AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT

EXHIBIT 10.7

AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT

December 16, 2008

FEI considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of FEI and its shareholders. FEI recognizes that, as is the case with many publicly held corporations, the possibility of a change of control may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of FEI and its shareholders. In order to induce Executive to remain employed by FEI in the face of uncertainties about the long-term strategies of FEI and possible change of control of FEI and their potential impact on Executive’s position with FEI, this Amended and Restated Executive Severance Agreement (“Agreement”), which has been approved by the Board of Directors of FEI, sets forth the severance benefits that FEI will provide to Executive in the event Executive’s employment by FEI is terminated under the circumstances described in this Agreement.

1. Employment Relationship . Effective as of August 14, 2006 (the “Employment Commencement Date”), Executive became employed by FEI as President and Chief Executive Officer (“Current Position”). Executive and FEI acknowledge that Executive’s employment with FEI constitutes “at-will” employment, and either party may terminate this employment relationship at any time and for any or no reason, subject to the obligation of FEI to provide the severance benefits specified in this Agreement in accordance with the terms hereof.

2. Release of Claims . In consideration for and as a condition precedent to receiving the severance benefits outlined in this Agreement, Executive agrees to execute a Release of Claims in the form attached as Exhibit A (“Release of Claims”). Executive promises to execute and deliver the Release of Claims to FEI within the later of (a) 21 days from the date Executive receives the Release of Claims (or within such longer period of time as required by applicable law but in no event later than sixty (60) days following Executive’s termination, inclusive of any revocation period set forth in the Release of Claims) or (b) the last day of Executive’s active employment.

3. Compensation Upon Termination for Death, Disability or Other than For Cause not in Connection with a Change of Control . In the event of a Termination of Executive’s Employment (as defined in Section 8.1 of this Agreement) from the Current Position due to Executive’s death, Disability (as defined in Section 8.4 of this Agreement) or termination by FEI for any reason other than for Cause (as defined in Section 8.2 of this Agreement), and such termination is not in Connection with a Change of Control (as defined in Section 8.5 of this Agreement), then contingent upon Executive’s execution of the Release of Claims and compliance with Sections 9, 10 and 12 FEI shall pay Executive, in a single lump sum payment after employment has ended and eight days have passed following execution of the Release of Claims without revocation (subject to Section 23), the amounts set out below as severance pay and in lieu of any other compensation for periods subsequent to the date of termination:

(a) If the date of Termination of Executive’s Employment occurs prior to the first anniversary of the Employment Commencement Date, then Executive shall be paid a lump sum amount in cash equal to the sum of: (i) twenty-four (24) months of Executive’s annual base pay at the rate in effect immediately prior to the date of termination, plus (ii) 200% of the Executive’s target bonus for the year in which Termination of Executive’s

Employment occurs under the annual cash incentive plan(s) in effect at the time of termination (less bonus amounts already paid for such year).

(b) If the date of Termination of Executive’s Employment occurs on or after the first anniversary of the Employment Commencement Date, then Executive shall be paid a lump sum amount in cash equal to the sum of: (i) eighteen (18) months of Executive’s annual base pay at the rate in effect immediately prior to the date of termination, plus (ii) 150% of the Executive’s target bonus for the year in which Termination of Executive’s Employment occurs under the annual cash incentive plan(s) in effect at the time of termination (less bonus amounts already paid for such year).

4. Compensation Upon Termination Without Cause or Resignation for Good Reason in Connection with a Change of Control . In the event of a Termination of Executive’s Employment in Connection with a Change of Control (i) for Good Reason (ii) other than for Cause, or (iii) upon Executive’s death or Disability and Executive was employed in his Current Position at the time of a Change of Control, then in each event contingent upon Executive’s executing and not revoking the Release of Claims and compliance with Sections 9, 10 and 12, Executive shall be entitled to the benefits set forth in this Section 4 (subject to Section 23). If Executive is entitled to benefits under this Section 4, Executive shall not be entitled to any benefits under Section 3 of this Agreement as they are not cumulative.

4.1 Base Pay and Bonus. Executive shall be paid a lump sum amount in cash equal to the sum of: (i) twenty-four (24) months of Executive’s annual base pay at the rate in effect immediately prior to the date of termination, plus (ii) 200% of the Executive’s target bonus for the year in which Termination of Executive’s Employment occurs under the annual cash incentive plan(s) in effect at the time of termination (less bonus amounts already paid for such year). Subject to Section 23, if Executive’s employment ends on or before October 15 of a calendar year, his or her severance pay will be paid after eight days have passed following execution of the Release of Claims without revocation but on or before December 31 of that calendar year. If Executive’s employment ends after October 15 if a calendar year, his or her severance pay will paid on the later of (a) the second payroll date in the calendar year next following the calendar year in which the Executive’s employment has ended or (b) the first payroll date following the date his or her Release of Claims becomes effective, subject to Section 23 below.

