EXHIBIT 4.1



                 AGREEMENT OF MERGER AND PLAN OF REORGANIZATION

                          DATED AS OF NOVEMBER 4, 2000,

                                  BY AND AMONG

                     EXFO ELECTRO-OPTICAL ENGINEERING INC.,

                                 EXFO SUB, INC.,

                           BURLEIGH INSTRUMENTS, INC.,

                             ROBERT G. KLIMASEWSKI,

                               WILLIAM G. MAY, JR,

                                DAVID J. FARRELL

                                       AND

                               WILLIAM S. GORNALL


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                                TABLE OF CONTENTS

                                                                            PAGE

ARTICLE 1 THE MERGER ..........................................................2

         1.1      The Merger...................................................2

         1.2      Effect of Merger.............................................2

         1.3      Effective Time...............................................2

         1.4      Directors and Officers.......................................3

         1.5      Articles of Incorporation, Bylaws............................3

         1.6      Taking of Necessary Action, Further Action...................3

         1.7      The Closing..................................................3

         1.8      Merger Consideration, Conversion of Securities...............4

         1.9      Escrow Arrangements..........................................6

         1.10     Stock Purchase...............................................6

         1.11     Redemption of IDA Bonds and Purchase of Fishers' Assets......6

         1.12     Transfer Taxes...............................................7

         1.13     Payment of Expenses..........................................7

ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS...7

         2.1      Organization and Authority...................................7

         2.2      Subsidiaries.................................................8

         2.3      Capitalization...............................................9

         2.4      No Breach....................................................9

         2.5      Share Ownership.............................................10

         2.6      Consents and Approvals......................................10

         2.7      Litigation; Proceedings.....................................11

         2.8      Financial Statements........................................11

         2.9      No Undisclosed Liabilities..................................12

         2.10     Absence of Certain Changes or Events........................13

         2.11     Compliance with Laws........................................13

         2.12     Taxes.......................................................13

         2.13     Intellectual Property.......................................15

         2.14     Title to and Condition of Properties........................16

                                       -i-
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                                TABLE OF CONTENTS
                                   (continued)

                                                                            PAGE

         2.15     Contracts and Agreements....................................16

         2.16     Insurance...................................................18

         2.17     Employees...................................................18

         2.18     Employee Benefits...........................................19

         2.19     Securities Matters..........................................21

         2.20     Facilities..................................................23

         2.21     Environmental Matters.......................................23

         2.22     Transaction with the Shareholders...........................26

         2.23     Capital Expenditures........................................26

         2.24     Use of Name.................................................26

         2.25     Brokers, Finders or Financial Advisors......................26

         2.26     Exclusivity of Representations..............................26

         2.27     Full Disclosure.............................................27

ARTICLE 3 REPRESENTATIONS AND WARRANTY OF THE BUYER AND BUYER SUB.............27

         3.1      Organization and Qualifications.............................27

         3.2      Capitalization..............................................28

         3.3      Authorization...............................................28

         3.4      Non-contravention...........................................29

         3.5      Consents and Approvals......................................29

         3.6      Litigation; Proceedings.....................................30

         3.7      Authorization for Buyer Shares..............................30

         3.8      Canadian Documents..........................................30

         3.9      No Undisclosed Liabilities..................................31

         3.10     Absence of Certain Changes or Events........................31

         3.11     Investment Intent...........................................31

         3.12     Experience of the Buyer.....................................31

         3.13     Brokers, Finders or Financial Advisors......................31

         3.14     Full Disclosure.............................................32

ARTICLE 4 COVENANTS OF THE PARTIES............................................32

                                      -ii-
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                                TABLE OF CONTENTS
                                   (continued)

                                                                            PAGE

         4.1      Conduct of Business by the Company..........................32

         4.2      Public Announcements........................................34

         4.3      Non-Solicitation; Non-Negotiation...........................35

         4.4      Commercially Reasonable Efforts.............................35

         4.5      Hart-Scott-Rodino Act and Foreign Regulatory Requirements...35

         4.6      Covenants of Parties........................................36

         4.7      Modification of Disclosure Schedules........................37

         4.8      Contact with Customers and Suppliers........................37

         4.9      Secondary Offering..........................................37

         4.10     Other Actions...............................................40

         4.11     Tax Return Filing...........................................40

         4.12     Assistance and Cooperation..................................41

         4.13     Subchapter S relief.........................................42

         4.14     Tax Covenants...............................................42

ARTICLE 5 CONDITIONS TO CLOSING...............................................42

         5.1      Conditions to Each Party's Obligations......................42

         5.2      Conditions to Obligations of the Buyer......................43

         5.3      Conditions to Obligations of the Shareholders and
                  the Company ................................................46

ARTICLE 6 OTHER AGREEMENTS....................................................48

         6.1      Confidentiality.............................................48

         6.2      Cooperation After the Closing...............................48

         6.3      Registration of Buyer Shares................................48

         6.4      Reorganization..............................................55

         6.5      Expenses....................................................56

         6.6      Non-Competition.............................................56

ARTICLE 7 SURVIVAL AND INDEMNIFICATION........................................56

         7.1      Survival Notwithstanding Investigation......................56

         7.2      General Indemnification by the Shareholders.................56

         7.3      Indemnification by the Buyer................................57

         7.4      Indemnification Against Third Party Claims..................58

                                      -iii-
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                                TABLE OF CONTENTS
                                   (continued)

                                                                            PAGE

         7.5      Tax Indemnification.........................................59

         7.6      Indemnification to be after Tax, Insurance, Etc.............59

         7.7      Expiry and Limits of Liability..............................59

         7.8      Procedure...................................................61

ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER...................................63

         8.1      Termination.................................................63

         8.2      Effect of Termination.......................................63

         8.3      Waiver......................................................63

ARTICLE 9 MISCELLANEOUS.......................................................64

         9.1      Entire Agreement; Amendments................................64

         9.2      Notices.....................................................64

         9.3      Amendments; Waivers.........................................66

         9.4      Headings....................................................66

         9.5      Successors and Assigns......................................66

         9.6      No Third-Party Beneficiaries................................66

         9.7      Governing Law; Consent to Jurisdiction; Language............66

         9.8      Execution...................................................66

         9.9      Severability................................................67

         9.10     Interpretation..............................................67

         9.11     Currency....................................................67

                                      -iv-
<PAGE>

                             INDEX OF DEFINED TERMS

AGREEMENT......................................................................1
ARTICLES OF MERGER.............................................................2
AUDITED FINANCIAL STATEMENTS..................................................12
BCL............................................................................1
BUILDING.......................................................................6
BUYER..........................................................................1
BUYER BALANCE SHEET DATE......................................................31
BUYER FINANCIAL STATEMENTS....................................................30
BUYER INDEMNIFIED PERSON......................................................57
BUYER INDEMNIFIED PERSONS.....................................................57
BUYER MATERIAL ADVERSE EFFECT.................................................27
BUYER SHARES...................................................................4
BUYER STOCK OPTION PLANS......................................................28
BUYER SUB......................................................................1
BUYER SUBORDINATE VOTING SHARES................................................1
CANADIAN DOCUMENTS............................................................30
CASH CONSIDERATION.............................................................4
CLOSING........................................................................3
CLOSING PRICE..................................................................4
COBRA.........................................................................21
CODE...........................................................................2
COMPANY........................................................................1
COMPANY COMMON STOCK...........................................................1
COMPANY CONTRACTS.............................................................17
COMPANY INTELLECTUAL PROPERTY.................................................15
COMPANY MATERIAL ADVERSE EFFECT................................................7
COMPANY PLANS.................................................................19
COPYRIGHTS....................................................................15
COUNTY.........................................................................6
DEMAND REGISTRATION...........................................................38
EFFECTIVE TIME.................................................................3
ENVIRONMENT...................................................................25
ENVIRONMENTAL CONDITION.......................................................25
ENVIRONMENTAL LAW.............................................................25
ENVIRONMENTAL PERMITS.........................................................25
ERISA.........................................................................19
ERISA AFFILIATE...............................................................19
ESCROW AGREEMENT...............................................................6
ESCROW FUND....................................................................6
EXCHANGE RATIO.................................................................5
EXPENSES.......................................................................7
FACILITIES....................................................................23
FARRELL........................................................................1
FINANCIAL STATEMENTS..........................................................12
FISHERS........................................................................6

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FISHERS' ASSETS................................................................6
GAAP..........................................................................12
GORNALL........................................................................1
GOVERNMENTAL ENTITY...........................................................10
HAZARDOUS SUBSTANCES..........................................................25
HSR ACT.......................................................................11
IDA BONDS......................................................................6
INDEMNIFIED PARTY.............................................................61
INDEMNITEE....................................................................58
INDEMNITOR....................................................................58
INTERIM FINANCIAL STATEMENTS..................................................12
KLIMASEWSKI....................................................................1
KNOWLEDGE.....................................................................67
LIENS.........................................................................16
MAY............................................................................1
MERGER.........................................................................1
MERGER CONSIDERATION...........................................................4
NON-COMPETE PERIOD............................................................56
ORDER.........................................................................36
PATENTS.......................................................................15
PERMITS.......................................................................13
PERSON........................................................................11
PLAN OF MERGER.................................................................2
PROSPECTUS....................................................................52
REDEMPTION.....................................................................6
REGISTRATION STATEMENT........................................................49
RELEASE.......................................................................25
RESTRICTED SECURITIES.........................................................51
SEC FINANCIAL STATEMENTS......................................................45
SECONDARY OFFERING............................................................37
SECONDARY REGISTRATION STATEMENT..............................................37
SECURITIES ACT................................................................21
SHAREHOLDER AFFILIATE.........................................................52
SHAREHOLDERS...................................................................1
SHAREHOLDERS INDEMNIFIED PERSONS..............................................57
SIGNING PRICE..................................................................4
SOFTWARE......................................................................15
STOCK CONSIDERATION............................................................4
STOCK PURCHASE.................................................................6
STOCK PURCHASE CONSIDERATION...................................................6
STRADDLE PERIOD...............................................................59
SUBSIDIARIES...................................................................2
SURVIVING CORPORATION..........................................................1
SURVIVING CORPORATION COMMON STOCK.............................................1
TAX CLAIMS....................................................................59
TAX LOSSES....................................................................59

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TAX RETURNS...................................................................14
TAXES.........................................................................14
TECHNOLOGY....................................................................15
TRADEMARKS....................................................................15
TRANSFER TAXES.................................................................7
WITHDRAWN SHARES...............................................................6

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                                LIST OF EXHIBITS


Exhibit A                  Articles of Merger

Exhibit B                  Officers of Surviving Corporation

Exhibit C                  Buyer Shares

Exhibit D                  Form of Escrow Agreement



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                                LIST OF SCHEDULES

Schedule 2.2               Subsidiaries

Schedule 2.3               Capitalization and share restriction agreements

Schedule 2.4               Conflicts with agreements

Schedule 2.5               Share ownership

Schedule 2.10              Certain changes or events

Schedule 2.12              S Corporation election

Schedule 2.13(A)           Intellectual property

Schedule 2.13(B)           Intellectual property

Schedule 2.13(E)           Conflicts with agreements dealing in intellectual
                           property

Schedule 2.14              Liens

Schedule 2.15              Company contracts

Schedule 2.15(A)           Breaches of company contracts and contracts
                           restricting sales territory

Schedule 2.15(B)           Embedded software licenses

Schedule 2.16              Insurance

Schedule 2.17              List of employees

Schedule 2.18              Company plans

Schedule 2.20              Current leases and property previously owned within
                           the last five years

Schedule 2.21(C)           Environmental permits

Schedule 2.22              Transactions with the Shareholders

Schedule 2.23              Capital expenditures

Schedule 2.24              Use of name

Schedule 4.1               Conduct of business by the Company

<PAGE>

                 AGREEMENT OF MERGER AND PLAN OF REORGANIZATION

         THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this "AGREEMENT")
is dated as of November 4, 2000 among EXFO Electro-Optical Engineering Inc.,
incorporated pursuant to the CANADA BUSINESS CORPORATIONS ACT (the "BUYER"),
EXFO Sub, Inc., a corporation organized under the laws of the State of New York
("BUYER SUB"), Burleigh Instruments, Inc., a corporation organized under the
laws of the State of New York (the "COMPANY"), Robert G. Klimasewski,
("KLIMASEWSKI"), William G. May, Jr., ("MAY"), David J. Farrell ("FARRELL") and
William S. Gornall ("GORNALL" and, together with Klimasewski, May and Farrell,
the "SHAREHOLDERS").

                                    RECITALS

         WHEREAS, the respective Boards of Directors of Buyer and the Company,
and Buyer, as the sole shareholder of Buyer Sub have determined that it is
advisable and in the best interests of the respective corporations and their
shareholders that Buyer Sub be merged with and into the Company in accordance
with the New York Business Corporation Law (the "BCL" ) and the terms of this
Agreement, pursuant to which the Company will be the surviving corporation (the
"MERGER");

         WHEREAS, in furtherance thereof, the respective Boards of Directors of
Buyer, Buyer Sub and the Company have approved the merger of Buyer Sub with and
into the Company, with the Company to be the surviving corporation in such
Merger (the "SURVIVING CORPORATION"), upon the terms and subject to the
conditions set forth in this Agreement, pursuant to which each outstanding share
of common stock, par value $0.02 per share, of Company ("COMPANY COMMON STOCK")
issued and outstanding immediately prior to the Effective Time (as defined in
Section 1.3), will be converted into the right to receive cash and Buyer
Subordinate Voting Shares, without par value, (all such shares to be issued in
the Merger ("BUYER SUBORDINATE VOTING SHARES") based upon the Exchange Ratio (as
defined in Section 1.8);

         WHEREAS Buyer will receive at the Effective Time full equity ownership
of the outstanding stock of the Surviving Corporation through the simultaneous
conversion at the Effective Time of the issued and outstanding common stock of
Buyer Sub into common stock of the Surviving Corporation and cancellation of
Company Common Stock;

         WHEREAS the holders of shares of Company Common Stock immediately prior
to the Effective Time have the right to receive cash and Buyer Subordinate
Voting Shares in the Merger and, in consideration of Buyer's agreeing to deliver
such Buyer Subordinate Voting Shares to the Shareholders, as set forth in
Section 2.1, and in exchange for their issuance, Buyer is entitled to subscribe
and will subscribe to a number of shares of common stock, par value $0.02 per
share, of the Surviving Corporation ("SURVIVING CORPORATION COMMON STOCK")
equivalent to the number of shares of Company Common Stock outstanding
immediately prior to the Effective Time;

         WHEREAS, the Shareholders own 100% of the Company Common Stock;

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                                      - 2 -

         WHEREAS, the Company has two majority-owned subsidiaries, Burleigh
Instruments, Ltd. and Burleigh Instruments GmbH (the "SUBSIDIARIES");

         WHEREAS, Klimasewski and May are the sole minority shareholders of the
Subsidiaries and desire to sell their full interests in the Subsidiaries to
Buyer;

         WHEREAS, the Company and the Shareholders desire to make certain
representations, warranties, covenants, and agreements in connection with, and
establish various conditions precedent to, the Merger; and

         WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section
368(a)(1)(A) and 368(a)(2)(E) of the United States Internal Revenue Code of
1986, as amended (the "CODE").

         NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth in this Agreement, the parties hereto hereby
agree as follows:

                                    ARTICLE 1

                                   THE MERGER

1.1      THE MERGER

         At the Effective Time (as defined in Section 1.3 hereof), subject to
         the terms and conditions of this Agreement and the Articles of Merger
         (as defined in Section 1.3 hereof), Buyer Sub shall be merged with and
         into the Company, the separate existence of Buyer Sub shall cease, and
         the Company shall continue as the Surviving Corporation.

1.2      EFFECT OF MERGER

         The effect of the Merger shall be as set forth in Section 906 of the
         BCL, and the Surviving Corporation shall succeed to and, without
         limiting the generality of the foregoing, shall possess all the
         properties, rights, privileges, immunities, powers, franchises and
         purposes, and be subject to all the duties, liabilities, debts,
         obligations, restrictions and disabilities, of the Company, all without
         further act or deed.

1.3      EFFECTIVE TIME

         The consummation of the Merger shall be effected as promptly as
         practicable, but in no event more than three business days after the
         satisfaction or waiver of the conditions set forth in ARTICLE 5 of this
         Agreement (other than those conditions which by their nature are to be
         satisfied at the Closing, but subject to satisfaction of those
         conditions), and the parties hereto will cause a copy of the Articles
         of Merger attached hereto as Exhibit A (the "ARTICLES OF MERGER") and
         including a Plan of Merger (the "PLAN OF MERGER") to be executed,
         delivered and filed with

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                                      - 3 -

         the Secretary of State of the State of New York in accordance with the
         BCL. The Merger shall become effective at the later to occur of the
         filing of the Articles of Merger with the Secretary of State of the
         State of New York. The date and time on which the Merger shall become
         effective is referred to herein as the "EFFECTIVE TIME" .

1.4      DIRECTORS AND OFFICERS

         From and after the Effective Time, the directors of the Surviving
         Corporation shall be the persons who were the directors of Buyer Sub
         immediately prior to the Effective Time and the officers of the
         Surviving Corporation shall be the persons who are set forth on Exhibit
         B attached hereto. The directors and officers of the Surviving
         Corporation shall hold office for the term specified in, and subject to
         the provisions contained in, the Articles of Incorporation and Bylaws
         of the Surviving Corporation and applicable law. If, at or after the
         Effective Time, a vacancy shall exist on the Board of Directors or in
         any of the offices of the Surviving Corporation, such vacancy shall be
         filled in the manner provided in the Articles of Incorporation and
         Bylaws of the Surviving Corporation.

1.5      ARTICLES OF INCORPORATION, BYLAWS

         From and after the Effective Time and until further amended in
         accordance with applicable law, the Articles of Incorporation of the
         Company as in effect immediately prior to the Effective Time shall be
         the Articles of Incorporation of the Surviving Corporation. From and
         after the Effective Time and until further amended in accordance with
         law, the Bylaws of the Company as in effect immediately prior to the
         Effective Time shall be the Bylaws of the Surviving Corporation.

1.6      TAKING OF NECESSARY ACTION, FURTHER ACTION

         Buyer, Buyer Sub, the Company and the Shareholders, respectively, shall
         each use all commercially reasonable efforts to take all such action as
         may be necessary or appropriate to effectuate the Merger under the BCL
         at the time specified in Section 1.3 hereof. If, at any time after the
         Effective Time, any further action is necessary or desirable to carry
         out the purposes of this Agreement and to vest the Surviving
         Corporation with full right, title and possession to all properties,
         rights, privileges, immunities, powers and franchises of the Company,
         the officers of the Surviving Corporation are fully authorized in the
         name of the Company or otherwise to take, and shall take, all such
         lawful and necessary action.

1.7      THE CLOSING

         (a)      The closing of the transactions contemplated by this Agreement
                  (the "CLOSING") will take place at the offices of Harter,
                  Secrest & Emery LLP, 700 Midtown Tower, Rochester, New York
                  14604-2070 and will be effective as of the Effective Time.

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                                      - 4 -

         (b)      At the Closing, parties shall deliver or shall cause to be
                  delivered to each other the documents required to be delivered
                  pursuant to this Agreement, including the following:

                  (i)      Buyer shall deliver to each Shareholder: (i) the
                           aggregate amount of the Cash Consideration payable to
                           such Shareholder in United States dollars in
                           immediately available funds by wire transfer to one
                           or more accounts designated prior to the Effective
                           Time in writing by each such Shareholder for said
                           purpose, subject to Section 1.13; (ii) stock
                           certificates representing the Buyer Shares (other
                           than Escrow Shares) registered in each Shareholder's
                           name and in such denominations as set forth on
                           Exhibit C, which shall be agreed upon by the parties
                           at the Closing and which shall be determined by
                           reference to the Closing Price; and (iii) all
                           documents, instruments and writings required to have
                           been delivered at or prior to the Effective Time by
                           the Buyer or by Buyer Sub pursuant to this Agreement;

                  (ii)     Buyer shall deliver to the Escrow Agent stock
                           certificates representing the Escrow Shares;

                  (iii)    Each Shareholder shall deliver and surrender to the
                           Buyer his certificate or certificates representing
                           shares of Company Common Stock, and the Company and
                           the Shareholders shall deliver to the Buyer and Buyer
                           Sub all other documents, instruments and writings
                           required to have been delivered at or prior to the
                           Effective Time by the Company or the Shareholders
                           pursuant to this Agreement.

1.8      MERGER CONSIDERATION, CONVERSION OF SECURITIES

         The total consideration to be paid by Buyer in the Merger shall be
         $275,000,000 (the "MERGER CONSIDERATION") consisting of (a) $40,000,000
         payable in cash (the "CASH CONSIDERATION") and (b) $235,000,000 (the
         "STOCK Consideration") payable in the form of Buyer Subordinate Voting
         Shares (the "BUYER SHARES"). The aggregate number of Buyer Shares
         payable shall be determined by dividing the Stock Consideration by the
         Closing Price. The "CLOSING Price" shall be the average closing price
         of Buyer Subordinate Voting Shares for the five trading days ending
         with the day immediately preceding the Closing, as reported by the
         Nasdaq National Market; provided, however, that for purposes of this
         Agreement, if the Closing Price is less than 90% of the Signing Price,
         the Closing Price shall be 90% of the Signing Price, and if the Closing
         Price is greater than 110% of the Signing Price, the Closing Price
         shall be 110% of the Signing Price. The "SIGNING PRICE" is $38.125,
         representing the closing price of the Buyer Subordinate Voting Shares,
         as reported by the Nasdaq National Market, at closing of trading on
         October 31, 2000. If, prior to the Closing, there is any stock
         dividend, stock split or other change in the character or amount of the
         outstanding

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                                      - 5 -

         Buyer Subordinate Voting Shares, then in such event any and all new,
         substituted or additional securities to which the Shareholders would
         have been entitled by reason of their ownership of the Buyer Shares had
         the Closing occurred prior to such event shall be considered Buyer
         Shares for purposes of this Agreement and the consideration to be
         received by each Shareholder shall be adjusted accordingly. At the
         Effective Time, by virtue of the Merger and without further action on
         the part of Buyer, Buyer Sub or the Company, the shares of Company
         Common Stock issued and outstanding immediately prior to Closing shall
         be conceded and extinguished and shall be converted into the right to
         receive the Merger Consideration, such that each share of Company
         Common Stock issued and outstanding immediately prior to the Effective
         Time shall be converted into the right to receive eight hundred dollars
         ($800), plus a pro-rata portion of the Stock Consideration
         (collectively, the "EXCHANGE RATIO"). Each share of common stock, par
         value of $0.001 per share of Buyer Sub issued and outstanding
         immediately prior to the Effective Time shall be converted into and
         shall become one validly issued fully paid and non-assessable share of
         Surviving Corporation Common Stock as of the Effective Time, and the
         Surviving Corporation shall become a wholly-owned subsidiary of Buyer.
         In exchange for and in consideration of the issuance of the Merger
         Consideration, Buyer will be entitled to subscribe and undertakes and
         agrees to subscribe, at the Effective Time, for the Surviving
         Corporation Common Stock. The Surviving Corporation Common Stock will
         at the Effective Time have been duly authorized and, when issued to
         Buyer, will be validly issued and outstanding as fully paid and
         non-assessable. The number of shares of Company Common Stock held by
         each Shareholder and to be converted into the right to receive the
         Merger Consideration is set forth opposite each Shareholder's name on
         Exhibit C. Subject to the escrow provisions of Section 1.9, the Merger
         Consideration shall be payable to the Shareholders pro rata, determined
         by multiplying such Merger Consideration by a fraction, the numerator
         of which is the number of shares of Company Common Stock owned by the
         Shareholder and the denominator of which is the total number of issued
         and outstanding shares of Company Common Stock. No fraction of a share
         of Buyer Subordinate Voting Shares shall be issued, and each fractional
         share thereof shall be rounded up to the nearest whole number. Until
         surrendered and exchanged, each outstanding certificate which, prior to
         the Effective Time, represented shares of Company Common Stock shall be
         deemed to represent and evidence only the right to receive the Merger
         Consideration to be paid therefore as set forth in this Section 1.8. No
         interest shall accrue or be payable with respect to any Cash
         Consideration which any Shareholder shall be entitled to receive. Buyer
         shall be authorized to pay Merger Consideration attributable to any
         certificate theretofore issued which has been lost or destroyed, upon
         receipt of satisfactory evidence of ownership of the shares of Company
         Common Stock represented thereby and of appropriate indemnification. It
         being agreed that the Merger Consideration received by Messrs. Farrell
         and Gornall shall be reduced on a dollar for dollar basis equal to six
         (6) months their respective annual remuneration in the event that
         Messrs. Farrell or Gornall terminate unilaterally

<PAGE>

                                      - 6 -

         their respective employment agreement with the Surviving Corporation
         prior to the second anniversary of the Effective Time.

1.9      ESCROW ARRANGEMENTS

         Simultaneously with the Merger and at the Effective Time, an aggregate
         15% of the Stock Consideration will be delivered to the Escrow Agent
         (as such term is defined in the Escrow Agreement attached hereto as
         Exhibit D (the "ESCROW AGREEMENT")). Such shares of Buyer Shares shall
         constitute an escrow fund (the "ESCROW FUND") to be governed by the
         terms set forth in the Escrow Agreement. The portion of the Escrow Fund
         contributed on behalf of each of the Shareholders shall be in
         proportion to the Merger Consideration which such holder would
         otherwise be entitled under Section 1.8. The Escrow Fund shall
         terminate in accordance with the terms of the Escrow Agreement. The
         provisions of the Escrow Agreement shall govern in the event of any
         conflict between the Escrow Agreement and this Section 1.9. The
         Shareholders may withdraw shares of Buyer Shares (the "WITHDRAWN
         SHARES") and substitute cash in lieu thereof at any time, provided that
         the amount deposited in substitution for the Withdrawn Shares is equal
         to the product of (i) the Closing Price, and (ii) the number of
         Withdrawn Shares.

1.10     STOCK PURCHASE

         At the Closing, May and Klimasewski shall sell to the Surviving
         Corporation, and the Surviving Corporation shall purchase from May and
         Klimasewski, all of their right, title and interest in and to the
         shares of the Subsidiaries held by them (the "STOCK PURCHASE"). The
         price for the shares to be acquired in the Stock Purchase shall be one
         dollar (the "STOCK PURCHASE CONSIDERATION").

1.11     REDEMPTION OF IDA BONDS AND PURCHASE OF FISHERS' ASSETS

         Immediately after the Closing, May and Klimasewski shall cause the
         Fishers Development Company, a New York general partnership, all of the
         equity which is owned by Klimasewski and May ("FISHERS") to require the
         Ontario County Industrial Development Agency ("COUNTY") to redeem (the
         "REDEMPTION") the $1,350,000 Ontario County Industrial Development
         Agency Multi-Mode Variable Rate Demand Industrial Development Revenue
         Bonds, Series 2000 (the "IDA BONDS") in full in accordance with the
         terms of such IDA Bonds. Concurrently upon the Redemption, May and
         Klimasewski shall cause Fishers to sell the land, building (the
         "BUILDING") and equipment (collectively referred to as "FISHERS'
         Assets"), situated at 7647 County Road 42, in the town of Fishers in
         the State of New York, to be sold to the Surviving Corporation at an
         aggregate purchase price of $2,300,000. Such Building shall be
         renovated in accordance with the capital expenditures plan described in
         Section 2.23 hereof.

<PAGE>

                                      - 7 -

1.12     TRANSFER TAXES.

         All stamp, transfer, documentary, sales, use, registration, recordation
         and other such taxes and fees incurred in connection with this
         Agreement (collectively, "TRANSFER TAXES") shall be paid by the
         Shareholders and the Shareholders shall, at their own expense, prepare
         and properly file accurate tax returns and other documentation with
         respect to the Transfer Taxes on a timely basis.

1.13     PAYMENT OF EXPENSES.

         At the Closing, the Buyer hereby agrees to pay directly, on behalf of
         the Shareholders, the investment banking and legal fees incurred by or
         on behalf of the Shareholders in connection with the transactions
         contemplated hereby (collectively, the "EXPENSES"). At the Closing, the
         Buyer shall pay the Expenses in cash, in the currency requested by the
         service provider, by wire transfer of immediately available funds. Such
         payment of Expenses made by the Buyer shall be deducted from the Cash
         Consideration payable hereunder. The Shareholders shall, at least two
         business days prior to the Closing Date, advise the Buyer in writing of
         the amount of the Expenses, together with wire transfer instructions
         for such payments.

                                    ARTICLE 2

       REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS

The Company and the Shareholders hereby jointly and severally represent and
warrant to Buyer, as of the date hereof (except as to any representation or
warranty which specifically relates to an earlier date) as follows:

2.1      ORGANIZATION AND AUTHORITY

         (a)      The Company is a corporation duly incorporated, validly
                  existing and in good standing under the laws of the State of
                  New York. The Company has the requisite corporate power and
                  authority: (a) to carry on its business as currently
                  conducted; (b) to own and use the properties owned and used by
                  it; and (c) to execute and deliver this Agreement and to
                  consummate the transactions contemplated hereby. The Company
                  is duly qualified to do business as a foreign corporation and
                  in good standing in each jurisdiction where the nature of its
                  business or the ownership or leasing of its properties makes
                  such qualification necessary, except where the failure to be
                  so qualified or in good standing could not reasonably be
                  expected to have a Company Material Adverse Effect. For
                  purposes of this Agreement, "COMPANY MATERIAL ADVERSE EFFECT"
                  means any change, effect, event, occurrence or state of facts
                  (or any development that has had or is reasonably likely to
                  have any change or effect) that is materially adverse to the
                  business, financial condition or results of operations of the

<PAGE>

                                      - 8 -

                  Company, taken as a whole, provided, however, any adverse
                  change, effect or circumstance (a) primarily arising out of or
                  resulting primarily from actions contemplated by the parties
                  hereto in connection with this Agreement, (b) resulting from
                  economic factors affecting the economy as a whole or (c)
                  resulting from factors generally affecting the specific
                  markets in which the Company competes shall not be deemed in
                  themselves, either alone or in combination, to constitute, and
                  shall not be taken into account in determining whether there
                  has been, a Company Material Adverse Effect. The execution and
                  delivery by the Company of this Agreement and the consummation
                  by the Company of the transactions contemplated hereby have
                  been duly and validly authorized by all necessary corporate
                  action on the part of the Company and no other corporate
                  proceedings on the part of the Company are necessary to
                  authorize this Agreement or to consummate the transactions so
                  contemplated by this Agreement. This Agreement has been duly
                  and validly executed and delivered by the Company and the
                  Shareholders, and assuming this Agreement constitutes a valid
                  and binding obligation of the Buyer and Buyer Sub, this
                  Agreement constitutes a valid and binding agreement of the
                  Company and the Shareholders enforceable against the Company
                  and the Shareholders in accordance with its terms, subject,
                  however, as to enforcement, to bankruptcy, insolvency,
                  fraudulent transfer, reorganization, moratorium and similar
                  laws of general applicability relating to or affecting
                  creditor's rights and to general principles of equity,
                  regardless of whether such enforceability is considered in
                  equity or at law. The Company is not in violation of any of
                  the provisions of its Certificate of Incorporation, by-laws or
                  other organizational documents or laws applicable to it,
                  except for violations which could not reasonably be expected
                  to have a Company Material Adverse Effect.

