Document:

ex4_44.htm

    
      

      

    

    
      Final
version

    

     

     

     

     

     

     

     

     

     

     

     

     

    
      	
              AWS
      HOLDING AB AND ETTORE J. CORINGRATO JR

            
	
               

               

               

            
	
              GEXFO
      DISTRIBUTION INTERNATIONALE INC.

               

               

            
	
              SHARE
      TRANSFER AGREEMENT

            
	
               

              REGARDING
      PICOSOLVE AB

               

            

    

    
      
        Final
version

      

       

       

       

       

       

       

       

       

       

       

       

       

    

    

    
      

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Final
version

     

    TABLE OF CONTENTS

     

    1       Background

    2       Definitions

    3       Sale and
Purchase

    4       Purchase Price

    4.1         The Purchase
Price

    4.2.        Payment of the Fixed Purchase
Price

    4.3         Payment of the
Earn-Out

    4.6         General
Conditions

    4.7         Conditions Precedent to Buyer’s
obligations

    4.8         Non-fulfilment

    5       Closing

    6       Warranties of the
Seller

    6.1         Corporate Existence and
Power

    6.2         Corporate Authorisation and
Non-Contravention

    6.3         Capitalisation and
Title

    6.4         Records

    6.5         Accounts and Accounting
Principles

    6.6         Loans and Other Financial
Facilities

    6.7         Dividends and
Loans

    6.8         Title to Assets

    6.9         Accounts Receivable and Liquid
Assets

    6.10        Leased Premises

    6.11        Powers of
Attorney

    6.12        Agreements

    6.13        Insurance

    6.14        Environmental
Matters

    6.15        Intellectual
Property

    6.16        IT and Data
Protection

    6.17        Employment and Pension Agreements and
Labour Controversies

    6.18        Compliance with
Law

    6.19        Litigation

    6.20        Taxes

    6.21        The Business

    6.22        Relationship with the
Seller

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    6.23         Information

    6.24         Absence of Certain Changes or
Events

    7       Covenants of the
Seller

    7.1         Restrictive
Covenant

    7.2         Co-operation by
Seller

    7.3         Breach by the
Seller

    8       Covenants of the
Buyer

    9       Indemnification

    9.1         Indemnification

    9.2         Limitation of
Indemnification

    10       Confidentiality

    11       Announcements

    12       Costs

    13       Entire
Agreement

    14       Amendments and
Waivers

    15       Notices

    16       Assignments

    17       Partial
Invalidity

    18       Governing Law and
Disputes

     

     

     

    APPENDICES:

     

    
      
        	
                Appendix 4.4.1 

              	
                Calculation of the
  Earn-outs

              

      

      
        

        
          	
                  Appendix 4.6

                	
                  Competition
Authorities

                

        

        
           

          
            	 Appendix 6.3.2 	 Share Capital of the
  company

          

           

        

      

    

    
      	
              Appendix 6.4.1

            	
              Copies of the Company’s articles of association,
      shareholders’ register and extracts from the relevant trade
      register

            

    

    

    
      	
              Appendix 6.5.2

            	
              Balance
Sheet

            

    

    

    
      	
              Appendix 6.6.1

            	
              Loans and other Financial
    Facilities

            

    

    

    
      	
              Appendix 6.10.1

            	
              Leased
Premises

            

    

    

    
      	
              Appendix 6.12.1

            	
              Material
Agreements

            

    

    

    
      	
              Appendix 6.12.4

            	
              Obligations or Warranty
      Undertakings

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              Appendix 6.15.1

            	
              Intellectual
Property

            

    

    

    
      	
              Appendix 6.15.5

            	
              List of all litigation, proceedings,
      investigations, claims or
actions

            

    

    

    
      	
              Appendix 6.15.7

            	
              Owned Intellectual Property or Licensed
      Intellectual Property

            

    

    

    
      	
              Appendix 6.17.1

            	
              Employment
matters

            

    

    

    
      	
              Appendix 6.17.2

            	
              Employment
Agreements

            

    

    

    
      	
              Appendix 6.19.1

            	
              Litigation

            

    

    

    
      	
              Appendix 6.24.1

            	
              Certain
Events

            

    

    
       

      PATENT
TRANSFER AGREEMENT

       

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        Table of Contents

      

    

     

    Final version

     

     

    SHARE
TRANSFER AGREEMENT

     

     

    This
share transfer agreement (this “Agreement”) is entered into on 5 February
2009

     

    AMONGST:

     

    
      	
              (1)  

            	
              Starta Eget Boxen 11 629
      AB, in the process of changing its name to AWS Holding AB, a
      company duly incorporated and organised under the laws of Sweden, Sweden
      (the “Holding”); and NOTE 1

            

    

     

    
      	
              (2)  

            	
              Ettore
      J. Coringrato Jr., (“NN”) NOTE
1

            

    

     

     

     

    Holding
and NN are jointly referred to as the Seller

     

    
      	
              (3)  

            	
              GEXFO Distribution
      Internationale, Inc., a company duly incorporated and organised
      under the laws of the province of Quebec, Canada, having its registered
      address at  400 Godin Avenue, Quebec City, Province of Quebec,
      Canada, G1M 2K2 (the “Buyer”).

            

    

     

     

    
      	
              1  

            	
              Background

            

    

     

    
      	
              1.1  

            	
              PicoSolve
      AB, is a company duly incorporated and organised under the laws of Sweden,
      having its registered address at Chalmers Teknikpark, 412 88 Gothenburg,
      Sweden (the “Company”), NOTE 1

            

    

     

    The
Intellectual Property as defined herein and other assets related to a method and
apparatus for the Technology. NOTES 1 AND 2

     

    NOTE
1

     

    Buyer is
a holding company whose parent company EXFO Electro-Optical Engineering, Inc
(“EXFO”)  is a company active directly or indirectly in technologial
areas related to the Technology.

     

     

    NOTE 1:    Contains seller's
confidential information.

    NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

     

     

    
      
        
        

      

      
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    NOTE
2

     

     

    
      	
              1.2  

            	
              The
      Seller owns all of the outstanding shares in the Company. NOTE
      1

            

    

     

    
      	
              1.3  

            	
              The
      Seller agrees to sell and the Buyer agrees to purchase all of the Shares
      on a fully diluted basis the terms and conditions set out in this
      Agreement.

            

    

     

     

    
      	
              2  

            	
              Definitions

            

    

     

    In this
Agreement, the following definitions are used:

     

    “Accounting Principles” means
generally accepted accounting principles in Sweden

     

    “Accounts” means the balance
sheet attached hereto as Appendix
6.5.2;

     

    “Accounts Date” means 5
February 2009

     

     “Affiliated Person”
means a closely related Person (Sw. närstående) as set out in
Chapter 21 § 1 of the Swedish Companies Act (Sw. Aktiebolagslagen
(2005:551)) or a Person directly or indirectly controlling, controlled by
or under common control with the Seller or the Buyer (as the case may
be);

     

    “Agreement” means this share
transfer agreement, including all the appendices attached to it;

     

     “Business” means the
development and commercializing of the Technology  by the EXFO
Group;

     

    “Business Day” means a day
when banks are open for general banking business in Sweden and
Canada;

     

    “Buyer” means GEXFO
Distribution Internationale, Inc.;

     

    “Claim” means any claim made
by the Buyer against the Seller in respect of a Loss;

     

    “Closing” means the completion
of the transaction contemplated by this Agreement;

     

     “Closing Date”
means  February 5, 2009 

     

     “Company” means
Picosolve AB, NOTE 2;

     

     

    
      NOTE 1:    Contains seller's
confidential information.

      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

       

       

      
        
          
          

        

        
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    “Competition Authorities”
means the competition authorities or courts in the jurisdictions listed in Appendix 4.6, and/or the European Commission or a
relevant member state of the European Economic Area, in the event of a referral
thereto;

     

    “Confidential Information”
means any information of any kind or nature whatsoever, whether written
or oral, including, without limitation, this Agreement and financial
information, trade secrets, customer lists and other information, regarding the
Buyer, the Seller or the Company which is not known to the general
public;

     

    “Directors” means the board
members, dep­uty board members, managing directors and deputy managing
directors of the Company as at the Closing Date;

     

    “Earn-Out period” has the
meaning set out in Section 4;

     

    “Encumbrance” means any
mortgage, charge, pledge, lien, option or other security interest or restriction
of any kind;

     

    “EXFO Group” means the current
and future companies directly or indirectly controlled by or under common
control of EXFO;

     

    “Independent Accounting Firm”
means a reputable international accounting firm to be selected by the
Parties, provided that such firm shall not then be currently performing
significant services for any of the Parties or, failing agreement between them,
such firm to be appointed by the Stockholm Chamber of Commerce;

     

    “Intellectual Property” means
inventions, patents, trademarks, domain names, trade names, designs, copyrights
(including copyrights in software), neighbouring rights and database rights,
confidential and proprietary information including trade secrets, know-how, and
any other rights of a similar kind, whether registered or not, including
applications for the registration of such rights;

     

    “Licensed Intellectual
Property” means all Intellectual Property licensed to any of the
Company;

     

    “Loss” means any claim, loss,
damage, liability or expense that the Buyer or the Company has incurred or may
incur (including, without limitation, settlement costs and any legal, accounting
and other expenses for the investigation or defence of any actions or threatened
actions), resulting from or in connection with any breach of any of the
Warranties;

     

    “Material Agreement” means
each agreement and other undertaking by or to Company, the value of which, or
which contains undertakings or provisions that restrict the ability or right of
the Company to engage in any business or compete with any Person, or which has
not been entered into in the ordinary course of the Business or which is
otherwise of material importance to the Company or the Business; NOTE
2

     

     

    
      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

       

       

    

    
      
        
        

      

      
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    “Net selling price” means the
price payable by the customer, exclusive of taxes, freights, customs and any
other external charges;

     

    “Network” means all hardware
which is used in the Business and all communication networks or the network
capacity which is necessary for the communication systems used in the
Business;

     

    “Open Source Software” means
software licensed under terms pursuant to which the software licensed may be
used, modified and/or redistributed in source code and/or object code forms
without the payment of a license fee, including but not limited to those
licenses approved by the Open Source Initiative (see www.opensource.org) , such
as the GNU General Public License (GPL), the GNU Library or Lesser General
Public License (LGPL), the Mozilla Public License and the Apache
License;

     

    “Owned Intellectual Property”
means all Intellectual Property owned by the Company;

     

    “Party” means the Seller or
the Buyer, and “Parties”
means the Seller and the Buyer, collectively;

     

    “Person” means any individual,
firm, company, corporation or other corporate body, government, state or agency
of a state or any joint venture, trust, association or partnership (general or
limited), whether or not incorporated, and whether or not its owners enjoy
limited liability, and any other legal entity;

     

    “Purchase Price” means the
purchase price for the Shares set out in Section 4.1.1 hereof;

     

     “SEK” means the currency
Swedish kronor;

     

    “Seller” mean AWS Holding AB,
and NN; NOTE 1

     

    “Shares” means all outstanding
shares in the Company on a fully diluted basis;

     

     “Signing Date” means the
date of this Agreement;

     

    “Statutory Books” means the
shareholders’ register and minutes from shareholders’ meetings and board
meetings;

     

     “Taxes” means all direct
and indirect taxes and charges, social security fees, fees, duties and other
assessments (including but not limited to any income tax, whether actual or
deemed), sales tax, use tax, transfer tax, transaction tax, investment tax,
capital tax, real property tax, value added tax, withholding tax, employment
tax, asset holding tax or registration tax, preliminary tax under the Swedish
Tax Payment Act (Sw.
skattebetalningslagen), or the equivalent legislation in any relevant
jurisdiction, or any amendments or replacements thereof, and deferred taxes,
wherever arising, together with any interest, penalties, residual tax charges or
addition to tax; and

     

     

    
      NOTE 1:    Contains seller's
confidential information.

