20-F

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 20-F

o  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
ý  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 28, 2017
OR
o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
o  SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 001-34491

DRAGONWAVE INC.
(Exact name of Registrant as specified in its charter)

N/A
(Translation of the Registrant's name into English)

Canada
(Jurisdiction of incorporation)

411 Legget Drive, Suite 600, Ottawa, Ontario, Canada K2K 3C9
(Address of principal executive offices)

Peter Allen
President and Chief Executive Officer
411 Legget Drive, Suite 600, Ottawa, Ontario, Canada, K2K 3C9
(613) 599-9991
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.:

Title of each class

Common Shares, no par value

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report. As at February 28, 2017, 7,305,219 common shares of the Registrant were issued and outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ý

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes o No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such a shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o                       Accelerated filer o                       Non-accelerated filer ý                       Emerging growth company o

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act:  o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ý                       International Financial Reporting Standards o

Other as issued by the International Accounting Standards Board o

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow: Item 17 o Item 18 o

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No ý

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o

Contents

PART I	2
ITEM 1. Identity of Directors, Senior Management and Advisers	2
ITEM 2. Offer Statistics and Expected Timetable	2
ITEM 3. Key Information	2
ITEM 4. Information on the Company	25
ITEM 4A. Unresolved Staff Comments	44
ITEM 5. Operating and Financial Review and Prospects	44
ITEM 6. Directors, Senior Management, and Employees	52
ITEM 7. Major Shareholders and Related Party Transactions	75
ITEM 8. Financial Information	76
ITEM 9. The Offer and Listing	77
ITEM 10. Additional Information	78
ITEM 11. Quantitative and Qualitative Disclosures About Market Risk	88
ITEM 13. Defaults, Dividend Arrearages and Delinquencies	89
ITEM 14. Material Modifications to the Rights of Security Holders and Use of Proceeds	89
ITEM 15. Controls and Procedures	90
ITEM 16. RESERVED	91
ITEM 16A. Audit Committee Financial Expert	91
ITEM 16B. Code of Ethics	91
ITEM 16C. Principal Accountant Fees and Services	92
ITEM 16D. Exemptions from the Listing Standards for Audit Committees	92
ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers	92
ITEM 16F. Change in Registrant's Certifying Accountant	92
ITEM 16G. Corporate Governance	92
ITEM 16H. Mine Safety Disclosure	93
PART III	94
ITEM 17. Financial Statements	94
ITEM 18. Financial Statements	94
ITEM 19. Exhibits

Information Contained in this Annual Report

        All information in this Annual Report on Form 20-F, or our Annual Report, is presented as of February 28, 2017 unless otherwise indicated.

        Unless the context requires otherwise, references in this Annual Report to "DragonWave", "we", "us", "our" or "the Company" include DragonWave Inc., incorporated in Canada, DragonWave Corp., incorporated in the state of Delaware, USA, DragonWave Pte. Ltd., incorporated in Singapore, DragonWave S.à r.l., incorporated in Luxembourg, DragonWave Telecommunication Technology (Shanghai) Co., Ltd., incorporated in China, DragonWave Mexico S.A. de C.V., incorporated in Mexico, Axerra Networks Asia Pacific Limited, incorporated in Hong Kong, DragonWave India Private Limited, incorporated in India and DragonWave Inc.'s majority owned subsidiary, DragonWave HFCL India Private Limited, incorporated in India.

        References in this Annual Report to "Nokia" or "NSN" refer to both Nokia Solutions and Networks and its predecessor business as carried on under the name Nokia Siemens Networks. Nokia is a trademark of Nokia Corporation or its affiliates.

        Words importing the singular, where the context requires, include the plural and vice versa and words importing any gender include all genders.

        Unless otherwise indicated, all currency amounts referenced in this Annual Report are denominated in United States dollars.

Forward-Looking Statements

        This Annual Report contains "forward-looking information" and "forward-looking statements" within the meaning of applicable Canadian and United States securities laws. All statements other than statements that are reporting results or statements of historical fact are forward-looking. All forward-looking information and forward-looking statements are necessarily based on a number of estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may", "will", "should", "continue", "expect", "anticipate", "estimate", "believe", "intend", "plan" or "project" or the negative of these words or other variations on or synonyms of these words or comparable terminology. Forward-looking statements include, without limitation, statements regarding strategic plans, future production, sales and revenue estimates, cost estimates and anticipated financial results, capital expenditures, results attributable to mergers and acquisitions activities and other objectives.

        There can be no assurance that forward-looking statements will prove to be accurate and actual results and outcomes could differ materially from those expressed or implied in such statements.

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PART I

ITEM 1.    Identity of Directors, Senior Management and Advisers.

        Not applicable.

ITEM 2.    Offer Statistics and Expected Timetable.

        Not applicable.

ITEM 3.    Key Information.

A.    Selected Financial Data

        The selected financial data set forth in the table below has been derived from our audited historical financial statements for each of the fiscal years from 2013 to 2017. The selected consolidated statement of operations data for the fiscal years 2017 and 2016 and the selected consolidated balance sheet data at February 28, 2017 and February 29, 2016 have been derived from our audited consolidated financial statements set forth in "Part III — Item 18. Financial Statements". The selected consolidated statement of operations data for the years 2013 through 2015 and the selected consolidated balance sheet data at February 28, 2013, 2014 and 2015 have been derived from our previously published audited consolidated financial statements, which are not included in this Annual Report. This selected financial data should be read in conjunction with our consolidated financial statements and are qualified entirely by reference to such consolidated financial statements. We prepare our consolidated financial statements in U.S. dollars and in accordance with United States Generally Accepted Accounting Principles ("U.S. GAAP"). You should read the consolidated financial data with the section of this Annual Report entitled "Part I — Item 5. Operating and Financial Review and Prospects" and our consolidated financial statements and the notes to those financial set forth in "Part III — Item 18. Financial Statements".

        The tables are expressed in USD $000's except share and per share amounts.

Selected Consolidated Statements of Operation Data

	For the year ended
	Feb 28 2013			Feb 28 2014			Feb 28 2015			Feb 29 2016			Feb 28 2017
Revenue		123,877			90,011			157,766			86,295			43,916
Gross Profit		19,501			10,663			27,994			13,971			11,814
Gross Profit %		15.7%			11.8%			17.7%			16.2%			26.9%
Operating Expenses		76,709			50,236			47,717			37,776			27,922
Loss before other items		(57,208	)		(39,573	)		(19,723	)		(23,805	)		(16,108	)
Net loss applicable to shareholders		(54,749	)		(34,242	)		(21,520	)		(42,304	)		(15,888	)
Net loss per share Basic & Diluted		(36.50	)		(20.66	)		(7.90	)		(14.01	)		(3.26	)
Weighted average number of shares outstanding Basic & Diluted		1,499,832			1,657,535			2,724,467			3,019,259			4,879,738

2

Selected Consolidated Balance Sheet Data

	For the year ended
	Feb 28 2013		Feb 28 2014		Feb 28 2015		Feb 29 2016		Feb 28 2017
Cash and cash equivalents		22,959		18,992		23,692		4,277		4,073
Trade receivables		35,452		17,408		48,626		18,986		11,876
Inventory		32,722		30,416		24,294		22,702		21,415
Total other current assets		19,989		5,978		5,895		2,777		1,791
Long term assets		23,872		18,326		18,546		4,325		2,853
Total assets		134,994		91,120		121,053		53,067		42,008
Total liabilities		79,384		49,677		76,285		48,840		44,448
Shareholders' equity		55,594		41,524		43,801		2,520		(3,233	)
Shares issued and outstanding		1,521,931		2,320,349		3,011,632		3,020,069		7,305,219

Share Consolidation

        On February 2, 2016, following shareholder approval at a special meeting held on January 26, 2016, we confirmed the consolidation (the "Consolidation") of our common shares on the basis of twenty-five (25) pre-Consolidation shares for one (1) post-Consolidation share. Unless otherwise noted, the information contained in this Annual Report is presented on a post-Consolidation basis.

B.    Capitalization and Indebtedness.

        Not applicable.

C.    Reasons for the Offer and Use of Proceeds.

        Not applicable.

