**Exhibit 10.5**

 

**FEI COMPANY**

**EMPLOYEE SHARE PURCHASE PLAN**

As amended effective May 17, 2007

 

1.     **Purposeof the Plan**. FEI Company (the “Company”) believes that ownership ofshares of its Common Stock by employees of the Company and its ParticipatingSubsidiaries (hereinafter defined) is desirable as an incentive to betterperformance and improvement of profits, and as a means by which employees mayshare in the rewards of growth and success. The purpose of this Employee SharePurchase Plan (the “Plan”) is to provide a convenient means by which employeesof the Company and Participating Subsidiaries may purchase the Company’s sharesthrough payroll deductions and a method by which the Company may assist andencourage such employees to become share owners.

 

2.     **SharesReserved for the Plan**. There are 2,450,000 shares of the Company’sauthorized Common Stock reserved for issuance under the Plan. The number ofshares reserved for issuance under the Plan is subject to adjustment in theevent of any stock dividend, stock split, combination of shares,recapitalization or other change in the outstanding Common Stock of theCompany. The determination of whether an adjustment shall be made and themanner of any such adjustment shall be made by the Board of Directors of the Company,which determination shall be conclusive.

 

3.     **Administrationof the Plan**. The Plan shall be administered by the Board ofDirectors. The Board of Directors may promulgate rules and regulations forthe operation of the Plan, adopt forms for use in connection with the Plan, anddecide any question of interpretation of the Plan or rights arising thereunder.The Board of Directors may consult with counsel for the Company on any matterarising under the Plan. All determinations and decisions of the Board ofDirectors shall be conclusive. Notwithstanding the foregoing, the Board ofDirectors, if it so desires, may delegate to the Compensation Committee of theBoard the authority for general administration of the Plan.

 

4.     **EligibleEmployees**. Except as indicated below, all full-time employees of theCompany and all full-time employees of each of the Company’s subsidiarycorporations which is designated by the Board of Directors of the Company as aparticipant in the Plan (such participating subsidiary being hereinafter calleda “Participating Subsidiary”) are eligible to participate in the Plan. Anyemployee who would, after a purchase of shares under the Plan, own or be deemed(under Section 424(d) of the Internal Revenue Code of 1986, asamended (the “Code”)) to own stock (including stock subject to any outstandingoptions held by the employee) possessing five percent or more of the totalcombined voting power or value of all classes of stock of the Company or anyparent or subsidiary of the Company, shall be ineligible to participate in thePlan. A “full-time employee” is one who is in the active service of the Companyor a Participating Subsidiary excluding, however, any employee whose customaryemployment is 20 hours or less per week or whose customary employment is fornot more than five months per calendar year.

 

5.     **Offerings.**

 

(a)   ***OfferingPeriods*.**The Plan shall be implemented by a series of offeringperiods of approximately twelve months’ duration or such other duration as theBoard of Directors shall determine (“Offering Periods”), commencing on March 1and September 1 of each year and ending on the last day of February orAugust, respectively, occurring thereafter. The initial Offering Period shallcommence on March 1, 1998 and shall end on February 28, 1999.Notwithstanding the foregoing, the Board of Directors may establish a differentduration for one or more future Offering Periods, provided, however, that noOffering Period may have a duration exceeding twenty-seven (27) months. EachOffering Period shall be comprised of a series of two purchase periods (“PurchasePeriods”), as provided in clause (b) below. The first day of each OfferingPeriod is an “Offering Date” and the last day of each Purchase Period is a “PurchaseDate” for the Offering Period. If an Offering Date or a Purchase Date falls ona day on which the public equity securities markets in the United States arenot open for trading, the Company shall, by announcement at least ten daysbefore the date on which the Offering Date or Purchase Date would otherwisefall, specify the trading day that will be deemed that Offering Date, orPurchase Date, as the case may be. As of each Offering Date, the Company herebygrants to each eligible employee a right under the Plan to purchase shares of CommonStock on the Purchase Date for the price determined under paragraph 7 ofthe Plan exclusively through payroll deductions authorized underparagraph 6 of the Plan; provided, however, that (a) no such rightshall permit 

 

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the purchase of more than 1,000shares, and (b) no such right shall allow an employee’s right to purchaseshares under all stock purchase plans of the Company and its parents andsubsidiaries to which Section 423 of the Code applies to accrue at a ratethat exceeds $25,000 of fair market value of shares (determined at the OfferingDate) for each calendar year in which such right is outstanding.