       

    

     

    
      
        
        

      

      
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    NOTE 2

     

    “Valid Bookings” means
confirmed purchase orders, for products developed or based on the Technology,
received by the EXFO Group and accepted by the EXFO Group under their normal
business terms NOTE 2

     

    “Warranties” means the
warranties (Sw.
garantier) of the Seller set out in Section 6.

     

     

    
      	
              3  

            	
              Sale
      and Purchase

            

    

     

    
      	
              3.1  

            	
              Upon
      the terms and subject to the conditions set out in this Agreement, the
      Seller agrees to sell and the Buyer agrees to purchase the Shares,
      together with all rights attached to
them.

            

    

     

    
      	
              3.2  

            	
              The
      Shares shall be transferred to the Buyer on and as of the Closing Date,
      free and clear from any
Encumbrances.

            

    

     

     

    
      	
              4  

            	
              Purchase
      Price

            

    

     

    
      	
              4.1  

            	
              The
      Purchase Price

            

    

     

    
      	
              4.1.1  

            	
              NOTE
      2

            

    

     

    4.2
                Payment
of the Fixed Purchase Price

     

    The Fixed
Purchase Price shall be paid in USD by the Buyer on the Closing Date as set out
below:

     

    
      	
              (a)  

            	
              NOTE
      2

            

    

     

    
      	
              (b)  

            	
              NOTE
      2

            

    

     

    4.3                Payment
of the Earn-Out

     

    
      	
               
      

            	
              The
      purchase price for the Shares shall comprise of the First Earn-out,
      the  Second Earn-out, the Third Earn-Out and the Fourth Earn-Out
      and the four Earn-Outs calculated and paid according to an Earn-out
      structure as further set out below. Payment shall be effected to Holding
      and NN in the same proportions as the Fixed Purchase Price. Each of the periods below shall be an “Earn-Out
      period”. NOTE 2

            

    

     

     

    
      
        NOTE 2:    Contains confidential
information that would be prejudicial to the interests of
EXFO.

      

    

     

     

    
      
        
        

      

      
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              4.3.1

            	
              NOTE
      2

            

    

    

    
      	
              4.3.2

            	
              NOTE
  2

            

    

    

    
      	
              4.3.3.

            	
              NOTE
      2

            

    

    

    
      	
              4.3.4

            	
              NOTE
      2

            

    

    

     

    4.4                  Calculation
of Earn-out

     

    
      	
              4.4.1

            	
              The
      Buyer shall calculate earned Earn-Out for the respective period above
      after the expiry of the period. The calculation shall be made in USD as
      per EXFO’s accounting system.

            

    

    

    
      	
               
      

            	
              Appendix 4.4.1 sets out an example of the
      calculation of the Earn-Out
amounts.

            

    

    

    
      	
              4.4.2

            	
              The
      Seller may audit the Buyer’s calculation of Earn-Out at any time through
      an Independent Accounting Firm at Seller’s
cost.

            

    

    

     

    4.5                 
Dates for Payment of the Earn-Out

     

    
      	
              4.5.1

            	
              Within
      Business Days following the expiry of an Earn-Out period NOTES 1, 2
      AND 3

            

    

     

     

    
      NOTE 1:    Contains seller's
confidential information.

      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

      NOTE 3:    Contains third party
confidential information.

       

    

     

    
      
        
        

      

      
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              4.5.2

            	
              NOTE
      2

            

    

     

    4.6                  
General Conditions

     

    
      	
               
      

            	
              The
      respective obligations of the Buyer and the Seller to complete the
      transactions contemplated by this Agreement shall be subject to receipt of
      all clearances and approvals from the Competition Authorities, listed in
      Appendix 4.6 unconditional, or if
      subject to any conditions, only such conditions that are acceptable to the
      Buyer in its sole discretion or the waiver by the Buyer of any clearance
      or approval from the competition
authorities.

            

    

     

    
      	
               
      

            	
              The
      Buyer has waived this condition on the Closing
  Date.

            

    

     

    4.7                 
Conditions Precedent to Buyer’s obligations

     

    The
obligations of the Buyer to complete the transactions contemplated by this
Agreement shall be subject to the satisfaction or the waiver by the Buyer of the
following conditions precedent:

     

    
      	
                
      (a)  

            	
              any
      and all required consents under any of the Material Agreements to the
      change of control or change of management of the Company having been
      obtained on terms and conditions acceptable to the Buyer, in its sole
      discretion;

            

    

     

    
      	
              (b)  

            	
              the
      Warranties being true and correct  at the Closing Date and the
      Seller shall having performed  all of its obligations hereunder
      required to be performed by it on or prior to the Closing Date;
      and

            

    

     

    
      	
              (c)  

            	
              approval
      of the board of directors of the Buyer and EXFO;
  and

            

    

     

    
      	
              (d)  

            	
              the
      Patent Transfer Agreement between Holding and EXFO, shall have been duly
      executed; and

            

    

     

    
      	
              (e)  

            	
              NOTES
      3 AND 4

            

    

     

    
      	
              (f)  

            	
              NOTES
      1 AND 2

            

    

     

    
      	
              (g)  

            	
              The
      balance sheet of the Company as of the Closing Date satisfactory to the
      Buyer

            

    

     

     

    
      NOTE 1:    Contains seller's
confidential information.

      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

      NOTE 3:    Contains third party
confidential information.

      NOTE 4:    Contains confidential
employee related information.

       

       

      
        
          
          

        

        
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              (h)  

            	
              NOTES
      3 AND 4

            

    

     

    4.8                Non-fulfilment

     

    
      	
               
      

            	
              In
      the event that the conditions set out in Sections 4.7 above have not been
      fulfilled , the Buyer shall be entitled, in its sole discretion, to
      terminate this Agreement forthwith in writing, and the Seller shall not be
      entitled to any compensation of any kind due to such termination. NOTE
      2

            

    

     

     

    
      	
              5  

            	
              Closing

            

    

     

    
      	
              5.1  

            	
              Signing
      and Closing shall take place at the offices of Advokatfirman Vinge KB,
      Nils Ericssongatan 17, Göteborg, at 14.00 on the Closing
    Date.

            

    

     

    
      	
              5.2  

            	
              At
      Closing:

            

    

     

    
      	
              (a)  

            	
              the
      Seller shall:

            

    

     

    
      	
              (i)  

            	
              transfer
      the Shares

            

    

     

    
      	
              (ii)  

            	
              deliver
      to the Buyer the Company’s shareholders’ register, evidencing that the
      Buyer has been duly entered as the holder of the
  Shares;

            

    

     

    
      	
              (iii)  

            	
              ensure
      that all Directors, as notified by the Buyer to the Seller not later than
      three (3) Business Days prior to the Closing Date, retire from their
      respective offices, each such Director acknowledging in writing that he or
      she has resigned as a director of the Company, and that he or she has no
      claims against the Buyer or the Company for compensation or
      otherwise;

            

    

     

    
      	
              (iv)  

            	
              have
      taken all such measures that are requested by the Buyer in order for the
      Buyer to hold a shareholders’ meeting and a board meeting in the Company
      on the Closing Date, allowing the Buyer to appoint new directors and
      deputy directors, to appoint company signatories and to make all other
      decisions required by the Buyer;

            

    

     

    
      	
              (v)  

            	
              cause
      the Company to issue powers of attorney enabling the persons appointed by
      the Buyer to sign for and on behalf of the Company until new signatories
      have been duly registered;

            

    

     

    
      	
              (vi)  

            	
              demonstrate
      to the Buyer that the Company has been fully and finally released from
      guarantees, indemnities or other obligations given or incurred by the
      Company, as applicable, in favour of the Seller or any of its Affiliated
      Persons.

            

    

     

    
      	
              (vii)  

            	
              Demonstrate
      to the Buyer that the Company does not have any debt, amount payable,
      taxes payable or any other amount due at the Closing
  Date.

            

    

     

     

    
      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

      NOTE 3:    Contains third party
confidential information.

      NOTE 4:    Contains confidential
employee related information.

       

    

     

    
      
        
        

      

      
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              (b)  

            	
              the
      Buyer shall, against performance by the Seller of the requirements in
      Section 5.2 (a), pay the Purchase Price as set out in Section
      4.1.

            

    

     

     

    
      	
              6  

            	
              Warranties
      of the Seller

            

    

     

    The
Seller makes the following warranties (Sw. garantier), all of which
are made as of the Closing Date, unless otherwise expressly stated.

     

    
      	
              6.1  

            	
              Corporate
      Existence and Power

            

    

     

    
      	
              6.1.1  

            	
              The
      Holding and the Company are duly incorporated and validly existing under
      the laws of the jurisdictions in which they were incorporated and the
      Seller has the requisite power and authority to enter into and perform its
      obligations under this Agreement and in any certificate or other document
      furnished or to be furnished under this Agreement. The Company has full
      corporate power and all necessary licences, permits and authorisations to
      carry on the Business as now conducted and to own, lease and operate the
      assets and Properties necessary in connection therewith. NN has the
      requisiste power and authority to enter into and perform his obligations
      under this Agreement and any obligation relating
  hereto.

            

    

     

    
      	
              6.1.2  

            	
              The
      Company has not filed (or have had filed against them) any petition for
      their winding-up, are not insolvent within the meaning of applicable laws,
      rules or regulations or similar requirements, and have not made any
      assignment in favour of its creditors, nor has any petition for
      receivership or any administration order been presented in respect of any
      of the Company. The Company has not initiated any proceedings with respect
      to a compromise or arrangement with its creditors or for the dissolution,
      liquidation or reorganisation of theCompany or the winding-up or cessation
      of the business of the Company. No receiver or administrative receiver or
      liquidator has been appointed in respect of the Company or any of its
      material assets.

            

    

     

    
      	
              6.2  

            	
              Corporate
      Authorisation and Non-Contravention

            

    

     

    
      	
              6.2.1  

            	
              This
      Agreement and any certificate or other document furnished or to be
      furnished under this Agreement and the performance by the Seller of its
      obligations under them have been duly authorised by all necessary
      corporate action on the part of the Seller, and this Agreement and any
      other document or instrument executed in connection with this Agreement
      will, when executed, constitute valid and binding obligations of the
      Seller in accordance with their respective
  terms.

            

    

     

    
      	
              6.2.2  

            	
              The
      execution by the Seller of this Agreement and any other document or
      instrument in connection with it, and the performance by the Seller of its
      obligations under the Agreement and the consummation of the transaction
      provided for in this Agreement, do not and will not result in a breach of
      any provision of the articles of association of the Seller or the Company
      or of any applicable law, order, judgement or decree of any court or
      governmental agency or of any agreement to which the Seller or the Company
      is a party or by which the Seller or the Company is
  bound.

            

    

     

     

    
      
        
        

      

      
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              6.3  

            	
              Capitalisation
      and Title

            

    

     

    
      	
              6.3.1  

            	
              The
      Seller lawfully owns and has good and transferable title to the Shares.
      The Shares are free and clear from any Encumbrances and there is no
      agreement to create any Encumbrance over any such shares. Upon the
      delivery of the Shares by the Seller against payment of the Purchase
      Price, the Buyer will acquire good and marketable title to the Shares free
      and clear from any Encumbrances.