D.    Risk Factors.

        The following are some of the important factors related to our business and industry that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements:

•

limited cash resources and our dependence on our credit facilities and accommodations by our lenders and certain suppliers;

•

there is doubt about our ability to continue as a going concern due to recurring losses from operations, accumulated deficit and insufficient cash resources to meet our business objectives, all of which means that we may not be able to continue operations;

•

we have a history of losses;

•

our reliance on a small number of customers for a large percentage of revenue;

•

our ability to implement our ongoing program of operating cost reductions;

•

intense competition from several competitors;

•

competition from indirect competitors;

•

future revenue opportunities through our channel partners is uncertain;

•

our dependence upon our resellers in certain jurisdictions to provide localized support and other local services which assist us in avoiding certain costs and investments;

•

pressure on our pricing models from existing and potential customers and as a result of competition;

•

our need for working capital will intensify if we are successful in winning new business;

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•

our dependence on our ability to develop new products, enhance existing products and execute product roll outs on a basis that meets customer requirements;

•

our exposure to product warranty claims, and inventory and account receivables exposure in relation to recent product quality issues;

•

our ability to successfully manage our resources;

•

our dependence on our ability to manage our workforce and recruit and retain management and other qualified personnel;

•

quarterly revenue and operating results that are difficult to predict and can fluctuate substantially;

•

a lengthy and variable sales cycle;

•

our reliance on suppliers, including outsourced manufacturing, third party component suppliers and suppliers of outsourced services;

•

our ability to manage the risks related to increasingly complex engagements with channel partners and end customers;

•

our exposure to credit risk for accounts receivable;

•

our dependence on the development and growth of the market for high capacity wireless communications services;

•

the allocation of radio spectrum and regulatory approvals for our products;

•

the ability of our customers to secure a license for applicable radio spectrum;

•

changes in government regulation or industry standards that may limit the potential market for our products;

•

currency fluctuations;

•

our ability to protect our own intellectual property and potential harm to our business if we infringe the intellectual property rights of others;

•

risks associated with software licensed by us;

•

a change in our tax status or assessment by domestic or foreign tax authorities;

•

exposure to risks resulting from our international sales and operations, including the requirement to comply with export control and economic sanctions laws;

•

our exposure to potential product defects and product liability claims and health and safety risk relating to wireless products;

•

the impact that general economic weakness and volatility may be having on our customers;

•

losses or disruptions to operations resulting from a cybersecurity attack; and

•

disruption resulting from economic and geopolitical uncertainty.

        In particular, in our most recent fiscal year ended on February 28, 2017, approximately 25% of our sales were through the Nokia channel. Recent developments within Nokia, including Nokia's combination with Alcatel-Lucent, have resulted in our conclusion that new product sales through this channel are unlikely.

        See "Part I — ITEM 4. "Information on our Business — Mergers & Acquisitions and Joint Ventures — Acquisition of Microwave Transport Business of NSN and Relationship with Nokia"

        Additional risks related specifically to our securities include:

•

risks associated with maintaining compliance with NASDAQ's continued listing requirements;

•

risks associated with our outstanding warrants and the impact that the terms of such warrants have on our ability to raise capital and to undertake certain business transactions;

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•

risks associated with our ability to raise additional capital;

•

large fluctuations in the trading price of our common shares;

•

our actual financial results may vary from our publicly disclosed forecasts;

•

expense and risks associated with being a U.S. public company and possible loss of our foreign private issuer status;

•

expense and risks associated with the loss of our ability to use the multi jurisdictional disclosure system ("MJDS") adopted by the United States and Canada;

•

an investor may not be able to bring actions or enforce judgment against us and certain of our directors and officers;

•

we do not currently intend to pay dividends on our common shares;

•

tax consequences associated with an investment in our securities;

•

future sales of common shares by our existing shareholders could cause our share price to fall;

•

our management's broad discretion over the use of proceeds of financings; and

•

certain Canadian laws could prevent or deter a change of control.

        Readers should carefully consider the following risk factors in addition to the other information contained in this Annual Report. The risks and uncertainties below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently consider immaterial also may impair our business operations and cause the price of our common shares or other securities to decline. Any of the matters highlighted in the following risks could have a material adverse effect on our business, results of operations and financial condition. In that event, the trading price of our common shares or other securities could decline, and a purchaser of our common shares or other securities may lose all or part of his, her or its investment.

  Risks Related to our Business and Industry

We have limited cash resources and we have had to depend on our credit facilities and accommodations by our lenders and certain suppliers.

        While our objective is cash flow break-even from operations, given the volatility in our revenues we cannot accurately predict when that objective will be achieved, if at all. We intend to continue to rely on our revolving credit facilities to provide working capital to finance our operations. As discussed above, during the fiscal year ended February 28, 2017, we were in breach of certain covenants under our credit facilities and entered into a forbearance agreement with Comerica Bank. Subsequent to February 28, 2017, the fourth forbearance agreement had expired and a new forbearance agreement has not yet been agreed.

        We are dependent on the continued availability of these credit facilities or alternative sources of financing. Alternative sources of financing could include public or private debt or equity financings. Our ability to access our existing credit facilities and/or alternative sources of funding is heavily dependent on the rollout by our customers of large network enhancement projects which include a microwave backhaul component. If one of our current or targeted large customers significantly reduces or delays expected purchases of our products or services, our cash resources will be materially adversely affected.

        In order to maintain our credit facilities in good standing, we must comply with bank covenants and carefully manage our cash. From time to time this places constraints on our ability to make investments and ramp up our operations.

        In addition, we have benefited from a low interest environment. If interest rates increase, our costs of borrowing will increase, which may adversely affect our financial condition.

        The Company relies on flexible payment terms from its suppliers as part of its working capital strategy. In some cases, this has included extended payment terms. While we expect our suppliers to continue to support this

5

approach, there can be no guarantee that our suppliers will continue to support the payment terms that we have relied on in the past, and any changes would result in further working capital pressures on the Company.

There is doubt about our ability to continue as a going concern due to recurring losses from operations, accumulated deficit and insufficient cash resources to meet our business objectives, all of which means that we may not be able to continue operations.

        We have generated operating losses and continue to consume significant cash resources, which together raise doubt about our ability to continue as a going concern. In order to continue as a going concern, the Company has to successfully implement a number of changes which may be difficult to achieve or may not happen before the Company's remaining cash resources are fully depleted. These plans include:

•

Further cost reductions to match anticipated revenue levels;

•

Successfully transitioning our sales efforts toward markets with higher gross margins, and lower working capital requirements;

•

Continuing to collect accounts receivable from customers in a timely manner;

•

Actively investigating and pursuing alternative forms of financing;

•

Reducing inventory levels in both raw material and finished goods inventory;

•

Working closely with vendors to ensure supply continuity; and

•

Investigating strategic and financial alternatives that may be available including a potential sale of the Company, alternative debt and equity, and business combinations.

We have a history of losses and cannot provide assurance that we will achieve profitability. If we fail to do so, our share price may decline or we may be forced to discontinue operations.

        We expect our expenses will be managed in light of short term and long term revenue opportunities. We cannot provide assurance that we will be able to achieve profitability on a quarterly or annual basis. Our business strategies may be unsuccessful. If short term and long term revenue opportunities do not come to fruition, this will impact our ability to achieve profitability. If we are not able to achieve profitability, our share price may decline and we may require additional financing, which may not be available to us and may cause us to discontinue operations. If we discontinue operations, our investors could lose their entire investment.

We rely on a small number of customers for a large percentage of our revenue.

        Historically, we have relied on a small number of customers for a large percentage of our revenue. During the fiscal year ended February 28, 2017, we reshaped our channel strategy. Our revised strategy primarily positions our latest and new products directly to customers. We have been dependent, and expect that in at least the next twelve months we will continue to be dependent, on a small number of key customers. Nokia represented approximately 25% of our sales for the fiscal year ended February 28, 2017 and we expect this revenue to decline rapidly over time. Other key customers accounted for 14% and 13% of revenue respectively in the fiscal year ended February 28, 2017.

        We are heavily dependent on the rollout by our customers of large network enhancement projects which include a microwave backhaul component for our revenue. These projects are capital intensive for our target customers and are subject to uncertain timing and budgetary decisions. If one of our large customers significantly reduces or delays expected purchases of our products or services, our revenue will be adversely affected.

