Participant terminates his or her employment within sixty (60) days after the end of the Cure Period. If the Company cures the Good Reason event during the Cure Period, Good Reason shall be deemed not
to have occurred. 
 “Participant” means, as to any Performance Period, an Employee who has been selected by the Committee
for participation in the Plan for that Performance Period. 
 “Performance Period” means any Fiscal Year. 
 “Plan” means the Mercury Computer Systems, Inc. Annual Executive Bonus Plan—Individual Performance, as set forth in this instrument
and as hereafter amended from time to time. 
 “Planned Retirement” shall be deemed the reason for the Termination of
Employment by the Participant of the Participant’s employment if such employment is terminated pursuant to mutual agreement between the Participant and the Company in connection with the Participant’s retirement on or after attaining the
minimum age, completing the minimum number of years of service, and satisfying all other conditions specified for retirement status under the Company’s retirement policy statement effective October 25, 2002 (or any successor policy
thereto). 
  

 2 








 “Target Bonus” means the target bonus payable under the Plan to a Participant for the
Performance Period, expressed as a percentage of the Participant’s base salary, as determined by the Committee. 
 “Termination
of Employment” means a cessation of the employee-employer relationship between an Employee and the Company or an Affiliate for any reason, including without limitation a termination by resignation, discharge, death, Disability, Planned
Retirement, or the disaffiliation of an Affiliate, but excluding any such termination where there is a simultaneous reemployment by the Company or an Affiliate. 
 SECTION 3 
 SELECTION OF PARTICIPANTS AND DETERMINATION OF BONUSES 
 3.1 Selection of Participants. The Committee shall review and approve the Chief Executive Officer’s selection of Employees who shall be
Participants for any Performance Period. The Committee, based on the recommendation of the Chief Executive Officer, also may designate as Participants one or more individuals (by name or position) who are expected to become Employees during a
Performance Period. Participation in the Plan shall be determined by the Committee on a Performance-Period-by-Performance-Period basis. Accordingly, an Employee who is a Participant for a given Performance Period is in no way guaranteed or assured
of being selected for participation in any subsequent Performance Period. 
 3.2 Determination of Performance Goals. The Committee
shall review and approve the Chief Executive Officer’s recommendation of the performance goals for all eligible Participants for the Performance Period. Such performance goals shall be set forth in writing. The performance goals shall be
individual “management by results” performance objectives and the Committee may make subjective judgments regarding the degree to which each Participant has satisfied his or her performance goals. The Chief Executive Officer, without the
review and approval of the Committee, but with notice to the Committee, may modify the performance goals, or the relative weighting of the performance goals, during the Performance Period to reflect changes in business conditions and Company
priorities. The Committee, subject to ratification by a majority of the independent directors on the Board, may modify the performance goals, or the relative weighting of the performance goals, for the Chief Executive Officer to earn a bonus during
the Performance Period to reflect changes in business conditions and Company priorities. 
 3.3 Determination of Target
Bonuses. The Committee shall review and approve the Chief Executive Officer’s recommendation of a Target Bonus for each Participant. Each Participant’s Target Bonus shall be determined by the Committee, and each Target Bonus shall
be set forth in writing. 
 3.4 Determination of Actual Bonuses. After the end of each Performance Period, the Committee shall
certify in writing the extent to which the performance goals applicable to each Participant for the Performance Period were achieved or exceeded. 
 SECTION 4 
 PAYMENT OF BONUSES 
 4.1 Right to Receive Payment. Each Actual Bonus that may become payable under the Plan shall be paid solely from the general assets of the Company or the Affiliate that employs the Participant (as the case
may be), as determined by the Committee. Nothing in the Plan shall be construed to create a trust or to establish or evidence any Participant’s claim of any right to payment of an Actual Bonus other than as an unsecured general creditor with
respect to any payment to which he or she may be entitled. 
 4.2 Form of Payment. Each payment under the Plan shall be in cash.

