Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into this 29th
day of July, 2015 by and between FARO Technologies, Inc., a Florida corporation
(the “Company”), and Laura Murphy (“Executive”), to be effective as of
August 10, 2015 (the “Effective Date”).

BACKGROUND

WHEREAS, the Company desires to engage Executive as the Senior Vice President
and Chief Financial Officer of the Company from and after the Effective Date, in
accordance with the terms of this Agreement. Executive is willing to serve as
such in accordance with the terms and conditions of this Agreement.

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

1. Employment. Executive is hereby employed on the Effective Date as the Senior
Vice President and Chief Financial Officer of the Company. In such capacity,
Executive shall have the duties, responsibilities and authority commensurate
with such position as shall be assigned to her by the Chief Executive Officer of
the Company (the “CEO”), and will report directly to the CEO.

2. Employment Period. Unless earlier terminated in accordance with Section 6,
Executive’s employment shall be for a term beginning on the Effective Date and
ending on August 9, 2016 (the “Employment Period”). Beginning on August 10, 2016
and on each August 10 thereafter, the Employment Period shall, without further
action by Executive or the Company, be extended by an additional one-year
period; provided, however, that either party may cause the Employment Period to
cease to extend automatically, by giving written notice to the other not less
than 60 days prior to any August 10 renewal date. Upon such notice, the
Employment Period shall terminate upon the expiration of the then-current term,
including any prior extensions.

3. Extent of Service. During the Employment Period, Executive shall devote
substantially all of her business effort, time, energy, and skill to the
business of the Company, to the promotion of the interests of the Company, and
to the fulfillment of Executive’s obligations under this Agreement. Executive
acknowledges and agrees that from time to time the Company may assign Executive
to different or additional positions with the Company or one of the Company’s
affiliated companies, with such title, duties, and responsibilities as
determined by the Company in its sole discretion. Executive agrees to serve any
and all such positions without additional compensation.

4. Compensation and Benefits.

(a) Base Salary. During the Employment Period, the Company will pay to Executive
base salary at the rate of U.S. $335,000 per year (“Base Salary”), less normal
withholdings, payable in approximately equal bi-weekly or other installments as
are or become customary under the Company’s payroll practices for its employees
from time to time. The Compensation Committee of the Board of Directors (the
“Board”) shall review Executive’s Base Salary annually and may adjust
Executive’s Base Salary from year to year. Such adjusted salary then shall
become Executive’s Base Salary for purposes of this Agreement.

 

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(b) Incentive, Savings and Retirement Plans. During the Employment Period,
Executive shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs available to employees of the
Company based in the United States. Without limiting the foregoing, the
following shall apply:

(i) during the Employment Period, Executive will have an opportunity to receive
an annual cash bonus based upon the achievement of performance goals established
from year to year by the Compensation Committee of the Board, with a target
bonus of forty percent (40%) of her Base Salary. Notwithstanding the foregoing,
Executive’s annual bonus for fiscal year 2015, if any, shall be prorated based
on the number of days Executive is employed by the Company during fiscal year
2015. Except as otherwise provided by the Board, Executive must be employed by
the Company on the date the annual bonus, if any, is paid in order to receive
the annual bonus; and

(ii) during the Employment Period, Executive will be eligible for annual grants
under the Company’s long-term incentive plan or plans of stock-based awards
based upon the achievement of performance goals established from year to year by
the Compensation Committee of the Board, with a target value of one hundred
percent (100%) of her Base Salary. Grants are expected to be awarded as a
combination of performance-based stock options and restricted stock units, in a
ratio of 75% and 25%, respectively. Nothing in this Agreement requires the Board
to make grants of options or other awards in any year or to make grants of any
specific types of awards or in any certain amount or ratio.

(c) Welfare Benefit Plans. During the Employment Period, Executive and
Executive’s eligible dependents shall be eligible for participation in, and
shall receive all benefits under, the welfare benefit plans, practices, policies
and programs provided by the Company to the extent available to all senior
executive employees of the Company based in the United States, subject to the
terms and conditions of any such plans.