2.2      SUBSIDIARIES

         Schedule 2.2 sets forth, for each Subsidiary: (a) its name and
         jurisdiction of incorporation; (b) the number of shares of authorized
         capital stock of each class of its capital stock or other equity
         interests; (c) the number of issued and outstanding shares of each
         class of its capital stock or other equity interests, the names of the
         holders thereof and the number of shares held by each such holder; (d)
         the number of shares of its capital stock held in treasury; and (e) its
         directors and officers. Each Subsidiary is an entity duly organized,
         validly existing and, to the extent legally applicable, in good
         standing under the laws of the jurisdiction of its organization. Each
         Subsidiary is duly qualified to conduct business and is in corporate
         good standing under the laws of each jurisdiction in which the nature
         of its business or the ownership or leasing of its properties makes
         such qualification necessary, except for any such failures to be
         qualified that would not reasonably be expected to have a Company
         Material Adverse Effect. Neither of the Subsidiaries currently has any
         active business operations, nor have had any active business operations
         in the previous three years. No Subsidiary is in default under

<PAGE>

                                      - 9 -

         or in violation of any provision of its organizational documents or
         under any statutes or regulations. All of the issued and outstanding
         shares of capital stock of each Subsidiary are duly authorized, validly
         issued, fully paid, non-assessable and free of pre-emptive rights. All
         shares of each Subsidiary that are held of record or owned beneficially
         by the Company are held or owned free and clear of any Liens or other
         restrictions on transfer (other than restrictions under applicable
         securities laws). There are no outstanding or authorized options,
         warrants, rights, agreements or commitments to which the Company or any
         Subsidiary is a party or which are binding on any of them providing for
         the issuance, disposition or acquisition of any capital stock of any
         Subsidiary. There are no outstanding stock appreciation, phantom stock
         or similar rights with respect to any Subsidiary. There are no voting
         trusts, proxies or other agreements or understandings with respect to
         the voting of any capital stock of any Subsidiary to which the Company
         or any Subsidiary is a party. Neither the Subsidiaries nor the Company,
         except for the Subsidiaries, own any stock, partnership interest, joint
         venture interest or any other security or ownership interest issued by
         any other corporation, organization, limited liability company or
         entity. All issued and outstanding shares of capital stock or other
         equity interest of the Subsidiaries are owned by the Company,
         Klimasewski or May, free and clear of all liens, charges, encumbrances,
         claims and options of any nature. The Company, Klimasewski and May each
         have full right power and authority to sell, transfer, assign and
         deliver the respective shares of capital stock or other equity interest
         of the Subsidiaries being sold by each of them to the Buyer. All of the
         outstanding shares of capital stock or other equity interests of the
         Subsidiaries have been duly and validly authorized and issued and are
         fully paid and non-assessable.

2.3      CAPITALIZATION

         The authorized, issued and outstanding shares of capital stock of the
         Company are as set forth on Schedule 2.3. The outstanding shares of
         Company Common Stock are duly and validly authorized and issued, fully
         paid and non-assessable and are owned of record by the Shareholders as
         set forth on Schedule 2.3 and represents 100% of the issued and
         outstanding share capital of the Company. The Company does not have
         outstanding any options, warrants or other rights to acquire, directly
         or indirectly, capital stock from the Company, and the Company does not
         have any obligation to repurchase or redeem any capital stock of the
         Company. Except as set forth on Schedule 2.3, the Company is not party
         to any agreement, and, to the Shareholders' Knowledge, there is no
         agreement between any Persons, which grants any rights of first refusal
         or pre-emptive rights or relates to the voting or giving of written
         consents with respect to any security or by a director of the Company
         or its Subsidiaries.

2.4      NO BREACH

         Except as set forth on Schedule 2.4, the execution and delivery of this
         Agreement do not, and the consummation of the transactions contemplated
         by this Agreement and compliance with the provisions of this Agreement
         will not conflict with, or

<PAGE>

                                     - 10 -

         result in any violation of or default (with or without notice or lapse
         of time, or both) under, or give rise to a right of termination,
         cancellation or acceleration of any obligation, or result in the
         creation of any Lien upon any of the properties or assets of the
         Company or any of its Subsidiaries pursuant to, any provision of: (i)
         the Certificate of Incorporation or By-laws of the Company or any
         provision of the comparable organizational documents of any of its
         Subsidiaries; (ii) any loan or credit agreement, note, bond, mortgage,
         indenture, lease or other agreement, instrument, permit, concession,
         franchise or license applicable to the Company, the Subsidiaries or
         their respective properties or assets or (iii) subject to the
         governmental filings and other matters referred to in Section 2.6, any
         statute, law, rule, regulation, judgment, order or decree applicable to
         the Company or its Subsidiaries or the properties or assets of the
         Company or its Subsidiaries, other than, with respect to any of the
         matters described above, any such conflicts, violations, defaults,
         rights or Liens that individually or in the aggregate would not
         reasonably be expected to have a Company Material Adverse Effect, or
         prevent or materially delay the consummation of any of the transactions
         contemplated by this Agreement.

2.5      SHARE OWNERSHIP

         Except as set forth on Schedule 2.5, each Shareholder has full right,
         power and authority to sell, transfer, assign and deliver the shares of
         Company Common Stock being sold by such Shareholder hereunder.
         Immediately prior to the delivery of the shares of Company Common
         Stock, such Shareholder was the sole registered and beneficial owners
         of the shares of Company Common Stock listed opposite his name on
         Schedule 2.3 and, except as set forth on Schedule 2.5, had good and
         valid title to such shares, free and clear of all Liens and
         restrictions on transfer (other than restrictions on transfer imposed
         by applicable securities laws). There are no outstanding options,
         warrants, convertible securities, calls, rights, commitments,
         pre-emptive rights or agreements or instruments or understandings of
         any character to which such Shareholder is a party, obligating such
         Shareholder to deliver or sell, or cause to be delivered or sold,
         contingently or otherwise, such shares of Company Common Stock. There
         are no voting trust agreements or other contracts, agreements,
         arrangements, commitments, plans or understandings to which such
         Shareholder is a party restricting or otherwise relating to voting,
         dividend or other rights with respect to such shares.

2.6      CONSENTS AND APPROVALS

         No consent, approval, order or authorization of, or registration,
         declaration or filing with, any Federal, state or local government or
         any court, administrative agency, commission or other governmental
         authority or agency, domestic or foreign (each, a "GOVERNMENTAL
         ENTITY"), is required by or with respect to the Company and its
         Subsidiaries in connection with the execution and delivery of this
         Agreement by the Company or the consummation by the Company and its
         Subsidiaries of the transactions contemplated by this Agreement, except
         for (a) the filing of a pre-merger notification and report form by the
         Company under

<PAGE>

                                     - 11 -

         the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
         (the "HSR ACT") and applicable filings under foreign antitrust and
         competition laws, (b) such filings, consents, approvals, orders,
         registrations and declarations as may be necessary as a result of the
         facts or circumstances relating solely to the Company and its
         Subsidiaries, and (c) such other consents, approvals, orders,
         authorizations, registrations, declarations and filings the failure of
         which to be obtained or made would not, individually or in the
         aggregate, reasonably be expected to have a Company Material Adverse
         Effect or prevent or materially delay the consummation of any of the
         transactions contemplated by this Agreement. Neither the execution and
         delivery of this Agreement by any Shareholder nor the consummation of
         the transactions contemplated hereby by any Shareholder will (1)
         conflict with, result in a breach or violation of or constitute (or
         with notice or lapse of time or both constitute) a default under any
         law, statute, regulation, order, judgment or decree or any instrument,
         contract or other agreement to which any Shareholder is a party or by
         which any Shareholder is bound, or (2) require such Shareholder to
         obtain any authorization, consent, approval or waiver from, give
         notification to, or make any filing with, any Governmental Entity, or
         to obtain the approval or consent of any other Person, except for such
         conflicts, breaches, violations or defaults, or any authorization,
         consent, approval, waiver, notification or filing the failure of which
         to obtain or make, will not (x) impair in any material respect the
         ability of such Shareholder to perform such Shareholder's obligations
         under this Agreement or (y) prevent or materially delay the
         consummation of any of the transactions contemplated by this Agreement.
         For purposes of this Agreement, "PERSON" means an individual or
         corporation, partnership, trust, incorporated or unincorporated
         association, joint venture, limited liability company, joint stock
         company, government (or an agency or subdivision thereof) or other
         entity of any kind.

2.7      LITIGATION; PROCEEDINGS

         There is no action, suit or proceeding, governmental or otherwise,
         pending or, to the Company's Knowledge, threatened against the Company
         or the Subsidiaries or any of their respective properties or business
         that questions the validity of this Agreement, or the right of the
         Company to enter into this Agreement or to consummate the transactions
         contemplated hereby or that, individually or in the aggregate, would
         reasonably be expected to have a Company Material Adverse Effect. There
         is no judgment, decree, injunction, rule or order of any Governmental
         Entity outstanding against the Company or the Subsidiaries having or
         reasonably likely to have, in the future, any such effect.

2.8      FINANCIAL STATEMENTS

         The Shareholders have delivered to the Buyer (a) complete and correct
         copies of the Company's audited consolidated balance sheet as of
         December 31, 1999 and 1998, and the related statements of operations,
         shareholders' equity and cash flows (together with the auditors' report
         thereon) for the year ended December 31, 1999 and 1998, together with
         notes to such financial statements (the "AUDITED

<PAGE>

                                     - 12 -

         FINANCIAL STATEMENTS"), and (b) complete and correct copies of the
         Company's unaudited consolidated balance sheet as at September 30,
         2000, and the related statements of operations, stockholders' equity
         and cash flows for the nine month periods ended September 30, 2000 (the
         "INTERIM FINANCIAL STATEMENTS") (the Audited Financial Statements and
         Interim Financial Statements are herein collectively referred to as the
         "FINANCIAL STATEMENTS"). The Financial Statements are in accordance
         with the books and records of the Company and have been prepared in
         accordance with generally accepted accounting principles ("GAAP")
         consistently applied throughout the periods covered thereby and present
         fairly in all material respects, as of their respective dates, the
         financial condition and results of operations of the Company (subject,
         in the case of Interim Financial Statements, to normal, recurring
         year-end adjustments that may be required upon audit). No information
         has become available to the Company that would render the Financial
         Statements materially and adversely incomplete or inaccurate.

2.9      NO UNDISCLOSED LIABILITIES

         (a)      None of the Company and its Subsidiaries has any liability
                  (whether known or unknown, whether absolute or contingent,
                  whether liquidated or unliquidated and whether due or to
                  become due) which is material to the Company and its
                  Subsidiaries, taken as a whole, except for: (i) liabilities
                  shown on the latest balance sheet included in the Financial
                  Statements; (ii) liabilities which have arisen since the date
                  of the latest balance sheet included in the Financial
                  Statements in the ordinary course of business consistent with
                  past practices and that do not violate any covenants or
                  representations and warranties contained in this Agreement; or
                  (iii) contractual liabilities incurred in the ordinary course
                  of business which are not required by GAAP to be reflected on
                  a balance sheet.

         (b)      The Shareholders may not evade their liability under the
                  warranty undertakings made under the terms of this Agreement
                  or the resulting financial liability by pleading ignorance of
                  the facts in question.

         (c)      Any enquiry carried out by the Buyer and/or by representatives
                  or advisers of the Buyer, or anyone whomsoever from the
                  Company or the Subsidiaries within the Buyer's group,
                  including the verification of the schedules hereto, shall not
                  exempt the Shareholders from their obligations in respect of
                  this agreement or its commitments.

         (d)      The Shareholders represent that nothing can limit their
                  capacity to subscribe and perform the undertakings taken in
                  respect of this Agreement and in particular they represent
                  there is no legal or contractual obstacle or restriction to
                  the performance of the warranty obligations subscribed in
                  connection with this Agreement.

<PAGE>

                                     - 13 -

2.10     ABSENCE OF CERTAIN CHANGES OR EVENTS

         Except as set forth on Schedule 2.10, since September 30, 2000, each of
         the Company and its Subsidiaries has conducted its business only in the
         ordinary course and has used its best efforts to preserve its business
         and assets and (a) there has not occurred any events or changes that
         have had, or would reasonably be expected to have, individually or in
         the aggregate, a Company Material Adverse Effect and (b) there has not
         been any change in the accounting principles, policies, practices or
         procedures of the Company and its Subsidiaries or their application to
         the Company and (c) neither the Company or its Subsidiaries has taken
         any action that would have been prohibited under Section 4.1 hereof.

2.11     COMPLIANCE WITH LAWS

         The Company and its Subsidiaries are in compliance with all applicable
         statutes, laws, ordinances, regulations, rules, judgments, decrees and
         orders of any Governmental Entity applicable to their respective
         businesses or operations, except for matters which, individually or in
         the aggregate, would not reasonably be expected to have a Company
         Material Adverse Effect. Each of the Company and its Subsidiaries has
         in effect all federal, state, local and foreign governmental approvals,
         authorizations, certificates, filings, franchises, licenses, notices,
         permits and rights ("PERMITS") necessary for it to own, lease or
         operate its properties and assets and to carry on its business as now
         conducted, and there has occurred no default under any such Permit,
         except for the lack of any Permits and for defaults under Permits
         which, individually or in the aggregate, would not reasonably be
         expected to have a Company Material Adverse Effect.

2.12     TAXES

         Except to the extent that the failure to comply with the following
         representations would not reasonably be expected to have, in the
         aggregate, a Company Material Adverse Effect: each of the Company and
         its Subsidiaries has timely filed all Tax Returns required to be filed
         by it, or requests for extensions to file such Tax Returns have been
         timely filed and granted and have not expired, and all such filed Tax
         Returns are complete and accurate in all respects; the Company and each
         of its Subsidiaries have timely paid (or the Company has paid on its
         behalf) all Taxes due or claimed to be due whether by proposed
         assessment or otherwise by any taxing authority; the most recent
         financial statements contained in the Financial Statements reflect an
         adequate reserve for all Taxes payable by the Company and its
         Subsidiaries for all taxable periods and portions thereof accrued
         through the date of such financial statements; no deficiencies for any
         Taxes have been proposed, asserted or assessed against the Company or
         any of its Subsidiaries that are not adequately reserved for on the
         Company's financial statements in accordance with GAAP; all Taxes that
         the Company or any of its Subsidiaries is or was required by law to
         withhold or collect have been duly withheld or collected and, to the
         extent required, have been paid to the proper Governmental Entity; the
         Company does not have any liability for Taxes of any

<PAGE>

                                     - 14 -

         other person or entity; the Company has made all required estimated Tax
         payments sufficient to avoid any underpayment penalties; there are no
         outstanding agreements, waivers or arrangements extending the statutory
         period of limitations applicable to any claim for, or the period of the
         collection or assessment of, Taxes due with respect to the Company for
         any taxable period; no closing agreement that could affect the Taxes of
         the Company for periods ending after the date of the Closing pursuant
         to Section 7121 of the Code (or any predecessor provision) or any
         similar provision of any state, local or foreign law has been entered
         into by or with respect to the Company; the Company has not agreed to
         and is not required to make any adjustment with respect to the taxable
         periods ending after the date of the Closing pursuant to Section 481(a)
         of the Code (or any predecessor provision) by reason of any change in
         any accounting method, there is no application pending with any taxing
         authority requesting permission for any such change in any accounting
         method of the Company, and the IRS has not proposed any such adjustment
         or change in accounting method; the Company has not filed, and will not
         file through the date of the Closing, any state or local Tax Returns on
         a unitary or combined basis with any other person; the Company has made
         no material elections, other than an election to be an S corporation
         pursuant to Section 1362 of the Code (or pursuant to a comparable state
         or local tax provision); and there is no contract, agreement, plan or
         arrangement covering any person that, individually or collectively,
         could give rise to the payment of any amount that would not be
         deductible by the Company by reason of Section 280G of the Code. For
         purposes of this Agreement, "TAXES" means all taxes, including without
         limitation income, gross receipts, ad valorem, value-added, excise,
         real property, personal property, sales, use, transfer, withholding,
         employment, payroll and franchise taxes imposed by the United States of
         America or any state, local or foreign government, or any agency
         thereof, or other political subdivision of the United States or any
         such government, and any interest, fines, penalties, assessments or
         additions to tax resulting from, attributable to or incurred in
         connection with any tax or any contest or dispute thereof. For purposes
         of this Agreement, "TAX RETURNS" means all reports, returns,
         declarations, statements or other information required to be supplied
         to a taxing authority in connection with Taxes.

         The Company (i) timely elected to be treated as an S corporation for
         federal tax purposes and, except as set forth on Schedule 2.12, for the
         tax purposes of each state in which the Company is subject to tax,
         effective on October 1, 1988, and (ii) where applicable has properly
         maintained its status as an S corporation for all taxable periods since
         October 1, 1988 and, accordingly, the Shareholders will pay when due
         federal income taxes or state income taxes with respect to any taxable
         period beginning on October 1, 1988 and through its taxable year (or
         portion thereof) ending on the date of the Closing. Schedule 2.12 sets
         forth each state with respect to which the Company has made an election
         to be treated as an S corporation. Neither the Shareholders nor the
         Company is aware of any event that exists or has existed that presents
         any risk that the status of the Company as an S corporation is or has
         been at any time subject to termination or revocation. There are no
         liens for Taxes upon any of the assets of the Company, except Liens

<PAGE>

                                     - 15 -

         for current Taxes not yet due and payable. To the Company's Knowledge,
         there is no pending dispute with any taxing authority relating to any
         of the Company's Tax Returns and there is no tax audit of any Tax
         Return of the Company pending or currently in process.

2.13     INTELLECTUAL PROPERTY

         (a)      Schedule 2.13(a) includes a list of all Patents, Trademarks,
                  Copyrights and Software owned or licensed by the Company and
                  its Subsidiaries. "COMPANY INTELLECTUAL PROPERTY" shall mean
                  all (i) United States and foreign patents, patent
                  applications, and other patent rights ("PATENTS"); (ii) United
                  States and foreign trademarks, service marks, trade dress,
                  trade names, brand names, Internet domain names, designs,
                  logos, or corporate names, whether registered or unregistered,
                  and all registrations and applications for registration
                  thereof ("TRADEMARKS"); (iii) United States and foreign
                  copyrights, including all renewals and extensions thereof,
                  copyright registrations and applications for registration
                  thereof, and non-registered copyrights ("Copyrights"); (iv)
                  trade secrets, concepts, ideas, designs, research, processes,
                  procedures, techniques, methods, know-how, data, mask works,
                  discoveries, inventions, modifications, extensions,
                  improvements, and other proprietary rights (whether or not
                  patentable or subject to copyright, mask work, or trade secret
                  protection) ("TECHNOLOGY"); and (v) computer software
                  programs, including, without limitation, all source code,
                  object code, and documentation related thereto ("SOFTWARE"),
                  but not including mass-marketed software with a price of less
                  than $1,500 per copy. The Company and its Subsidiaries own or
                  are licensed or otherwise possess legally enforceable rights
                  to use, sell, and license, free and clear of any and all Liens
                  or material restrictions, any and all Company Intellectual
                  Property, except where any failure to own, license or
                  otherwise possess legally enforceable rights to use such
                  Company Intellectual Property would not reasonably be expected
                  to have a Company Material Adverse Effect.

         (b)      Schedule 2.13(b) sets forth all material licenses,
                  sublicenses, and other agreements or permissions under which
                  the Company and its Subsidiaries are a licensor of Company
                  Intellectual Property.

         (c)      Except as may be evidenced by patents issued after the date
                  hereof, neither the Company nor its Subsidiaries have been
                  named in any suit, action or proceeding which involves a claim
                  of infringement of any Patents, Trademarks, Copyrights,
                  Technology or Software of any third party. To the Company's
                  Knowledge, the manufacturing, marketing, licensing or sale of
                  the products of the Company and its Subsidiaries as presently
                  conducted do not infringe any valid Patents, Trademarks,
                  Copyrights, Technology or Software of any third party, except
                  for any such infringement that would not reasonably be
                  expected to have a Company Material Adverse Effect. Each of
                  the Company and its Subsidiaries has

<PAGE>

                                     - 16 -

                  taken all necessary and reasonable action to maintain and
                  protect each item of Company Intellectual Property.

         (d)      All material Sofware used, sold, or licensed by the Company
                  and its Subsidiaries is free from any material software
                  defect, performs materially in conformance with its
                  documentation, and does not contain any code or mechanism that
                  could be used to interfere with the operation of the Software.

         (e)      Except as set forth on Schedule 2.13(e), the Company is not
                  and its Subsidiaries are not, nor, as a result of the
                  execution and delivery of this Agreement or the performance of
                  its obligations hereunder, will be, in violation of any
                  agreement relating to any Company Intellectual Property.

2.14     TITLE TO AND CONDITION OF PROPERTIES

         Each of the Company and its Subsidiaries has good and marketable title
         to or a valid leasehold interest under a capitalized lease in all
         assets recorded on the Company's balance sheet as of September 30,
         2000, free and clear of all pledges, claims, liens, charges,
         encumbrances or security interests of any kind or nature whatsoever
         (collectively, "LIENS"), except for (a) assets no longer used or useful
         in the conduct of the business or disposed of in the ordinary course of
         business since such date, (b) Liens disclosed in the Financial
         Statements and in Schedule 2.14, (c) Liens or imperfections of title
         which are not, individually or in the aggregate, material in character,
         amount or extent and which do not materially detract from the value or
         materially interfere with the present or presently contemplated use of
         the assets subject thereto or affected thereby, and (d) Liens for
         current Taxes not yet due and payable. Each of the Company and its
         Subsidiaries has a valid leasehold or other interest in all other
         assets used by it in its business, other than exceptions that would not
         reasonably be expected to have a Company Material Adverse Effect. All
         of the machinery, equipment and other tangible personal property and
         assets owned or used by the Company and its Subsidiaries are in good
         condition and repair, except for ordinary wear and tear, and are fit
         for their present use and usable in the ordinary course of business,
         except for any matter otherwise covered by this sentence which would
         not reasonably be expected to have, individually or in the aggregate, a
         Company Material Adverse Effect.

2.15     CONTRACTS AND AGREEMENTS

         Schedule 2.15 sets forth a list of:

         (a)      each contract, agreement or commitment of the Company or its
                  Subsidiaries which requires total payments to or by the
                  Company or any of its Subsidiaries of at least $50,000
                  annually;

         (b)      each contract, agreement or commitment of the Company or its
                  Subsidiaries or any of its Subsidiaries which has a remaining
                  term longer

<PAGE>

                                     - 17 -

                  than one hundred and eighty (180) days, which requires total
                  payments to or by the Company or any of its Subsidiaries of at
                  least $100,000 during the remaining term and which is not
                  terminable on thirty (30) or fewer days' notice without
                  penalty;

         (c)      each contract, agreement or commitment to which the Company or
                  any of its Subsidiaries is a party or by which any of its
                  assets are bound relating to indebtedness for borrowed money,
                  including capital leases and security agreements relating
                  thereto and any amendment or waiver thereof;

        (d)       each lease of real property by the Company or any of its
                  Subsidiaries;

        (e)       any collective bargaining agreement, union agreement,
                  employment agreement, consulting agreement, management service
                  agreement or substantially similar type of contract or
                  agreement to which the Company or any of its Subsidiaries is a
                  party;

         (f)      any consent decree and other judgment, decree or order,
                  settlement agreement or other agreement limiting the ability
                  of the Company or any of its Subsidiaries to compete in any
                  line of business or with any Person in any geographic areas;

         (g)      any joint venture agreement or other contract, agreement or
                  commitment to which the Company or any of its Subsidiaries is
                  a party involving a sharing of profits or expenses; and

         (h)      any outstanding loan (other than pursuant to a plan intended
                  to satisfy the requirements of Section 401(c) of the Code) or
                  advance by the Company or any of its Subsidiaries to, or
                  investment by the Company or any of its Subsidiaries in, any
                  Person, or any agreement, contract, commitment or
                  understanding relating to the making of any such loan, advance
                  or investment (excluding trade receivables).

         All of the contracts, agreements, leases, licenses, arrangements,
         commitments and documents listed on Schedule 2.15 (collectively, the
         "COMPANY CONTRACTS") are valid obligations of the Company or any of its
         Subsidiaries and, to the Company's Knowledge, each other party thereto,
         and are binding and in full force and effect in accordance with their
         terms and conditions. Except as would not, individually or in the
         aggregate, reasonably be expected to have a Company Material Adverse
         Effect, there is no existing default thereunder or breach thereof by
         the Company or any of its Subsidiaries or by any other party thereto,
         or any conditions which, with the passage of time or the giving of
         notice or both, might reasonably constitute such a default by the
         Company, such Subsidiaries, or by any other party to a Company Contract
         and, except as set forth in Schedule 2.15(a), none of the Company
         Contracts will be breached by or give any other party a right of
         termination as a result of the transaction contemplated by this
         Agreement. There

<PAGE>

                                     - 18 -

         are no pending or, to the Company's Knowledge, threatened disputes with
         respect to the Company Contracts.

         Except as set forth on Schedule 2.15(b), neither the Company nor the
         Subsidiaries, pursuant to any contract, agreement, franchise, licence
         or permit, holds, possesses, uses or has access to, or has the right to
         hold, possess, use or have access to, any property or right of any
         nature belonging to any other person upon which the conduct of the
         business of the Company or the Subsidiaries as it is being customarily
         conducted is dependent. Except as set forth on Schedule 2.15(b),
         neither the Company nor the Subsidiaries is bound by any contract or
         agreement purporting to materially constrain or limit the Company or
         the Subsidiaries in the conduct of its business or affairs. Neither the
         Company nor the Subsidiaries are bound by any non-competition,
         affirmative or restrictive covenant limiting the nature of the business
         that any such corporation can carry on, or the time or territory in
         which the business of the corporation and of the Subsidiaries can be
         operated. Neither the Company nor the Subsidiaries knows of any bid or
         contract proposal made by the Company or the Subsidiaries that, if
         accepted and entered into, might result in a material loss to the
         Company or the Subsidiaries.

2.16     INSURANCE

         Schedule 2.16 sets forth a list of all policies of fire, extended
         coverage, liability and all other kinds of insurance held by the
         Company in connection with the conduct of its and its Subsidiaries'
         business and operations (other than policies relating to Company
         Plans). Such policies are in full force and effect and, to the
         Company's Knowledge, neither the Company nor any Subsidiary is not in
         default with respect to its obligations under any of such insurance
         policies, except for any failures to be in full force and effect or
         defaults that would not reasonably be expected to have a Company
         Material Adverse Effect. The Company and its Subsidiaries maintain the
         type and amount of insurance which the Company and its Subsidiaries
         believe is adequate in coverage and amount to insure fully against the
         risks to which the Company, its Subsidiaries and their employees,
         directors, business, properties and other assets would reasonably be
         expected to be exposed in the operation of their respective business.

2.17     EMPLOYEES

         (a)      Schedule 2.17 sets forth the names, the rate of compensation
                  (and the portions thereof attributable to salary and bonuses,
                  respectively) and location of all current employees of the
                  Company and each Subsidiary.

         (b)      No key employee or group of employees has given notice to
                  terminate or, to the Company's knowledge, has any plans to
                  terminate employment with the Company or any Subsidiary.
                  Neither the Company nor its Subsidiaries is a party to or
                  bound by any collective bargaining agreement, nor has it

<PAGE>

                                     - 19 -

                  experienced any strikes, grievances, claims of unfair labor
                  practices or other collective bargaining disputes.

         (c)      To the Company's Knowledge, no organizational effort has been
                  made or threatened, either currently or within the past two
                  years, by or on behalf of any labor union with respect to
                  employees of the Company or any Subsidiary.

2.18     EMPLOYEE BENEFITS

         (a)      Schedule 2.18 lists all material employee benefit plans and
                  collective bargaining, employment or severance agreements or
                  other similar arrangements which the Company and its
                  Subsidiaries, or any ERISA Affiliate, sponsors, maintains, or
                  to which contributions are made, for the benefit of employees
                  of the Company, its Subsidiaries or an ERISA Affiliate,
                  including, without limitation, (1) any "employee benefit plan"
                  (within the meaning of Section 3(3) of the Employee Retirement
                  Income Security Act of 1974, as amended ("ERISA")), (2) any
                  profit-sharing, deferred compensation, bonus, stock option,
                  stock purchase, pension, retainer, consulting, retirement,
                  severance, welfare or incentive plan, agreement or
                  arrangement, (3) any plan, agreement or arrangement providing
                  for "fringe benefits." The plans, agreements and arrangements
                  described in this Section 2.18 are referred to herein as the
                  "COMPANY PLANS". For purposes of this Agreement, "ERISA
                  AFFILIATE" means any Person that is a member of "controlled
                  group of corporations" with, or is under "common control"
                  with, or is a member of the same "affiliated service group"
                  with the Company, as defined in Section 414 of the Code.

         (b)      None of the Company Plans is (i) a plan subject to Title IV of
                  ERISA or Section 412 of the Code, (ii) a "multi-employer plan"
                  (within the meaning of Section 3(37) of ERISA), (iii) a
                  "multiple employer plan" (within the meaning of Section 3(40)
                  of ERISA or Section 413(c) of the Code), (iv) a "voluntary
                  employees' beneficiary association" (within the meaning of
                  Section 501(c)(9) of the Code), or (v) a "multiple employer
                  welfare arrangement" (within the meaning of Section 3(40)(A)
                  of ERISA).

         (c)      Neither the Company, its Subsidiaries nor any ERISA Affiliate
                  has ever contributed to, or had an obligation to contribute
                  to, any plan subject to Title IV of ERISA or Section 412 of
                  the Code, any "multi-employer plan" (within the meaning of
                  Section 3(37) of ERISA), any "multiple employer plan" (within
                  the meaning of Section 3(40) of ERISA or Section 413(c) of the
                  Code), any "voluntary employees' beneficiary association"
                  (within the meaning of Section 501(c)(9) of the Code), or any
                  "multiple employer welfare arrangement" (within the meaning of
                  Section 3(40)(A) of ERISA).

<PAGE>

                                     - 20 -

         (d)      None of the Company Plans, nor any trust created thereunder,
                  now holds or has heretofore held as assets any stock or
                  securities issued by the Company, its Subsidiaries or any
                  ERISA Affiliate.

         (e)      The Company and its Subsidiaries have delivered or made
                  available to Buyer true and complete copies of all documents
                  and summary plan descriptions of the Company Plans or summary
                  descriptions of any such Company Plan not otherwise in
                  writing. The Company and its Subsidiaries have delivered to
                  Buyer true and complete copies of the most recent
                  determination letters and the Forms 5500 filed in the most
                  recent plan year with respect to any Company Plan, including
                  all schedules thereto and financial statements with attached
                  opinions of independent accountants (if required). The Company
                  and its Subsidiaries have delivered to Buyer all
                  communications received from or sent to the Internal Revenue
                  Service or the Department of Labor within the last year,
                  including but not limited to any Forms 5330 filed by the
                  Company, its Subsidiaries or any ERISA Affiliate related to
                  Company Plans.

         (f)      Each Company Plan (and any related trust agreement) has been
                  administered in accordance with its terms, except for any
                  failure to so administer that would not reasonably be expected
                  to have a Company Material Adverse Effect. The Company, its
                  Subsidiaries and each ERISA Affiliate, is in compliance with
                  the applicable provisions of ERISA, the Code and all laws
                  applicable thereto, except for any failure to so comply that
                  would not reasonably be expected to have a Company Material
                  Adverse Effect.

         (g)      All reports, returns and similar documents with respect to
                  each Company Plan required to be filed with any Governmental
                  Authority or distributed to any participant of each Company
                  Plan have been duly and timely filed or distributed.

         (h)      No actions, suits, disputes or claims (other than routine
                  claims for benefits in the ordinary course) are pending or, to
                  the Company's Knowledge, threatened with respect to any
                  Company Plan. To the Company's Knowledge, no audits,
                  inquiries, reviews, proceedings, claims, or demands are
                  pending with any Governmental Authority with respect to any
                  Company Plan.

         (i)      Each Company Plan that is intended to be qualified under
                  Section 401(a) of the Code has received a favourable
                  determination letter from the Internal Revenue Service that
                  such Company Plan is qualified under Section 401(a) of the
                  Code.

         (j)      No Company Plan provides for or continues medical or health
                  benefits, or life insurance or other death benefits (through
                  insurance or otherwise) for any employee or any dependent or
                  beneficiary of any employee after such

<PAGE>

                                     - 21 -

                  employee's retirement or other termination of employment
                  except as may be required by COBRA or applicable state law,
                  and there has been no communication to any employee that could
                  reasonably be expected to promise or guarantee any such
                  benefits. For purposes of this Agreement, "COBRA" means the
                  Consolidated Omnibus Budget Reconciliation Act of 1985, as
                  amended, Section 4980B of the Code, Title I Part 6 of ERISA,
                  and any similar state group health plan continuation law,
                  together with all regulations and proposed regulations
                  promulgated thereunder.

         (k)      The consummation of the transactions contemplated by this
                  Agreement will not entitle any individual to severance pay,
                  and will not accelerate the time of payment or vesting, or
                  increase the amount of compensation due to any individual.

