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SECOND AMENDING AGREEMENT
TO THE EMPLOYMENT AGREEMENT

This Second Amending Agreement dated as of September 1, 2002, is entered into by and between EXFO Electro-Optical Engineering Inc., a corporation having its principal place of business at 465 Godin Avenue, Vanier, Quebec, G1M 3G7, Canada (the "Corporation") and Bruce Bonini (the "Employee").

WHEREAS the Corporation and the Employee entered into an Employment Agreement dated September 1, 2000 providing for the terms of employment of the Employee which was amended by a First Amending Agreement dated September 1, 2001 (collectively, the "Agreement");

WHEREAS the parties hereto have agreed to amend the Agreement to modify certain terms of employment;

THEREFORE the parties agree as follows:

1. AMENDMENTS

Schedule A and Schedule D to the Agreement are each hereby replaced in their entirety with the Schedule A and the Schedule D attached hereto and forming an integral part hereof.

2. MISCELLANEOUS

2.1 In all respects, except for those changes required to give meaning and effect to the amendments provided for in the foregoing sections hereof, the Agreement, as amended hereby, remains in full force and effect, is hereby ratified and confirmed in all respects, and is binding upon the parties hereto. The Agreement constitutes the whole and entire agreement between the parties hereto with respect to the subject matter thereof and cancels and supersedes any prior written agreements, declarations, commitments, representations and undertakings, written or oral, in respect thereof.

2.2 This Second Amending Agreement shall be construed in accordance with and governed for all purposes by the laws applicable in the state of Texas U.S.A. Service of process in any dispute shall be effective (a) upon the Corporation, if service is made on any officer of the Corporation other than the Employee; (b) upon the Employee, if served at Employee's residence last known to the Corporation with an information copy to the

1.

Employee at any other residence, or care of a subsequent employer, of which the Corporation may be aware.

2.3 This Agreement has been written in English at the express request of the parties. Cette entente a ete redigee en anglais a demande expresse des parties.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

EXFO ELECTRO-OPTICAL
ENGINEERING INC.

BY: /s/ GERMAIN LAMONDE                         /s/ BRUCE BONINI
    -------------------                         ----------------
        GERMAIN LAMONDE                             BRUCE BONINI


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1. REMUNERATION

From September 1, 2002 to August 31, 2003:

(i) Base salary of US$150,000 per annum.

(ii) Commission on Total Billings (as defined in Schedule D, attached hereto):

During the period from September 1, 2002 to October 31, 2002, commissions will be payable to Employee on a monthly basis in amounts equal to the following percentages of Total Billings made in North America by all companies in the Corporation's group of companies as of September 1, 2002, but excluding EXFO Gnubi Products Group Inc., EXFO Burleigh Life Science products and EXFO Photonics X-Cite products:

For Total Billings from US$0 to US$38,400,000 - 0.2266% of the Total Billings figure is payable;

For Total Billings exceeding US$38,400,000 and up to US$51,200,000 - 0.4531% of the Total Billings figure is payable; and

For Total Billings exceeding US$51,200,000 - 0.6797% of the Total Billings figure is payable.

During the period from November 1, 2002 to August 31, 2003, commissions will be payable to Employee on a monthly basis in amounts equal to the following percentages of Total Billings made in North America by all companies in the Corporation's group of companies as of September 1, 2002, but excluding EXFO Gnubi Products Group Inc., EXFO Burleigh Life Science products and EXFO Photonics non-photonics and X-Cite products (collectively, the "Defined Exceptions"):

For Total Billings from US$0 to US$32,690,000 - 0.2661% of the Total Billings figure is payable;

For Total Billings exceeding US$32,690,000 and up to US$46,700,000 - 0.4140% of the Total Billings figure is payable; and

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For Total Billings exceeding US$46,700,000 - 0.6210% of the
Total Billings figure is payable.

It is noted that the rule of 60% of commission remuneration for 70% of Total Billings (1st level) will continue to be used by the parties for future financial years.

(iii) Quarterly bonus: After the end of each of the Corporation's financial quarters, the Employee shall be paid a bonus of US$2,500 if the following Total Billings objectives by the North American Sales department for each such quarter are attained for sales of products of all companies in the Corporation's group of companies as of September 1, 2002, but excluding the Defined Exceptions:

1st Quarter: US$9,800,000 3rd Quarter: US$12,550,000 2nd Quarter: US$10,100,000 4th Quarter: US$14,750,000.

In the event the annual Total Billings objective for the North American Sales department of US$47,200,000 (based on all companies in the Corporation's group of companies as of September 1, 2002, but excluding the Defined Exceptions) (the "Annual Objective") is attained, notwithstanding the non-attainment of some of the above-noted quarterly objectives, the Employee shall be paid a bonus for the year totalling US$10,000, taking into account any quarterly payments that may have been made for attainment of the quarterly objectives.

(iv) Margin Improvement Bonus: A bonus of US$4,000 shall be paid to Employee upon evaluation by Employee's superior that, during the financial year ending on August 31, 2003, he attained the objective of implementing strategies and controls to increase the margin of the products of the Corporate Companies on sales in North America by: (i) defining and commencing the implementation of a plan to improve the cost per order dollar ("CPOD") over that of the financial year ended August 31, 2002 and to attain 10% CPOD annual improvement until 2005; (ii) maintaining or decreasing the average discount rate as compared to the level of the financial year ended August 31, 2002 and defining and implementing a price increase plan for future years; and (iii) attaining a growth rate of sales of Category A Products (as defined in Schedule D) superior to the average sales growth rate for all products.

(v) Demo Management Bonus: A bonus of US$2,000 shall be paid to Employee upon evaluation by Employee's superior that, during the financial year ending on August 31, 2003, he attained the objective of improving demo management by: (i) reducing demo levels on North American Sales territory to less than US$3,000,000 book value (i.e. less than 6% of Total Billings

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objective); and (ii) reducing demo losses to less than US$30,000 book value (i.e. less than 1% of demo pool).

(vi) Opportunity Bonus: A bonus of US$2,000 shall be paid to Employee upon evaluation by Employee's superior that, during the financial year ending on August 31, 2003, he attained the following objectives: (i) reducing to less than 5% opportunities with "no closing date" or "passed closing date"; and (ii) successful and efficient deployment of Lost Business Report and use thereof by North American sales team, commencing upon availability of such tool.

(vii) Support Bonus: A bonus of US$2,000 shall be paid to Employee upon evaluation by the Vice President of EXFO Gnubi Products Group Inc. that, during the financial year ending on August 31, 2003, the North American sales team has adequately supported the sales efforts and activities relating to EXFO Gnubi products.

(viii) The Employee shall receive a monthly car expense allowance of US$700.00.

(ix) The provisions governing the payment of commission and the reimbursement of expenses are set forth in Schedule D attached hereto.

(x) An annual review of remuneration shall occur on or about September 1, 2003.

2. PLACE OF WORK

The Employee shall exercise his functions out of the office of EXFO America Inc. located in Richardson, Texas, U.S.A.

3. VACATION

Four (4) weeks of paid vacation annually.

4. DEFINITIONS

For the purposes of this Agreement, the meaning of the term "Corporation" shall be deemed to include EXFO America Inc.

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TERMS RELATING TO THE PAYMENT OF COMMISSION AND BONUSES

1. DEFINITIONS - For the purposes of the Agreement, the following terms shall have the meanings set forth hereinbelow:

"Billings" shall mean the amount, based on the Net Invoice Price, invoiced to a customer for an Order.

"Net Invoice Price" shall mean the total price at which an Order is invoiced to the customer including any increase or decrease in the amount of the Order, but excluding commissions payable to distributors, shipping costs, mailing costs, taxes, custom duties, transportation, insurance, duties and any allowances or discounts granted to the customer by EXFO.

"Order" shall mean any commitment received from the defined territory to purchase products that EXFO is in a position to manufacture or that is subject to split commission in accordance with Section 3 of this Attachment D.

"Category A Products" shall mean the following products: FTB-400 Universal Test System; FTB-5800 Chromatic Dispersion Analyzer; FTB-5500 PMD Analyzer; IQS Intelligent Test System; OWA-9500 Optical Waveguide Analyzer; IQS-12001B Cable Assembly Test System.

"Total Billings" shall mean the total amount of Billings invoiced in any defined territory or credited to Employee pursuant to a commission split for any specified period.

2. COMPUTATION AND PAYMENT OF COMMISSION AND BONUSES

2.1 All quarterly bonuses are payable at the end of the month following the end of the quarter in which the applicable bonus was earned and annual bonuses are payable within 60 days of the end of the financial year.

2.2 At the time of payment of commission to Employee, the Employer will provide to Employee a monthly commission statement showing

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commissions and bonuses earned during the month, or the quarter as applicable, with invoice numbers, copy of invoices and customer names.

2.3 Commission and bonuses are not payable on amounts received in payment for compliance testing, repairs and reworks, research and development, engineering, special tooling and non-recurring start-up costs.