        We generally supply products to our end-customers and channel partners on a purchase order basis and, accordingly, customers are under no ongoing obligation to buy our products. Our relationships with our end-customers and channel partners are generally not exclusive. To the extent that certain of our end-customers and channel partners regard us as a critical supplier of equipment, such customers and channel partners may choose to develop alternative sources of supply, such as our competitors, in order to mitigate actual or perceived risk to their own supply chains. If one or more of our end-customers or channel partners discontinues its

6

relationship with us for any reason, or reduces or postpones current or expected purchases of our products or services, our business, results of operations and financial condition could be materially adversely affected.

        Strategic transactions within the service provider market, such as consolidation as a result of mergers as well as divestitures and restructurings, may introduce uncertainty into our customers and prospective customers as they realign their businesses. This may delay orders for our products and services, cause orders to be cancelled or the use of our products to be discontinued, which would have a material adverse effect on our business, financial condition and results of operations.

Our need for working capital will intensify if we are successful in winning new business.

        An increase in demand for our products, including through successfully winning new business, will increase our need for working capital to support the supply of such products to our customers. Spikes in demand as a result of the project-based nature of network deployments will strain our financial resources. To the extent that our working capital funding requirements exceed our financial resources, we will need to seek additional sources of debt or equity financing to support our working capital needs. Furthermore, additional financing may not be available on terms favorable to us, or at all. A failure to obtain additional financing could prevent us from making expenditures that may be required to respond effectively to an increase in demand for our products.

We face intense competition from several competitors and if we do not compete effectively with these competitors, our revenue may not grow and could decline.

        We have experienced, and expect to continue to experience, intense competition from a number of companies. Among independent microwave vendors, we compete principally with Aviat Networks, Inc., Ceragon Networks Ltd., SIAE Microelettronica and NEC Corporation. Our existing and/or new competitors may announce new products, services or enhancements that better meet the needs of customers or changing industry standards or deeply discount the price of their products. Further, new competitors or alliances among competitors could emerge. Increased competition may cause price reductions, reduced gross margins and loss of market share, any of which could have a material adverse effect on our business, financial condition and results of operations. Our competitors may also establish or strengthen co-operative relationships with sales channel partners or other parties with whom we have strategic relationships, thereby limiting our ability to promote and sell our products. For example, certain of our competitors are included in Nokia's recently introduced microwave ecosystem.

        Some of our competitors and potential competitors have significantly greater financial, technical, marketing and/or service resources than us and/or have greater geographical reach to existing and prospective customers. Some of these companies also have a larger installed base of products, longer operating histories or greater name recognition than we do. Some of our competitors have the ability to offer vendor financing to their customers which we do not currently have nor expect to have in the foreseeable future. Customers for our products are particularly concerned that their suppliers will continue to operate and provide upgrades and maintenance for their products over a long-term period. Our relatively small size and short operating history may be considered negatively by current and prospective customers. In addition, our competitors may be able to respond more quickly than us to changes in end-user requirements and devote greater resources to the enhancement, promotion and sale of their products.

We face competition from indirect competitors.

        In addition to direct competitors, we face competition from broadband technologies that compete with wireless transmission. Our products compete to a certain extent with other high-speed communications solutions, including fiber optic lines, DSL, free space optics, low and medium capacity point-to-point radios and other wireless technologies. Some of these technologies utilize existing installed infrastructure and have achieved significantly greater market acceptance and penetration than high-capacity broadband wireless technologies. Our wireless products and many other wireless products require a direct line of sight between antennas, potentially limiting deployment options and the ability to deploy products in a cost-effective manner. In addition, customers may wish to use transmission frequencies for which we do not offer products and, therefore, such customers may turn to our competitors to fulfill their requirements. We expect to face increasing

7

competitive pressures from both current and future technologies in the broadband backhaul market. In light of these factors, the market for broadband wireless solutions may fail to develop or may develop more slowly than expected. Any of these outcomes could have a material adverse effect on our business, results of operations and financial condition.

We have to reduce our prices from time to time in response to intense competition. If we are required to change our prices in the future to compete successfully, our margins and operating results may be adversely affected.

        The intensely competitive market in which we conduct our business has required us to reduce our prices, and may require us to do so in the future. If our competitors offer deep discounts on certain products or services in an effort to recapture or gain market share or to sell other products and services, we may be required to lower our prices or offer other favorable terms to compete successfully. In the past, certain changes in our pricing models have had a negative impact on our margins and operating results. Any such changes in the future could reduce our margins and could adversely affect our operating results.

We depend on our ability to implement our ongoing program of operating cost reductions.

        Our future success depends on both growing revenues and our ability to effectively implement our ongoing cost control and efficiency programs. There can be no guarantee that we will be able to successfully reduce our operating costs. If we are unable to successfully reduce our operating costs, we may be forced to discontinue operations.

Our success depends on our ability to develop new products, enhance existing products, and execute product roll-outs on a basis that meets customer requirements.

        The markets for our products are characterized by rapidly changing technology, evolving industry standards and increasingly sophisticated customer requirements. The introduction of products embodying new technology and the emergence of new industry standards can render our existing products obsolete and unmarketable and can exert price pressures on existing products. Our success depends on our ability to anticipate and react quickly to changes in technology or in industry standards and to successfully develop and introduce new, enhanced and competitive products on a timely basis. In particular, the continued acceptance and future success of our product offerings will depend on the capacity of those products to handle growing volumes of traffic, their reliability and security, and their cost-effectiveness compared to competitive product offerings. We cannot give assurance that we will successfully develop new products or enhance and improve our existing products, that new products and enhanced and improved existing products will achieve market acceptance, or that the introduction of new products or enhanced existing products by others will not render our products obsolete. Our inability to develop products that are competitive in technology and price and that meet customer needs could have a material adverse effect on our business, financial condition and results of operations. Accelerated product introductions and short product life cycles require high levels of expenditure for research and development that could adversely affect our operating results. Further, any new products that we develop could require long development and testing periods and may not be introduced in a timely manner or may not achieve the broad market acceptance necessary to generate significant revenue. We may also determine that certain product candidates do not have sufficient potential to warrant the continued allocation of resources. Accordingly, we may elect to terminate one or more of our programs for such product candidates. If we terminate a product in development in which we have invested significant resources, our prospects may suffer, as we will have expended resources on a project that does not provide a return on our investment and we may have missed the opportunity to have allocated those resources to potentially more productive uses. This may negatively impact our business, operating results and financial condition.

        If a new product does receive market acceptance, it is often necessary to adapt our supply chain rapidly in order to meet customer expectations and demand. Constraints caused by component suppliers and outsourced manufacturers can slow the pace of new product rollouts, adversely affecting our business, financial condition and results of operations.

        As we develop new products, our older products will reach the end of their lives. As we discontinue the sale of these older products, we must manage the liquidation of inventory, supplier commitments and customer

8

expectations. Part of our inventory may be written off, which would increase our cost of sales. In addition, we may be exposed to losses on inventories purchased by our contract manufacturers. If we or our contract manufacturers are unable to properly manage the discontinuation of older products and/or if we are unable to secure customer acceptance of new products, our business, financial condition and results of operations could be materially and adversely affected.

We are subject to product warranty claims and inventory and account receivables exposure in relation to recent product quality issues.

        As discussed below under the heading "Legal Proceedings", in January 2016, an arbitration process was initiated with a customer in India to resolve a dispute over inventory shipped to them in June 2015. The value of the inventory shipped is $4.7 million. The customer has submitted their claim statement which we feel has no merit. We submitted a counter-claim for the material shipped, orders cancelled and other damages in June 2016. Since that date there have been four arbitration hearings. The next hearing date is expected to be held in June, 2017. As of the date of this Annual Report, the outcome of this matter is not determinable but there can be no guarantee that the arbitration decision in this matter will be favorable to us.

Future revenue opportunities through our channel partners is uncertain.

        We are dependent upon our ability to establish and develop new relationships and to build on existing relationships with channel partners to sell our current and future products and services. We cannot provide assurance that we will be successful in maintaining or building on our relationships with channel partners. In addition, we cannot provide assurance that our channel partners will act in a manner that will promote the success of our products and services. Failure by channel partners to promote and support our products and services could adversely affect our business, results of operations and financial condition.

