Exhibit 10.4

EXECUTION VERSION

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is entered into as of August 13,
2012, by and between FSI International, Inc., a Minnesota corporation (the
“Company”), and John C. Ely (“Executive”) (collectively, the “Parties”).

RECITALS:

Executive is party to a Severance Agreement with the Company dated as of
March 28, 2008 (the “Severance Agreement”) and a Management Agreement with the
Company dated as of March 28, 2008, which was amended on December 29, 2010
(collectively, the “Management Agreement”). The Management Agreement and the
Severance Agreement are collectively referred to as the “Existing Agreements.”

The Company, Tokyo Electron Ltd., a Japanese corporation (“Tokyo Electron”) and
RB Merger Corp., a Minnesota corporation and wholly-owned Subsidiary of Tokyo
Electron (“Merger Sub”) have entered into an Agreement and Plan of Merger dated
August 13, 2012 (the “Merger Agreement”), pursuant to which the Company will
become a wholly-owned indirect subsidiary of Tokyo Electron (the “Merger”).

The Parties agree and acknowledge that this Agreement will supersede and replace
the Existing Agreements effective as of the consummation of the Merger (the
“Closing”) and that the Existing Agreements will have no further force or effect
as of the Closing.

The Parties acknowledge that (i) this Agreement will be binding immediately upon
its execution, but, notwithstanding any provision of this Agreement to the
contrary, this Agreement will not become effective or operative until the
Closing and (ii) if the Merger Agreement terminates for any reason without the
occurrence of the Closing, this Agreement will not become effective and all of
the terms and provisions of this Agreement shall be null and void.

The Company desires to secure the benefit of Executive’s experience and ability
and to be assured of the continued services of Executive by employing Executive
in the capacity and on the terms set forth below, and Executive desires to
commit to serve the Company on the terms herein provided.

In consideration of the premises and mutual covenants contained herein, the
Company and Executive agree as follows:

1. Employment. The term of this Agreement will commence as of the Closing, and
will continue until one day following the one year anniversary of the Closing,
unless sooner terminated in accordance with Section 8 (the “Term”). The date on
which Executive’s employment with the Company terminates is referred to herein
as the “Termination Date.” The period of time during which Executive provides
services to the Company is referred to herein as the “Employment Period.”

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2. Title. Executive will be the Vice President, Sales, Marketing and Service of
the Company during the Term. Executive will report directly to the Company’s
President during the Term and will have such duties as assigned to Executive
from time to time by the President.

3. Intellectual Property.

(a) Executive will execute the Company’s standard Agreement for Confidential
Information and Intellectual Property (the “Confidentiality IP Agreement”),
provided, however that in the event of any conflict between any specific terms
in this Agreement and the Confidentiality IP Agreement, the terms in this
Agreement shall control.

(b) Executive will, if and when reasonably required to do so by the Company
(whether during the Employment Period or afterwards) and at the Company’s
expense: (i) apply, or join with the Company in applying, for protection in any
part of the world for any invention, process, development or design to which
Section 3(a) applies; (ii) execute or procure to be executed all instruments,
and do or procure to be done all things, which are necessary for vesting such
protection in the name of the Company or any nominee of the Company, or
subsequently for renewing and maintaining the same in the name of the Company or
its nominees; and (iii) assist in defending any proceedings relating to, or to
any application for, such patents or other protection. The Company will, subject
to Section 8(f)(iii), reimburse Executive for all reasonable out-of-pocket
travel, telephone and other expenses incurred in connection with the provision
of services under this Section 3(b) promptly after Executive furnishes the
Company with reasonable substantiating documentation in respect of such
expenses. In addition, in the event that the foregoing obligations require
Executive to spend a substantial amount of Executive’s working time after the
Employment Period, Executive will be compensated for Executive’s time at the
rate commensurate with Executive’s base salary as in effect immediately prior to
the termination of Executive’s employment.

(c) Executive irrevocably appoints the Company as Executive’s attorney in
Executive’s name (with full power of substitution or resubstitution) and on
Executive’s behalf to execute all documents, and do all things, required in
order to give full effect to the provisions of this Section 3. The Company will
promptly provide Executive with copies of all documents so executed.

4. Confidentiality; Covenant Not to Compete.

(a) Executive will execute Confidentiality IP Agreement, provided, however that
in the event of any conflict between any specific terms in this Agreement and
the Confidentiality IP Agreement, the terms in this Agreement shall control.