2.4 The following amounts shall be deducted from any amounts of commission and bonuses due to Employee:

(i) an amount equal to commissions or bonuses previously paid or credited relating to products which have since been returned by the customer or on allowances credited to the customer for any reason by EXFO; and

(ii) an amount equal to commission previously paid or credited on a sale for which EXFO shall not have been fully paid by the customer whether by reason of the customer's bankruptcy, insolvency, or any other reason which EXFO considers, in its sole judgement to have rendered the account uncollectible. If EXFO eventually collects any such uncollectible accounts, the Employer shall pay Employee the percentage of commission applicable at the time of the original sale upon the net proceeds of such collection.

2.5 In the case of the termination of the Agreement, the Employer may withhold payment of commission and bonuses in accordance with the terms set forth in Section 5 of this Attachment D.

3. COMMISSION SPLIT

3.1 When engineering processes, the execution or shipping of an Order involves both territories not part of the territory covered by the North American Sales

department and the territory covered by the North American Sales department, unless otherwise agreed by the affected parties, EXFO will split the amount of the Billing accounted for in the Total Billings between the territories involved as follows, with the exception of Billings credited to the NSP U.S.A. team:

(i) 40% of the amount of the Billing shall be credited to the department in whose territory the product is engineered or specifications were prepared;

(ii) 40% of the amount of the Billing shall be credited to the department to whose territory the product is shipped;

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(iii) 20% of the amount of the Billing shall be credited to the department in whose territory the Order is executed.

3.2 In the event the Billing is credited to the NSP U.S.A. team, unless otherwise agreed by the affected parties, EXFO will split the amount of the Billing accounted for in the Total Billings between the territories involved as follows:

(i) For the Category A companies listed below, 50% of the amount of the Billing shall be credited to the department in whose territory the end-user is located and 50% of the amount of the Billing shall be credited to the department in whose territory the product is engineered or the specifications were prepared. This category is used for companies who have a highly centralized standardization selection process.

(ii) For the Category B companies listed below, 70% of the amount of the Billing shall be credited to the department in whose territory the end-user is located and 30% of the amount of the Billing shall be credited to the department in whose territory the product is engineered or the specifications were prepared. This category is used for companies with a semi-diverse standardization selection process.

(iii) For the Category C companies listed below, 100% of

                  the amount of the Billing shall be credited to the
                  department in whose territory the end-user is
                  located. This category is used for companies who have
                  a very diverse and multi-location standardization
                  selection process.

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Category A                     Category B              Category C
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AT&T Long Distance             QWEST                   SBC
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AT&T Local Services            WorldCom/MCI            Verizon
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Sprint Long Distance           Time Warner Telecom     Cox Cable
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Dominion                                               GSA
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                                                       BellSouth
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3.3 EXFO will make the determination as to commission splits and advise the interested parties, usually at the time the Order is accepted by EXFO. The amount payable as commission in such a case shall never exceed the amount of commission which would have been payable if only one territory had been involved.

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4. ACCEPTANCE OF ORDERS - The following conditions shall be fulfilled before acceptance by EXFO of an Order: (i) all Orders shall be confirmed to EXFO by the purchaser/buyer with a purchase order number,
(ii) EXFO shall have received confirmation of the "ship to" and "bill to" addresses and the telephone number of the purchaser/buyer and of the end user, (iii) an authorized representative of EXFO shall have accepted the Order, and (iv) the credit department of EXFO Electro-Optical Engineering Inc. shall have accepted the Order.

5. PAYMENT OF COMMISSION AND BONUSES AND ADMISSIBLE BUSINESS EXPENSES IN CASE OF TERMINATION - In the event of the termination of the Agreement, payment of commission and bonuses and reimbursement of Admissible Business Expenses will be made by Employer as follows:

5.1 Commission and bonuses: any commission and bonuses that may still be payable at the date of termination shall be withheld by Employer until the occurrence of the latest of the following events:

(i) all samples or demonstrators of products and all documentation and equipment, including hardware and software, belonging to EXFO that may be in the Employee's possession have been returned to EXFO;

(ii) the expiration of a 90 day period following the date of termination.

5.2 Reimbursement of Admissible Business Expenses: any reimbursement of Admissible Business Expenses incurred before the date of the termination that may be payable shall be withheld by Employer until the occurrence of the latest of the following events:

(i) all samples or demonstrators of any EXFO products and all documentation and equipment, including hardware and software, belonging to EXFO that may be in the Employee's possession have been returned to EXFO;

(ii) the expiration of a 90 day period following the date of termination.

It is understood that reimbursement of Admissible Business Expenses is not payable by EXFO until it has received a duly completed expense report and full supporting documents and has had a reasonable period of time to review the expense report and the supporting documents and process the reimbursement.

9.

SEVERANCE AND GENERAL RELEASE AGREEMENT
("AGREEMENT")

For good and valuable consideration, receipt of which is hereby acknowledged, and in order to resolve and settle finally, fully and completely all matters or disputes that now or may exist between them, as set forth below, the parties agree as follows:

1. PARTIES. The parties to this Agreement are Bruce Bonini, his heirs, representatives, successors and assigns (hereinafter referred to collectively as "Employee"), and EXFO Electro-Optical Engineering Inc., and any of its parents, predecessors, successors, subsidiaries, affiliates or related companies, officers, directors, employees and/or representatives (hereinafter referred to collectively as the "Company").

2. TERMINATION OF EMPLOYMENT. The parties agree that Employee's employment with the Company shall be terminated effective August 15, 2003. The employee shall cease the execution of his functions effective July 14, 2003. All salary, commissions, and insurance benefits shall remain in effect through August 15, 2003. The period from July 15, 2003 to August 15, 2003 shall constitute the 30 days' written notice required by paragraph 3.3 of the September 1, 2000, Employment Agreement between Employee and the Company.

3. SEVERANCE. The Company shall pay Employee 12 months' salary, commissions and commission bonuses, as provided for in paragraph 3.3 of the said Employment Agreement. The salary and commissions will be paid over 12 months at the Company's regular payroll intervals via direct deposit to any account as specified in writing by Employee through and including the December, 31, 2003 payroll. On January 15, 2003 the Company will pay the Employee the remaining balance in a lump sum wired to the

same Employee account as specified by the Employee. Schedule of payment appears in Attachment A that is an integral part hereof.

4. BENEFITS. For the 12 month severance payment period or until Employee notifies the Company that he has accepted full time employment and become eligible for coverage under another employer's benefit plan whichever is earlier, the Company shall pay Employee's COBRA premiums to maintain Employee's health insurance benefits at the level he had immediately prior to the termination of his employment. Employee is responsible for electing COBRA coverage, Company will provide forms and assistance to Employee as necessary to insure timely and complete filings.

5. NO ADDITIONAL COMPENSATION OWED. The parties agree that, except as expressly set forth in this Agreement, no further compensation, including, but not limited to, salary, bonus, benefits, or payments (hereinafter collectively referred to as "Compensation") shall be due from or paid by the Company to Employee. Additionally, Employee hereby waives and relinquishes all claims to further employment and Compensation from the Company, except as specified in this Agreement and in Section 5 of the Confidentiality, Assignment of Work Product, Non-Competition and Non- Solicitation Agreement for Sales Personnel, ("the Confidentiality Agreement") which Employee signed on April 10, 2001, and which is a schedule to the Employment Agreement.

6. SHARE PURCHASE. Under the Share Plan for Holders of Class "F" Shares of EXFO Electro-Optical Engineering Inc. or of Shares resulting from the Conversion of the Class "F" Shares, the Company agrees that the Employee be allowed to retain his 49,324 EXFO subordinate voting shares (formerly known as the Class "F" shares) in accordance with the terms of that Plan.

7. AGREEMENT NOT TO COMPETE. Employee and Company both acknowledge that they are each bound by the Confidentiality Agreement.

8. RELEASE OF CLAIMS. In consideration of the payments and promises contained in this Agreement, Employee releases, discharges, and forever holds the Company harmless from any and all claims, demands or suits, whether civil or criminal, at law or in equity, known or unknown, fixed or contingent, liquidated or unliquidated, arising or existing on or at any time prior to the execution of this Agreement. Such released claims include claims relating to or arising out of (i) Employee's employment with the Company, (ii) any written employment agreements between Employee and the Company; (iii) Employee's separation from employment with the Company, and (iv) all claims known or unknown that have been asserted, or that could be asserted, by Employee against the Company, including but not limited to claims under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, and the Americans with Disabilities Act.

9. NO ADMISSION OF LIABILITY. This Agreement shall not in any way be construed as an admission by the Company of any acts of wrongdoing or violation of any statute, law, or legal right.