 

(b)   ***PurchasePeriods.*** Each Offering Period shall consist of two (2) consecutivePurchase Periods of approximately six (6) months’ duration, or such othernumber or duration as the Board shall determine. A Purchase Period commencingon or about March 1 shall end on or about the next August 31. APurchase Period commencing on or about September 1 shall end on or aboutthe next February 28. Notwithstanding the foregoing, the Board mayestablish a different duration for one or more future Purchase Periods ordifferent commencing or ending dates for such Purchase Periods.

 

6.     **Participation in the Plan**.

 

(a)   ***InitiatingParticipation***. An eligible employee may participate in anOffering Period under the Plan by filing with the Company no later than theclose of business on the Offering Date, on forms furnished by the Company, asubscription and payroll deduction authorization. Once filed, a subscriptionand payroll deduction authorization shall remain in effect for subsequentOffering Periods unless amended or terminated. The payroll deductionauthorization will take effect on the Offering Date or, if later, on the firstpayroll effective date that is at least three business days after the date onwhich it was filed, and will authorize the employing entity to make payrolldeductions in the specified amount from each paycheck of the participatingemployee. Payroll deductions for any Purchase Period may not exceed15 percent of the gross amount of base pay plus commissions, if any, inthe aggregate payable to the employee for such Purchase Period. If a payrolldeduction is made by a Participating Subsidiary, that entity will promptlyremit the amount of the deduction to the Company. Eligible employees may notparticipate simultaneously in more than one Offering Period.

 

(b)   ***Amending orTerminating Participation***. A participating employee may amendhis or her payroll deduction authorization once during any Purchase Period, toreduce the amount of future payroll deductions, with effect during theremaining part of the Purchase Period. Other amendments to the payrolldeduction authorization will not become effective until the next followingPurchase Period. A permitted change in payroll deductions shall be effectivefor any pay period only if written notice is received by the Company at leastthree business days prior to the payroll effective date published by the Companyfor that pay period. After an employee has begun participating in the Plan, heor she may terminate participation in the Plan by written notice received bythe Company at any time up to the tenth day before a Purchase Date.Participation in the Plan shall also terminate when a participant ceases to bean eligible employee for any reason, including death or retirement.Determination of when the employment relationship terminates for this purposeshall be made under Section 1.421-7 of U.S. Treasury Regulations orsuccessor regulations. A participant may not reinstate participation in thePlan with respect to a particular Offering Period after once terminatingparticipation in the Plan with respect to that Offering Period. Upontermination of a participant’s participation in the Plan, all amounts deductedfrom the participant’s pay and not previously used to purchase shares under thePlan shall be returned to the participant.

 

(c)   ***AutomaticWithdrawal from an Offering Period.***If the fair market value ofa share of Common Stock on a Purchase Date other than the final Purchase Dateof an Offering Period is less than the fair market value of a share of CommonStock on the Offering Date of the Offering Period, then every participant shallbe (a) automatically withdrawn from such Offering Period at the close ofsuch Purchase Date and after the acquisition of shares of Common Stock for thePurchase Period and (b) enrolled in the Offering Period commencing on thefirst business day subsequent to such Purchase Date. A participant may electnot to be automatically withdrawn from an Offering Period pursuant to thisparagraph 6(c) by delivering to the Company not later than the close ofbusiness on the Purchase Date a written notice indicating such election.

