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 Part