10. RETURN OF PROPERTY. Employee shall immediately return all equipment, manuals, property, and documents in his possession which belong to, relate to, or refer to the Company, including all files, programs and passwords stored electronically or otherwise. Company acknowledges that the Employee has met this requirement and that Company has signed for receipt of all if it's property as documented in the "Employee Exit Inventory" sheet signed by Employee and Company representative, Mr. Louis Metoyer, on July 22, 2003 at the EXFO America offices at 1201 Richardson Dr. Suite 260, Richardson, Texas 75080.

11. CONFIDENTIALITY. Employee will keep the fact, terms, and amount of this Agreement completely confidential except to the extent that such information may become public knowledge as a result of required disclosure by the Company; and except as necessary to consult with Employee's accountant, tax advisor or attorney and will not disclose any information concerning this Agreement or the terms of the underlying settlement unless he is obliged to disclose same pursuant to a court order. Employee recognizes that this confidentiality provision is material to the Company's decision to enter into this Agreement.

12. SCOPE OF AGREEMENT. Employee represents and agrees that he has had a reasonable time to review the Agreement and consult with an attorney if he chooses, that he fully understands all the provisions of the Agreement, and that he is voluntarily entering into this Agreement.

13. NO ASSIGNMENT OF CLAIMS. Employee represents that he has not transferred or assigned, to any person or entity, any claim involving the Company or any portion thereof, or interest therein.

14. BINDING EFFECT OF AGREEMENT. This Agreement shall be binding upon the Company and upon Employee and his heirs, administrators, representatives, executors, successors and assigns.

15. CONTROLLING LAW. This Agreement is made and entered into within the State of Texas and shall in all respects be interpreted, enforced, and governed under the laws of the State of Texas.

16. SEVERABILITY. Should any provision of this Agreement be declared or determined to be illegal or invalid by any government agency or court of competent jurisdiction, the validity of the remaining parts, terms or provisions of this Agreement shall not be affected and such provisions shall remain in full force and effect.

17. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement between the parties, and fully supersedes any and all prior agreements, understandings, or representations between the parties pertaining to the subject matter of this Agreement except to the extent noted in Sections 5 and 7 herein with regard to the Confidentiality Agreement.

Employee represents and acknowledges that in executing this Agreement, he does not rely, and has not relied, upon any representation(s) by the Company or its agents except as expressly contained in this Agreement.

18. REVOCATION RIGHTS. Employee understands that he may revoke this Agreement within seven days after execution. By signing below, Employee confirms that he: (a) has read this Agreement carefully and completely; (b) has been given a period of at least 21 days to consider and review this Agreement;
(c) is aware of his right to consult with legal counsel and acknowledges that he has had ample opportunity to do so; and (d) understands all the provisions contained in this Agreement.

MY SIGNATURE BELOW MEANS THAT I HAVE READ THIS RELEASE AND SETTLEMENT AGREEMENT AND AGREE AND CONSENT TO ALL THE TERMS AND CONDITIONS CONTAINED IN THE AGREEMENT.

EMPLOYEE

COMPANY

Dated:_________________________     /s/ GERMAIN LAMONDE
                                    -------------------

                                  Attachment A
                               Schedule of payment

                      Type of Pay                          Pay Period   Base Salary  Avg. Commissions   Pay Date        Status
-----------------------------------------------------------------------------------------------------------------------------------
30 Day Notification Pay (1st half) & Actual Commissions    7/31/2003     $6,250.00       $4,464.21      7/31/2003        Paid
           30 Day Notification Pay (2nd half)              8/15/2003     $6,250.00                      8/15/2003     To be Paid
 Start of Twelve Month Severance Pay & Avg. Commissions    8/30/2003     $6,250.00       $6,530.67      8/30/2003     To be Paid
             Continuation of severance pay                 9/15/2003     $6,250.00                      9/15/2003     To be Paid
    Continuation of severance pay & Avg. Commissions       9/30/2003     $6,250.00       $6,530.67      9/30/2003     To be Paid
             Continuation of severance pay                 10/15/2003    $6,250.00                     10/15/2003     To be Paid
    Continuation of severance pay & Avg. Commissions       10/30/2003    $6,250.00       $6,530.67     10/30/2003     To be Paid
             Continuation of severance pay                 11/15/2003    $6,250.00                     11/15/2003     To be Paid
    Continuation of severance pay & Avg. Commissions       11/31/2003    $6,250.00       $6,530.67     11/31/2003     To be Paid
             Continuation of severance pay                 12/15/2003    $6,250.00                     12/15/2003     To be Paid
    Continuation of severance pay & Avg. Commissions       12/31/2003    $6,250.00       $6,530.67     12/31/2003     To be Paid
          Balance of severance (final payment)             1/15/2004    $93,950.00      $45,714.69      1/15/2004     To be Paid

SEPARATION AGREEMENT AND GENERAL RELEASE

WHEREAS Mr. Sami Yazdi is employed by EXFO Protocol Inc. (the "Employer"), a subsidiary of EXFO Electro-Optical Engineering Inc., having its head office at 465 Godin Avenue, Vanier, Quebec, G1M 3G7.

WHEREAS Mr. Yazdi's employment has been terminated effective March 14, 2003; and

WHEREAS the Employer wishes to provide adequate compensation to Mr. Yazdi;

NOW THEREFORE, MR. YAZDI HEREBY COVENANTS AND AGREES AS FOLLOWS:

Mr. Yazdi hereby accepts and agrees to receive from the Employer an amount equivalent to twelve (12) months of regular salary as compensation for termination of his employment, less any deductions required by law. This amount does not include any salary, vacation pay, reimburseable business expenses or any other amount that was otherwise payable to Mr. Yazdi as of the last day of his employment, and that was paid at that time. Mr. Yazdi acknowledges that he is not entitled to any other amount in relation to his employment or termination thereof.

In consideration of the sums received from the Employer in accordance with the present Agreement, Mr. Yazdi hereby releases and forever discharges the Employer, its directors, officers, administrators, shareholders, affiliates, successors and assigns from all actions, causes of action, claims and demands of every nature in any way related to his employment and the termination of his employment.

For the above consideration, Mr. Yazdi hereby agrees not to make any claim, or to commence or maintain any action or proceeding, against any person or corporation, in which a claim or demand of any nature could arise against the Employer, its directors, officers, administrators, shareholders, affiliates successors and assigns in any way related to his employment and the termination of his employment.

Mr. Yazdi acknowledges that the Employer, by the above payment or otherwise, does not admit any liability to him in any manner or for any reason whatsoever, and any liability is in fact denied.

Mr Yazdi hereby confirms that he has returned all items created by him pursuant to his employment or furnished by the Employer, including all equipment, credit cards, books, records, reports, files, manuals, literature, diskettes, confidential information or other materials and that he has not kept copies of any of the above.

Mr. Yazdi hereby acknowledges that he is bound by obligations of confidentiality, non-competition and non-solicitation of employees and customers.

Mr. Yazdi declares having had the opportunity to read the present document and to obtain any additional required information or advice and that the amount payable hereunder constitutes a reasonable and sufficient indemnity for the termination of his employment.

The parties have agreed that this Agreement be written in English. Les parties ont convenu que la presente entente soit redigee en anglais.

IN WITNESS WHEREOF the parties have executed this Agreement.

/s/ SAMI YAZDI                          /s/ GERMAIN LAMONDE
--------------                          -------------------
SAMI YAZDI                              EXFO PROTOCOL INC.

DATE: APRIL 1, 2003                     DATE: MARCH 19, 2003
      -------------                           --------------

EXFO GNUBI PRODUCTS GROUP INC.

EXECUTIVE EMPLOYMENT AGREEMENT

JAMES R. STEVENS

TABLE OF CONTENTS

1. Definitions..................................................... 1

2. Employment and Term............................................. 4

3. Nature of Employment............................................ 4

4. Remuneration.................................................... 5
4.1. Basic Remuneration..................................... 5
4.2. Benefits............................................... 5
4.3. Bonus Remuneration..................................... 5

5. Expenses........................................................ 5

6. Vacation........................................................ 5

7. Termination..................................................... 5
7.1. Notice................................................. 5
7.2. Effective Date......................................... 6
7.3. Stop Work Notice....................................... 6
7.4. No Other Entitlement................................... 7

8. No Conflicting Obligations...................................... 7

9. Confidential Information........................................ 8
9.1. Protection of Confidential Information................. 8
9.2. Covenants Respecting Confidential Information.......... 8
9.2.1. Non-Disclosure.................................. 8
9.2.2. Using, Copying, etc............................. 8
9.2.3. Return of Confidential Information.............. 8
9.3. Obligations Continue................................... 9

10. Competition and Solicitation.................................... 9
10.1. Non-Competition........................................ 9
10.2. No Solicitation of Clients and Suppliers............... 9
10.3. No Solicitation of Employees........................... 10
10.4. Independent Covenants.................................. 10

11. Intellectual Property........................................... 10
11.1. Ownership.............................................. 10
11.2. Records................................................ 10
11.3. Moral Rights........................................... 10
11.4. Further Assurances..................................... 11

12. Warranties, Covenants and Remedies.............................. 11

13. Co-operation by Executive....................................... 11

14. Notices......................................................... 12

15. Headings........................................................ 12

16. Invalidity of Provisions........................................ 12

17. Entire Agreement................................................ 12

18. Waiver, Amendment............................................... 13

19. Governing Law................................................... 13

20. Counterparts.................................................... 13

21. Acknowledgement................................................. 13

EXFO GNUBI PRODUCTS GROUP INC.