        In our fiscal year ended February 28, 2017 our principal channel partner was Nokia. Our sales through the Nokia channel accounted for 25% of our revenues in the 2017 fiscal year. As discussed above, we expect sales through the Nokia channel to decrease significantly and rapidly as a result of Nokia's acquisition of Alcatel-Lucent and its competing microwave product lines. See "Acquisition of Microwave Transport Business of NSN and Relationship with Nokia".

        Most of our channel partners also sell products and services of our competitors. If some of our competitors offer their products and services to our channel partners on more favorable terms or have more products or services available to meet their needs, there may be pressure on us to reduce the price of our products or services or increase the commissions payable to channel partners, failing which our channel partners may stop carrying our products or services or de-emphasize the sale of our products and services in favor of the products and services of our competitors.

        We believe that channel partners exert significant influence on customer purchasing decisions, especially purchasing decisions by large service provider customers. In particular, large service provider customers may choose to adopt strategies to limit the number of channel partners and/or equipment vendors for their network builds, or only contract with channel partners that offer "end to end" solutions, to address interoperability concerns among other reasons. This approach may reduce our opportunities to sell directly to end-customers and increase our reliance on our channel partners. In addition, several of our channel partners have developed their own microwave solutions internally. To the extent that our channel partners have or acquire their own microwave solutions that compete with our products, our relationships with these channel partners could be materially adversely affected.

        Mergers and consolidations among channel partners could disrupt our sales channels, particularly if a merger partner introduces its own internal microwave solution into one of our established channel partners.

        We are also directly and indirectly exposed to developments in our channel partners' businesses. Competition in the mobile broadband infrastructure and related services market is intense. Our channel partners may be unable to maintain or improve their market position or respond successfully to changes in the competitive environment. Our channel partners may fail to effectively and profitably invest in new competitive products, services, upgrades and technologies and bring them to market in a timely manner. To the extent that

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our business depends on our channel partners, the failure of our channel partners to adopt successful strategies and grow their own businesses could have a material adverse effect on our business, results of operations and financial condition.

Failure to successfully manage our managerial, financial and human resources through spikes in demand may adversely impact our operating results.

        Given the project-based nature of deployments, we experience spikes in demand that are unpredictable and can place a strain on managerial, financial and human resources. Our ability to manage our operations will depend in large part upon a number of factors, including our ability to rapidly:

•

build a network of channel partners to create an expanding presence in the evolving marketplace for our products and services;

•

build a sales team to keep customers and channel partners informed regarding the technical features, issues and key selling points of our products and services;

•

attract and retain qualified technical personnel in order to continue to develop reliable and flexible products and provide services that respond to evolving customer needs;

•

develop support capacity for customers as sales increase, so that we can provide post-sales support without diverting resources from product development efforts; and

•

expand our internal management and financial controls significantly, so that we can maintain control over our operations and provide support to other functional areas.

        Our inability to achieve any of these objectives could harm our business, financial condition and results of operations.

        In addition, managing organizational changes have strained the Company's management, operational and financial resources. Any future mergers or acquisitions may increase the strain on our management, operational and financial resources. If the Company does not succeed in managing organizational changes effectively, the Company may not be able to meet the demand, if any, for its products and we may lose sales or customers, harming our business, financial condition and results of operations.

Our ability to manage our workforce, recruit and retain management and other qualified personnel is crucial to our ability to develop, market, sell and support our products and services.

        We depend on the services of our key technical, sales, marketing and management personnel. The loss of any of these key persons could have a material adverse effect on our business, results of operations and financial condition. Our success is also highly dependent on our continuing ability to identify, hire, train, motivate and retain highly qualified technical, sales, marketing and management personnel. Competition for such personnel can be intense, and we cannot provide assurance that we will be able to attract or retain highly qualified technical, sales, marketing and management personnel in the future. Stock options and other share based compensation comprise a significant component of our compensation of key employees, and if our share price declines, it may be difficult to recruit and retain such individuals. The size of our pool for share based awards (including options) may limit our ability to use equity incentives as a means to recruit and retain key employees. Our inability to attract and retain the necessary technical, sales, marketing and management personnel may adversely affect our future growth and profitability. We have recently implemented reductions in the salaries of our executive officers. In the future, it may be necessary for us to increase the level of compensation paid to existing or new employees to a degree that our operating expenses could be materially increased. We do not currently maintain corporate life insurance policies on key employees.

        As we expand globally, we may add to our workforce in jurisdictions where it is common or legally required for employees to be unionized. In such case, we may become dependent on maintaining good relations with our workforce in order to, among other things, minimize the possibility of strikes, lock-outs and other stoppages that could affect our operations. Relations with our employees may be impacted by changes in labour relations which may be introduced by, among other things, employee groups, unions, and the relevant governmental authorities

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in whose jurisdictions we carry on business. Labour disruptions that directly or indirectly affect any of our operations could have a material adverse impact on our business, results of operations and financial condition.

Our quarterly revenue and operating results can be difficult to predict and can fluctuate substantially.

        Our revenue is difficult to forecast, is likely to fluctuate significantly and may not be indicative of our future performance from quarter to quarter. In addition, our operating results may not follow any past trends. The factors affecting our revenue and results, many of which are outside of our control, include:

•

competitive conditions in our industry, including strategic initiatives by us or our competitors, new products or services, product or service announcements and changes in pricing policy by us or our competitors;

•

market acceptance of our products and services;

•

our ability to maintain existing relationships and to create new relationships with channel partners;

•

varying size, timing and contractual terms of orders for our products, which may delay the recognition of revenue;

•

the project-based nature of deployments of our products;

•

the discretionary nature of purchase and budget cycles of our customers and changes in their budgets for, and timing of, equipment purchases;

•

strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;

•

general weakening of the economy resulting in a decrease in the overall demand for telecommunications products and services or otherwise affecting the capital investment levels of service providers;

•

timing of product development and new product initiatives; and

•

the length and variability of the sales cycles for our products.

        Because our quarterly revenue is dependent upon a relatively small number of transactions, even minor variations in the rate and timing of conversion of our sales prospects into revenue could cause us to plan or budget inaccurately, and those variations could adversely affect our financial results. Delays or reductions in the amount or cancellations of customers' purchases would adversely affect our business, results of operations and financial condition.

We have a lengthy and variable sales cycle.

        It is difficult for us to forecast the timing of revenue from sales of our products because our customers typically invest substantial time, money and other resources researching their needs and available competitive alternatives before deciding to purchase our products and services. Typically, the larger the potential sale, the more time, money and other resources will be invested by customers. As a result, it may take many months after our first contact with an end-customer before a sale can actually be completed. In addition, we rely on our channel partners to sell our products to customers and, therefore, our sales efforts are vulnerable to delays at both the channel partner and the end-customer level.

        During these long sales cycles, events may occur that affect the size or timing of the order or even cause it to be cancelled, including:

•

purchasing decisions may be postponed, or large purchases reduced, during periods of economic uncertainty;

•

we or our competitors may announce or introduce new products or services;

•

our competitors may offer lower prices on similar products; or

•

budget and purchasing priorities of customers may change.

        If these events were to occur, sales of our products or services may be cancelled or delayed, which would reduce our revenue.

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We rely on our suppliers to supply components for our products and we are exposed to the risk that these suppliers will not be able to supply components on a timely basis, or at all.

        The manufacturers of our products depend on obtaining adequate supplies of components on a timely basis. We source several key components used in the manufacture of our products from a limited number of suppliers, and in some instances, a single source supplier.

        In addition, these components are often acquired through purchase orders and we may have no long-term commitments regarding supply or pricing from our suppliers. Lead-times for various components may lengthen, which may make certain components scarce. As component demand increases and lead-times become longer, our suppliers may increase component costs. We also depend on anticipated product orders to determine our materials requirements. Lead-times for limited-source materials and components can be as long as six months, vary significantly and depend on factors such as the specific supplier, contract terms and demand for a component at a given time. From time to time, shortages in allocations of components have resulted in delays in filling orders. Shortages and delays in obtaining components in the future could impede our ability to meet customer orders. Any of these sole source or limited source suppliers could stop producing the components, cease operations entirely, or be acquired by, or enter into exclusive arrangements with, our competitors. As a result, these sole source and limited source suppliers may stop selling their components to our outsourced manufacturers at commercially reasonable prices, or at all. Any such interruption, delay or inability to obtain these components from alternate sources at acceptable prices and within a reasonable amount of time would adversely affect our ability to meet scheduled product deliveries to our customers and reduce margins realized.