(b) During the Employment Period and for a one (1) year period thereafter:

 

  (i)

except for ownership of one percent or less of the shares of any company listed
on a national or regional stock exchange, Executive will not own any share of
stock or other ownership interest, either directly or indirectly, or serve as a
director, officer, manager, trustee, partner, employee, independent contractor,
agent, or consultant, or otherwise become active or involved in the management,
operation, or representation of a business

 

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  or other enterprise that is engaged in or about to engage in selling,
marketing, producing, distributing, leasing, designing, or developing a
Competing Product in any Restricted Country, provided, however, that Executive
may accept employment with a business organization that is engaged or about to
engage in selling, marketing, producing, distributing, leasing, or developing a
Competing Product in a Restricted Country if (x) such business organization is
diversified to the extent that it has significant operations other than that
portion of the business organization that is engaged or about to engage in
selling, marketing, producing, distributing, leasing, or developing a Competing
Product; (y) during the entire one (1) year period following termination of
employment with the Company, Executive will be rendering services to that
portion of the business organization that is not engaged or about to engage in
selling, marketing, producing, distributing, leasing, or developing a Competing
Product and (z) prior to acceptance of employment by Executive with such
business organization, separate written assurances satisfactory to the Company
shall be received and accepted by the Company from both Executive and the
business organization, in each case stating that during the entire one (1) year
period following termination of employment with the Company Executive will not
be rendering services to any portion of the business organization that, directly
or indirectly, is engaged or about to engage in selling, marketing, producing,
distributing, leasing, designing, or developing a Competing Product.

 

  (ii) Executive will comply with the provisions of Section 8 of the
Confidentiality IP Agreement, provided however:

 

  (A) The “Restrictive Period” in Section 8 of the Confidentiality IP Agreement
shall mean the time during Employment Period and for a period of one (1) year
following the date on which the Employment terminates for any reason; and

 

  (B) The Executive’s nonsolicitation covenants under Section 8(b) shall apply
only to any person, entity or customer with whom Executive communicated, whether
in person, through written or printed materials, or by telephone, electronic
mail, or other form of electronic transmission, during the 24 month period
ending on the effective date of the termination of Executive’s employment with
the Company; and

 

  (C) This Paragraph 4(b)(ii) shall not be interpreted to limit or restrict in
any way the commitments of Employee set forth in Paragraph 4(b)(i).

(c) The restrictions in this Section 4 are separate and severable and, if any
restriction is unenforceable in whole or in part, for any reason, such
unenforceability will not affect the enforceability of the remaining
restrictions or, in the case of restrictions unenforceable in part, the
remainder of that restriction. The Parties agree that Executive’s compliance
with the terms and conditions set forth in this Section 4 is a material
inducement to the Company’s entry and performance of this Agreement.

 

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5. Compensation.

(a) Salary. Each year during the Term, the Company will pay to Executive an
annual salary at the rate of no less than $255,000 (the “Salary”). The Salary
will be payable in accordance with the Company’s customary payroll practice but
in no event shall be paid less frequently than once every thirty (30) days. The
Salary will be pro rated for partial years during the Term, including for 2012.

(b) Bonus. During the Term, Executive will be eligible to receive cash bonus
payments (each a “Bonus”) pursuant to the terms of a bonus incentive plan
sponsored by Tokyo Electron (the “Bonus Plan”), provided that if Executive
remains employed by the Company through the one year anniversary of the Closing,
Executive will be eligible to receive a pro rated Bonus for the relevant
performance period in effect on the one year anniversary of the Closing, payable
on December 15, 2013.

6. Employee Benefits.

(a) Benefits. During the Term, Executive will be entitled to participate in all
benefit plans as the Company regularly provides to its other senior executive
officers as a group subject to the terms and conditions thereof; provided,
however, that nothing contained herein will preclude the Company from amending
or terminating any particular employee benefit plan. Notwithstanding the
foregoing, Executive will not be entitled to participate in any severance pay
plan of the Company, other than as set forth in Section 8.

(b) Vacation. During the Term, Executive will be entitled to five (5) weeks of
vacation time each calendar year, pro-rated monthly for partial calendar years,
to be used in accordance with the requirements of the Company’s vacation policy
as in effect from time to time. Earned but unused vacation will be paid to
Executive in accordance with the Company’s policies in effect on the date
hereof.

(c) Perquisite Allowance. During the Term, be entitled to an annual cash
perquisite allowance of $15,000.

(d) Life and Long-Term Disability Insurance. During the Term, the Company will
provide Executive with life and long-term disability insurance in the same
manner as is provided to Executive as of the date hereof.

(e) Expenses. Subject to compliance with the Company’s normal and customary
policies regarding substantiation and verification of business expenses and
Section 8(f)(iii), Executive is authorized to incur on behalf of the Company and
the Company will pay, or reimburse Executive for, all customary and reasonable
expenses incurred during the Term in connection with the performance of his
duties hereunder or for promoting, pursuing or otherwise furthering the business
of the Company, or any of its subsidiaries, including, but not limited to,
expenses for travel, entertainment and similar items.

 

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7. Deductions and Withholdings. All amounts payable or which become payable
hereunder will be subject to any deductions and withholdings required by law.