(d) Expenses. During the Employment Period, Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by Executive
in the course of performing her duties and responsibilities under this
Agreement, in accordance with the policies, practices and procedures of the
Company to the extent available to employees of the Company based in the United
States with respect to travel, entertainment and other business expenses.

(e) Relocation Benefits. During calendar year 2015, Executive shall be entitled
to the executive relocation benefits provided under the Company’s relocation
policy, a copy of which has been provided to Executive.

5. Change in Control. Executive shall be a participant in the FARO Technologies,
Inc. Amended and Restated Change in Control Severance Policy, as amended (the
“CIC Policy”), a copy of which has been provided to Executive. For the avoidance
of doubt, if Executive becomes eligible to receive benefits under the CIC
Policy, she shall not be eligible to receive any benefits pursuant to Section 7.
In addition, upon a Change in Control (as defined in the Company’s long-term
incentive plan or plans), (a) any outstanding and unvested stock options held by
Executive shall become fully vested and exercisable, and such stock options
shall thereafter continue or lapse in accordance with the other provisions of
the applicable award certificate; and (b) any outstanding restricted stock units
held by Executive shall become fully vested and shall immediately convert to
shares of Company common stock.

 

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6. Termination of Employment.

(a) Death or Retirement. Executive’s employment shall terminate automatically
upon Executive’s death or retirement during the Employment Period.

(b) Disability. If the Company determines in good faith that Executive has
become Disabled (as defined below) during the Employment Period, it may give to
Executive written notice of its intention to terminate Executive’s employment.
In such event, Executive’s employment with the Company shall terminate effective
on the 30th day after receipt of such written notice by Executive (the
“Disability Effective Date”), provided that, within the 30 days after such
receipt, Executive shall not have returned to full-time performance of
Executive’s duties. For purposes of this Agreement, Executive shall be Disabled
if, as determined by the Board in good faith, Executive is, by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of the
Company, as determined by the Board in good faith.

(c) Termination by the Company. The Company may terminate Executive’s employment
during the Employment Period with or without Cause. For purposes of this
Agreement, “Cause” means (i) Executive’s failure to perform substantially her
duties with the Company and/or any affiliate (excluding any such failure
resulting from Executive’s Disability) after a written demand for substantial
performance is delivered to Executive by or on behalf of the Board which
identifies the manner in which the Board believes that Executive has not
substantially performed her duties and providing Executive 30 days to cure the
identified deficiencies, (ii) Executive engages in illegal conduct or gross
misconduct that is materially injurious to the Company or any affiliate,
(iii) Executive engages in conduct or misconduct that materially harms the
reputation or financial position of the Company or any affiliate, (iv) Executive
is convicted of, or pleads nolo contondere to, a felony or to a crime involving
fraud, dishonesty, violence or moral turpitude, (v) Executive is found liable in
any SEC or other civil or criminal securities law action, (vi) Executive commits
an act of fraud or embezzlement against the Company or any affiliate, or
(vii) Executive accepts a bribe or kickback.

(d) Termination by Executive. Executive’s employment may be terminated by
Executive with or without Good Reason. Executive’s termination without Good
Reason shall require 30 days’ prior written notice to the Company. Executive’s
termination for Good Reason must occur within a period of 120 days after the
occurrence of an event of Good Reason. For purposes of this Agreement, “Good
Reason” shall mean, without Executive’s consent, the Company’s relocation of her
principal office more than 50 miles from the Company’s current headquarters
location in the United States of America. A termination by Executive shall not
constitute termination for Good Reason unless Executive shall first have
delivered to the Company written notice setting forth with specificity the
occurrence deemed to give rise to a right to terminate for Good Reason within 30
days after the initial occurrence of such event. Following receipt of such
notice from Executive, the Company shall have a period of 60 days within which
it may take action to correct, rescind or otherwise substantially reverse the
occurrence supporting termination for Good Reason as identified by Executive.
Good Reason shall not include Executive’s death or Disability. The parties
intend, believe and take the position that a resignation by Executive for Good
Reason as defined above effectively constitutes an involuntary separation from
service within the meaning of Section 409A of the Code and Treas. Reg.
Section 1.409A-1(n)(2).