EXECUTIVE EMPLOYMENT AGREEMENT

RECITALS:

A. The corporation specified in Schedule A (the "Corporation") is a member of the corporate group of companies of EXFO Electro-Optical Engineering Inc. ("EXFO") (the "EXFO Group") and is in the business of researching, developing and manufacturing modular and scalable multi-channel communication test devices.

B. The Corporation and the undersigned employee named in Schedule "A" (the "Executive") wish to enter into this Agreement to set forth the rights and obligations of each of them with respect to the Executive's employment with the Corporation, for their mutual benefit and to reflect the nature of the Executive's employment by the Corporation.

NOW THEREFORE IN CONSIDERATION OF THE MUTUAL COVENANTS AND AGREEMENTS CONTAINED IN THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION (THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED), THE CORPORATION AND THE EXECUTIVE AGREE AS FOLLOWS:

1. DEFINITIONS

In this Agreement:

"AGREEMENT" means this agreement and all schedules attached to this agreement, in each case as they may be amended or supplemented from time to time;

"BASIC SALARY" has the meaning set out in section 4.1;

"BENEFITS" has the meaning set out in section 4.2;

"BUSINESS DAY" means any day, other than Saturday, Sunday or any statutory holiday in the State of Texas;

"COMPETITIVE BUSINESS" means currently any business which develops, manufactures and sells high-performance test, measurement and automation instruments that are used in a variety of applications in the telecommunications and data communications networking industries and includes any other technologies and/or applications which are directly competitive with the business of the Corporation as the business of the Corporation may change from time to time;

"CONFIDENTIAL INFORMATION" means information, whether or not originated by the Executive, that relates to the business or affairs of any entity in the EXFO Group, its

clients or suppliers and is confidential or proprietary to, about or created by any entity in the EXFO Group, its clients or suppliers.

(a) Confidential Information includes, but is not limited to, the following types of information and other information of a similar nature (whether or not reduced to writing or designated or marked as confidential):

(i) work product resulting from or related to work or projects performed or to be performed by any entity in the EXFO Group, including but not limited to, the interim and final lines of inquiry, hypotheses, research and conclusions related thereto and the methods, processes, procedures, analysis, techniques and audits used in connection therewith;

(ii) computer software of any type or form and in any stage of actual or anticipated development, including but not limited to, programs and program modules, routines and subroutines, procedures, design concepts, design specifications (design notes, annotations, documentation, flowcharts, coding sheets, and the like), source code, object code and load modules, programming, program patches and system designs;

(iii) information relating to developments (as hereinafter defined) prior to any public disclosure thereof, including but not limited to, the nature of the developments, production data, technical and engineering data, test data and test results, the status and details of research and development of products and services, and information regarding acquiring, protecting, enforcing and licensing proprietary rights (including patents, copyrights and trade secrets);

(iv) internal EXFO Group personnel and financial information, vendor names and other vendor information, purchasing and internal cost information, internal services and operational manuals, and the manner and method of conducting business by entities in the EXFO Group;

(v) marketing and development plans, price and cost data, price and fee amounts, pricing and billing policies, quoting procedures, marketing techniques and methods of obtaining business, forecasts and forecast assumptions and volumes, and future plans and potential strategies of the EXFO Group or any entity in the EXFO Group which have been or are being discussed;

(vi) contracts and their contents, client services, data provided by clients and the type, quantity and specifications of products and services purchased, leased, licensed or received by clients of the entities in the EXFO Group; and

(vii) all information which becomes known to the Executive as a result of employment, which the Executive acting reasonably, believes is confidential information or which any entity in the EXFO Group takes measures to protect.

(b) Confidential Information does not include:

(i) the general skills and experience gained during the Executive's employment or engagement which the Executive could reasonably have been expected to acquire in similar employment or engagements with other companies;

(ii) information publicly known without breach of this Agreement or similar agreements; or

(iii) information, the disclosure of which is required to be made by any law, regulation, governmental authority or court (to the extent of the requirement), provided that before disclosure is made, notice of the requirement is provided to the affected entity in the EXFO Group, and to the extent possible in the circumstances, such entity is afforded an opportunity to dispute the requirement.

"DEVELOPMENTS" means all discoveries, inventions, designs, works of authorship, improvements and ideas (whether or not patentable or copyrightable) and legally recognized proprietary rights (including, but not limited to, patents, copyrights, trademarks, topographies, know-how and trade secrets), and all records and copies of records relating to the foregoing, that:

(a) result or derive from the Executive's employment or from the Executive's knowledge or use of Confidential Information;

(b) are conceived or made by the Executive (individually or in collaboration with others) during the term of the Executive's employment by the Corporation or by another entity in the EXFO Group;

(c) result from or derive from the use or application of the resources of the Corporation or of another entity in the EXFO Group; or

(d) relate to the business operations of or actual or demonstrably anticipated research and development by the EXFO Group or an entity in the EXFO Group;

"DISABILITY" means the mental or physical state of the Executive such that the Executive has been unable as a result of illness, disease, mental or physical disability or similar cause, as determined by a legally qualified practitioner mutually acceptable to Executive and the Corporation, to fulfil the Executive's obligations under this Agreement either for

any consecutive 120-day period or for any period of 180 days (whether or not consecutive) in any consecutive 730-day period;

"EMPLOYMENT PERIOD" has the meaning attributed to such term in section 2;

"JUST CAUSE" means: (i) theft, fraud, dishonesty, or misconduct by the Executive involving the property, business or affairs of the Corporation or the carrying out of the Executive's duties; (ii) any material breach or non-observance by the Executive of any term of this Agreement that is capable of correction, after notice by the Corporation of the failure to do so and an opportunity for the Executive to correct the same within a reasonable time from the date of receipt of such notice, or (iii) any breach or threatened breach of any of sections 8, 9, 10, 11 or 12;

"PERSON" means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted;

"STOP WORK NOTICE" has the meaning set out in section 7.3;

"TERMINATION DATE" has the meaning set out in section 7.2; and

"YEAR OF EMPLOYMENT" means any 12 month period commencing on the date of commencement of the Executive's employment as set out in Schedule "A" or on any anniversary of that date.

2. EMPLOYMENT AND TERM

The Corporation will employ the Executive, and the Executive will serve the Corporation, in the office set out in Schedule "A" with effect from the date set out in Schedule "A", until the effective date that the Executive's employment is terminated in accordance with section 7 (the "Employment Period").

3. NATURE OF EMPLOYMENT

3.1. The Executive will perform the duties at the office in Addison, Texas as set out in Schedule "A".

3.2. During the Employment Period, the Executive will faithfully, honestly and diligently serve the Corporation and the EXFO Group. The Executive will (except in the case of illness or accident) devote full-time attention to the Executive's employment and will use the Executive's best efforts to promote the interests of the Corporation and of the EXFO Group. Unless otherwise specified in Schedule "A", the Executive appreciates that the Executive's duties may involve reasonable travel, commensurate with Executive's position, from the Executive's place of employment (both within and outside of the United States), and the Executive agrees to travel as reasonably required in order to fulfil the Executive's duties.

3.3. The Executive will comply with all rules, regulations and instructions of the Corporation now in force, or that may be adopted from time to time, and communicated by the Corporation to its executives generally.

4. REMUNERATION

4.1. BASIC REMUNERATION. The Corporation will pay the Executive a gross annual salary (the "Basic Salary") as set out in Schedule "A". The Basic Salary will be payable in periodic equal instalments in accordance with the practices of the Corporation applicable to its other senior executives. The Corporation will review the Executive's Basic Salary at least annually.

4.2. BENEFITS. The Executive will be entitled to participate in all benefit plans, funds or arrangements available from time to time to employees of the EXFO Group located in the United States (the "Benefits").

4.3. BONUS REMUNERATION. The Executive will be entitled to receive bonus remuneration, if any, in respect of each Year of Employment during the Employment Period, as the board of directors of the Corporation, in its sole discretion, may authorize in accordance with the terms of any management incentive compensation plan of the Corporation in effect from time to time. The terms of any management incentive compensation of the Corporation will be detailed to the Executive at the beginning of each fiscal year.

5. EXPENSES

The Corporation will, upon presentation of expense statements or receipts and any other supporting documentation as the Corporation may reasonably require, pay or reimburse the Executive in accordance with the Corporation's expense policies for all travel and out-of-pocket expenses reasonably incurred or paid by the Executive in the performance of the Executive's duties and responsibilities.