8. Termination. For purposes of this Section 8, all payments due to Executive
under this Section 8 will be paid in accordance with the Company’s ordinary
practices for making such payments and at the time set forth in the applicable
provision.

(a) Retention Payments.

 

  (i) The Company will pay to Executive, or Executive’s estate if applicable, an
amount equal to $204,000, representing Executive’s pro-rata cash incentive
payment for fiscal 2012, payable in the same manner and at the same time as
annual bonus payments are made to then-current employees of the Company with
respect to 2012, but in no event later than March 15, 2013. This payment will be
made to Executive or Executive’s estate no later than March 15, 2013 regardless
of whether Executive is still employed by the Company on March 15, 2013. For the
avoidance of doubt, Executive is not entitled to any additional bonus for 2012.

 

  (ii)

In addition to the payment in Section 8(a)(i), if (A) Executive remains employed
with the Company through the one year anniversary of the date of the Closing, or
(B) Executive’s employment is terminated by the Company for any reason prior to
the one year anniversary of the date of the Closing or (C) Executive terminates
his employment for Good Reason prior to the one year anniversary of the date of
the Closing, or (D) Executive dies prior to the one year anniversary of the date
of the Closing, or (E) the Executive’s employment is terminated prior to the one
year anniversary of the date of Closing after the Executive becomes disabled
(within the meaning of Section 409A of the Internal Revenue Code of 1986, as
amended from time to time (the “Code”) (the applicable date in (A), (B), (C),
(D) or (E), the “Retention Vesting Date”), then the Company will pay to
Executive or to Executive’s estate if applicable, an amount equal to $992,250,
payable in a lump sum on the forty-fifth (45th) day following the Retention
Vesting Date.

(b) Termination of Employment Without Cause or for Good Reason. In addition to
any payment to which Executive may be entitled under Section 8(a), if
(i) Executive’s employment is terminated by the Company without Cause at any
time prior to the one year anniversary of the Closing or (ii) Executive
terminates employment for Good Reason prior to the one year anniversary of the
Closing, then the Company will pay to Executive an amount equal to the sum of:

(A) the greater of (1) the Salary that would have been payable to Executive had
he remained in employment with the Company through the one year anniversary of
the Closing or (2) six months of the Salary, payable in a lump sum on the
forty-fifth (45th) day following the Termination Date; and

 

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(B) the product of (1) the Bonus that would have been paid to Executive for the
performance period in which the Termination Date occurs had Executive remained
in employment through the end of such performance period, and (2) a fraction,
the numerator of which is the number of days elapsed in such performance period
through the Termination Date and the denominator of which is the total number of
days in such performance period, payable as set forth in Section 5(b).

(c) Release. Any obligation of the Company to make any payment to Executive
following the Termination Date pursuant to Section 8(a) or 8(b) is conditioned
upon Executive first delivering to the Company a release, in the form attached
hereto as Exhibit A, with such changes as may be required to comply with
applicable law (the “Release”), within forty-five (45) calendar days after the
Termination Date, with all periods for revocation expired.

(d) No Mitigation Obligation; Reduction in Severance. Executive will not have a
duty to mitigate the payments to be made to Executive pursuant to this Section 8
by obtaining subsequent employment or otherwise.

(e) Forfeiture. Notwithstanding the foregoing, any right of Executive to receive
any payment under Section 8(b) will be forfeited if Executive knowingly and
materially breaches Sections 3 and/or 4 (and to extent curable, failed to cure
within thirty (30) days after receiving written notice from the Company of the
alleged breach).

(f) Section 409A. Notwithstanding any provisions of Section 8 to the contrary:

 

  (i) Notwithstanding any other provision of this Agreement, Executive’s
Termination Date will occur when Executive’s “separation from service” occurs
pursuant to Section 409A of the Code, and its implementing regulations and
guidance (“Section 409A”) (“Separation from Service”). Furthermore, for purposes
of this Agreement the terms “termination of service”, “termination of
employment” and other terms to that effect will mean Separation from Service.

 

  (ii) If Executive is a “specified employee” (within the meaning of
Section 409A and determined pursuant to procedures adopted by the Company) at
the time of Executive’s Separation from Service and if any portion of the
payments or benefits to be received by Executive under Section 8 upon
Executive’s Separation from Service would be considered deferred compensation
under Section 409A, then each portion of such payments that would otherwise be
payable pursuant to Section 8 or otherwise during the six-month period
immediately following Executive’s Separation from Service (the “Delayed Period”)
will instead be paid or made available on the earlier of (A) the first business
day of the seventh month following the date Executive incurs a Separation from
Service and (B) Executive’s death (the applicable date, the “Permissible Payment
Date”);

 

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  (iii) Except as otherwise set forth in this Agreement, with respect to any
amount of expenses eligible for reimbursement hereunder, such expenses will be
reimbursed by the Company within sixty (60) calendar days (or, if applicable, on
the Permissible Payment Date) following the date on which the Company receives
the applicable invoice from Executive (and approves such invoice), but in no
event later than December 31 of the year following the year in which Executive
incurs the related expenses. In no event will the reimbursements or in-kind
benefits to be provided by the Company in one taxable year affect the amount of
reimbursements or in-kind benefits to be provided in any other taxable year, nor
will Executive’s right to reimbursement or in-kind benefits be subject to
liquidation or exchange for another benefit; and

 

  (iv) Each payment under this Agreement will be considered a “separate payment”
and not one of a series of payments for purposes of Section 409A.