            

    

     

    
      	
              6.3.2  

            	
              The
      share capital of the Company is fully and correctly listed in Appendix 6.3.2. The Shares constitute the
      entire issued capital stock of the Company, and are legally and validly
      issued and fully paid and owned as set out in Appendix
6.3.2.

            

    

     

    
      	
              6.3.3  

            	
              There
      are no outstanding subscriptions, options or similar rights relating to
      the Shares and no securities giving a right to conversion into, or any
      agreement or arrangement which accords to any Person the right to acquire,
      shares in the Company.

            

    

     

    
      	
              6.3.4  

            	
              All
      share certificates representing the Shares are in the possession of the
      Seller  and they are the only share certificates ever issued in
      relation to such shares.

            

    

     

    
      	
              6.3.5  

            	
              The
      Company has been rendered any conditional contribution by any
      Person.

            

    

     

    
      	
              6.4  

            	
              Records

            

    

     

    
      	
              6.4.1  

            	
              Copies
      of the Company’s articles of association, shareholders’ registers and
      extracts from the relevant trade registers are attached as Appendix 6.4.1, and all such copies are
      true, accurate, up-to-date and complete, and reflect the present status of
      the Company.

            

    

     

    
      	
              6.4.2  

            	
              All
      constitutional and other corporate documentation of the Company required
      by the applicable law, including but not limited to the Statutory Books,
      articles of association, annual reports, permits and licences, exist and
      are kept in accordance with applicable law and in an organised way and are
      true, accurate, up-to-date and complete, and all registrations and
      applications relating thereto have been fulfilled, and all applicable fees
      have been paid. There are no registrations of changes pending with the
      relevant authorities in the jurisdiction of the Company. No notice or
      allegation that any of the corporate documentation mentioned in this
      Section 6.4.2 is incorrect or should be rectified has been
      received.

            

    

     

    
      	
              6.5  

            	
              Accounts
      and Accounting Principles

            

    

     

    
      	
              6.5.1  

            	
              The
      Accounting Principles have been applied on a consistent basis during the
      existence of the Company.

            

    

     

    
      	
              6.5.2  

            	
              The
      Accounts have been prepared in accordance with the Accounting Principles
      and they give a true and fair view of the financial position and results
      of the operations of the Company. Balance sheet is attached as, Appendix
6.5.

            

    

     

     

    
      
        
        

      

      
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              6.5.3  

            	
              The
      Company has not pledged any assets or has any obligations,
      commit­ments or liabilities, liquidated or non-liquidated, contingent
      or otherwise, whether for Taxes or otherwise, in excess of what is shown
      in the Accounts.

            

    

     

    
      	
              6.5.4  

            	
              The
      inventory of the Company has been subject to physical stock-taking as at
      the Accounts Date and adequate reserves have been made in the Accounts for
      slow moving items, excessive inventory levels and commercial or technical
      obsolescence in accordance with the Accounting
  Principles.

            

    

     

    
      	
              6.5.5  

            	
              The
      value of all inventory, including finished goods, work-in-process and raw
      materials, has been recorded in accordance with the Accounting
      Principles.

            

    

     

    
      	
              6.6  

            	
              Loans
      and Other Financial Facilities

            

    

     

    
      	
              6.6.1  

            	
              There
      are no loans or other financial facilities available to the Company other
      than as set out in Appendix
      6.6.1.

            

    

     

    
      	
              6.6.2  

            	
              There
      is no event which gives, or after notice or lapse of time, or both, would
      give any third party the right to call for repayment from the Company
      prior to normal maturity of any loan or other financial
      facility.

            

    

     

    
      	
              6.7  

            	
              Dividends
      and Loans

            

    

     

    The
Company has not made any payment to its shareholders or any other Person or
granted or received loans or furnished securities in contravention of the
Swedish Companies Act (Sw.
Aktiebolagslagen (2005:551)) or the equivalent legislation in any
relevant jurisdiction.

     

    
      	
              6.8  

            	
              Title
      to Assets

            

    

     

    
      	
              6.8.1  

            	
              The
      Company is the owner of the assets, tangible and intangible, that are
      reflected in the Accounts and has good and marketable title to all such
      assets, tangible and intangible, free and clear from any
      Encumbrance.

            

    

     

    
      	
              6.8.2  

            	
              The
      Company does not have any lease for premises and assets, tangible and
      intangible, necessary for it to carry on the Business as presently
      conducted.

            

    

     

    
      	
              6.9  

            	
              Accounts
      Receivable and Liquid Assets

            

    

     

    
      	
              6.9.1  

            	
              There
      are no accounts receivable or any amount to be received by the Company at
      the Closing Date.

            

    

     

    
      	
              6.9.2  

            	
              All
      liquid assets of the Company, including but not limited to bank accounts
      and cash, are available free and clear from any
    Encumbrances.

            

    

     

    
      	
              6.10  

            	
              Leased
      Premises

            

    

     

    
      	
              6.10.1  

            	
              There
      are no lease agreements for premises leased by the
  Company.

            

    

     

    
      	
              6.10.2  

            	
              The  Company
      does not own and has never owned any real estate or
    property.

            

    

     

     

    
      
        
        

      

      
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              6.11  

            	
              Powers
      of Attorney

            

    

     

    The
Company has not issued to any Person any power of attorney or other
authorisation (express or implied), which is still outstanding, to enter into
any agreement or obligation or other transaction on its behalf or to bind it in
any way, other than the authorisation given to its employees to enter into
routine agreements in the ordinary course of business.

     

    
      	
              6.12  

            	
              Agreements

            

    

     

    
      	
              6.12.1  

            	
              There
      are no other Material Agreements than those listed in Appendix 6.12.1. The Material Agreements
      listed in said appendix are in full force and effect and the text of the
      agreements accurately reflects the contents of the
    agreements.

            

    

     

    
      	
              6.12.2  

            	
              Neither
      the Seller nor the Company has received any notice that the Company
      is  in default under any provision of any Material Agreement,
      and the Company has not received or given notice of termination of any
      Material Agreement.

            

    

     

    
      	
              6.12.3  

            	
              The
      Company is not:

            

    

     

    
      	
              (a)  

            	
              in
      default under any provision of any Material Agreement and no event has
      occurred which would constitute such a
default;

            

    

     

    
      	
              (b)  

            	
              aware
      of, or has any reason to believe, that any counterparty to a Material
      Agreement is in default under any provision of any Material
      Agreement;

            

    

     

    
      	
              (c)  

            	
              a
      party to any agreement containing provisions for material price
      re-determination or price revision except for compensation for inflation,
      movements in exchange rates, and discounts for bulk
  buying;

            

    

     

    
      	
              (d)  

            	
              or
      has been a party to any agreement or arrangement which is or could be
      contravening applicable laws;

            

    

     

    
      	
              (e)  

            	
              a
      party to or bound by any agreement, judgement or order under which the
      execution or performance of this Agreement (i) would give any other
      contracting party the right to terminate or adversely change the terms and
      conditions of such agreement, or that would otherwise have a negative
      effect for the Company, or (ii) would constitute a violation or default by
      the Company, or (iii) would result in the creation of an Encumbrance on
      any assets of the Company; or

            

    

     

    
      	
              (f)  

            	
              a
      party to any agreement containing any terms or conditions not consistent
      with fair market terms, conditions and
prices.

            

    

     

    
      	
              6.12.4  

            	
              The
      Company has not sold any company, business, shares, real property or other
      asset where there are outstanding obligations or warranty undertakings
      (express or implied), except as set out in Appendix
6.12.4.

            

    

     

    
      	
              6.13  

            	
              Insurance

            

    

     

    
      	
              6.13.1  

            	
              The
      Company does not maintain insurance policies on fire, theft, loss,
      disruption, product and general liability and other forms of
      insurance.

            

    

     

     

    
      
        
        

      

      
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              6.14  

            	
              Environmental
      Matters

            

    

     

    
      	
              6.14.1  

            	
              The
      Company fully complies and has fully complied with the Environmental
      Laws.

            

    

     

    
      	
              6.15  

            	
              Intellectual
      Property

            

    

     

    
      	
              6.15.1  

            	
              Appendix 6.15.1 sets forth a true and
      complete list of all i) patent registrations and patent applications,
      trademarks, trademark registrations, trademark applications, designs,
      design registrations, design applications and domain names included in the
      Owned Intellectual Property, and ii) license agreements for Licensed
      Intellectual Property

            

    

     

    
      	
              6.15.2  

            	
              The
      Owned Intellectual Property and the Licensed Intellectual Property include
      all of the Intellectual Property used in the ordinary conduct of the
      Business as currently conducted or intended to be conducted and there are
      no other items of Intellectual Property that are necessary for the
      ordinary conduct of the Business or for the Business contemplated to be
      conducted.

            

    

     

    
      	
              6.15.3  

            	
              The
      Company is the exclusive owner of the Owned Intellectual Property with
      full right of disposition and not subject to any Encumbrances, and are
      entitled to use the Licensed Intellectual Property in the ordinary course
      of the Business as currently conducted or as contemplated to be
      conducted.

            

    

     

    
      	
              6.15.4  

            	
              The
      Owned Intellectual Property and the Licensed Intellectual Property are
      subsisting, valid, enforceable and not withdrawn, cancelled or abandoned.
      All Owned Intellectual Property and Licensed Intellectual Property which
      may be registered by the Company have been duly registered. All
      application fees and renewal fees for such Intellectual Property have been
      paid in full and the registrations and applications are in all other
      respects being maintained and
asserted.

            

    

     

    
      	
              6.15.5  

            	
              Appendix 6.15.5 sets forth a list of all
      litigation, proceedings, investigations, claims or actions of any nature
      alleging that the operation of the Business as formerly or currently
      conducted or as contemplated to be conducted or the use of the Owned
      Intellectual Property or the Licensed Intellectual Property infringes,
      misappropriates, or otherwise violates or conflicts with the Intellectual
      Property of any Person. Except as set out in Appendix 6.15.5, no
      litigation, proceedings, investigations, claims or actions of such nature
      are pending or are threatened.

            

    

     

    
      	
              6.15.6  

            	
              No
      Person has been engaged, is engaging or is expected to engage in any
      activity or use of any Intellectual Property that infringes,
      misappropriates, or otherwise violates or conflicts with the Owned
      Intellectual Property or the Licensed Intellectual
    Property.

            

    

     

    
      	
              6.15.7  

            	
              Except
      as set out in Appendix 6.15.7, none of the Owned Intellectual
      Property or Licensed Intellectual Property has been, is or is expected to
      become, subject to any outstanding consents, settlements or judgments
      restricting the use of such Intellectual Property or adversely effecting
      the commercial value of the Company’s right to such Intellectual Property
      or that would impair the validity or enforceability of such Intellectual
      Property and the Company has not granted, or is obliged to grant, any
      licence, assignment or other right in respect of any Intellectual
      Property, or is obliged to disclose any Intellectual Property to any
      Person.

            

    

     

     

    
      
        
        

      

      
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              6.15.8  

            	
              The
      consummation of the transactions contemplated by this Agreement will not
      cause any impairment of any Owned Intellectual Property or any termination
      of any license agreement for Licensed Intellectual Property or effect any
      change in such agreement adverse to the
Buyer.