 4.3 Timing of Payments. Payment of each Actual Bonus shall be made as soon as administratively practical but in no event later
than seventy-five (75) days following the end of the applicable Performance Period. 
  

 3 








 4.4 Employment at Time of Payment. Unless otherwise set forth herein, a Participant must be
employed on the date an Actual Bonus is to be paid. The Chief Executive Officer may make exceptions to this requirement in his or her sole discretion. 
 4.5 Proration. The Chief Executive Officer has the discretion to pro rate bonuses if a Participant’s employment with the Company is terminated prior to the end of the Performance Period or if a Participant
is employed by the Company for less than the entire Performance Period. 
 4.6 Termination due to Death, Disability, Planned Retirement,
Termination without Cause, and Resignation for Good Reason. In the event of a Participant’s (a) death, (b) Disability, (c) Planned Retirement, (d) termination without Cause, or (e) resignation for Good Reason, the
Participant shall be entitled to a prorated portion of his or her Actual Bonus for the current Performance Period, subject to satisfaction of the applicable performance goals, based on the number of days worked during the current Performance Period
prior to the Termination of Employment. In addition, each such Participant shall be entitled to receive any Actual Bonus earned for a prior Performance Period, to the extent not paid. Such payments shall be made as soon as administratively
practicable and in no event later than seventy-five (75) days following the end of the Performance Period in which the Termination of Employment occurred. 
 4.7 Section 409A. Notwithstanding anything in this Plan to the contrary, to the extent that any payment or benefit described in this Plan constitutes “non-qualified deferred compensation” under
Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Participant’s Termination of Employment, then such payments or benefits shall be payable only upon the Participant’s “Separation from
Service.” The term “Separation from Service” shall mean the Participant’s “separation from service” from the Company, an affiliate of the Company or a successor entity within the meaning set forth in Section 409A
of the Code, determined in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h). If the Participant is considered a “specified employee,” within the meaning of Section 409A of the Code and amounts
payable under this Plan are considered deferred compensation subject to Section 409A of the Code, no payments will be paid during the six-month period following the Participant’s Separation from Service. 
 SECTION 5 
 ADMINISTRATION

 5.1 Committee is the Administrator. The Plan shall be administered by the Committee. The Committee shall consist of not
less than two (2) members of the Board. Each member of the Committee shall qualify as an “outside director” under section 162(m) of the Code. If it is later determined that one or more members of the Committee do not so qualify,
actions taken by the Committee prior to such determination shall be valid despite such failure to qualify. 
 5.2 Committee
Authority. It shall be the duty of the Committee to administer the Plan in accordance with the Plan’s provisions; provided, however, that any determinations regarding the participation of the Company’s Chief Executive Officer in
the Plan, and any bonuses or payments to such Chief Executive Officer under the Plan, shall be ratified by a majority of the independent directors on the Board. The Committee shall have all powers and discretion necessary or appropriate to
administer the Plan and to control its operation, including without limitation the power to (a) review and approve which Employees shall be granted bonuses based upon the recommendation of the Chief Executive Officer, (b) review and
approve the terms and conditions of bonuses based upon the recommendation of the Chief Executive Officer, (c) interpret the Plan and the bonuses, (d) adopt such procedures and subplans as are necessary or appropriate to permit
participation in the Plan by Employees who are foreign nationals or employed outside of the United States, (e) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and (f) interpret,
amend, or revoke any such rules. 
  

