Exhibit 10.1

TRANSITION AND SEPARATION AGREEMENT

This Transition and Separation Agreement (this “Agreement”), dated this 10th day
of March, 2016, is entered into by and between FARO Technologies, Inc. (the
“Company”), and Laura A. Murphy-Wolf (“Murphy”).

Recitals

WHEREAS, in connection with Murphy’s resignation from the Company, and in order
to promote a smooth and amicable transition of duties, the Company has decided
to offer the separation compensation and the other consideration described
herein, conditioned upon Murphy’s compliance with the terms and conditions
described in this Agreement.

NOW THEREFORE, in consideration of the promises and the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:

Agreement

1) Transition.

a) Resignation as Senior Vice President and CFO. Murphy’s resignation from the
position of Senior Vice President and Chief Financial Officer and from any other
positions or appointments that she may hold by or through the Company and its
affiliates, including as an officer or director of any subsidiary of the
Company, is effective March 10, 2016 (the “Resignation Date”). Murphy agrees to
execute, promptly upon request by the Company or any of its affiliates, any
additional documents necessary to effectuate such resignations. After the
Resignation Date, Murphy will no longer be authorized or permitted to incur any
expenses, obligations or liabilities on behalf of the Company or engage in any
duties and responsibilities except the Transition Duties outlined below.

b) Transition Duties. After the Resignation Date and continuing to April 8, 2016
(the “Transition Period”), Murphy shall continue as an at-will employee of the
Company to perform the transition duties outlined herein (the “Transition
Duties”). In recognition of Murphy’s stated desire to pursue outside interests,
it is anticipated that the Transition Duties will not require Murphy’s full time
attention, and the Company understands and accepts that Murphy may work remotely
as necessary during the Transition Period. Murphy shall work at the direction of
the Company’s President and CEO towards achieving a smooth transition of
authority and operations to the Company’s employees designated by the Company’s
President and CEO, providing assistance and input concerning ongoing
work-related matters in order to effectively transition matters to other staff,
and performing other duties as reasonably directed by the President and CEO.
Murphy acknowledges and agrees that her employment with the Company will
terminate at the conclusion of the Transition Period, and that the Company may
shorten the Transition Period in its sole discretion upon notice to Murphy.

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2) Consideration. The Company agrees to pay Murphy the following consideration
(the “Separation Compensation”), contingent upon Murphy’s execution of this
Agreement, and Murphy’s continued full compliance with the terms of this
Agreement:

a) In consideration for her work during the Transition Period, the Company will
pay Murphy the aggregate gross amount of Twenty-Five Thousand Dollars
($25,000.00), payable in pro rata installments during the Transition Period
consistent with the Company’s current payroll practices. Murphy will not receive
a bonus payment under the Company’s short-term cash incentive program in respect
of performance for any part of 2016 but will receive a bonus payment of Ten
Thousand Eight Hundred Ninety-Four Dollars ($10,894) representing her earned
pro-rated bonus under the Company’s 2015 short-term cash incentive program
payable concurrently with the payment of such bonus to the Company’s employees.

b) In consideration for the covenants set forth in Sections 3, 5, 7, 8 and 9 of
this Agreement, the Company will pay Murphy the aggregate gross amount of Two
Hundred Twenty-Six Thousand Two Hundred Fifty Dollars ($226,250.00) (the
“Consideration”) payable in pro rata installments during the Transition Period
consistent with the Company’s current payroll practices. If Murphy breaches any
of the covenants set forth in Sections 3, 5, 7, 8 and 9 of this Agreement, she
will forfeit the right to receive the Consideration and she will be obligated to
return to the Company any and all Consideration already received by her under
this Agreement.

c) The Company will pay Murphy: (i) an aggregate gross amount of Five Thousand
Dollars ($5,000) representing reimbursement for attorneys’ fees, (ii) an
aggregate gross amount of Seventeen Thousand Dollars ($17,000), representing the
remaining lease payments under Murphy’s lease for her apartment in Winter Park,
Florida, and (iii) an aggregate gross amount of Ten Thousand Dollars ($10,000)
to cover relocation costs from her Winter Park, Florida apartment to her new
personal residence.

d) In addition, the Company will promptly reimburse Murphy for all corporate
expenses including those incurred on Murphy’s American Express corporate card
through the date of this Agreement that have not been previously reimbursed
consistent with the Company’s current payroll practices. For the avoidance of
doubt, this is not Separation Compensation.

