The Company’s 2025 Long Term Incentive Plan (as amended from time to time, the “2025 Plan”) was adopted by the Company’s Board of Directors in July 2025 and approved by the Company’s shareholders on October 22, 2025. At July 3, 2026, the aggregate number of shares authorized for issuance under the 2025 Plan is 2,003 shares, including 1,900 shares approved by the Company’s shareholders on October 22, 2025 and 103 shares by virtue of awards forfeited from and after October 22, 2025 under a predecessor stock incentive plan, the Company’s Amended and Restated 2018 Stock Incentive Plan (the “2018 Plan”). The shares authorized for issuance under the 2025 Plan will continue to be increased to the extent that any award previously granted under the 2018 Plan is forfeited, terminates, expires, lapses without being exercised or is settled for cash in the future. The 2025 Plan provides for the grant to employees and non-employees of non-qualified and incentive stock options, stock appreciation rights, time-based and performance-based restricted stock awards or units, and deferred stock awards or units. Stock options and stock appreciation rights must be granted with an exercise price of not less than 100% of the fair value of the Company’s common stock on the date of grant and have a maximum exercisable term of ten years. Under the share counting rules applicable to the 2025 Plan, each share issued pursuant to a stock option or stock appreciation right counts as half a share against the available share reserve, and each share issued pursuant to any other award (a “full value” award) counts as one share against the available reserve. Accordingly, at July 3, 2026, a maximum of 3,916 shares underlying future

As part of the Company's ongoing annual equity grant program for employees, the Company grants performance-based restricted stock unit awards to certain executives and employees pursuant to the 2025 Plan (and prior to October 22, 2025, the 2018 Plan). Performance awards vest based on the requisite service period subject to the achievement of specific financial performance targets. Based on the performance targets, some of these awards require graded vesting which results in more rapid expense recognition compared to traditional time-based vesting over the same vesting period. The Company monitors the probability of achieving the performance targets on a quarterly basis and may adjust periodic stock compensation expense accordingly based on its determination of the likelihood for reaching targets. The performance targets generally include the achievement of financial performance goals. Payouts under performance-based restricted stock unit awards may also be subject to adjustment based on Mercury's total shareholder return.

The Company's 1997 Employee Stock Purchase Plan, as amended and restated (the “1997 ESPP”) was terminated in accordance with its terms effective May 14, 2024. Under the 1997 ESPP, rights were granted to purchase shares of common stock at 85% of the lesser of the market value of such shares at either the beginning or the end of each six-month offering period. The 1997 ESPP permitted employees to purchase common stock through payroll deductions, which may not have exceeded 10% of an employee’s compensation as defined in the 1997 ESPP. The number of shares issued under the 1997 ESPP during fiscal years 2026, 2025 and 2024 was 0, 0, and 167, respectively. There were an immaterial amount of shares related to the 1997 Plan issued and returned to the reserve during fiscal 2025.

The Company adopted a new employee stock purchase plan (the “2024 ESPP”) in April 2024, which was approved by the Company's shareholders on October 23, 2024. The number of shares authorized for issuance under the 2024 ESPP is 1,000 shares. Under the 2024 ESPP, rights are granted to purchase shares of common stock at 85% of the lesser of the market value of such shares at either the beginning or the end of each six-month offering period. The 2024 ESPP permits employees to purchase common stock through payroll deductions, which may not exceed 10% of an employee’s compensation as defined in the 2024 ESPP. During 2026, 116 shares were issued under the 2024 ESPP. Shares available for future purchase under the 2024 ESPP totaled 754 as of July 3, 2026.

On August 15, 2023, the Company announced that William L. Ballhaus was appointed as the Company’s President and Chief Executive Officer. Mr. Ballhaus received an onboarding grant of premium-priced stock options ("New Hire Option") under the 2018 Plan. The Company and Mr. Ballhaus are parties to an employment agreement, which is included in exhibit 10.1 on Form 8-K filed by the Company with the SEC on August 15, 2023.


	Options Outstanding
	Number of Shares	Weighted Average Grant Date Fair Value		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value as of 6/28/2024
Outstanding at June 28, 2024	934	12.71		$	45.00	3.69 years	—
Granted	—			$	—
Exercised	—			$	—
Cancelled	—			$	—
Outstanding at June 27, 2025	934	$	12.71	$	45.00	2.75 years	$	—
Granted	—			$	—
Exercised	—			$	—
Cancelled	—			$	—
Outstanding at July 3, 2026	934	$	12.71	$	45.00	2.04 years	$	—
Exercisable at July 3, 2026	—	$	—	$	—	—	$	—

There were no options vested or exercised during fiscal year 2026. Non-vested stock options are subject to the risk of forfeiture until the fulfillment of specified conditions. As of July 3, 2026, there was $2,126 of total unrecognized compensation cost related to non-vested options granted that is expected to be recognized over a weighted-average period 1.04 years from July 3, 2026.

The Company uses the Black-Scholes valuation model for estimating the fair value on the date of grant of stock options. The expected volatility of options granted has been determined using a weighted average of the historical volatility of the Company’s stock for a period equal to the expected term of the option. The expected term of options has been determined using the average of the contractual term and the weighted average vesting term of the options. The risk-free interest rate is based on a zero-coupon U.S. treasury instrument whose term is consistent with the expected term of the stock options. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero. The Company applied an estimated annual forfeiture rate based on historical averages in determining the expense recorded in each period.

The Company recognizes expense for its share-based payment plans in the Consolidated Statements of Operations and Comprehensive Loss in accordance with ASC 718. Under the fair value recognition provisions of ASC 718, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the service period.


	Fiscal Years Ended
	July 3, 2026		June 27, 2025		June 28, 2024
Cost of revenues	$	5,584	$	1,205	$	2,919
Selling, general and administrative	29,197		17,809		16,936
Research and development	6,351		6,005		5,814
Stock-based compensation expense before tax	41,132		25,019		25,669
Income taxes(1)	(11,106)		(6,755)		(6,931)
Stock-based compensation expense, net of income taxes	$	30,026	$	18,264	$	18,738
(1) Federal and state statutory rate of 27%