 

  (g) Certain Additional Payment by the Company.

 

  (i) Anything in this Agreement to the contrary notwithstanding, in the event
that any payment or distribution by the Company or any member of the Company
Group to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement, any stock
option, restricted stock agreement or otherwise, but determined without regard
to any additional payments required under this Section 8(g)) (a “Payment”) would
be subject to the excise tax imposed by Section 4999 of the Code or any interest
or penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then the Executive shall be
entitled to receive an additional payment (a “Gross Up Payment”) in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross Up Payment, the Executive retains an
amount of the Gross Up Payment equal to the Excise Tax imposed upon the Payment.

 

  (ii)

Subject to the provisions of Paragraph 8(g)(iii), all determinations required to
be made under this Section 8(g), including whether and when a Gross Up Payment
is required and the amount of such Gross Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by such nationally
recognized registered public accounting firm (other than the accounting firm(s)
then serving as the independent auditors for the Company and the person
effecting the Event) as may be designated by the Company’s independent auditors
and reasonably acceptable to the Executive (the “Accounting Firm”), which
Accounting Firm shall provide

 

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  detailed supporting calculations both to the Company and the Executive within
15 business days of the receipt by the Accounting Firm of notice from the
Executive that there has been a Payment, or such earlier time as is requested by
the Company. All fees and expenses of the Accounting Firm shall be borne solely
by the Company. Except as otherwise provided in Paragraph 8(g)(v), any Gross Up
Payment, as determined pursuant to this Section 8(g), shall be paid by the
Company to the Executive within ten business days of the receipt of the
Accounting Firm’s determination. Any determination by the Accounting Firm shall
be binding upon the Company and the Executive. As result of the uncertainty in
the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross Up
Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Paragraph 8(g)(iii) and the Executive thereafter is required to make a payment
of an Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment together with all
penalties and interest related thereto shall, subject to the requirements of
Paragraph 8(g)(v), be promptly paid by the Company to or for the benefit of the
Executive.

 

  (iii) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim (provided that any delay in so informing the Company
within such ten business day period shall not affect the obligations of the
Company under this Section 8(g) except to the extent that such delay materially
and adversely affects the Company) and shall apprise the Company of the nature
of such claim and the date on which such claim is required to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which it gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:

 

  (A) give the Company any information reasonably requested by the Company
relating to such claim,

 

  (B) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,

 

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  (C) cooperate with the Company in good faith in order to effectively contest
such claim, and

 

  (D) permit the Company to participate in any proceedings relating to such
claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses including reasonable attorneys’ fees. Without
limitation on the foregoing provisions of this Paragraph 8(g)(iii), the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall, subject to the requirements of Paragraph 8(g)(v), advance the
amount of such payment to the Executive, on an interest free basis, and shall
indemnify and hold the Executive harmless, on an after tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company’s control of
the contest shall be limited to issues with respect to which a Gross Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

 

  (iv)

If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Paragraph 8(g)(iii), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company’s
complying with the requirements of Paragraph 8(g)(iii)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Paragraph 8(g)(iii), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim

 

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and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty (30) days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross Up Payment required to be paid.

 

  (v) The obligations of this Section 8(g) shall survive the termination of this
Agreement. Notwithstanding any provision above to the contrary, any Gross Up
Payment payable under this Section 8(g) shall be made by the end of the calendar
year next following the calendar year in which the Executive remits the taxes.
Further, notwithstanding any provision above to the contrary, any right to
reimbursement under this Section 8(g) of expenses incurred by Executive due to a
tax audit or litigation addressing the existence or amount of a tax liability
shall be made by the end of the calendar year following the calendar year in
which the taxes that are the subject of the audit or litigation are remitted, or
where as a result of the audit or litigation no taxes are remitted, the end of
the calendar year following the calendar year in which the audit is completed or
there is a final and nonappealable settlement or other resolution of the
litigation. If the Executive’s separation from service (within the meaning of
Section 409A of the Code) with the Company and its Company Group after an Event
gives rise to a Payment described in Paragraph 8(g)(i), and if the Executive is
a “specified employee” within the meaning of Section 409A of the Code at the
time of such separation from service, then any Gross Up Payment (including any
advance referenced in Paragraph 8(g)(iii)) and any reimbursement of expenses
payable under this Section 8(g) shall not be made before the date that is six
months after the date of such separation from service.

