Document:

Exhibit 4.1

 

 

Effective as of February 22, 2016

 

 

AMENDED AND RESTATED ARTICLES OF INCORPORATION

OF

 RIVER VALLEY BANCORP

ARTICLE 1

 Name

The name of the Corporation is River Valley Bancorp.

ARTICLE 2

 Purposes and Powers

Section 2.01  Purposes. The purposes for which the Corporation is formed are the transaction of any or all lawful business for which corporations may be incorporated under the Indiana Business Corporation Law, as the same may, from time to time, be amended (the “Act”).

Section 2.02  Powers. The Corporation shall have the same powers as an individual to do all things necessary or convenient to carry out its business and affairs, including without limitation, all the powers specifically enumerated in the Act.

ARTICLE 3

 Term of Existence

The period during which the Corporation shall continue is perpetual.

ARTICLE 4

 Registered Office and Resident Agent

The street address of the registered office of the Corporation is:

	
303 Clifty Drive

P.O. Box 626

Madison, Indiana 47250

and the name and business office address of its registered agent in charge of such office are:

	
James E. Fritz

303 Clifty Drive

P.O. Box 626

Madison, Indiana 47250

ARTICLE 5

 Number of Shares

The total number of shares which the Corporation shall have authority to issue is Seven Million (7,000,000) shares, all of which are without par value.

 

ARTICLE 6

 Terms of Shares

Section 6.01  Designation of Classes, Number and Par Value of Shares. The shares of authorized capital shall be divided into Two Million (2,000,000) shares of Preferred Stock, without par value, as hereinafter provided (“Preferred Stock”), and Five Million (5,000,000) shares of Common Stock, without par value (“Common Stock”), as hereinafter provided.

Section 6.02  Rights, Privileges, Limitations and Restrictions of Preferred Stock. The Board of Directors of the Corporation is vested with authority to determine and state the designations and the relative preferences, limitations, voting rights, if any, and other rights of the Preferred Stock and of each series of Preferred Stock by the adoption and filing in accordance with the Act, before the issuance of any shares of such Preferred Stock or series of Preferred Stock, of an amendment or amendments to these Articles of Incorporation as the same may, from time to time, be amended, determining the terms of such Preferred Stock or series of Preferred Stock (“Preferred Stock Designation”). All shares of Preferred Stock of the same series shall be identical with each other in all respects. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of Directors, after giving effect to the provisions in Article 11 hereof (“Voting Stock”), voting as a single class, without a separate vote of the holders of the Preferred Stock or any series thereof, unless a vote of any such holders is required pursuant to the Preferred Stock Designation.

Section 6.03    Rights, Privileges, Limitations and Restrictions of Common Stock.

Clause 6.031  Single Class. The shares of Common Stock shall constitute a separate and single class and shall not be issued in series. All shares of Common Stock shall be identical with each other in all respects.

Clause 6.032  Liquidation. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation, the holders of the shares of Common Stock shall be entitled, after payment or provision for payment of the debts and other liabilities of the Corporation and of all shares of stock having priority over the Common Stock, in the event of voluntary or involuntary liquidation, dissolution or winding up, to share ratably in the remaining net assets of the Corporation.

Clause 6.033  Voting Rights. Every holder of shares of Common Stock shall have the right, at every Shareholders’ meeting, to one vote for each share of Common Stock standing in his name on the books of the Corporation, except as otherwise provided in the Act.

Section 6.04  Issuance of Shares. The Board of Directors has authority to authorize and direct the issuance by the Corporation of shares of Preferred Stock and Common Stock at such times, in such amounts, to such persons, for such considerations and upon such terms and conditions as it may, from time to time, determine upon, subject only to the restrictions, limitations, conditions and requirements imposed by the Act, other applicable laws and these Articles of Incorporation, as the same may, from time to time, be amended.

 

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Section 6.05  Distributions Upon Shares. The Board of Directors has authority to authorize and direct the payment of dividends and the making of other distributions by the Corporation in respect of the issued and outstanding shares of Preferred Stock and Common Stock (i) at such times, in such amount and forms, from such sources and upon such terms and conditions as it may, from time to time, determine upon, subject only to the restrictions, limitations, conditions and requirements imposed by the Act, other applicable laws and these Articles of Incorporation, as the same may, from time to time, be amended, and (ii) in shares of the same class or series or in shares of any other class or series without obtaining the affirmative vote or the written consent of the holders of the shares of the class or series in which the payment or distribution is to be made.

Section 6.06  Acquisition of Shares. The Board of Directors has authority to authorize and direct the acquisition by the Corporation of the issued and outstanding shares of Preferred Stock and Common Stock at such times, in such amounts, from such persons, for such considerations, from such sources and upon such terms and conditions as it may, from time to time, determine upon, subject only to the restrictions, limitations, conditions and requirements imposed by the Act, other applicable laws and these Articles of Incorporation, as the same may, from time to time, be amended.

Section 6.07  Recognition Procedure for Beneficial Ownership of Shares or Rights. The Board of Directors may establish in the Code of By-Laws of the Corporation a recognition procedure by which the beneficial owner of any share or right of the Corporation that is registered on the books of the Corporation in the name of a nominee is recognized by the Corporation, to the extent provided in any such recognition procedure, as the owner thereof.

Section 6.08  Disclosure Procedure for Beneficial Ownership of Shares or Rights. The Board of Directors may establish in the Corporation’s Code of By-Laws a disclosure procedure by which the name of the beneficial owner of any share or right of the Corporation that is registered on the books of the Corporation in the name of a nominee shall, to the extent not prohibited by the Act or other applicable laws, be disclosed to the Corporation. Any disclosure procedure established by the Board of Directors may include reasonable sanctions to ensure compliance therewith, including without limitation (i) prohibiting the voting of, (ii) providing for mandatory or optional reacquisition by the Corporation of, and (iii) the withholding or payment into escrow of any dividend or other distribution in respect of, any share or right of the Corporation as to which the name of the beneficial owner is not disclosed to the Corporation as required by such disclosure procedure.

Section 6.09  No Pre-emptive Rights. The holders of the Common Stock and the holders of the Preferred Stock or any series of the Preferred Stock shall have no pre-emptive rights to subscribe to or purchase any shares of Common Stock, Preferred Stock or other securities of the Corporation.

Section 6.10  Record Ownership of Shares or Rights. The Corporation, to the extent permitted by law, shall be entitled to treat the person in whose name any share or right of the Corporation is registered on the books of the Corporation as the owner thereof for all purposes, and shall not be bound to recognize any equitable or any other claim to, or interest in, such share or right on the part of any other person, whether or not the Corporation shall have notice thereof.

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ARTICLE 7

 Directors

Section 7.01  Number. The number of Directors of the Corporation shall not be less than five (5) nor more than fifteen (15), as may be specified from time to time by resolution adopted by a majority of the total number of the Corporation’s Directors. If and whenever the Board of Directors has not specified the number of Directors, the number shall be six (6). The terms of the initial directors of the Corporation shall expire at the first Annual Meeting of Shareholders of the Corporation. At that meeting, the directors elected by the Shareholders shall be divided into three (3) classes, as nearly equal in number as possible, with the term of office of the first class to expire at the Annual Meeting of Shareholders held following the fiscal year ended December 31, 1997, the term of office of the second class to expire at the Annual Meeting of Shareholders held following the fiscal year ended December 31, 1998, and the term of office of the third class to expire at the Annual Meeting of Shareholders held following the fiscal year ended December 31, 1999. At each Annual Meeting of Shareholders following such initial classification, Directors elected by the Shareholders to succeed those Directors whose term expires shall be elected for a term of office to expire at the third succeeding Annual Meeting of Shareholders after their election. Each Director shall hold office until his successor is chosen and qualified. Directors need not be Shareholders of the Corporation. There shall be no cumulative voting by Shareholders of any class or series in the election of Directors of the Corporation.

Section 7.02  Vacancies. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly-created directorships resulting from any increase in the authorized number of Directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled only by a majority vote of the Continuing Directors, as defined in Section 11.02 of Article 11 hereof, although less than a quorum of the Board of Directors. Directors so chosen shall hold office for a term expiring at the Annual Meeting of Shareholders at which the term of the class to which they have been elected expires. No decrease in the number of authorized Directors constituting the entire Board of Directors shall shorten the term of any incumbent Director.

Section 7.03  Removal. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any Director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the Corporation entitled to vote generally in the election of Directors, voting together as a single class. For purposes of this section, removal for cause shall be limited to the grounds then specifically enumerated in 12 C.F.R. § 563.39 (or any successor provision) with respect to termination for cause.

Section 7.04  Shareholder Nomination of Director Candidates and Introduction of Business. Advance notice of Shareholder nominations for the election of Directors and of business to be brought by Shareholders before any meeting of the Shareholders of the Corporation shall be given in the manner provided in the Corporation’s Code of By-Laws.

Section 7.05  Calling of Special Shareholder Meetings. Special meetings of the Shareholders of the Corporation may only be called by the Chairman of the Board of Directors or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of Directors of the Corporation.

 

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Section 7.06  Code of By-Laws. The Board of Directors of the Corporation shall have power, without the assent or vote of the Shareholders, to make, alter, amend or repeal the Code of By-Laws of the Corporation by the affirmative vote of a number of Directors equal to a majority of the number who constitute a full Board of Directors at the time of such action. Shareholders shall not have any power to make, alter, amend or repeal the Corporation’s Code of By-Laws.

Section 7.07  Factors to be Considered by Board. In addition to any other considerations which the Board of Directors may lawfully take into account, in determining whether to take or to refrain from taking corporate action on any matter, including making or declining to make any recommendation to the Shareholders of the Corporation, the Board of Directors may in its discretion consider the long-term as well as short-term best interests of the Corporation (including the possibility that these interests may be best served by the continued independence of the Corporation), taking into account, and weighing as the Directors deem appropriate, the social and economic effects of such action on present and future employees, suppliers, customers of the Corporation and its subsidiaries (including account holders and borrowers of any of the Corporation’s subsidiaries), the effect upon communities in which offices or other facilities of the Corporation are located, and the effect on the Corporation’s ability to fulfill its corporate obligations as a savings and loan holding company or a bank holding company and on the ability of any of its subsidiary financial institutions to fulfill the objectives of a financial institution under applicable statutes and regulations, and any other factors the Directors consider pertinent.