e) The payments described in Sections 2(a), 2(b) and 2(c) shall be minus the
deductions the Company considers appropriate for any local, state and federal
income taxes, Social Security, Medicare and other analogous withholdings. The
Company’s agreement to make the payments described in Sections 2(a), 2(b) and
2(c) is specifically contingent upon Murphy executing this Agreement and not
revoking the Agreement, as set forth in Section 11(f) below. To the extent the
Separation Compensation becomes payable pursuant to the terms of this Agreement,
the Company will begin to make such payments within five (5) business days (or,
if later, on the first payroll date) after this Agreement becomes effective and
not subject to revocation pursuant to Section 11(f) below. Notwithstanding the
foregoing, the payments referenced in Section 2(c) will be made within five days
after the Agreement becomes effective and not subject to revocation pursuant to
Section 11(f) below.

f) Murphy’s health insurance benefits with the Company shall continue on the
same terms and conditions during the Transition Period, and cease to be
effective at the conclusion of the Transition Period. Murphy shall be offered
COBRA continuation following the conclusion of the Transition Period

 

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to the extent required by law and provided that Murphy timely elects
continuation of medical benefits pursuant to COBRA, and does not become eligible
for medical benefits under any other employer plan, the Company will reimburse
Murphy the monthly COBRA payment which Murphy makes, for a period not to exceed
eight (8) months. Murphy’s other benefits shall terminate effective as of the
conclusion of the Transition Period.

3) General Release and Covenant Not to Sue. In return for the Consideration in
Section 2(b), Murphy fully and forever discharges and releases the Company, its
subsidiaries and affiliates, and each of their respective officers, directors,
managers, employees, agents, attorneys and successors and assigns (collectively,
the “FARO Companies”) from any and all claims or causes of action, known or
unknown, for relief of any nature, arising on or before the date of this
Agreement, which Murphy now has or claims to have or which Murphy at any time
prior to signing this Agreement had, against the FARO Companies, including, but
in no way limited to: any claim arising from or related to Murphy’s employment
by FARO or the termination of Murphy’s employment with FARO, including but not
limited to any claim under the Age Discrimination in Employment Act (“ADEA”),
the Older Workers Benefit Protection Act (“OWBPA”), Title VII of the Civil
Rights Act of 1964, as amended, 42 U.S.C. § 1981, the Americans With
Disabilities Act (“ADA”), the Family and Medical Leave Act (“FMLA”), the
Employee Retirement Income Security Act (“ERISA”), the Equal Pay Act (“EPA”),
the Occupational Safety and Health Act (“OSHA”), the Florida Civil Rights Act
and any and all other local, state, and federal law claims arising under statute
or common law. Murphy also agrees not to file a lawsuit against any of the FARO
Companies in connection with such released claims. Murphy agrees that if anyone
makes a claim or undertakes an investigation involving her in any way, Murphy
waives any and all rights and claims to financial recovery resulting from such
claim or investigation. Murphy further represents that she has not assigned to
any other person any of such claims, and that she has the full right to grant
this release. It is agreed that this is a general release and it is to be
broadly construed as a release of all claims, except those that cannot be
released by law. By signing this Agreement, Murphy acknowledges that she is
doing so knowingly and voluntarily, that she understands that she may be
releasing claims she may not know about, and that she is waiving all rights she
may have had under any law that is intended to protect her from waiving unknown
claims. Notwithstanding the foregoing, nothing in this Section 3 shall affect
Murphy’s right to indemnification pursuant to Article 6 of the Company’s Amended
and Restated Articles of Incorporation.

4) No Admission of Liability. The signing of this Agreement, the payment of the
Separation Compensation, and the conferring of any other consideration upon
Murphy is not an admission by the Company of fault or potential liability on the
part of the Company. Rather, this Agreement is entered into in an effort to
provide Murphy with a separation package and to end the parties’ employment
relationship on an amicable basis. Murphy agrees that neither this Agreement nor
any of its terms shall be offered or admitted into evidence or referenced in any
judicial or administrative proceedings for the purpose or with the effect of
attempting to prove fault or liability on the part of the Company, except as may
be necessary to consummate or enforce the express terms of this Agreement.