6. VACATION

The Executive will be entitled during each Year of Employment during the Employment Period to vacation time with pay as set out in Schedule "A").

Vacation will be taken by the Executive at times reasonably acceptable to the Corporation having regard to its operations. Except as provided under applicable employment legislation, the Executive shall not be entitled to carry over any unused portion of vacation to the following Year of Employment and will lose the entitlement to such unused portion.

7. TERMINATION

7.1. NOTICE. The Executive's employment may be terminated at any time:

7.1.1. by the Corporation without prior notice and without further obligations under this Agreement to the Executive for reasons of Just Cause or because of the occurrence of Disability;

7.1.2. by the Executive on giving prior written notice as set out in Schedule "A"; or

7.1.3. in any other case by the Corporation on giving prior written notice as set out in Schedule "A", provided that if, in the case of termination by the Corporation under this section 7.1.3, the Executive is entitled under applicable employment legislation to a longer period of notice than that set out in Schedule "A", the notice to be given by the Corporation under this section 7.1.3 will be that minimum period of notice that is required under such employment legislation and no more.

The Executive's employment will be automatically terminated, without further obligation on the part of the Corporation or the EXFO Group, upon the Executive's death.

7.2. EFFECTIVE DATE. The effective date on which the Executive's employment will be deemed to have been terminated under this section 7 (the "Termination Date") will be:

7.2.1. in the case of termination under section 7.1.1, the day on which the Executive is deemed, under section 14, to have received notice from the Corporation of termination;

7.2.2. in the case of termination under section 7.1.2 or 7.1.3, the last day of the minimum period referred to in the relevant section; and

7.2.3. in the case of the death of the Executive, on the date of the Executive's death.

7.3. STOP WORK NOTICE. Notwithstanding the foregoing, where the Corporation is giving or has given written notice to the Executive, pursuant to section 7.1.3 above, the Corporation will have the right, at any time prior to the end of the Employment Period, by giving notice to the Executive (a "Stop Work Notice") to require that the Executive cease to perform the Executive's duties and responsibilities and cease attending the Corporation's premises immediately upon the giving of the Stop Work Notice. The Executive will, as requested in these circumstances, resign all offices held in with entities in the EXFO Group.

If a Stop Work Notice is given, the Corporation will continue to pay the Executive to the end of the Employment Period. For that purpose, in calculating the Executive's entitlement to Basic Salary the Executive will be considered to have been actively employed by the Corporation to the end of the Employment Period, and the Basic Salary will be the actual Basic Salary on the date on which notice was given under section 7.1.3. The Executive will be entitled to Benefits only if permitted by the terms of any fund, plan or arrangement. To the extent that continued participation in Benefits is not permitted, the Corporation will pay to the Executive the amount of

contributions the Corporation would otherwise have been required to make with respect to any relevant fund, plan or arrangement to the end of the Employment Period.

Subject to this paragraph, the Executive will not be required to mitigate the Executive's loss in these circumstances, or to account to the Corporation for any amount earned that might otherwise be considered to mitigate the liability of the Corporation to make the payments described above. If the Executive accepts alternative employment during the notice period, all obligations of the Corporation in respect of the continuation of benefits or payments of premiums in lieu will cease with effect as to the date of commencement of the alternative employment. The Executive will advise the Corporation forthwith of the acceptance of any employment relevant to this paragraph.

7.4. NO OTHER ENTITLEMENT. Except as provided above in this section 7, where the Executive's employment has been terminated by the Executive or terminated or deemed to have been terminated by the Corporation for any reason, the Executive will not be entitled, except to the extent required under any mandatory employment standard under applicable employment legislation, to receive any bonus, any payment as termination pay, severance pay, pay in lieu of notice, or as damages. Except as to any entitlement as provided above, the Executive hereby waives any claims the Executive may have against the Corporation for or in respect of termination pay, severance pay, or on account of loss of office or employment or notice in lieu thereof or damages in lieu thereof (other than rights to accrued and unpaid Basic Salary and to reimbursement for expenses pursuant to section 5). Payments to the Executive upon termination in accordance with this Agreement by the Corporation will be deemed to include and to satisfy entitlement to termination pay, vacation pay and severance pay pursuant to applicable employment legislation to the extent of those payments. Receipt by the Executive of payments in accordance with this Agreement will be deemed to constitute a full and final release and discharge by the Executive of the Corporation, the entities in the EXFO Group and all of their directors, officers and agents (for each of whom and for this purpose the Corporation contracts as a trustee) from all claims in respect of the Executive's hiring by, employment with and termination of employment with the Corporation.

8. NO CONFLICTING OBLIGATIONS

8.1. The Executive warrants to the Corporation that:

8.1.1. the performance of the Executive's duties as an employee of the Corporation will not breach any agreement or other obligation to keep confidential the proprietary information of any third party; and

8.1.2. the Executive is not bound by any agreement with or obligation to any third party that conflicts with the Executive's obligations as an employee of the Corporation or that may affect any interest of an entity in the EXFO Group in Developments.

8.2. The Executive will not, in the performance of the Executive's duties as an employee of the Corporation:

8.2.1. improperly bring to the Corporation or use any trade secrets, confidential information or other proprietary information of any third party; or

8.2.2. knowingly infringe the intellectual property rights of any third party.

9. CONFIDENTIAL INFORMATION

9.1. PROTECTION OF CONFIDENTIAL INFORMATION. All Confidential Information, whether it is developed by the Executive during the Employment Period or by others employed or engaged by or associated with any entity in the EXFO Group, is the exclusive and confidential property of such entity in the EXFO Group or its clients, as the case may be, and will at all times be regarded and protected as such, as provided in this Agreement.

9.2. COVENANTS RESPECTING CONFIDENTIAL INFORMATION. As a consequence of the acquisition of Confidential Information, the Executive will occupy a position of trust and confidence with respect to the affairs and business of each entity in the EXFO Group and their clients. In view of the foregoing, it is reasonable and necessary for the Executive to make the following covenants regarding the Executive's conduct during and subsequent to the Executive's employment by the Corporation:

9.2.1. NON-DISCLOSURE. At all times during and subsequent to the Executive's employment with the Corporation, the Executive will not disclose Confidential Information to any person or entity (other than as necessary in carrying out the Executive's duties on behalf of the Corporation) without first obtaining the consent of the affected entity in the EXFO Group, and the Executive will take all reasonable precautions to prevent inadvertent disclosure of any Confidential Information. This prohibition includes, but is not limited to, disclosing or confirming the fact that any similarity exists between the Confidential Information and any other information.

9.2.2. USING, COPYING, ETC. At all times during and subsequent to the Executive's employment with the Corporation, the Executive will not use, copy, transfer or destroy any Confidential Information (other than as necessary in carrying out the Executive's duties on behalf of the Corporation) without first obtaining the consent of the affected entity in the EXFO Group, and the Executive will take all reasonable precautions to prevent inadvertent use, copying, transfer or destruction of any Confidential Information. This prohibition includes, but is not limited to, licensing or otherwise exploiting, directly or indirectly, any products or services which embody or are derived from Confidential Information or exercising judgment or performing analysis based upon knowledge of Confidential Information.

9.2.3. RETURN OF CONFIDENTIAL INFORMATION. Within five days after the termination of the Executive's employment by the Corporation on any

basis, or of receipt by the Executive of a written request, the Executive will promptly deliver to the applicable entity in the EXFO Group all property of or belonging to or administered by such entity, including without limitation, all Confidential Information that is embodied in any physical or ephemeral form, whether in hard copy or on magnetic media, and that is within the Executive's possession or under the Executive's control.

9.3. OBLIGATIONS CONTINUE. The Executive's obligations under this section 9 are to remain in effect perpetually and will exist and continue in full force and effect notwithstanding any breach or repudiation or any alleged breach or repudiation of this Agreement by the Corporation.

10. COMPETITION AND SOLICITATION

10.1. NON-COMPETITION. The Executive acknowledges that employment by the Corporation will give the Executive access to Confidential Information, and that the Executive's knowledge of Confidential Information will enable the Executive to put the Corporation at a significant competitive disadvantage if the Executive is employed or engaged by or becomes involved in a Competitive Business. Accordingly, during the Employment Period and for the relevant period of time after the Termination Date as set out in Schedule "A", the Executive will not, directly or indirectly, individually or in partnership or in conjunction with any Person:

10.1.1. be engaged, directly or indirectly, in any manner whatsoever, including, without limitation, either individually or in partnership, jointly or in conjunction with any other Person, or as an employee, consultant, adviser, principal, agent, member or proprietor in any Competitive Business; or

10.1.2. advise, invest in, lend money to, guarantee the debts or obligations of, or otherwise have any other financial or other interest (including an interest by way of royalty or other compensation arrangements) in or in respect of any Person which carries on a Competitive Business.

The restriction in section 10.1.2 above will not prohibit the Executive from holding not more than five percent of the issued shares of a public company listed on any recognized stock exchange or traded on any BONA FIDE "over the counter" market anywhere in the world.