 

  (vi)

Possible Payment Reduction. Notwithstanding any provision to the contrary
contained herein except the last sentence of this Section 8(g)(vi), if the lump
sum cash payments due and the other benefits to which Executive shall become
entitled under Section 8 hereof, either alone or together with other payments in
the nature of compensation to Executive which are contingent on a change in the
ownership or effective control of the Company or in the ownership of a
substantial portion of the assets of the Company or otherwise, would equal or
exceed, by less than $25,000, three times the Employee’s “base amount” as
defined in Section 280G of the Code or any successor provision thereto, then in
such case such lump sum payment and/or such other benefits and payments shall be
reduced by the Accounting Firm to the largest aggregate amount as will result in
no portion thereof being subject to the excise tax imposed under Section 4999 of
the Code (or any successor provision thereto) or being non-deductible to the
Company for federal income tax purposes pursuant to Section 280G of the Code (or
any successor provision thereto). No modification of, or successor provision to,
Section 280G or Section 4999 subsequent to the date of this Agreement shall,
however, reduce the benefits to which

 

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  Executive would be entitled under this Agreement in the absence of this
Section 8(g)(vi) to a greater extent than they would have been reduced if
Section 280G and Section 4999 had not been modified or superseded subsequent to
the date of this Agreement, notwithstanding anything to the contrary provided in
the first sentence of this Section 8(g)(vi).

(h) Miscellaneous. Except as set forth in this Sections 6(b) and 8, no other
amounts will be due or payable to Executive relating to termination of
Executive’s employment.

9. Definitions. For purposes of this Agreement, the following definitions will
be applicable to the terms set forth below:

“Affiliate” means Tokyo Electron and any other Person directly or indirectly
controlling or controlled by Tokyo Electron or the Company or other companies
under common ownership or control with Tokyo Electron or the Company as of the
date of this Agreement or at any time during the Term.

“Cause” shall mean and be limited to, (i) willful and gross neglect of duties by
Executive or (ii) an act or acts committed by Executive constituting a felony
under United States federal or applicable state law and substantially
detrimental to the Company or any Affiliate, following a determination to that
effect by a resolution duly adopted by the affirmative vote of not less than
two-thirds of the entire membership of the Board at a meeting thereof called and
held for such purpose (after reasonable notice is provided to Executive and
Executive is given an opportunity to be heard before the Board) finding that in
the good faith opinion of the Board Executive is guilty of the conduct described
in (i) or (ii).

“Company Group” means Tokyo Electron, the Company, any of their respective
subsidiaries or any of their respective current or former parent.

“Competing Product” means for the period (i) Executive is an employee of the
Company, a product or service that competes with or will compete with any
product, product line, or service that is sold, marketed, produced, distributed,
leased, or under development by the Company with respect to which Executive
performed services of any kind or nature during the twenty-four (24) month
period ending on the date of the conduct at issue, and (ii) after Executive’s
employment with the Company has ended, any product or service that competes with
or will compete with any product, product line, or service that is sold,
marketed, produced, distributed, leased, or under development by the Company
with respect to which Executive performed services of any kind or nature during
the twenty-four (24) month period ending on the date of Executive’s termination
of employment with the Company.

“Confidential Information” means certain proprietary information maintained in
confidence by the Company Group as intellectual property, trade secrets, or
otherwise, including but not limited to information relating to (i) its
finances, processes, products, services, research, and development, and (ii) its
manufacturing, purchasing, accounting, engineering, designing, marketing,
merchandising, selling, distributing, leasing, and servicing systems and
techniques; it also includes plans or proposals with regard to any of the
foregoing, whether implemented or not. All information originated by Executive,
or disclosed to Executive, or to which Executive

 

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otherwise gains access, during the period of Executive’s employment with the
Company that Executive has reason to believe is Confidential Information, or
that is characterized or treated by the Company Group as being Confidential
Information, or that would be of economic value to a third party, shall be
presumed to be Confidential Information.

“Customer” means any Person to (i) whom or to which the Company has sold,
distributed, or leased its products or services, or (ii) whom or which the
Company has solicited for sales, distribution, or leasing of its products or
services, whether directly or indirectly, and whether by or through employees of
the Company or of affiliated sales organizations.

“Customer Information” means information relating to Customers’ operations,
processes, products, and research and development and to Customers’
manufacturing, purchasing, and engineering systems and techniques.

“Event” shall mean the occurrence of any change in the ownership or effective
control of the Company of any change in the ownership of a substantial portion
of the assets of the Company, all within the meaning of Section 280G(b)(2)(A) of
the Code and its regulations.