         (l)      With respect to any Company Plan, all required or
                  discretionary (in accordance with historical practices)
                  payments, premiums, contributions, reimbursements, or accruals
                  for all periods ending prior to or as of the Effective Time
                  shall have been made or properly accrued on the current
                  balance sheets or will be properly accrued on the books and
                  records of the Company, its Subsidiaries and each ERISA
                  Affiliate as of the Effective Time. None of the Company Plans
                  has any unfunded liabilities which are not reflected on the
                  current balance sheet or the books and records of the Company,
                  its Subsidiaries and each ERISA Affiliates.

2.19     SECURITIES MATTERS

         (a)      Each Shareholder alone, or through his personal
                  representative, has such knowledge and experience in financial
                  and business matters and such experience in evaluating and
                  investing in companies such as Buyer as to be capable of
                  evaluating the merits and risks of an investment in the Buyer
                  Shares. Such Shareholder has the financial ability to bear the
                  economic risk of his investment in the Buyer Shares being
                  acquired hereunder, has adequate means for providing for his
                  current needs and contingencies and has no need for liquidity
                  with respect to his investment in Buyer.

         (b)      Each Shareholder is acquiring the Buyer Shares for his own
                  account, for investment purposes only, and not with the view
                  to, or for resale in connection with, any distribution
                  thereof. Such Shareholder understands that the Buyer Shares
                  have not been distributed pursuant to a prospectus in Canada
                  pursuant to applicable legislation and have not been
                  registered under the SECURITIES ACT of 1933, as amended (the
                  "SECURITIES ACT"), or under the securities laws of Canada, by
                  reason of a specified exemption from the registration or
                  prospectus provisions thereunder which depends upon, among
                  other things, the BONA FIDE nature of such Shareholder's
                  investment intent as expressed herein. Such Shareholder
                  acknowledges that his representations and warranties contained
                  herein are being relied upon by Buyer as a basis for the
                  exemption of the issuance of the Buyer

<PAGE>

                                     - 22 -

                  Shares hereunder from the registration requirements of the
                  Securities Act and any applicable state securities laws.

         (c)      Each Shareholder acknowledges that the Buyer Shares must be
                  held indefinitely until they are subsequently registered under
                  the Securities Act and under applicable state securities laws
                  or an exemption from such registration is available. Such
                  Shareholder has been advised or is aware of: (A) the
                  provisions of Rule 144 and Rule 145 promulgated under the
                  Securities Act which permits limited resale of the securities
                  purchased in a private placement subject to the satisfaction
                  of certain conditions including, among other things, the
                  availability of certain current public information about Buyer
                  and compliance with applicable requirements regarding the
                  holding period and the amount of securities to be sold and the
                  manner of sale and (B) Regulation S promulgated under the
                  Securities Act or other applicable legislation which permits
                  resale of the purchased securities in the United States or
                  Canada subject to certain restrictions. Each Shareholder
                  understands that only Buyer can take action to register the
                  Buyer Shares.

         (d)      Such Shareholder acknowledges that the Buyer Shares must also
                  be held in accordance with applicable securities laws in
                  Canada and the Shareholder undertakes not to sell, transfer or
                  assign the Buyer Shares in contravention of the applicable
                  laws in force in Canada.

         (e)      Each Shareholder or his representative has had an opportunity
                  to discuss the Buyer's business, management, financial affairs
                  and acquisition plans with its management, to review the
                  Buyer's facilities, and to obtain such additional information
                  concerning such Shareholder's investment in the Buyer Shares
                  in order for such Shareholder to evaluate its merits and
                  risks, and such Shareholder has determined that the Buyer
                  Shares are a suitable investment for such Shareholder and that
                  at this time such Shareholder could bear a complete loss of
                  his investment.

         (f)      Each Shareholder is aware that no U.S. or Canada federal,
                  state, provincial or other agency has passed upon or made any
                  finding or determination concerning the fairness of the
                  transactions contemplated by this Agreement or the adequacy of
                  the disclosure of the exhibits and schedules hereto or
                  thereto.

         (g)      Each Shareholder understands that all certificates for the
                  Buyer Shares issued to such Shareholder shall bear a legend in
                  substantially the following form and including such legend as
                  may be required under Canadian securities laws:

                      "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
                      SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY
                      STATE SECURITIES LAWS. THE

<PAGE>

                                     - 23 -

                      SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR
                      OTHERWISE DISPOSED OF WITHOUT SUCH REGISTRATION OR THE
                      DELIVERY TO THE ISSUER OF AN OPINION OF COUNSEL,
                      REASONABLY SATISFACTORY TO THE ISSUER, THAT SUCH
                      DISPOSITION WILL NOT REQUIRE REGISTRATION OF SUCH
                      SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
                      OR ANY STATE SECURITIES LAWS."

2.20     FACILITIES

         Neither the Company nor its Subsidiaries owns any real property.
         Schedule 2.20 sets forth a list of all real property currently leased
         or occupied by the Company or its Subsidiaries or leased or occupied by
         the Company or its Subsidiaries during the previous five (5) years
         (collectively, the "FACILITIES"). Except as set forth on Schedule 2.20,
         the Facilities are not subject to any encumbrances, encroachments,
         building or use restrictions, exceptions, reservations or limitations,
         except those which do not, taken as a whole, result in a Company
         Material Adverse Effect or which prevent any continued use thereof in
         the usual and normal conduct of the Company's or its Subsidiaries'
         business. There are no pending or, to the Company's Knowledge,
         threatened condemnation proceedings relating to any of the Facilities.

2.21     ENVIRONMENTAL MATTERS

         (a)      There is not now nor has there been any treatment, storage,
                  disposal, transportation, handling, production or processing,
                  other than that required in the normal course of business and
                  in compliance in all material respects with all applicable
                  Environmental Laws, by the Company or its Subsidiaries, of any
                  Hazardous Substance at the Facilities. There is not now nor
                  has there been any Release of any Hazardous Substance at, to
                  or from any location for which the Company or any of its
                  Subsidiaries may be liable which require any investigation,
                  response or remediation activities under applicable
                  Environmental Laws the cost of which, individually or in the
                  aggregate, could reasonably be expected to have a Company
                  Material Adverse Effect.

         (b)      To the Company's Knowledge, there is not now nor have there
                  been any underground storage tanks located at the Facilities
                  during the Company's or its Subsidiaries' lease or use
                  thereof, and no such tanks have been removed by or on behalf
                  of the Company or its Subsidiaries from any Facilities at any
                  time.

         (c)      Schedule 2.21(c) contains a list of all Environmental Permits
                  held by the Company. Each of the Company and its Subsidiaries
                  has had within the past three years and presently has each
                  Environmental Permit required under applicable Environmental
                  Laws for the Business as currently

<PAGE>

                                     - 24 -

                  operated and for any alterations or improvements conducted by
                  the Company and its Subsidiaries at the Facilities, except
                  where the failure to have any such Environmental Permit,
                  individually or in the aggregate, would not have a Company
                  Material Adverse Effect. The Company and its Subsidiaries has
                  been and is currently in material compliance with all
                  Environmental Laws, including each Environmental Permit,
                  except where the failure to so comply, individually or in the
                  aggregate, would not have a Company Material Adverse Effect.
                  The Company and its Subsidiaries have made available to Buyer
                  all environmental reports, audits, assessments or studies
                  performed or prepared within the last three years within the
                  possession or control of the Company its Subsidiaries with
                  respect to the Facilities.

         (d)      Neither the Company nor its Subsidiaries has (i) entered into
                  or been subject to any consent decree, compliance order, or
                  administrative order with respect to the Facilities or any
                  property to which any Hazardous Substances generated by the
                  Company or any of its Subsidiaries has been sent for
                  treatment, storage or disposal, which decree or order is still
                  in effect; (ii) within the past three years received notice
                  under the citizen suit provision of any Environmental Law in
                  connection with the Facilities or any other property to which
                  any Hazardous Substance generated by the Company or any of its
                  Subsidiaries has been sent for treatment, storage or disposal;
                  (iii) within the past three years received any request for
                  information, notice, demand letter, administrative inquiry or
                  formal or informal complaint or claim with respect to any
                  Environmental Condition relating to the Facilities or any
                  other property to which any Hazardous Substance generated by
                  the Company or any of its Subsidiaries has been sent for
                  treatment, storage or disposal; or (iv) been subject to or,
                  within the past three years, threatened with any governmental
                  or citizen enforcement action with respect to the Facilities
                  or any other property to which any Hazardous Substance
                  generated by the Company or any of its Subsidiaries has been
                  sent for treatment, storage or disposal, and to the Company's
                  Knowledge, none of the matters set forth in this clause (d)
                  will be forthcoming.

         (e)

                  There are not now nor have there been any capacitors,
                  transformers, other equipment, or materials containing PCBs
                  which are or were owned by the Company or any of its
                  Subsidiaries at or on the Facilities in quantities or
                  concentrations that require removal or remediation by the
                  Company or any of its Subsidiaries under Environmental Laws.
                  To the Company's Knowledge, after due inquiry there is not now
                  nor has there been prior to or during the lease, operation or
                  use of any Facility by the Company or any of its Subsidiaries,
                  asbestos present at or on the Facilities in a condition that
                  requires abatement, encapsulation or removal by the Company or
                  any of its Subsidiaries under any Environmental Laws.

<PAGE>

                                     - 25 -

         For purposes of this Section 2.21, the following defined terms have the
         meanings set forth below:



                  "ENVIRONMENT" means soil, surface waters, ground waters, land,
                  stream sediments, surface or subsurface strata, ambient air
                  and any environmental medium.

                  "ENVIRONMENTAL CONDITION" means any condition with respect to
                  the Environment on or at the Facilities, any property to which
                  any Hazardous Substances generated by the Company or any of
                  its Subsidiaries has been sent for treatment, storage or
                  disposal, whether or not yet discovered, which does or is
                  reasonably likely to result in any material damage, loss,
                  cost, expense, claim, demand, order, or liability to or
                  against Buyer or the Company or any of its Subsidiaries.

                  "ENVIRONMENTAL LAW" means any environmental or health and
                  safety-related law, regulation, rule, ordinance, or legally
                  enforceable order or determination of any Governmental Entity.

                  "ENVIRONMENTAL PERMITS" means any and all federal, state and
                  local governmental permits, licenses and other authorizations
                  and approvals required under any Environmental Law, or that
                  relates to the Environment or to public health and safety or
                  worker health and safety as they may be affected by the
                  Environment.

                  "HAZARDOUS SUBSTANCES" shall mean any flammable material,
                  explosives, radon, radioactive materials, asbestos,
                  urea-formaldehyde foam insulation, polychlorinated biphenyls,
                  petroleum and petroleum by-products, methane, hazardous
                  materials, hazardous waste, or hazardous or toxic substances
                  as defined in the Comprehensive Environmental Response,
                  Compensation and Liability Act of 1980, as amended (42 U.S.C.
                  ss.9601, et seq.), the Hazardous Materials Transportation Act,
                  as amended (49 U.S.C. ss.1801, et seq.), the Resource
                  Conservation and Recovery Act, as amended (42 U.S.C. ss.6901,
                  et seq.), the Toxic Substances Control Act, as amended (15
                  U.S.C.ss.2601, et seq.), Articles 15 and 27 of the New York
                  State Environmental Conservation Law or any other applicable
                  Environmental Law and the regulations promulgated thereunder.

                  "RELEASE" has the same meaning as given to that term in the
                  Comprehensive Environmental Response, Compensation and
                  Liability Act of 1980, as amended (42 U.S.C.ss.9601, et seq.)
                  and the regulations promulgated thereunder.

<PAGE>

                                     - 26 -

2.22     TRANSACTION WITH THE SHAREHOLDERS

         Except as set forth in Schedule 2.22, the Company and its Subsidiaries
         do not owe any amount to the Shareholders or the Shareholder Affiliates
         for money loaned to the Company and the Shareholders and the
         Shareholder Affiliates do not owe any amount to the Company or the
         Subsidiaries for money loaned to any of the Shareholders or the
         Shareholder Affiliates. Except as set forth in Schedule 2.22, the
         Company, the Shareholders and the Shareholder Affiliates have not
         entered into or have any obligation, directly or indirectly, to enter
         into any transaction, including, without limitation, the purchase from,
         sale to or exchange of property with, or the rendering of any service
         by or for the Company, its Subsidiaries, the Shareholders or the
         Shareholder Affiliates, as the case may be.

2.23     CAPITAL EXPENDITURES

         Schedule 2.23 sets forth all of the completed and planned capital
         expenditures of Fishers as of September 30, 2000 in respect of the
         construction of the new additional 20,000 square foot facility situated
         at 7647 County Road, in the town of Fishers in the State of New York
         which all form part of the Fishers' Assets sold to the Surviving
         Corporation as described in Section 1.11.

2.24     USE OF NAME

         Except as set forth on Schedule 2.24 the Company has full exclusive
         right and title to use its corporate name as set forth in its
         certificate of incorporation.

2.25     BROKERS, FINDERS OR FINANCIAL ADVISORS

         No broker, investment banker, financial advisor or other person, other
         than Wit SoundView Corporation, is entitled to any broker's, finder's,
         financial advisor's or other similar fee or commission in connection
         with the transactions contemplated by this Agreement based upon
         arrangements made by or on behalf of the Company, its Subsidiaries or
         any Shareholder.

2.26     EXCLUSIVITY OF REPRESENTATIONS

         THE REPRESENTATIONS AND WARRANTIES MADE BY THE COMPANY AND THE
         SHAREHOLDERS IN THIS AGREEMENT ARE IN LIEU OF AND ARE EXCLUSIVE OF ALL
         OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING WITHOUT LIMITATION ANY
         IMPLIED WARRANTIES. THE COMPANY AND THE SHAREHOLDERS HEREBY DISCLAIM
         ANY SUCH OTHER OR IMPLIED REPRESENTATIONS OR WARRANTIES,
         NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE BUYER OR ITS
         OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY
         DOCUMENTATION OR OTHER INFORMATION, INCLUDING ANY FINANCIAL PROJECTIONS
         OR OTHER SUPPLEMENTAL DATA.

<PAGE>

                                     - 27 -

2.27     FULL DISCLOSURE

         Each of the Shareholders has made or caused to be made due enquiry with
         respect to each of the representations, warranties and statements
         contained in this Agreement and in each of the schedules, certificates,
         documents and other writings referred to herein or furnished to the
         Buyer hereunder, and none of the same contains any untrue statement of
         a material fact or omit a material fact necessary to make the
         statements contained therein not misleading, and all such statements,
         taken as a whole, together with this Agreement, do not contain any
         untrue statement of a material fact or omit a material fact necessary
         to make the statements contained herein and therein not misleading.
         Save and except for those matters disclosed herein, the Shareholders
         have no knowledge of any facts and there are not any facts which should
         reasonably be made known to the Buyer relating to the Company or the
         Subsidiaries not herein disclosed, which might be reasonably expected
         to materially diminish the Buyer's appreciation of the worth or
         profitability of the Company and the Subsidiaries, taken as a whole, or
         which, if known by the Buyer, might be reasonably expected to deter the
         Buyer from completing the transactions herein contemplated.

                                    ARTICLE 3

             REPRESENTATIONS AND WARRANTY OF THE BUYER AND BUYER SUB

Buyer and Buyer Sub hereby jointly and severally represent and warrant to the
Company and the Shareholders, as of the date hereof (except as to any
representation or warranty which specifically relates to an earlier date), as
follows:

3.1      ORGANIZATION AND QUALIFICATIONS

         Each of Buyer and Buyer Sub is a corporation duly organized, validly
         existing and in good standing under the laws of its jurisdiction of
         incorporation, with the requisite corporate power and authority to own
         and use its properties and assets and to carry on its business as
         currently conducted. Buyer and Buyer Sub are each duly qualified to do
         business and is in good standing as a foreign corporation in each
         jurisdiction in which the nature of their respective businesses
         conducted or property owned by each makes such qualification necessary,
         except where the failure to be so qualified or in good standing, as the
         case may be, would not reasonably be expected to have a Buyer Material
         Adverse Effect. For purposes of this Agreement, "BUYER MATERIAL ADVERSE
         EFFECT" means any change, effect, event, occurrence or state of facts
         (or any development that has had or is reasonably likely to have any
         change or effect) that is materially adverse to the business, financial
         condition or results of operations of the Buyer and its subsidiaries
         (including Buyer Sub), taken as a whole, provided, however, any adverse
         change, effect or circumstance (a) primarily arising out of or
         resulting primarily from actions contemplated by the parties hereto in
         connection with this Agreement; (b) resulting from economic factors
         affecting the economy as a whole; (c) resulting in changes from the
         market price or trading volume of the

<PAGE>

                                     - 28 -

         Buyer Subordinate Voting Shares; or (d) resulting from factors
         generally affecting the specific markets in which the Buyer and its
         subsidiaries compete shall not be deemed in themselves, either alone or
         in combination, to constitute, and shall not be taken into account in
         determining whether there has been, a Buyer Material Adverse Effect.

3.2      CAPITALIZATION

         The authorized, issued and outstanding shares of each class of capital
         stock of Buyer and Buyer Sub are as set forth in Exhibit C. Exhibit C
         also sets forth the number of shares reserved for issuance pursuant to
         the Buyer's duly approved stock option plans (collectively, the "BUYER
         STOCK OPTION PLANS"), and the total number of options outstanding under
         Buyer Stock Option Plans or otherwise. All of the issued and
         outstanding shares of capital stock of Buyer and Buyer Sub and Buyer
         Sub have been duly authorized and validly issued and are fully paid and
         non-assessable. Except as provided in this Agreement and pursuant to
         the Buyer Stock Option Plans: (a) no subscription, warrant, option,
         convertible security or other right (contingent or otherwise) to
         purchase or acquire any shares of capital stock of Buyer or Buyer Sub
         is authorized or outstanding; (b) Buyer and Buyer Sub have no
         obligation (contingent or otherwise) to issue any subscription,
         warrant, option, convertible security or other such right or to issue
         or distribute to holders of any shares of their capital stock any
         evidences of indebtedness or assets of Buyer; and (c) except for the
         preferred shares series 1 of the Buyer of which 800,000 are issued and
         outstanding, Buyer and Buyer Sub have no obligation (contingent or
         otherwise) to purchase, redeem or otherwise acquire any shares of their
         capital stock or any interest therein or to pay any dividend or make
         any other distribution in respect thereof. All of the issued and
         outstanding shares of capital stock of Buyer have been offered, issued
         and sold by Buyer in compliance with applicable federal and state
         securities laws or pursuant to valid exemptions therefrom.

3.3      AUTHORIZATION

         Buyer and Buyer Sub each have the requisite corporate power and
         authority to enter into and to consummate the transactions contemplated
         by this Agreement and otherwise to carry out their obligations
         hereunder. The execution and delivery of this Agreement by the Buyer
         and Buyer Sub and the consummation by them of the transactions
         contemplated hereby have been duly authorized by all necessary action
         on the part of the Buyer and Buyer Sub, and no further action is
         required by the Buyer or Buyer Sub. This Agreement has been duly
         executed by the Buyer and Buyer Sub and, assuming this Agreement
         constitutes a valid and binding obligation of the Company and the
         Shareholders, this Agreement constitutes a valid and binding agreement
         of the Buyer and Buyer Sub enforceable against each of them in
         accordance with its terms, subject, however, as to enforcement, to
         bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
         and similar laws of general applicability relating to or affecting
         creditors' rights and to general principles of equity, regardless of
         whether such

<PAGE>

                                     - 29 -

         enforceability is considered in equity or at law. Neither Buyer nor
         Buyer Sub is in violation of any of the provisions of its Certificate
         of Incorporation, bylaws or other organizational documents.

3.4      NON-CONTRAVENTION

         Subject to regulatory approval under applicable securities laws and
         regulations, including those of any stock exchanges, the execution and
         delivery of this Agreement do not, and the consummation of the
         transactions contemplated by this Agreement and compliance with the
         provisions of this Agreement will not, conflict with, or result in any
         violation of or default (with or without notice or lapse of time, or
         both) under, or give rise to a right of termination, cancellation or
         acceleration of any obligation or to loss of a material benefit under,
         or result in the creation of any Lien upon any of the properties or
         assets of the Buyer or any of its subsidiaries (including Buyer Sub)
         pursuant to, any provision of: (a) the Certificate of Incorporation or
         By-laws of the Buyer or any provision of the comparable organizational
         documents of Buyer or any of its subsidiaries; (b) any loan or credit
         agreement, note, bond, mortgage, indenture, lease or other agreement,
         instrument, permit, concession, franchise or license applicable to the
         Buyer or any of its subsidiaries or their respective properties or
         assets; or (c) subject to the governmental filings and other matters
         referred to in Section 3.5, any statute, law, rule, regulation,
         judgment, order or decree applicable to the Buyer or any of its
         subsidiaries or their respective properties or assets, other than, in
         the case of clauses (b) and (c) above, any such conflicts, violations,
         defaults, rights or Liens that individually or in the aggregate would
         not reasonably be expected to have a Buyer Material Adverse Effect or
         prevent or materially delay the consummation of any of the transactions
         contemplated by this Agreement.

3.5      CONSENTS AND APPROVALS

         No consent, approval, order or authorization of, or registration,
         declaration or filing with, any Governmental Entity is required by or
         with respect to the Buyer or any of its subsidiaries (including Buyer
         Sub) in connection with the execution and delivery of this Agreement by
         the Buyer or the consummation by the Buyer and Buyer Sub of the
         transactions contemplated by this Agreement, except for: (a) the filing
         of a pre-merger notification and report form under the HSR Act and
         applicable filings under foreign antitrust competition laws; (b)
         approvals for listing of the shares to be issued in furtherance of the
         transactions set forth herein on The Toronto Stock Exchange and for
         quotation on the Nasdaq National Market and any approval of the
         shareholders of the Buyer; (c) such filings, consents, approvals,
         orders, registrations and declarations as may be required under the
         laws of any foreign country in which the Buyer or any of its
         subsidiaries conducts any business or owns any assets; (c) such
         filings, consents, approvals, orders, registrations and declarations as
         may be necessary as a result of the issuance of the Buyer Shares or any
         facts or circumstances relating solely to the Company; and (d) such
         other consents, approvals, orders, authorizations, registrations,
         declarations and filings the failure of which to be obtained or made
         would not,

<PAGE>

                                     - 30 -

         individually or in the aggregate, reasonably be expected to have a
         Buyer Material Adverse Effect or prevent or materially delay the
         consummation of any of the transactions contemplated by this Agreement.

3.6      LITIGATION; PROCEEDINGS

         There is no action, suit or proceeding, governmental or otherwise,
         pending or, to the Buyer's Knowledge, threatened against the Buyer, any
         of its subsidiaries (including Buyer Sub) or any of their respective
         properties or business that questions the validity of this Agreement,
         the right of the Buyer or Buyer Sub to enter into this Agreement or to
         consummate the transactions contemplated hereby, or that, individually
         or in the aggregate, would reasonably be expected to have a Buyer
         Material Adverse Effect. There is no judgment, decree, injunction, rule
         or order of any Governmental Entity outstanding against the Buyer or
         Buyer Sub or any of their subsidiaries having, or which, insofar as
         reasonably can be foreseen, in the future would have, any such effect.

3.7      AUTHORIZATION FOR BUYER SHARES

         Buyer has taken all necessary action to issue the Buyer Shares by the
         Effective Time. The Buyer Shares have been duly authorized and, when
         issued and delivered in accordance with the terms of this Agreement,
         will be validly issued, fully paid and non-assessable and free and
         clear of all Liens (other than restrictions on transfer imposed by
         applicable securities laws) and will not be issued in violation of any
         pre-emptive rights, rights of first refusal or similar rights.

3.8      CANADIAN DOCUMENTS

         Buyer has provided to the Company and each Shareholder each statement
         and report, as may be required to have been filed as of the date hereof
         under Canadian securities laws (the "CANADIAN DOCUMENTS"). As of their
         respective filing dates, the Canadian Documents complied in all
         material respects with the requirements of the securities laws in force
         in Canada, and none of the Canadian Documents contained any untrue
         statement of a material fact or omitted to state a material fact
         required to be stated therein or necessary to make the statements made
         therein, in light of the circumstances in which they were made, not
         misleading, except to the extent corrected by a subsequently filed
         Canadian Document. The financial statements of Buyer being the
         consolidated audited balance sheets of the Buyer as at August 31, 1999
         and 1998 and the statements of earnings, retained earnings and cash
         flows for each of the years in the three years ended August 31, 1999
         and the unaudited interim consolidated balance sheet, statements of
         earnings, retained earnings and cash flows of the Buyer for the nine
         months ended May 31, 2000 and May 31, 1999, including the notes thereto
         (the "BUYER FINANCIAL STATEMENTS") were complete and correct in all
         material respects as of their respective dates, complied as to form in
         all material respects with applicable accounting requirements with
         respect thereto as of their respective dates, and have

<PAGE>

                                     - 31 -

         been prepared in accordance with Canadian GAAP applied on a basis
         consistent throughout the periods indicated and consistent with each
         other (except as may be indicated in the notes thereto or, in the case
         of unaudited statements included in the Buyer's interim reports. The
         balance sheets included in the Buyer Financial Statements present
         fairly in all material respects as of their respective dates the
         financial condition of the Buyer (subject, in the case of interim
         financial statements, to normal, recurring year-end adjustments that
         may be required upon audit).

3.9      NO UNDISCLOSED LIABILITIES

         None of the Buyer and its subsidiaries (including Buyer Sub) have any
         liability (whether known or unknown, whether absolute or contingent,
         whether liquidated or unliquidated and whether due or to become due)
         which is material to the Buyer and its subsidiaries, taken as a whole,
         except for: (a) liabilities shown on the latest balance sheet included
         in the Canadian regulatory authorities Documents filed with the
         Canadian regulatory authorities prior to the date of this Agreement
         (the "BUYER BALANCE SHEET DATE"); (b) liabilities which have arisen in
         the ordinary course of business since the Buyer Balance Sheet Date; and
         (c) contractual liabilities incurred in the ordinary course of business
         which are not required by Canadian GAAP to be reflected on a balance
         sheet.

3.10     ABSENCE OF CERTAIN CHANGES OR EVENTS

         Since the Buyer Balance Sheet Date, the Buyer has conducted its
         business only in the ordinary course and there has not occurred any
         events or changes that have had, or would reasonably be expected to
         have, individually or in the aggregate, a Buyer Material Adverse
         Effect.

3.11     INVESTMENT INTENT

         The Buyer is acquiring the Company Shares for its own account for
         investment purposes only and not with a view to or for distributing or
         reselling such Company Shares or any part thereof or interest therein
         without prejudice, however, to Buyer's rights to sell such securities
         in compliance with applicable Canadian and U.S. federal and state
         securities laws.

3.12     EXPERIENCE OF THE BUYER

         The Buyer, through its representatives, has such knowledge,
         sophistication and experience in business and financial matters so as
         to be capable of evaluating the merits and risks of the prospective
         investment in the Company Shares and has so evaluated the merits and
         risks of such investment.

3.13     BROKERS, FINDERS OR FINANCIAL ADVISORS

         Except for the fees payable by Buyer to Merrill Lynch, Pierre, Fenner &
         Smith or any of its Affiliate, no broker, investment broker, financial
         advisor or other person

<PAGE>

                                     - 32 -

         is entitled to any broker's, finder's, financial advisor's or other
         similar fee or commission from Buyer in connection with the
         transactions contemplated by this Agreement.

3.14     FULL DISCLOSURE

         The Buyer has made or caused to be made due enquiry with respect to
         each of the representations, warranties and statements contained in
         this Agreement and in each of the schedules, certificates, documents
         and other writings referred to herein or furnished to the Shareholders
         and the Company hereunder, and none of the same contains any untrue
         statement of a material fact or omit a material fact necessary to make
         the statements contained therein not misleading, and all such
         statements, taken as a whole, together with this Agreement, do not
         contain any untrue statement of a material fact or omit a material fact
         necessary to make the statements contained herein and therein not
         misleading.

                                    ARTICLE 4

                            COVENANTS OF THE PARTIES

4.1      CONDUCT OF BUSINESS BY THE COMPANY

         Except as set forth on Schedule 4.1, and except to the extent consented
         to by Buyer or as expressly permitted or contemplated by this
         Agreement, during the period from the date of this Agreement to the
         Effective Time, the Company shall carry, and cause its Subsidiaries to,
         on its business in the usual, regular and ordinary course in
         substantially the same manner as heretofore conducted and, to the
         extent consistent therewith, use reasonable efforts to preserve intact
         its current business organizations, keep available the services of its
         current officers and employees and preserve its relationships with
         customers, suppliers, licensors, licensees, distributors and others
         having business dealings with it to the end that their goodwill and
         ongoing businesses shall be unimpaired in any material respect at the
         Effective Time. Without limiting the generality of the foregoing,
         without Buyer's consent (which consent shall not be unreasonably
         withheld), during the period from the date of this Agreement to the
         Effective Time, Shareholders shall not permit and the Company shall not
         permit any of its Subsidiaries to:

         (a)      declare, set aside or pay any dividends on, or make any other
                  distributions in respect of, any of its capital stock, except
                  for distributions of current year subchapter "S" corporation
                  earnings in amounts determined by the Company's Board of
                  Directors to reflect the taxes payable on such earnings, (i)
                  split, combine or reclassify any of its capital stock or issue
                  or authorize the issuance of any other securities in respect
                  of, in lieu of or in substitution for shares of its capital
                  stock, or (ii) purchase, redeem or otherwise acquire any
                  shares of its capital stock or any other securities, or any
                  rights, warrants or options to acquire any such shares or
                  other securities;

<PAGE>

                                     - 33 -

         (b)      issue, deliver, sell, pledge or otherwise encumber any shares
                  of its capital stock, any other voting securities or any
                  securities convertible into, or any rights, warrants or
                  options to acquire, any such shares, voting securities or
                  convertible securities;

         (c)      amend its Certificate of Incorporation or By-laws or other
                  comparable organization documents;

         (d)      acquire or agree to acquire (i) by merging or consolidating
                  with, or by purchasing a substantial portion of the assets of,
                  or by any other manner, any business or any corporation,
                  partnership, joint venture, association or other business
                  organization or division thereof, or (ii) any assets that are
                  material, individually or in the aggregate, to the Company,
                  except purchases in the ordinary course of business consistent
                  with past practice;

         (e)      sell, lease, license, mortgage or otherwise encumber or
                  subject to any Lien (other than Liens pursuant to its existing
                  credit facilities) or otherwise dispose of any of its
                  properties or assets which are material, individually or in
                  the aggregate, to the Company, except in the ordinary course
                  of business consistent with past practice;

         (f)      (i) incur any indebtedness for borrowed money or guarantee any
                  such indebtedness of another person, issue or sell any debt
                  securities or warrants or other rights to acquire any debt
                  securities, or guarantee any debt securities of another
                  person, except for borrowings under its existing credit
                  facilities in amounts necessary to make distributions for
                  taxes as described in Section 4.1(a), or for working capital
                  purposes in an aggregate amount of less than $1,000,000, the
                  endorsement of checks in the normal course of business and the
                  extension of credit in the normal course of business, or (ii)
                  make any loans, advances or capital contributions to, or
                  investments in, any other Person, other than advances to
                  employees in accordance with past practice;

         (g)      except for the items currently contracted for by the Company,
                  make or agree to make any new capital expenditure or
                  expenditures which, individually, is in excess of $50,000 or,
                  in the aggregate, are in excess of $100,000;

         (h)      make any material Tax election or settle or compromise any
                  material income Tax liability;

         (i)      pay, discharge, settle or satisfy any claims, liabilities or
                  obligations (absolute, accrued or contingent, asserted or
                  unasserted), other than the payment, discharge or
                  satisfaction, in the ordinary course of business consistent
                  with past practice or in accordance with their terms, of
                  liabilities reflected or reserved against in, or contemplated
                  by, the most recent consolidated financial statements (or the
                  notes thereto) included in

<PAGE>

                                     - 34 -

                  the Financial Statements or incurred in the ordinary course of
                  business consistent with past practice;

         (j)      except in the ordinary course of business, modify, amend or
                  terminate any Company Contract, or waive, release or assign
                  any material rights or claims;

         (k)      except as required to comply with applicable law, (i) adopt,
                  enter into or amend any Company Plan, (ii) increase in any
                  material manner the compensation or fringe benefits of, or pay
                  any bonus to, any director, officer or employee of the Company
                  or its Subsidiaries (except for normal increases or bonuses in
                  the ordinary course of business consistent with past practice)
                  or (iii) grant any awards under any Employee Benefit Plan
                  (including the grant of stock options, stock appreciation
                  rights, stock based or stock related awards, performance units
                  or restricted stock, or the removal of existing restrictions
                  in any Employee Benefit Plan or agreement or awards made
                  thereunder);

         (l)      other than as required by law or GAAP, make any material
                  change to its accounting policies or procedures; or

         (m)      authorize any of, or commit or agree to take any of, the
                  foregoing actions.