4.2 Health Insurance . Pursuant to COBRA, a federal law, Executive is entitled to extend coverage under any FEI group health plan in which Executive and Executive’s dependents are enrolled at the time of termination of employment. FEI will pay Executive a lump sum cash payment in an amount equivalent to two times (2x) the reasonably estimated cost Executive may incur to extend for a period of 18 months under the COBRA continuation laws Executive’s group health and dental plan coverage in effect at the time of termination. Executive may use this payment for such COBRA continuation coverage or for any other purpose. The amount payable pursuant to Section 4.2 shall be paid on the same date that the Section 4.1 payment is payable.

4.3. Life Insurance . For a period of two years following Termination of Executive’s Employment, FEI shall maintain in full force and effect, at its sole cost and expense, for Executive’s continued benefit, any life insurance policy insuring Executive’s life in effect immediately prior to termination, provided that Executive’s continued participation is possible under the general terms and provisions of such policy. In the event that Executive’s continued participation in such policy is barred, FEI shall make a lump sum cash payment to Executive equal to the total premiums that would have been paid by FEI for such two-year period. The amount payable pursuant to Section 4.3, if any, shall be paid on the same date that the Section 4.1 payment is payable.

4.4 Stock Options and Other Awards . All outstanding stock options held by Executive shall become immediately exercisable in full and shall remain exercisable until the earlier of (a) two (2) years after termination of employment or (b) the option expiration date as set forth in the applicable option agreement. All vesting and performance requirements shall be deemed fully satisfied, and all repurchase rights of FEI shall immediately terminate, under all outstanding restricted stock awards held by the Executive. With respect to outstanding awards other than stock options and restricted stock (but including restricted stock units), Executive will immediately vest in and have the right to exercise such awards, all restrictions will lapse, and all performance goals or other vesting criteria will be deemed achieved at 100 percent target levels and all other terms and conditions met. Such awards will be paid or otherwise settled as soon as administratively practicable following the date of termination or, if later, the date of exercise (subject to Section 23, to the extent applicable).

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5. Capped Benefit . Notwithstanding any provision in this Agreement, in the event that Executive would receive a greater after-tax benefit from the Capped Benefit (as defined in the next sentence) than from the payments pursuant to this Agreement (the “Specified Benefits”), the Capped Benefit shall be paid to Executive and the Specified Benefits shall not be paid. The Capped Benefit is the Specified Benefits, reduced by the amount necessary to prevent any portion of the Specified Benefits from being “parachute payments” as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (“IRC”), or any successor provision. In the event of a reduction in accordance with the preceding sentence, the reduction will occur in the following order: reduction of the cash severance pay provided pursuant to Sections 4.1 and 4.2, the vesting acceleration of outstanding equity awards provided pursuant to Section 4.4, and the Company-paid life insurance coverage (or the cash equivalent) provided pursuant to Section 4.3. For purposes of determining whether Executive would receive a greater after-tax benefit from the Capped Benefit than from the Specified Benefits, there shall be taken into account all payments and benefits Executive will receive in connection with a Change of Control (collectively, excluding the Specified Benefits, the “Change of Control Payments”) as determined in accordance with Section 280G of the IRC and the regulations issued thereunder. To determine whether Executive’s after-tax benefit from the Capped Benefit would be greater than Executive’s after-tax benefit from the Specified Benefits, there shall be subtracted from the sum of the before-tax Specified Benefits and the Change of Control Payments (including the monetary value of any non-cash benefits) any excise tax that would be imposed under IRC Section 4999 and all federal, state and local taxes required to be paid by Executive in respect of the receipt of such payments, assuming that such payments would be taxed at the highest marginal rate applicable to individuals in the year in which the Specified Benefits are to be paid or such lower rate as Executive advises FEI in writing is applicable to Executive. Unless FEI and Executive otherwise agree in writing, any determination required under this Section shall be made in writing by FEI’s independent public accountants or other nationally recognized accountants reasonably acceptable to both parties (the “Accountants”), whose determination shall be conclusive and binding upon Executive and FEI for all purposes. For purposes of making the calculations required by this Section, the Accountants may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the IRC. FEI and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. FEI shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section.

6. Tax Withholding; Subsequent Employment .

6.1 Withholding . All payments provided for in this Agreement are subject to applicable tax withholding obligations imposed by federal, state and local laws and regulations.

6.2 Subsequent Employment . The amount of any payment provided for in this Agreement shall not be reduced, offset or subject to recovery by FEI by reason of any compensation earned by Executive as the result of employment by another employer after termination.

7. Other Agreements or Arrangements . In the event that severance benefits are payable to Executive under any other agreement or arrangement with or plan or policy of FEI in effect at the time of termination (including but not limited to any employment agreement or severance plan or policy, but excluding for this purpose any stock option agreement, restricted stock agreement or restricted share unit agreement, or any plan under which any such stock options, shares of restricted stock or restricted stock units may have been issued, that may provide for accelerated vesting, extension of exercise periods or related benefits upon the occurrence of a change of control, death or disability), the benefits provided in this Agreement shall be in lieu of the benefits provided in all such other agreements and arrangements.