5) Confidentiality and Non-Disparagement.

a) Murphy agrees not to disclose confidential, sensitive, or proprietary
information concerning the Company obtained by her during her employment with
the Company. For purposes of this Agreement,

 

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“confidential, sensitive, or proprietary” information would include, without
limitation, all materials and information (whether written or not) about the
Company’s services, products, processes, research, customers, personnel,
finances, purchasing, sales, marketing, accounting, costs, pricing,
improvements, discoveries, software, business methods and formulas, inventions,
and other business aspects of the Company which are not generally known and
accessible to the public at large or which provide the Company with a
competitive advantage.

b) Murphy agrees that she will not: (1) make any statements to representatives
of any press or media, Company employee, government entity, customer or vendor,
which is disparaging of the Company, its reputation, or the character,
competence or reputation of any officer, director, executive, employee, partner,
or agent of the Company or any of its affiliated entities; (2) directly or
indirectly provide information, issue statements, or take any action that would
be reasonably likely to damage the Company’s reputation, cause the Company
embarrassment or humiliation, or otherwise cause or contribute to the Company
being held in disrepute; (3) directly or indirectly seek to cause any person or
organization to discontinue or limit their current employment or business
relationship with the Company; or (4) encourage or assist others to issue such
statements or take such actions prohibited in this Section.

c) In response to inquiries from third parties, Murphy and the Company shall
confirm only that Murphy has separated from the Company on mutually acceptable
terms. Murphy agrees that FARO also may confirm to third parties Murphy’s dates
of employment, title, and position(s).

d) Notwithstanding anything herein to the contrary, any confidentiality,
non-disclosure, non-disparagement or similar provision in this agreement does
not prohibit or restrict any party under this Agreement from initiating
communications directly with, or responding to any inquiry from, or providing
testimony before, the SEC, FINRA, any other self-regulatory organization or any
other state or federal regulatory authority, regarding this Agreement or its
underlying facts or circumstances.

6) Return of Property. Murphy agrees that no later than the conclusion of the
Transition Period she will have returned all Company business records and
property, including as applicable all financial files, notes, computer, cell
phone, keys, contracts, employee records, files, correspondence, thumb drives,
or the like containing information which was provided by the Company or obtained
as a result of Murphy’s employment relationship with the Company.

7) Future Assistance. In partial consideration for receiving the Compensation,
Murphy agrees that after the Transition Period, she will cooperate and make
herself reasonably available to the Company in the event her assistance is
needed to locate, understand, or clarify work previously performed by her or
other work-related issues relating to her employment. Murphy further agrees,
upon the Company’s request, to cooperate, assist and make herself reasonably
available to the Company or its attorneys, on an as-needed basis, to provide
information related to the Company’s financial statements, as well as any
lawsuits which are pending or which may arise in the future, related in any way
to issues of which Murphy had personal knowledge or involvement during the term
of employment with the Company. This may include, but is not limited to,
providing information to the Company’s attorneys, providing truthful and
accurate sworn testimony in the form of deposition, affidavit and/or otherwise
requested by the Company or providing testimony to government agencies. Given
Murphy’s position as an executive employee, if she is contacted by a
governmental agency to provide information related to the Company, she agrees to
contact the Company’s General Counsel prior to providing any information or
response to

 

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the governmental agency in order to provide the Company with a meaningful
opportunity to respond to such a request. To the extent permitted by applicable
law, Murphy also agrees to permit the Company’s attorneys to be present during
any interview she may be required to give with any governmental entity. The
Company agrees to reimburse Ms. Murphy for her reasonable out-of-pocket costs
and expenses incurred in connection with any such future assistance.

8) Non-Competition. In order to protect the Company’s trade secrets and
confidential information, third-party goodwill and other legitimate business
interests, Murphy acknowledges and agrees that during the Transition Period and
for a period of two (2) years after the conclusion of the Transition Period (the
“Restricted Period”), Murphy will not, without the Company’s express written
permission, directly or indirectly, assist, be employed by, consult with, or
provide services to any FARO Competitor. Murphy understands and agrees that,
during the Restricted Period, she is and will be subject to the restrictions set
forth in this Section 8 in any geographic territory where the Company conducts
business, including without limitation, the continental United States, Europe
and Asia. “FARO Competitor” means (i) any business or enterprise that provides
goods and/or services similar to or competitive with the Company (each such
business or enterprise, a “Competitor”), or (ii) any of such Competitor’s
subsidiaries, affiliates, agents or distributors, irrespective of whether the
subsidiary, affiliate, agent or distributor itself provides goods and/or
services similar to or competitive with the Company. As used in this definition,
“affiliate” includes any entity, business or enterprise that, directly or
indirectly, controls a Competitor or is under common control through another
person or entity with a Competitor. The terms “controls,” “controlled by,” and
“under common control” mean, when used with respect to any specified legal
entity, the power to direct the management and policies of such entity, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise. The term “assist” includes any direct or indirect interest in any
enterprise, whether as a stockholder, member, partner, joint venture,
franchisor, franchisee, executive, consultant or otherwise (other than by
ownership of less than two percent (2%) of the stock of a publicly held
corporation) or rendering any direct or indirect service or assistance to any
FARO Competitor.