            

    

     

    
      	
              6.15.9  

            	
              The
      Company has, with respect to third parties, maintained the confidentiality
      of any trade secrets and other confidential Intellectual Property related
      to the Business.

            

    

     

    
      	
              6.15.10  

            	
              All
      software used by the Company is free of all viruses, worms, Trojan horses
      and other contaminants and does not contain any bugs, errors, or problems
      of a material nature that disrupt its operation or have an adverse impact
      on the operation of other software programs or operating
      systems.

            

    

     

    
      	
              6.15.11  

            	
              No
      Open Source Software has been used by the Company and no product or item
      developed or distributed by the Company has been distributed with, or is
      designed to link with or access in any way any Open Source
      Software.

            

    

     

    
      	
              6.15.12  

            	
              The
      Company has complied with the requirements of all licenses if any for
      Licensed Intellectual Property, including licenses for Open Source
      Software.

            

    

     

    
      	
              6.15.13  

            	
              None
      of the activities of the Company or the employees of the Company violates
      any agreement or arrangement which any such employees have with former
      employers. All employees and consultants who contributed to the discovery
      or development of any of the Owned Intellectual Property have fully and
      finally (without any compensation remaining to be paid) assigned all
      rights to such Intellectual Property to the
  Company.

            

    

     

    
      	
              6.16  

            	
              IT
      and Data Protection

            

    

     

    
      	
              6.16.1  

            	
              The
      Company is not using software and is not using a Network for the
      Business.

            

    

     

    
      	
              6.17  

            	
              Employment
      and Pension Agreements and Labour
Controversies

            

    

     

    
      	
              6.17.1  

            	
              Except
      as set out in Appendix 6.17.1 there
      are no, and the Company has not undertaken to have collective bargaining
      agreements of the Company.

            

    

     

    
      	
              6.17.2  

            	
              NOTES
      1, 2 AND 4

            

    

     

     

    
      NOTE 1:    Contains seller's
confidential information.

      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

      NOTE 4:    Contains confidential
employee related information.

       

       

      
        
          
          

        

        
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              6.18  

            	
              Compliance
      with Law

            

    

     

    
      	
              6.18.1  

            	
              The
      Company complies with and has at all times (i) complied with and (ii)
      conducted the Business in accordance with applicable laws relating to its
      operations and the Business.

            

    

     

    
      	
              6.18.2

            	
              All
      necessary licenses  consents, permits and authorisations have been
      obtained by the Company to enable the Company to carry on the Business in
      the places and in the manner in which such business is now conducted and
      all such licences, consents, permits and authorisations are valid and
      subsisting and have been complied with in all respects. NOTE
    2

            

    

     

    
      	
              6.19  

            	
              Litigation

            

    

     

    
      	
              6.19.1  

            	
              There
      are no suits, administrative, arbitration or other proceedings (including
      but not limited to Tax proceedings) pending or threatened againstt the
      Company, the Business or assets, and there are no such suits or
      proceedings pending or threatened by the Company against any other Person,
      nor are there any circumstances which may result in such suits,
      administrative, arbitration or other proceedings, except as set out in
      Appendix
  6.19.1.

            

    

     

    
      	
              6.19.2  

            	
              No
      investigation or enquiry is being or has been conducted by any
      governmental, fiscal, regulatory or other body in respect of the affairs
      of the Company, and no such investigation is pending, threatened or
      expected.

            

    

     

    
      	
              6.20  

            	
              Taxes

            

    

     

    
      	
              6.20.1  

            	
              The
      Company has properly filed with the appropriate tax authorities all tax
      returns and reports required to be filed for all tax periods ending prior
      to the Closing Date and such filings are true, correct and complete and
      all information required for a correct assessment of Taxes has been
      provided, and the Company is not in delay with the payment of any Taxes
      due to any tax authority.

            

    

     

    
      	
              6.20.2  

            	
              The
      tax returns of the Company have been assessed and approved by the tax
      authorities through the tax years up to and including the years for which
      such assessment and approval is required and the Company is not subject to
      any dispute with any such
authority.

            

    

     

    
      	
              6.20.3  

            	
              All
      Taxes that have become due have been fully paid or fully provided for in
      the Accounts and the Company will not be liable for any additional Tax
      pertaining to the period before the Accounts Date. All Taxes for the
      period after the Accounts Date have been fully paid when
    due.

            

    

     

    
      	
              6.20.4  

            	
              There
      are no tax audits, disputes or litigation currently pending with respect
      to the Company, and there is no basis for assessment of any deficiency in
      any Taxes against

            

    

     

    
      	
              6.20.5  

            	
              The
      Company has not been involved in any transactions, which could be
      considered as tax evasion.

            

    

     

     

    NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

     

     

    
      
        
        

      

      
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              6.20.6  

            	
              All
      transactions and agreements entered into by the Company with the Seller
      have been made on terms and conditions which do not in any way deviate
      from what would have been agreed between independent parties (i.e. on
      an arm’s length basis).

            

    

     

    
      	
              6.20.7  

            	
              All
      losses for tax purposes incurred by the Company are trading losses and are
      available to be carried forward and set off against income in succeeding
      periods without limitation and have been accepted by the relevant tax
      authorities.

            

    

     

    
      	
              6.20.8  

            	
              The
      Company is not and has not been subject to any taxation outside its
      respective country of fiscal
residence.

            

    

     

    
      	
              6.21  

            	
              The
      Business

            

    

     

    
      	
              6.21.1  

            	
              The
      Company is not a party to or bound by any agreement which limits the
      freedom of the Company to compete in any line of business or with any
      Person or to transact business with any
Person.

            

    

     

    
      	
              6.21.2  

            	
              The
      Company has no interest in any other business entity or association or
      carries on, or has agreed to carry on, business in partnership or as an
      equity participant in a joint venture with any other
    Person.

            

    

     

    
      	
              6.21.3  

            	
              The
      Company has not entered into any agreement or commitment or is a party to
      any transaction or arrangement which is not of an arm’s length nature or
      not made in connection with the
Business.

            

    

     

    
      	
              6.21.4  

            	
              There
      is no Encumbrance on the whole or on any part of the Business or assets of
      the Company except as set out in the Accounts and there is no agreement to
      create any such Encumbrance.

            

    

     

    
      	
              6.21.5  

            	
              The
      Company has no outstanding offers which are capable of being binding
      following acceptance by any third party, except in the ordinary course of
      business.

            

    

     

    
      	
              6.21.6  

            	
              The
      Company is not bound by any agreement which cannot readily be fulfilled or
      performed by the Company on time.

            

    

     

    
      	
              6.22  

            	
              Relationship
      with the Seller

            

    

     

    
      	
              6.22.1  

            	
              Neither
      the Seller, SCI, nor any of its Affiliated Persons or any other Person
      affiliated with the Seller, have any claims of any kind against the
      Company and the Company is not indebted in any way towards the Seller,
      SCI, any of the Seller’s Affiliated Person or any other Person affiliated
      with the Seller.

            

    

     

    
      	
              6.22.2  

            	
              There
      are no agreements or arrangements between the Company and the Seller, no
      liabilities or obligations (contingent or otherwise) owed by the Company
      in respect of the Seller, and no guarantees or similar commitments issued
      by the Company for obligations owed by the
  Seller.

            

    

     

     

    
      
        
        

      

      
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              6.22.3  

            	
              No
      services, which have been provided by the Seller to the Company, are
      necessary for the conduct of the Business in the ordinary
      course.

            

    

     

    
      	
              6.22.4  

            	
              No
      payments of any kind, including but not limited to management charges,
      have been made by the Company to the Seller, save for payments under
      agreements or arrangements made on an arm’s length
  basis.

            

    

     

    
      	
              6.23  

            	
              Information

            

    

     

    
      	
              6.23.1  

            	
              All
      documents provided to the Buyer by or on behalf of the Seller or the
      Company are true and correct and no document provided to the Buyer by or
      on behalf of the Seller or the Company, contains any untrue statement of a
      relevant fact or omits to state a relevant fact necessary not to make the
      statements contained in the document
misleading.

            

    

     

    
      	
              6.23.2  

            	
              All
      original copies and other relevant documentation relating to agreements
      entered into by the Company, and other information which is relevant in
      relation to the activities of the Company, including historical records,
      are true, accurate and complete in all respects and kept in good order and
      are in the possession of the
Company.

            

    

     

    
      	
              6.23.3  

            	
              There
      are no facts or circumstances relating to the affairs of any of the
      Company which have not been disclosed to the Buyer and which, if
      disclosed, might reasonably have been expected to influence the decision
      of the Buyer to purchase the Shares on the terms of this
      Agreement.

            

    

     

    
      	
              6.24  

            	
              Absence
      of Certain Changes or Events

            

    

     

    Except as
expressly set out in Appendix 6.24.1, since
the Accounts Date:

     

    
      	
              (a)  

            	
              the
      Business has been conducted in the ordinary course of business with a view
      to maintaining it as a going concern and no major decisions in any matters
      of material importance to the Business have been implemented and the
      Company has complied with applicable laws and has used its best efforts to
      maintain all material licenses, permits and authorisations required to
      carry on the business as presently
conducted;

            

    

     

    
      	
              (b)  

            	
              the
      Company has not issued or repaid any share capital or issued any debt
      instrument;

            

    

     

    
      	
              (c)  

            	
              the
      Company has not declared or paid any dividend, group contribution or made
      any other distribution (including but not limited to repayment of
      conditional contributions) to the Seller or any other
    Person;

            

    

     

    
      	
              (d)  

            	
              the
      Company  has not entered into any transaction, arrangement or
      agreement with the Seller, other than as contemplated by this Agreement,
      and no payments have been made or agreed to be made by the Company to the
      Seller or any of its Affiliated Persons other than pursuant to commercial
      arrangements in the ordinary course of
business;

            

    

     

    
      	
              (e)  

            	
              none
      of the Material Agreements have been amended or terminated and there has
      been no agreement to amend or terminate such
  agreements;

            

    

     

     

    
      
        
        

      

      
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              (f)  

            	
              there
      has not occurred any change in the financial condition, any extraordinary
      event, loss, damage (whether covered by insurance or not) or any waiver of
      any debts, claims, or rights of substantial value which separately or
      jointly has resulted in, or may result in, a Material Adverse
      Effect;

            

    

     

    
      	
              (g)  

            	
              the
      Company has not sold, acquired, invested in, assigned, transferred,
      pledged or otherwise encumbered, leased or otherwise disposed of any asset
      – or borrowed any additional funds, assumed or incurred any liability,
      obligation, expenditure or
commitment.

            

    

     

    
      	
              (h)  

            	
              The
      Company has not repaid any of its loans existing as at the Accounts Date,
      other than as required in the agreements governing such loans or in the
      ordinary course of business;

            

    

     

    
      	
              (i)  

            	
              there
      has been no change of accounting methods, principles or practices or
      working capital principles or
practices;

            

    

     

    
      	
              (j)  

            	
              the
      Company has not deferred any payments to creditors beyond the agreed date
      of payment;

            

    

     

    
      	
              (k)  

            	
              the
      Company has not amended its principles for debt collection to the effect
      that payments from debtors are
accelerated;

            

    

     

    
      	
              (l)  

            	
              all
      Taxes have been paid when due;

            

    

     

    
      	
              (m)  

            	
              there
      has been no investments in fixed
assets;

            

    

     

    
      	
              (n)  

            	
              the
      Company has not amended its articles of association and has not passed any
      resolution in shareholders’ meetings (other than any resolution
      constituting ordinary business conducted at an annual shareholders’
      meeting or as required in connection with this
  Agreement);

            

    

     

    
      	
              (o)  

            	
              the
      Company has not created any Encumbrance over any of its
      assets;

            

    

     

    
      	
              (p)  

            	
              the
      Company has not settled or waived any material
  claim;

            

    

     

    
      	
              (q)  

            	
              the
      Company has not instituted any litigation proceedings or settled or waived
      any claim other than in relation to the collection of trade
      debts;

            

    

     

    
      	
              (r)  

            	
              the
      Company has not entered into voluntary liquidation;
  and

            

    

     

    
      	
              (s)  

            	
              neither
      the Seller nor the Company have agreed or arranged to do any of the
      foregoing.