8. Definitions .

8.1 Termination of Executive’s Employment . Termination of Executive’s Employment means that FEI has terminated Executive’s employment from his Current Position with FEI, provided that such termination is a “separation from service” within the meaning of Section 409A, as determined by FEI. For purposes of Section 4, Termination of Executive’s Employment shall include termination by Executive in Connection with a Change of Control, by written notice to FEI referring to the applicable paragraph of Section 8.1, for “Good Reason” based on:

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(A) the assignment to Executive of a different title, job or responsibilities that results in any decrease in the level of responsibility of Executive with respect to the surviving company after the Change of Control when compared to Executive’s Current Position;

(B) a reduction by FEI or the surviving company in Executive’s base pay as in effect immediately prior to the Change of Control, other than a salary reduction that is part of a general salary reduction affecting employees generally;

(C) a reduction by FEI or the surviving company in total benefits available to Executive under cash incentive, stock incentive and other employee benefit plans after the Change of Control compared to the total package of such benefits as in effect prior to the Change of Control; or

(D) FEI or the surviving company requires Executive to be based more than 50 miles from where Executive’s office is located immediately prior to the Change of Control except for required travel on company business to an extent substantially consistent with the business travel obligations which Executive undertook on behalf of FEI prior to the Change of Control.

8.2 Cause . Termination for “Cause” shall mean a termination by FEI based on (i) Executive’s willful and substantial misconduct in the performance of his duties, (ii) Executive’s willful failure to perform his duties after two weeks written notice from FEI (other than as a result of a total or partial incapacity due to a physical or mental illness, accident or similar event), (iii) the Executive’s material breach of this Agreement, (iv) the commission by Executive of any material fraudulent act with respect to the business and affairs of FEI or any subsidiary or affiliate thereof or (v) Executive’s conviction of (or plea of nolo contendere to) a crime constituting a felony. FEI may terminate Executive’s employment for Cause only with the approval of a majority of the Board.

8.3 Change of Control . A Change of Control shall mean that one of the following events has taken place:

(A) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of FEI representing more than twenty percent (20%) of the total voting power represented by FEI’s then outstanding voting securities (other than to the extent such beneficial ownership arises from a voting agreement, proxy or similar document entered into in connection with and pertaining to a merger or similar transaction approved by FEI’s Board);

(B) the consummation of the sale or disposition by FEI of all or substantially all of FEI’s assets;

(C) the consummation of a merger or consolidation of FEI with any other corporation, other than a merger or consolidation which would result in the voting securities of FEI outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of FEI or such surviving entity or its parent outstanding immediately after such merger or consolidation; or

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(D) a change in the composition of the Board occurring within a one (1) year period, as a result of which less than a majority of the directors are Incumbent Directors. “Incumbent Directors” means directors who either (A) are directors of FEI as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least two-thirds of the directors of FEI at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to FEI).

Notwithstanding anything in the foregoing to the contrary, no Change of Control shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in Executive, or a group of persons which includes Executive, acquiring, directly or indirectly, securities representing 20 percent or more of the voting power of outstanding securities of FEI.

8.4 Disability . For purposes of the payment of severance benefits under Section 3 or Section 4 of this Agreement, “Disability” shall mean Executive’s absence from full-time duties with FEI for 180 consecutive days as a result of Executive’s incapacity due to physical or mental illness, unless within 30 days after notice of termination by FEI following such absence Executive shall have returned to the full-time performance of Executive’s duties. The conclusive and binding determination of Executive’s Disability will be made by the Board of Directors in accordance with the definition of Disability as set forth above.

8.5 In Connection with a Change of Control . For purposes of this Agreement, a termination of Executive’s employment with FEI is “in Connection with a Change of Control” if Executive’s employment is terminated on or within eighteen (18) months following a Change of Control (as such term is defined in Section 8.3 of this Agreement).

9. Non-Competition . For the duration of Executive’s employment with FEI and, if severance benefits are payable under Section 3 or 4 following the termination of such employment, for one year following the date of termination (collectively, the “Noncompete Period”), Executive will not, without the prior written consent of FEI, directly or indirectly, engage or invest in, own, manage, operate, finance, control or participate in the ownership, management, operation, financing or control of, be employed by, associated with, or in any manner connected with, lend Executive’s name to, lend Executive’s credit to or render services or advice to, any business whose products or activities compete in whole or in part with the former, current or currently contemplated products or activities of FEI or any of its subsidiaries, in any state of the United States or in any country in which FEI or any of its subsidiaries sells products or conducts business; provided , however , that Executive may purchase or otherwise acquire up to (but not more than) one percent of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended. Executive agrees that this covenant is reasonable with respect to its duration, geographical area, and scope. During the Noncompete Period, Executive will, within ten days after accepting any employment, advise FEI of the identity of any employer of Executive. Receipt of the benefits provided under Sections 3 and 4 hereof is conditioned upon compliance by Executive with this Section.

10. Non-Solicitation; Non-Hire . For the Noncompete Period, Executive hereby agrees that Executive will not, directly or indirectly, either for himself or any other person: (a) induce or attempt to induce any employee of FEI or any of its subsidiaries to leave the employ of FEI or such subsidiary; (b) in any way interfere with the relationship between FEI and its subsidiaries and any employee of FEI or any of its subsidiaries; (c) employ, or otherwise engage as an employee, independent contract