Section 7.08  Authorized Board Actions. In furtherance and not in limitation of the powers conferred by law or in these Articles of Incorporation, as the same may, from time to time, be amended, the Board of Directors (and any committee of the Board of Directors) is expressly authorized, to the extent permitted by law, to take such action or actions as the Board or such committee may determine to be reasonably necessary or desirable to (A) encourage any person (as defined in Section 12.03, Clause 12.031 hereof) to enter into negotiations with the Board of Directors and management of the Corporation with respect to any transaction which may result in a change in control of the Corporation which is proposed or initiated by such person or (B) contest or oppose any such transaction which the Board of Directors or such committee determines to be unfair, abusive or otherwise undesirable with respect to the Corporation and its business, assets or properties or the Shareholders of the Corporation, including, without limitation, the adoption of such plans or the issuance of such rights, options, capital stock, notes, debentures or other evidences of indebtedness or other securities of the Corporation (which issuance may be with or without consideration, and may (but need not) be issued pro rata), which rights, options, capital stock, notes, evidences of indebtedness and other securities (i) may be exchangeable for or convertible into cash or other securities on such terms and conditions as may be determined by the Board or such committee and (ii) may provide for the treatment of any holder or class of holders thereof designated by the Board of Directors or any such committee in respect of the terms, conditions, provisions and rights of such securities which is different from, and unequal to, the terms, conditions, provisions and rights applicable to all other holders thereof.

Section 7.09  Amendment, Repeal. Notwithstanding anything contained in the Articles of Incorporation or the Code of By-Laws of the Corporation to the contrary and notwithstanding that a lesser percentage or no vote may be specified by law, but in addition to any affirmative

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vote of the holders of any particular class or series of capital stock of the Corporation required by law or any Preferred Stock Designation, the affirmative vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend, change or repeal this Article 7.

ARTICLE 8

 Initial Directors

The names and post office addresses of the initial Board of Directors of the Corporation are as follows:

	 	
Name

	 	
Post Office Address

	 	
Robert W. Anger

	 	
303 Clifty Drive

P.O. Box 626

Madison, Indiana 47250

	 	 	 	 
	 	
Cecil L. Dorten

	 	
303 Clifty Drive

P.O. Box 626

Madison, Indiana 47250

	 	 	 	 
	 	
James E. Fritz

	 	
303 Clifty Drive

P.O. Box 626

Madison, Indiana 47250

	 	 	 	 
	 	
Michael J. Hensley

	 	
303 Clifty Drive

P.O. Box 626

Madison, Indiana 47250

	 	 	 	 
	 	
Earl W. Johann

	 	
303 Clifty Drive

P.O. Box 626

Madison, Indiana 47250

	 	 	 	 
	 	
Fred W. Koehler

	 	
303 Clifty Drive

P.O. Box 626

Madison, Indiana 47250

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ARTICLE 9

 Incorporator

The name and post office address of the Incorporator of the Corporation are as follows:

	
Claudia V. Swhier, Esq.

Barnes & Thornburg

1313 Merchants Bank Building

11 South Meridian Street

Indianapolis, Indiana 46204

ARTICLE 10

Provisions for Regulation of Business and Conduct

 of Affairs of Corporation

Section 10.01  Amendments of Articles of Incorporation. Except as otherwise provided in Articles 7, 11, and 12 hereof, the Corporation reserves the right to increase or decrease the number of its authorized shares, or any class or series thereof, and to reclassify the same, and to amend, alter, change or repeal any provision contained in these Articles of Incorporation, or any amendment hereto, or to add any provision to these Articles of Incorporation or to any amendment hereto, in any manner now or hereafter prescribed or permitted by the Act or any other applicable laws, and all rights and powers conferred upon Shareholders, Directors and/or Officers in these Articles of Incorporation, or any amendment hereto, are granted subject to this reserve power. No Shareholder has a vested property right resulting from any provision in these Articles of Incorporation, or any amendment hereto, or authorized to be in the Code of By-Laws of the Corporation or these Articles of Incorporation by the Act, including, without limitation, provisions relating to management, control, capital structure, dividend entitlement, or purpose or duration of the Corporation.

Section 10.02  Action by Shareholders. Meetings of the Shareholders of the Corporation shall be held at such place, within or without the State of Indiana, as may be specified in the Code of By-Laws of the Corporation or in the respective notices, or waivers of notice, thereof. Any action required or permitted to be taken at any meeting of the Shareholders may be taken without a meeting if a consent in writing setting forth the action so taken is signed by all the Shareholders entitled to vote with respect thereto, and such written consent is filed with the minutes of the proceedings of the Shareholders.

Section 10.03  Action by Directors. Meetings of the Board of Directors of the Corporation or any committee thereof shall be held at such place, within or without the State of Indiana, as may be specified in the Code of By-Laws of the Corporation or in the respective notices, or waivers of notice, thereof. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if a consent in writing setting forth the action so taken is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of the proceedings of such Board or committee.

Section 10.04  Places of Keeping of Corporate Records. The Corporation shall keep at its principal office a copy of (1) its Articles of Incorporation, and all amendments thereto currently

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in effect; (2) its Code of By-Laws, and all amendments thereto currently in effect; (3) minutes of all meetings of the Shareholders and records of all actions taken by the Shareholders without a meeting (collectively, “Shareholders Minutes”) for the prior three years; (4) all written communications by the Corporation to the Shareholders including the financial statements furnished by the Corporation to the Shareholders (“Shareholder Communications”) for the prior three years; (5) a list of the names and business addresses of the current Directors and the current Officers of the Corporation; and (6) the most recent Annual Report of the Corporation as filed with the Secretary of State of Indiana. The Corporation shall also keep and maintain at its principal office, or at such other place or places within or without the State of Indiana as may be provided, from time to time, in the Code of By-Laws, (1) minutes of all meetings of the Board of Directors and of each committee of such Board, and records of all actions taken by the Board of Directors and by each committee without a meeting; (2) appropriate accounting records of the Corporation; (3) a record of the Shareholders in a form that permits preparation of a list of the names and addresses of all the Shareholders, in alphabetical order, stating the number of shares held by each Shareholder; and (4) Shareholders Minutes for periods preceding the prior three years. All of the records of the Corporation described in this Section 10.04 (collectively, the “Corporate Records”) shall be maintained in written form or in another form capable of conversion into written form within a reasonable time.

Section 10.05  Limitation of Liability and Reliance on Corporate Records and Other Information.

Clause 10.051.  General Limitation. No Director, member of any committee of the Board of Directors, or of another committee appointed by the Board, Officer, employee or agent of the Corporation (“Corporate Person”) shall be liable for any loss or damage if, in taking or omitting to take any action causing such loss or damage, either (1) such Corporate Person acted (A) in good faith, (B) with the care an ordinarily prudent person in a like position would have exercised under similar circumstances, and (C) in a manner such Corporate Person reasonably believed was in the best interests of the Corporation, or (2) such Corporate Person’s breach of or failure to act in accordance with the standards of conduct set forth in Clause 10.051(1) above (the “Standards of Conduct”) did not constitute willful misconduct or recklessness.

Clause 10.052.  Reliance on Corporate Records and Other Information. Any “Corporate Person” shall be fully protected, and shall be deemed to have complied with the Standards of Conduct, in relying in good faith, with respect to any information contained therein, upon (1) the Corporate Records, or (2) information, opinions, reports or statements (including financial statements and other financial data) prepared or presented by (A) one or more other Corporate Persons whom such Corporate Person reasonably believes to be competent in the matters presented, (B) legal counsel, public accountants or other persons as to matters that such Corporate Person reasonably believes are within such person’s professional or expert competence, (C) a committee of the Board of Directors or other committee appointed by the Board of Directors, of which such Corporate Person is not a member, if such Corporate Person reasonably believes such committee of the Board of Directors or such appointed committee merits confidence, or (D) the Board of Directors, if such Corporate Person is not a Director and reasonably believes that the Board merits confidence.

 

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Section 10.06  Interest of Directors in Contracts. Any contract or other transaction between the Corporation and (i) any Director, or (ii) any corporation, unincorporated association, business trust, estate, partnership, trust, joint venture, individual or other legal entity (“Legal Entity”) (A) in which any Director has a material financial interest or is a general partner, or (B) of which any Director is a director, officer, or trustee (collectively, a “Conflict Transaction”), shall be valid for all purposes, if the material facts of the Conflict Transaction and the Director’s interest were disclosed or known to the Board of Directors, a committee of the Board of Directors with authority to act thereon, or the Shareholders entitled to vote thereon, and the Board of Directors, such committee or such Shareholders authorized, approved or ratified the Conflict Transaction. A Conflict Transaction is authorized, approved or ratified:

(1)            By the Board of Directors or such committee, if it receives the affirmative vote of a majority of the Directors who have no interest in the Conflict Transaction, notwithstanding the fact that such majority may not constitute a quorum or a majority of the Board of Directors or such committee or a majority of the Directors present at the meeting, and notwithstanding the presence or vote of any Director who does have such an interest; provided, however, that no Conflict Transaction may be authorized, approved or ratified by a single Director; and

(2)            By such Shareholders, if it receives the vote of a majority of the shares entitled to be counted, in which vote shares owned or voted under the control of any Director who, or of any Legal Entity that, has an interest in the Conflict Transaction may be counted; provided, however, that a majority of such shares, whether or not present, shall constitute a quorum for the purpose of authorizing, approving or ratifying a Conflict Transaction.

This Section 10.06 shall not be construed to require authorization, ratification or approval by the Shareholders of any Conflict Transaction, or to invalidate any Conflict Transaction, that would otherwise be valid under the common and statutory law applicable thereto.

Section 10.07  Compensation of Directors. The Board of Directors is hereby specifically authorized, in and by the Code of By-Laws of the Corporation, or by resolution duly adopted by such Board, to make provision for reasonable compensation to its members for their services as Directors, and to fix the basis and conditions upon which such compensation shall be paid. Any Director of the Corporation may also serve the Corporation in any other capacity and receive compensation therefor in any form.