            

    

     

     

    
      	
              7  

            	
              Covenants
      of the Seller

            

    

     

    
      	
              7.1  

            	
              Restrictive
      Covenant

            

    

     

    
      	
              7.1.1  

            	
              The
      Seller, directly or indirectly, undertakes at all times for a period
      of  from the Closing Date not to, without the written consent of the
      Buyer, assist or have any active interest in, own any assets or shares in
      or act as agent or as adviser or consultant to or otherwise enter into any
      relationship with any customer or supplier of any of the Company, the
      Buyer or the EXFO Group, or to carry out any other activities which
      compete with the Business. NOTE 2

            

    

     

     

    NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

     

     

    
      
        
        

      

      
        Page 18
of 54

        
          

        

      

      
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              7.1.2  

            	
              The
      Seller, directly or indirectly, undertakes at all times for a period
      of  from the Closing Date not to solicit the services of or endeavour
      to entice away from the Company, the Buyer or the EXFO Group any of its
      directors, managers or employees nor to employ any such person during such
      period of time. NOTE 2

            

    

     

    
      	
              7.1.3  

            	
              NOTE
      2

            

    

     

    
      	
              7.2  

            	
              Co-operation
      by Seller

            

    

     

    
      	
              7.2.1  

            	
              The
      Seller shall, at any time and from time to time, whether before, at, or
      after the Closing Date, execute and deliver any further instruments or
      documents and, at its own cost, take all such further action as the Buyer
      may reasonably request in order to consummate effectively the transaction
      contemplated by this Agreement and to deliver to the Buyer legal title to
      the Shares.

            

    

     

    
      	
              7.2.2  

            	
              The
      Seller shall take, or cause to be taken, all actions and to do, or cause
      to be done, all things necessary to consummate and make effective as
      promptly as possible the transaction contemplated by this Agreement and to
      co-operate with the Buyer in connection with the foregoing, such as to
      provide all information and documents required for the Buyer to complete
      notification to the Competition Authorities. The Seller shall obtain the
      authorisations, consents, orders and approvals of regulatory bodies and
      officials that may be or become necessary for the performance of its
      obligations pursuant to this Agreement and the completion of the
      transaction contemplated by it. The Seller shall co-operate with the Buyer
      and promptly seek to obtain such authorisations, consents, orders and
      approvals as may be necessary for the performance of the Parties’
      respective obligations pursuant to this
  Agreement.

            

    

     

    
      	
              7.3  

            	
              Breach
      by the Seller

            

    

     

    Should
the Seller violate any of the provisions set out in Sections 7.1.1 or 7.1.2
above, the Seller shall at the Buyer’s request pay liquidated damages. The
payment of liquidated damages or other damages does not affect the rights of the
Buyer to take other action in relation to a violation of the provisions herein,
including but not limited to injunctive relief as set out in section 18.2 below.
NOTES 1 AND 2

     

    
      	
              8  

            	
              Covenants
      of the Buyer

            

    

     

    Subject
to approval of the auditor of the Company, the Buyer undertakes to cause those
Directors who retire in connection with this transaction to be granted discharge
from liability for their administration until the Closing Date (or the earlier
date of their retire­ment) at the next annual shareholders’ meeting of the
Company. For the avoidance of doubt, the grant of discharge in accordance with
this Section will not in any way release the Seller from its Warranties,
covenants and liabilities under this Agreement.

     

     

    
      NOTE 1:    Contains seller's
confidential information.

      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

       

       

    

    
      
        
        

      

      
        Page 19
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        Table of Contents

      

    

     

     

    
      	
              9  

            	
              Indemnification

            

    

     

    
      	
              9.1  

            	
              Indemnification

            

    

     

    
      	
              9.1.1  

            	
              The
      Seller shall be liable and shall indemnify the Buyer, and, after the
      Closing, without duplication, the Company, from and against any and all
      Losses.

            

    

     

    
      	
              9.1.2  

            	
              NOTE
      2

            

    

     

    
      	
              9.1.3  

            	
              NOTE
      2

            

    

     

    
      	
              9.1.4  

            	
              The
      Buyer may deduct the amount of any Loss from any Earn-Out payment owed by
      the Buyer.

            

    

     

    
      	
              9.2  

            	
              Limitation
      of Indemnification

            

    

     

    
      	
              9.2.1  

            	
              NOTE
      2

            

    

     

    
      	
              9.2.2  

            	
              NOTE
      2

            

    

     

    
      	
              (a)  

            	
              NOTE
      2

            

    

     

    
      	
              (b)  

            	
              NOTE
      2

            

    

     

    
      	
              9.2.3  

            	
              NOTE
      2

            

    

     

     

    
      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

       

    

     

    
      
        
        

      

      
        Page 20
of 54

        
          

        

      

      
        Table of Contents

      

    

     

     

    
      	
              9.2.4

            	
              NOTE
      2

            

    

     

    
      	
              9.2.5

            	
              This
      Section 9.2.5 shall not apply to any breach of Warranty in relation to
      Section 6.1 (Corporate Existence and Power), 6.2 (Corporate Authorisation
      and Non-Contravention) or 6.3 (Capitalisation and Title), above. Claims
      for any such breach may be made by the Buyer without any
      limitations.

            

    

     

     

    
      	
              10  

            	
              Confidentiality

            

    

     

    
      	
              10.1  

            	
              Each
      Party undertakes not to use or disclose any Confidential Information
      unless (i) required to do so by law or pursuant to any order of court or
      other competent authority or tribunal (ii) required to do so by any
      applicable stock exchange regulations or the regulations of any other
      recognised market place (iii) such disclosure has been consented to by the
      other Party in writing (such consent not to be unreasonably withheld) or
      (iv) to its professional advisers (who are bound to such party by a duty
      of confidentiality which applies to any information disclosed). If a Party
      becomes required, in circumstances contemplated by (i) or (ii) to disclose
      any information, the disclosing Party shall use its reasonable endeavours
      to consult with the other Party prior to any such
    disclosure.

            

    

     

    
      	
              10.2  

            	
              Notwithstanding
      Section 10.1 above, as from the Closing Date, the Buyer shall be entitled
      to use and disclose any Confidential Information relating to the
      Company.

            

    

     

     

    
      	
              11  

            	
              Announcements

            

    

     

    All press
releases, public announcements and public relations activities by the Parties
with regard to this Agreement or the transaction contemplated by it shall be
mutually approved by the Parties in advance of such release, announcement or
activity. A Party shall, however, not be prevented from, after reasonable
consultation with the other Party, disclosing such information which is required
under law or pursuant to any order of court or other competent authority or
tribunal or under any applicable stock exchange regulations or the regulations
of any other recognised market place.

     

    Notwithstanding
the above, Seller shall not make any announcement whatsoever without the prior
written approval of the Buyer, which shall not be unreasonably
withheld.

     

     

    
      	
              12  

            	
              Costs

            

    

     

    Each
Party shall pay its own costs and expenses in connection with the preparation
and completion of the transaction contemplated by this Agreement and no such
costs or expenses shall be charged to or paid by the Company.

     

     

    NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

    
       

       

      
        
          
          

        

        
          Page 21
of 54

          
            

          

        

        
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              13  

            	
              Entire
      Agreement

            

    

     

    This
Agreement represents the entire understanding and agreement between the Parties
with respect to the subject matter hereof and supersedes all prior negotiations,
understandings and agreements relating to the subject matter
hereof.

     

     

    
      	
              14  

            	
              Amendments
      and Waivers

            

    

     

    This
Agreement may only be amended by an instrument in writing duly executed by the
Parties. No change, termination, modification or waiver of any provision, term
or condition of this Agreement shall be binding on the Parties, unless it is
made in writing.

     

     

    
      	
              15  

            	
              Notices

            

    

     

    
      	
              15.1  

            	
              All
      notices, requests, demands, approvals, waivers and other communications
      required or permitted under this Agreement must be in writing in the
      English language and shall be deemed to have been received by a Party
      when:

            

    

     

    
      	
              (a)  

            	
              delivered
      by post, unless actually received earlier, on the third Business Day after
      posting, if posted within Sweden, or the fifth Business Day, if posted to
      or from a place outside Sweden;

            

    

     

    
      	
              (b)  

            	
              delivered
      by hand, on the day of delivery;

            

    

     

    
      	
              (c)  

            	
              delivered
      by fax, on the day of dispatch if supported by a written confirmation from
      the sender’s fax machine that the message has been properly
      transmitted.

            

    

     

    
      	
              15.2  

            	
              All
      such notices and communications shall be addressed as set out below or to
      such other addresses as may be given by written notice in accordance with
      this Section.

            

    

     

    

    NOTES 1
AND 3

     

     

    
      NOTE 1:    Contains seller's
confidential information.

      NOTE 4:    Contains third party
confidential information.

    

    
 

    
      
        
        

      

      
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    NOTES 1
AND 3

     

     

    
      	
              15.3  

            	
              For
      the purposes of this Agreement, “writing” or “written” shall include faxes
      but not e-mails.

            

    

     

     

    
      	
              16  

            	
              Assignments

            

    

     

    No Party
may assign, delegate, sub-contract, or otherwise transfer or pledge or grant any
other security interest in or over any of its rights or obligations under this
Agreement without the prior written consent of the other Party, except that the
Buyer may transfer or assign, in whole or in part, to one or more of its
Subsidiaries from time to time the right to purchase all or a portion of the
Shares, provided that no such transfer will relieve the Buyer of its
obligations, or affect the rights of the Seller, under this Agreement.
Notwithstanding the above, the Buyer may pledge or grant security interests over
its rights under this Agreement for the purpose of financing the transaction
contemplated by this Agreement, including (a) any refinancing of the existing
indebtedness of the Company and (b) any other facilities provided to the Buyer
and/or the Company in addition to such financing.

     

     

    
      	
              17  

            	
              Partial
      Invalidity

            

    

     

    If any
provision of this Agreement or the application of it shall be declared or deemed
void, invalid or unenforceable in whole or in part for any reason, the remaining
provisions of this Agreement shall continue in full force and effect. The
Parties shall seek to amend such void, invalid or unenforceable provisions and
thereby this Agreement in order to give effect to, so far as is possible, the
spirit of this Agreement and to achieve the purposes intended by the
Parties.

     

     

    
      	
              18  

            	
              Governing
      Law and Disputes

            

    

     

    
      	
              18.1  

            	
              This
      Agreement shall be governed by and construed in accordance with the laws
      of Sweden.