9) Non-Solicitation. During the Restricted Period, Murphy shall not, without the
prior written permission of the Company, directly or indirectly, for herself or
on behalf of any other person or entity, (i) solicit, call upon, encourage or
contact, or attempt to solicit, call upon, encourage or contact any customer or
prospective customer of the Company or any of its subsidiaries for purposes of
providing products or services competitive with those products or services
offered by the Company or any of its subsidiaries or causing such person or
entity to terminate their business relationship with the Company or any of its
subsidiaries, or (ii) solicit or induce, or attempt to solicit or induce, any
employee of the Company or any of its subsidiaries to terminate his or her
relationship with the Company or any of its subsidiaries and/or to enter into an
employment or agency relationship with Murphy or with any other person or entity
with whom Murphy is affiliated, provided that the restriction in this Section 9
shall apply only to employees of the Company or any of its subsidiaries with
whom Murphy worked by virtue of and during her employment with the Company.

10) Section 409A. The provisions of this Agreement will be administered,
interpreted and construed in a manner consistent with Section 409A of the
Internal Revenue Code of 1986, as amended, the regulations issued thereunder, or
any exception thereto (or disregarded to the extent such provision cannot be so
administered, interpreted, or construed). Each payment under this Agreement
shall be considered a

 

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separate and distinct payment. Murphy shall have no right to designate the date
of any payment under this Agreement. Murphy will not be considered to have
terminated employment with the Company and its affiliates for purposes of any
payments under this Agreement which are subject to Section 409A until Murphy
would be considered to have incurred a “separation from service” (within the
meaning of Section 409A). To the extent required in order to avoid accelerated
taxation and/or tax penalties under Section 409A, amounts that would otherwise
be payable pursuant to this Agreement or any other arrangement between Murphy
and the Company and its affiliates during the six (6) month period immediately
following Murphy’s separation from service will instead be paid on the first
business day after the date that is six (6) months following Murphy’s separation
from service (or, if earlier, Murphy’s date of death). Nothing contained in this
Agreement shall constitute any representation or warranty by the Company
regarding compliance with Section 409A or any other applicable provision of
federal, state, local or other tax law. The Company has no obligation to take
any action to prevent the assessment of any tax under Section 409A or any other
applicable provision of federal, state , local or other tax law, and neither the
Company, nor any of the FARO Companies, shall have any liability to Murphy or
any other person with respect thereto.

11) Miscellaneous.

a) Murphy shall pay all damages (including, but not limited to, litigation
and/or defense costs, expenses, prejudgment interest, and reasonable attorneys’
fees) incurred by the Company as a result of Murphy’s material breach of this
Agreement. The Company shall pay all damages (including, but not limited to,
litigation and/or defense costs, expenses, prejudgment interest, and reasonable
attorneys’ fees) incurred by Murphy as a result of the Company’s material breach
of this Agreement.

b) Murphy agrees that the Company shall have no other obligations or liabilities
to her except as provided herein. This Agreement shall be construed as a whole
in accordance with its fair meaning and the laws of the State of Florida. Any
dispute under this Agreement shall be adjudicated by a court of competent
jurisdiction in the state or federal courts of Orange County, Florida. Except as
otherwise provided for herein, this Agreement constitutes the entire agreement
between the Company and Murphy on the matters described herein and it shall not
be modified unless in writing and executed by a duly authorized officer of the
Company. The provisions of this Agreement are severable and if any provision is
held to be invalid or unenforceable, it shall not affect the validity or
enforceability of any other provision.