4.2      PUBLIC ANNOUNCEMENTS

         From the date of this Agreement until the earlier of the Effective Time
         or the termination of this Agreement, no party hereto will issue or
         cause the publication of any press release or other public announcement
         with respect to this Agreement or the transactions contemplated hereby
         without the prior consent of Buyer (in the case of the Shareholders or
         the Company) or the Shareholders (in the case of Buyer), which consent
         shall not be unreasonably withheld; provided, however, that: (a)
         nothing herein will prohibit either party from issuing or causing
         publication of any such press release or public announcement to the
         extent that such party's counsel reasonably determines such action to
         be required by law, or the regulations of any government agency or the
         principal exchange or market on which Buyer Subordinate Voting Shares
         are traded, in which case the party making such determination will, to
         the greatest extent practicable in light of the circumstances, use best
         efforts to allow the other party reasonable time to comment on such
         release or announcement in advance of its issuance; and (b) Buyer, the
         Company and the Shareholders may disclose this Agreement and the
         transactions contemplated hereby to third parties in connection with
         securing consents of such third parties and in connection with any
         permits, approvals, filings or consents required by law to be obtained.
         To the extent feasible, prior to the Closing, all press releases or
         other announcements or notices regarding the transactions contemplated
         by this Agreement shall be made jointly by Buyer and the Company.

<PAGE>

                                     - 35 -

4.3      NON-SOLICITATION; NON-NEGOTIATION

         The Company and the Shareholders agree that they will not, and they
         will use their commercially reasonable efforts to cause their
         representatives, agents or employees acting on their behalf, not to,
         after the execution of this Agreement until the earlier of (a) the
         termination of this Agreement or (b) the Effective Time, directly or
         indirectly, solicit, encourage, initiate, negotiate or discuss with any
         third party or permit the consummation of any acquisition proposal
         relating to or affecting the Company, or any direct or indirect
         interests in the Company, whether by exchange offer, purchase of assets
         or stock, business combination, merger or other transaction, and that
         the Company and the Shareholders will promptly advise Buyer of the
         terms of any communications they may receive relating to any bid for
         all or any part of any such interest in the Company.

4.4      COMMERCIALLY REASONABLE EFFORTS

         Subject to the terms and conditions herein, each of the parties hereto
         agrees to use all commercially reasonable efforts to take, or cause to
         be taken, all action, and to do, or cause to be done as promptly as
         practicable, all things necessary, proper and advisable under
         applicable laws and regulations to consummate and make effective the
         transactions contemplated by this Agreement, including without
         limitation, fulfilment of the conditions to closing set forth herein.
         If at any time after the Closing any further action is necessary or
         desirable to carry out the purposes of this Agreement, including,
         without limitation, the execution of additional instruments, the proper
         officers and directors of the Buyer and the Company and the
         Shareholders shall take all such necessary action.

4.5      HART-SCOTT-RODINO ACT AND FOREIGN REGULATORY REQUIREMENTS

         (a)      To the extent required by law, each of the Company and the
                  Buyer and each of the Shareholders shall (i) prepare and file
                  as promptly as practicable with the Department of Justice and
                  the Federal Trade Commission the notification and report form,
                  if any, required for the transactions contemplated hereunder
                  by the HSR Act, including without limitation, a request for
                  early termination of the waiting period thereunder, as well as
                  any filings with, or submissions to, any antitrust,
                  competition or other similar authority in any foreign
                  jurisdiction where such filing is required in connection with
                  the transactions contemplated hereby, and (ii) respond
                  promptly to inquiries, if any, from the Federal Trade
                  Commission or the Department of Justice or the antitrust,
                  competition or comparable governmental authority of any
                  foreign jurisdiction in connection with such filing. The Buyer
                  will be responsible for all filing fees in connection with the
                  filings required by the HSR Act or the antitrust, competition
                  or comparable laws of any foreign jurisdiction and each party
                  shall bear the expenses for the preparation of their
                  documentation for the filing.

<PAGE>

                                     - 36 -

         (b)      Without limiting the generality of the foregoing, the Company
                  and the Buyer each agree to cooperate and to use their
                  respective commercially reasonable efforts to obtain any
                  government clearances required to consummate the transactions
                  contemplated by this Agreement (including through compliance
                  with the HSR Act), to respond to any requests for information
                  from Governmental Entities, and to contest and resist any
                  action, including any legislative, administrative or judicial
                  action, and to have vacated, lifted, reversed or overturned
                  any decree, judgment, injunction or other order (whether
                  temporary, preliminary or permanent (an "ORDER") that
                  restricts, prevents or prohibits the consummation of the
                  transactions contemplated by this Agreement, including,
                  without limitation, by vigorously pursuing all available
                  avenues of administrative and judicial appeal and all
                  available legislative action. The parties also agree to take
                  any and all of the following actions to the extent
                  commercially reasonable to obtain the approval of any
                  Governmental Entity with jurisdiction over the enforcement of
                  any applicable laws regarding the transactions contemplated by
                  this Agreement: entering into negotiations; providing
                  information; substantially complying with any second request
                  for information pursuant to the HSR Act; making proposals;
                  entering into and performing agreements or submitting to
                  judicial or administrative orders; selling or otherwise
                  disposing of, or holding separate (through the establishment
                  of a trust or otherwise) particular assets or categories of
                  assets, or businesses of the Company or the Buyer; and
                  withdrawing from doing business in a particular jurisdiction.
                  The parties hereto will, to the extent permitted by applicable
                  law, consult and cooperate with one another, and consider in
                  good faith the views of one another, in connection with any
                  analyses, appearances, presentations, memoranda, briefs,
                  arguments, opinions and proposals made or submitted by or on
                  behalf of any party hereto in connection with proceedings
                  under or relating to the HSR Act or any other federal, state
                  or foreign antitrust or fair trade law. Notwithstanding
                  anything to the contrary in this section, neither the Company
                  nor the Buyer shall be required to take any action that would
                  reasonably be expected to substantially impair the overall
                  benefits expected, as of the date hereof, to be realized from
                  the consummation of the transactions contemplated by this
                  Agreement.

4.6      COVENANTS OF PARTIES

         From the date of this Agreement until the earlier of the Effective Time
         or the termination of this Agreement, each of the parties to this
         Agreement covenants and agrees that it shall take no action which
         would: (a) materially adversely affect the ability of any party to this
         Agreement to obtain any consents required for the transactions
         contemplated hereby; or (b) materially adversely affect the ability of
         any party to perform its covenants and agreements under this Agreement.

<PAGE>

                                     - 37 -

4.7      MODIFICATION OF DISCLOSURE SCHEDULES

         At any time prior to four business days before the Effective Time, the
         Company and the Shareholders, by written notice to the Buyer, may amend
         or supplement the Disclosure Schedules attached to this Agreement with
         respect to any matter that, if existing or occurring at or prior to the
         Effective Time, would have been required to be set forth or described
         in the Disclosure Schedules or that is necessary to complete or correct
         any information in any representation or warranty contained in ARTICLE
         2. The Buyer shall have two business days to object in writing to such
         amendment or supplement. If such amendment or supplement is considered
         by the Buyer as a Company Material Adverse Effect then the Buyer shall
         have the right to terminate this Agreement as described in Section
         8.1(d). If the Buyer does not object within such two business day
         period, then such amendment or supplement shall be given effect for all
         purposes of this Agreement.

4.8      CONTACT WITH CUSTOMERS AND SUPPLIERS

         The Buyer (and all of its agents and affiliates and any employees,
         directors or officers thereof) will not contact and communicate with
         the employees, customers, suppliers and licensors of the Company in
         connection with the transactions contemplated hereby unless it has
         received the prior written consent of the Company, which consent shall
         not be unreasonably withheld but may be conditioned in any reasonable
         manner.

4.9      SECONDARY OFFERING

         (a)      THE BUYER SHALL:

                  (i)      use its commercially reasonable efforts to file a
                           registration statement on Form F-1 (the "SECONDARY
                           REGISTRATION STATEMENT") with the SEC within 90 days
                           after the Closing in order to register the resale by
                           the Shareholders of Buyer Shares in an underwritten
                           public offering led by an underwriter selected by the
                           Buyer equal to any number of Buyer Shares not subject
                           to the lock-up as set forth in Section 5.2(i)
                           provided, however, that the aggregate market value of
                           the Buyer Shares registered for resale shall not be
                           less than US$100,000,000 or more than US$300,000,000
                           (including any over-allotment option) (based upon the
                           average closing price quoted on the Nasdaq National
                           Market for the five trading days ending on the fifth
                           day prior to the filing of such Registration
                           Statement); and

                  (ii)     upon the effectiveness of such Registration
                           Statement, facilitate an underwritten secondary
                           public offering (the "SECONDARY OFFERING") led by an
                           underwriter selected by the Buyer of the

<PAGE>

                                     - 38 -

                           Buyer Shares registered under the Secondary
                           Registration Statement;

                  (iii)    have the right, however, to (A) postpone such filing
                           of the Secondary Registration Statement or
                           facilitation of such Secondary Offering for a period
                           of up to 90 days after the Closing if the Buyer is
                           engaged in any bona fide proposal for a merger,
                           acquisition or material financing which, in the good
                           faith determination of the Board of Directors of the
                           Buyer, would be adversely affected by the
                           Registration Statement or the Offering to the
                           material detriment of the Buyer, or (B) need not make
                           such effort to file the Registration Statement or
                           facilitate such Offering if the Board determines in
                           good faith after consulting with the Buyer's
                           financial advisors that the Offering would materially
                           adversely affect the existing shareholders of the
                           Buyer due to the capital market conditions at such
                           time.

         (b)      In connection with the Secondary Offering, the Buyer and the
                  Shareholders shall agree to execute an underwriting agreement
                  with the underwriter of the Secondary Offering which is
                  customary for secondary equity offerings, including 90-day
                  "market stand-off" provisions.

         (c)      The Buyer shall be obligated to pay any expenses incurred in
                  connection with the preparation and filing of the Secondary
                  Registration Statement, and the Shareholders shall be
                  obligated to pay any underwriting commissions or discounts in
                  connection with the Secondary Offering.

         (d)      The Buyer and the Shareholders shall enter into customary
                  indemnification arrangements, pursuant to which the Buyer
                  shall indemnify the Shareholders with respect to any
                  misstatements or omissions made in the Secondary Registration
                  Statement relating to the Buyer; provided, however, that the
                  Buyer will not be liable in any such case if and to the extent
                  that any such loss, claim, damage or liability arises out of
                  or is based upon an untrue statement or alleged untrue
                  statement or omission or alleged omission so made in
                  connection with the business and financial information
                  relating to the Company prior to the Closing.

         (e)      If the Secondary Offering is not completed by March 30, 2001,
                  the Shareholders may make one written request (which request
                  shall be made by Mr. Klimasewski on behalf of the
                  Shareholders) to the Buyer to register, and the Buyer shall
                  register, under the Securities Act (other than pursuant to a
                  Registration Statement on Form F-4 or S-8 or any successor
                  thereto) (a "DEMAND REGISTRATION") for any number of Buyer
                  Shares not subject to the lock-up as set forth in Section
                  5.2(i) received by the Shareholders pursuant to this Agreement
                  for the resale of such shares in an underwritten public
                  offering led by an underwriter selected by the

<PAGE>

                                     - 39 -

                  Shareholders and subject to the prior consent of the Buyer,
                  which consent shall not be unreasonably withheld; provided
                  that the Buyer shall not be obligated to effect (x) more than
                  one Demand Registration for the Shareholders or (y) a Demand
                  Registration if the Shareholders propose to sell Buyer Shares
                  with an aggregate price (based upon the average closing price
                  quoted on the Nasdaq National Market for the five trading days
                  ending on the fifth day prior to the date of such request) of
                  less than US$100,000,000 or not more than US$300,000,000. If
                  at the time the Demand Registration is made pursuant to this
                  Section 4.9(e), the Buyer is engaged in any bona fide proposal
                  for a merger, acquisition or material financing which, in the
                  good faith determination of the Board of Directors of the
                  Buyer, would be adversely affected by the Demand Registration
                  to the material detriment of the Buyer, then the Buyer may at
                  its option direct that such request be delayed for a
                  reasonable period not in excess of 90 days from the date of
                  the written request. The request for a Demand Registration by
                  the Shareholders shall state the amount of the Buyer Shares
                  proposed to be sold and the lead underwriter selected by the
                  Shareholders. The Buyer shall be obligated to pay any expenses
                  incurred in connection with the Demand Registration and the
                  Shareholders shall be obligated to pay any underwriting
                  commissions or discounts in connection with the Demand
                  Registration. It being understood that such sales by
                  Shareholders in Section 4.9 shall be made only to U.S.
                  residents through the Nasdaq National Market.

         (f)      Without limiting or otherwise restricting the rights granted
                  to the Shareholders pursuant to this Section 4.9 or Section
                  6.3, if the Buyer proposes to register (including for this
                  purpose a registration effected by the Buyer for stockholders
                  other than the Shareholders) any of its stock or other
                  securities under the Securities Act in connection with the
                  public offering of such securities (other than a registration
                  relating solely to the sale of securities to participants in a
                  Buyer employee benefit plan, or a registration on any form
                  which does not include substantially the same information as
                  would be required to be included in a registration statement
                  covering the sale of the Buyer Shares), the Buyer shall,
                  within five (5) days before the anticipated filing date, give
                  each Shareholder written notice of such registration. Upon the
                  written request of any Shareholder given within five (5) days
                  after the date of such notice by the Buyer, the Buyer shall,
                  subject to the provisions of this Section, cause to be
                  registered under the Securities Act all of the Buyer Shares
                  that each such Shareholder has requested to be registered. The
                  failure of any Shareholder to respond within such five-day
                  period shall be deemed to be a waiver of such Shareholder's
                  rights under this Section 4.9(f), only with respect to the
                  particular registration for which notice has been given. If a
                  Shareholder sends the Buyer a written request for inclusion of
                  part or all of such Shareholder's Buyer Shares in a
                  registration, such Shareholder shall not be entitled to
                  withdraw or revoke such request without prior written consent
                  of the Buyer in its sole discretion unless, as a result of

<PAGE>

                                     - 40 -

                  facts or circumstances arising after the date on which such
                  request was made relating to the Buyer or to market
                  conditions, such Shareholder reasonably determines that
                  participation in such registration would have a material
                  adverse effect on such Shareholder. In connection with any
                  offering involving an underwriting of shares of the Buyer's
                  capital stock, the Buyer shall not be required under this
                  Section 4.9(f) to include any of the Buyer Shares in such
                  underwriting unless the Shareholders accept the terms of the
                  underwriting as agreed upon between the Buyer and the
                  underwriters selected by it (or by other persons entitled to
                  select the underwriters). If the total amount of securities,
                  including Buyer Shares requested by Shareholders to be
                  included in such offering, exceeds the amount of securities
                  that the underwriters determine in their sole discretion is
                  compatible with the success of the offering in view of the
                  market conditions, then the Buyer shall be required to include
                  in the offering only that number of such securities, including
                  Buyer Shares, which the underwriters determine in their sole
                  discretion will not jeopardize the success of the offering,
                  FIRST all of the securities to be offered for the account of
                  the Buyer, SECOND, the securities to be offered for the
                  account of the selling shareholders (including the selling
                  Shareholders), pro rata based on the number of securities
                  owned by such shareholders and entitled to inclusion therein
                  on the basis of a registration rights agreement with the
                  Buyer; and THIRD, any other securities requested to be
                  included in such offering. This Section 4.9(f) shall cease to
                  apply on June 1, 2002, subject to the Buyer complying with
                  Sections 4.9 and 6.3.

4.10     OTHER ACTIONS

         No party shall take any action, except in every case as may be required
         by applicable law, that would or is intended to result in: (a) any of
         its representations and warranties set forth in this Agreement that are
         qualified as to materiality being or becoming untrue; (b) any of such
         representations and warranties that are not so qualified becoming
         untrue in any manner having a Company Material Adverse Effect or Buyer
         Material Adverse Effect, as the case may be; (c) any of the conditions
         set forth in this Agreement not being satisfied or in a violation of
         any provision of this Agreement; or (d) adversely affecting the ability
         of any of them to obtain any of the consents or approvals required from
         any Governmental Entity as a condition to Closing.

4.11     TAX RETURN FILING.

         (a)      The Shareholders shall cause the Company to prepare, in a
                  manner consistent with past practices, and timely file
                  (including extensions of time to file) all Tax Returns
                  required to be filed by the Company, the due date of which
                  (without extensions) occurs on or before the date of the
                  Closing and pay (i) all Taxes due with respect to any such Tax
                  Returns, and (ii) all other Taxes due or claimed to be due
                  from or with respect to the Company on or before the date of
                  the Closing; provided that the Shareholders shall

<PAGE>

                                     - 41 -

                  submit drafts of all such Tax Returns that are related to
                  Taxes based on the income of the Company to Buyer no later
                  than 30 days prior to the due date of such Tax Return, for
                  Buyer's review and comment.

         (b)      The Company will prepare and timely file any Tax Returns due
                  to be filed by the Company after the date of the Closing but
                  relating to periods of time prior to the date of the Closing.

         (c)      The Buyer will, or will cause the Company to prepare and
                  timely file all Tax Returns with respect to the Company that
                  relate to the Straddle Period and are required to be filed
                  after the date of the Closing.

         (d)      The Shareholders will take whatever action is necessary to
                  maintain the S status of the Company for federal purposes and
                  for the purposes of each state listed in Schedule 2.12 as a
                  state in which the Company is treated as an S corporation,
                  through the date that is one day prior to Closing.

         (e)      The Shareholders will not cause the Company to make any
                  additional federal tax elections under the Code with respect
                  to the Company for any tax period ending after the date of the
                  Closing.

4.12     ASSISTANCE AND COOPERATION

         After the date of the Closing, each of the Shareholders and Buyer shall
         as may reasonably be requested:

         (a)      assist (and, where appropriate, cause their respective
                  affiliates to assist) the other party in preparing any Tax
                  Returns or reports which such other party is responsible for
                  preparing and filing in accordance with Section 4.11;

         (b)      cooperate fully in preparing for any audits of, or disputes
                  with taxing authorities regarding, any Tax Returns of the
                  Company or the Subsidiaries;

         (c)      make available to the other and to any taxing authority to the
                  extent reasonably requested all information, records, and
                  documents relating to Taxes of the Company or the
                  Subsidiaries;

         (d)      provide timely notice to the other in writing of nay pending
                  or threatened tax audits or assessments of the Company or the
                  Subsidiaries for any taxable period (or portion thereto)
                  ending on or prior to the date of the Closing; and

         (e)      furnish the other with copies of all correspondence received
                  from any taxing authority in connection with any tax audit or
                  information requested with respect to any such taxable period.

<PAGE>

                                     - 42 -

         Any information obtained under the provisions of this Section 4.12
         shall be kept confidential except as may otherwise be necessary in
         connection with the filing of Tax Returns or claims for refund or in
         conducting an audit or other proceeding.

4.13     SUBCHAPTER S RELIEF.

         In the event of an inadvertent termination of the Company's S
         corporation status prior to the date of the Closing for federal or
         state purposes, the Shareholders will use their best efforts to obtain
         relief with the appropriate taxing authority.

4.14     TAX COVENANTS

         (a)      Buyer has been engaged in an active trade or business outside
                  the United States (within the meaning of Treas. Reg.
                  ss.1.367(a)-2T(b)(2) and (3)) for the entire 36-month period
                  ending on the date of the Closing. Buyer has no intention to
                  substantially dispose of or discontinue such trade or
                  business. For this representation, the activities of any
                  qualified subsidiary of Buyer (as defined in Treas.
                  Reg.ss.1.367(a)-3(c)(5)(vii)) or any qualified partnership
                  owned by Buyer (as defined in Treas.
                  Reg.ss.1.367(a)-3(c)(5)(viii)), may be considered the
                  activities of Buyer.

         (b)      (i)      Fifty percent (50) or less of both the total voting
                           power and the total value of the stock of Buyer will
                           be received in the Merger, in the aggregate, by the
                           Shareholders who are United States persons, as
                           defined in Treas. Reg.ss.1.367(a)-3(c)(5)(iv)).

                  (ii)     Fifty percent (50%) or less of each of the total
                           voting power and the total value of the stock of
                           Buyer will be owned, in the aggregate, immediately
                           after the Merger by United States persons, as defined
                           in Treas. Reg. ss.1.367(a)-3(c)(5)(iv)), that are
                           either officers or directors of the Company as of the
                           date of this Agreement. For purposes of this
                           representation, any stock of the Buyer owned by
                           United States persons immediately after the transfer
                           will be taken into account, whether or not it was
                           received in the Merger for Company Common Stock.

                                   ARTICLE 5

                              CONDITIONS TO CLOSING

5.1      CONDITIONS TO EACH PARTY'S OBLIGATIONS

         The respective obligations of each party to consummate the transactions
         contemplated hereby at the Closing are subject to the fulfillment to
         each party's reasonable satisfaction on or prior to the Effective Time
         of each of the following conditions:

<PAGE>

                                     - 43 -

         (a)      HSR ACT. If applicable, the waiting period (and any extension
                  thereof) applicable to the transactions contemplated hereby
                  and the issuance of the Buyer Shares under the HSR Act and any
                  applicable foreign antitrust and competition laws shall have
                  been terminated or shall have expired.

         (b)      SECURITIES REGULATORY APPROVALS. The regulatory approval
                  required under United States and Canadian securities laws and
                  under the by-laws, regulations or policies of the United
                  States and Canadian securities regulatory authorities and
                  stock exchanges and where required, any approval of the
                  Buyer's shareholders shall have been obtained.

         (c)      NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
                  preliminary or permanent injunction or other judgment or order
                  issued by any Government Entity, court of competent
                  jurisdiction or other statute, law, rule, legal restraint or
                  prohibition shall be in effect preventing the consummation of
                  the transactions contemplated hereby.

         (d)      The Shareholders shall have provided reasonable satisfactory
                  evidence of filing of certificate with the County of the
                  intention of Fishers to commence the Redemption. To the extent
                  that the IDA Bond have not been redeemed in full within 120
                  days after the Effective Time, Fishers shall use its best
                  efforts to cause the Surviving Corporation to be released from
                  any guaranty under the IDA Bond.

         (e)      ESCROW AGREEMENT. Buyer and the Shareholders shall have each
                  executed and delivered the Escrow Agreement.

         (f)      TAX FREE REORGANIZATION. As of the Effective Time, the
                  proportion of Cash Consideration to Merger Consideration shall
                  be such that the transactions contemplated hereby will qualify
                  as a tax free reorganization pursuant to Sections 368
                  (a)(1)(A) and 368 (a)(2)(E) of the Code.

5.2      CONDITIONS TO OBLIGATIONS OF THE BUYER

         The obligation of Buyer and Buyer Sub to consummate the Merger at the
         Closing is subject to the fulfillment to the Buyer's and Buyer Sub's
         satisfaction on or prior to the Effective Time of each of the following
         conditions:

         (a)      REPRESENTATIONS AND WARRANTIES. Each representation and
                  warranty of the Company and the Shareholders contained in this
                  Agreement shall be true and correct in all respects without
                  giving effect to any qualification as to materiality such that
                  the aggregate effect of any inaccuracies in such
                  representation and warranties will not have a Company Material
                  Adverse Effect as of the date of this Agreement and as of the
                  Effective Time as though made as of the Effective Time, except
                  to the extent such representations and warranties expressly
                  relate to an earlier date, in which case as of such earlier
                  date. Buyer and Buyer Sub shall have received a

<PAGE>

                                     - 44 -

                  certificate signed by a duly authorized officer of the Company
                  and by each Shareholder to such effect.

         (b)      PERFORMANCE. All covenants, agreements and conditions
                  contained in this Agreement to be performed or complied with
                  by the Company and each Shareholder at or prior to the
                  Effective Time shall have been performed or complied with by
                  the Company and each Shareholder in all material respects.
                  Buyer and Buyer Sub shall have received a certificate signed
                  by a duly authorized officer of the Company and by each
                  Shareholder to such effect.

         (c)      CONSENTS. All consents, the absence of which, in the
                  aggregate, would be reasonably likely to have a Company
                  Material Adverse Effect, shall have been obtained.

         (d)      RESIGNATIONS. Buyer shall have received the resignations,
                  effective as of the Effective Time, of each director of the
                  Company and the Subsidiaries specified by the Buyer in writing
                  at least five business days prior to the Closing, along with a
                  release of all claims against the Company and the
                  Subsidiaries.

         (e)      NO MATERIAL ADVERSE EFFECT. No fact or development shall have
                  occurred since the date of this Agreement and be continuing
                  which has had or would be reasonably likely to result in any
                  change, effect, event, occurrence or state of facts (or any
                  development that has had or is reasonably likely to have any
                  change or effect) that, individually or in the aggregate, has
                  had or would reasonably be expected to have a Company Material
                  Adverse Effect. Buyer shall have received a certificate signed
                  by a duly authorized officer of the Company to such effect.

         (f)      DELIVERY OF SHARE CERTIFICATES. Each Shareholder shall have
                  delivered to Buyer for cancellation share certificates
                  representing the shares of the Company Common Stock duly
                  endorsed for transfer.

         (g)      STOCK PURCHASE. Each of Klimasewski and May shall have
                  delivered to Buyer share certificates representing all of
                  their respective shareholdings of each of the Subsidiaries,
                  duly endorsed for transfer, together with stock powers related
                  to such Shares, and shall have taken all actions reasonably
                  necessary to consummate the Stock Purchase.

         (h)      EMPLOYMENT AGREEMENTS. Each of Farrell and Gornall shall have
                  entered into and delivered to the Buyer an employment
                  agreement in the form of Schedule 5.2(h).

         (i)      LOCK-UP AGREEMENT. Each of Farrell and Gornall shall have
                  entered into and delivered to the Buyer a lock-up agreement in
                  the form of Schedule 5.2(i).

<PAGE>

                                     - 45 -

         (j)      LEGAL OPINION. The Buyer shall have received an opinion of
                  Harter, Secrest & Emery LLP, the Company's and the
                  Shareholder's counsel, in the form reasonably acceptable to
                  counsel of the Buyer.

         (k)      RATIFYING RESOLUTIONS. Each of the Company and its
                  Subsidiaries shall have delivered to the Buyer resolutions
                  from their respective shareholders and boards of directors
                  ratifying all acts completed by such shareholders and board of
                  directors from their dates of incorporation to the Effective
                  Time.

          (l)     CERTIFICATES AND DOCUMENTS. The Company shall have delivered
                  at or prior to the Closing:

                  (i)      a copy of the Company's Certificate of Incorporation,
                           with all amendments to date, certified by the
                           Secretary of State of New York as of a date within
                           three business days prior to the Effective Time,
                           together with Bylaws of the Company, certified by its
                           secretary as of the Effective Time;

                  (ii)     resolutions of the Board of Directors of the Company
                           and of the Shareholders, authorizing and approving
                           all matters in connection with this Agreement and the
                           transactions contemplated herein, certified by a duly
                           authorized officer of the Company as of the Effective
                           Time;

                  (iii)    copies of all OEM contracts, purchase contracts and
                           similar agreements in force and entered into by the
                           Company; and

                  (iv)     such other documents relating to the transactions
                           contemplated in this Agreement as the Buyer may
                           reasonably request.

         (m)      SEC FINANCIAL STATEMENTS. The Shareholders shall have
                  delivered (i) consolidated, audited balance sheets of the
                  Company and its Subsidiaries as of the end of the two most
                  recent fiscal years, (ii) a consolidated, unaudited balance
                  sheet as of the end of the most recent quarter preceding the
                  Closing, (iii) consolidated, audited statements of income and
                  cash flows for each of the three fiscal years preceding the
                  Closing, and (iv) consolidated, unaudited statements of income
                  and cash flows for the interim period between the latest
                  audited balance sheet date and the date of the balance sheet
                  being provided pursuant to clause (ii), in each case meeting
                  the requirements of the SEC that would be applicable to the
                  Company as if its securities were registered under Section 12
                  of the SECURITIES AND EXCHANGE ACT OF 1934, as amended
                  (collectively, the "SEC FINANCIAL STATEMENTS").

         (n)      ACCOUNTANTS. The Buyer shall have received confirmation that
                  KPMG LLP, the Company's auditors, are independent certified
                  public accountants qualified to deliver the accountant's
                  report on the SEC Financial

<PAGE>

                                     - 46 -

                  Statements as required by the SEC. In addition, the Company
                  shall have entered into an agreement on terms satisfactory to
                  the Buyer with KPMG LLP pursuant to which KPMG LLP shall (A)
                  deliver to the Buyer any consents with respect to the Buyer's
                  use of the SEC Financial Statements and the use of KPMG's name
                  in connection with the Buyer's filings with the SEC and (B)
                  deliver customary "comfort letters" with respect to the SEC
                  Financial Statements and required reconciliations, as may be
                  reasonably requested by the Buyer.

         (o)      SECTION 1445 STATEMENT. Each Shareholder shall have furnished
                  Buyer with a statement meeting the requirements of Treasury
                  Regulation Section 1.1445-2(b)(2).

5.3      CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS AND THE COMPANY

         Each Shareholder's and the Company's obligation to consummate the
         Merger at the Closing is subject to the fulfillment to its satisfaction
         or waiver on or prior to the Effective Time of each of the following
         conditions:

         (a)      REPRESENTATIONS AND WARRANTIES. Each representation and
                  warranty of Buyer and Buyer Sub contained in this Agreement
                  shall be true and correct in all respects without giving
                  effect to any qualification as to materiality such that the
                  aggregate effect of any inaccuracies in such representation
                  and warranties will not have a Buyer Material Adverse Effect
                  as of the date of this Agreement and as of the Effective Time
                  as though made as of the Effective Time, except to the extent
                  such representations and warranties expressly relate to an
                  earlier date, in which case as of such earlier date. Each
                  Shareholder and the Company shall have received a certificate
                  signed on behalf of Buyer and Buyer Sub by duly authorized
                  executive officers of Buyer and Buyer Sub to such effect.

         (b)      PERFORMANCE. All covenants, agreements and conditions
                  contained in this Agreement to be performed or complied with
                  by the Buyer or Buyer Sub on or prior to the Effective Time
                  shall have been performed or complied with by the Buyer or
                  Buyer Sub in all material respects. Each Shareholder and the
                  Company shall have received a certificate signed on behalf of
                  Buyer or Buyer Sub by duly authorized executive officers of
                  Buyer and Buyer Sub to such effect.

         (c)      PAYMENT OF PURCHASE PRICE. Buyer shall have delivered to each
                  Shareholder cash representing the Cash Consideration, if any,
                  to be received by such Shareholder for its Shares of Company
                  Common Stock and certificates representing the Buyer Shares in
                  payment of the Stock Consideration to be received by such
                  Shareholder for its shares of Company Common Stock. Buyer
                  shall have delivered certificates representing the Escrow
                  Shares to the Escrow Agent.

<PAGE>

                                     - 47 -

         (d)      CONSENTS. All consents, the absence of which, in the
                  aggregate, would be reasonably likely to have a Buyer Material
                  Adverse Effect, shall have been obtained.

         (e)      NO MATERIAL ADVERSE EFFECT. No fact or development shall have
                  occurred since the date of this Agreement and be continuing
                  which has had or would be reasonably likely to result in any
                  change, effect, event, occurrence or state of facts (or any
                  development that has had or is reasonably likely to have any
                  change or effect) that, individually or in the aggregate, has
                  had or would reasonably be expected to have a Buyer Material
                  Adverse Effect. The Company and each Shareholder shall have
                  received a certificate signed on behalf of Buyer and Buyer Sub
                  by duly authorized officers of Buyer and Buyer Sub to such
                  effect.