            

    

     

    
      	
              18.2  

            	
              Any
      dispute, controversy or claim arising out of, or in connection with, this
      Agreement, or the breach, termination or invalidity of the Agreement,
      shall be finally settled by arbitration in accordance with the Arbitration
      Rules of the Arbitration Institute of the Stockholm Chamber of Commerce
      and the decision of the arbitrator(s) shall be final and binding upon the
      Parties both as to law and to fact snd shall not be appealable to any
      court in any jurisdiction. The Parties shall share the expense of the
      arbitrator(s) equally, unless otherwise decided by the
      arbitrator(s).

            

    

     

     

    
      
        NOTE 1:    Contains seller's
confidential information.

        NOTE 4:    Contains third party
confidential information.

         

         

        
          
            
            

          

          
            Page 23
of 54

            
              

            

          

          
            Table of Contents

          

        

      

    

     

     

    Notwithstanding
the above, Buyer or EXFO shall have the right to initiate proceedings in any
competent court of law for the granting of interim measures, such as injunctions
or other actions to prevent, minimize or prohibit any threatened or ongoing
breach of this Agreement. NOTE 2

     

    
      	
              18.3  

            	
              The
      place of arbitration shall be Gothenburg, Sweden. The language to be used
      in the arbitral proceedings shall be English. The arbitration shall be
      conducted by one arbitrator unless either Party requests that an
      arbitration tribunal composed of three (3) arbitrators shall adjuciate the
      dispute and such Party shall be solely responsible for the expenses of the
      two extra arbitrators, unless otherwise decided by the
      arbitrators.

            

    

     

    
      	
              18.4  

            	
              The
      Parties undertake and agree that all arbitral proceedings conducted with
      reference to this arbitration clause will be kept strictly confidential.
      This confidentiality undertaking shall cover all information disclosed in
      the course of such arbitral proceedings, as well as any decision or award
      that is made or declared during the proceedings. Information covered by
      this confidentiality undertaking may not, in any form, be disclosed to a
      third party without the written consent of the other Party. This
      notwithstanding, a Party shall not be prevented from disclosing such
      information in order to safeguard in the best possible way his rights
      vis-à-vis the other Party in connection with the dispute, or if the Party
      is obliged to so disclose pursuant to statute, regulation, a decision by
      an authority, a stock exchange contract or
  similar.

            

    

     

    
      	
              18.5  

            	
              In
      case this Agreement or any part of it is assigned or transferred to a
      third party, such third party shall automatically be bound by the
      provisions of this arbitration
clause.

            

    

     

    

    
      	
               
      

            	
              ____________________

            

    

    

    

    
      
        NOTE 2:    Contains confidential
information that would be prejudicial to the interests of
EXFO.

      

    

    

    
      
        
        

      

      
        Page 24
of 54

        
          

        

      

      
        Table of Contents

      

    

    

     

    This
Agreement has been duly executed in three (3) original copies, of which each of
the Parties has taken one (1) each.

     

     

    

    NOTES 1, 2, 3 AND 4

     

     

     

    
      NOTE 1:    Contains seller's
confidential information.

      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

      NOTE 3:    Contains third party
confidential information.

      NOTE 4:    Contains confidential
employee related information.

       

    

    
      
        
        

      

      
        Page 25
of 54

        
          

        

      

      
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    APPENDIX 4.4.1 -
Calculation of the Earn-outs

     

     

    
      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

       

       

      
        
          
          

        

        
          Page 26
of 54

          
            

          

        

        
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      APPENDIX 4.6 - Competition Authorities

       

       

      N/A

       

       

      
        
          
          

        

        
          Page 27
of 54

          
            

          

        

        
          Table of Contents

        

      

       

       

      Appendix 6.3.2 - Share Capital of the Company

       

       

      
        NOTE 1:    Contains seller's
confidential information.

        NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

         

      

       

      
        
          
          

        

        
          Page 28
of 54

          
            

          

        

        
          Table of Contents

        

      

    

     

     

    Appendix 6.4.1  -
Copies of the Company's articles of association, shareholders' register and
extracts from the relevant trade register

     

     

    
      NOTE 1:    Contains seller's
confidential information.

       

       

      
        
          
          

        

        
          Page 29
of 54

          
            

          

        

        
          Table of Contents

        

      

       

       

    

    Appendix 6.5.2 -
Balance Sheet

     

     

    
      NOTE 1:    Contains seller's
confidential information.

      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

       

       

      
        
          
          

        

        
          Page 30
of 54

          
            

          

        

        
          Table of Contents

        

      

       

    

     

    Appendix 6.6.1 - Loans
and other Financial Facilities

     

     

    
      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

       

       

      
        
          
          

        

        
          Page 31
of 54

          
            

          

        

        
          Table of Contents

        

      

       

       

    

    Appendix 6.10.1 -
Leased Premises

     

     

    N/A

     

     

    
      
        
        

      

      
        Page 32
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    Appendix 6.12.1 -
Material Agreements

     

     

    
      NOTE 1:    Contains seller's
confidential information.

      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

      NOTE 4:    Contains confidential
employee related information.

    

     

     

    
      
        
        

      

      
        Page 33
of 54

        
          

        

      

      
        Table of Contents

      

    

     

     

    Appendix 6.12.4 -
Obligations or Warranty Undertakings

     

     

    
      NOTE 1:    Contains seller's
confidential information.

      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

      NOTE 4:    Contains confidential
employee related information.

    

     

     

    
      
        
        

      

      
        Page 34
of 54

        
          

        

      

      
        Table of Contents

      

    

     

     

    Appendix 6.15.1 -
Intellectual Property

     

     

    
      NOTE 1:    Contains seller's
confidential information.

      NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

       

       

      
        
          
          

        

        
          Page 35
of 54

          
            

          

        

        
          Table of Contents

        

      

       

       

      Appendix 6.15.5 - List of all litigation, proceedings,
investigations, claims or actions

       

       

      
        NOTE 1:    Contains seller's
confidential information.

        NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

         

         

        
          
            
            

          

          
            Page 36
of 54

            
              

            

          

          
            Table of Contents

          

        

         

         

        Appendix 6.15.7 - Owned Intellectual Property or
Licensed Intellectual Property

         

         

        
          NOTE 1:    Contains seller's
confidential information.

          NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

          NOTE 3:    Contains third party
confidential information.

           

           

          
            
              
              

            

            
              Page 37
of 54

              
                

              

            

            
              Table of Contents

            

          

           

        

         

        Appendix 6.17.1 - Employment matters

         

         

        
          NOTE 1:    Contains seller's
confidential information.

          NOTE 4:    Contains confidential
employee related information.

        

         

         

        
          
            
            

          

          
            Page 38
of 54

            
              

            

          

          
            Table of Contents

          

        

         

         

        Appendix 6.17.2 - Employment Agreements

         

         

        
          NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

          NOTE 4:    Contains confidential
employee related information.

        

         

         

        
          
            
            

          

          
            Page 39
of 54

            
              

            

          

          
            Table of Contents

          

        

         

         

        Appendix 6.19.1 - Litigation

         

         

        
          NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

           

           

          
            
              
              

            

            
              Page 40
of 54

              
                

              

            

            
              Table of Contents

            

          

           

        

         

        Appendix 6.24.1 - Certain Events

         

         

        
          NOTE 1:    Contains seller's
confidential information.

          NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

           

        

        

        
          
            
              
              

            

            
              Page 41
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        Patent Transfer Agreement

         

        

        This
patent transfer agreement (this “Patent Transfer Agreement”) is entered into on
5 February 2009

        

        BETWEEN:

        

        (1) Starta Eget Boxen 11629 AB,
under change of name to AWS Holding AB, a company duly incorporated and
organized under the laws of Sweden, Sweden (the “Seller”); and NOTE
1

        

        (2) EXFO Electro-Optical
Engineering Inc., a company duly incorporated and organized under the laws of
Canada, having its registered address at 400 Godin Avenue, Quebec City, Province
of Quebec, Canada, G1M 2K2 (the “Buyer”).

        

         

        
          	
                  1

                	
                  Background

                

        

         

        
          	
                  1.1

                	
                  The
      Seller is the owner of all title, right and interest in and to certain
      inventions, one of which is comprised by a pending patent application and
      two of which are protected under issued
patents.

                

        

        

        1.2             
The Buyer is interested in acquiring the Invention, the Patents,
the

        Patent
Rights, the Background Documents and the Know-how, all as defined below.
Further, the Buyer, through a wholly owned subsidiary, is interested in
acquiring a company performing business relating to the Invention, the Patents,
the Patent Rights, the Background Documents and the Know-how, as defined below,
and has on the day of this Patent Transfer Agreement also entered into a share
transfer agreement regarding purchase of the shares of Picosolve AB, (the
“Company”) from Starta Eget Boxen 11629 AB and Ettore J. Coringrato Jr. NOTE
1

        

        
          	
                  1.3

                	
                  The
      Seller agrees to sell and the Buyer agrees to purchase the Invention, the
      Patents, the Patent Rights, the Background Documents and the Know-how, as
      defined below, on the terms and conditions set out in this
      Agreement.

                

        

        

        
           

          
            	
                    2

                  	
                    Definitions

                  

          

           

        

        
        

        
          	 	
                  In
      this Patent Transfer Agreement, the following definitions are
      used:

                

        

         

         

        NOTE 1:    Contains seller's
confidential information.

         

         

        
          
            
            

          

          
            Page 42
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                  “Affiliated Person” means
      a closely related Person (Sw. närstående) as set
      out in Chapter 21 § 1 of the Swedish Companies Act (Sw. Aktiebolagslagen
      (2005:551)) or a Person directly or indirectly controlling,
      controlled by or under common control with the Seller or the Buyer (as the
      case may be);

                

        

        

        
          	
                   
      

                	
                  “Background Documents”:
      means the tangible copy of all written and electronic communications
      between any Person that were involved in claiming rights with respect to
      the Patents including any patent agent involved in namely: (i) the
      preparation of the Patents’ application; (ii) the filing of the Patents’
      applications; (iii) the registration of the Patents; (iv) the maintenance
      of the Patents; or (v) any other communication related to the Patents.
      Notwithstanding Buyer obtaining such Background Documents in accordance
      with the terms of this Patent Transfer Agreement, the Background Documents
      shall maintain their confidential and privileged
  status.