Section 10.08  Direction of Purposes and Exercise of Powers by Directors. The Board of Directors, subject to any specific limitations or restrictions imposed by the Act or these Articles of Incorporation, as the same may, from time to time, be amended, shall direct the carrying out of the purposes and exercise the powers of the Corporation, without previous authorization or subsequent approval by the Shareholders of the Corporation.

ARTICLE 11

[Deleted in its Entirety]

 

 

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ARTICLE 12

 Provisions for Certain Business Combinations

Section 12.01  Vote Required.

Clause 12.011.  Higher Vote for Certain Business Combinations. In addition to any affirmative vote required by law or these Articles of Incorporation, and except as otherwise expressly provided in Section 12.02 of this Article 12:

		1.	any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with (A) any Interested Shareholder (as hereinafter defined), or (B) any other corporation (whether or not itself an Interested Shareholder) which is, or after such merger or consolidation would be, an Affiliate (as hereinafter defined) of an Interested Shareholder; or

		2.	any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Shareholder or any Affiliate of any Interested Shareholder, of any assets of the Corporation or any Subsidiary having an aggregate Fair Market Value equaling or exceeding 25% or more of the combined assets of the Corporation and its Subsidiaries; or

		3.	the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the Corporation or any Subsidiary to any Interested Shareholder or any Affiliate of any Interested Shareholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate Fair Market Value equaling or exceeding 25% of the combined assets of the Corporation and its Subsidiaries except pursuant to an employee benefit plan of the Corporation or any Subsidiary thereof; or

		4.	the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of an Interested Shareholder or any Affiliate of any Interested Shareholder; or

		5.	any reclassification of securities (including any reverse stock split) or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving any Interested Shareholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class or series of equity or convertible securities of the Corporation or any Subsidiary which is Beneficially Owned (as hereinafter defined) directly or indirectly by any Interested Shareholder or any Affiliate of any Interested Shareholder;

shall require the affirmative vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of Voting Stock, voting together as a single class. Such affirmative vote shall be required notwithstanding that any other provisions of these Articles of Incorporation, or any provision of law, or any Preferred Stock Designation, or any agreement with any national securities exchange or otherwise might otherwise permit a lesser vote or no vote.

 

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Clause 12.012.  Definition of “Business Combination.” The term “Business Combination” as used in this Article 12 shall mean any transaction which is referred to in any one or more of paragraphs (1) through (5) of Clause 12.011 of this Section 12.01.

Section 12.02.  When Higher Vote is Not Required. The provisions of Section 12.01 of this Article 12 shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote as is required by law, and any other provision of these Articles of Incorporation, and any Preferred Stock Designation, if, in the case of a Business Combination that does not involve any cash or other consideration being received by the Shareholders of the Corporation, solely in their capacity as Shareholders of the Corporation, the condition specified in the following Clause 12.021 is met or, in the case of any other Business Combination, the conditions specified in either of the following Clause 12.021 or 12.022 are met:

Clause 12.021.  Approval by Continuing Directors. The Business Combination shall have been approved by a majority of the Continuing Directors (as hereinafter defined); provided, however, that this condition shall not be capable of satisfaction unless there are at least three Continuing Directors.

Clause 12.022.  Price and Procedure Requirements. All of the following conditions shall have been met:

		1.	The consideration to be received by holders of shares of a particular class (or series) of outstanding capital stock (including Common Stock) shall be in cash or in the same form as the Interested Shareholder or any of its Affiliates has previously paid for shares of such class (or series) of capital stock. If the Interested Shareholder or any of its Affiliates has paid for shares of any class (or series) of capital stock with varying forms of consideration, the form of consideration to be received per share by holders of shares of such class (or series) of capital stock shall be either cash or the form used to acquire the largest number of shares of such class (or series) of capital stock previously acquired by the Interested Shareholder.

		2.	The aggregate amount of (x) the cash and (y) the Fair Market Value as of the date (the “Consummation Date”) of the consummation of the Business Combination, of the consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least equal to the higher of the following (in each case appropriately adjusted in the event of any stock dividend, stock split, combination of shares or similar event):

		A.	(if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Shareholder or any of its Affiliates for any shares of Common Stock acquired by them within the two-year period immediately prior to the date of the first public announcement of the proposal of the Business Combination (the “Announcement Date”) or in any transaction in which the Interested Shareholder became an Interested Shareholder, whichever is higher; and

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		B.	the Fair Market Value per share of Common Stock on the Announcement Date or on the date on which the Interested Shareholder became an Interested Shareholder (the “Determination Date”), whichever is higher.

		3.	The aggregate amount of (x) the cash and (y) the Fair Market Value, as of the Consummation Date, of the consideration other than cash to be received per share by holders of shares of any class (or series), other than Common Stock, of outstanding capital stock of the Corporation shall be at least equal to the highest of the following (in each case appropriately adjusted in the event of any stock dividend, stock split, combination of shares or similar event), it being intended that the requirements of this subparagraph (3) shall be required to be met with respect to every such class (or series) of outstanding capital stock whether or not the Interested Shareholder or any of its Affiliates has previously acquired any shares of a particular class (or series) of capital stock:

		A.	(if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Shareholder or any of its Affiliates for any shares of such class (or series) of capital stock acquired by them within the two-year period immediately prior to the Announcement Date or in any transaction in which it became an Interested Shareholder, whichever is higher;

		B.	the Fair Market Value per share of such class (or series) of capital stock on the Announcement Date or on the Determination Date, whichever is higher; and

		C.	(if applicable) the highest preferential amount per share, if any, to which the holders of shares of such class (or series) of capital stock would be entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation.

		4.	After such Interested Shareholder has become an Interested Shareholder and prior to the consummation of such Business Combination: (a) except as approved by a majority of the Continuing Directors, there shall have been no failure to declare and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) on any outstanding Preferred Stock; (b) there shall have been (I) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock), except as approved by a majority of the Continuing Directors, and (II) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Stock, unless the failure so to increase such annual rate is approved by a majority of the Continuing Directors; and (c) neither such Interested Shareholder nor any of its Affiliates shall have become the beneficial owner of any additional shares of Voting Stock except as part of the transaction which results in such Interested Shareholder becoming an Interested Shareholder; provided, however, that no approval by Continuing Directors shall satisfy the requirements of this subparagraph (4) unless at the time of such approval there are at least three Continuing Directors.

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		5.	After such Interested Shareholder has become an Interested Shareholder, such Interested Shareholder and any of its Affiliates shall not have received the benefit, directly or indirectly (except proportionately, solely in such Interested Shareholder’s or Affiliate’s capacity as a Shareholder of the Corporation), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the Corporation, whether in anticipation of or in connection with such Business Combination or otherwise.

		6.	A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to all Shareholders of the Corporation at least 30 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions).

		7.	Such Interested Shareholder shall have provided the Corporation with such information as shall have been requested pursuant to Section 12.05 of this Article 12 within the time period set forth therein.

Section 12.03  Certain Definitions. For the purposes of this Article 12:

Clause 12.031.  A “person” shall include an individual, a group acting in concert, a corporation, a partnership, an association, a joint venture, a pool, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of securities.

Clause 12.032.   “Interested Shareholder” means any person (other than the Corporation or any Subsidiary) who or which:

		1.	is the beneficial owner (as hereinafter defined), directly or indirectly, of ten percent or more of the voting power of the outstanding Voting Stock; or

		2.	is an Affiliate or an Associate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding Voting Stock; or

		3.	is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Shareholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933, as amended.

Clause 12.033.   A person shall be a “beneficial owner” of, or shall “Beneficially Own,” any Voting Stock:

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		1.	which such person or any of its Affiliates or Associates (as hereinafter defined) beneficially owns, directly or indirectly within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as in effect on May 24, 1996; or

		2.	which such person or any of its Affiliates or Associates has (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (b) the right to vote pursuant to any agreement, arrangement or understanding (but neither such person nor any such Affiliate or Associate shall be deemed to be the beneficial owner of any shares of Voting Stock solely by reason of a revocable proxy granted for a particular meeting of Shareholders, pursuant to a public solicitation of proxies for such meeting, and with respect to which shares neither such person nor any such Affiliate or Associate is otherwise deemed the beneficial owner); or

		3.	which are beneficially owned, directly or indirectly, within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as in effect on May 24, 1996, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (other than solely by reason of a revocable proxy as described in subparagraph (2) of this Clause 12.033) or disposing of any shares of Voting Stock; provided, however, that in the case of any employee stock ownership or similar plan of the Corporation or of any Subsidiary in which the beneficiaries thereof possess the right to vote any shares of Voting Stock held by such plan, no such plan nor any trustee with respect thereto (nor any Affiliate of such trustee), solely by reason of such capacity of such trustee, shall be deemed, for any purpose hereof, to beneficially own any shares of Voting Stock held under any such plan.

Clause 12.034.  For the purposes of determining whether a person is an Interested Shareholder pursuant to Clause 12.032 of this Section 12.03, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of Clause 12.033 of this Section 12.03 but shall not include any other unissued shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.

Clause 12.035.  “Affiliate” or “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on May 24, 1996.

Clause 12.036.  “Subsidiary” means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Interested Shareholder set forth in Clause 12.032 of this Section 12.03, the term “Subsidiary” shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation.

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Clause 12.037.  “Continuing Director” for purposes of this Article 12 means any member of the Board of Directors of the Corporation who is unaffiliated with the Interested Shareholder and was a member of the Board prior to the time that the Interested Shareholder became an Interested Shareholder, and any director who is thereafter chosen to fill any vacancy on the Board of Directors or who is elected and who, in either event, is unaffiliated with the Interested Shareholder and in connection with his or her initial assumption of office is recommended for appointment or election by a majority of Continuing Directors then on the Board.