“Good Reason” means the Company’s (i) failure to provide Executive with
compensation and benefits owed to Executive under this Agreement when due or a
material reduction in Salary or the amount of Executive’s target Bonus
opportunity (other than reductions applicable to all employees of the Company),
(ii) a material diminution of Executive’s title, duties and responsibilities,
provided that, any reasonable change of title, duties and responsibilities made
by the Board following the Closing will not trigger Good Reason under this
Agreement, (iii) requirement that Executive relocate to any place other than a
location within 50 miles of the location at which Executive performed
substantially all of his duties immediately preceding this Agreement; and (iv) a
material breach by the Company of any of the terms of this Agreement, or any
other written agreement between the Company or Tokyo Electron and Executive,
provided, that (A) any occurrence of Good Reason will be deemed to have been
waived by Executive unless Executive provides the Company written notice of
termination of employment for Good Reason within 45 calendar days of the event
giving rise to Good Reason and (B) the Company will have 30 calendar days after
written notice from Executive to cure any event giving rise to Good Reason.

“Person” means any individual, corporation, partnership, trust, association or
other entity or organization, including, but not limited to, a government or
political subdivision or any agency or instrumentality thereof.

“Restricted Country” means any nation or country in which the Company had
customers, had business operation, or otherwise did business, directly or
indirectly, in the twenty-four (24) month period ending on the date of
termination of employment.

10. Notices. All communications, including without limitation notices, consents,
requests or approvals, required or permitted to be given hereunder will be in
writing and will be duly given when hand delivered or dispatched by electronic
facsimile transmission (with receipt thereof confirmed), or three business days
after having been sent by a nationally recognized overnight courier service such
as FedEx or UPS, addressed to the Company (to the attention of

 

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the General Counsel) at its principal executive offices and to Executive at
Executive’s principal residence, or to such other address as any Party may have
furnished to the other in writing and in accordance herewith, except that
notices of changes of address will be effective only upon receipt.

11. Binding Effect. This Agreement will be binding upon and inure to the benefit
of the heirs and representatives of Executive and the successors and permitted
assigns of the Company. This Agreement will be assignable by the Company to any
entity which is owned, directly or indirectly, entirely by the Company or its
parent or to an acquiror of all or substantially all of the stock or assets of
the Company (whether direct or indirect, by purchase, merger, reorganization,
consolidation, acquisition of property or stock, liquidation or otherwise),
provided that such assignee assumes in writing all obligations, liabilities and
covenants contained in this Agreement, and such successor or assignee will be
deemed “the Company” for all purposes under this Agreement. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession (other than in the case of a merger or consolidation) shall be deemed
a material breach of this Agreement.

12. Applicable Law; Venue; Jurisdiction. This Agreement is made and is to be
governed by and construed under the internal laws of Minnesota without regard to
principles of conflict of laws. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in
any court of competent jurisdiction in the State of Minnesota and each of the
parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts related thereto) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is bought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any Party anywhere in the world, whether within or without the jurisdiction
of any such court.

13. Waiver of Breach. A waiver by either Party of any breach of the provisions
of this Agreement by the other Party, or, in any particular instance or series
of instances, of any term or condition of this Agreement, will not constitute or
be deemed a waiver of such breach or of any such term or condition in any other
instance nor will any waiver constitute a continuing waiver hereunder. No waiver
will be binding unless executed in writing by the Party making the waiver.

14. Warranties; Covenants; Acknowledgement. As an inducement to the Company to
enter into this Agreement, Executive represents and warrants as follows:
(i) Executive is not a party to any other agreement or obligation for personal
services; (ii) there exist no impediments or restraints, contractual or
otherwise on Executive’s power, right or ability to enter into this Agreement
and to perform Executive’s duties and obligations hereunder; and (iii) the
performance of Executive’s obligations under this Agreement does not and will
not violate or conflict with any agreement relating to confidentiality,
non-competition or exclusive employment to which Executive is or was subject.

 

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15. Amendment; Termination. The provisions of this Agreement may be amended,
modified, supplemented, or otherwise altered only by an agreement, in writing,
executed by the Company and Executive. Except as provided in Section 8 hereof,
this Agreement may not be terminated other than by an agreement in writing,
executed by the Company and Executive.

16. Captions and Section Headings. Captions and Section headings used herein are
for convenience only and are not a part of this Agreement and will not be used
in construing it. References to Sections are to Sections in this Agreement
unless otherwise stated.

17. Severability. The provisions of this Agreement are severable. If any
provision of this Agreement will be held to be invalid or otherwise
unenforceable, in whole or in part, the remaining provisions or enforceable
parts thereof will not be affected thereby and will be enforced to the fullest
extent permitted by law. In addition, should any provision or any portion
thereof ever be adjudicated by a court of competent jurisdiction to exceed the
time or other limitation permitted by applicable law as determined by such court
in such action, then such provisions will be decreased, and performed to the
maximum time or other limitations prescribed by applicable law, the parties
acknowledging their desire that in such event such action be taken.