        Alternative sources of components are not always available or available at acceptable prices. In addition, we rely on, but have limited control over, the quality, reliability and availability of the components supplied to us. If we cannot manufacture our products due to a lack of components, or are unable to redesign our products with other components in a timely manner, our business, results of operations and financial condition could be adversely affected.

        Our dependence and exposure on component suppliers is heightened when we introduce new products. New products frequently include components that we do not use in other product lines. When we introduce new products, we must secure reliable sources of supply for those products at volumes that will be dictated by end-customer demand. Demand is often difficult to predict until the new product is better established. Constraints in our supply chain can slow the progress of new product roll-outs, adversely affecting our business, results of operations and financial condition.

We rely primarily upon two outsourced manufacturers for manufacturing and we are exposed to the risk that these manufacturers will not be able to satisfy our manufacturing needs on a timely basis.

        We do not have any internal manufacturing capabilities and we rely upon a small number of outsourced manufacturers to manufacture our products. Substantially all of our products are currently manufactured by Jabil and Plexus. See "Description of the Business – General – Production and Services". Our ability to ship products to our customers could be delayed or interrupted as a result of a variety of factors relating to our outsourced manufacturers, including:

•

our outsourced manufacturers not being obligated to manufacture our products on a long-term basis in any specific quantity or at any specific price;

•

early termination of, or failure to renew, contractual arrangements;

•

our failure to effectively manage our outsourced manufacturer relationships;

•

our outsourced manufacturers experiencing delays, disruptions or quality control problems in their manufacturing operations;

•

lead-times for required materials and components varying significantly and being dependent on factors such as the specific supplier, contract terms and the demand for each component at a given time;

•

underestimating our requirements, resulting in our outsourced manufacturers having inadequate materials and components required to produce our products, or overestimating our requirements,

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resulting in charges assessed by the outsourced manufacturers or liabilities for excess inventory, each of which could negatively affect our gross margins;

•

the possible absence of adequate capacity and reduced control over component availability, quality assurances, delivery schedules, manufacturing yields and costs; and

•

our outsourced manufacturers experiencing financial instability which could affect their ability to manufacture or deliver our products.

        Although we believe that Jabil and Plexus have sufficient economic incentive to perform our manufacturing, the resources devoted to these activities by Jabil and Plexus are not within our control, and there can be no assurance that manufacturing problems will not occur in the future. Insufficient supply or an interruption or stoppage of supply from Jabil and Plexus or our inability to obtain additional manufacturers when and if needed, could have a material adverse effect on our business, results of operations and financial condition.

        If any of our outsourced manufacturers are unable or unwilling to continue manufacturing our products in required volumes and quality levels, we will have to identify, qualify, select and implement acceptable alternative manufacturers, which would likely be time consuming and costly. In addition, an alternate source may not be available to us or may not be in a position to satisfy our production requirements at commercially reasonable prices and quality. Therefore, any significant interruption in manufacturing would result in us being unable to deliver the affected products to meet our customer orders, which could have a material adverse effect on our business, results of operations and financial condition.

Our engagements with our channel partners and end-customers are increasingly complex, particularly for large network deployments, and failure to execute may result in commercial penalties or liquidated damages.

        Some of the projects for which we offer products and services are increasing in size and complexity, both on a technical level and in terms of required interaction with our channel partners. The larger and more complex such projects are, the greater the risks associated with such projects. These risks may include exposure to penalties and liabilities resulting from a breach of contract, failure to deliver on the agreed product roadmap or warranted features, failure to resolve product quality or performance issues, failure to meet delivery lead times, or failure to effectively integrate our products with third party products.

We are dependent upon our resellers in certain jurisdictions to provide localized support and other local services which assist us in avoiding certain costs and investments.

        By selling our products in certain markets through resellers, the Company is able to avoid certain costs relating to operating in those markets, including but not limited to local support costs, costs of maintaining a local legal entity, administration costs and logistics. If we choose or are required to sell direct in these markets (due to customer preference, termination of a reseller relationship or other reasons) the cost advantages described will no longer be available to us, which could result in an increase in operating costs.

We may be adversely affected by credit risk.

        We are exposed to credit risk for accounts receivable in the event that counterparties do not meet their obligations. We attempt to mitigate our credit risk to the extent possible by performing credit reviews. Both economic and geopolitical uncertainty can influence the ultimate collectability of these receivable amounts. Failure to collect outstanding receivables could have a material adverse effect on our business, results of operations and financial condition.

Our growth is dependent on the development and growth of the market for high-capacity wireless communications services.

        The market for high-capacity wireless communications services is still emerging and the market demand, price sensitivity and preferred business model to deliver these services remain highly uncertain. Our growth is dependent on, among other things, the size and pace at which the market for high-capacity wireless communications services develops. If this market does not gain widespread acceptance and declines, remains

13

constant or grows more slowly than anticipated, we may not be able to grow, and our overall revenues and operating results will be materially and adversely affected.

        In particular, our products are optimized for service providers that wish to deploy networks based on emerging 3G+ technologies such as HSPA and LTE. There can be no assurance that there will be sufficient end-user demand for services offered using these emerging network technologies. Other competing technologies may be developed that have advantages over these emerging technologies, and service providers of other networks based on these competing technologies may be able to deploy their networks at a lower cost, which may allow these service providers to compete more effectively.

        Service providers that do choose to deploy emerging technologies for high-capacity wireless communications services are also dependent on suppliers other than us in order to build and operate their networks. If these third party suppliers are unsuccessful in developing the network components, subscriber equipment and other equipment required by our customers in a timely and cost-efficient manner, network deployments by our customers and demand for our products will be materially and adversely affected.

If sufficient radio spectrum is not allocated for use by our products or if we fail to obtain regulatory approval for our products, our ability to market our products may be restricted.

        Radio communications are subject to significant regulation in North America, Europe, India and other jurisdictions in which we sell our products. Generally, our products must conform to a variety of national and international standards and requirements established to avoid interference among users of radio frequencies and to permit the interconnections of telecommunications equipment. In addition, our products are affected by the allocation and licensing (by auction or other means) of radio spectrum by governmental authorities. Such governmental authorities may not allocate or license sufficient radio spectrum for use by prospective customers of our products. Historically, in many developed countries, the lack of availability of commercial radio spectrum or the failure by governments to license that spectrum has inhibited the growth of wireless telecommunications networks.

        In order to sell our products in any given jurisdiction, we must obtain regulatory approval for our products. Each jurisdiction in which we market our products has its own rules relating to such approval. Products that support emerging wireless telecommunications services can be marketed in a jurisdiction only if permitted by suitable radio spectrum allocations and regulations, and the process of establishing new regulations is complex and lengthy.

        Any failure by regulatory authorities to allocate suitable and sufficient radio spectrum to potential customers in a timely manner could adversely and materially impact demand for our products and may result in the delay or loss of potential orders for our products. In addition, any failure by us to obtain or maintain the proper regulatory approvals for our products could have a material adverse effect on our business, financial condition and results of operations.

If our current or prospective customers are unable to secure a license for applicable radio spectrum or other regulatory approvals to operate as a service provider, the customer may not be permitted to deploy or operate a wireless network using our products.

        Our products operate primarily on government-licensed radio frequencies. Users of our products must either have a spectrum license to operate and provide communications services in the applicable frequency or must acquire the right to do so from another license holder. In many jurisdictions, regulatory approvals are also required in order to operate a telecommunications or radio-communications network. Obtaining such licenses and other approvals is a lengthy process and is subject to significant uncertainties, including uncertainties as to timing and availability. There can be no assurance as to when any government may license radio spectrum or as to whether our customers will be successful in securing, maintaining or renewing any necessary spectrum licenses or other regulatory approvals.

        In addition, if a license holder of such radio spectrum files for liquidation, dissolution or bankruptcy, substantial time could pass before its licenses are transferred, cancelled, reissued or made available by the applicable government licensing authority. Until the licenses are transferred, cancelled, reissued or otherwise

14

made available, other operators may be precluded from operating in such licensed spectrum, which could decrease demand for our products. In addition, if the authorities choose to revoke licenses for certain radio frequencies, demand for our products may decrease as well.