         (f)      CANADIAN LEGAL OPINION. The Company and the Shareholders shall
                  have received an opinion of Fasken Martineau DuMoulin LLP, the
                  Buyer's Canadian counsel, in the form reasonably acceptable to
                  counsel to the Shareholders.

         (g)      U.S. LEGAL OPINION. The Company and Shareholders shall have
                  received an opinion of Paul, Weiss, Rifkind, Wharton &
                  Garrison, the Buyer's U.S. counsel and Buyer Sub's counsel, in
                  the form reasonably acceptable to counsel to the Shareholders;

         (h)      CERTIFICATES AND DOCUMENTS. Buyer and Buyer Sub shall have
                  delivered at or prior to the Closing to the Company and each
                  of the Shareholders:

                  (i)      a copy of Buyer's and Buyer Sub's respective
                           Certificates of Incorporation, with all amendments to
                           date, certified by the Secretaries of State or
                           similar officers of Buyer's and Buyer Sub's
                           respective jurisdictions of organization as of a date
                           within three business days prior to the Effective
                           Time, together with Bylaws of the Buyer and Buyer
                           Sub, certified by their respective Secretaries as of
                           the Effective Time;

                  (ii)     resolutions of the Board of Directors of Buyer and
                           Buyer Sub, authorizing and approving all matters in
                           connection with this Agreement and the transactions
                           contemplated herein, certified by the Secretaries of
                           Buyer and Buyer Sub as of the Effective Time; and

                  (iii)    such other documents relating to the transactions
                           contemplated in this Agreement as the Company and/or
                           any Shareholder may reasonably request.

         (i)      AUTHORIZATIONS. All authorizations, approvals or permits, if
                  any, of any Governmental Entity or regulatory body that are
                  required in connection with the lawful issuance and sale of
                  the Buyer Shares pursuant to this

<PAGE>

                                     - 48 -

                  Agreement shall have been duly obtained and shall be effective
                  on and as of the Closing.

                                   ARTICLE 6

                                OTHER AGREEMENTS

6.1      CONFIDENTIALITY

         After the Closing, Buyer, Buyer Sub and each Shareholder shall strictly
         maintain the confidentiality of all information, documents and
         materials relating to the Company or the transactions contemplated by
         this Agreement, including without limitation the terms hereof, except
         to the extent disclosure of any such information is reasonably believed
         by the disclosing party to be required by law or authorized by the
         other party, or otherwise made publicly available by the other party,
         or reasonably occurs in connection with disputes over the terms of this
         Agreement. In the event that any party hereto reasonably believes after
         consultation with counsel that it is required by law to disclose any
         confidential information described in this Section 6.1, such disclosing
         party will (a) provide the other party with prompt notice before such
         disclosure in order that the other party may attempt to obtain a
         protective order or other assurance that confidential treatment will be
         accorded to confidential information, and (b) cooperate with the other
         party in attempting to obtain such order or assurance. The provisions
         of this Section 6.1 shall not apply to any information, documents or
         materials which are in the public domain or shall come into the public
         domain, other than by reason of default by the disclosing party of this
         Agreement or becomes known in the industry through no wrongful act on
         the part of such disclosing party.

6.2      COOPERATION AFTER THE CLOSING

         The Shareholders will, at any time, and from time to time, after the
         Effective Time, execute and deliver such further instruments of
         conveyance and transfer and take such additional action as may be
         reasonably necessary to effect, consummate, confirm or evidence the
         transactions contemplated by this Agreement. Without limiting the other
         obligations of the Shareholders hereunder, each Shareholder agrees
         that, after the Closing, he shall provide reasonable cooperation and
         assistance to Buyer and the Company, at Buyer's sole cost and expense,
         with respect to any matters, disputes, suits or claims by or against
         any person not a party to this Agreement and including the execution of
         agreements with the employees of the Surviving Company in accordance
         with Buyer's current employment policies and applicable law.

6.3      REGISTRATION OF BUYER SHARES

         (a)      SHELF PROSPECTUS.  The Buyer shall:

                  (i)      as soon as practicable after June 29, 2001, prepare
                           and file with the SEC a registration statement on
                           Form F-3 or F-10 or any

<PAGE>

                                     - 49 -

                           comparable registration form then in effect (the
                           "REGISTRATION STATEMENT") relating to the resale of
                           the Buyer Shares by the Shareholders from time to
                           time on the Nasdaq National Market or the facilities
                           of any U.S. national securities exchange or market on
                           which the Buyer Shares (issued pursuant to this
                           Agreement) are then traded or in privately-negotiated
                           transactions in the United States;

                  (ii)     use its reasonable efforts, subject to receipt of
                           necessary information from the Shareholders, to cause
                           the SEC to declare the Registration Statement
                           effective within 60 days after the Registration
                           Statement is filed by the Buyer;

                  (iii)    promptly prepare and file with the SEC (and provide
                           notice to the Shareholders of any such filing) such
                           amendments and supplements to the Registration
                           Statement and the prospectus used in connection
                           therewith as may be necessary to keep the
                           Registration Statement effective until the earlier of
                           (i) two years after the effective date of the
                           Registration Statement, or (ii) the date on which the
                           Buyer Shares may be resold by the Shareholders
                           without registration by reason of Rule 144(k) under
                           the Securities Act or any other rule of similar
                           effect;

                  (iv)     furnish to each Shareholder with respect to the Buyer
                           Shares registered under the Registration Statement
                           (and to each underwriter, if any, of such Buyer
                           Shares) such number of copies of prospectuses and
                           such other documents as the Shareholder may
                           reasonably request, in order to facilitate the public
                           sale or other disposition of all or any of the Buyer
                           Shares by the Shareholder;

                  (v)      file documents required of the Buyer for normal "blue
                           sky" clearance in states specified in writing by the
                           Shareholders; provided, however, that the Buyer shall
                           not be required to qualify to do business or consent
                           to service of process in any jurisdiction in which it
                           is not now so qualified or has not so consented;

                  (vi)     notify each holder of Buyer Shares covered by such
                           Registration Statement at any time when a prospectus
                           relating thereto is required to be delivered under
                           the Securities Act of the happening of any event as a
                           result of which the prospectus included in such
                           Registration Statement, as then in effect, includes
                           an untrue statement of a material fact or omits to
                           state a material fact required to be stated therein
                           or necessary to make the statements therein not
                           misleading in the light of the circumstances then
                           existing. The Buyer will use reasonable best efforts
                           to amend or supplement such prospectus in order to
                           cause such prospectus not to include any untrue
                           statement of a material fact or omit to state a

<PAGE>

                                     - 50 -

                           material fact required to be stated therein or
                           necessary to make the statements therein not
                           misleading in the light of the circumstances then
                           existing;

                  (vii)    use its reasonable best efforts to furnish, on the
                           date that such Buyer Shares are delivered to the
                           underwriters for sale, if such securities are being
                           sold through underwriters selected by the Buyer, (i)
                           an opinion, dated as of such date, of the counsel
                           representing the Buyer for the purposes of such
                           registration, in form and substance as is customarily
                           given to underwriters in an underwritten public
                           offering, addressed to the underwriters, if any, and
                           (ii) a letter dated as of such date, from the
                           independent certified public accountants of the
                           Buyer, in form and substance as is customarily given
                           by independent certified public accountants to
                           underwriters in an underwritten public offering
                           addressed to the underwriters;

                  (viii)   bear all expenses in connection with the procedures
                           in paragraphs (i) through (ix) of this Section, and
                           the registration of the Buyer Shares pursuant to the
                           Registration Statement, other than fees and expenses,
                           if any, of counsel and other advisers to the
                           Shareholders or underwriting discounts, brokerage
                           fees, Taxes payable and commissions incurred by the
                           Shareholders, if any; and

                  (ix)     in the event of any underwritten public offering with
                           an underwriter selected by the Buyer, enter into and
                           perform its obligations under an underwriting
                           agreement, in usual and customary form, with the
                           managing underwriter(s) of such offering. Each
                           Shareholder participating in such underwriting shall
                           also enter into and perform its obligations under
                           such an agreement.

                  The Buyer understands that the Shareholders disclaim being
                  underwriters, and that the Shareholders being deemed an
                  underwriter shall not relieve the Buyer of any obligations it
                  has hereunder.

         (b)      DISPOSITION. Notwithstanding the generality of Section 6.3(a),
                  each Shareholder agrees that upon notice from Buyer at any
                  time or from time to time during the time the prospectus
                  relating to the securities proposed to be sold by such
                  Shareholder is required to be delivered under the Securities
                  Act of the happening of any event as a result of which, in
                  Buyer's opinion, the prospectus included in the Registration
                  Statement, as then in effect, includes an untrue statement of
                  a material fact or omits to state a material fact required to
                  be stated therein or necessary to make the statements therein
                  not misleading in light of the circumstances then existing,
                  such Shareholder will forthwith discontinue such Shareholder's
                  disposition of such securities pursuant to the Registration
                  Statement until

<PAGE>

                                     - 51 -

                  the time of such Shareholder's receipt of a supplement to or
                  an amendment of such prospectus as may be necessary so that,
                  as thereafter delivered to the purchasers of such securities,
                  such prospectus shall not include, in Buyer's opinion, an
                  untrue statement of a material fact or omit to state a
                  material fact required to be stated therein or necessary to
                  make the statements therein not misleading in light of the
                  circumstances then existing. It is understood and agreed that,
                  after the Registration Statement has been declared effective,
                  its effectiveness may be suspended on or one more occasions
                  for up to an aggregate of 90 days in a twelve-month period,
                  provided that no single suspension of such effectiveness shall
                  be in effect for more than 30 consecutive days.

         (c)      PUBLIC INFORMATION. For so long as Buyer is subject to the
                  reporting requirements of Section 13 or 15 of the Exchange Act
                  and any of the Buyer Shares are deemed "RESTRICTED SECURITIES"
                  under Rule 144 promulgated under the Securities Act, Buyer
                  will file the reports required to be filed by it under the
                  Securities Act and Section 13(a) or 15(d) of the Exchange Act
                  and the rules and regulations adopted by the SEC thereunder,
                  or, if it ceases to be so required to file such reports, it
                  will, upon the request of the Shareholders (i) make publicly
                  available such information as is necessary to permit sales of
                  Buyer Shares pursuant to Rule 144 under the Securities Act,
                  and (ii) take such further action that is reasonable in the
                  circumstances, in each case to the extent required from time
                  to time to enable the Shareholders to sell their Buyer Shares
                  without registration under the Securities Act within the
                  limitation of the exemptions provided by Rule 144 under the
                  Securities Act, as such rule may be amended from time to time,
                  or any similar rules or regulations hereafter adopted by the
                  SEC.

         (d)      LISTING. Buyer will use its reasonable best efforts to cause
                  the Buyer Shares to be sold pursuant to the Registration
                  Statement to be listed on the Nasdaq National Market or any
                  other securities exchanges or markets on which shares of Buyer
                  Subordinate Voting Shares are then listed.

         (e)      INDEMNIFICATION AND CONTRIBUTION.

                  (i)      In the event of a registration of any of the Buyer
                           Shares under the Securities Act pursuant to this
                           Section 6.4, Buyer will indemnify and hold harmless
                           each Shareholder and each Shareholder Affiliate
                           against any losses, claims, damages or liabilities,
                           joint or several, to which such Shareholder or
                           Shareholder Affiliate may become subject under the
                           Securities Act, the Exchange Act, or any other
                           federal or state statutory law or regulation, or at
                           common law or otherwise (including in settlement of
                           any litigation, if such settlement is effected with
                           the written consent of the Buyer), insofar as such
                           losses, claims, damages or liabilities (or actions in
                           respect thereof) arise out of or are based upon any
                           untrue statement

<PAGE>

                                     - 52 -

                           or alleged untrue statement of any material fact
                           contained in the Registration Statement, including
                           the prospectus, financial statements and schedules,
                           and all other documents filed as a part thereof, as
                           amended at the time of effectiveness of the
                           Registration Statement, including any information
                           deemed to be a part thereof as of the time of
                           effectiveness pursuant to paragraph (b) of SEC Rule
                           430A, or pursuant to SEC Rule 434, or the prospectus,
                           in the form first filed with the SEC pursuant to SEC
                           Rule 424(b), or filed as part of the Registration
                           Statement at the time of effectiveness if no Rule
                           424(b) filing is required (the "PROSPECTUS"), or any
                           amendment or supplement thereto, or arise out of or
                           are based upon the omission or alleged omission to
                           state therein a material fact required to be stated
                           therein or necessary to make the statements therein
                           not misleading, and will reimburse each such
                           Shareholder and each such Shareholder Affiliate for
                           any legal or other expenses reasonably incurred by
                           such Shareholder or Shareholder Affiliate in
                           connection with investigating, defending, settling,
                           compromising or paying any such loss, claim, damage,
                           liability or action; provided, however, that Buyer
                           will not be liable in any such case if and to the
                           extent that any such loss, claim, damage or liability
                           arises out of or is based upon an untrue statement or
                           alleged untrue statement or omission or alleged
                           omission so made in connection with the business
                           financial information relating to the Company prior
                           to the Closing or so made in conformity with
                           information furnished by such Shareholder
                           specifically for use in such Registration Statement.
                           For purposes hereof, the term "SHAREHOLDER AFFILIATE"
                           shall mean any affiliates of the Shareholder and any
                           officer, director, trustee or other person who
                           controls the Shareholder or any affiliate of the
                           Shareholder within the meaning of Section 15 of the
                           Securities Act or Section 20 of the Exchange Act, and
                           the term "Registration Statement" shall include any
                           final prospectus, exhibit, supplement or amendment
                           included in or relating to, and any document
                           incorporated by reference in, the Registration
                           Statement.

                  (ii)     In the event of a registration of any of the Buyer
                           Shares under the Securities Act pursuant to this
                           Section 6.4, each Shareholder having Buyer Shares
                           registered thereunder, severally and not jointly,
                           will indemnify and hold harmless Buyer and each Buyer
                           Affiliate, each underwriter and each person who
                           controls any underwriter within the meaning of the
                           Securities Act, against all losses, claims, damages
                           or liabilities, joint or several, to which Buyer or
                           such Buyer Affiliate, underwriter or person may
                           become subject under the Securities Act or otherwise,
                           insofar as such loses, claims, damages or liabilities
                           (or actions in respect thereof) arise out of or are
                           based upon any untrue statement or alleged untrue
                           statement of any material fact contained in the
                           Registration

<PAGE>

                                     - 53 -

                           Statement or any amendment or supplement thereof, or
                           arise out of or are based upon the omission or
                           alleged omission to state therein a material fact
                           required to be stated therein or necessary to make
                           the statements therein not misleading, and will
                           reimburse Buyer and each such officer, director,
                           underwriter and controlling person for any legal or
                           other expenses reasonably incurred by them in
                           connection with investigating or defending any such
                           loss, claim, damage, liability or action; provided,
                           however, that such Shareholder will be liable under
                           the Section 6.3(e)(ii) in any such case if and only
                           to the extent that any such loss, claim, damage or
                           liability arises out of or is based upon an untrue
                           statement or alleged untrue statement of a material
                           fact or omission or alleged omission of a material
                           fact made in reliance upon and in conformity with
                           information pertaining to such Shareholder furnished
                           in writing to Buyer by such Shareholder specifically
                           for use in the Registration Statement; and provided
                           further, however, that the liability of each
                           Shareholder hereunder shall not in any event exceed
                           the net proceeds received from the sale of his, her
                           or its Buyer Shares covered by such Registration
                           Statement.

                  (iii)    Promptly after receipt by an indemnified party under
                           this Section 6.3(e) of notice of the threat or
                           commencement of any action, such indemnified party
                           will, if a claim in respect thereof is to be made
                           against an indemnifying party under this Section
                           6.3(e), promptly notify the indemnifying party in
                           writing thereof; but the omission to so notify the
                           indemnifying party will not relieve it from any
                           liability which it may have to any indemnified party
                           for contribution or otherwise under the indemnity
                           agreement contained in this Section 6.3(e) to the
                           extent it is not prejudiced as a result of such
                           failure. In case any such action is brought against
                           any indemnified party and such indemnified party
                           seeks or intends to seek indemnity from an
                           indemnifying party, the indemnifying party will be
                           entitled to participate in, and, to the extent that
                           it may wish, jointly with all other indemnifying
                           parties similarly notified, to assume the defense
                           thereof with counsel reasonably satisfactory to such
                           indemnified party; provided, however, if the
                           defendants in any such action include both the
                           indemnified party and the indemnifying party and the
                           indemnified party shall have reasonably concluded
                           that there may be a conflict between the positions of
                           the indemnifying party and the indemnified party in
                           conducting the defense of any such action or that
                           there may be legal defenses available to it and/or
                           other indemnified parties which are different from or
                           additional to those available to the indemnifying
                           party, the indemnified party or parties shall have
                           the right to select separate counsel to assume such
                           legal defenses and to otherwise participate in the
                           defense of such action on behalf of such indemnified
                           party or parties. Upon receipt of notice from the

<PAGE>

                                     - 54 -

                           indemnifying party to such indemnified party of its
                           election so to assume the defense of such action and
                           approval by the indemnified party of counsel, the
                           indemnifying party will not be liable to such
                           indemnified party under this Section 6.3(e) for any
                           legal or other expenses subsequently incurred by such
                           indemnified party in connection with the defense
                           thereof unless (1) the indemnified party shall have
                           employed such counsel in connection with the
                           assumption of legal defenses in accordance with the
                           proviso to the preceding sentence (it being
                           understood, however, that the indemnifying party
                           shall not be liable for the expenses of more than one
                           separate counsel, approved by such indemnifying party
                           in the case of paragraph (i), representing all of the
                           indemnified parties who are parties to such action)
                           or (2) the indemnified party shall not have employed
                           counsel reasonably satisfactory to the indemnifying
                           party to represent the indemnified party within a
                           reasonable time after notice of commencement of
                           action, in each of which cases the reasonable fees
                           and expenses of counsel shall be at the expense of
                           the indemnifying party.

                  (iv)     In order to provide for just and equitable
                           contribution to joint liability under the Securities
                           Act in any case in which either (1) any indemnified
                           party exercising rights under this Agreement makes a
                           claim for indemnification pursuant to this Section
                           6.3(e) but it is judicially determined (by the entry
                           of a final judgment or decree by a court of competent
                           jurisdiction and the expiration of time to appeal or
                           the denial of the last right of appeal) that such
                           indemnification may not be enforced in such case
                           notwithstanding the fact that this Section 6.3(e)
                           provides for indemnification in such case, (2)
                           contribution under the Securities Act may be required
                           on the part of any such Shareholder in circumstances
                           for which indemnification is provided under this
                           Section 6.3, or (3) the indemnification provided for
                           by this Section 6.3 is insufficient to hold harmless
                           an indemnified party, other than by reason of the
                           exceptions provided therein, then, and in each such
                           case, Buyer and the Shareholders will contribute to
                           the aggregate losses, claims, damages or liabilities
                           to which they may be subject (after contribution from
                           others) (x) in such proportion as is appropriate to
                           reflect the relative fault of the indemnifying party
                           on the one hand and the indemnified party on the
                           other or (y) if the allocation provided by clause (x)
                           above is not permitted by applicable law, or provides
                           a lesser sum to the indemnified party than the amount
                           hereinafter calculated, in such proportion as is
                           appropriate to reflect not only the relative fault
                           referred to in clause (x) above but also the relative
                           benefits received by the indemnifying party and the
                           indemnified party from the registration of the
                           securities as well as the statements or omissions
                           which resulted in such losses, claims, damages or
                           liabilities and any other relevant equitable

<PAGE>

                                     - 55 -

                           considerations. No Shareholder will be required to
                           contribute any amount in excess of the net proceeds
                           received from the sale of his, her or its Buyer
                           Shares covered by such Registration Statement and no
                           person or entity guilty of fraudulent
                           misrepresentation (within the meaning of Section 12
                           of the Securities Act) will be entitled to
                           contribution from any person or entity who was not
                           guilty of such fraudulent misrepresentation.

                  (v)      The obligations of the Buyer and the Shareholders
                           under this Section 6.3(e) shall survive completion of
                           any offering of Buyer Shares pursuant to a
                           Registration Statement and the termination of Buyer's
                           obligations under Section 6.3(a). No indemnifying
                           party, in the defense of any such claim or
                           litigation, shall, except with the consent of each
                           indemnified party, consent to entry of any judgment
                           or enter into any settlement which does not include
                           as an unconditional term thereof the giving by the
                           claimant or plaintiff to such indemnified party of a
                           release from all liability in respect to such claim
                           or litigation.

         (f)      INFORMATION AVAILABLE. So long as the Registration Statement
                  is effective covering the resale of Buyer Shares owned by the
                  Shareholders, the Buyer will furnish to each Shareholder:

                  (i)      as soon as practicable after (A) its Annual Report on
                           Form 10-K, 20-F or 40-F, (B) its interim reports, (C)
                           its material change reports, (D) its proxy statement,
                           (E) a full copy of the particular Registration
                           Statement covering the Buyer Shares, and (F) a copy
                           of each other registration statement covering Buyer
                           Subordinate Voting Shares filed with the SEC (the
                           foregoing, in each case, excluding exhibits unless
                           requested by such Shareholder); and

                  (ii)     a reasonable number of copies of the prospectuses to
                           supply to any other party requiring such
                           prospectuses; and the Buyer, upon the reasonable
                           request of the Shareholder, will meet with the
                           Shareholder or a representative thereof at the
                           Buyer's headquarters to discuss information relevant
                           for disclosure in the Registration Statement covering
                           the Buyer Shares and will otherwise cooperate with
                           any Shareholder conducting an investigation for the
                           purpose of reducing or eliminating such Shareholder's
                           exposure to liability under the Securities Act,
                           including the reasonable production of information at
                           the Buyer's headquarters, subject to appropriate
                           confidentiality limitations.

6.4      REORGANIZATION

         From and after the date hereof and until the Effective Time, no party
         hereto, nor, in the case of the corporate entities, any of their
         respective subsidiaries or other

<PAGE>

                                     - 56 -

         affiliates shall knowingly take any action, or knowingly fail to take
         any action, that would jeopardize qualification of the Merger as a
         reorganization within the meaning of Section 368(a)(1)(A) and
         368(a)(2)(E) of the Code. Each of Buyer, the Company, the Surviving
         Corporation and the Shareholders shall file all federal and state
         income tax returns consistent with the treatment of the Merger as a
         Reorganization within the meaning of Section 368(a)(1)(A) and
         368(a)(2)(E) of the Code.

6.5      EXPENSES

         Except as otherwise expressly provided herein, each party hereto will
         pay its own expenses incurred in connection with the negotiation of
         this Agreement, the performance of their respective obligations
         hereunder and the consummation of the transactions contemplated hereby,
         whether or not consummated.

6.6      NON-COMPETITION

         The Shareholders shall not, for a period of three years from the
         Effective Time ("NON-COMPETE PERIOD"), within Canada, the United States
         and the European Union and in any country in which the Buyer or the
         Company presently conducts or may conduct business in the future,
         without the prior written consent of the Buyer, directly or indirectly,
         in any manner whatsoever, including, without limitation, either
         individually or in partnership or jointly or in conjunction with any
         other person, as principal, agent, shareholder or in any other manner
         whatsoever, carry on or be engaged in or be concerned with or lend
         money to, guarantee the debts or obligations of, or permit their names
         to be used or employed by any person or entity engaged or concerned
         with or interested in the business of supply of DWDM test and
         measurement instrumentation, component and positioning and biomedical
         products.

                                   ARTICLE 7

                          SURVIVAL AND INDEMNIFICATION

7.1      SURVIVAL NOTWITHSTANDING INVESTIGATION.

         Notwithstanding any investigation conducted before the Effective Time
         and notwithstanding implied knowledge or notice of any fact or
         circumstance which any Person may have as a result of such
         investigation or otherwise, the parties hereto shall be entitled to
         rely upon the representations and warranties set forth herein and the
         obligations of the parties hereto with respect thereto shall survive
         the Effective Time and shall continue in full force and effect in
         accordance with and subject to the terms of this ARTICLE 7.

7.2      GENERAL INDEMNIFICATION BY THE SHAREHOLDERS.

         Subject to the provisions contained herein, each of the Shareholders
         shall be liable to the Buyer and their respective directors, officers
         and employees (collectively,

<PAGE>

                                     - 57 -

         the "BUYER INDEMNIFIED PERSONS" and each a "BUYER INDEMNIFIED Person")
         and shall defend, indemnify and hold harmless all of the Buyer
         Indemnified Persons against any and all Claims incurred or suffered by
         or imposed upon any of the Buyer Indemnified Persons arising directly
         or indirectly out of:

         (a)      the breach of any agreement, covenant, representation or
                  warranty of any of the Shareholders or the Company contained
                  in or contemplated by this Agreement (other than Sections
                  2.12, 4.11, 4.12 or 4.13 hereof) or in any other agreement or
                  document required to be furnished by any of the Shareholders
                  or the Company to the Buyer hereunder; and

         (b)      the non-fulfilment of any agreement, covenant or obligation of
                  any of the Shareholders or the Company contained in this
                  Agreement (other than Sections 2.12, 4.11, 4.12 or 4.13
                  hereof) or in any other agreement or document required to be
                  entered into by any of the Shareholders or the Company
                  pursuant hereto to the extent not waived in writing by the
                  Buyer.

         The obligation of indemnification of the Shareholders hereunder shall
         be joint and several.

         For the purpose of this indemnification all representations and
         warranties shall be read without giving effect to any qualification as
         to materiality.

7.3      INDEMNIFICATION BY THE BUYER.

         The Buyer shall be liable to each of the Shareholders and their
         respective heirs and assigns (collectively the "SHAREHOLDERS
         INDEMNIFIED PERSONS" and each a "SHAREHOLDERS INDEMNIFIED PERSON") and
         shall defend, indemnify and hold harmless all of the Shareholders
         Indemnified Persons against any and all Claims incurred or suffered by
         or imposed upon any of the Shareholders Indemnified Persons arising
         directly or indirectly out of:

         (a)

                  the breach of any agreement, covenant, representation or
                  warranty of the Buyer contained in or contemplated by this
                  Agreement or in any other agreement or document required to be
                  furnished by the Buyer to the Shareholders hereunder; and

         (b)      the non-fulfilment of any agreement, covenant or obligation of
                  the Buyer contained in this Agreement or in any agreement or
                  document required to be entered into by the Buyer pursuant
                  hereto, to the extent not waived in writing by the
                  Shareholders;

         provided that the amount of indemnification in relation to such Claims
         to be made by the Shareholder Indemnified Person pursuant to the
         provisions hereof shall be limited to a fraction of the total Claims
         resulting from the applicable breach determined by dividing the number
         of Buyer Subordinate Voting Shares of the share capital of the Buyer
         held by such Shareholder immediately after the

<PAGE>

                                     - 58 -

         Effective Time divided by the total number of Buyer Shares issued
         pursuant to this Agreement.

7.4      INDEMNIFICATION AGAINST THIRD PARTY CLAIMS.

         (a)      Promptly upon receipt by any of the Buyer Indemnified Persons
                  or the Shareholder Indemnified Persons (in this Section
                  referred to as the "INDEMNITEE") of a notice of any Third
                  Party Claim in respect of which the Indemnitee proposes to
                  demand indemnification from the Buyer or the Shareholder (in
                  this Section referred to as the "INDEMNITOR") pursuant to the
                  provisions hereof, the Indemnitee shall give written notice to
                  that effect to the Indemnitor with reasonable promptness.

         (b)      The Indemnitor shall have the right by written notice to the
                  Indemnitee not later than 30 days after giving of the notice
                  described in Section 7.4 to assume the control of the defence,
                  compromise or settlement of the Third Party Claim, provided
                  that such assumption shall, by its terms, be without cost to
                  the Indemnitee and shall not limit in any way the Indemnitee's
                  right to indemnification pursuant to the provisions hereof.

         (c)      Upon the assumption of control by the Indemnitor as aforesaid,
                  the Indemnitor shall, at its expense, diligently proceed with
                  the defence, compromise or settlement of the Third Party Claim
                  at Indemnitor's sole expense, including retention of counsel
                  reasonably satisfactory to the Indemnitee and, in connection
                  therewith, the Indemnitee shall co-operate fully, but at the
                  sole expense of the Indemnitor, to make available to the
                  Indemnitor all pertinent information and witnesses under the
                  Indemnitee's control, make such assignments and take such
                  other steps as in the opinion of counsel for the Indemnitor
                  are necessary to enable the Indemnitor to conduct such
                  defence, provided always that the Indemnitee shall be entitled
                  to reasonable security from the Indemnitor for any expense,
                  costs or other liabilities to which it may be or may become
                  exposed by reason of such co-operation.

         (d)      The final determination of any such Third Party Claim,
                  including all related costs, attorneys' fees and expenses,
                  shall be binding and conclusive upon the Indemnitor and the
                  Indemnitee as to the validity or invalidity, as the case may
                  be, of such Third Party Claim against the Indemnitor
                  hereunder.

         Notwithstanding any provision of this Section 7.4, the Indemnitor may
         not consent to any settlement of a Third Party Claim if the terms of
         such settlement require the Indemnitee to act or refrain from acting,
         without the prior written consent of the Indemnitee.

         (e)      Should the Indemnitor fail to give notice to the Indemnitee as
                  provided in Section 7.4, the Indemnitee shall be entitled to
                  make such settlement of the

<PAGE>

                                     - 59 -

                  Third Party Claim as in its sole discretion may appear
                  advisable, and such settlement or any other final
                  determination of the Third Party Claim shall be binding upon
                  the Indemnitor.

7.5      TAX INDEMNIFICATION.

         (a)      The Shareholders agree, jointly and severally, to indemnify
                  and hold harmless the Buyer Indemnified Parties against any
                  Losses incurred or paid by a Buyer Indemnified Party, which
                  arise as a result of (i) any liability for any Taxes imposed
                  on the Company and the Subsidiaries pursuant to federal,
                  state, local or foreign law attributable to any periods ending
                  on or before the date of the Closing, (ii) with respect to any
                  Straddle Period, the portion of Taxes payable by or assessed
                  against the Company which are properly allocable to the part
                  of such Straddle Period ending on the date of the Closing,
                  pursuant to Section 7.5(b), (iii) any breach of the
                  representations or warranties made by the Company and the
                  Shareholders in Section 2.12, and (iv) any breach of, or
                  failure to perform, any agreement or covenant contained in
                  Sections 4.11, 4.12 or 4.13 hereof (all such Losses being "TAX
                  LOSSES"). Any indemnity payments to or from the Shareholders
                  or to or from the Buyer pursuant to this Agreement, whether
                  under this Section 7.5 or otherwise, shall be treated by the
                  Buyer and the Shareholders as purchase price adjustments for
                  all tax purposes. All indemnification obligations set forth in
                  this Section 7.5(a) shall be treated as "TAX CLAIMS" for
                  purposes of this Agreement.

         (b)      For purposes of this Section 7.5, with respect to any taxable
                  year or period beginning before and ending after the date of
                  the Closing (a "STRADDLE PERIOD"), an allocation of Taxes
                  shall be made to the part of such Straddle Period which ends
                  on the date of the Closing based on (i) the closing of the
                  books method, in the case of income or any similar Taxes, (ii)
                  the number of days elapsed between the beginning of such
                  Straddle Period to and including the date of the Closing in
                  the case of property Taxes, and (iii) when the relevant
                  transaction occurs, in the case of sales and gross receipts
                  Taxes.

7.6      INDEMNIFICATION TO BE AFTER TAX, INSURANCE, ETC.

         The amount of the indemnification for any Claim which the Buyer
         Indemnified Persons and the Shareholder Indemnified Persons shall be
         entitled to receive pursuant to this Agreement shall be payable on
         demand and shall be determined after giving effect to any insurance
         recoveries, tax savings and recoveries from third parties.

7.7      EXPIRY AND LIMITS OF LIABILITY

         (a)      The representations and warranties of the Shareholders herein
                  (other than those of the Shareholders with respect to the
                  matters set forth in

<PAGE>

                                     - 60 -

                  Section 7.7(b)), shall terminate on the date which is 90 days
                  after the date the Buyer has publically released its audited
                  financial statements for the year ended August 31, 2002 except
                  to the extent that, during such period, any Buyer Indemnified
                  Person shall have given detailed notice (to the extent
                  feasible) to the Shareholders of a specified Claim in respect
                  of any representation or warranty in which case such
                  representation and warranty with respect to such Claim shall
                  continue in full force and effect until the final
                  determination of such Claim.