 

7.     **OptionPrice.** The price at which shares shall be purchased in an PurchasePeriod shall be the lower of (a) 85% of the fair market value of a shareof Common Stock on the Offering Date of the applicable Offering Period or (b) 85%of the fair market value of a share of Common Stock on that Purchase Date. Thefair market value of a share of Common Stock on any date shall be the closingprice of the Common Stock for such date as reported by the Nasdaq NationalMarket or, if the Common Stock is not reported on the Nasdaq National Market,such other reported value of the Common Stock as shall be specified by theBoard of Directors.

 

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8.     **NewlyEligible Employees.** A person who becomes an eligible employee afterthe Offering Date of an Offering Period shall not be eligible to participate insuch Offering Period but may participate in any subsequent Offering Periodprovided he or she is still an eligible employee as of the Offering Date ofsuch subsequent Offering Period.

 

9.     **Purchaseof Shares**. All amounts withheld from the pay of a participant shallbe credited to his or her account under the Plan by the Custodian appointedunder paragraph 10. No interest will be paid on such accounts unless theBoard of Directors determines otherwise. On each Purchase Date of an OfferingPeriod, the amount of the account of each participant will be applied to thepurchase of whole shares by such participant from the Company at the pricedetermined under paragraph 7. Any cash balance remaining in a participant’saccount after a Purchase Date because it was less than the amount required topurchase a full share shall be retained in the participant’s account for thenext Purchase Period.

 

10.   **Deliveryand Custody of Shares**. Shares purchased by participants pursuant tothe Plan will be delivered to and held in the custody of such investment orfinancial firm (the “Custodian”) as shall be appointed by the Board ofDirectors. The Custodian may hold in nominee or street name certificates forshares purchased pursuant to the Plan and may commingle shares in its custodypursuant to the Plan in a single account without identification as toindividual participants. By appropriate instructions to the Custodian on formsto be provided for that purpose, a participant may from time to time obtain (a) transferinto the participant’s own name of some or all of the shares held by theCustodian for the participant’s account and delivery of such shares to theparticipant; (b) transfer of some or all of the shares held for theparticipant’s account by the Custodian to a regular individual brokerageaccount in the participant’s own name, either with the firm then acting asCustodian or with another firm, or (c) sale of some or all of the sharesheld by the Custodian for the participant’s account at the market price at thetime the order is executed and remittance of the net proceeds of sale to theparticipant. Upon termination of participation in the Plan, a participant mayelect to have the shares held by the Custodian for his or her accounttransferred and delivered in accordance with (a) above, transferred to abrokerage account in accordance with (b), or sold in accordance with (c).

 

11.   **Records andStatements**. The Custodian will maintain the records of the Plan. Assoon as practicable after each Purchase Date the Custodian will furnish to eachparticipant a statement showing the activity in the participant’s account forthe period covered by the statement and the cash and share balances in theaccount as of the Purchase Date. Participants will be furnished such otherreports and statements, and at such intervals, as the Board of Directors shalldetermine from time to time.

 

12.   **Expense ofthe Plan**. The Company will pay all expenses incident to operation ofthe Plan, including costs of record keeping, accounting fees, legal fees,commissions and issue or transfer taxes on purchases pursuant to the Plan andon delivery of shares to a participant or into his or her brokerage account.The Company will not pay expenses, commissions or taxes incurred in connectionwith sales of shares by the Custodian at the request of a participant. Expensesto be paid by a participant will be deducted from the proceeds of sale prior toremittance.

 

13.   **Rights NotTransferable**. The right to purchase shares under this Plan is nottransferable by a participant, and such right is exercisable during theparticipant’s lifetime only by the participant. Upon the death of aparticipant, any cash or shares held for the participant’s account shall betransferred to the persons entitled thereto under the laws of the state ofdomicile of the participant upon a proper showing of authority.