Clause 12.038.    “Fair Market Value” means: (i) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by the Board in accordance with Section 12.04 of this Article 12, in each case with respect to any class of stock, appropriately adjusted for any dividend or distribution in shares of such stock or any combination or reclassification of outstanding shares of such stock into a smaller number of shares of such stock; and (ii) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by the Board in accordance with Section 12.04 of this Article 12.

Clause 12.039.    Reference to “highest per share price” shall in each case with respect to any class of stock reflect an appropriate adjustment for any dividend or distribution in shares of such stock or any stock split or reclassification of outstanding shares of such stock into a greater number of shares of such stock or any combination or reclassification of outstanding shares of such stock into a smaller number of shares of such stock.

Clause 12.0310.    In the event of any Business Combination in which the Corporation survives, the phrase “consideration other than cash to be received” as used in Clauses 12.022(2) and 12.022(3) of Section 12.02 of this Article 12 shall include the shares of Common Stock and/or the shares of any other class (or series) of outstanding capital stock retained by the holders of such shares.

Section 12.04  Powers of the Board of Directors. A majority of the total number of Directors of the Corporation, but only if a majority of such Directors shall then consist of Continuing Directors or, if a majority of the total number of Directors shall not then consist of Continuing Directors, a majority of the then Continuing Directors, shall have the power and duty to determine, on the basis of information known to them after reasonable inquiry, all facts necessary to determine compliance with this Article 12, including, without limitation, (a) whether a person is an Interested Shareholder, (b) the number of shares of Voting Stock beneficially owned by any person, (c) whether a person is an Affiliate or Associate of another, (d) whether the applicable conditions set forth in Clause 12.022 of Section 12.02 have been met

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with respect to any Business Combination, (e) the Fair Market Value of stock or other property in accordance with Clause 12.038 of Section 12.03 of this Article 12, and (f) whether the assets which are the subject of any Business Combination referred to in Clause 12.011(2) of Section 12.01 have, or the consideration to be received for the issuance or transfer of securities by the Corporation or any Subsidiary in any Business Combination referred to in Clause 12.011(3) of Section 12.01 has, an aggregate Fair Market Value equaling or exceeding 25% of the combined assets of the Corporation and its Subsidiaries.

Section 12.05  Information to be Supplied to the Corporation. A majority of the total number of Directors of the Corporation, but only if a majority of such Directors shall then consist of Continuing Directors or, if a majority of the total number of Directors shall not then consist of Continuing Directors, a majority of the then Continuing Directors, shall have the right to demand that any person who it is reasonably believed is an Interested Shareholder (or holds of record shares of Voting Stock Beneficially Owned by any Interested Shareholder) supply the Corporation with complete information as to (i) the record owner(s) of all shares Beneficially Owned by such person who it is reasonably believed is an Interested Shareholder, (ii) the number of, and class or series of, shares Beneficially Owned by such person who it is reasonably believed is an Interested Shareholder and held of record by each such record owner and the number(s) of the stock certificate(s) evidencing such shares, and (iii) any other factual matter relating to the applicability or effect of this Article 12, as may be reasonably requested of such person, and such person shall furnish such information within 10 days after receipt of such demand.

Section 12.06  No Effect on Fiduciary Obligations of Interested Shareholders. Nothing contained in this Article 12 shall be construed to relieve any Interested Shareholder from any fiduciary obligation imposed by law.

Section 12.07  Amendment, Repeal, Etc. Notwithstanding any other provisions of these Articles of Incorporation or the Code of By-Laws of the Corporation to the contrary and notwithstanding that a lesser vote or no vote may be specified by law, but in addition to any affirmative vote of the holders of any particular class or series of the Corporation’s capital stock required by law or any Preferred Stock Designation, the affirmative vote of the holders of at least 80 percent of the voting power of all of the then-outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend or repeal this Article 12.

ARTICLE 13

 Indemnification

Section 13.01  General. The Corporation shall, to the fullest extent to which it is empowered to do so by the Act, or any other applicable laws, as from time to time in effect, indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal, by reason of the fact that he is or was a Director, Officer, employee or agent of the Corporation, or who, while serving as such Director, Officer, employee or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, whether for profit or not, against expenses (including counsel fees), judgments, settlements, penalties and fines (including excise taxes assessed with respect to employee benefit plans) actually or reasonably

16

incurred by him in accordance with such action, suit or proceeding, if he acted in good faith and in a manner he reasonably believed, in the case of conduct in his official capacity, was in the best interests of the Corporation, and in all other cases, was not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, he either had reasonable cause to believe his conduct was lawful or no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not meet the prescribed standard of conduct.

Section 13.02  Authorization of Indemnification. To the extent that a Director, Officer, employee or agent of the Corporation has been successful, on the merits or otherwise, in the defense of any action, suit or proceeding referred to in Section 13.01 of this Article, or in the defense of any claim, issue or matter therein, the Corporation shall indemnify such person against expenses (including counsel fees) actually and reasonably incurred by such person in connection therewith. Any other indemnification under Section 13.01 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case, upon a determination that indemnification of the Director, Officer, employee or agent is permissible in the circumstances because he has met the applicable standard of conduct. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of Directors who were not at the time parties to such action, suit or proceeding; or (2) if a quorum cannot be obtained under subdivision (1), by a majority vote of a committee duly designated by the Board of Directors (in which designation Directors who are parties may participate), consisting solely of two or more Directors not at the time parties to such action, suit or proceeding; or (3) by special legal counsel: (A) selected by the Board of Directors or its committee in the manner prescribed in subdivision (1) or (2), or (B) if a quorum of the Board of Directors cannot be obtained under subdivision (1) and a committee cannot be designated under subdivision (2), selected by a majority vote of the full Board of Directors (in which selection Directors who are parties may participate); or (4) by the Shareholders, but shares owned by or voted under the control of Directors who are at the time parties to such action, suit or proceeding may not be voted on the determination.

Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subsection (3) to select counsel.

Section 13.03  Good Faith Defined. For purposes of any determination under Section 13.01 of this Article 13, a person shall be deemed to have acted in good faith and to have otherwise met the applicable standard of conduct set forth in Section 13.01 if his action is based on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by (1) one or more Officers or employees of the Corporation or another enterprise whom he reasonably believes to be reliable and competent in the matters presented; (2) legal counsel, public accountants, appraisers or other persons as to matters he reasonably believes are within the person’s professional or expert competence; or (3) a committee of the Board of Directors of the Corporation or another enterprise of which the person is not a member if he reasonably believes the committee merits confidence. The term “another enterprise” as used in this Section 13.03 shall mean any other corporation or any

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partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent. The provisions of this Section 13.03 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standards of conduct set forth in Section 13.01 of this Article 13.

Section 13.04  Payment of Expenses in Advance. Expenses incurred in connection with any civil or criminal action, suit or proceeding may be paid for or reimbursed by the Corporation in advance of the final disposition of such action, suit or proceeding, as authorized in the specific case in the same manner described in Section 13.02 of this Article, upon receipt of a written affirmation of the Director, Officer, employee or agent’s good faith belief that he has met the standard of conduct described in Section 13.01 of this Article and upon receipt of a written undertaking by or on behalf of the Director, Officer, employee or agent to repay such amount if it shall ultimately be determined that he did not meet the standard of conduct set forth in this Article 13, and a determination is made that the facts then known to those making the determination would not preclude indemnification under this Article 13.

Section 13.05    Provisions Not Exclusive. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which a person seeking indemnification may be entitled under these Articles of Incorporation, the Corporation’s Code of By-Laws, any resolution of the Board of Directors or Shareholders, any other authorization, whenever adopted, after notice, by a majority vote of all Voting Stock then outstanding, or any contract, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a Director, Officer, employee or agent, and shall inure to the benefit of the heirs, executors and administrators of such a person.

Section 13.06    Vested Right to Indemnification. The right of any individual to indemnification under this Article shall vest at the time of occurrence or performance of any event, act or omission giving rise to any action, suit or proceeding of the nature referred to in Section 13.01 of this Article 13 and, once vested, shall not later be impaired as a result of any amendment, repeal, alteration or other modification of any or all of these provisions. Notwithstanding the foregoing, the indemnification afforded under this Article shall be applicable to all alleged prior acts or omissions of any individual seeking indemnification hereunder, regardless of the fact that such alleged acts or omissions may have occurred prior to the adoption of this Article. To the extent such prior acts or omissions cannot be deemed to be covered by this Article 13, the right of any individual to indemnification shall be governed by the indemnification provisions in effect at the time of such prior acts or omissions.

Section 13.07    Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a Director, Officer, employee or agent of the Corporation, or who is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against any liability asserted against or incurred by the individual in that capacity or arising from the individual’s status as a Director, Officer, employee or agent, whether or not the Corporation would have power to indemnify the individual against the same liability under this Article.

Section 13.08    Additional Definitions. For purposes of this Article, references to the “Corporation” shall include any domestic or foreign predecessor entity of the Corporation in a

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merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.

For purposes of this Article, serving an employee benefit plan at the request of the Corporation shall include any service as a Director, Officer, employee or agent of the Corporation which imposes duties on, or involves services by such Director, Officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries. A person who acted in good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” referred to in this Article.

For purposes of this Article, “party” includes any individual who is or was a plaintiff, defendant or respondent in any action, suit or proceeding, or who is threatened to be made a named defendant or respondent in any action, suit or proceeding.

For purposes of this Article, “official capacity,” when used with respect to a Director, shall mean the office of director of the Corporation; and when used with respect to an individual other than a Director, shall mean the office in the Corporation held by the Officer or the employment or agency relationship undertaken by the employee or agent on behalf of the Corporation. “Official capacity” does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, employee benefit plan, or other enterprise, whether for profit or not.

Section 13.09    Payments a Business Expense. Any payments made to any indemnified party under this Article under any other right to indemnification shall be deemed to be an ordinary and necessary business expense of the Corporation, and payment thereof shall not subject any person responsible for the payment, or the Board of Directors, to any action for corporate waste or to any similar action.