         (b)      Notwithstanding the foregoing provisions of Section 7.7(a):

                  (i)      representations and warranties herein of the
                           Shareholders with respect to the Company Common Stock
                           and the share capital of the Company and any of the
                           Subsidiaries as set forth in Sections 2.1, 2.2., 2.3
                           and 2.5 shall survive indefinitely;

                  (ii)     representations and warranties herein of the
                           Shareholders relating to any liability of the Company
                           or the Subsidiaries for the payment of Taxes shall
                           survive so long as any claim may be made in respect
                           of such matters under any applicable statute of
                           limitations; and

                  (iii)    notwithstanding the foregoing, there shall be no
                           limit of time on the representations and warranties
                           of the Shareholders relating to any matter in the
                           case of fraud, gross negligence, voluntary omission
                           or bad faith on the part of the Shareholders.

         (c)      Notwithstanding the other provisions of this ARTICLE 7, no
                  Claims with respect to breaches or failure of representations
                  and warranties contemplated by Section 7.7(b)(i) and
                  7.7(b)(iii) may be made against the Shareholders hereunder
                  unless and until the aggregate amount of all Claims which may
                  be made pursuant to this Agreement exceed $250,000, in which
                  event the Shareholders shall become liable for the full amount
                  of all Claims on a dollar for dollar basis, up to a maximum
                  amount equal to:

                  (i)      the Merger Consideration in the event of a Claim
                           arising from a breach of a representation and
                           warranty with respect to the matters set forth in
                           Sections 2.1, 2.2., 2.3 and 2.5, and;

                  (ii)     30% of the Merger Consideration, in the event of a
                           Claim arising from a breach of any other
                           representation and warranty set forth in this
                           Agreement.

         (d)      Any claims for which the Shareholders shall become liable
                  shall be payable to the Buyer from the Escrow Fund on a dollar
                  for dollar basis. In the event the Claims exceed the amount
                  contained in the Escrow Fund, the Shareholders shall become
                  liable for such further amount on a dollar for dollar basis,
                  subject to Section 7.7(c).

<PAGE>

                                     - 61 -

         (e)      The representations and warranties of the Buyer shall
                  terminate on the date which is 90 days after the date on which
                  the Buyer has publically released its audited financial
                  statements for the year ended August 31, 2002 except to the
                  extent that, during such period any Shareholders Indemnified
                  Person shall have given detailed notice to the Buyer of a
                  specified Claim in respect of any representation or warranty
                  in which case such representation and warranty shall continue
                  in full force and effect until the final determination of such
                  Claim.

         (f)      Notwithstanding the foregoing provisions of Section 7.7(e):

                  (i)      representations and warranties herein of the Buyer
                           with respect to the Buyer Shares and the share
                           capital of the Buyer shall survive in accordance with
                           the applicable statute of limitations under the
                           securities laws in Canada and the United States; and

                  (ii)     notwithstanding the foregoing, there shall be no
                           limit of time on the representations and warranties
                           of the Buyer relating to any matter in the case of
                           fraud, gross negligence, voluntary omission or bad
                           faith on the part of the Buyer.

         (g)      Notwithstanding the other provisions of this Section 7.7, no
                  Claims with respect to breaches or failure of representations
                  and warranties contemplated by Section 7.7(b) may be made
                  against the Buyer hereunder unless and until the aggregate
                  amount of all Claims which may be made pursuant to this
                  Agreement exceed $250,000, in which event the Buyer shall
                  become liable for the full amount of all Claims on a dollar
                  for dollar basis, up to a maximum amount equal to:

                  (i)      the Merger Consideration, in the event of a Claim
                           arising from a breach of a representation and
                           warranty with respect to the matters set forth in
                           Sections 3.1, 3.2 and 3.3, and;

                  (ii)     30% of the Merger Consideration in the event of a
                           Claim arising from a breach of any other
                           representation and warranty set forth in this
                           Agreement.

7.8      PROCEDURE

         Promptly (but in no event more than 15 days) after receipt by a Buyer
         Indemnified Party or a Shareholder Indemnified Party (an "INDEMNIFIED
         PARTY") (as the case may require) of notice of the commencement of any
         action, such Indemnified Party shall, if a claim in respect thereof is
         to be made against the indemnifying party under this Section 7.8,
         notify in writing the indemnifying party of the commencement thereof.
         In case any such action is brought against any Indemnified Party, and
         such Indemnified Party notifies the indemnifying party of the
         commencement thereof, the indemnifying party shall be entitled to
         participate in and, to the extent that it may wish, jointly with any
         other

<PAGE>

                                     - 62 -

         indemnifying party similarly notified, to assume the defense thereof,
         subject to the provisions hereof, with counsel reasonably satisfactory
         to such Indemnified Party; PROVIDED, in the case of Tax Claims, that
         the Shareholders have acknowledged to the Buyer in writing the
         Shareholders' liability under Section 7.5 for all Tax Losses incurred
         or suffered by the Buyer or the Company which results from such action.
         Following notification to the Indemnified Party of its election so to
         assume the defense thereof, the indemnifying party shall not be liable
         to such Indemnified Party under this Section 7.8 for any legal or other
         expenses subsequently incurred by such Indemnified Party in connection
         with the defense there, other than reasonable costs of investigation.
         The Indemnified Party shall have the right to employ separate counsel
         in any such action and to participate in the defense thereof, but the
         fees and expenses of such counsel shall not be at the expense of the
         indemnifying party if the indemnifying party has assumed the defense of
         the action, within a reasonable time after notice of commencement of
         the action, with counsel reasonably satisfactory to the Indemnified
         Party; PROVIDED HOWEVER, that the indemnifying party shall be required
         to pay for Indemnified Party's counsel, if, such Indemnified Party
         shall have reasonably concluded, on reliance of the written opinion of
         counsel experienced in such matters, that there may be defenses
         available to it or him which are different from or additional to those
         available to the indemnifying party (in which case indemnifying parties
         shall not have the right to direct the defense of action). The Buyer
         shall also have the right to jointly control, with the Shareholders,
         any contest involving a Tax Losses with respect to Straddle Periods. No
         settlement of any action against an Indemnified Party shall be made
         without the consent of the Indemnified Party, which shall not be
         unreasonably withheld. In the event that any Indemnified Party should
         have a direct claim against any indemnifying party hereunder that does
         not involve any third-party claim or claims asserted against the
         Indemnified Party, the Indemnified Party shall transmit to the
         indemnifying party a written notice describing in reasonable detail the
         nature of the claim, an estimate of the amount of damages attributable
         to such claim to the extent feasible (which estimate shall not be
         conclusive of the final amount of such claim) and the basis of the
         Indemnified Party's request for indemnification under this ARTICLE 7.
         If the indemnifying party does not notify the Indemnified Party within
         90 days from its receipt of such notice that the indemnifying party
         disputes such claim, the claim specified by the Indemnified Party in
         the indemnity notice shall be deemed a liability of the indemnifying
         party hereunder. If the indemnifying party has timely disputed such
         claim, as provided above, such dispute shall be resolved by litigation
         in an appropriate court of competent jurisdiction. The parties agree
         that the sole and exclusive remedy which any party hereto shall have
         against any other party hereto under this Agreement shall be the right
         to proceed for indemnification in the manner and only to the extent
         provided in this ARTICLE 7.

<PAGE>

                                     - 63 -

                                   ARTICLE 8

                        TERMINATION, AMENDMENT AND WAIVER

8.1      TERMINATION

         This Agreement may be terminated at any time prior to the Closing
         (except as limited as to time in Section 8.1(b) below):

         (a)      by the mutual written consent of the Buyer and the
                  Shareholders;

         (b)      by the Buyer or the Shareholders, if the Closing shall not
                  have occurred prior to the 90th day following the date hereof;
                  provided, however, that the right to terminate this Agreement
                  under this Section 8.1(b) shall not be available to any party
                  if such party's failure to fulfill any obligation under this
                  Agreement shall have been the cause of, or shall have resulted
                  in, the failure of the Closing to occur prior to such date;

         (c)      by the Buyer in the event a condition set forth in Sections
                  5.1 or 5.2 becomes incapable of being fulfilled; or

         (d)      by the Buyer in the event that a Disclosure Schedule is
                  amended or supplemented by the Company, which amendment or
                  supplement is considered by the Buyer to have a Company
                  Material Adverse Effect.

8.2      EFFECT OF TERMINATION

         In the event of the termination of this Agreement as provided in
         Section 8.1, this Agreement shall forthwith become void and there shall
         be no liability on the part of any party hereto; provided, however,
         that nothing herein shall relieve either the Shareholders or the Buyer
         from liability for any breach of this Agreement or failure to perform
         hereunder. If this Agreement is terminated as provided herein, upon
         request therefore, each party will re-deliver all documents, workpapers
         and other material of any other party relating to the transactions
         contemplated hereby, whether obtained before or after the execution
         hereof, to the party furnishing the same.

8.3      WAIVER

         At any time prior to Closing, any party may (a) extend the time for the
         performance of any of the obligations or other acts of any other party
         hereto, (b) waive any inaccuracies in the representations and
         warranties contained herein or in any document delivered pursuant
         hereto or (c) waive compliance with any of the agreements or conditions
         contained herein. Any such extension or waiver shall be valid only if
         set forth in an instrument in writing signed by the party to be bound
         thereby.

<PAGE>

                                     - 64 -

                                   ARTICLE 9

                                  MISCELLANEOUS

9.1      ENTIRE AGREEMENT; AMENDMENTS

         This Agreement, together with the Exhibits and Schedules hereto,
         contain the entire understanding of the parties with respect to the
         subject matter hereof and supersedes all prior agreements and
         understandings, oral or written, with respect to such matters, which
         the parties acknowledge have been merged into this Agreement and the
         Exhibits and Schedules hereto.

9.2      NOTICES

         All notices, requests, consents and other communications hereunder
         shall be in writing and shall be deemed effectively given: (a) upon
         personal delivery to the party to be notified, (b) when sent by
         confirmed facsimile if sent during normal business hours of the
         recipient; if not, then on the next business day, (c) three business
         days after having been sent by registered or certified mail, return
         receipt requested, postage prepaid, or (d) two business days after
         deposit with recognized overnight courier, specifying next day
         delivery, with written verification of receipt. The address for all
         notices, requests, consents and other communications hereunder to the
         parties to this Agreement shall be delivered or sent to the following:

         (a)      THE COMPANY:

                  Burleigh Instruments, Inc.
                  7647 Main Street
                  Fishers, New York 14453-0755
                  U.S.A.

                  ATTENTION: PRESIDENT
                  Telephone: (716) 924-9355
                  Facsimile: (716) 924-9072

                  WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:

                  Michael R. McEvoy, Esq.
                  Harter, Secrest & Emery LLP
                  700 Midtown Tower
                  Rochester, New York 14604-2070
                  U.S.A.

         (b)      THE BUYER OR BUYER SUB:

                  EXFO Electro-Optical Engineering Inc.
                  465 Godin Avenue

<PAGE>

                                     - 65 -

                  Vanier, Quebec, Canada, G1T 2M5

                  ATTENTION: GERMAIN LAMONDE, PRESIDENT
                  Telephone: (418) 683-0211
                  Facsimile: (418) 683-2170

                  WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:

                  Fasken Martineau DuMoulin LLP
                  Stock Exchange Tower, 800 Place-Victoria, 24th Floor
                  Montreal, Quebec, Canada, H4Z 1E9

                  ATTENTION: MTRE ROBERT PARE
                  Telephone: (514) 397-7517
                  Facsimile: (514) 397-7600

         (c)      Robert G. Klimasewski
                  3708 Batzing Road
                  Caledonia, New York, 14423
                  U.S.A.

                  William G. May, Jr.
                  1701 Gulf Stream Avenue, #739
                  Ft-Pierce, Florida, 34949
                  U.S.A.

                  David J. Farrell
                  7535 Surrey Lane
                  Victor, New York, 14564
                  U.S.A.

                  William S. Gornall
                  2 Saddle Ridge Trail
                  Fairport, New York, 14450
                  U.S.A.

                  IN EACH CASE, WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE)
                  TO:

                  Michael R. McEvoy, Esq.
                  Harter, Secrest & Emery LLP
                  700 Midtown Tower
                  Rochester, New York 14604
                  U.S.A.

         Or such other address as may be designated in writing hereafter, in the
         same manner, by such Person.

<PAGE>

                                     - 66 -

9.3      AMENDMENTS; WAIVERS

         No provision of this Agreement may be waived or amended except in a
         written instrument signed, in the case of an amendment, by each party
         to this Agreement, or, in the case of a waiver, by the party against
         whom enforcement of any such waiver is sought. No waiver of any default
         with respect to any provision, condition or requirement of this
         Agreement shall be deemed to be a continuing waiver in the future or a
         waiver of any other provision, condition or requirement hereof, nor
         shall any delay or omission of either party to exercise any right
         hereunder in any manner impair the exercise of any such right accruing
         to it thereafter.

9.4      HEADINGS

         The headings herein are for convenience only, do not constitute a part
         of this Agreement and shall not be deemed to limit or affect any of the
         provisions hereof.

9.5      SUCCESSORS AND ASSIGNS

         This Agreement shall be binding upon and inure to the benefit of the
         parties and their successors and permitted assigns. The Company and the
         Shareholders may not assign this Agreement or any rights or obligations
         hereunder without the prior written consent of the Buyer. The Buyer and
         Buyer Sub may not assign this Agreement or any of the rights or
         obligations hereunder without the prior written consent of the Company
         and the Shareholders.

9.6      NO THIRD-PARTY BENEFICIARIES

         This Agreement is intended for the benefit of the parties hereto and
         their respective successors and permitted assigns, and is not for the
         benefit of, nor may any provision hereof be enforced by, any other
         Person.

9.7      GOVERNING LAW; CONSENT TO JURISDICTION; LANGUAGE

         This Agreement shall be governed by and construed and enforced in
         accordance with the internal laws of the State of New York without
         regard to the principles of conflicts of law thereof. Each party hereby
         irrevocably consents to the jurisdiction of the state and federal
         courts located in Monroe County, New York, to adjudicate any dispute
         arising pursuant to this Agreement or the transactions contemplated
         hereby, and waives any objections thereto. The parties have expressly
         requested that this Agreement and all notices related thereto be
         drafted in the English language. Les parties ont expressement exige que
         cette convention ainsi que tous documents y afferents soient rediges en
         anglais.

9.8      EXECUTION

         This Agreement may be executed in two or more counterparts, all of
         which when taken together shall be considered one and the same
         agreement and shall become

<PAGE>

                                     - 67 -

         effective when counterparts have been signed by each party and
         delivered to the other parties, it being understood that all parties
         need not sign the same counterpart. In the event that any signature is
         delivered by facsimile transmission, such signature shall create a
         valid and binding obligation of the party executing (or on whose behalf
         such signature is executed) the same with the same force and effect as
         if such facsimile signature page were an original thereof.

9.9      SEVERABILITY

         In case any one or more of the provisions of this Agreement shall be
         invalid or unenforceable in any respect, the validity and
         enforceability of the remaining terms and provisions of this Agreement
         shall not in any way be affected or impaired thereby and the parties
         will attempt to agree upon a valid and enforceable provision which
         shall be a reasonable substitute therefor, and upon so agreeing, shall
         incorporate such substitute provision in this Agreement.

9.10     INTERPRETATION

         The Section headings in this Agreement are for convenience of reference
         only and shall not be deemed to alter or affect the meaning or
         interpretation of any provision hereof. The language used in this
         Agreement will be deemed to be the language chosen by the parties
         hereto to express their mutual intent, and no rule of strict
         construction will be applied against any party hereto. Any references
         to the "KNOWLEDGE" of the Company or of the Shareholders or the
         Company's "KNOWLEDGE" or the Shareholders' "KNOWLEDGE" or any similar
         formulation shall mean the actual knowledge of the Shareholders or
         Peter Battisti, the Company's Chief Financial Officer. Any references
         to the "KNOWLEDGE" of the Buyer or the Buyer's "KNOWLEDGE" or any
         similar formulation shall mean the actual knowledge of the officers (as
         defined in Rule 16a-1(f) of the Exchange Act) of Buyer The disclosure
         of any matter in any portion of the Disclosure Schedules hereto shall
         be deemed to be a disclosure for all purposes of this Agreement to
         which such matter could reasonably be likely to be pertinent, but shall
         expressly not be deemed to constitute an admission by the Company, the
         Shareholders or the Buyer, as the case may be, or to otherwise imply,
         that any such matter is material for the purposes of this Agreement.

9.11     CURRENCY

         Unless otherwise stipulated herein, all dollar amounts are in the legal
         currency of the United States of America.

<PAGE>

                                     - 68 -


IN WITNESS WHEREOF, the parties hereto have caused this Agreement of Merger and
Plan of Reorganization to be duly executed by their respective authorized
signatories as of the date first indicated above.


                                   BURLEIGH INSTRUMENTS, INC.

                              By:  /s/  David J. Farrell
                                   --------------------------------------------
                              Name:     David J. Farrell
                                   --------------------------------------------
                              Title:    President
                                   --------------------------------------------


                                   EXFO ELECTRO-OPTICAL ENGINEERING INC.

                              By:  /s/  Germain Lamonde
                                   --------------------------------------------
                              Name:     Germain Lamonde
                                   --------------------------------------------
                              Title:    President and Chief Executive Officer
                                   --------------------------------------------


                                   EXFO SUB, INC.

                              By:  /s/  Germain Lamonde
                                   --------------------------------------------
                              Name:     Germain Lamonde
                                   --------------------------------------------
                              Title:    President
                                   --------------------------------------------


                                   /s/  Robert G. Klimasewski
                                   --------------------------------------------
                                   Robert G. Klimasewski


                                   /s/  William G. May, Jr.
                                   --------------------------------------------
                                   William G. May, Jr.


                                   /s/  David J. Farrell
                                   --------------------------------------------
                                   David J. Farrell


                                   /s/  William S. Gornall
                                   --------------------------------------------
                                   William S. Gornall

<PAGE>

                                                                       EXHIBIT A

                              Certificate of Merger

                                       of

                                  EXFO SUB, INC

                                       and

                            BURLEIGH INSTRUMENTS, INC

                                      into

                            BURLEIGH INSTRUMENTS, INC

               (Under Section 904 of the Business Corporation Law)


                  It is hereby certified on behalf of each of the constituent
corporations herein named, as follows:

                  FIRST: The Board of Directors of each of the constituent
corporations has duly adopted a plan of merger setting forth the terms and
conditions of the merger of said corporations.

                  SECOND: The name of the constituent corporation which is to be
the surviving corporation, and which is hereinafter sometimes referred to as the
"surviving constituent corporation", is Burleigh Instruments, Inc. The date upon
which its certificate of incorporation was filed by the Department of State is
August 25, 1972.

                  THIRD: The name of the other constituent corporation, which is
being merged into the surviving constituent corporation, and which is
hereinafter sometimes referred to as the "merged constituent corporation", is
EXFO Sub, Inc. The date upon which its certificate of incorporation was filed by
the Department of State is November 6, 2000.

<PAGE>

                                        2


                  FOURTH: As to each constituent corporation, the plan of merger
sets forth the designation and number of outstanding shares of each class and
series, as well as the specification of the classes and series entitled to vote
on the plan of merger, as follows:


                           Burleigh Instruments, Inc.


                    DESIGNATION OF EACH             NUMBER OF
                    OUTSTANDING CLASS AND           OUTSTANDING SHARES OF
                    SERIES OF SHARES                EACH CLASS

                    Common Stock,                   50,000 shares
                    $0.02 par value



                                 EXFO Sub, Inc.


                    DESIGNATION OF EACH             NUMBER OF
                    OUTSTANDING CLASS AND           OUTSTANDING SHARES OF
                    SERIES OF SHARES                EACH CLASS

                    Common Stock,                   100 shares
                    $0.01 par value



                  FIFTH: The merger herein certified was authorized in respect
of the surviving constituent corporation by the vote of the holders of at least
two-thirds of all outstanding shares of the corporation entitled to vote on the
plan of merger.

                  SIXTH: The merger herein certified was authorized in respect
of the merged constituent corporation by the written consent of the holders of
all outstanding shares of the corporation entitled to vote on the plan of
merger.

                  SEVENTH: The effective date of the merger herein certified
shall be the 20th day of December, 2000.

<PAGE>

                                        3

                  IN WITNESS WHEREOF, we have subscribed this document on the
date set forth below and do hereby affirm, under the penalties of perjury, that
the statements contained therein have been examined by us and are true and
correct.

Signed on December 19, 2000.


                                        /s/  Germain Lamonde
                                        ---------------------------------------
                                             Germain Lamonde, President
                                             of the Board of EXFO Sub, Inc.


                                        /s/  Kimberley Okell
                                        ---------------------------------------
                                             Kimberley Okell, Secretary of
                                             EXFO Sub, Inc.


                                        /s/  David Farrell
                                        ---------------------------------------
                                             David Farrell, President of
                                             Burleigh Instruments, Inc.


                                        /s/  Peter Battisti
                                        ---------------------------------------
                                             Peter Battisti, Secretary of
                                             Burleigh Instruments, Inc.


<PAGE>

                                                                       EXHIBIT D

                                ESCROW AGREEMENT

         THIS ESCROW AGREEMENT is dated the ___ day of December, 2000, by and
among EXFO Electro-Optical Engineering Inc., incorporated pursuant to the CANADA
BUSINESS CORPORATIONS ACT (the "BUYER"), Robert G. Klimasewski, ("KLIMASEWSKI")
William G. May, Jr. ("MAY"), David J. Farrell ("FARRELL") and William S. Gornall
("GORNALL") (collectively, the "SHAREHOLDERS"), and CIBC Mellon Trust Company,
as escrow agent (the "ESCROW AGENT").

                                    RECITALS

         WHEREAS; Buyer, EXFO Sub, Inc., a New York corporation ("BUYER SUB"),
Burleigh Instruments, Inc., a New York corporation and the Shareholders are
parties to that certain Agreement of Merger and Plan of Reorganization dated
November ___, 2000 (the "MERGER AGREEMENT"), providing for the merger of Buyer
Sub with and into Burleigh; and

         WHEREAS, the parties intend to establish an escrow fund pursuant to
Section 1.9 of the Merger Agreement;

         NOW, THEREFORE, the parties hereto, in consideration of the premises
and of their mutual covenants hereinafter set forth and intending to be legally
bound hereby, agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         The terms defined in this Article I shall, for all purposes of this
Escrow Agreement, have the meanings herein specified, unless the context
otherwise specifies or requires. Capitalized terms used and not otherwise
defined in this Escrow Agreement shall have the respective meanings given to
them in the Merger Agreement.

         "ESCROW AGENT" means CIBC Mellon Trust Company, as escrow agent under
this Escrow Agreement, and shall include its successors and permitted assigns.

         "ESCROW FUND" means the Escrowed Shares and the Funds, if any.

         "ESCROWED SHARES" means the shares of Buyer Subordinate Voting Shares,
without par value, which are from time to time held in escrow by the Escrow
Agent pursuant to this Escrow Agreement.

         "FUNDS" means any cash received from a Shareholder by the Escrow Agent
in lieu of Escrowed Shares pursuant to Section 2.2(a), or any other cash
received by the Escrow Agent pursuant to the terms hereof.

         "QUALIFIED INVESTMENTS" means any of the following securities, if and
to the extent the same have a maturity of not more than 30 days and are at the
time legal for investment or security, as the case may be, of escrowed funds:

<PAGE>

                  (a) direct obligations of, or obligations the principal of and
         interest on which are unconditionally guaranteed by, the United States
         of America;

                  (b) bonds, debentures, notes or other evidences of
         indebtedness issued by any of the following agencies or such other like
         governmental or government-sponsored agencies which may be hereafter
         created: Bank for Cooperatives; Federal Intermediate Credit Banks;
         Federal Financing Banks; Federal Home Loan Bank System; Export-Import
         Bank of the United States; Farmers Home Administration; Small Business
         Administration; Inter-American Development Bank; International Bank for
         Reconstruction and Development; Federal Land Banks; the Federal
         National Mortgage Association; and the Government National Mortgage
         Association;

                  (c) public housing bonds issued by public agencies or
         municipalities and fully secured as to the payment of both principal
         and interest by a pledge of annual contributions under an annual
         contributions contract or contracts with the United States of America;
         or temporary notes, preliminary loan notes, or project notes issued by
         public agencies or municipalities, in each case fully secured as to the
         payment of both principal and interest by a requisition or payment
         agreement with the United States of America;

                  (d) direct and general obligations of any state of the United
         States of America, to the payment of the principal of and interest on
         which the full faith and credit of such state is pledged, if at the
         time of their purchase such obligations are rated in either of the two
         highest rating categories by the rating service or services of either
         Standard and Poor's Corporation or Moody's Investors Service, Inc., or,
         upon the discontinuance of either or both of such services, such other
         national recognized rating service or services, as the case may be, as
         shall be selected by the Escrow Agent;

                  (e) negotiable or non-negotiable certificates of deposit, time
         deposits, or other similar banking arrangements, issued by any bank or
         trust company the deposits of which are insured by the Federal Deposit
         Insurance Corporation, such securities to be secured as to principal,
         but only to the extent not insured by the Federal Deposit Insurance
         Corporation or a similar corporation chartered by the United States of
         America, by the securities listed in (a), (b), (c) or (d) above and in
         a manner satisfactory to the Escrow Agent;

                  (f) repurchase agreements secured as to principal by the
         securities listed in (a), (b), (c) or (d) above and in a manner
         satisfactory to the Escrow Agent; and

                  (g) commercial paper with the highest rating by NCO/Moody's
         Commercial Paper Division of Moody's Investors Service, Inc.

                                   ARTICLE II
              DESIGNATION OF ESCROW AGENT; ASSETS SUBJECT TO ESCROW

         Section 2.1       DESIGNATION OF ESCROW AGENT. The parties hereto other
than the Escrow Agent hereby designate and appoint CIBC Mellon Trust Company, as
Escrow Agent to serve in accordance with the terms of this Escrow Agreement. The
Escrow Agent hereby accepts such

                                        2

<PAGE>

appointment and agrees to act in accordance with the terms and conditions
provided in this Escrow Agreement.

         Section 2.2       ASSETS SUBJECT TO ESCROW.

                  (a) The Shareholders hereby deposit an aggregate of _____
         shares of Buyer Subordinate Voting Shares, (consisting of ___ shares
         deposited by Klimasewski, ___ shares deposited by May, ___ shares
         deposited by Gornall and ____ shares deposited by Farrell), issued in
         the name of such Shareholders, to be held by the Escrow Agent in
         accordance with the terms and provisions of this Escrow Agreement. At
         any time during the term of this Agreement, any Shareholder may
         substitute cash for any shares of Buyer Subordinate Voting Shares
         initially deposited by such Shareholder and remaining in the Escrow
         Fund. The amount of cash to be deposited by such Shareholder for each
         share of Buyer Subordinate Voting Shares to be removed from the Escrow
         Fund will be equal to the Closing Price, which the parties agree is
         $_____.

                  (b) Cash or other property received by the Escrow Agent in
         respect of the Escrowed Shares from redemption or liquidation thereof,
         shall be held by the Escrow Agent in accordance with the terms and
         provisions of this Agreement. Any dividends declared with respect to
         the Escrowed Shares, whether in cash, shares of the Buyer Subordinate
         Voting Shares or other property shall be promptly forwarded to the
         proper Shareholder.

                                  ARTICLE III
                     DURATION OF ESCROW; TREATMENT OF FUNDS

         Section 3.1       DURATION OF ESCROW. Subject to the provisions of
Article IV hereof, the Escrow Agent shall hold the Escrowed Shares and the Funds
as provided in this Escrow Agreement until the termination hereof in accordance
with Article IV.

         Section 3.2       ESCROWED SHARES. Except as expressly provided in this
Escrow Agreement, the Escrowed Shares may not be transferred, sold or otherwise
disposed of by the Escrow Agent. Each of the Shareholders shall be permitted to
exercise any voting rights with respect to the Escrowed Shares issued in his
name.

         Section 3.3       FUNDS. All Funds received by the Escrow Agent under
the provisions of this Escrow Agreement shall, as nearly as may be practicable,
be continuously invested and reinvested by the Escrow Agent in Qualified
Investments pursuant to the written instructions of the Shareholders, in each
case maturing within not more than 30 days from the date of the acquisition
thereof. The Escrow Agent shall sell at the best price obtainable at market
rates provided by broker/dealers or present for redemption any such securities
so purchased as an investment of Funds whenever it shall be necessary to do so
in order to provide Funds to make any distribution required pursuant to this
Agreement. Subject to compliance with the foregoing, the Escrow Agent shall not
be liable or responsible for any loss resulting from any such investment.

                                        3

<PAGE>

         Section 3.4       INCOME. All income from the investment of Funds (net
of losses, if any) shall be allocable to the Shareholders as their interests may
from time to time appear and distributed among the Shareholders by the Escrow
Agent not less frequently than quarterly.

                                   ARTICLE IV
                                     CLAIMS

         Section 4.1       NOTICE OF CLAIMS. From time to time on or before the
termination of this Agreement, the Company may give notice (a "Notice") to the
Shareholders, and the Escrow Agent asserting in reasonable detail the nature and
dollar amount of any claim (a "Claim") it may have under Section 7.2 of the
Merger Agreement. If the Shareholders give notice to the Company and the Escrow
Agent disputing any Claim (a "Counter Notice") within 30 days following receipt
by the Escrow Agent of the Notice regarding such Claim, such Claim shall be
resolved as provided in Section 4.3. If no Counter Notice is received by the
Escrow Agent within such 30-day period, then the amount of damages claimed by
the Company in the Notice shall be deemed established for purposes of this
Escrow Agreement and, at the end of such 30-day period, the Escrow Agent shall
pay to the Buyer the portion of the Escrow Fund claimed in the Notice from (and
in all cases only to the extent of) the Escrow Fund.

         Section 4.2       DISTRIBUTIONS. In making any payment of a Claim from
the Escrow Fund, the Escrow Agent may distribute as consideration therefor: (a)
shares of Buyer Subordinate Voting Shares, which shall be valued for this
purpose at the closing sales price per share of Buyer Subordinate Voting Shares
on the most recent date on which trading of such stock occurred on the principal
exchange or market on which such shares are then traded preceding the date of
such distribution, or (b) cash. Any distributions to the Buyer pursuant to this
Article IV shall be allocable to the Shareholders pro rata in accordance with
their initial deposits into the Escrow Fund.

         Section 4.3       COUNTER NOTICE; RESOLUTION. If a Counter Notice has
been given pursuant to Section 4.1 the Escrow Agent shall make no distribution
except in accordance with (i) joint written instructions of the Buyer and the
Shareholders or (ii) a final non-appealable order of a court of competent
jurisdiction. Any such court order shall be accompanied by a legal opinion by
counsel for the presenting party satisfactory to the Escrow Agent to the effect
that the order is final and non-appealable. The Escrow Agent shall act on such
court order and legal opinion without further question.

         Section 4.4       JOINT INSTRUCTIONS. Notwithstanding anything in this
Escrow Agreement to the contrary, the Escrow Agent shall be entitled to rely on
any joint written instructions received from the Buyer and the Shareholders.

                                    ARTICLE V
                                   TERMINATION

         Section 5.1       TERMINATION OF ESCROW. On the date which is 365 days
after the Closing Date as defined in the Merger Agreement, the Escrow Agent
shall pay and distribute 50% of the Escrow Fund pro rata to the Shareholders in
accordance with each Shareholder's initial deposit to the Escrow Fund, unless
any Claims are then pending, in which case a portion of the

                                        4

<PAGE>

Escrowed Shares and Funds equal to the disputed portion of any pending claim
shall be retained by the Escrow Agent in the Escrow Fund, pending joint written
instructions of the Company and the Shareholders or a final non-appealable order
of a court of competent jurisdiction as contemplated by Section 4.3 and the
remaining balance of the Escrow fund shall be released on the date which is the
second anniversary date of the Closing Date, as defined in the Merger Agreement,
unless any Claims are then pending, in which case a portion of the Escrowed
Shares and Funds equal to the disputed portion of any pending claim shall be
retained by the Escrow Agent in the Escrow Fund, pending joint written
instructions of the Company and the Shareholders or a final non-appealable order
of a court of competent jurisdiction as contemplated by Section 4.3. The Buyer
and the Shareholders agree to provide such joint written instructions to deliver
such Escrowed Shares and Funds to the Shareholders to the extent they exceed the
reasonably anticipated value of the Claims then pending.

