EMPLOYMENT AGREEMENT





This Employment Agreement (the "Agreement") dated as of May 30, 2000, 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 Mario Larose, an individual with an address at 20

Anse-a-Beaufils, Laval, Quebec, H7Y 1V4 (the "Employee").







                               TERMS OF AGREEMENT

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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 employ Employee, on a full-time basis

         commencing on or about June 12, 2000, to act as Vice President,

         Marketing 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, as the Corporation's President and Chief Executive

         Officer shall from time to time reasonably direct. 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 form making

         passive personal investments or conducting private business affairs if

         such activities do not materially interfere with the services required

         under this Agreement. Employee shall 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. The

                  Employee's remuneration may be adjusted in accordance with the

                  Corporation's policies and procedures.



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         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, acting through its Human Resources

                  Committee, may approve for the Employee. 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.



         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

                  authorised 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 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.



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         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 by a majority vote of the Board

                  of Directors of the Corporation except that the Employee, if a

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