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                              EMPLOYMENT AGREEMENT



This Employment Agreement (the "Agreement"), dated as of May 29, 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 Germain Lamonde, an individual with an

address at 4310, Cure-Drolet, Cap Rouge (Quebec) G1Y 3H2 (the "Employee").



                               TERMS OF AGREEMENT



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 to continue to act as President and Chief Executive 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, as

     the Corporation's Board of Directors 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 from 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 Board of Directors 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.



     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. Nothing contained in this





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            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, as applicable. Details of such benefits as of the

            date hereof are set forth in Schedule B of this Agreement.



     2.4    VACATION



            Employee may take the number of weeks of paid vacation during each

            year that is indicated 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 twenty (180)

            consecutive days and this incapacity has not been remedied within

            one (1) year of the first day of disability, or (b) for more than

            two hundred and seventy (270) days in any consecutive eighteen (18)

            month period and this incapacity has not been remedied within

            eighteen (18) months of the first day of disability, 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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