18. Entire Agreement. This Agreement (together with Exhibit A hereto) and that
certain letter agreement between the Company and Executive dated August 13,
2012, contains the entire agreement of the Company and Executive, and supersedes
any and all other agreements, either oral or written, between the Company, its
predecessors or subsidiaries, and Executive with respect to the employment of
Executive by the Company, including, without limitation, the Existing
Agreements, which have no force or effect as of the Closing. Each Party to this
Agreement acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by any Party, or anyone acting on
behalf of any Party, which are not embodied herein, and that no other agreement,
statement or promise with respect to the subject matter hereof not contained in
this Agreement will be valid or binding.

19. Injunctive Relief. Executive and the Company (a) intend that the provisions
of Section 4 be and become valid and enforceable, (b) acknowledge and agree that
the provisions of Section 4 are reasonably necessary to protect the legitimate
interests of the Company Group and their businesses and (c) that any violation
of Section 4 may cause irreparable injury to the Company Group, the exact amount
of which will be difficult to ascertain and the remedies at law for which will
not be reasonable or adequate compensation to the Company Group for such a
violation. Accordingly, Executive agrees that if Executive violates any of the
provisions of Section 4 in addition to any other remedy available at law or in
equity, the Company will be entitled to seek specific performance or injunctive
relief. The remedies of the Company under Section 9 of the Confidentiality IP
Agreement shall be limited to the remedies set forth in this Section 19.

20. Representation by Counsel; Mutual Negotiation. Each Party has had the
opportunity to be represented by counsel of its choice in negotiating this
Agreement. This Agreement will therefore be deemed to have been negotiated and
prepared at the joint request and direction of the Parties, at arm’s length,
with the advice and participation of counsel, and will be interpreted in
accordance with its terms and without favor to any Party.

 

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21. Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed an original, and all of which together will
constitute one and the same instrument.

22. Section 409A. The Parties intend for this Agreement to either comply with,
or be exempt from, Section 409A and all provisions of this Agreement will be
interpreted and applied accordingly. In no event, however, shall this Section 22
or any other provisions of this Agreement be construed to require the Company to
provide any gross-up for the tax consequences under Section 409A of any
provisions of, or payments under, this Agreement and the Company shall have no
responsibility for tax consequences under Section 409A to Executive resulting
from the terms or operation of this Agreement.

23. Operation of Agreement. This Agreement will be binding immediately upon its
execution, but, notwithstanding any provision of this Agreement to the contrary,
this Agreement will not become effective or operative (and neither Party will
have any obligation hereunder) until the Closing.

[Signature Page Follows]

 

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The Parties have executed this Agreement as of the date first written above.

 

 

EXECUTIVE     FSI INTERNATIONAL, INC. By:   /s/ John C. Ely     By:   /s/ Benno
G. Sand   John C. Ely       Benno G. Sand       Title:  

Executive Vice President

Business Development and

Investor Relations

 

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EXHIBIT A

FORM OF RELEASE

This Release (“Release”) is entered into by John C. Ely, an individual
(“Employee”), effective as of the date written below.

RECITALS:

A. Employee is or has been an employee of FSI International, Inc., a Minnesota
corporation (“Employer”).

B. Employer and Employee have entered into an Employment Agreement dated as of
August 13, 2012 (the “Employment Agreement”) that entitles Employee under
certain circumstances to applicable severance payments (the “Separation
Payments”) upon certain terms and conditions as set forth in the Employment
Agreement [Separation Payments to be specified upon execution of Release]. One
of the conditions for entitlement to the Separation Payments is the signing and
delivery by Employee of a document in the form of this Release in accordance
with the terms and conditions described in the Employment Agreement and this
Release.

C. Employee’s employment has terminated and Employee wishes to obtain the
Separation Payments.

TERMS AND CONDITIONS

1. Employee’s Waiver and Release.

1.1 On behalf of Employee and Employee’s marital community, heirs, executors,
administrators, and assigns, Employee expressly waives, releases, and
acknowledges satisfaction of all claims of any kind against Employer, its
present and former affiliates and related entities (including without limitation
direct and indirect parent companies), their predecessors, successors, and
assigns, and all of their present and former officers, directors, employees,
agents, representatives, and attorneys, in their individual and representative
capacities (collectively “Employer Parties”). This waiver and release is
comprehensive and except as otherwise provided below includes all claims
(including claims to attorneys’ fees), damages, causes of action, or disputes,
whether known or unknown, based upon acts or omissions occurring or that could
be alleged to have occurred prior to the execution of this Release. This waiver
and release includes, without limitation, all claims for wages, employee
benefits, and damages of any kind arising out of any contracts, express or
implied; any covenant of good faith and fair dealing; estoppel, detrimental
reliance, or misrepresentation; discrimination, including age or disability
discrimination; any federal, state, local, or other governmental statute or
ordinance, including, without limitation, Title VII of the Civil Rights Act of
1964, the Age Discrimination in Employment Act, as amended, the Americans with
Disabilities Act, the Equal Pay Act, as amended, the Fair Labor Standards Act,
the Employee Retirement Income Security Act, as amended (“ERISA”), and similar
state laws or any other legal limitation on the employment relationship.