(e) Notice of Termination. Any termination by the Company or Executive shall be
communicated by Notice of Termination to the other party given in accordance
with Section 12(d). For purposes of this Agreement, a “Notice of Termination”
means a written notice which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) to the extent applicable, sets forth in

 

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reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive’s employment under the provision so indicated, and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date. The failure by Executive
or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of Executive or the Company, respectively, under this Agreement
or preclude Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing Executive’s or the Company’s rights under this
Agreement.

(f) Date of Termination. “Date of Termination” means (i) if Executive’s
employment is terminated by the Company other than for Disability, the date
specified in the Notice of Termination (which shall be not less than 60 days
after delivery of such notice, but Executive may waive such notice), (ii) if
Executive’s employment is terminated by Executive, the date specified in
Executive’s Notice of Termination (which shall be not less than 60 days after
delivery of such notice, but the Company may waive such notice), or (iii) if
Executive’s employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of Executive or the Disability
Effective Date, as the case may be.

7. Obligations of the Company upon Termination.

(a) Termination by Executive for Good Reason; Termination by the Company Other
Than for Cause or Disability. If, during the Employment Period, the Company
shall terminate Executive’s employment other than for Cause or Disability, or
Executive shall terminate employment for Good Reason, then:

(i) the Company shall pay to Executive in a lump sum in cash on the first
regular payday following the Date of Termination, Executive’s Base Salary
through the Date of Termination to the extent not previously paid (the “Accrued
Salary”);

(ii) the Company shall pay to Executive severance equal to Executive’s Base
Salary, payable in approximately equal installments over a period of twelve
(12) months, the first payment to be made within the first 60 days after the
Date of Termination (such first payment date during such period to be determined
exclusively by the Company), or such later date as may be required pursuant to
Section 11, and with monthly payments thereafter in accordance with the
Company’s normal payroll practices; provided, that (A) within 45 days after the
Date of Termination Executive shall have executed a general release of claims
and covenant not to sue in favor of the Company and its affiliates, in the form
provided by the Company and such release shall not have been revoked within any
revocation period specified in such release, and (B) Executive complies with the
Non-Competition Addendum, dated as of July 29, 2015. Each installment payment
shall be considered a separate payment, as described in Treas. Reg.
Section 1.409A-2(b)(2), for purposes of Section 409A of the Code;

(iii) any outstanding and unvested stock options held by Executive shall become
fully exercisable as of the Date of Termination, and such stock options shall
thereafter continue or lapse in accordance with the other provisions of the
applicable award certificate;

(iv) any outstanding restricted stock units held by Executive shall become fully
vested as of the Date of Termination and shall immediately convert to shares of
Company common stock on the Date of Termination; and

(v) to the extent not previously paid or provided, the Company shall timely pay
or provide to Executive any other amounts or benefits required to be paid or
provided or which

 

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Executive is eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies (such other
amounts and benefits, the “Other Benefits”).

(b) Death, Disability or Retirement. If Executive’s employment is terminated by
reason of Executive’s death, Disability or retirement during the Employment
Period, this Agreement shall terminate without further obligations to Executive
or Executive’s legal representatives under this Agreement, other than for
payment of Accrued Salary and the timely payment or provision of Other Benefits.
Accrued Salary shall be paid to Executive or Executive’s estate or beneficiary,
as applicable, in a lump sum in cash within 30 days after the Date of
Termination. With respect to the provision of Other Benefits, the term Other
Benefits as used in this Section 7(b) shall include without limitation, and
Executive or Executive’s estate and/or beneficiaries shall be entitled to
receive, benefits under such plans, programs, practices and policies relating to
death, disability or retirement benefits, if any, as are applicable to Executive
on the Date of Termination.