19Exhibit

Exhibit 10-24+
 
FEI COMPANY
RESTRICTED STOCK UNIT AGREEMENT
[NAME]
NOTICE OF GRANT
FEI Company (the “Company”) hereby grants you, [Name] (the “Employee”), an award of Restricted Stock Units (“RSUs”) under the Company’s 1995 Stock Incentive Plan (the “Plan”). The date of this Restricted Stock Unit Agreement (the “Agreement”) is [DATE] (the “Grant Date”). Subject to the provisions of Appendix A (attached) and Appendix B (attached) and of the Plan, the principal features of this award are as follows:
Number of RSUs:    [________]
		
	Vesting Schedule:
	The RSUs (if any) in which Employee may vest will depend upon achievement of performance metrics set forth in and in accordance with the Performance Matrix, attached hereto as Appendix B.*

IMPORTANT:
* Except as otherwise provided in Appendix A or Appendix B, Employee will not vest in the RSUs unless he or she is employed by, or otherwise providing services to, the Company or one of its subsidiaries through the applicable vesting date.
Your signature below indicates your agreement and understanding that this award is subject to all of the terms and conditions contained in Appendix A, Appendix B and the Plan. For example, important additional information on vesting and forfeiture of the RSUs is contained in paragraphs 4 through 8 of Appendix A. PLEASE BE SURE TO READ ALL OF APPENDIX A AND APPENDIX B, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS AGREEMENT.
FEI COMPANY                    EMPLOYEE

                                            
[NAME]                        [NAME]

                    
[TITLE]

Date: ___________, 201__                Date: ___________, 201__            

APPENDIX A

TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS 
1.    Definitions. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Plan.
2.    Grant. The Company hereby grants to the Employee under the Plan an award of the Number of RSUs set forth on the Notice of Grant, subject to all of the terms and conditions in this Agreement and the Plan. 
 3.    Company’s Obligation to Pay. Each RSU has a value equal to the fair market value of a share of Common Stock (“Share”) on the date that the RSU is granted. Unless and until the RSUs have vested in the manner set forth in paragraphs 4, 5 or 6, the Employee will have no right to payment of such RSUs. Prior to actual payment of any vested RSUs, such RSUs will represent an unsecured obligation. Payment of any vested RSUs shall be made in whole Shares only.
4.    Vesting Schedule/Period of Restriction. Except as provided in paragraphs 5 and 6, the RSUs awarded by this Agreement shall vest in accordance with the vesting provisions set forth on the first page of this Agreement and Appendix B. Employee shall not vest in the RSUs in accordance with any of the provisions of this Agreement (including its appendices) unless the Employee shall have been continuously employed by, or providing services to, the Company or by one of its subsidiaries from the Grant Date until the date the RSUs are otherwise scheduled to vest. 
5.    Modifications to Vesting Schedule.
(a)    Vesting upon Leave of Absence. Notwithstanding anything in paragraph 4 to the contrary, and except as otherwise provided by the Compensation Committee of the Board of Directors of the Company (the “Committee”) or as required by applicable law, vesting of the RSUs shall be suspended during any unpaid leave of absence, other than military leave, of more than ninety (90) days. The vesting schedule shown in the Notice of Grant will be delayed for the number of days that the unpaid leave of absence extends beyond ninety (90) days. The suspension of vesting will commence on the ninety-first (91st) day of the leave and will end on the date the Employee returns to work on a regular schedule as determined by the Company. No vesting credit will be awarded for the time vesting has been suspended during such leave of absence. 
(b)    Death of Employee. In the event of the Employee’s death, one hundred percent (100%) of the RSUs subject to this RSU award shall vest on the date of the Employee’s death. In the event that any applicable law limits the Company’s ability to accelerate the vesting of this award of RSUs, this paragraph 5(b) shall be limited to the extent required to comply with applicable law.
6.    Committee Discretion. The Committee, in its discretion, may accelerate the vesting of the balance, or some lesser portion of the balance, of the RSUs at any time, subject to the terms of the Plan. If so accelerated, such RSUs will be considered as having vested as of the date specified by the Committee. If the Committee, in its discretion, accelerates the vesting of the balance, or some lesser portion of the balance, of the RSUs, the payment of such accelerated RSUs nevertheless shall be made at the same time or times as if such RSUs had vested in accordance with the vesting schedule set forth on the first page of this Agreement (whether or not the Employee remains employed by the Company or by one of its subsidiaries as of such date(s)).
7.    Changes in Capital Structure.
(a)    Stock Splits; Stock Dividends. If the outstanding Common Stock of the Company is hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any stock split, combination of shares or dividend payable in shares, recapitalization or reclassification appropriate adjustment shall be made by the Board of Directors in the number and kind of shares subject to the RSUs. The Board of Directors shall have no obligation to effect any adjustment that would or might result in the issuance of fractional shares, and any fractional shares resulting from any adjustment may be disregarded or provided for in any manner determined by the Board of Directors. Any such adjustments made by the Board of Directors shall be conclusive.
(b)    Mergers, Reorganizations, Etc. In the event of a merger, consolidation or plan of exchange to which the Company is a party or a sale of all or substantially all of the Company's assets (each, a "Transaction"), the Board of Directors shall, in its sole discretion and to the extent possible under the structure of the Transaction, select one of the following alternatives for treating this award of RSUs:
(i)    This award shall remain in effect in accordance with its terms.

(ii)    This award shall be assumed or substituted by the surviving corporation or its parent with an award with substantially the same terms as this award. The amount and type of securities subject thereto shall be determined by the Board of Directors of the Company, taking into account the relative values of the companies involved in the Transaction and the exchange rate, if any, used in determining shares of the surviving corporation to be issued to holders of shares of the Company.
(iii)    If this award is not continued in accordance with paragraph 7(b)(i) or assumed or substituted in accordance with paragraph 7(b)(ii), this award shall be accelerated and cancelled after payment to the Employee in Shares of an amount equal to the RSUs subject to this award at the time of the Transaction.
8.    Payment after Vesting. Any RSUs that vest in accordance with paragraphs 4 or 5 will be paid to the Employee (or in the event of the Employee’s death, to his or her estate) as soon as practicable following the date of vesting but in no event later than the date that is two and one-half (21⁄2) months from the end of the Company’s tax year that includes the vesting date, subject to paragraph 11. Any RSUs that vest in accordance with paragraph 7 will be paid to the Employee (or in the event of the Employee’s death, to his or her estate) in accordance with the provisions of such paragraph, subject to paragraph 11. For each RSU that vests, the Employee will receive one Share, subject to paragraph 11.
9.    Forfeiture. Notwithstanding any contrary provision of this Agreement, the balance of the RSUs that have not vested pursuant to paragraphs 4, 5 and 6 at the time the Employee is no longer employed by, or providing service to, the Company for any or no reason will be forfeited and automatically transferred to and reacquired by the Company at no cost to the Company. 
10.    Death of Employee. Any distribution or delivery to be made to the Employee under this Agreement will, if the Employee is then deceased, be made to the administrator or executor of the Employee’s estate. Any such administrator or executor must furnish the Company with (a) written notice of his or her status as transferee, and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.
11.    Withholding of Taxes. The Company (or the subsidiary of the Company employing Employee) will withhold a portion of the RSUs that have an aggregate market value sufficient to pay the required federal, state and local income, employment and any other applicable taxes required to withheld by the Company or the subsidiary of the Company employing Employee with respect to the RSUs, unless the Employee makes alternate arrangements satisfactory to the Board of Directors for such withholdings in advance of the date the withholding obligations arise. Notwithstanding any contrary provision of this Agreement, no Shares will be issued unless and until satisfactory arrangements (as determined by the Board of Directors) have been made by the Employee with respect to the payment of any income and other taxes which the Company determines must be withheld or collected with respect to such Shares. In addition and to the maximum extent permitted by law, the Company (or the subsidiary of the Company employing Employee) has the right to retain without notice from salary or other amounts payable to the Employee, cash having a sufficient value to satisfy any tax withholding obligations that cannot be satisfied through the withholding of otherwise deliverable Shares. If the Employee fails to make satisfactory arrangements for the payment of any required tax withholding obligations hereunder at the time any applicable Shares otherwise are scheduled to vest pursuant to this Agreement and such Employee is not an “executive officer” of the Company (within the meaning of Section 402 of the Sarbanes Oxley Act of 2002), the Employee will have 30 business days to cure such failure. If such failure is not cured within this 30-day period or, in the case of an “executive officer” of the Company, the Employee has failed to make satisfactory arrangements at the time the applicable Shares otherwise are scheduled to vest, the Employee hereby expressly consents to the Company retaining, to the maximum extent permitted by law and without notice, from salary or other amounts payable to the Employee cash having a sufficient value to satisfy any tax withholding obligations. To the extent such cash is insufficient to satisfy the Company’s tax withholding obligations, the Employee will permanently forfeit the RSUs, or a portion thereof, and such RSUs will be returned to the Company at no cost to the Company.
12.    Rights as Stockholder. Neither the Employee nor any person claiming under or through the Employee will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares (which may be in book entry form) will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Employee (including through electronic delivery to a brokerage account). After such issuance, recordation and delivery, the Employee will have all the rights of a stockholder of the Company with respect to voting such Shares and receipt of dividends and distributions on such Shares. 
13.    No Effect on Employment. Subject to any employment contract with the Employee, the terms of such employment will be determined from time to time by the Company, or the subsidiary of the Company employing the Employee, as the case may be, and the Company, or the subsidiary of the Company employing the Employee, as the case may be, will have the right, which is hereby expressly reserved, to terminate or change the terms of the employment of the Employee at any time for any reason whatsoever, with or without good cause. The transactions contemplated hereunder and the vesting schedule set forth on the first page of this Agreement do not constitute an express or implied promise of continued employment for any period of time. 