 

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1.2 Employee agrees not to assert against any Employer Party in any court any of
the claims released under this Release and Employee will indemnify Employer
Parties from and hold Employer Parties harmless against any claims brought by
Employee against the Employer Parties arising out of or connected with the
matters waived and released in this Release. This waiver and release does not
release (i) any claim based upon acts or omissions occurring or that could be
alleged to have occurred after the execution of this Release, (ii) any claims
challenging the validity of this Release in connection with federal Age
Discrimination in Employment Act claims, (iii) any rights of indemnification,
advancement and reimbursement of legal fees and directors’ and officers’
liability insurance to which Employee is entitled under the Employment
Agreement, (iv) any rights as a stockholder or optionholder of the Employer
Parties, (v) claims for accrued, vested benefits under any employee benefit plan
or pension plan of the Employer Parties, subject to the terms and conditions of
such plan and applicable law, or (vi) any claim that may not be released by law
under this Release, or any claim that may be necessary to enforce the provisions
of this Release of the Employment Agreement which survive Employee’s termination
of employment, including without limitation Employer’s obligation to make full
and timely payment of the Separation Payments, or to pay to Executive any other
earned and unpaid compensation.

1.3 Except as specifically identified below Employee’s signature, Employee has
not filed or caused to be filed any lawsuit, complaint, or charge with respect
to any claim this Release purports to waive or release, and Employee promises
never to file or prosecute a lawsuit, complaint, or charge requesting any
personal relief, including monetary payments, penalties or damages or any kind,
based on such claims. If no claims are identified below, Employee represents
that no such claims exist. Employee agrees to cause the withdrawal or dismissal
with prejudice of any claim Employee has purported to waive or release in this
Release. This Section 1.3 will not apply to claims challenging the validity of
this Release in connection with federal Age Discrimination in Employment Act
claims.

2. Review and Revocation Period. Employee is encouraged to review this Release
with Employee’s attorney prior to executing and delivering it to Employer.
Employee may sign and return this Release no earlier than Employee’s date of
termination of employment with Employer and no later than 21 calendar days from
delivery hereof, after which time the offer will expire and may no longer be
accepted. To accept, Employee must execute and deliver the Release to Employer,
to the attention of the undersigned representative of Employer. Employee has a
period of [Insert Applicable Revocation Period under law] after delivering the
executed Release to Employer to revoke the Release. To revoke, Employee is asked
to deliver a notice revoking Employee’s acceptance to the undersigned
representative of Employer, at the referenced address. This Release will become
effective on the [Insert Applicable Revocation Period under law] after delivery
of this executed Release by Employee to Employer, provided that Employee has not
revoked acceptance or rescinded the Release (the “Effective Date”).

3. Knowing and Voluntary Agreement. Employee warrants and represents that
Employee: (i) has carefully read this Release and finds that it is written in a
manner that Employee understands; (ii) knows the contents hereof; (iii) has been
advised to consult and has discussed the Release and its effects with Employee’s
personal attorney or has voluntarily foregone the opportunity to do so;
(iv) understands Employee is giving up all claims, damages, and disputes in
accordance with Section 1, including claims under the federal Age

 

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Discrimination in Employment Act and other statutes, that may have arisen before
the date of this Release; (v) has had ample time to review and analyze this
entire Release; (vi) has 21 calendar days to consider this Release before
signing it; (vii) has seven calendar days to revoke this Release after signing
it; (viii) understands the final and binding effect of this Release;
(ix) acknowledges and agrees that in exchange for this release Employee has
received consideration to which Employee was otherwise not entitled; and (x) has
signed this Release as Employee’s free and voluntary act.

4. Severability. The provisions of this Release are severable, and if any
provision of it is found to be unlawful or unenforceable, it will be deemed
narrowed to the extent required to make it lawful and enforceable. If such
modification is not possible, such provision will be severed from the Release
and the remaining provisions will remain fully valid and enforceable to the
maximum extent consistent with applicable law.

5. Other. Employee represents and warrants that Employee is the sole owner of
all claims, demands, and causes of action referred to herein. Nothing in this
Release is intended as or should be construed as a reflection of liability or
wrongdoing by any person or entity. All Employer Parties will be third party
beneficiaries of this Release. This Release is assignable by Employer in the
event of sale or transfer.

IN WITNESS WHEREOF, the undersigned Employee has executed this Release on the
date written below.

Dated:                                                                  

 

   John C. Ely       (Address)

Claims identified per Section 1.3 (give date, court or agency and claim number),
if any:

 

        

 

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