For greater certainty, the Executive's obligations under this section 10.1 are in addition to the obligations respecting disclosure and use of Confidential Information in section 9.

10.2. NO SOLICITATION OF CLIENTS AND SUPPLIERS. The Executive acknowledges the importance to the business carried on by the EXFO Group of the client and supplier relationships developed by it and the unique opportunity that the Executive's employment and the Executive's access to the Confidential Information offers to interfere with these relationships. Accordingly, during the Employment Period and for the relevant period of time after the Termination Date as set out in Schedule "A", the Executive will not, directly or indirectly, contact or solicit any

person who the Executive knows to be a prospective, current or former client or supplier of any entity in the EXFO Group for the purpose of (i) selling to the client any products or services that are the same as or substantially similar to, or in any way competitive with, the products or services sold by entities in the EXFO Group; or (ii) buying from such supplier any products or services that are used or intended for use in any products or services that are the same as or substantially similar to, or in any way competitive with, the products or services sold by entities in the EXFO Group, and in each case during the Executive's employment or at the end thereof, as the case may be.

10.3. NO SOLICITATION OF EMPLOYEES. The Executive acknowledges the importance to the business carried on by the entities in the EXFO Group of the human resources engaged and developed by it and the unique access the Executive's employment offers to interfere with these resources. Accordingly, during the Employment Period and for the relevant period of time after the Termination Date as set out in Schedule "A", the Executive will not induce or solicit, attempt to induce or solicit or assist any third party in inducing or soliciting any employee or consultant of any entity in the EXFO Group, to leave such entity or to accept employment or engagement elsewhere.

10.4. INDEPENDENT COVENANTS. Each of sections 10.1, 10.2 and 10.3 will be construed as constituting obligations independent of any other obligations of the Executive pursuant to this Agreement. The existence of any claim or cause of action the Executive may have or assert against the Corporation, whether based on this Agreement or otherwise, will not constitute a defence to the enforcement by the Corporation of any of the covenants and agreements in such foregoing sections.

11. INTELLECTUAL PROPERTY

11.1. OWNERSHIP. All Developments will be the exclusive property of the Corporation or of the relevant entity in the EXFO Group and the Corporation, or such relevant entity, will have sole discretion to deal with Developments. For greater certainty, all work done during the Employment Period by the Executive for the Corporation or another entity in the EXFO Group is a work for hire of which the Corporation, or the other relevant entity in the EXFO Group, as the case may be, is the first author for copyright purposes and in respect of which all copyright will vest in the Corporation or the relevant entity in the EXFO Group, as the case may be.

11.2. RECORDS. The Executive will keep complete, accurate and authentic notes, reference materials, data and records of all Developments in the manner and form requested by the Corporation.

All these materials will be Confidential Information upon their creation.

11.3. MORAL RIGHTS. The Executive hereby irrevocably waives all moral or other rights arising under copyright protection legislation in any applicable jurisdiction, or at common law, that the Executive may have now or in the future with respect to the Developments, including, without limitation, any rights the Executive may have to have the Executive's name associated with the Developments or to have the Executive's name not associated with the Developments,

any rights the Executive may have to prevent the alteration, translation or destruction of the Developments, and any rights the Executive may have to control the use of the Developments in association with any product, service, cause or institution. The Executive agrees that this waiver may be invoked by the Corporation, and by any of its authorized agents or assignees, in respect of any or all of the Developments.

11.4. FURTHER ASSURANCES. The Executive will do all further things that may be reasonably necessary or desirable in order to give full effect to the foregoing. If the Executive's co-operation is required in order for any entity in the EXFO Group to obtain or enforce legal protection of the Developments following the termination of the Executive's employment, the Executive will provide that co-operation so long as the Corporation pays to the Executive reasonable compensation for the Executive's time at a rate to be agreed, provided that the rate will not be less than the last Base Salary or compensation rate paid to the Executive by the Corporation during the Executive's employment.

12. WARRANTIES, COVENANTS AND REMEDIES

12.1. The obligations of the Executive as set forth in sections 8, 9, 10 and 11 of this Agreement will be deemed to have commenced as of the date on which the Executive was first employed by an entity in the EXFO Group. The Executive warrants that the Executive has not, to date, breached any of the obligations set forth in any of those sections. Any breach or threatened breach of those sections by the Executive will constitute Just Cause for immediate termination of the Executive's employment or engagement by the Corporation.

12.2. The Executive understands that the entities in the EXFO Group have expended significant financial resources in developing their products and the Confidential Information. Accordingly, a breach or threatened breach by the Executive of any of sections 8, 9, 10, 11 or 12.1, could result in unfair competition with entities in the EXFO Group and could result in the Corporation, the other entities in the EXFO Group and their respective shareholders suffering irreparable harm that is not capable of being calculated and that cannot be fully or adequately compensated by the recovery of damages alone. Accordingly, the Executive agrees that the Corporation and/or the relevant entity in the EXFO Group will be entitled to interim and permanent injunctive relief, specific performance and other equitable remedies, in addition to any other relief to which the Corporation or such entity may become entitled.

12.3. The Executive's obligations under each of sections 8, 9, 10, 11, 12.1 and 12.2 are to remain in effect in accordance with each of their terms and will exist and continue in full force and effect despite any breach or repudiation, or alleged breach or repudiation, of this Agreement or the Executive's employment (including, without limitation, the Executive's wrongful dismissal) by the Corporation.

13. CO-OPERATION BY EXECUTIVE

The Executive will co-operate in all respects with the Corporation if a question arises as to whether the Executive has a Disability. Without limitation, the Executive will authorize the Executive's medical doctor or other health care specialist to discuss the condition of

the Executive with the Corporation and will as reasonably requested by the Corporation submit to examination by a medical doctor or other health care specialist selected by the Corporation.

14. NOTICES

Any notice or other communication required or permitted to be given hereunder must be in writing, and must be given by facsimile or other means of electronic communication or by hand-delivery as hereinafter provided, except that any notice of termination by the Corporation under section 7 above must be hand-delivered or given by registered mail. Any notice of other communication, if mailed by registered mail, will be deemed to have been received on the day that mail is delivered by the post office, or if sent by facsimile, will be deemed to have been received on the Business Day following the sending, or if delivered by hand to the Executive will be deemed to have been received at the time it is delivered to the Executive or, if delivered to the Executive or the Corporation at the applicable address set out in Schedule "A", when it is delivered to the Executive or the Corporation at the applicable address set out in Schedule "A", when it is delivered either to the individual set out in Schedule "A" or to an individual at that address having apparent authority to accept deliveries on behalf of the addressee. Notice of change of address will also be governed by this section. Notices and other communications must be addressed as set out in Schedule "A".

15. HEADINGS

The inclusion of headings in this Agreement is for convenience of reference only and is not to affect construction or interpretation.

16. INVALIDITY OF PROVISIONS

Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any provision by a court of competent jurisdiction will not affect the validity or enforceability of any other provision.

17. ENTIRE AGREEMENT

This Agreement and the attached Schedule "A" constitute the entire agreement between the parties pertaining to the subject matter of this Agreement. This Agreement supersedes and replaces all prior agreements, if any, written or oral, with respect to the Executive's employment by the Corporation and any rights which the Executive may have by reason of any prior agreement or by reason of the Executive's prior employment, if any, by another entity in the EXFO Group. There are no warranties, representations or agreements between the parties in connection with the subject matter of this Agreement except as specifically set forth or referred to in this Agreement. No reliance is placed on any representation, opinion, advice or assertion of fact made by the Corporation, any other entity in the EXFO Group or their respective directors, officers and agents (for each of whom and for this purpose the Corporation contracts as trustee) to the Executive, except to the extent that the same has been reduced in writing and included as a term of this Agreement. Accordingly, there will be no liability, either in

tort or in contract, assessed in relation to any representation, opinion, advice or assertion of fact, except to the extent aforesaid.

18. WAIVER, AMENDMENT

Except as expressly provided in this Agreement, no amendment or waiver of this Agreement will be binding unless executed in writing by the party to be bound. No waiver of any provision of this Agreement will constitute a waiver of any other provision nor will any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided.

19. GOVERNING LAW AND ATTORNMENT

This Agreement will be governed exclusively by and construed in accordance with the laws of the State of Texas without regard to principles of conflict of laws.

20. COUNTERPARTS

This Agreement may be signed in counterparts. Each counterpart will constitute an original document and all counterparts, taken together, will constitute one and the same instrument. Executed counterparts may be delivered by telecopier or other electronic delivery.