(c) Cause; Other than for Good Reason. If Executive’s employment shall be
terminated for Cause during the Employment Period, or Executive shall resign
other than for Good Reason or Disability, this Agreement shall terminate without
further obligations to Executive, other than for payment of Accrued Salary and
the timely payment or provision of Other Benefits. Accrued Salary shall be paid
to Executive in a lump sum in cash on the first regular payday following the
Date of Termination.

(d) Expiration of Employment Period. If Executive’s employment shall be
terminated due to the normal expiration of the Employment Period, this Agreement
shall terminate without further obligations to Executive, other than for payment
of Accrued Salary and the timely payment or provision of Other Benefits. Accrued
Salary shall be paid to Executive in a lump sum in cash within 30 days after the
Date of Termination.

(e) Resignations. Termination of Executive’s employment for any reason
whatsoever shall constitute Executive’s resignation as an officer of the
Company, its subsidiaries and affiliates.

8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit
Executive’s continuing or future participation in any employee benefit plan,
program, policy or practice provided by Parent or its affiliated companies and
for which Executive may qualify, except as specifically provided in this
Agreement. Amounts that are vested benefits or which Executive is otherwise
entitled to receive under any plan, policy, practice or program of the Company
or any of its affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice or program
except as explicitly modified by this Agreement.

9. Full Settlement; No Mitigation. The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations under
this Agreement shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
Executive or others. In no event shall Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not Executive obtains other employment.

 

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10. Successors.

(a) This Agreement is personal to Executive and without the prior written
consent of the Company shall not be assignable by Executive otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by Executive’s legal representatives.

(b) This Agreement shall inure to the benefit of and be binding upon the Company
and its successors and assigns.

(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, “Company” shall mean the Company and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

11. Code Section 409A.

(a) General. This Agreement shall be interpreted and administered in a manner so
that any amount or benefit payable hereunder shall be paid or provided in a
manner that is either exempt from or compliant with the requirements of
Section 409A of the Code and applicable Internal Revenue Service guidance and
Treasury Regulations issued thereunder (and any applicable transition relief
under Section 409A of the Code). Nevertheless, the tax treatment of the benefits
provided under the Agreement is not warranted or guaranteed. Neither the Company
nor its directors, officers, employees or advisers shall be held liable for any
taxes, interest, penalties or other monetary amounts owed by Executive as a
result of the application of Section 409A of the Code.

(b) Definitional Restrictions. Notwithstanding anything in this Agreement to the
contrary, to the extent that any amount or benefit that would constitute
non-exempt “deferred compensation” for purposes of Section 409A of the Code
(“Non-Exempt Deferred Compensation”) would otherwise be payable hereunder by
reason of Executive’s termination of employment, such Non-Exempt Deferred
Compensation will not be payable to Executive by reason of such circumstance
unless the circumstances giving rise to such termination of employment meet any
description or definition of “separation from service” in Section 409A of the
Code and applicable regulations (without giving effect to any elective
provisions that may be available under such definition). This provision does not
affect the dollar amount or prohibit the vesting of any Non-Exempt Deferred
Compensation upon a termination of employment, however defined. If this
provision prevents the payment of any Non-Exempt Deferred Compensation, such
payment shall be made at the time and in the form that would have applied absent
the non-409A-conforming event.

(c) Six-Month Delay in Certain Circumstances. Notwithstanding anything in this
Agreement to the contrary, if any amount or benefit that would constitute
Non-Exempt Deferred Compensation would otherwise be payable or distributable
under this Agreement by reason of Executive’s separation from service during a
period in which she is a Specified Employee (as defined below), then, subject to
any permissible acceleration of payment by the Company under Treas. Reg.
Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of
interest), or (j)(4)(vi) (payment of employment taxes): (i) the amount of such
Non-Exempt Deferred Compensation that would otherwise be payable during the
six-month period immediately following Executive’s separation from service will
be accumulated through and paid or provided on the first day of the seventh
month following Executive’s separation from service (or, if Executive dies
during such period, within 30 days after

 

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Executive’s death) (in either case, the “Required Delay Period”); and (ii) the
normal payment or distribution schedule for any remaining payments or
distributions will resume at the end of the Required Delay Period. For purposes
of this Agreement, the term “Specified Employee” has the meaning given such term
in Code Section 409A and the final regulations thereunder.