14.    Address for Notices. Any notice to be given to the Company under the terms of this Agreement will be addressed to the Company, in care of General Counsel, FEI Company, 5350 NE Dawson Creek Drive, Hillsboro, Oregon 97124, or at such other address as the Company may hereafter designate in writing.
15.    Grant is Not Transferable. Except to the limited extent provided in this Agreement, this grant of RSUs and the rights and privileges conferred hereby will not be sold, pledged, assigned, hypothecated, transferred or disposed of any way (whether by operation of law or otherwise) and will not be subject to sale under execution, attachment or similar process, until the Employee has been issued Shares in payment of the RSUs. Upon any attempt to sell, pledge, assign, hypothecate, transfer or otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this grant and the rights and privileges conferred hereby immediately will become null and void. 
16.    Restrictions on Sale of Securities. The Shares issued as payment for vested RSUs under this Agreement will be registered under U.S. federal securities laws and will be freely tradable upon receipt. However, an Employee’s subsequent sale of the Shares may be subject to any market blackout-period that may be imposed by the Company and must comply with the Company’s insider trading policies, and any other applicable securities laws.
17.    Binding Agreement. Subject to the limitation on the transferability of this grant contained herein, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.
18.    Additional Conditions to Issuance of Certificates for Shares. The Company shall not be required to issue any certificate or certificates for Shares hereunder prior to fulfillment of all the following conditions: (a) the admission of such Shares to listing on all stock exchanges on which such class of stock is then listed; (b) the completion of any registration or other qualification of such Shares under any U.S. state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Committee shall, in its absolute discretion, deem necessary or advisable; (c) the obtaining of any approval or other clearance from any U.S. state or federal governmental agency, which the Committee shall, in its absolute discretion, determine to be necessary or advisable; and (d) the lapse of such reasonable period of time following the date of vesting of the RSUs as the Committee may establish from time to time for reasons of administrative convenience.
19.    Plan Governs. This Agreement is subject to all the terms and provisions of the Plan. In the event of a conflict between one or more provisions of this Agreement and one or more provisions of the Plan, the provisions of the Plan will govern. 
20.    Committee Authority. The Committee will have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any RSUs have vested). All actions taken and all interpretations and determinations made by the Committee in good faith will be final and binding upon the Employee, the Company and all other interested persons. No member of the Committee will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement. 
21.    Captions. Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.
22.    Agreement Severable. In the event that any provision in this Agreement will be held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Agreement.
23.    Modifications to the Agreement. This Agreement constitutes the entire understanding of the parties on the subjects covered. The Employee expressly warrants that he or she is not accepting this Agreement in reliance on any promises, representations, or inducements other than those contained herein. Modifications to this Agreement or the Plan can be made only in an express written contract executed by a duly authorized officer of the Company. Notwithstanding anything to the contrary in the Plan or this Agreement, the Company reserves the right to revise this Agreement as it deems necessary or advisable, in its sole discretion and without the consent of the Employee, to comply with Section 409A of the Code or to otherwise avoid imposition of any additional tax or income recognition under Section 409A of the Code prior to the actual payment of Shares pursuant to this award of RSUs.
24.    Amendment, Suspension or Termination of the Plan. By accepting this RSUs award, the Employee expressly warrants that he or she has received a right to receive stock under the Plan, and has received, read and understood a description of the Plan. The Employee understands that the Plan is discretionary in nature and may be amended, suspended or terminated by the Company at any time.
25.    Notice of Governing Law. This award of RSUs shall be governed by, and construed in accordance with, the laws of the 

State of Oregon, without regard to principles of conflict of laws.
		
	1.
	The following paragraph applies only to Plan participants who reside in the European Union.

Data Privacy. By signing this Agreement, Employee hereby consents to the collection, use and transfer, in electronic or other form, of Employee’s personal data (“Data”) by the Company and its subsidiaries for the exclusive purpose of implementing, administering and managing Employee’s participation in the Plan. Employee understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in Employee’s country, or elsewhere, and that the recipient’s country may have different data privacy laws and protections than Employee’s country. Employee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Employee’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom Employee deposits any shares of stock acquired upon vesting of the RSUs. Employee understands that Data will be held only as long as is necessary to implement, administer and manage Employee’s participation in the Plan. Employee understands that Employee may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or withdraw the consents herein by contacting in writing Employee’s local human resources representative. Employee understands that withdrawal of consent may affect Employee’s ability to exercise or realize benefits from the Plan.

APPENDIX B

PROSPECTUS

FEI COMPANY

COMMON STOCK and rights issued Under 
1995 stock incentive plan

Shares of Common Stock of FEI Company (the “Company”) are offered to selected employees, officers, directors and non-employee agents, consultants, advisers, persons involved in the sale or distribution of the Company’s products and independent contractors of the Company and its subsidiaries pursuant to stock options granted under the FEI Company 1995 Stock Incentive Plan, as amended.

______________________________________________________________________________________________________

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933.
______________________________________________________________________________________________________

The date of this Prospectus is December 11, 2015.

The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and in accordance therewith files periodic reports and other information with the Securities and Exchange Commission (the “SEC”). The Company makes available free of charge on its website its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports as soon as reasonably practicable after the Company files such material with, or furnishes it to, the SEC. The Company’s reports, proxy statements and other information are filed with the SEC at the offices of the SEC’s Public Reference Room located at 100 F Street, N.E., Washington D.C. 20549. More information on the operation of the Public Reference Room is available by calling the SEC at +1-202-551-8090The SEC also maintains an Internet website at http://www.sec.gov/ where most of the Company’s SEC filings may be obtained. Copies of these materials may also be obtained free of charge by contacting the Company’s investor relations department at +1-503-726-7500.

Additional updating information with respect to the securities and plans covered herein may be provided in the future to plan participants by means of appendices or supplements to this Prospectus.

The Company will promptly furnish, without charge, a copy of the Company’s Annual Report to Shareholders upon written or oral request of any each person to whom this Prospectus is given. Delivery of required documents may be through email or other electronic means at the Company’s discretion.

No person has been authorized to give any information or to make any representations in connection with this offering other than those contained in this Prospectus. This Prospectus does not constitute an offering in any jurisdiction in which such offering may not lawfully be made.

______________________________________________________________________________________________________

TABLE OF CONTENTS
Page

THE COMPANY...............................................................................................................................................................................1
THE PLAN........................................................................................................................................................................................1
FEDERAL INCOME TAX CONSEQUENCES...............................................................................................................................7
RESTRICTIONS ON TRANSFERABILITY OF SHARES............................................................................................................10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE    10

THE COMPANY

The Company is the issuer of Common Stock offered pursuant to its 1995 Stock Incentive Plan as amended (the “Plan”). The Company and its subsidiaries design, manufacture and market hardware and software for focused ion beam systems, or FIBs, scanning electron microscopes, or SEMs, transmission electron microscopes, or TEMs, and DualBeamTM systems, which combine a FIB and SEM on a single platform. The address of the principal executive offices of the Company is 5350 NE Dawson Creek Drive, Hillsboro, Oregon 97124, U.S.A. The Company’s tele-phone number is +1-503-726-7500.

THE PLAN

The Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”) or to the qualification requirements of Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Certain stock options granted under the Plan are intended to be incentive stock options as defined in Section 422 of the Code (“Incentive Stock Options”). Other stock options, including all options granted under the Plan to individuals who are not employees of the Company or any of its subsidiaries are not Incentive Stock Options and are referred to in this Prospectus as “Nonstatutory Stock Options.”

Purpose of the Plan

The purpose of the Plan is to enable the Company and its subsidiaries to attract and retain the services of selected directors, officers, employees, agents, consultants, advisers, persons involved in the sale or distribution of the Company’s products and independent contractors, and to encourage them to extend their best efforts on behalf of the Company, by giving such individuals an opportunity to participate in the ownership of the Company.

Eligibility

Eligible participants include employees, officers and directors of the Company, non-employee agents, consultants, advisors, persons involved in the sale or distribution of the Company’s products and independent contractors of the Company or any subsidiary.

Administration

The Board of Directors of the Company (the “Board”) interprets and administers the Plan and may from time to time adopt and amend rules and regulations relating to its administration. Any decision of the Board relating to the Plan will be final and binding on all parties. The Board may delegate to a committee of the Board or specified officers of the Company, or both, the authority to make certain option grants and take certain other actions under the Plan. Additional information about the Plan and administration of the Plan may be obtained from FEI Company, Attn: Legal Department, 5350 NE Dawson Creek Drive, Hillsboro, OR 97124.

Participation and Types of Grants

Stock Options. The Compensation Committee of the Board determines:
		
	•
	the persons to whom options are granted; 

		
	•
	the option price; 

		
	•
	the number of shares to be covered by each option; 

		
	•
	the term of each option; 

		
	•
	the times at which options may be exercised; and 

		
	•
	whether the option is an Incentive Stock Option or a Nonstatutory Stock Option. 

The Compensation Committee determines the exercise price of options under the Plan, provided that with respect to Nonstatutory Stock Options intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code (“Section 162(m)”) and all Incentive Stock Options, the option price cannot be less than the fair market value of the Company’s common stock on the date of grant. If an optionee at the time of grant of an Incentive Stock Option owns stock representing more than 10% of the Company’s combined voting power, the option price may not be less than 110% of the fair market value of the Company’s common stock on the date of grant. In addition, the Plan limits the amount of Incentive Stock Options that may become exercisable under the Plan in any year to $100,000 per optionee, based on the fair market value of the stock on the date of grant. No monetary consideration is paid to the Company upon the granting of options. Currently, no employee may be granted options or Stock Appreciation Rights (“SARs”) under the Plan for more than 200,000 shares in connection with the hiring of the employee or 250,000 shares in any subsequent year. 

Options granted under the Plan generally continue in effect for the term fixed by the Compensation Committee. However, the term of an Incentive Stock Option may not exceed 10 years from the date of grant, unless the optionee owns more than 10% of 

the Company’s combined voting power and then the term may not exceed 5 years. (Historically most option grants have had 10-year terms and more recently, 7-year terms.) Options are exercisable in accordance with the terms of an option agreement entered into at the time of grant. Options generally are nontransferable except on the death of a holder. Options generally may be exercised only while an optionee is employed by or in the service of the Company or a subsidiary or within 12 months following termination of employment or service by reason of death or disability or 90 days following termination for any other reason. In the event of the death of an optionee, all outstanding options held by the optionee generally will become fully vested. The Compensation Committee may extend the exercise period of any Nonstatutory Stock Option for any period up to the expiration date of the option and may increase the number of shares for which the option may be exercised up to the total number of shares underlying the option. The purchase price for each share purchased on the exercise of options must be paid in the manner permitted by the Compensation Committee, which may include:
		
	•
	cash, including cash that may be the proceeds of a loan from the Company (other than to executive officers); 

		
	•
	shares of the Company’s common stock valued at fair market value; 

		
	•
	restricted stock;

		
	•
	performance units or other contingent awards denominated in either stock or cash; 

		
	•
	net exercise; 

		
	•
	promissory notes (other than to executive officers); or 

		
	•
	other forms of consideration, as determined by the Compensation Committee. 