                                   ARTICLE VI
                             DUTIES OF ESCROW AGENT

         Section 6.1       LIABILITY. The Escrow Agent shall not be liable,
except for its own gross negligence or willful misconduct and, except with
respect to claims based upon such gross negligence or willful misconduct that
are successfully asserted against the Escrow Agent, the other parties hereto
shall jointly and severally indemnify and hold harmless the Escrow Agent (and
any successor Escrow Agent) from and against any and all losses, liabilities,
claims, actions, damages and expenses, including reasonable attorneys' fees and
disbursements, arising out of and in connection with this Escrow Agreement.
Without limiting the foregoing, the Escrow Agent shall not be liable in
connection with its investment or reinvestment of any Funds held by it hereunder
in good faith, in accordance with the terms hereof, including, but not limited
to, any liability for any reasonable delays (not resulting from its gross
negligence or willful misconduct) in the investment or reinvestment of the
Escrow Fund, or any loss of interest incident to any such reasonable delays.

         Section 6.2       RELIANCE. The Escrow Agent shall be entitled to rely
upon any order, judgment, certification, demand, notice, instrument or other
writing delivered to it hereunder without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity of the service thereof. The Escrow Agent may act in reliance upon any
instrument or signature reasonably believed by it to be genuine and may assume
that the person purporting to give receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so. The Escrow Agent may conclusively presume that the
undersigned representative of any party hereto which is an entity other than a
natural person has full power and authority to instruct the Escrow Agent on
behalf of that party unless written notice to the contrary is delivered to the
Escrow Agent. The Escrow Agent may act pursuant to the advise of counsel with
respect to any matter relating to this Escrow Agreement and shall not be liable
for any action taken or omitted by it in good faith in accordance with such
advice.

         Section 6.3       RESIGNATION. The Escrow Agent (and any successor
Escrow Agent) may at any time resign as such by delivering the Escrow Fund to
any successor Escrow Agent jointly designated by the Buyer and the Shareholders
in writing, or to any court of competent jurisdiction, whereupon the Escrow
Agent shall be discharged of and from any and all further

                                        5

<PAGE>

obligations arising in connection with this Escrow Agreement. The resignation of
the Escrow Agent will take effect on the earlier of (a) the appointment of a
successor (including a court of competent jurisdiction) or (b) the day which is
30 days after the date of delivery of its written notice of resignation to the
other parties hereto. If at that time the Escrow Agent has not received a
designation of a successor Escrow Agent, the Escrow Agent's sole responsibility
after that time shall be to retain and safeguard the Escrow Fund until receipt
of a designation of successor Escrow Agent or a joint written disposition
instruction by the other parties hereto or a final non-appealable order of a
court of competent jurisdiction.

         Section 6.4       DISAGREEMENTS. In the event of any disagreement
between the other parties hereto resulting in adverse claims or demands being
made in connection with the Escrow Fund or in the event that the Escrow Agent in
good faith is in doubt as to what action it should take hereunder, the Escrow
Agent shall be entitled to retain the Escrow Fund until the Escrow Agent shall
have received (i) a final non-appealable order of a court of competent
jurisdiction directing delivery of the Escrow Fund or (ii) a written agreement
executed by the Buyer and the Shareholders directing delivery of the Escrow
Fund, in which event the Escrow Agent shall disburse the Escrow Fund in
accordance with such order or agreement. Any court order shall be accompanied by
a legal opinion by counsel for the presenting party satisfactory to the Escrow
Agent to the effect that the order is final and non-appealable. The Escrow Agent
shall act on such court order and legal opinion without further question.

         Section 6.5       FEES. The Buyer shall pay the Escrow Agent
compensation, as payment in full for the services to be rendered by the Escrow
Agent hereunder, in the amounts set forth on Schedule A attached hereto, and
agrees to reimburse the Escrow Agent for all reasonable expenses incurred in
performance of its duties hereunder. Any compensation and reimbursement of
expenses to which the Escrow Agent is entitled shall be borne and paid solely by
the Buyer.

         Section 6.6       SECURITIES DEPOSITORY. The other parties hereto
authorize the Escrow Agent, for any securities held hereunder, to use the
services of any United States central securities depository it reasonably deems
appropriate, including, but not limited to, the Depository Trust Company and the
Federal Reserve Book Entry System.

         Section 6.7       NO OTHER DUTIES. This Escrow Agreement expressly sets
forth all the duties of Escrow Agent with respect to any and all matters
pertinent hereto. No implied duties or obligations shall be read into this
Escrow Agreement against the Escrow Agent. The Escrow Agent shall not be bound
by the provisions of any agreement among the other parties hereto except this
Escrow Agreement.

                                   ARTICLE VII
                                  MISCELLANEOUS

         Section 7.1       NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed effectively
given: (a) upon personal delivery to the party to be notified, (b) when sent by
confirmed facsimile if sent during normal business hours of the recipient; if
not, then on the next business day, (c) three business days after having been
sent by registered or certified mail, return receipt requested, postage prepaid,
or (d) two business days after deposit with recognized overnight courier,
specifying next day delivery, with

                                        6

<PAGE>

written verification of receipt. The address for all notices, requests, consents
and other communications hereunder to the parties to this Agreement shall be
delivered or sent to the following:

The Buyer:

                  EXFO Electro-Optical Engineering Inc.
                  465, Godin Avenue
                  Vanier, Quebec    G1M 3G7
                  Canada
                  Telephone (418) 683-0211
                  Facsimile (418) 683-2170
                  Attention:  Germain Lamonde

With a copy (which shall not constitute notice) to:

                  Fasken Martineau DuMoulin LLP
                  Stock Exchange Tower, Suite 3400
                  800 Place-Victoria
                  Montreal, Quebec   H4Z 1E9
                  Canada
                  Attention: Robert Pare, Esq.
                  Telephone (514) 397-7517
                  Facsimile (514) 397-7600


                  Robert G. Klimasewski
                  _________________________
                  _________________________
                  _________________________


                  William G. May, Jr.
                  _________________________
                  _________________________
                  _________________________


                  David J. Farrell
                  _________________________
                  _________________________
                  _________________________


                  William S. Gornall
                  _________________________

                                        7

<PAGE>

                  _________________________
                  _________________________


In each case, with a copy (which shall not constitute notice) to:

                  Michael R. McEvoy, Esq.
                  Harter, Secrest & Emery LLP
                  700 Midtown Tower
                  Rochester, New York 14604

The Escrow Agent:

                  _________________________
                  _________________________
                  _________________________
                  Attention:  ___________, Esq.
                  Telephone (___)__________
                  Facsimile (___) ___________


Or such other address as may be designated in writing hereafter, in the same
manner, any party hereto.

         Section 7.2       COUNTERPARTS. This Escrow Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
instrument and all of which together shall constitute a single agreement.

         Section 7.3       CAPTIONS. The captions in this Escrow Agreement are
for convenience of reference only and shall not be given any effect in the
interpretation of this Escrow Agreement.

         Section 7.4       NO WAIVER. The failure of a party to insist upon
strict adherence to any term of this Escrow Agreement on any occasion shall not
be considered a waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this Escrow Agreement.
Any waiver must be in writing.

         Section 7.5       EXCLUSIVE AGREEMENT; AMENDMENT. This Escrow Agreement
supersedes all prior agreements among the parties with respect to its subject
matter, is intended (with the documents referred to herein) as a complete and
exclusive statement of the terms of the agreement among the parties with respect
thereto and cannot be changed or terminated except by a written instrument
executed by Buyer, the Shareholders and the Escrow Agent.

         Section 7.6       GOVERNING LAW. This Escrow Agreement and (unless
otherwise provided) all amendments hereof and waivers and consents hereunder
shall be governed by the laws of the State of New York, without regard to the
conflicts of law principles thereof.

                                        8

<PAGE>

         IN WITNESS WHEREOF, Buyer, each of the Shareholders and the Escrow
Agent have caused this Escrow Agreement to be duly executed as of the day and
year first above written.


                                   EXFO ELECTRO-OPTICAL ENGINEERING INC.


                                   By:  _______________________________________
                                   Name:
                                   Title:



                                   SHAREHOLDERS


                                   ____________________________________________
                                   Robert G. Klimasewski


                                   ____________________________________________
                                   William G. May, Jr.


                                   ____________________________________________
                                   David J. Farrell


                                   ____________________________________________
                                   William S. Gornall


                                   CIBC MELLON TRUST COMPANY

                                   By:  _______________________________________
                                   Name:
                                   Title:


                                        9

<PAGE>

                              DISCLOSURE SCHEDULES



         All documents referenced in these schedules were made available
            to the Buyer at an earlier date. Additional access to any
               referenced documents may be available upon request.

          THE DISCLOSURE OF ANY MATTER IN A PORTION OF THESE DISCLOSURE
        SCHEDULES SHALL BE DEEMED TO BE A DISCLOSURE FOR ALL PURPOSES OF
        THE AGREEMENT OF MERGER AND PLAN OF REORGANIZATION TO WHICH SUCH
          MATTER COULD REASONABLY BE LIKELY TO BE PERTINENT, BUT SHOULD
       EXPRESSLY NOT BE DEEMED TO CONSTITUTE AN ADMISSION BY THE COMPANY,
       THE SHAREHOLDERS OR THE BUYER, AS THE CASE MAY BE, OR TO OTHERWISE
          IMPLY, THAT ANY SUCH MATTER IS MATERIAL FOR PURPOSES OF THIS
                                   AGREEMENT.

<PAGE>

                                  SCHEDULE 2.2

                                  SUBSIDIARIES

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
BURLEIGH INSTRUMENTS, GmbH
--------------------------------------------------------------------------------
<S>                                               <C>
Jurisdiction of incorporation                     Germany
--------------------------------------------------------------------------------
The number of shares of authorized capital        DM 150,000
stock of each class of its capital stock
--------------------------------------------------------------------------------
The number of issued and outstanding shares       DM 150,000
of each class of its capital stock
--------------------------------------------------------------------------------
The names of the holders of issued and            William G. May, DM 16,500
outstanding shares of each class of capital       Robert G. Klimasewski, DM 16,500
stock and the number of shares held by each       Burleigh Instruments, Inc., DM 117,000
such holder
--------------------------------------------------------------------------------
The number of shares of its capital stock held    None
in treasury
--------------------------------------------------------------------------------
Managing Director                                 Peter Battisti
--------------------------------------------------------------------------------



--------------------------------------------------------------------------------
BURLEIGH INSTRUMENTS (U.K.) Ltd.
--------------------------------------------------------------------------------
Jurisdiction of Incorporation                     United Kingdom
--------------------------------------------------------------------------------
The number of shares of authorized capital        (pound) 1,000
stock of each class of its capital stock
--------------------------------------------------------------------------------
The number of issued and outstanding shares       (pound) 700
of each class of its capital stock
--------------------------------------------------------------------------------
The names of the holders of issued and            Burleigh Instruments, (pound) 500
outstanding shares of each class of capital       William G. May, (pound) 100
stock and the number of shares held by each       Robert G. Klimasewski, (pound) 100
such holder
--------------------------------------------------------------------------------
The number of shares of its capital stock held    None
in treasury
--------------------------------------------------------------------------------
Managing Director                                 David J. Farrell
--------------------------------------------------------------------------------
Officer                                           Peter Battisti, Secretary
--------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                  SCHEDULE 2.3

                                 CAPITALIZATION


--------------------------------------------------------------------------------
         SHAREHOLDER                              NUMBER OF SHARES
--------------------------------------------------------------------------------
Robert G. Klimasewski                                  19,467
--------------------------------------------------------------------------------
William G. May                                         19,467
--------------------------------------------------------------------------------
David J. Farrell                                        7,390
--------------------------------------------------------------------------------
William S. Gornall                                      3,676
--------------------------------------------------------------------------------
Total                                                  50,000
--------------------------------------------------------------------------------



Authorized capitalization of 1,000,000 shares of common stock, $0.02 par value.



                          SHARE RESTRICTION AGREEMENTS
                          ----------------------------

1)       Shareholders Agreement among Robert G. Klimasewski, William G. May and
         Burleigh Instruments, Inc., April 17, 1989. This Agreement restricts
         the transfer of shares by granting an option to purchase the shares
         first to the other shareholders and then to Burleigh Instruments, Inc.

2)       Stock Purchase Agreement among David J. Farrell, William S. Gornall,
         Robert G. Klimasewski and William G. May, May 12, 2000. Farrell and
         Gornall have pledged their shares pursuant to a pledge agreement dated
         May 12, 2000 to secure payment of certain promissory notes.

<PAGE>

                                  SCHEDULE 2.4

                            CONFLICTS WITH AGREEMENTS

1)       Sublease Agreement between Fishers Development Company and Burleigh
         Instruments, Inc., September 1, 2000
2)       Environmental Compliance and Indemnification Agreement, September 1,
         2000
3)       Agency Compliance Agreement between Ontario County I.D.A. and Burleigh
         Instruments, Inc., September 1, 2000
4)       Inducement Agreement among Ontario County I.D.A., Fishers Development
         Company and Burleigh Instruments, Inc., September 1, 2000
5)       Guaranty Agreement from Fishers Development Company and Burleigh
         Instruments, Inc. to Ontario County I.D.A. and The Huntington National
         Bank, September 1, 2000
6)       Continuing Guaranty from Burleigh Instruments, Inc. to KeyBank N.A.,
         September 22, 2000
7)       Sublease Agreement between Fishers Development Company and Burleigh
         Instruments, Inc., January 1, 1978
8)       Sublease Agreement between Fishers Development Company and Burleigh
         Instruments, Inc., First Amendment, April 8, 1993
9)       Sublease Agreement between Fishers Development Company and Burleigh
         Instruments, Inc., Second Amendment, March 10, 1998
10)      Guaranty of Payment and Performance between Burleigh Instruments, Inc.
         and KeyBank N.A., April 15, 1998
11)      Term Loan Agreement between Burleigh Instruments, Inc. and KeyBank,
         April 8, 1993
12)      Promissory Note in the principal amount of $786,000 made by Burleigh
         Instruments, Inc. to KeyBank N.A., April 8, 1993
13)      Burleigh Instruments, Inc. Capital Grant from Empire State Development,
         March 24, 2000
14)      Ontario County RIF Loan Application
15)      Business Loan Agreement between KeyBank N.A. and Burleigh Instruments,
         Inc., September 22, 2000
16)      Commercial Security Agreement and Promissory Note between KeyBank N.A.
         and Burleigh Instruments, Inc., July 18, 2000
17)      NASA SBIR Phase II Contract, March 12, 1999
18)      Department of the Air Force Contract, June 22, 2000
19)      UCLA Subcontract to Air Force Contract, October 9, 2000
20)      USHIO Research Institute of Technology Inc. Development Agreement,
         March 11, 1998
21)      EXFO Electro-Optical Engineering Inc. Strategic Alliance Agreement,
         July 3, 1997, Annex I and Annex II to Strategic Alliance Agreement, as
         amended, December 10, 1997, and Termination of Annex III to Strategic
         Alliance Agreement, August 20, 1999
22)      Package Insurance, Zurich Group, Policy # CMM 31725527, August 1, 2000
23)      Automobile Insurance, Zurich Group, Policy # CMM 31725527, August 1,
         2000
24)      Workers' Compensation Insurance, Zurich Group, Policy # TC1 95562931,
         August 1, 2000
25)      Umbrella Insurance, Zurich Group, Policy # UBA 95469814, August 1, 2000
26)      Directors and Officers Insurance, Zurich Group, Policy # 473-11-57,
         August 1, 2000
27)      Producer Loan Agreements between Burleigh Instruments, Inc. and
         Burleigh DISC, Inc.:
                  a)       Dated April 1, 1994 for $17,200.00
                  b)       Dated February 28, 1995 for $440,000.00
                  c)       Dated February 28, 1997 for $207,250.00
                  d)       Dated April 1, 1998, for $273,700.00

<PAGE>



                                  SCHEDULE 2.5

                                 SHARE OWNERSHIP
                                 ---------------



1)       Shareholders Agreement among Robert G. Klimasewski, William G. May and
         Burleigh Instruments, Inc., April 17, 1989. This Agreement restricts
         the transfer of shares by granting an option to purchase the shares
         first to the other shareholders and then to Burleigh Instruments, Inc.

2)       Stock Purchase Agreement among David J. Farrell, William S. Gornall,
         Robert G. Klimasewski and William G. May, May 12, 2000. Farrell and
         Gornall have pledged their shares pursuant to a pledge agreement dated
         May 12, 2000 to secure payment of certain promissory notes.



<PAGE>

                                  SCHEDULE 2.10

                            CERTAIN CHANGES OR EVENTS
                            -------------------------


1)       Burleigh Instruments, Inc. is considering an amendment to its 401(k)
         Plan and Sales Growth Bonus Plan to eliminate the current six month
         waiting period for participation.

2)       Burleigh Instruments, Inc. expects to implement a Cafeteria Plan for
         its employees effective January 1, 2001.

3)       Burleigh Instruments, Inc. expects to implement a Recruiting Bonus
         Program effective January 1, 2001.

4)       Burleigh Instruments, Inc. expects to implement a Referral Bonus
         Program for its employees effective January 1, 2001.

5)       The Company's appeal of an export license denial for the return of an
         Atomic Force Microscope System to the Government of India (the unit had
         been returned to Burleigh for repairs) has been denied by the Bureau of
         Export Administration. Burleigh has advised the Government of India
         that it cannot pursue this matter further. By letter dated November 16,
         2000, the Government of India has requested a refund of the cost of the
         unit (approximately $42,000).



<PAGE>



                                  SCHEDULE 2.12

                             S CORPORATION ELECTION
                             ----------------------

         Burleigh Instruments, Inc. has elected to be treated as an S
corporation for New York state tax and Federal tax purposes. However, Burleigh
Instruments, Inc. is subject to tax in Maryland and has not elected to be
treated an S corporation for Maryland state tax purposes.



<PAGE>

                                SCHEDULE 2.13(A)

                              INTELLECTUAL PROPERTY
                              ---------------------

U.S. PATENTS
1)       Patent # 5847387: Support Device and Stage Assembly for a Scanned-Probe
         Microscope, December 8, 1998
2)       Patent # 5831264: Electrostrictive Actuator for Scanned-Probe
         Microscope, November 3, 1998
3)       Patent # 5751090: Peristaltic Driver Apparatus, May 12, 1998
4)       Patent # 5157256: System for Exchanging Samples and Electrode Tip Units
         in a Surface Probe Microscope, October 20, 1992
5)       Patent # 4874979: Electromechanical Translation Apparatus, October 17,
         1989
6)       Patent # 4336809: Human and Animal Tissue Photoradiation System and
         Method, June 29, 1982
7)       Patent # 4319843: Interferometer Apparatus for the Direct Measurement
         of Wavelength and Frequency, March 16, 1982
8)       Patent # 4208636: Laser Apparatus, June 17, 1980
9)       Patent # 4157802: Rigid Thermally Stable Structure for Supporting
         Precision Devices, June 12, 1979
10)      Patent # 3902085: Electromechanical Translation Apparatus, August 26,
         1975
11)      Patent # 3902084: Piezoelectric Electromechanical Translation
         Apparatus, August 26, 1975

U.S. PATENTS APPLIED FOR OR PENDING (THE COMPANY AND THE SHAREHOLDERS MAKE NO
REPRESENTATION REGARDING WHETHER ANY SUCH PATENTS WILL BE GRANTED.)
12)      Patent Application: Inertial Impact Drill for Cytological Applications,
         filed June 14, 2000
13)      Patent Application: Flex-tensional Electromechanical Displacement
         Amplifier, filed March 16, 2000
14)      Patent Application: Linear Incremental Bi-directional Motor with a
         Ratchet Stepper Mechanism, filed June 5, 2000
15)      Patent Application: Linear Incremental Bi-directional Motor with
         Interdigitated High Force Clamps, filed June 5, 2000
16)      Patent Application: Laser Wavelength Meter, filed November 15, 2000.

FOREIGN PATENTS
17)      Canadian Patent: Electromechanical Translation Apparatus, December 29,
         1992

U.S. TRADEMARKS
19)      Trademark for "Inchworm" dated May 22, 1984, Reg. No 1,278,748
20)      Trademark for "Gibraltar" dated October 20, 1998, Reg. No 2,198,525
21)      Trademark for "Wavemeter" dated August 11, 1981, Reg. No 1,164,470
22)      Trademark for "Instructional STM" dated August 10, 1993, Reg. No
         1,787,680
23)      Trademark for "Aris" dated October 29, 1991, Reg. No 1,662,937
24)      Trademark for "Metris" dated October 28, 1997, Reg. No 2,109,779
25)      Trademark for "True Image" dated October 26, 1993, Reg. No 1,800,550
26)      Trademark for "Hifase" dated April 24, 1990, Reg. No 1,592,830
27)      Trademark for "True View" dated February 21, 1995, Reg. No, 1,879,556

<PAGE>

28)      Trademark for "Resolver" dated February 17, 1998 (2), Reg. No 2,137,226
29)      Trademark for "Resolver and Design" dated March 10, 1998, Reg. No
         2,142,507
30)      Trademark for "Tip Check" dated September 14, 1993, Reg. No 1,792,463

U.S. TRADEMARKS APPLIED FOR OR PENDING (THE COMPANY AND THE SHAREHOLDERS MAKE NO
REPRESENTATION REGARDING WHETHER ANY SUCH TRADEMARKS WILL BE REGISTERED.)
31)      Trademark Application for "PiezoDrill," filed June 20, 2000, Serial No
         761073,291
32)      Trademark Application for "Freedom," filed November 20, 2000, Serial
         N(degree) 76167987
33)      Trademark Application for "Burleigh," filed November 10, 2000, Serial
         N(degree) 76163387

DOMAIN NAMES
34)      "Burleigh.com"
35)      "PiezoDrill.com"

LICENSES
36)      License from UFO Systems, Inc. on March 4, 1993 for software
37)      License from Alligator Technologies for "Prime Factor FFT" software
38)      License from Hewlett Packard for Patent # 29246
39)      License for development of Microsoft Windows prototype code
40)      Research Systems Inc. OEM Software License Agreement dated April 16,
         1999
41)      WinZip 4.0 Registration Form/Invoice dated June 16, 1993
42)      MAXCIM software program sublicensed from William G. May and Robert G.
         Klimasewski
43)      Non-exclusive (after July 1, 2001) License from Micromap Technology
         Purchase Agreement dated July 1, 1998 for software and Microscope
         design.
44)      License/Software Agreements for individual computers or operators of
         computers, as follows:

1.       AutoCad lt97
a.       Serial Number:  160-10430686

2.       AutoCAD LT
a.       Serial Number:  160-10396370

3.       MathCad
a.       Serial Number:  PN900909DP1938C

4.       AutoCad
a.       Serial number:  110-99777441

5.       AutoCad LT
a.       Serail Number:  160-10698669

6.       Mathcad7
a.       PN702805D00319-2a

7.       AutoCad LT
a.       Serial Number:  160-10430692

<PAGE>

8.       AutoCAD LT
a.       Serial Number:  160-10696211

9.       AutoCAD
a.       Serial Number:  160-10430695

10.      AutoCAD
a.       Serial Number:  110-99512979

11.      AutoCAD LT
a.       Serial Number:  160-10677955

12.      Don Dobbelaere, operator
a.       AutoCAD, Serial Number:  160-10430691
b.       Microsoft Projec, Serial Number:  53606-892-0489331-11977

13.      Dan Viggiano, operator
a.       AutoCAD, Serial Number:  110-99512978
b.       SolidWorks 2000, Serial Number:  0000 0001 9324 0050
c.       Axum, Serial Number:  AP510805D00559
E.       Mathcad7, PN702805D00341-2a

14.      Rob Culhane, operator
a.       AutoCAD LT, Serial Number:  160-10430701
b.       PartMiner, Number:  160388
c.       MAX+plus II
d.       Magnetics Designer, Number : 3578

15.      Michael Craghead, operator
a.       AutoCAD LT, Serial Number:  160-10430702
b.       Micrsoft Project, ID: 63606-809-3258881-53883
c.       SmartDraw, SD-00-213305-000A-00000-50-84582
d.       Parts&Vendors SE Edition, License: td9812211084811

16.      Matthew Lombard, operator
a.       AutoCAD, Serial Number:  110-99512979
b.       SolidWorks 2000, Serial Number:  0000 0001 9321 9606

17.      John Theodorsen, operator
a.       AutoCAD LT, Serial Number:  160-10430703

18.      Bob Blair, operator
a.       AutoCAD LT, Serial Number:  160-10430699
b.       Microsoft Project, Serial Number:  53606-330-9020012-48781

19.      Robert Frankel, operator
a.       AutoCAD LT, Serial Number:  160-10430707
b.       Mathcad7, pn702802d00708-2a

<PAGE>

c.       EDC-1000HR Imaging Software
d.       ZEMAX-SE, Serial Number:  28-716

20.      Cindy Snow, operator
a.       About AutoCAD, Serial Number:  110-99512948
b.       About SolidWorks 2000, Serial Number:  000 0007 5001 0478

21.      Lonnie Bennett, operator
a.       About AutoCAD, Serial Number:  110-995112979
b.       About SolidWorks 2000, Serial Number:  000 0001 9322 2645

22.      Jeff Hereth, operator
a.       About AutoCAD, Serial Number:  110-99512968
b.       About SolidWorks 2000, Serial Number:  0000 0012 5192 2610

23.      Bill Gornall, operator
a.       About AutoCAD LT, Serial Number:  160-10430709
b.       Mathcad7, Serial Number: vn702802d00419-2a
c.       About Convert It!Pro

24.      Mike Houk, operator
a.       About Mathcad, Serial Number:  PU80081oDA6180
b.       About AutoCAD LT, Serial Number:  160,10430687
c.       About Corel PHOTO-PAINT Plus, Serial Number:  056878

25.      Autodesk Audo CAD LT 97
a.       Serial Number:  160-10430694


<PAGE>



                                SCHEDULE 2.13(B)

                              INTELLECTUAL PROPERTY
                              ---------------------

The Company's products include certain embedded proprietary software, which the
Company deems to be distributed pursuant to a license.



<PAGE>



                                SCHEDULE 2.13(E)

                      CONFLICTS WITH AGREEMENTS DEALING IN
                      ------------------------------------
                              INTELLECTUAL PROPERTY
                              ---------------------

1)       NASA SBIR Phase II Contract, March 12, 1999

2)       Department of the Air Force Contract, June 22, 2000

3)       UCLA Subcontract to Air Force Contract, October 9, 2000

4)       USHIO Research Institute of Technology Inc. Development Agreement,
         March 11, 1998

5)       EXFO Electro-Optical Engineering Inc. Strategic Alliance Agreement,
         July 3, 1997, Annex I and Annex II to Strategic Alliance Agreement, as
         amended, December 10, 1997, and Termination of Annex III to Strategic
         Alliance Agreement, August 20, 1999



<PAGE>



                                  SCHEDULE 2.14

                                      LIENS
                                      -----

1)       KeyBank of New York filed with the New York Department of State and
         with the Ontario County Clerk two UCC-1 financing statements covering
         all of the Company's goods, accounts, chattel paper, general
         intangibles, instruments, documents, wherever located, whether now or
         existing or hereafter acquired or arising.