                

        

         

        
          	
                   
      

                	
                  “Business Day” means a
      day when banks are open for general banking business in Sweden and in
      Canada;

                

        

         

        
          	
                   
      

                	
                  “Buyer” means EXFO Electro-Optical
      Engineering Inc.;

                

        

        

        
          	
                   
      

                	
                  “Confidential
      Information” means any information of any kind or nature
      whatsoever, whether written or oral, including, without limitation, this
      Patent Transfer Agreement and financial information, trade secrets and
      other information regarding the Buyer, the Invention, the Patents, the
      Patent Rights, the Background Documents and/or the Know-how, which is not
      know to the general public;

                

        

        

        
          	
                   
      

                	
                  “Earn-out” means the
      purchase price for the Invention, the Patents, the Patent Rights, the
      Background Documents and the Know-how including the First Earn-out, the
      Second Earn-out, the Third Earn-out  and the Fourth Earn-out and
      as further set out in Section 3;

                

        

        

        
          	
                   
      

                	
                  “Earn-Out period” has
      the meaning set out in section 3;

                

        

        

        
          	
                   
      

                	
                  “Effective Date” means
      the date when this Patent Transfer Agreement becomes effective as set out
      in Section 4;

                

        

        

        
          	
                   
      

                	
                  “Encumbrance” means any
      mortgage, charge, pledge, lien, option or other security interest or
      restriction of any kind, including any
licenses;

                

        

        

        
          	
                   
      

                	
                  “Invention” means the
      inventions, as further described in the Patents, and all-optical phase
      sensitive sampling arrangement that have or are yet to be
      submitted;

                

        

         

         

        
          
            
            

          

          
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of 54

            
              

            

          

          
            Table of Contents

          

        

        
 

        
          	
                   
      

                	
                  “Know-how” means the
      knowledge, experience, data, drawings, models and descriptions and any
      other information and knowledge concerning the Invention, the Patents and
      the Patent Rights;

                

        

        

        
          	
                   
      

                	
                  “Net selling price”
      means the price payable by the customer, exclusive of taxes,
      freights, customs and other external
charges;

                

        

        

        
          	
                   
      

                	
                  “Open Source Software”
      means software licensed under terms pursuant to which the software
      licensed may be used, modified and/or redistributed in source code and/or
      object code forms without the payment of a license fee, including but not
      limited to those licensed approved by the Open Source Initiative (see
      www.opensource.org), such as the GNU General Public License (GPL), the GNU
      Library or Lesser General Public License (LGPL), the Mozilla Public
      Licence and the Apache License;

                

        

        

        
          	
                   
      

                	
                  “Party” means the Seller
      or the Buyer, and “Parties” means the
      Seller and the Buyer, collectively;

                

        

        

        
          	
                   
      

                	
                  ”Patent
      Rights”
      means the Patents, as defined below, and all present and future patent
      applications and issued patents in every country claiming priority from
      the Patents including any extension, supplemental protection
      certification, registration, confirmation, reissue, continuation,
      divisional, continuation-in-part, re-examination or renewal thereof and
      any and all present and future patent applications in relation to the
      Invention;

                

        

        

        
          	
                   
      

                	
                  ”Patents” NOTE
      2

                

        

        

        
          	
                   
      

                	
                  “Person” means any
      individual, firm, company, corporation or other corporate body,
      government, state or agency of a state or any joint venture, trust,
      association or partnership (general or limited), whether or not
      incorporated, and whether or not its owners enjoy limited liability, and
      any other legal entity;

                

        

         

        

        
          	
                   
      

                	
                  “Seller” means Starta
      Eget Boxen 11629 AB, under change of name to AWS Holding
    AB;

                

        

        

        
          	
                   
      

                	
                  “Technology” NOTE
      2

                

        

         

         

        NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

        
 

        
          
            
            

          

          
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of 54

            
              

            

          

          
            Table of Contents

          

        

         

         

        
          	
                   
      

                	
                  “Valid Bookings” means
      confirmed purchase orders, for products developed or based on the
      Technology, received by the EXFO Group and accepted by the EXFO Group
      under their normal business terms NOTE
2

                

        

        

         

        
          	
                  2

                	
                  Assignment

                

        

         

        
          	
                  2.1

                	
                  The
      Seller hereby sells, transfers and conveys and the Buyer hereby acquires
      all right, title and interest in and to the Invention, the Patents, the
      Patent Rights, the Background Documents and the Know-how, including the
      right to apply for intellectual property protection such as patent
      protection in any country.

                

        

        

        
          	
                  2.2

                	
                  The
      Seller shall always be of reasonable assistance and further execute free
      of charge any document required in Buyer’s reasonable opinion for
      protection of the Invention and all other documents which may be required
      to perfect the Buyer’s title to the Invention, the Patents, the Patent
      Rights, the Background Documents and the
  Know-how.

                

        

        

        
          	
                  2.3

                	
                  The
      Buyer shall bear the costs for filing, prosecuting and maintaining the
      Patents and the Patent Rights incurred as from the Effective Date of this
      Patent Transfer Agreement, including any fees payable to patent offices
      for the assignment of the Patent
Rights.

                

        

        

         

        
          	
                  3

                	
                  Purchase
      Price

                

        

         

        3.1          Earn-out; i.e First
Earn-out, Second Earn-out, Third Earn-out

         

        and
Fourth Earn-out

         

        
          	
                  3.1.1

                	
                  The
      purchase price for the Invention, the Patents, the Patent Rights, the
      Background Documents and the Know-how shall consist of the First Earn-out,
      the Second Earn-out, the Third Earn-out and the Fourth Earn-out NOTE
      2

                

        

         

         

        NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

         

         

        
          
            
            

          

          
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                  3.1.2

                	
                  NOTE
      2

                

        

        

        
          	
                  3.1.3

                	
                  NOTE
      2

                

        

        

        
          	
                  3.1.4

                	
                  NOTE
      2

                

        

        

        
          	
                  3.1.5

                	
                  NOTE
      2

                

        

        

        
          	
                  3.1.4

                	
                  NOTE
      2

                

        

        

         

        3.2            
Calculation of Earn-out

         

        
          	
                  3.2.1

                	
                  The
      Buyer shall calculate earned Earn-Out for the respective period above
      after the expiry of the period. The calculation shall be made in USD as
      per the Buyer’s accounting system.

                

        

        

        
          	
                   
      

                	
                  Appendix 3.2.1 sets out an example of the
      calculation of the Earn-out
amounts.

                

        

         

         

        NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

         

         

        
          
            
            

          

          
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of 54

            
              

            

          

          
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                  3.2.2

                	
                  The
      Seller may audit the Buyers calculation of Earn-Out at any time through an
      Independent Accounting Firm.

                

        

        

         

        3.3              Dates
for Payment of the Earn-out

         

        
          	
                  3.3.1

                	
                  NOTE
      2

                

        

        

        
          	
                  3.3.2

                	
                  NOTE
      2

                

        

        

         

        
          	
                  4

                	
                  Effective
      Date

                

        

         

        
          	
                   
      

                	
                  This
      Patent Transfer Agreement is effective as of the date of this Patent
      Transfer Agreement.

                

        

        

         

        
          	
                  5

                	
                  Warranties

                

        

         

        The
Seller make the following warranties, all of which are made as as of the
Effective Date.

         

        
          	
                  5.1

                	
                  The
      Seller is the exclusive owner of  the Invention, the Patents,
      the Patent Rights, the Background Documents and the Know-how with full
      right of disposition and not subject to any Encumbrances, including
      licenses.

                

        

         

        
          	
                  5.2

                	
                  The
      Patents and the Patent Rights are subsisting, valid, enforceable and not
      withdrawn, cancelled or abandoned. All Invention, Patents and Patent
      Rights which may be registered have been duly registered. All application
      fees and renewal fees for such Invention, Patents and Patent Rights have
      been paid in full and the registrations and applications are in all other
      respects being maintained and
asserted.

                

        

         

        
          	
                  5.3

                	
                  No
      litigation, proceedings, investigations, claims or actions of such nature
      are pending or are threatened in respect of the Invention, the Patents,
      the Patent Rights and/or the
Know-how.

                

        

         

        
          	
                   
      

                	
                  5.4

                	
                  No
      Person has been engaged, is engaging or is expected to engage
      in   any activity or use that infringes, misappropriates,
      or otherwise violates or conflicts with the Invention, the Patents, the
      Patent Rights and the Know-how.

                

        

         

         

        NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

         

         

        
          
            
            

          

          
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                  5.5

                	
                  None
      of the Invention, the Patents, the Patent Rights, the Background Documents
      and/or the Know-how has been, is or is expected to become, subject to any
      outstanding consents, settlements or judgments restricting the use of such
      Invention, Patents, Patent Rights, the Background Documents and/or
      Know-how or adversely effecting the commercial value of the right to such
      Technology, Invention, Patents, Patent Rights and/or Know-how or that
      would impair the validity or enforceability of such Invention, Patents,
      Patent Rights and/or  Know-how and the Seller, including the
      Seller’s predecessors, has not granted, or is obliged to grant, any
      licence, assignment or other right in respect of any Invention, Patents,
      Patent Rights, the Background Documents and/or Know-how, or is obliged to
      disclose any Technology, Invention, Patents, Patent Rights, the Background
      Documents and/or Know-how to any
Person.

                

        

         

        
          	
                  5.6

                	
                  The
      consummation of the transactions contemplated by this Patent Transfer
      Agreement will not cause any impairment of any  Invention,
      Patents, Patent Rights, the Background Documents and/or
      Know-how.

                

        

         

        
          	
                  5.7

                	
                  All
      software used by the Seller, including the Seller’s predecessors, in
      relation to the Invention, the Patents, the Patent Rights, the Background
      Documents and/or the Know-how is free of all viruses, worms, Trojan horses
      and other contaminants and does not contain any bugs, errors, or problems
      of a material nature that disrupt its operation or have an adverse impact
      on the operation of other software programs or operating
      systems.

                

        

         

        
          	
                  5.8

                	
                  No
      Open Source Software has been used in relation to the Invention, the
      Patents, the Patent Rights, the Background Documents and/or the Know-how
      and no product or item developed or distributed by the Company has been
      distributed with, or is designed to link with or access in any way any
      Open Source Software.

                

        

         

        
          	
                  5.9

                	
                  All
      employees and consultants who contributed to the discovery or development
      of any of the Invention, the Patents, the Patent Rights, the Background
      Documents and/or the Know-how have fully and finally (without any
      compensation remaining to be paid) assigned all rights to
      such  Invention, Patents, Patent Rights, the Background
      Documents and/or  Know-how to the
  Seller.

                

        

         

        
          	
                  5.10

                	
                  No
      public disclosure of the Invention or the Patents has been made that would
      impair patentability of the Invention or the Patent, or validity of the
      Patents or Patent Rights.

                

        

         

         

        
          
            
            

          

          
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                  6

                	
                  Confidentiality

                

        

         

        
          	
                   
      

                	
                  The
      Seller undertakes not to use or disclose any Confidential Information
      unless (i) required to do so by law or pursuant to any order of court or
      other competent authority or tribunal (ii) required to do so by any
      applicable stock exchange regulations or the regulations of any other
      recognised market place (iii) such disclosure has been consented to by the
      Buyer in writing (such consent not to be unreasonably withheld) or (iv) to
      its professional advisers (who are bound to such party by a duty of
      confidentiality which applies to any information disclosed). If the Seller
      becomes required, in circumstances contemplated by (i) or (ii) to disclose
      any information, the Seller shall use its reasonable endeavours to consult
      with the Buyer prior to any such
disclosure.

                

        

        

        7               
 Announcements

         

        
          	
                   
      

                	
                  All
      press releases, public announcements and public relations activities by
      the Parties with regard to this Patent Transfer Agreement or the
      transaction contemplated by it shall be mutually approved by the Parties
      in advance of such release, announcement or activity. A Party shall,
      however, not be prevented from, after reasonable consultation with the
      other Party, disclosing such information which is required under law or
      pursuant to any order of court or other competent authority or tribunal or
      under any applicable stock exchange regulations or the regulations of any
      other recognised market place.

                

        

         

        
          	
                   
      

                	
                  Notwithstanding
      the above, the Seller shall not make any announcement whatsoever without
      the prior written approval of the Buyer, which shall not unreasonably be
      withheld.

                

        

        

        8              
 Costs

         

        
          	
                   
      

                	
                  Each
      Party shall pay its own costs and expenses in connection with the
      preparation and completion of the transaction contemplated by this Patent
      Transfer Agreement.

                

        

         

        

        9                
Entire Agreement

         

        
          	
                   
      

                	
                  This
      Patent Transfer Agreement represents the entire understanding and
      agreement between the Parties with respect to the subject matter hereof
      and supersedes all prior negotiations, understandings and agreements
      relating to the subject matter
hereof.