Changes in government regulation, or industry standards, may limit the potential markets for our products. We may need to modify our products, which may increase our product costs and adversely affect our ability to become profitable.

        Radio frequencies are subject to extensive regulation both nationally and internationally. The emergence or evolution of regulations and industry standards for wireless products, through official standards committees or widespread use by operators, could require us to modify our systems. This may be expensive and time-consuming. Each country has different regulations and procedures for the approval of wireless communications equipment and the uses of radio spectrum in association with that equipment. If new industry standards emerge that we do not anticipate, our products could be rendered obsolete.

We may be adversely affected by currency fluctuations.

        The majority of our revenue and direct cost of sales is earned and incurred in U.S. dollars, while our operating expenses are (or have been) incurred in Canadian dollars, Israeli shekels, Chinese renminbi, U.S. dollars and EUROs. Fluctuations in the exchange rate between the U.S. dollar and other currencies, such as the Canadian dollar, may have a material adverse effect on our business, financial condition and operating results. As of March 1, 2010, we adopted the U.S. dollar as our functional and reporting currency. This was a result of the shift over time of the proportion of our revenues and expenses in U.S. dollars. We do not currently engage in transactional hedging schemes but we do attempt to hedge or mitigate the risk of currency fluctuations by actively monitoring and managing our foreign currency holdings relative to our foreign currency expenses.

If our intellectual property is not adequately protected, we may lose our competitive advantage.

        Our success depends in part on our ability to protect our rights in our intellectual property. We rely on various intellectual property protections, including patents, copyright, trade-mark and trade secret laws and contractual provisions, to preserve our intellectual property rights. Our present protective measures may not be adequate or enforceable to prevent misappropriation of our technology or to prevent a third party from developing the same or similar technology. Despite our precautions, it may be possible for third parties to obtain and use our intellectual property without our authorization. Policing unauthorized use of intellectual property is difficult, and some foreign laws and jurisdictions do not protect proprietary rights to the same extent as the laws of Canada or the United States.

        To protect our intellectual property, we may become involved in litigation, which could result in substantial expenses, divert management's attention, cause significant delays, materially disrupt the conduct of our business or adversely affect our revenue, financial condition and results of operations.

Our business may be harmed if we infringe on the intellectual property rights of others.

        Our commercial success depends, in part, upon us not infringing intellectual property rights owned by others. A number of our competitors and other third parties have been issued patents and may have filed patent applications or may obtain additional patents and proprietary rights for technologies similar to those used by us in our products. Some of these patents may grant very broad protection to the owners of the patents. We cannot determine with certainty whether any existing third party patents or the issuance of any third party patents would require us to alter our technology, obtain licenses or cease certain activities. We may become subject to claims by third parties that our technology infringes their intellectual property rights due to the growth of products in our target markets, the overlap in functionality of these products and the prevalence of products. Aggressive patent litigation is not uncommon in our industry and can be disruptive. We may become subject to these claims either directly or through indemnities against these claims that we routinely provide to our customers and channel partners. In some of our agreements we do not have a limit on our liability for such claims and therefore a successful claim could result in significant liability to us.

        In addition, we have received, and may receive in the future, claims from third parties asserting infringement and other related claims. Litigation may be necessary to determine the scope, enforceability and

15

validity of such third party proprietary rights or to establish our proprietary rights. Some of our competitors have, or are affiliated with companies having, substantially greater resources than us and these competitors may be able to sustain the costs of complex intellectual property litigation to a greater degree and for a longer period of time than us. Regardless of their merit, any such claims could:

•

be time consuming to evaluate and defend;

•

result in costly litigation;

•

cause product shipment delays or stoppages;

•

divert the attention and focus of our management and technical personnel away from our business;

•

subject us to significant damages, noting that in the United States plaintiffs may be entitled to treble damages if intellectual property infringement is found to be willful;

•

subject us to significant other liabilities, including liability to indemnify end-customers pursuant to standard contractual indemnities entered into by us in favor of those customers;

•

require us to enter into costly royalty or licensing agreements to avoid or settle infringement litigation; and

•

require us to modify, rename or stop using the infringing technology.

        We may be prohibited from developing or commercializing certain technologies and products unless we obtain a license from a third party. There can be no assurance that we will be able to obtain any such license on commercially favorable terms, or at all. If we do not obtain such a license, our business, results of operations and financial condition could be materially adversely affected and we could be required to cease related business operations in some markets and to restructure our business to focus on operations in other markets.

        Moreover, license agreements with third parties may not include all intellectual property rights that may be issued to or owned by the licensors, and future disputes with these parties are possible. Current or future negotiations with third parties to establish license or cross license arrangements, or to renew existing licenses, may not be successful and we may not be able to obtain or renew a license on satisfactory terms, or at all. If we cannot obtain required licenses, or if existing licenses are not renewed, litigation could result.

If we lose our rights to use software we currently license from third parties, we could be forced to seek alternative technology, which could increase our operating expenses and could adversely affect our ability to compete.

        We license certain software used in our products from third parties, generally on a non-exclusive basis. The termination of any of these licenses, or the failure of the licensors to adequately maintain or update their software, could delay our ability to ship our products while we seek to implement alternative technology offered by other sources and could require significant unplanned investments on our part if we are forced to develop alternative technology internally. In addition, alternative technology may not be available to us on commercially reasonable terms from other sources. In the future, it may be necessary or desirable to obtain other third party technology licenses relating to one or more of our products or relating to current or future technologies to enhance our product offerings. There is a risk that we will not be able to obtain licensing rights to the needed technology on commercially reasonable terms, or at all.

We are subject to taxation and review by international tax authorities as we continue to operate globally, which may adversely affect our business, financial condition and results of operations.

        We operate in various tax jurisdictions throughout the world and also generate revenues through international sales efforts. A change in our tax status or assessment by domestic or foreign tax authorities may adversely impact our operating results. While we believe that all of our tax positions are reasonable and correctly determined, there can be no assurance that applicable tax authorities will agree with those positions.

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Our international sales and operations subject us to additional risks that can adversely affect our operating results.

        Our business model is to sell our products across the world in jurisdictions where service providers are building new communications networks or expanding existing networks, and our sales and operations are, therefore, global in nature. As a result of the completion of the NSN Transaction, our exposure to international markets was significantly increased. Our current and future international operations subject us to a variety of risks, including:

•

difficulty managing and staffing foreign offices and the increased travel, infrastructure and legal compliance costs associated with multiple international locations;

•

increased time and costs to ensure adequate business interruption controls, processes and facilities;

•

increased time and costs to manage and evolve financial reporting systems, maintain effective financial disclosure controls and procedures, and comply with corporate governance requirements in multiple jurisdictions;

•

increased costs and potential disruption of facilities transitions required in some business acquisitions;

•

increased exposure to global social, political and economic instability, and changes in economic conditions;

•

potential increased exposure to liability or damage of reputation resulting from a higher incidence of corruption or unethical business practices in some countries;

•

difficulties in enforcing contracts, collecting accounts receivable and longer payment cycles, especially in emerging markets;

•

the need to localize our products and licensing programs for international customers;

•

tariffs, trade barriers, compliance with customs regulations and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets;

•

increased exposure to foreign currency exchange rate risk;

•

reduced protection and limited enforcement for intellectual property rights in some countries; and

•

potential increased exposure to natural disasters, epidemics and acts of war or terrorism.

        Because our products are sold and marketed in different countries, the products must function in and meet the requirements of many different environments and be compatible with various systems and products. If our products fail to meet these requirements, this could negatively impact on sales and have a material adverse effect on our business, results of operation and financial condition. If we are unable to successfully address the potential risks associated with our overall international operations, our operating results and financial condition may be negatively impacted.

We are subject to government regulations concerning our products and their sale and export and our failure or inability to comply with these regulations could materially restrict our operations and subject us to penalties.