 4 








 5.3 Decisions Binding. All determinations and decisions made by the Committee, the Board, and
any delegate of the Committee pursuant to the provisions of the Plan shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law. 
 5.4 Delegation by the Committee. The Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all
or part of its authority and powers under the Plan to one or more directors and/or officers of the Company. 
 SECTION 6 
 GENERAL PROVISIONS 
 6.1 Tax
Withholding. The Company or an Affiliate, as determined by the Committee, shall withhold all applicable taxes from any Actual Bonus, including any federal, state, and local taxes (including without limitation the Participant’s FICA
obligations). 
 6.2 No Effect on Employment. Nothing in the Plan shall interfere with or limit in any way the right of the
Company or an Affiliate, as applicable, to terminate any Participant’s employment or service at any time, with or without Cause. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Affiliates
(or between Affiliates) shall not be deemed a Termination of Employment. Employment with the Company and its Affiliates is on an at-will basis only. The Company expressly reserves the right, which may be exercised at any time and without regard to
when during or after a Performance Period such exercise occurs, to terminate any individual’s employment with or without Cause, and to treat him or her without regard to the effect which such treatment might have upon him or her as a
Participant. 
 6.3 Participation. No Employee shall have the right to be selected to receive a bonus under this Plan, or, having
been so selected, to be selected to receive a future bonus. 
 6.4 Indemnification. Each person who is or shall have been a
member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from (a) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any bonus, and (b) from any and all amounts paid by
him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at
its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company’s Articles of Incorporation or By-Laws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless. 
 6.5 Successors. All obligations of the Company and any Affiliate under the Plan, with respect to bonuses granted hereunder, shall be binding on
any successor to the Company and/or such Affiliate, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company or
such Affiliate. 
 6.6 Beneficiary Designations. If permitted by the Committee, a Participant under the Plan may name a
beneficiary or beneficiaries to whom any vested but unpaid bonus shall be paid in the event of the Participant’s death. Each such designation shall revoke all prior designations by the Participant and shall be effective only if given in a form
and manner acceptable to the Committee. In the absence of any such designation, any vested benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate. 
  

 5 








 6.7 Nontransferability of Bonuses. No bonus granted under the Plan may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution, or to the limited extent provided in Section 6.6. All rights with respect to a bonus granted to a Participant shall be
available during his or her lifetime only to the Participant. 
 SECTION 7 
 AMENDMENT, TERMINATION, AND DURATION 
 7.1 Amendment, Suspension, or
Termination. The Board or the Committee, each in its sole discretion, may amend or terminate the Plan, or any part thereof, at any time and for any reason. The amendment, suspension, or termination of the Plan shall not, without the consent
of the Participant, alter or impair any rights or obligations under any Target Bonus theretofore granted to such Participant or Actual Bonus earned by such Participant. During any period of suspension or after termination of the Plan, no bonus may
be granted. 
 7.2 Duration of the Plan. The Plan shall commence on the date specified herein, and subject to Section 7.1
(regarding the Board or the Committee’s right to amend or terminate the Plan), shall remain in effect thereafter. 
 SECTION 8 

 LEGAL CONSTRUCTION 
 8.1
Language Conventions. Unless the Plan expressly specifies otherwise or the context of any language of the Plan clearly requires otherwise, language referring to the plural shall include the singular, language referring to the singular shall
include the plural, language referring to one gender shall be deemed to include both genders, language referring to a natural person shall be deemed to include corporations and other entities, use of the word “include”,
“includes”, or “including” shall not be deemed to be limiting and shall be deemed to be followed by the language “without limitation”, use of the word “or” shall be deemed to have the inclusive meaning
conveyed by the phrase “and/or”, use of the words “hereof”, “herewith”, “herein”, “hereinafter”, “hereby”, “hereunder”, and similar terms shall be deemed to refer to the Plan as a
whole and not to any particular provision of the Plan, references to articles and sections shall be deemed to refer to articles and sections of the Plan, and references to schedules, exhibits, or other attachments shall be deemed to refer to
schedules, exhibits, or other attachments to the Plan. 
 8.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. 
 8.3 Requirements of Law. The granting of bonuses under the Plan shall be subject to all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may be required. 
 8.4 Governing Law. The Plan and
all bonuses shall be construed in accordance with and governed by the laws of The Commonwealth of Massachusetts, but without regard to the portion of such laws relating to conflicts of law. 
 8.5 Captions. Headings and captions are used in the Plan for convenience of reference only, do not form a part of this Plan, and shall not
affect in any way the meaning or interpretation of the Plan.
  

 6