c) This Agreement shall have no effect on Murphy’s entitlement to stock options
or other benefits earned and vested prior to the conclusion of the Transition
Period, except (i) to the extent such benefits are affected by the conclusion of
the Transition Period under the terms of the respective plans governing such
benefits and (ii) Murphy’s unvested stock options and restricted stock units
shall not continue to vest after March 10, 2016. Except as provided above, such
benefits shall be governed by their respective plan terms outside the terms of
this Agreement. As of the date of this Agreement, Murphy holds only unvested
stock options and restricted stock units under the Company’s equity plans. The
unvested stock options and restricted stock units will not continue to vest
during the Transition Period. As of March 10, 2016, any stock options and
restricted stock units that remain unvested as of such date will terminate and
be forfeited without the payment to Murphy of any consideration.

d) MURPHY ACKNOWLEDGES THAT SHE VOLUNTARILY ENTERS INTO THIS AGREEMENT WITH A
FULL AND COMPLETE UNDERSTANDING OF ITS TERMS AND LEGAL EFFECT. MURPHY REPRESENTS
THAT SHE WAS ADVISED TO CONSULT WITH AN ATTORNEY ABOUT THE PROVISIONS OF THIS
AGREEMENT BEFORE SIGNING BELOW.

 

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e) Murphy further represents that by entering into this Agreement, Murphy is not
relying on any statements or representations made by the Company, its officers,
directors, agents, or employees, which are not specifically incorporated in this
Agreement; rather, Murphy is relying upon Murphy’s own judgment and the advice
of Murphy’s attorney, if applicable.

f) The offer embodied in this Agreement shall remain open and capable of
acceptance by Murphy until March 31, 2016, after which time the offer shall be
revoked. Murphy acknowledges that she has been given at least 21 calendar days
from the date of this Agreement to accept the terms of this Agreement, although
she may accept it at any time within those 21 days. After Murphy executes this
Agreement, Murphy will still have an additional 7 days in which to revoke her
acceptance. To revoke, Murphy must notify the Company’s General Counsel in
writing delivered via hand delivery or certified mail, return receipt requested,
and the Company’s General Counsel must receive such written notification before
the end of the 7-day revocation period. If Murphy does not execute this
Agreement within the 21-day period, or if she timely revokes this Agreement
during the 7-day revocation period, this Agreement will not become effective and
she will not be entitled to the Separation Compensation provided for in
Section 2 above, and she will return to the Company any and all Separation
Compensation already received by her under this Agreement.

g) This Agreement may not be revoked at any time after the expiration of the
7-day revocation period referenced in Section 11(f) above. This Agreement is not
intended to and shall not affect the right of Murphy to file a lawsuit,
complaint or charge that challenges the validity of this Agreement under the
Older Workers Benefit Protection Act, 29 U.S.C. §626(f), with respect to claims
under the ADEA. Murphy agrees, however, that, with the exception of an action to
challenge her waiver of claims under the ADEA, if she ever attempts to make,
assert or prosecute any claim(s) covered by the General Release and Covenant Not
to Sue in Section 3, she will, prior to filing or instituting such claim(s),
return to the Company any and all the Consideration payments already received by
her under this Agreement, plus interest at the highest legal rate, and, with the
exception of an action to challenge her waiver of claims under the ADEA, if the
Company prevails in defending the enforceability of any portion of the Agreement
or in defending itself against any such claim, she will pay the Company’s
attorneys’ fees and costs incurred in defending itself against the claim(s)
and/or the attempted revocation, recession or annulment of all or any portion of
this Agreement.

h) The rights and obligations of the Company under this Agreement shall inure to
the benefit of, and shall be binding upon the successors and assigns of the
Company and by this Section 11(h), Murphy expressly consents to the Company’s
right to assign this agreement. This Agreement cannot be assigned by Murphy.

i) Except as provided in Section 11(c), this Agreement sets forth the entire
agreement between the parties concerning the termination of Murphy’s employment
with the Company and supersedes any other written or oral promises concerning
the subject matter of this Agreement. Sections 5 (Change in Control) and
Section 7 (Obligations of the Company upon Termination) of Murphy’s employment
agreement with the Company dated as of July 29, 2015 shall have no further force
and effect following the date of this Agreement.

 

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j) This Agreement may be signed in counterparts or transmitted by electronic
means, but shall be considered duly executed if so signed by the parties.

*****

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year indicated below.

 

 

FARO TECHNOLOGIES, INC.

 

/s/ Jody S. Gale

 

By: Jody S. Gale

Its: Senior Vice President, General Counsel & Secretary

Date: March 10, 2016

 

/s/ Laura Murphy

 

By: Laura Murphy

Date: March 10, 2016