        As discussed above, our sales and operations are global in nature and we must comply with applicable export control and economic sanctions laws. Canadian export control and economic sanctions laws govern any information, products or materials that we ship from Canada or otherwise provide to non-Canadian persons. On May 27, 2009 and August 14, 2009, we filed a 'non-compliance report' with Canada's Export and Import Controls Bureau ("EICB") relating to our inadvertent non-compliance with the requirement to obtain an export permit covering certain of our products and a number of export sales and electronic transfers of these products since October 2004. While there can be no assurance that the Government of Canada will not exercise its discretion to impose penalties or impose conditions with respect to the issuance of new export permits in respect of the past acts of non-compliance, since the time we first reported past non-compliance on May 27, 2009, the EICB, on November 26, 2009, granted us a broad-based export permit for a period of two years. We have subsequently been issued a new broad-based export permit that is valid until November 2017. Regardless of its past practice, if the EICB elects to decline the issuance of further export permits or deems us to be in

17

non-compliance of such permits based on continuing disclosure, our ability to continue to export our products could be restricted which could materially disrupt the conduct of our business or adversely affect our revenue, financial condition and results of operations.

        Finally, although we are a Canadian company, certain of our business transactions are also governed by U.S. export control requirements, including the export of items containing more than de minimis amounts of U.S. controlled content. While we are not aware of any instances of non-compliance with U.S. licensing requirements for hardware or technology exports made during the past five years, our internal review raised questions concerning certain past internet-based transfers of software (some of which apparently contained small amounts of low-level encryption for networking), and we filed a voluntary disclosure with the U.S. Department of Commerce.

        In addition to government regulations regarding sale and export, we are subject to other regulations regarding our products. For example, the SEC has adopted disclosure rules for companies that use conflict minerals in their products, with substantial supply chain verification requirements in the event that the materials come from, or could have come from, the Democratic Republic of the Congo or adjoining countries. These new rules and verification requirements may impose additional costs on us and on our suppliers, and may limit the sources or increase the prices of materials used in our products. Further, if we are unable to certify that our products are conflict free, we may face challenges with our customers, which could place us at a competitive disadvantage, and our reputation may be harmed.

Defects in our products could result in significant costs to us and could impair our ability to sell our products.

        Our products are complex and, accordingly, they may contain defects or errors, particularly when first introduced or as new versions are released. We may not discover such defects or errors until after a product has been released and used by our end-customers. Defects and errors in our products could materially and adversely affect our reputation, result in significant costs to us, delay planned release dates and impair our ability to sell our products in the future. The costs we incur correcting any product defects or errors may be substantial and could adversely affect our operating margins. While we plan to continually test our products for defects and errors and work with customers through our post-sales support services to identify and correct defects and errors, defects or errors in our products may be found in the future.

        During the deployment phase with a new Tier 1 customer in India in June 2015, we experienced an unexpected problem with our product. Our root cause analysis identified the cause of the problem and a plan was developed which would fully address the problem through a retrofit. Replacement parts for the retrofit involve a well-known and reliable technology and are readily available. The customer was advised of this solution, however the deployment has not resumed and the customer has initiated an arbitration process with the Company. We continue to pursue a resolution to this matter and we may face additional costs associated with this situation. See "Legal Proceedings" below.

If a successful product liability claim were made against us, our business could be seriously harmed.

        Our agreements with our customers typically, although not always, contain provisions designed to limit our exposure to potential product liability claims. Despite this, it is possible that these limitations of liability provisions may not be effective as a result of existing or future laws or unfavorable judicial decisions. We have not experienced a material product liability claim to date; however, the sale and support of our products may entail the risk of those claims, which are likely to be substantial in light of the use of our products in critical applications. A successful product liability claim could result in significant monetary liability to us and could seriously harm our business.

A general global economic downturn may negatively affect our customers and their ability to purchase our products. A downturn may decrease our revenues and increase our costs and may increase credit risk with our customers and impact our ability to collect accounts receivable and recognize revenue.

        Since the middle of 2008, there has been global economic uncertainty, including reduced economic growth, reduced confidence in financial markets, bank failures and credit availability concerns. Disruptions in the financial markets have had and may continue to have an adverse effect on the U.S. and world economies, which

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could adversely and materially impact business spending patterns. Tightening of credit in financial markets could adversely affect the ability of our customers and suppliers to obtain financing for significant purchases and operations and could result in a decrease in or cancellation of orders for our products.

        Economic downturns may exacerbate some of the other risks that affect our business, results of operations and financial condition. A tighter credit market for consumer, business, and service provider spending may have several adverse effects, including reduced demand for our products, increased price competition or deferment of purchases and orders by our customers. Additional effects may include increased demand for customer finance, difficulties in collection of accounts receivable and increased risk of counterparty failures.

We may be negatively affected by geopolitical uncertainty.

        The market for our products depends on geopolitical conditions affecting the broader market. Acts of terrorism and the outbreak of hostilities and armed conflicts between countries can create geopolitical uncertainties that may affect the global economy. We have conducted significant business in the Middle East which has recently been subject to increased political tensions and changes. Some of these changes have in fact affected our ability in recent fiscal years to do business in this region. Downturns in the economy or geopolitical uncertainties may cause our customers to delay or cancel projects, reduce their overall capital or operating budgets or reduce or cancel orders for our products, which could have a material adverse effect on our business, results of operations and financial condition.

There may be health and safety risks relating to wireless products.

        Our wireless communications products emit electromagnetic radiation. In recent years, there has been publicity regarding, and increased public attention with respect to, the potentially negative direct and indirect health and safety effects of electromagnetic emissions from cellular telephones and other wireless equipment sources, including allegations that these emissions may cause cancer. Health and safety issues related to our products may arise that could lead to litigation or other actions against us or to additional regulation of our products. We may be required to modify our technology and may not be able to do so. We may also be required to pay damages that may reduce our profitability and adversely affect our financial condition. Even if these concerns prove to be baseless, the resulting negative publicity could affect our ability to market our products and, in turn, could harm our business and results of operations.

Disruptions due to cyber security breaches could affect our business, operations and financial condition.

        Our operations involve the storage of confidential and proprietary information. Security breaches could expose us to a risk of loss or stolen intellectual property or information about our operations, litigation, indemnity obligations and other liability. If our security measures are breached and someone successfully implements a denial of service attack or other disruptive event as a result, this could cause delays or stoppages to our operations which could detrimentally affect our reputation, cause our business to suffer or we could incur significant liability. A cyber security attack could also result in lost revenues or increased costs due to a disruption of operations, shipping delays, destruction or corruption of data and higher insurance premiums. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target, we may be unable to prevent these techniques or to implement adequate preventative measures.

        We have implemented security measures, back-up systems, monitoring and testing, maintenance of protective systems and contingency plans, to protect and to prevent unauthorized access and to reduce the likelihood of disruptions to our systems. Our Audit Committee is responsible for overseeing the processes for all internal controls including the IT and business controls in the Company which mitigate the risk of any cyber security attack. In addition, we maintain an insurance policy with Chubb Insurance, for Information Technology and Professional Liability which includes coverage for cyber security attacks. We also have security processes, protocols and standards that are applicable to our third party service providers.

        Despite these measures, all our information systems, including back-up systems and any third party service provider systems that we employ, are vulnerable to damage, interruption, disability or failure due to a variety of reasons, including physical theft, electronic theft, fire, power loss, computer and telecommunication failures or

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other catastrophic events, as well as from internal and external security breaches, denial of service attacks, viruses, worms and other known or unknown disruptive events. We or our third party service providers may be unable to anticipate, timely identify or appropriately respond to one or more of the rapidly evolving and increasingly sophisticated means by which computer hackers, cyber terrorists and others may attempt to breach our security measures or those of our third party service providers' information systems.

        If an actual breach of our security occurs that causes a disruption to our operations, we could lose potential sales or potentially default on contracts with existing customers.

  Risks Related to our Common Shares & Warrants

Our Common Shares may be delisted from the NASDAQ Capital Market if we cannot maintain compliance with NASDAQ's continued listing requirements.

        In order to maintain our listing on NASDAQ, we are required to comply with NASDAQ requirements, which include, but are not limited to, maintaining a minimum shareholders' equity. In particular, we are required to maintain a minimum of $2,500,000.00 in shareholders' equity pursuant to NASDAQ Listing Rule 5550(b)(1) ("the Listing Rule"). On October 21, 2016, we received a notice from NASDAQ notifying us that we no longer comply with the Listing Rule. On December 14, 2016, Listing Qualifications Staff of NASDAQ issued a letter granting us an extension until April 17, 2017 to regain compliance. On April 21, 2017 the Company announced that while we did not regain compliance by the end of the granted compliance period we would be filing an appeal of the Nasdaq Listing Qualification Staff determination to delist the Company's securities from the Nasdaq Stock Market. On April 25, 2017, Nasdaq provided the Company with a formal notice that the Panel would consider our appeal at an oral hearing. The hearing was held on June 1, 2017 and on June 6, 2017, we were notified that the Nasdaq Hearings Panel has granted our request for continued listing on Nasdaq, subject to the achievement of certain interim milestones.