(e) Timing of Release of Claims. Whenever in this Agreement a payment or benefit
is conditioned on Executive’s execution of a release of claims, such release
must be executed and all revocation periods shall have expired within 60 days
after the Date of Termination; failing which such payment or benefit shall be
forfeited. If such payment or benefit constitutes Non-Exempt Deferred
Compensation, then, subject to subsection (c) above, such payment or benefit
(including any installment payments) that would have otherwise been payable
during such 60-day period shall be accumulated and paid on the 60th day after
the Date of Termination provided such release shall have been executed and such
revocation periods shall have expired. If such payment or benefit is exempt from
Section 409A of the Code, the Company may elect to make or commence payment at
any time during such period.

(f) Timing of Reimbursements and In-kind Benefits. If Executive is entitled to
be paid or reimbursed for any taxable expenses under this Agreement and such
payments or reimbursements are includible in Executive’s federal gross taxable
income, the amount of such expenses reimbursable in any one calendar year shall
not affect the amount reimbursable in any other calendar year, and the
reimbursement of an eligible expense must be made no later than December 31 of
the year after the year in which the expense was incurred. No right of Executive
to reimbursement of expenses under Section 4 shall be subject to liquidation or
exchange for another benefit.

12. Miscellaneous.

(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. Executive agrees that the exclusive forum for
any action to enforce this Agreement, as well as any action relating to or
arising out of this Agreement, shall be the state or federal courts of the State
of Florida. With respect to any such court action, Executive hereby
(a) irrevocably submits to the personal jurisdiction of such courts;
(b) consents to service of process; (c) consents to venue; and (d) waives any
other requirement (whether imposed by statute, rule of court, or otherwise) with
respect to personal jurisdiction, service of process, or venue. Both parties
hereto further agree that the state and federal courts of the State of Florida
are convenient forums for any dispute that may arise herefrom and that neither
party shall raise as a defense that such courts are not convenient forums.

(b) Captions. The captions of this Agreement are not part of the provisions of
this Agreement and shall have no force or effect. Except as otherwise provided,
all references in this Agreement to “Section” or “Sections” refer to the
corresponding section or sections of this Agreement.

(c) Amendments. This Agreement may not be amended or modified otherwise than-by
a written agreement executed by the parties hereto or their respective
successors and legal representatives.

(d) Notices. All notices and other communications under this Agreement shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

 

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If to Executive:    Laura Murphy    c/o FARO Technologies, Inc.    250
Technology Park    Lake Mary, FL 32746 If to the Company:    FARO Technologies,
Inc.    250 Technology Park    Lake Mary, Florida 32746    Attention: General
Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance with this Section 12(d). Notice and communications shall
be effective when actually received by the addressee.

(e) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

(f) Withholding. The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

(g) Waivers. Executive’s or the Company’s failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right Executive or the Company may have under this Agreement, shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement.

(h) Entire Agreement. Except as otherwise provided in this Agreement, this
Agreement contains the entire agreement between the Company and Executive with
respect to the subject matter hereof and, from and after the Effective Date,
this Agreement shall supersede any other agreement between the parties with
respect to the subject matter hereof. The parties agree that this Agreement
shall not supersede the Patent & Confidentiality Agreement or the
Non-Competition Addendum, both of which shall remain in full force and effect in
accordance with their terms.

*****

 

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IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand and, pursuant to
the authorization from the Board, the Company has caused these presents to be
executed in its name on its behalf, all as of the day and year first above
written.

 

/s/ Laura Murphy

Laura Murphy FARO TECHNOLOGIES, INC. By:  

/s/ Jay Freeeland

Its:   President and Chief Executive Officer

 

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