21. ACKNOWLEDGEMENT

The Executive acknowledges that:

(i) the Executive has received a copy of this Agreement;

(ii) the Executive has had sufficient time to review and consider this Agreement thoroughly;

(iii) the Executive has read and understands the terms of this Agreement and the Executive's obligations under this Agreement;

(iv) the restrictions placed upon the Executive by this Agreement are reasonably necessary to protect the proprietary interests in the Confidential Information and the Developments of the entities in the EXFO Group, and will not preclude the Executive from being gainfully employed in a suitable capacity following termination of the Executive's employment by the Corporation, given the Executive's general knowledge and experience;

(v) the Executive has been given an opportunity to obtain independent legal advice, or other advice as the Executive may desire, concerning the interpretation and effect of this Agreement, and by signing this Agreement the Executive has either obtained advice or voluntarily waived the Executive's opportunity to receive same; and

(vi) the Agreement is entered into voluntarily by the Executive.

IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT.

EXFO GNUBI PRODUCTS GROUP INC.

Date:    OCTOBER 4, 2002           By:  /s/ GERMAIN LAMONDE
         ---------------                ---------------------------------------
                                        Germain  Lamonde,  Chairman  of the
                                        Board

I agree to my employment on these terms

/s/ JAMES STEVENS
---------------------------------------
     Signature of Executive

SCHEDULE "A"

EXECUTIVE EMPLOYMENT AGREEMENT

This schedule is attached to and forms an essential part of the executive employment agreement between EXFO Gnubi Products Group Inc. (the "Corporation") and James R. Stevens (the "Executive").

1. In accordance with section 2 of the Agreement, the Executive's employment under the Agreement will commence on October 4, 2002.

2. In accordance with section 2 of the Agreement, the office to be held by the Executive in the Corporation will be Vice President OEM Protocol and Dallas Operations. The Corporation may, at any time, assign the Executive to perform other functions that are consistent with the Executive's skill and experience.

3. In accordance with section 3.1 of the Agreement, the undersigned has agreed to perform the duties of the office of Vice President OEM Protocol and Dallas Operations.

4. In accordance with section 4.1 of the Agreement, the Executive will be entitled to an annual salary of $175,000 (before deduction for income taxes and other required deductions, but excluding the Benefits paid by the Corporation as provided in section 4.2 of the Agreement). The first annual remuneration revision shall occur on about August 31, 2003 and at that time a variable portion shall be included.

5. In accordance with section 6 of the Agreement, the Executive will be entitled to 3 weeks of paid vacation annually.

6. The Executive shall be eligible, in accordance with EXFO's policies, to be considered to participate in the EXFO Stock Option Plan to receive stock options and purchase shares pursuant to the Stock option Plan as the same is in effect at any relevant time.

7. In accordance with section 7.1.2 of the Agreement, the Executive may terminate the Executive's employment on giving to the Corporation at least 6 month's prior written notice. However, the Executive will attempt to provide as much (additional) prior notice as is possible and will, in all cases, assist fully as reasonably requested by the Corporation in effecting an orderly transition to the Executive's successor.

8. In accordance with section 7.1.3 of the Agreement, the Corporation may terminate the Executive's employment on giving to the Executive at least 6 months' prior written notice.

9. In accordance with section 10.1, the "Non-Competition" provisions will be valid until 2 years following the Termination Date.

10. In accordance with section 10.2, the "No Solicitation of Clients and Suppliers" provisions will be valid until 2 years following the Termination Date.

11. In accordance with section 10.3, the "No Solicitation of Employees" provisions will be valid until 2 years following the Termination Date.

12. In accordance with section 14 of the Agreement, any notice or communication to be given or made must be addressed as follows:

if to the Executive:

if to the Corporation:

c/o EXFO
465 Godin Avenue
Vanier, Quebec, Canada G1M 3G7

Attention: Vice President Human Resources Facsimile: 418-683-2170

May 28, 2003

Mr. John Holloran
EXFO Gnubi Products Group Inc.

Dear John:

This is to confirm our discussion on May 28, 2003 where we agreed to the terms of your departure from the EXFO organization. It is understood that adequate integration of our Protocol activity shall be completed prior to your departure.

o Your last day of employment will be Friday, December 26, 2003.

o Either party may decide on an earlier termination date by giving thirty days prior written notice but in no case may termination occur prior to October 31, 2003.

o Your salary will continue to include the premium for the interim General Manager role. However, such premium shall be considered as a staying bonus starting with the date of this letter.

o You will continue to receive your salary (including the staying bonus) for a period of four weeks after your termination date, unless you decide to leave earlier than December 26, 2003.

I greatly appreciate your contribution to EXFO and your professionalism and I am confident that our continued collaboration will be rewarding for both of us until your departure. Rest assured that should additional opportunities present themselves, I would not hesitate to request that you continue your contributions to EXFO. Should you require any references, you can be assured of my utmost support.

If you are in agreement that this represents the terms of our discussion, kindly sign below where indicated and return to my attention.

Best regards,

/s/ GERMAIN LAMONDE

Germain Lamonde
President and
Chief Executive Officer

Agreed to on this _______ day of June, 2003.

[GRAPHIC OMITTED]
[LOGO - EXFO]

EMPLOYMENT AGREEMENT

This Employment Agreement (the "Agreement") dated as of September 1, 2002, is entered into by and between EXFO Electro-Optical Engineering Inc., a corporation having its principal place of business at 465 Godin Avenue, Vanier, Quebec, G1M 3G7, Canada (the "Corporation") and Pierre Plamondon (the "Employee").

In consideration of this Agreement and the continued employment of the Employee by the Corporation, the parties agree as follows:

1. EMPLOYMENT

The Corporation hereby agrees to continue to employ Employee, on a full-time basis commencing on or about September 1, 2002 to continue acting as Vice-President, Finance and Chief Financial Officer of the Corporation and to perform such acts and duties and furnish such services to the Corporation in connection with and related to that position as is customary for persons with similar positions in like companies. Employee hereby accepts said employment. Employee shall use his best and most diligent efforts to promote the interests of the Corporation; shall discharge his duties in a highly competent manner; and shall devote his full business time and his best business judgement, skill and knowledge to the performance of his duties and responsibilities hereunder. This Agreement shall not be interpreted to prohibit Employee from making passive personal investments or conducting private business affairs if such activities do not interfere with the services required under this Agreement. Employee shall continue to report to the President and Chief Executive Officer of the Corporation.

2. COMPENSATION AND BENEFITS

2.1 SALARY

During the term of this Agreement, the Corporation shall pay Employee the remuneration indicated in Schedule A.

2.2 DISCRETIONARY BONUS

During the term of this Agreement, the Employee may participate in such bonus plan or plans of the Corporation as the Board of Directors or its Human Resources Committee may approve for the Employee in addition to the bonuses set forth in Schedule A hereof. Nothing contained in this Section 2.2 shall be construed to require the Board of Directors to approve a bonus plan or in any way grant to Employee the right to receive bonuses not otherwise approved.

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2.3 BENEFITS

During the term of this Agreement, the Employee shall receive such benefits as customarily provided to other officers and employees of the Corporation. Details of such benefits as of the date hereof are set forth in Schedule B of this Agreement.

2.4 VACATION

Employee may take paid vacation during each year as set forth in Schedule A at such times as shall be consistent with the Corporation's vacation policies and (in the Corporation's judgement) with the Corporation's vacation schedule for officers and other employees.

2.5 EXPENSES

Pursuant to the Corporation's customary policies in force at the time of payment, Employee shall be promptly reimbursed, against presentation of vouchers or receipts therefor, for all reasonable expenses properly incurred by him on the Corporation's behalf in the performance of his duties hereunder.

3. TERMINATION

3.1 DISABILITY

If during the term of this Agreement, Employee becomes ill, disabled or otherwise incapacitated so as to be unable to perform his usual duties (a) for a period in excess of one hundred and eighty (180) consecutive days, or (b) for more than one hundred eighty (180) days in any consecutive twelve
(12) month period and this incapacity has not been remedied by the end of the twelfth (12th) month of such consecutive twelve
(12) month period, then the Corporation shall have the right to terminate this Agreement, subject only to the terms of this Agreement and applicable laws, on thirty (30) day's notice to Employee. Termination pursuant to this Section 3.1 shall not affect any rights Employee may otherwise have under any disability insurance policies in effect at the time of such termination.

3.2 DISCHARGE FOR CAUSE

The Corporation may discharge Employee and terminate his employment under this Agreement for cause without further liability to the Corporation. As used in this Section 3.2, "cause" shall mean any or all of the following;

(a) gross or wilful misconduct of Employee during the course of his employment;

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(b) conviction of any criminal offence involving dishonesty, breach of trust or moral turpitude during the term of this Agreement; or

(c) Employee's breach of any of the material terms of this Agreement.

3.3 TERMINATION WITHOUT CAUSE

Upon thirty (30) days prior written notice, the Corporation may terminate this Agreement without cause by a majority vote of the Board of Directors of the Corporation except that the Employee, if a Director, shall not be entitled to vote thereon. The Corporation shall incur no liability in this regard except as specifically set forth in Schedule A and that it shall continue to pay Employee the then current base salary as set forth in Schedule A for a twelve (12) month period after termination if such termination shall occur prior to the events mentioned in Section 3.4, otherwise the terms of
Section 3.4 shall apply.