 

14.   **Dividendsand Other Distributions**. Cash dividends and other cashdistributions, if any, on shares held by the Custodian will be paid currentlyto the participants entitled thereto unless the Company subsequently adopts adividend reinvestment plan and the participant directs that his or her cashdividends be invested in accordance with such plan. Stock dividends and otherdistributions in shares of the Company on shares held by the Custodian shall beissued to the Custodian and held by it for the account of the respectiveparticipants entitled thereto.

 

15.   **Voting andShareholder Communications**. In connection with voting on any mattersubmitted to the shareholders of the Company, the Custodian will furnish toeach participant a proxy authorizing the participant to vote the shares held bythe custodian for his account. Copies of all general communications toshareholders of the Company will be sent to participants in the Plan.

 

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16.   **TaxWithholding.** Each participant who has purchased shares underthe Plan shall immediately upon notification of the amount due, if any, pay to theCompany in cash amounts necessary to satisfy any applicable federal, state,local, national or other governmental tax withholding determined by the Companyto be required in any country having taxing jurisdiction. If the Companydetermines that additional withholding is required beyond any amount depositedat the time of purchase, the participant shall pay such amount to the Companyon demand. If the participant fails to pay the amount demanded, the Company maywithhold that amount from other amounts payable by the Company to theparticipant, including salary, subject to applicable law.

 

17.   **Responsibilityand Indemnity**. Neither the Company, its Board of Directors, theCustodian, any Participating Subsidiary, nor any member, officer, agent, oremployee of any of them, shall be liable to any participant under the Plan forany mistake of judgment or for any omission or wrongful act unless resultingfrom gross negligence, willful misconduct or intentional misfeasance. TheCompany will indemnify and save harmless its Board of Directors, the Custodianand any such member, officer, agent or employee against any claim, loss,liability or expense arising out of the Plan, except such as may result fromthe gross negligence, willful misconduct or intentional misfeasance of suchentity or person.

 

18.   **Conditionsand Approvals**. The obligations of the Company under the Plan shallbe subject to and conditional upon compliance with all applicable U.S. state,federal and foreign laws and regulations, compliance with the rules of anystock exchange or market on which the Company’s securities may be listed, andapproval of such federal, state and foreign authorities or agencies as may havejurisdiction over the Plan or the Company. The Company will use its best effortto comply with such laws, regulations and rules and to obtain suchapprovals.

 

19.   **Amendmentof the Plan**. The Board of Directors of the Company may from time totime amend the Plan in any and all respects, except that without the approvalof the shareholders of the Company, the Board of Directors may not increase thenumber of shares reserved for the Plan or decrease the purchase price of sharesoffered pursuant to the Plan.

 

20.   **Terminationof the Plan**. The Plan shall terminate when all of the sharesreserved for purposes of the Plan have been purchased, provided that the Boardof Directors in its sole discretion may at any time terminate the Plan withoutany obligation on account of such termination, except as hereinafter in thisparagraph provided. Upon termination of the Plan, the cash and shares, if any,held in the account of each participant shall forthwith be distributed to theparticipant or to the participant’s order, provided that if prior to thetermination of the Plan, the Board of Directors and shareholders of the Companyshall have adopted and approved a substantially similar plan, the Board ofDirectors may in its discretion determine that the account of each participantunder this Plan shall be carried forward and continued as the account of such participantunder such other plan, subject to the right of any participant to requestdistribution of the cash and shares, if any, held for his account.

 

21.   **EffectiveDate of the Plan.** The Plan shall become effective on March 1,1998, subject to approval not later than June 30, 1998, by the affirmativevote, in person or by proxy, of the holders of at least a majority of theshares of the Company represented and voting on the approval of the Plan at avalidly held meeting of the shareholders.

 

AdoptedOctober 14, 1997

 

Amendmentsapproved by Shareholders:

April 23,1998

May 21,1998

May 18,2000

May 20,2004

May 19,2005

May 17,2007

 

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