                

        

         

        

        10             
Amendments and Waivers

         

        
          	
                   
      

                	
                  This
      Patent Transfer Agreement may only be amended by an instrument in writing
      duly executed by the Parties. No change, termination, modification or
      waiver of any provision, term or condition of this Patent Transfer
      Agreement shall be binding on the Parties, unless it is made in
      writing.

                

        

         

         

        
          
            
            

          

          
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        11             Notices

         

        
          	
                   
      

                	
                  All
      notices, requests, demands, approvals, waivers and other communications
      required or permitted under this Patent Transfer Agreement must be in
      writing in the English language and shall be deemed to have been received
      by a Party when:

                

        

         

        
          	
                  (a)  

                	
                  delivered
      by post, unless actually received earlier, on the third Business Day after
      posting, if posted within Sweden, or the fifth Business Day, if posted to
      or from a place outside Sweden;

                

        

        
          	
                  (b)  

                	
                  delivered
      by hand, on the day of delivery;

                

        

        
          	
                  (c)  

                	
                  delivered
      by fax, on the day of dispatch if supported by a written confirmation from
      the sender’s fax machine that the message has been properly
      transmitted.

                

        

        

        
          	
                   
      

                	
                  All
      such notices and communications shall be addressed as set out below or to
      such other addresses as may be given by written notice in accordance with
      this Section.

                

        

        
           NOTES
1 AND 3

         

         

        NOTE 1:    Contains seller's
confidential information.

        NOTE 3:    Contains third party
confidential information.

        
 

        
          
            
            

          

          
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                  For
      the purposes of this Patent Transfer Agreement, “writing” or “written”
      shall include faxes but not
e-mails.

                

        

        

        12             Assignments

         

        
          	 	
                  No
      Party may assign, delegate, sub-contract, or otherwise transfer or pledge
      or grant any other security interest in or over any of its rights or
      obligations under this Patent Transfer Agreement without the prior written
      consent of the other Party, except that the Buyer may transfer or assign,
      in whole or in part, to one or more of its group companies from time to
      time the right to purchase all or a portion of the Invention, the Patents,
      the Patent Rights, the Background Documents and/or the Know-how, provided
      that no such transfer will relieve the Buyer of its obligations, or affect
      the rights of the Seller, under this Patent Transfer
      Agreement.

                

        

         

         

        13             Partial
Invalidity

         

        
          	
                   
      

                	
                  If
      any provision of this Patent Transfer Agreement or the application of it
      shall be declared or deemed void, invalid or unenforceable in whole or in
      part for any reason, the remaining provisions of this Patent Transfer
      Agreement shall continue in full force and effect. The Parties shall seek
      to amend such void, invalid or unenforceable provisions and thereby this
      Patent Transfer Agreement in order to give effect to, so far as is
      possible, the spirit of this Patent Transfer Agreement and to achieve the
      purposes intended by the Parties.

                

        

         

         

        
          14             Governing
Law and Disputes

        

         

        
          	
                  14.1

                	
                  This
      Patent Transfer Agreement shall be governed by and in accordance with the
      laws of Sweden.

                

        

         

        
          	
                  14.2

                	
                  Any
      dispute arising out of or in connection with this Patent Transfer
      Agreement shall be finally settled by arbitration in accordance with the
      rules of the Arbitration Institute of the Stockholm Chamber of Commerce
      and the decision of the arbitrator shall be final and binding upon the
      Parties both as to law and to fact, and shall not be appealable to any
      court in any jurisdiction. The Parties shall share the expenses of the
      arbitrator equally, unless the arbitrator determines that expenses shall
      be otherwise assessed.

                

        

        

        
          	
                   
      

                	
                  Notwithstanding
      the above, the Buyer shall have the right to initiate proceedings in any
      competent court of law for the granting of interim measures, such as
      injunctions or other actions to prevent, minimize or prohibit any
      threatened or ongoing breach of this Patent Transfer
      Agreement.

                

        

         

         

        
          
            
            

          

          
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                  14.3

                	
                  The
      place of arbitration shall be Göteborg, Sweden. The language to be used in
      the arbitral proceedings shall be English. The arbitration shall be
      conducted by one (1) arbitrator unless either Party requests that an
      arbitral tribunal composed of three (3) arbitrators shall adjuciate the
      dispute and such Party shall be solely responsible for the expenses of
      theses arbitrators, unless theses arbitrators determine that expenses
      shall be otherwise assessed.

                

        

         

        
          	
                  14.4

                	
                  The
      Parties undertake and agree that all arbitral proceedings conducted with
      reference to this arbitration clause will be kept strictly confidential.
      This confidentiality undertaking shall cover all information disclosed in
      the course of such arbitral proceedings, as well as any decision or award
      that is made or declared during the proceedings. Information covered by
      this confidentiality undertaking may not, in any form, be disclosed to a
      third party without the written consent of the other Party. This
      notwithstanding, a Party shall not be prevented from disclosing such
      information in order to safeguard in the best possible way his rights
      vis-à-vis the other Party in connection with the dispute, or if the Party
      is obliged to so disclose pursuant to statute, regulation, a decision by
      an authority, a stock exchange contract or
  similar.

                

        

         

        
          	
                  14.5

                	
                  In
      case this Patent Transfer Agreement or any part of it is assigned or
      transferred to a third party, such third party shall automatically be
      bound by the provisions of this arbitration
  clause.

                

        

         

        

        

        

        _____________________

         

         

        
          
            
            

          

          
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        This
Patent Transfer Agreement has been duly executed in two (2) original copies, of
which each of the Parties have taken one (1) copy.

        

        Place:                                                                   Place:

        Date:                                                                   Date:

         

        NOTES 2 AND 4

         

         

        
          NOTE 2:    Contains
confidential information that would be prejudicial to the interests of
EXFO.

          NOTE 4:    Contains
confidential employee related information.

           

        

        

        
          
            
              
              

            

            
              Page 53
of 54

              
                

              

            

            
              Table of Contents

            

          

        

        

        Appendix
3.2.1 

         

         

        NOTE 2:    Contains confidential
information that would be prejudicial to the interests of EXFO.

         

      

       

      
        
          
          

        

        
          Page 54
of 54ex10_1.htm

     

    
       

      
        	 	 Industry
      Canada  	 Industrie
      Canada

      

       

    

     

    

    
      	
              Certificate

              of
      Amendment

               

            	
              Certificat

              de
      modification

            
	
              Canada
      Business

              Corporations
      Act

            	
              Loi
      canadienne sur

              les
      sociétés par actions

            

    

    

    

    
      	
               

              EXFO
      Ingénierie Électro-Optique inc./

               

               

               

            	 
      	 
      
	
              EXFO
      Electro-Optical Engineering inc.

               

            	 
      	
              197586-2

            
	   
      _____________________________________	 
      	   
      ________________________________
	
              Name
      of corporation-Dénomination de la société

               

               

            	 
      	
                 
      Corporation number-Numéro de la société

            
	
              I
      hereby certify that the articles of the

              above-named
      corporation were amended:

               

               

            	 
      	
                 
      Je certifie que les statuts de la société

                 
      susmentionnée ont été modifiés :

            
	
              a)   
      under section 13 of the Canada

                    
      Business Corporations Act in

                    
      accordance with the attached notice;

               

            	
              o

            	
              a)  
      en vertu de l’article 13 de la Loi

                    
      canadienne sur les sociétés par

                    
      actions, conformément à l’avis ci-joint;

            
	
              b)  
      under section 27 of the Canada

                    
      Business Corporations Act as set out in

                    
      the attached articles of amendment

                    
      designating a series of shares;

               

            	
              o

            	
              b)  
      en vertu de l’article 27 de la Loi

                    
      canadienne sur les sociétés par

                    
      actions, tel qu’il est indiqué dans les

                    
      clauses modificatrices ci-jointes

                    
      désignant une série d’actions;

               

            
	
              c)   
      under section 179 of the Canada

                    
      Business Corporations Act as set out in

                    
      the attached articles of amendment;

               

            	
              þ

            	
              c)   en
      vertu de l’article 179 de la Loi

                    
      canadienne sur les sociétés par

                    
      actions, tel qu’il est indiqué dans les

                    
      clauses modificatrices ci-jointes;

               

            
	
              d)   
      under section 191 of the Canada

                    
      Business Corporations Act as set out in

                    
      the attached articles of reorganization;

               

               

               

               

               

               

            	
              o

            	
              d)  
      en vertu de l’article 191 de la Loi

                    
      canadienne sur les sociétés par

                    
      actions, tel qu’il est indiqué dans les

                    
      clauses de réorganisation ci-jointes;

            
	
              /s/
      signed

               

            	 
      	
              February 6, 2003 / le 6 février
      2003

            
	
              Director
      - Directeur

            	 
      	
              Date
      of Amendment / Date de modification

               

            

    

     

    

    Canada

    

    
      
        
           
Copy /
Copie

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	 
      	
              Industry
      Canada

            	
              Industrie
      Canada

            	 
      	 
      	 
      
	 
      	 
      	 
      	
              FORM
      4

            	
              FORMULE
      4

            	 
      
	 
      	
              Canada
      Business

              Corporations
      Act

            	
              Loi
      canadienne sur les

              Sociétés
      par actions

            	
              ARTICLES
      OF AMENDMENT

              (SECTION
      27 OR 177)

            	
              CLAUSES
      MODIFICATRICES

              (ARTICLES
      27 OU 177)

            	 
      

    

     

     

    
      	
              1-
      Name of corporation – Dénomination de la société

               

            	
              2-
      Corporation No. – No
      de la société

            
	
              EXFO
      Ingénierie Électro-Optique Inc. /

              EXFO
      Electro-Optical Engineering Inc.

               

            	
              197586-2

            
	
               

              3-
      The articles of the above-named corporation are amended as
      follows :

            	
               

              Les
      statuts de la société mentionnée ci-dessus sont modifiés de la
      façon

              suivante :

            

    

    

    

    

    Article 7: Other Provisions,
if any:

    

    
      	
              1.  

            	
              Article
      7 of the Restated Articles of Incorporation dated June 29, 2000 shall be
      amended by inserting the

            

    

    following
immediately after the last paragraph of item 7 “Other Provisions”
thereof:

    

    “The
annual meeting of shareholders of the Corporation (whether or not also held as a
special meeting) may be held outside Canada, in the following
places:

    

    
      	
              a)  

            	
              the
      greater metropolitan area of any following cities in the United States of
      America: Boston (Massachusetts), Chicago (Illinois), Dallas (Texas),
      Denver (Colorado), Detroit (Michigan), Houston (Texas), Los Angeles
      (California), Miami (Florida), New York (New York), Philadelphia
      (Pennsylvania), San Francisco (California), Seattle (Washington),
      Washington (District of Columbia);

            

    

    

    
      	
              b)  

            	
              to
      the extent permitted by the Canada Business Corporations
      Act, any other city outside Canada designated from time to time by
      the Board of Directors of the Corporation in connection with the then next
      annual meeting of shareholders”.

            

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      	
              Date

               

            	
              Signature

            	
              Title-Titre

            
	
              January
      24, 2003

            	
              /s/
      Kimberly Okell

            	
              Secretary
      and Legal Counsel

            
	 
      	
               

              Kimberly
      Okell

            	
               

              FOR
      DEPARTMENTAL USE ONLY - À L’USAGE DU MINISTÈRE SEULEMENT

              Filed
      - Déposée

            

    

    IC 3069 (2/96)

     

    
      

      
        
          
             
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