Upon exercise of an option, the number of shares subject to the option and the number of shares available under the Plan for future option grants are reduced by the number of shares with respect to which the option is exercised. 

Automatic Equity Grants to Non-Employee Directors. Each new non-employee director receives Restricted Stock Units (“RSUs”) equal to that number of shares of common stock determined by dividing (i) $200,000, by (ii) the simple average closing price of the Company’s common stock during the full fiscal quarter preceding the quarter in which the director is appointed to the Board, rounded down to the nearest whole share.  The number of RSUs to be granted above may be reduced in any particular instance or instances as the Board may determine. These RSUs vest 25% per year over a four-year period commencing on the first anniversary of the grant date. 

In addition, each non-employee director, in each calendar year subsequent to the year in which such person became a non-employee director,  receives an annual automatic grant of (i) additional RSUs equal to that number of shares of common stock determined by dividing (x) $62,500 by (y) the simple average closing price of the Company’s common stock during the full fiscal quarter preceding the quarter in which the grant is made, rounded down to the nearest whole share, and (ii) options to purchase that number of shares of common stock with a Black-Scholes-Merton value (or such other valuation method and using the assumptions then generally being used by the Company to value its options for financial reporting purposes) equal to $62,500 based upon the simple average closing price of the Company’s common stock during the full fiscal quarter preceding the quarter in which the grant is made, rounded down to the nearest whole share. The option price per share for such options will be no less than 100 percent of the fair market value per share on the date of grant. The number of RSUs and/or options to be granted above may be reduced in any particular instance or instances as the Board may determine. These RSUs and options will fully vest on April 30 in the year following the grant date.

Vesting of the equity grants to non-employee directors is conditioned on the non-employee director continuing to serve as a director of the Company through each applicable vesting date. Notwithstanding the foregoing, (i) if a non-employee director ceases to be a director due to death, 100% of the unvested portion of the equity grant shall become fully vested on the date of death; and (ii) if a non-employee director ceases to be a director at or after age 70 for any reason other than removal for good cause as determined by the Board, 100% of the unvested portion of the equity grant shall become fully vested on the date such non-employee director ceases to be a director.

Stock Appreciation Rights. SARs may be granted under the Plan. SARs may, but need not, be granted in connection with an option grant or an outstanding option previously granted under the Plan. A SAR gives the holder the right to payment from the Company of an amount equal in value to the excess of the fair market value on the date of exercise of a share of the Company’s common stock over its fair market value on the date of grant or, if granted in connection with an option, the option price per share under the option to which the SAR relates. 

A SAR is exercisable only at the time or times established by the Compensation Committee. If a SAR is granted in connection with an option, the following rules apply: (1) it is exercisable only to the extent and on the same conditions that the related option is exercisable; (2) it is exercisable only when the fair market value of the stock exceeds the option price of the related option; (3) it may be for no more than 100% of the excess of the fair market value of the stock at the time of exercise over the option price; (4) upon its exercise, the option or portion thereof to which the SAR relates terminates; and (5) upon exercise of the option, the related SAR or portion thereof terminates. Payment by the Company upon exercise of a SAR may be made in:

		
	•
	the Company’s common stock valued at its fair market value; 

		
	•
	cash; or 

		
	•
	partly in stock and partly in cash, as determined by the Compensation Committee. 

The Compensation Committee may withdraw any SAR granted under the Plan at any time and may impose any condition upon the exercise of a SAR. The Compensation Committee also may adopt rules and regulations from time to time affecting the rights of holders of SARs. No SARs have been granted under the Plan. 

Stock Bonus Awards. The Compensation Committee may award shares of the Company’s common stock as a stock bonus under the Plan. The Compensation Committee may determine the persons who receive such awards, the number of shares to be awarded and the time of the award. Stock received as a stock bonus is subject to the terms, conditions and restrictions determined by the Compensation Committee at the time the stock is awarded. Upon the issuance of a stock bonus, the number of shares reserved for issuance under the Plan shall be reduced by the number of shares issued.

Restricted Stock. Under the Plan, the Compensation Committee may issue restricted stock to such persons and in such amounts as it determines. The Committee will also set the terms and restrictions of the grant, including restrictions concerning transferability, repurchase by the Company and forfeiture of the shares issued. Participants are required to pay any applicable federal, state or local tax withholdings. Upon the issuance of restricted stock, the number of shares reserved for issuance under the Plan shall be reduced by the number of shares issued.

Restricted Stock Units. The Compensation Committee may also award RSUs under the Plan. Each RSU will represent a bookkeeping entry amount equal to the fair market value of one share of the Company’s common stock. The terms and conditions of the award, including number of RSUs granted, vesting, payout and transfer restrictions will be specified in an RSU award agreement between the Company and the participant. The Compensation Committee will set vesting criteria that will determine the number of RSUs that will be paid out. The vesting criteria may be based upon Company-wide, business unit or individual performance (including continued employment), or any other basis. Upon vesting, the participant will be entitled to receive a payout as specified in the award agreement, although the Compensation Committee has discretion to reduce or waive any vesting criteria. Earned RSUs may be paid in cash, shares of common stock or a combination thereof. Unearned RSUs will be forfeited to the Company. Shares of common stock represented by RSUs that are fully paid in cash will again be available for grant under the Plan. The Company may use different methods to satisfy any applicable federal, state or local tax withholding requirements of a participant, including withholding the economic value represented by an appropriate portion of the RSU award, making cash demand or by withholding appropriate amounts of securities or cash due the participant from the Company. 

Cash Bonus Rights. The Compensation Committee may grant cash bonus rights under the Plan in connection with:
		
	•
	options granted or previously granted; 

		
	•
	SARs granted or previously granted; 

		
	•
	stock bonuses awarded or previously awarded; and 

		
	•
	shares sold or previously sold under the Plan. 

Bonus rights may be used to provide cash to employees for the payment of taxes in connection with awards under the Plan. 

Performance Units. The Compensation Committee may grant performance units consisting of monetary units that may be earned in whole or in part if the Company achieves goals established by the Compensation Committee over a designated period of time not to exceed 10 years. Payment of an award earned may be in cash or stock or both and may be made when earned, or vested and deferred, as the Compensation Committee determines. 

Foreign Qualified Grants. Awards under the Plan may be granted to eligible persons residing in foreign jurisdictions. The Compensation Committee may adopt supplements to the Plan required to comply with the applicable laws of foreign jurisdictions and to afford participants favorable treatment under those laws, but no award may be granted under any supplement with terms that are more beneficial to the participants than the terms permitted by the Plan. 

Performance Goals. Under Section 162(m), the annual compensation paid to the Company’s Chief Executive Officer and to each of the Company’s other four most highly compensated executive officers may not be deductible to the extent it exceeds $1.0 million. However, the Company is able to preserve the deductibility of compensation in excess of $1.0 million if the conditions of Section 162(m) are met. These conditions include shareholder approval of the amended and restated Plan, setting limits on the number of awards that any individual may receive and for awards other than options, establishing performance criteria that must be met before the award actually will vest or be paid. 

We have designed the amended and restated Plan so that it permits the Company to pay compensation that qualifies as performance-

based under Section 162(m). Thus, the Board (in its discretion) may make performance goals applicable to an individual with respect to an award. As determined by the Board, the performance goals applicable to an award will provide for a targeted level or levels of achievement for a performance period (of at least a fiscal quarter of the Company or such longer period as determined by the Board in its sole discretion) using one or more of the following measures: (a) assets or invested capital (b) bookings, (c) cash flow, (d) customer satisfaction, (e) earnings per share, (f) improvement in cash-to-cash cycle, (g) margin, (h) market share, (i) net income, (j) net income as a percentage of revenue, (k) operating income, (l) product development and quality, (m) profit, (n) return on assets, (o) return on equity, (p) return on invested capital, (q) revenue, (r) revenue in new products or markets, (s) success of new acquisitions as measured by sales, margins, net income or other measures, and (t) total shareholder return. The performance goals may differ from individual to individual and from award to award.

Any criteria used may be measured, as applicable (1) in absolute terms, (2) in combination with another performance goal or goals (for example, but not by way of limitation, as a ratio or matrix), (3) in relative terms (including, but not limited to, as compared to results for other periods of time and/or against another company, or companies or an index or indices), (4) on a per-share or per-capita basis, (5) against the performance of the Company as a whole or a specific business unit(s), business segment(s) or product(s) of the Company, and/or (6) on a pre-tax or after-tax basis. The Board, in its discretion, will determine whether any significant element(s) or item(s) will be included in or excluded from the calculation of any performance goal (for example, but not by way of limitation, the effect of mergers and acquisitions). As determined in the discretion of the Board, achievement of performance goals for a particular award may be calculated in accordance with the Company’s financial statements, prepared in accordance with generally accepted accounting principles, or as adjusted for certain costs, expenses, gains and losses to provide non-GAAP measures of operating results.

Changes in Capital Structure 

If shares of the Company’s outstanding common stock are increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of any recapitalization, stock split or other specified transactions, the Compensation Committee will make appropriate adjustment to the number and kind of shares available for awards under the Plan (including, but not limited to, the per person limits on grants and the number of RSUs automatically granted to directors). If the Company is a party to a merger, consolidation or plan of exchange or we sell all or substantially all of the Company’s assets, the Compensation Committee may select one of the following alternatives for treating outstanding options under the Plan:
		
	•
	outstanding options will remain in effect in accordance with their terms; 

		
	•
	outstanding options shall be converted into options to purchase stock in the corporation that is the surviving or acquiring corporation in the transaction; or 

		
	•
	a 30-day period before the completion of the transaction will be provided during which outstanding options will be exercisable to the extent exercisable and, upon the expiration of the 30-day period, all unexercised options will immediately terminate. The Compensation Committee may accelerate the exercisability of options so that they are exercisable in full during the 30-day period.