3.4 TERMINATION FOLLOWING MERGER OR ACQUISITION

If the Corporation merges or consolidates with another corporation, if substantially all of the assets of the Corporation are sold, or if a majority of the outstanding stock of the Corporation is acquired by another person and Employee's employment is subsequently terminated by the Corporation or surviving entity other than for cause as described in 3.2, Employee shall be entitled to severance benefits as described below based on length of service with the Corporation:

LENGTH OF SERVICE SEVERANCE BENEFITS

0 to5 years 12 months' remuneration plus health benefits; more than 5 years 18 months' remuneration plus health benefits.

In addition to the foregoing, any outstanding stock options (including substituted stock options of the acquiring or surviving corporation in such merger or acquisition) which have not vested in accordance with their terms will become fully vested and the Employee may choose to exercise such stock options at the time of such termination, otherwise these stock options shall be automatically terminated immediately following the termination of Employee's employment. For purposes of this Section 3.4, Employee shall be entitled to treat a (i) material demotion in title or function; (ii) a decrease in salary (taking into account both base salary and variable remuneration); (iii) a net decrease in the benefit package; or (iv) a change of location as termination under this Section 3.4, but only if Employee expressly so notifies the Corporation and terminates his employment hereunder within thirty (30) days of such demotion or relocation. If Employee is offered a substantially similar position with the surviving entity on the same or better conditions, Employee's refusal to

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accept such position shall not be treated as subject to this
Section 3.4, but rather shall be treated as a voluntary termination by Employee under Section 3.5.

3.5 VOLUNTARY TERMINATION BY EMPLOYEE

In the event of voluntary termination by Employee, Employee shall be entitled only to those amounts that have accrued to the date of termination in accordance with the terms hereof or are expressly payable under the terms of the Corporation's applicable benefit plans or are required by applicable law. The Corporation may, in its sole and absolute discretion, confer such other benefits or payments as it determines, but Employee shall have no entitlement thereto.

4. MISCELLANEOUS

4.1 INSURANCE

The Corporation hereby represents that it is presently the holder of directors and officers insurance in an amount and having a coverage that is recommended by its legal advisors and insurance broker as adequate taking into account the status of the Corporation, its size and the nature of its activities. The Corporation undertakes to ensure that such insurance shall remain in force throughout the term of this Agreement and in the event such insurance is cancelled, the Corporation shall immediately advise the Employee in writing.

4.2 ADDITIONAL AGREEMENTS

Upon execution of this Agreement, the Employee shall execute and deliver to the Corporation, unless previously delivered, an Exclusivity, Confidentiality, Assignment of Work Product, Non-Competition and Non-Solicitation Agreement, a copy of which is joined hereto as Annexe C.

4.3 NOTICES

Any notice or communication given by any party hereto to the other party shall be in writing and personally delivered or mailed by certified mail, return receipt requested, postage prepaid, to the addresses provided above. All notices shall be deemed given when actually received. Any person entitled to receive notice (or a copy thereof) may designate in writing, by notice to the others, such other address to which notices to such person shall thereafter be sent.

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4.4 ENTIRE AGREEMENT

This Agreement contains the entire understanding of the parties in respect of its subject matter and supersedes all prior agreements and understandings between the parties with respect to such subject matter, provided, however that nothing in this Agreement shall affect the Employee's obligations under the Exclusivity, Confidentiality, Assignment Of Work Product, Non-Competition And Non-Solicitation Agreement signed by the Employee.

4.5 AMENDMENT, WAIVER

This Agreement may not be amended, supplemented, cancelled or discharged, except by written instrument executed by the party affected thereby. No failure to exercise, and no delay in exercising, any right, power or privilege hereunder shall operate as a waiver thereof. No waiver of any breach of any provision of this Agreement shall be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision.

4.6 BINDING EFFECT, ASSIGNMENT

Employee's rights or obligations under this Agreement may not be assigned by Employee. The rights and obligations set forth in this Agreement shall bind and inure to the benefit of the Corporation and its successors and assigns. The Corporation 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 Corporation to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it as if no such event had taken place. As used in this Agreement, "Corporation" shall mean the Corporation as herein before defined any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

4.7 HEADINGS

The headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

4.8 GOVERNING LAW, INTERPRETATION

This Agreement shall be construed in accordance with and governed for all purposes by the laws applicable in the province of Quebec. Service of process in any dispute shall be effective (a) upon the Corporation, if service is made on any officer of the Corporation other than the Employee; (b) upon the Employee, if served at Employee's residence last known to the Corporation with an information copy to the

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Employee at any other residence, or care of a subsequent employer, of which the Corporation may be aware.

4.9 FURTHER ASSURANCES

Each of the parties agrees to execute, acknowledge, deliver and perform, or cause to be executed, acknowledged, delivered and performed at any time, or from time to time, as the case may be, all such further acts, deeds, assignments, transfers, conveyances, powers of attorney and assurances as may be necessary or proper to carry out the provisions or intent of this Agreement.

4.10 LANGUAGE

This Agreement has been written in English at the express request of the parties. Cette entente a ete redigee en anglais a demande expresse des parties.

4.11 SEVERABILITY

If any one or more of the terms, provisions, covenants or restrictions of this Agreement shall be determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement

EXFO ELECTRO-OPTICAL
ENGINEERING INC.

BY: /s/ GERMAIN LAMONDE                /s/ PIERRE PLAMONDON
    -------------------                --------------------
        GERMAIN LAMONDE                    PIERRE PLAMONDON

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1. REMUNERATION (in Canadian dollars)

From September 1, 2002 to August 31, 2003:

(i) Base salary of $175,000 per annum.

(ii) Variable remuneration as follows:

o An amount equivalent to 30% of base annual salary ($52,500) upon:

(a) attainment of 100% of the Health Indicators established by the Board of Directors of the Corporation for that financial year by the Corporation and its subsidiaries in accordance with the following proportions:

o EXFO Electro-Optical Engineering Inc. - Quebec Operations: 59%

o EXFO Burleigh Products Group Inc. - Rochester Operations: 15%

o EXFO Protocol Inc. - Montreal Operations: 15.5%

o EXFO Photonic Solutions Inc. - Toronto Operations: 10.5%; and

(b) attainment of 100% of the following personal objectives in accordance with the indicated proportions:

o upon evaluation by Employee's superior that, during the financial year ending on August 31, 2003, that Employee attained the objectives within his responsibility set forth in the document attached hereto as Attachment B for the year ending August 31, 2003 - 50%

o maintenance of high standards of integrity, compliance and ethics in financial reporting by the Corporation as evaluated by the Audit Committee of the Board of Directors: 30%

o generation of US$8 million in cash from operations (assuming no acquisitions other than Gnubi), excluding impact of tax and R & D credits, calculated proportionately to attainment given that 0 attainment = US$0 cash from operations - 30%

o attainment of US$0.05 cash earnings per share as evidenced by the consolidated annual financial statements for the year ending August 31, 2003 (assuming no acquisitions other than Gnubi), calculated

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proportionately to attainment given
that 0 attainment = US$0.00 cash
earnings per share - 15%.

In the event the Health Indicators for the year in question are not attained or are surpassed, the amount payable shall be proportional to attainment of the Health Indicators (0% to 150%) and shall be calculated using the percentage of the attainment of each of the Health Indicators within the framework of the above proportions for each operational unit.

In the event the personal objectives are not fully attained or are surpassed, the amount payable shall be proportional to attainment thereof (0% to 125%) and shall be calculated using the percentage of the attainment of each of the personal objectives within the framework of the above proportions for each personal objective.

METHOD OF CALCULATION: $52,500 X % HEALTH INDICATOR X
% PERSONAL OBJECTIVES

The Health Indicator portion of the variable remuneration shall be paid twice yearly, after the end of the Corporation's second quarter and after the end of the financial year.

In the event the Employee's employment is terminated by the Corporation with cause or the Employee voluntarily terminates his employment, the Health Indicator portion of the variable remuneration shall not be payable for the half of the financial year during which the employment terminated for such reasons and the personal objectives portion shall be entirely forfeited.

(iii) Annual reviews of remuneration shall occur on or about every September 1, commencing with September 1, 2003.

2. VACATION

The Employee shall have 4 weeks of paid vacation annually.

3. VARIOUS

The Corporation shall pay Employee's annual chartered accountant membership fees.

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The description below is a summary of the Corporation's present benefit package. It is expected that this package will evolve in the future.

1. The Corporation offers to management a long-term disability plan.

2. Management benefits from the following collective insurance coverage paid by the Corporation in the following proportions: 60% during first 2 years of employment, 80% during third and fourth years of employment and 100% thereafter:

o health insurance,

o dental insurance,

o life insurance,

o accidental death and dismemberment insurance.

Details of each type of coverage are contained in booklets issued by the insurer. Long-term disability insurance is obligatory and is paid for entirely by the Employee.