<PAGE>

                                  SCHEDULE 2.15

                                COMPANY CONTRACTS
                                -----------------

1)       Wit Soundview Engagement Agreement dated August 16, 2000
2)       Coherent Scientific PTY Agreement
3)       Titan Electro-Optics Co., Ltd. Distributor Agreement dated January 1,
         2000
4)       MJL Crysteck, Inc. Distributor Agreement dated June 25, 1999
5)       SE Technologies Corporation Distributor Agreement dated February 26,
         1999
6)       Eppendorf Scientific Value Added Reseller Purchase Agreement dated
         October 1, 1999
7)       Athens Scientific Representatives Distributor Agreement dated December
         8, 1998
8)       Daekhon International, Inc. Distributor Agreement dated November 1,
         1998
9)       AEI Customs Brokerage Services Power of Attorney from Burleigh dated
         October 15, 1998
10)      NPI GmbH Distributor Agreement dated October 1, 1998
11)      Nikon Reseller Purchase Agreement dated September 30, 1998
12)      Hust Institute Distributor Agreement dated May 15, 1998
13)      Titan Electro-Optics Co., Ltd. Distributor Agreement dated January 1,
         1998
14)      Kuo Yang Scientific Corporation Distributor Agreement dated December
         15, 1997
15)      Schmidt Scientific Distributor Agreement dated November 1, 1997
16)      Olympus America, Inc. Distributor Agreement dated September 18, 1997
17)      2M Strumenti S.r.l. Distributor Agreement dated July 1, 1997
18)      2M Strumenti S.r.l. Second Distributor Agreement dated July 1, 1997
19)      Gamma Optronic AB Distributor Agreement dated February 1, 1997
20)      MD Scitech Ltd. Distributor Agreement dated February 1, 1997
21)      Carl Zeiss Inc. Value Added Reseller Purchase Agreement
22)      Optilas GmbH Distributor Agreement dated February 14, 1995
23)      Mestec AS Distributor Agreement dated October 1, 1993
24)      Indeco Distributor Agreement dated February 1, 1993
25)      New Technology RK Ltd. Representation Agreement dated March 1, 1990
26)      Optilas B.V. Representation Agreement dated January 1, 1989
27)      Decada Representation Agreement dated January 1, 1989
28)      GMP Representation Agreement dated January 1, 1989
29)      Scientific Instruments Marketing, Co. Representation Agreement dated
         January 1, 1989
30)      Opto Electronica S/A Distributor Agreement dated February 1, 1992
31)      Lasing SA Representation Agreement dated January 1, 1989
32)      Atlaser di Distributor Agreement dated June 1, 2000
33)      Ambios Technology, Inc. Representative Agreement dated July 1, 1999
34)      Tech Science Ltd. Representation Agreement dated November 12, 1990
35)      Hellenic Scientific Representation Agreement dated January 1, 1989
36)      Micromap Technology Purchase Agreement dated July 1, 1998
37)      Newport Supply Agreement dated May 29, 1997
38)      Micromap Manufacturing and Sales Agreement dated September 18, 1996
39)      Direct Optical Research Purchase Order dated March 1, 2000
40)      Coulter Corporation Purchase Order (date illegible)
41)      Cavendish Instruments Purchase Orders (date illegible)
42)      Ontario County I.D.A. 2000 Bond
43)      Burleigh Instruments Capital Grant from Empire State Development

<PAGE>

44)      Ontario County RIF Loan Application
45)      KeyBank N.A. Mortgage Financing 1998
46)      KeyBank N.A. Mortgage Financing 1993
47)      Dr. Turan Erdogan Advisor Agreement dated February 28, 2000
48)      Martin LuKacher Consulting Agreement dated January 1, 2000
49)      James R. Gort Consulting Agreement dated June 27, 1997
50)      Don McClimans Consultant Agreement
51)      Chris McGoldrick Consultant Agreement
52)      Fred Haas FY2000 Commission Program dated March 18, 2000
53)      Peter Dera FY2000 Commission Program dated March 18, 2000
54)      Walter Herson FY2000 Commission Program dated March 18, 2000
55)      Jeff Kondziela FY2000 Commission Program dated October 11, 2000
56)      Anthony Amarel FY2000 Commission Program dated October 16, 2000
57)      Nabil Nader FY2000 Commission Program dated October 16, 2000
58)      Don Jarvie FY2000 Commission Program dated October 1, 2000
59)      Ellen Knight FY2000 Commission Program dated October 1, 2000
60)      Matt Sargent FY2000 Commission Program
61)      Mark Tolbert FY2000 Commission Program
62)      Fishers Development Company Sublease Agreement dated September 1, 2000
63)      Fishers Development Company - Ontario County I.D.A. Lease Dated
         September 1, 2000
64)      Williams Scottsman, Inc. Modular Trailer Lease dated February 4, 2000
65)      NASA SBIR Phase II Contract, March 12, 1999
66)      Precision Engineering Center North Carolina State University Membership
         Agreement dated January 23, 1998
67)      USHIO Research Institute of Technology Inc. Development Agreement dated
         March 11, 1998
68)      EXFO Electro-Optical Engineering Inc. Strategic Alliance Agreement,
         July 3, 1997, Annex I and Annex II to Strategic Alliance Agreement, as
         amended, December 10, 1997, and Termination of Annex III to Strategic
         Alliance Agreement, August 20, 1999
69)      Joint Development Agreement between Intelligent Automation, Inc. and
         Burleigh Instruments, Inc., January 23, 1997
70)      Agreement between Burleigh Instruments, Inc. and MicroE Inc. for
         development and reselling of Ultra High Vacuum Position Encoders, April
         17, 1998
71)      Agreements between Intelligent Automation and Burleigh Instruments,
         Inc., November 28, 1994 and December 21, 1994
72)      UCLA Contract dated September 1, 2000
73)      Department of the Air Force AFMC Contracts dated June 22, 2000
74)      Salary Continuation Plans and Noncompete Agreements with William G. May
         and Robert G. Klimasewski, each dated April 17 1989
75)      Compaq Computer Services Agreement (and services rendered) dated April
         2000
76)      Williams Communications Solutions Telephone Systems Renewal Contract
         Charges dated February 14, 2000
77)      Forte Software Support Agreement dated October 11, 1999
78)      Liebert Global Services Agreement
79)      Iron Mountain Data Base Update
80)      LaDue Architects, A.I.A., August 16, 1999
81)      RONCO Purchase Agreement, September 18, 2000
82)      KeyCorp Equipment Leasing Agreement dated July 26, 2000

<PAGE>

83)      Xerox Lease Agreements for Two Copiers/Printers dated July 25, 2000
84)      Purchase Order for Melles Griot dated June 16, 2000
85)      Purchase Order for Surmotech dated July 14, 2000
86)      Purchase Order for Surmotech dated September 15, 2000
87)      Purchase Order for Heidenhan Corp. dated November 3, 2000
88)      Purchase Order for API Motion Inc. dated October 6, 2000
89)      Purchase Order for Noritake dated October 31, 2000
90)      Purchase Order for JDS Uniphase Corp. dated July 17, 2000
91)      Purchase Order for Technical Applications Association dated December 1,
         2000
92)      Purchase Order for Arrow Electronics dated November 29, 2000
93)      Producer Loan Agreements between Burleigh Instruments, Inc. and
         Burleigh DISC, Inc.:
                  a)       Dated April 1, 1994 for $17,200.00
                  b)       Dated February 28, 1995 for $440,000.00
                  c)       Dated February 28, 1997 for $207,250.00
                  d)       Dated April 1, 1998, for $273,700.00



<PAGE>

                                SCHEDULE 2.15(A)

                          BREACHES OF COMPANY CONTRACTS
                          -----------------------------

1)       Sublease Agreement between Fishers Development Company and Burleigh
         Instruments, Inc., September 1, 2000
2)       Environmental Compliance and Indemnification Agreement, September 1,
         2000
3)       Agency Compliance Agreement between Ontario County I.D.A. and Burleigh
         Instruments, Inc., September 1, 2000
4)       Inducement Agreement among Ontario County I.D.A., Fishers Development
         Company and Burleigh Instruments, Inc., September 1, 2000
5)       Guaranty Agreement from Fishers Development Company and Burleigh
         Instruments, Inc. to Ontario County I.D.A. and The Huntington National
         Bank, September 1, 2000
6)       Continuing Guaranty from Burleigh Instruments, Inc. to KeyBank N.A.,
         September 22, 2000
7)       Sublease Agreement between Fishers Development Company and Burleigh
         Instruments, Inc., January 1, 1978
8)       Sublease Agreement between Fishers Development Company and Burleigh
         Instruments, Inc., First Amendment, April 8, 1993
9)       Sublease Agreement between Fishers Development Company and Burleigh
         Instruments, Inc., Second Amendment, March 10, 1998
10)      Guaranty of Payment and Performance between Burleigh Instruments, Inc.
         and KeyBank N.A., April 15, 1998
11)      Term Loan Agreement between Burleigh Instruments, Inc. and KeyBank,
         April 8, 1993
12)      Promissory Note in the principal amount of $786,000 made by Burleigh
         Instruments, Inc. to KeyBank N.A., April 8, 1993
13)      Burleigh Instruments, Inc. Capital Grant from Empire State Development,
         March 24, 2000
14)      Ontario County RIF Loan Application
15)      Business Loan Agreement between KeyBank N.A. and Burleigh Instruments,
         Inc., September 22, 2000
16)      Commercial Security Agreement and Promissory Note between KeyBank N.A.
         and Burleigh Instruments, Inc., July 18, 2000
17)      NASA SBIR Phase II Contract, March 12, 1999
18)      Department of the Air Force Contract, June 22, 2000
19)      UCLA Subcontract to Air Force Contract, October 9, 2000
20)      USHIO Research Institute of Technology Inc. Development Agreement,
         March 11, 1998
21)      EXFO Electro-Optical Engineering Inc. Strategic Alliance Agreement,
         July 3, 1997, Annex I and Annex II to Strategic Alliance Agreement, as
         amended, December 10, 1997, and Termination of Annex III to Strategic
         Alliance Agreement, August 20, 1999
22)      Package Insurance, Zurich Group, Policy # CMM 31725527, August 1, 2000
23)      Automobile Insurance, Zurich Group, Policy # CMM 31725527, August 1,
         2000
24)      Workers' Compensation Insurance, Zurich Group, Policy # TC1 95562931,
         August 1, 2000
25)      Umbrella Insurance, Zurich Group, Policy # UBA 95469814, August 1, 200
26)      Directors and Officers Insurance, Zurich Group, Policy # 473-11-57,
         August 1, 2000
27)      Producer Loan Agreements between Burleigh Instruments, Inc. and
         Burleigh DISC, Inc.:
                  a)       Dated April 1, 1994 for $17,200.00
                  b)       Dated February 28, 1995 for $440,000.00
                  c)       Dated February 28, 1997 for $207,250.00
                  d)       Dated April 1, 1998, for $273,700.00

<PAGE>

                                SCHEDULE 2.15(B)

         Please refer to the Licenses listed in Schedule 2.13(A).


                           EMBEDDED SOFTWARE LICENSES
                           --------------------------

         The Company includes on certain of its products embedded software owned
by third-parties and distributed by the Company pursuant to a license.


                      CONTRACTS RESTRICTING SALES TERRITORY
                      -------------------------------------


1)       Titan Electro-Optics Co., Ltd. Distributor Agreement dated January 1,
         2000
2)       MJL Crysteck, Inc. Distributor Agreement dated June 25, 1999
3)       SE Technologies Corporation Distributor Agreement dated February 26,
         1999
4)       Athens Scientific Representatives Distributor Agreement dated December
         8, 1998
5)       Daekhon International, Inc. Distributor Agreement dated November 1,
         1998
6)       NPI GmbH Distributor Agreement dated October 1, 1998
7)       Titan Electro-Optics Co., Ltd. Distributor Agreement dated January 1,
         1998
8)       Kuo Yang Scientific Corporation Distributor Agreement dated December
         15, 1997
9)       Schmidt Scientific Distributor Agreement dated November 1, 1997
10)      2M Strumenti S.r.l. Distributor Agreement dated July 1, 1997
11)      Gamma Optronic AB Distributor Agreement dated February 1, 1997
12)      MD Scitech Ltd. Distributor Agreement dated February 1, 1997
13)      Optilas GmbH Distributor Agreement dated February 14, 1995
14)      Mestec AS Distributor Agreement dated October 1, 1993
15)      Indeco Distributor Agreement dated February 1, 1993
16)      Opto Electronica S/A Distributor Agreement dated February 1, 1992
17)      Atlaser di Distributor Agreement dated June 1, 2000

<PAGE>

                                  SCHEDULE 2.16

                                    INSURANCE
                                    ---------

--------------------------------------------------------------------------------
INSURANCE           POLICY                       POLICY          EFFECTIVE
COMPANY             TYPE                         NUMBER          DATE
--------------------------------------------------------------------------------
Zurich Group        Commercial Property and      CMM 31725527    August 1, 2000
                    General Liability Insurance
--------------------------------------------------------------------------------
Zurich Group        Automobile Insurance         CMM 31725527    August 1, 2000

--------------------------------------------------------------------------------
Zurich Group        Workers' Compensation        TC1 95562931    August 1, 2000
                    Insurance
--------------------------------------------------------------------------------
Zurich Group        Umbrella Insurance           UBA 95469814    August 1, 2000

--------------------------------------------------------------------------------
Zurich Group        Directors and Officers       473-11-57       August 1, 2000
                    Insurance
--------------------------------------------------------------------------------



<PAGE>

                                  SCHEDULE 2.17
                                  -------------

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
BURLEIGH INSTRUMENTS                              DECEMBER 1, 2000                   BONUS IS ON A CASH BASIS
                                                                                        HIRE               ANNUAL        YTD
DEPT      EMPLOYEE                                     TITLE                            DATE               SALARY       BONUS
-----------------------------------------------------------------------------------------------------------------------------
<S>      <C>                            <C>                                          <C>                 <C>           <C>
5500     Adams, Larry                            ElectronicTechnician                10/25/1999            31,200       5,664
5500     Adler, Curtis                           Electronic Technician                3/12/2000            29,120       2,014
6600     Alongi, Anthony                      Customer Service Technician             3/20/2000            37,440       6,615
6100     Amarel, Anthony    *                   Regional Sales Manager                8/7/2000             40,000           0
7000     Anne, Wendy                              Order Entry Manager                10/30/2000            45,000           0
7000     Battisti, Peter                        Vice President, Finance               8/1/1986            110,000      25,983
5500     Bell, Armond                            Mechanical Assembler                 6/1/1999             18,720       4,395
8100     Bennett, Lonnie                      Senior Mechanical Designer              4/13/1992            58,850      13,555
5900     Blair, Robert                     Senior Manufacturing Engineering           2/3/1986             65,000      15,085
5800     Blend, James                                Senior Buyer                     1/12/1998            45,318      10,609
7000     Block, Kristofer                        PC Support Specialist                4/17/2000            33,280       5,429
8200     Burns, Robert                           Sr. Software Engineer               10/16/2000            80,000           0
8100     Chapman, Mark                         Senior Software Engineer               1/4/1999             72,000      16,727
6500     Clapper, David                    Electronic Communications Manager          9/5/2000             55,000       3,308
5800     Clark, Lawrence                          Purchasing Manager                  6/28/1982            55,016      13,017
5500     Conway, Timothy                Group Leader/Sr. Electronic Technician       11/20/1989            37,440       8,408
8100     Craghead, Michael                      Manager of Engineering                1/5/1998             73,000      16,580
8200     Culhane, Robert                          Electrical Engineer                 6/10/1996            45,150      10,333
6100     Dera, Peter           *                Regional Sales Manager                3/6/2000             40,000           0
8100     Dickinson, William                        Optical Engineer                   6/25/1979            55,000      12,480
8200     Dobbelaere, Donald                     Manager of Engineering                9/22/1997            65,400      14,592
8200     Duver, Frank                             Mechanical Engineer                 6/23/1999            55,650      12,581
5800     Edwards, Jonathan                        Traffic Coordinator                 4/21/1992            28,496       6,841
8100     Fanton, Kenneth                        Sr. Electrical Engineer               4/8/1991             63,000      14,551
5200     Farchione, Marcia                     Group Leader (PART TIME)               3/1/1983             23,712       5,566
7500     Farrell, David                                President                      5/22/1977           122,446      42,870
8200     Fasick, John                         Senior Mechanical Engineer              5/4/1998             63,000      14,551
6200     Friedrich, Edward               Worldwide Manager, Sales & Marketing         8/2/1996             89,042      12,664
5800     Gliewe, Mary                         Buyer/Expeditor (PART TIME)             12/8/1980            19,000       4,580
7000     Goodman, Carol                              Receptionist                     9/11/2000            20,800           0
7500     Gornall, William                     Vice President, Technology             10/24/1977           100,340      31,179
7000     Graf, Michael                     Manager of Information Technology          2/16/1996            73,500      16,753
5400     Guarino, Joseph                        Machine Shop Supervisor               3/13/1978            47,000      10,866
6200     Guidarelli, Thomas                        Software Engineer                  12/6/1999            75,000       8,873
6100     Haas, Fred             *            North American Sales Manager             2/1/1996             55,000           0
6500     Hayman, Bonnie                      Technical Writer (PART TIME)             1/4/1999             38,938       9,061
6200     Henderson, David                   Director, Positioning Products            8/12/1991           100,000      13,799
5900     Henry, Loretta                        Manufacturing Supervisor              12/23/1974            50,000      11,683
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
BURLEIGH INSTRUMENTS                              DECEMBER 1, 2000                   BONUS IS ON A CASH BASIS
                                                                                        HIRE               ANNUAL        YTD
DEPT      EMPLOYEE                                     TITLE                            DATE               SALARY       BONUS
-----------------------------------------------------------------------------------------------------------------------------
<S>      <C>                            <C>                                          <C>                 <C>           <C>
8100     Hereth, Jeffrey                      Mechanical Design Engineer              2/28/2000            44,000       3,837
6100     Hersom, Walter       *                 Regional Sales Manager                5/17/1999            40,000           0
8100     Houk, Michael                          Senior Optical Engineer               6/30/1993            80,250      17,970
6200     Jarvie, Donald          *              Worldwide Sales Manager               3/8/1993             50,000           0
5500     Jobson, Kim                        Mechanical/Electronic Assembler           1/4/1999             19,760       4,900
8100     Kavcak, Alexander                     Senior Software Engineer               7/10/2000            67,500       5,886
6500     Kelsey, Jean                         Sales & Marketing Assistant             4/10/1985            30,285       6,405
7500     Klimasewski, Robert                           DIRECTOR                       8/1/1972             95,000           0
6600     Klimasewski, Timothy                Director, Marketing Services            12/23/1989            78,750      19,486
5900     Klinger, Charles                Manager of Manufacturing Engineering         9/11/2000            75,000           0
8200     Kloiber, George                          Mechanical Designer                 12/6/1999            40,400       4,797
6200     Knight, Ellen             *             Sales Representative                 6/3/1996             30,000           0
6100     Kondziela, M. Jeffrey    *            Product Marketing Manager              5/24/1999            70,000           0
6600     Kost, Ann                           Customer Services Coordinator            4/19/1999            33,000       9,694
7000     Kowulich, Beverly                        Accounting Manager                  3/21/1977            53,000      13,378
6600     Kruly, Paul                           Customer Service Engineer              8/31/1981            51,000      11,354
5100     Laird, Tammy                                Group Leader                    10/20/1986            31,200       7,077
7000     Licata, Ignatius                       Database Administrator                10/9/2000            65,000       1,803
8500     Lombard, Matthew                   Manager of Engineering Services           9/18/2000            55,000           0
5900     Lusk, Barbara                           Production Expediter                 4/24/2000            24,960         692
6200     Marchese-Ragona, Silvio          Mgr, Applications Develp & Systems          9/29/2000            90,000       4,162
                                                      Integration
7500     May, William                                  DIRECTOR                       8/1/1972             95,000           0
7000     McKee, Ann                          Order Entry Clerk (PART TIME)            6/7/1999             20,800       4,442
5500     McMyne, Christopher                     Electronic Assembler                 5/30/2000            17,680           0
5200     Merlau, Lisa                            Mechanical Assembler                 2/18/1985            29,640       6,979
6100     Nader, Nabil          *              International Sales Manager             9/5/2000             50,000           0
5400     Nothnagle, Joseph                           CNC Operator                     2/6/1996             29,120       7,024
5200     Patterson, Amy                          Mechanical Assembler                12/20/1999            18,928       3,080
5900     Payne, Cynthia                        Director of Manufacturing             12/12/1979            89,000      22,345
5100     Perry, Lyn                              Electronic Assembler                 2/22/2000            16,640       1,951
5100     Pierce, Sharon                          Mechanical Assembler                 12/8/1997            19,968       4,467
7000     Polakiewicz, Sheree                       Order Entry Clerk                  7/10/2000            22,880         846
8200     Powers, Galen                   Program Manager of Government Funded         9/25/2000            65,000           0
                                                       Projects
5100     Rayburn, Justin                       Electronic Technician H30              11/3/1997            30,576       6,894
6500     Reynolds, Melody                     Manager, Marketing Services             1/10/2000            64,000      12,681
5500     Rosato, Michael                         Electronic Technician                10/2/2000            31,200           0
6100     Samoriski, Brian               Director, Optical Instruments Division        7/1/1997            103,000      28,194
6200     Sargent, Mathew  *                        Sales 3/3/2000tative                                    30,000           0
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
BURLEIGH INSTRUMENTS                              DECEMBER 1, 2000                   BONUS IS ON A CASH BASIS
                                                                                        HIRE               ANNUAL        YTD
DEPT      EMPLOYEE                                     TITLE                            DATE               SALARY       BONUS
-----------------------------------------------------------------------------------------------------------------------------
<S>      <C>                            <C>                                          <C>                 <C>           <C>
7000     Schnitzer, Laurie                       Human Resources Clerk                4/17/2000            22,880         846
5100     Schutt, William                          Optical Technician                  5/1/1978             39,350       9,375
7000     Searls, Lynn                         Manager of Human Resources              5/1/1998             61,500      14,165
5900     Shepardson, Alan                    Manager, Production Planning             1/16/1995            52,000      12,185
8200     Shirley, Thomas                         Electronic Technician                9/29/1997            35,000       8,297
6600     Singley, Joseph                           Optical Engineer                   6/26/2000            44,000           0
5400     Skirvin, Chester                          Instrument Maker                   6/22/1989            41,392       9,872
8200     Smith, James                           Sr. Electrical Engineer               1/24/2000            70,000      13,870
5800     Smothers, Ruth                              Buyer/Planner                   11/21/1995            35,700       8,579
8500     Snow, Cynthia                            Mechanical Designer                 2/11/1998            40,414       9,178
6500     Supinski, Peter                           Graphics Designer                 10/20/1997            56,675      12,700
5400     Switzer, Paul                              CNC Programmer                    3/21/1989            40,414       9,493
5100     Szydlowski, Alan                      Electro/Optics Technician              8/2/1999             31,200       6,637
5200     Terwilliger, Timothy                    Mechanical Assembler                 8/22/1988            29,640       6,882
5900     Theodorsen, John                       Manufacturing Engineer                1/5/1998             57,200      13,363
6200     Tolbert, Mark          *               Worldwide Sales Manager               5/24/1999            50,000           0
5900     Townsend, Robert                       Manufacturing Engineer                9/28/1987            60,900      13,997
7000     Trudeau, Marjorie                           Accountant II                    6/14/1984            29,846       6,996
6200     Viggiano III, Dan                    Product Development Manager             6/20/1997            50,820      11,684
5200     White, Mabel                            Mechanical Assembler                10/20/1997            29,120       5,752
5800     White, Timothy                           Traffic Coordinator                 6/12/2000            18,200         673
5200     Wiedrick, Michele                       Mechanical Assembler                11/16/2000            19,760           0
6600     Willis, Terleta                      Customer Service Technician             8/7/2000             40,400       3,523
8100     Worek, Keith                            Electronics Engineer                 7/1/1987             49,000      11,565
8200     Xu, Qin                                Applications Scientist                2/16/1999            57,750      12,973
6200     Yoffee, Susan                         Administrative Assistant              12/30/1994            27,040       6,462
6600     Zobel, James                          Customer Service Engineer              5/2/1983             51,000      11,892

         *    plus commission                                               TOTAL                       5,115,596     832,515
</TABLE>


All employees of Burleigh Instruments are located in Fishers, New York.



<PAGE>

                                  SCHEDULE 2.18

                                  COMPANY PLANS
                                  -------------


1)       Welfare Plan for Employees for Burleigh Instruments, Inc., amended and
         restated as of January 1, 1998
2)       Burleigh Instruments, Inc. 401(K) Profit Sharing Plan, amended and
         restated as of October 1, 1999
3)       Executive Group Carve Out "Split Dollar" Life Insurance Plans for R.
         Klimasewski, W. May, P. Battisti, W. Gornall and D. Farrell
4)       "Key Management" Life Insurance Policies with Security Mutual Life for
         W. Gornall and D. Farrell
5)       Salary Continuation Plans and Noncompete Agreements with William G. May
         and Robert G. Klimasewski, each dated April 17 1989
6)       Burleigh Instruments, Inc. Fringe Benefits Plan and Policies Enacted
         Pursuant to the Employee Handbook
7)       Burleigh Instruments, Inc. Health & Dental Plan
8)       Burleigh Instruments, Inc. Life Insurance
9)       Burleigh Instruments, Inc. Disability Plan
10)      Burleigh Instruments, Inc., Employee Term Life Coverage
11)      Burleigh Instruments, Inc., Long Term Disability Coverage
12)      Burleigh Instruments, Inc., Management Bonus Plan
13)      Burleigh Instruments, Inc., Workers' Compensation Plan
14)      Burleigh Instruments, Inc., Life Insurance Plan
15)      Burleigh Instruments, Inc., Cafeteria Plan (expected implementation
         date January 1, 2001)
16)      Burleigh Instruments, Inc., Recruitment Bonus Plan (expected
         implementation date January 1, 2001)
17)      Burleigh Instruments, Inc., Referral Bonus Plan (expected
         implementation date January 1, 2001)



<PAGE>

                                  SCHEDULE 2.20
                                  -------------

CURRENT LEASES
--------------

1)       Burleigh Instruments, Inc.:
         a)       Burleigh Park, 7647 Main Street, Fishers, NY 14453
         b)       Ten Mini Storage Units, for month to month terms, totaling
                  $980/month.


PROPERTY PREVIOUSLY OWNED WITHIN THE LAST FIVE YEARS
----------------------------------------------------

2)       Burleigh Instruments (U.K.), Ltd.: 9 Allied Business Centre,
         Coldharbour Lane, Harpenden, Herts. AL5 4UT, U.K.



<PAGE>

                                SCHEDULE 2.21(C)

                              ENVIRONMENTAL PERMITS
                              ---------------------


1)       New York State Department of Health Permit for Use of Hypodermic
         Syringes dated May 12, 1981.



<PAGE>

                                  SCHEDULE 2.22

                       TRANSACTIONS WITH THE SHAREHOLDERS
                       ----------------------------------

1)       Producer Loan Agreements between Burleigh Instruments, Inc. and
         Burleigh DISC, Inc.:
                  a)       Dated April 1, 1994 for $17,200.00
                  b)       Dated February 28, 1995 for $440,000.00
                  c)       Dated February 28, 1997 for $207,250.00
                  d)       Dated April 1, 1998, for $273,700.00

2)       Sublease Agreement with Fishers Development Company dated September 1,
         2000

3)       MAXCIM software program sublicensed from William G. May and Robert G.
         Klimasewski

4)       Shareholders Agreement among Robert G. Klimasewski, William G. May and
         Burleigh Instruments, Inc., April 17, 1989. This Agreement restricts
         the transfer of shares by granting an option to purchase the shares
         first to the other shareholders and then to Burleigh Instruments, Inc.

5)       Stock Purchase Agreement among David J. Farrell, William S. Gornall,
         Robert G. Klimasewski and William G. May, May 12, 2000. Farrell and
         Gornall have pledged their shares pursuant to a pledge agreement dated
         May 12, 2000 to secure payment of certain promissory notes.



<PAGE>

                                  SCHEDULE 2.23

                              CAPITAL EXPENDITURES
                              --------------------


--------------------------------------------------------------------------------
                        COST OF PROJECT FOR NEW BUILDING
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
BUILDING CONSTRUCTION COSTS                       $   1,799,617.00
--------------------------------------------------------------------------------
EXISTING BUILDING COSTS                           $     200,000.00
--------------------------------------------------------------------------------
PROFESSIONAL FEES AND OTHER COSTS                 $     297,285.00
--------------------------------------------------------------------------------
PRODUCTION EQUIPMENT                              $     200,628.00
--------------------------------------------------------------------------------
TOTAL                                             $   2,497,530.00
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
ADDITIONAL COSTS
--------------------------------------------------------------------------------
LEASING EQUIPMENT THROUGH KEY CORPORATE           $     800,000.00
CAPITAL (APPROXIMATE TOTAL)
--------------------------------------------------------------------------------
PRESENT LEASE LINE OF CREDIT ALREADY DRAWN        $     300,000.00
(APPROXIMATE)(APPROXIMATE)
--------------------------------------------------------------------------------



<PAGE>

                                  SCHEDULE 2.24

                                   USE OF NAME
                                   -----------


None



<PAGE>


                                  SCHEDULE 4.1

                       CONDUCT OF BUSINESS BY THE COMPANY
                       ----------------------------------


None


<PAGE>

                                                                 SCHEDULE 5.2(H)


                              EMPLOYMENT AGREEMENT


This Employment Agreement (the "Agreement") dated as of _________, 2000 is
entered into by and between Burleigh Instruments, Inc., a corporation having its
principal place of business at 7647 Main Street, Fishers, New York, U.S.A. (the
"Corporation") and [name](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 employ Employee, on a full-time basis
         commencing on or about _________, 2000, to act as [title] 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 [title] 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
         [title] 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 upwards 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 of the Corporation may approve for the
                  Employee. Nothing contained in this Section 2.2 shall be
                  construed to require

                                      - 1 -

<PAGE>

                  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      UNDERTAKING BY EMPLOYEE

                  The Employee hereby undertakes not to voluntarily terminate
                  his employment with the Corporation for a period of two (2)
                  years from the date hereof and acknowledges that in the event
                  that he does so terminate this Agreement, certain penalties
                  shall be payable by him, as set forth in the Agreement of
                  Merger and Plan of Reorganization, entered into by the
                  Employee, the Corporation and certain other parties on [date].

         3.2      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.

                                      - 2 -

<PAGE>
         3.3      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
                  Director, shall not be entitled to vote thereon. 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;

                  (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.

         3.4      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 that it shall continue to pay Employee the
                  remuneration set forth in Schedule A at his then current rate
                  for a six (6) month period after termination if termination
                  shall occur prior to the events mentioned in Section 3.4.

         3.5      TERMINATION FOLLOWING MERGER OR ACQUISITION

                  Notwithstanding Section 3.4, if the Corporation merges or
                  consolidates with another corporation, if substantially all of
                  the assets of the Corporation are sold, if a majority of the
                  outstanding stock of the Corporation is acquired by another
                  person, or if the control of the Corporation's majority
                  shareholder changes (a "Triggering Event") 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 the length of service with the Corporation
                  since the Triggering Event:

                  LENGTH OF SERVICE SINCE THE          SEVERANCE BENEFITS
                  ---------------------------          ------------------
                  TRIGGERING EVENT
                  ----------------
                  0 to 12 months                       12 months' remuneration
                                                       plus health benefits;
                  more than 12 months                  6 months' remuneration
                                                       plus health benefits;

                  For purposes of this Section 3.5, Employee shall be entitled
                  to treat a material demotion in title or function as
                  termination under this Section 3.5, 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, Employee's refusal

                                      - 3 -
<PAGE>

                  to accept such position shall not be treated as subject to
                  this Section 3.5, but rather shall be treated as a voluntary
                  termination by Employee under Section 3.6.

         3.6      VOLUNTARY TERMINATION BY EMPLOYEE

                  In the event of voluntary termination by Employee after a
                  period of two (2) years from the date hereof, 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.

         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.

         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,

                                      - 4 -

<PAGE>

                  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 use its best efforts to 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 State
                  of New York. 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 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,

                                      - 5 -

<PAGE>

                  conveyances, powers of attorney and assurances as may be
                  necessary or proper to carry out the provisions or intent of
                  this Agreement.

         4.10     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



         BURLEIGH INSTRUMENTS, INC.



         BY:   ________________________           _____________________________
               GERMAIN LAMONDE

                                      - 6 -

<PAGE>

                                   SCHEDULE A
                                       TO
                              EMPLOYMENT AGREEMENT

                            REMUNERATION AND VACATION
                            -------------------------


1.       REMUNERATION






2.       VACATION

         ______ weeks of paid vacation annually.


                                      - 7 -

<PAGE>

                                   SCHEDULE B
                                       TO
                              EMPLOYMENT AGREEMENT

                                    BENEFITS
                                    --------



         The Employee shall continue to be entitled to the same benefits as
         those in force prior to the date hereof. It is expected that this
         package will evolve in the future.






                                      - 8 -

<PAGE>

                                                                 SCHEDULE 5.2(I)

                                                              ____________, 2000



EXFO ELECTRO-OPTICAL ENGINEERING INC.
465 Godin Avenue
Vanier QC  G1M 3G7



RE:      AGREEMENT OF MERGER AND PLAN OF REORGANIZATION BETWEEN EXFO
         ELECTRO-OPTICAL ENGINEERING INC. ("EXFO"), EXFO SUB, INC. , BURLEIGH
         INSTRUMENTS, INC. (THE "COMPANY") AND ALL OF THE SHAREHOLDERS OF THE
         COMPANY (THE "TRANSACTION")
--------------------------------------------------------------------------------


Dear Sirs:

The undersigned shareholder of the Company understands that an Agreement of
Merger and Plan of Reorganization (the "Agreement") will be executed by the
Shareholders of the Company named therein. As consideration for the Transaction,
the Shareholders shall receive subordinate voting shares of EXFO (the "Buyer
Shares"). Of the o Buyer Shares received by the undersigned in the Transaction,
o Buyer Shares representing 52% of the Buyer Shares so received by the
undersigned are not subject to the Lock-Up Obligation (as such term is defined
below), subject to regulatory resale restrictions of the competent securities
regulators and the remaining o Buyer Shares received in the Transaction,
representing 48% of the Buyer Shares received by the undersigned, shall be
subject to the Lock-Up Obligation as set forth below (the "Lock-Up Buyer
Shares")

1.       In recognition of the benefit that the Transaction will confer upon the
         undersigned as a shareholder of EXFO, and for other good and valuable
         consideration, the receipt and sufficiency of which are hereby
         acknowledged, the undersigned agrees with EXFO that the undersigned
         will not, without the prior written consent of EXFO, directly or
         indirectly, (i) offer, pledge, sell (including any sale pursuant to
         Rule 144 under the SECURITIES ACT of 1933, as amended), contract to
         sell, sell any option or contract to purchase, purchase any option or
         contract to sell, grant any option, right or warrant for the sale of,
         or otherwise dispose of or transfer the Lock-Up Buyer Shares
         (including, without limitation, Buyer Shares which may be deemed to be
         beneficially owned by such shareholder in accordance with the rules of
         the Securities and Exchange Commission or the securities legislation of
         any province or territory of Canada and Buyer Shares that may be issued
         upon exercise of any option or warrant) or any securities convertible
         into or exchangeable or exercisable for Buyer Shares, now owned or with
         respect to which the undersigned has or hereafter acquires the power of
         disposition, or file any registration statement or prospectus with
         respect to any of the foregoing (other than as set forth in the

<PAGE>

                                      - 2 -

         Agreement) or (ii) enter into any swap or any other agreement or any
         transaction that transfers, in whole or in part, directly or
         indirectly, the economic consequence of ownership of the Lock-Up Buyer
         Shares, whether any such swap or Transaction is to be settled by
         delivery of shares or other securities, in cash or otherwise;
         (collectively the "Lock-Up Obligation"). The Lock-Up Obligation shall
         be released as to 8% on each date which is two days following the
         release by EXFO of its quarterly financial statements for the next
         following six quarters after June 29, 2001.

The undersigned understands that EXFO will proceed with the Transaction in
reliance upon this Lock-Up Letter Agreement.

The undersigned hereby represents and warrants that the undersigned has full
power and authority to enter into this Lock-Up Letter Agreement and that, upon
request, the undersigned will execute any additional documents necessary or
desirable in connection with the enforcement hereof. Any obligations of the
undersigned shall be binding upon the successors and assigns of the undersigned.

The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's registrar and transfer agent against the
transfer of Buyer Shares held by the undersigned except in compliance with the
foregoing restrictions.

This Lock-Up Letter Agreement has been entered into on the date first written
above. This Lock-Up Letter Agreement shall be governed by the laws of the State
of New York.


Very truly yours,


_____________________________
David J. Farrell