If the Company is dissolved, options will be treated as described in the third alternative listed above. 

Amendment and Termination of the Plan

The Board generally may amend, suspend or terminate the Plan at any time and for any reason. However, except as otherwise provided in the Plan, no amendment to an outstanding award may be made without the holder’s consent. In addition, the termination of the Plan will not affect any outstanding options, right of repurchase, or forfeitability of shares issued under the Plan.

The Plan will continue until all shares available for issuance under the Plan have been issued and all restrictions on such shares have lapsed. The Board may suspend or terminate the Plan at any time. 

Custodian

Shares purchased by employees under the Plan will be delivered to and held in the custody of a third party stock plan administrator (the “Custodian”). By appropriate instructions from the employee to the Custodian on forms to be provided for that purpose, the Plan participant may instruct the Custodian to (i) transfer all or part of the shares into the participant’s own name and deliver to the participant; (ii) transfer some or all of the participant’s shares into a regular individual brokerage account in the participant’s own name; or (iii) sell some or all of the shares for the participant’s account at the market price at the time the order is executed.

Cash dividends and other cash distributions, if any, on shares held by the Custodian will be paid to the participants unless the Company subsequently adopts a dividend reinvestment plan and the participant directs that his or her cash dividends be reinvested 

in accordance with such plan. No person has or may create a lien on any funds or securities held by the Custodian under the Plan except as may be provided by law.

FEDERAL INCOME TAX CONSEQUENCES

The following summary is intended only as a general guide to the U.S. federal tax consequences of participation in the Plan and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on particular circumstances. Tax consequences for any particular individual may be different.

Incentive Stock Options

Some options granted under the Plan were intended to qualify as incentive stock options for U.S. federal income tax purposes, although the Company has not granted options as incentive stock options in recent years and we cannot make additional incentive stock option grants under the 1995 Stock Incentive Plan. An optionee will recognize no income upon grant or upon a proper exercise of the incentive stock option (except for purposes of the alternative minimum tax) under current tax law. If an employee exercises an incentive stock option and dispose of the option shares more than two years following the date of grant and more than one year following the date of exercise, any gain or loss realized on subsequent disposition of the shares will be treated as capital gain or loss. If an employee disposes of shares acquired upon exercise of an incentive stock option before the expiration of either the one-year holding period or the two-year waiting period (referred to as a “disqualifying disposition”), any amount realized will be taxable as ordinary compensation income in the year of the disqualifying disposition to the extent that the lesser of the fair market value of the shares on the exercise date or the fair market value of the shares on the date of disposition exceeds the exercise price. We will not be allowed any deduction for federal income tax purposes at either the time of the grant or exercise of an incentive stock option. On any disqualifying disposition by an employee, we generally will be entitled to a deduction to the extent the employee realized ordinary income.

Nonstatutory Stock Options and Stock Appreciation Rights

Other awards authorized to be granted under the Plan are Nonstatutory Stock Options and SARs. Under federal income tax law now in effect, no income is realized by the grantee of a Nonstatutory Stock Option with an exercise price equal to the fair market value on the date of grant or SAR until the option or right is exercised. At the time of exercise of a Nonstatutory Stock Option or SAR, the optionee will realize ordinary compensation income and we generally will be entitled to a deduction in an amount by which the market value of the shares (and any cash) subject to the option or right at the time of exercise exceeds the exercise price. We are required to withhold taxes from the income amount for grantees who were employees at the time of grant. As a result of Section 409A of the Code and the proposed Treasury regulations promulgated thereunder (“Section 409A”), however, Nonstatutory Stock Options granted with an exercise price below the fair market value of the underlying stock (that were not vested as of December 31, 2004) may be taxable to the grantee in the year of vesting in an amount equal to the difference between the then fair market value of the underlying stock and the exercise price of such Awards and may be subject to an additional 20% tax plus penalties and interest (in addition to any state taxes imposed as a result of state laws similar to Section 409A). On the sale or other disposition of shares acquired upon exercise of a Nonstatutory Stock Option or SAR, any additional gain or loss will be taxable as capital gain or loss. 

Restricted Stock, Restricted Stock Unit Awards and Other Awards

For other awards granted under the Plan that are payable either in cash or shares of common stock and that are either transferable or not subject to a substantial risk of forfeiture, the holder of such an award generally must recognize ordinary income equal to the excess of (a) the cash or the fair market value of the shares of common stock received determined as of the date of such receipt, over (b) the amount (if any) paid for such shares of common stock by the holder of the award, and the Company will be entitled at that time to a deduction for the same amount. If the participant is an employee, such ordinary income is subject to tax withholdings.

For restricted stock, RSUs and other awards that are payable in shares that have a restriction on transfer and carry a substantial risk of forfeiture (such as a vesting contingency), the tax treatment is as follows. The holder of the award generally will recognize ordinary income equal to the fair market value of the shares determined as of the first time the shares become freely transferable or no longer subject to a substantial risk of forfeiture, whichever occurs first, less the price paid, if any, for the shares. The Company will be entitled at that time to a tax deduction for the same amount. In certain cases, participants may make a special election under the Code at the time of grant to treat an award as though it were not subject to risk of forfeiture and thereby accelerate the date of income recognition. If the participant is or was an employee at the time of grant, such ordinary income is subject to tax withholdings.

Section 409A

Section 409A, which was added by the American Jobs Creation Act of 2004, provides certain new requirements on nonqualified deferred compensation arrangements. These include new requirements with respect to an individual’s election to defer compensation and the individual’s selection of the timing and form of distribution of the deferred compensation. Section 409A also generally provides that distributions must be made on or following the occurrence of certain events (e.g., the individual’s separation from service, a predetermined date, or the individual’s death). Section 409A imposes restrictions on an individual’s ability to change his or her distribution timing or form after the compensation has been deferred. For certain individuals who are officers, Section 409A requires that such individual’s distribution commence no earlier than six (6) months after such officer’s separation from service.

Awards granted under the Plan with a deferral feature will be subject to the requirements of Section 409A. If an award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that award may recognize ordinary income on the amounts deferred under the Award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal tax (in addition to any state taxes imposed as a result of state laws similar to Section 409A) on compensation recognized as ordinary income, as well as interest on such deferred compensation. The Internal Revenue Service has not issued final regulations under Section 409A and, accordingly, the requirements of Section 409A (and the application of those requirements to Awards issued under the Plan) are not entirely clear.

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF U.S. FEDERAL INCOME TAXATION UPON GRANTEES AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF AWARDS UNDER THE PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF A GRANTEE’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE GRANTEE MAY RESIDE.

Application of Section 16 of the Exchange Act

Special rules may apply in the case of individuals subject to Section 16 of the Securities Exchange Act of 1934. In particular, unless a special election is made pursuant to the Code, shares received pursuant to the exercise of a stock option or SAR may be treated as restricted as to transferability and subject to a substantial risk of forfeiture for a period of up to six months after the date of exercise. Accordingly, the amount of any ordinary income recognized, and the amount of the Company’s tax deduction, are determined as of the end of such period.
 
Section 162(m)

Section 162(m) limits the amount that we may deduct for compensation paid to our Chief Executive Officer and to each of our four most highly compensated officers in any year to $1.0 million per person. However, the Plan has been designed to permit the Compensation Committee to grant awards that qualify as performance-based compensation under Section 162(m), thereby permitting the Company to receive a federal income tax deduction in connection with such awards.

RESTRICTIONS ON TRANSFERABILITY OF SHARES

Section 16(b) of the Securities Exchange Act of 1934 (the “1934 Act”) requires “insiders” to pay to the Company any “profit” realized through a “purchase and sale” or “sale and purchase” of the Company’s securities within any period of less than six months. Rule 16b‐3 under the 1934 Act provides that a purchase of Common Stock under the Plan is not treated as a purchase for purposes of creating liability under Section 16(b). However, a sale of Common Stock acquired under the Plan is subject to Section 16(b) and may be matched with a purchase (other than under the Plan) to create liability under Section 16(b). The Company may not waive the violation, permit rescission of a transaction with it, or settle for less than the entire “profit” realized, unless recovery on the merits is in serious doubt. All directors and officers of the Company and beneficial owners of 10% or more of the Company’s Common Stock are considered “insiders” for purposes of Section 16(b). The liability to the Company arising under Section 16(b) may limit the ability of officers and directors to dispose of any Common Stock acquired under the Plan within less than six months of an acquisition of shares other than under the Plan.

Sales of the Company’s securities by affiliates of the Company are subject to the registration requirements of the Securities Act of 1933 (the “1933 Act”). As a result, affiliates must sell shares acquired under the Plan pursuant to an effective registration statement or pursuant to an exemption from regis-tration. In this regard, Rule 144 under the 1933 Act may be available for the resale of such shares, provided that all the conditions of the Rule are met at the time of resale.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the S EC are incorporated herein by reference:

(a)    The Company’s latest annual report filed pursuant to Section 13(a) or 15(d) of the 1934 Act or the latest prospectus filed pursuant to Rule 424(b) under the 1933 Act that contains audited financial state-ments for the Company’s latest fiscal year for which such statements have been filed.

(b)    All other reports filed pursuant to Section 13(a) or 15(d) of the 1934 Act since the end of the fiscal year covered by the annual report or prospectus referred to in (a) above.

(c)    The description of the Common Stock con-tained in the Company’s registration statement filed under Section 12 of the 1934 Act, including any amendment or report filed for the purpose of updating the description.

All reports and other documents subsequently filed by the Company pursuant to Sections 13(a) and (c), 14 and 15(d) of the 1934 Act, as amended, prior to the filing of a post‐effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of the filing of such reports and documents.

Copies of any documents or portions of documents incorporated by reference in this Prospectus may be obtained without charge by a written or oral request to Legal Department, FEI Company, 5350 NE Dawson Creek Drive, Hillsboro, Oregon 97124, U.S.A., telephone +1-503-726-7500.

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