Price adjustment provisions in our outstanding 2013 Warrants may make it more difficult and expensive for us to raise additional capital in the future.

        The 2013 Warrants (as defined below) issued in the 2013 Offering (as defined below) provide that the exercise price will adjust to the lowest price per share at which we sell or issue or are deemed to sell or issue additional shares (with certain exceptions) (a "full-ratchet" adjustment). Because these price adjustment provisions will have the effect of lowering the price at which our common shares are issued upon exercise of the Warrants, if we are unable to raise additional capital at an effective price per share that is higher than the exercise price of these Warrants, these provisions may make it more difficult and more expensive for us to raise capital in the future. As of the date of this Annual Report there are 738,750 of the 2013 Warrants outstanding exercisable for up to 29,550 common shares.

        In connection with the August 2016 Offering (as defined below), the "full-ratchet" adjustment provisions of the 2013 Warrants were once again engaged, and the exercise price of the 2013 Warrants was changed such that 25 whole 2013 Warrants entitle the holder to purchase one common share at a price of $2.80 per share.

Certain provisions of our outstanding 2013 Warrants, April 2016 Warrants and August 2016 Long-Term Warrants may make it more difficult and expensive, or impossible, for us to undertake or complete certain business transactions.

        The 2013 Warrants, the April 2016 Warrants and the August 2016 Long-Term Warrants provide that, upon the consummation of a "Fundamental Transaction", we or our successor entity (if applicable) will purchase any outstanding 2013 Warrants, April 2016 or August 2016 Long-Term Warrants, as applicable, from the holders by paying to such holders an amount in cash equal to 100% of the "Black Scholes Value" (as such term is defined in the applicable form of warrant). As a result, completing certain business transactions may be more costly than anticipated and could result in an inability or failure to complete such transactions. A "Fundamental Transaction" means that we or any of our subsidiaries directly or indirectly, in one or more related transactions:

•

consolidate, amalgamate or merge with or into (whether or not we are, or one of our subsidiaries is, the surviving corporation) any other "Person" (as that term is defined in the form of warrant); provided however that the winding-up, consolidation, amalgamation or merger of any of our wholly-owned

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subsidiaries into us, in which we are the continuing or surviving entity, shall not qualify as a Fundamental Transaction, or

•

sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all the properties or assets of us and our subsidiaries, considered on a consolidated basis, to any other Person (other than a transfer of assets among us and our wholly-owned subsidiaries), or

•

allow any other Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding common shares; (not including any common shares held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or

•

consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or plan of arrangement) with any other Person whereby such other Person acquires more than 50% of our outstanding common share (not including any common shares held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), or

•

reclassify our common shares, or

•

for purposes of the 2013 Warrants, any "person" or "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of the United States Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules and regulations promulgated thereunder) is or shall become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by our issued and outstanding common shares.

Due to the speculative nature of warrants, it may not be profitable for holders of the 2013 Warrants, the April 2016 Warrants, the August 2016 Long-Term Warrants or the 2017 Warrants to exercise such warrants.

        The 2013 Warrants, the April 2016 Warrants (as defined below), the August 2016 Long-Term Warrants (as defined below) and the 2017 Warrants (as defined below) do not confer common share voting rights on their holders, but rather represent the right to acquire common shares for a limited period of time. Specifically, holders of the 2013 Warrants may exercise their right to acquire common shares and pay an exercise price of $2.80 per share upon the exercise of 25 whole 2013 Warrants prior to September 23, 2018. The holders of the April 2016 Warrants may exercise their right to acquire common shares and pay an exercise price of $8.50 per one whole April 2016 Warrant until April 11, 2021. The holders of the August 2016 Long-Term Warrants may exercise their right to acquire common shares and pay an exercise price of $4.37 per one whole August 2016 Long-Term Warrant until August 8, 2021. At any time on or after September 18, 2017, the holders of the 2017 Warrants may exercise their right to acquire common shares and pay an exercise price of $1.50 per one whole 2017 Warrant until September 18, 2022. The market price of the common shares may not ever equal or exceed the exercise price of the 2013 Warrants, April 2016 Warrants, August 2016 Long-Term Warrants or 2017 Warrants, as applicable, and consequently, it may not be profitable for holders of the 2013 Warrants, April 2016 Warrants, August 2016 Long-Term Warrants or 2017 Warrants to exercise such warrants. The market value of the Warrants is uncertain.

We will require additional capital and no assurance can be given that such capital will be available at all or available on terms acceptable to us.

        We may need to raise additional funds through public or private debt or equity financings in order to:

•

fund ongoing operations;

•

take advantage of opportunities, including more rapid expansion of our business or the acquisition of complementary products, technologies or businesses;

•

develop new products; or

•

respond to competitive pressures.

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        Any additional capital raised through the sale of equity will dilute the percentage ownership of the Company of each shareholder and such dilution may be significant. Capital raised through debt financing would require us to make periodic interest payments and may impose restrictive covenants on the conduct of our business. Furthermore, additional financing may not be available on terms favorable to us, or at all. A failure to obtain additional financing could prevent us from making expenditures that may be required to grow or maintain our operations.

The trading price of our common shares has been, and may continue to be, subject to large fluctuations.

        Our outstanding common shares are listed on both the TSX and NASDAQ Capital Market. The trading price of our common shares has been, and may continue to be, subject to large fluctuations and, therefore, the value of our common shares may also fluctuate significantly, which may result in losses to investors who have acquired or may acquire common shares.

        The trading price of our common shares may increase or decrease in response to a number of events and factors, including:

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low trading volumes;

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actual or anticipated fluctuations in our results of operations;

•

changes in estimates of our future results of operations by us or securities analysts;

•

announcement of technological innovations or new products or services by us or our competitors;

•

changes affecting the communications industry; and

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other events and factors, including but not limited to the risk factors identified in this Annual Report.

        In addition, different liquidity levels, volume of trading, currencies and market conditions on the TSX and NASDAQ may result in different prevailing trading prices.

        Securities class action litigation often has been brought against companies following periods of volatility in the market price of their securities. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs and damages and divert management's attention and resources, which could adversely affect our business. Any adverse determination in litigation against us could also subject us to significant liabilities.

Our actual financial results may vary from our publicly disclosed forecasts.

        Our actual financial results may vary from our publicly disclosed forecasts and these variations could be material and adverse. We periodically provide guidance on future financial results. Our forecasts reflect numerous assumptions concerning our expected performance, as well as other factors that are beyond our control and which may not turn out to be correct. Although we believe that the assumptions underlying our guidance and other forward-looking statements are reasonable when we make such statements, actual results could be materially different. Our financial results are subject to numerous risks and uncertainties, including those identified throughout these risk factors and elsewhere in this Annual Report. Also see "Forward-Looking Statements". If our actual results vary from our announced guidance, the price of our common shares may decline, and such a decline could be substantial. Except as required under applicable securities legislation, we do not undertake to update any guidance or other forward-looking information we may provide, whether as a result of new information, future events or otherwise.

As a foreign private issuer, we are subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to our shareholders.

        DragonWave is a "foreign private issuer" under applicable U.S. federal securities laws and, therefore, we are not required to comply with all the periodic disclosure and current reporting requirements of the Exchange Act and related rules and regulations. As a result, we do not file the same reports that a U.S. domestic issuer would file with the SEC, although we will be required to file or furnish to the SEC the continuous disclosure documents that we are required to file in Canada under Canadian securities laws. In addition, our officers,

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directors, and principal shareholders are exempt from the reporting and "short swing" profit recovery provisions of Section 16 of the Exchange Act. Therefore, our shareholders may not know on as timely a basis when our officers, directors and principal shareholders purchase or sell their common shares, as the reporting deadlines under the corresponding Canadian insider reporting requirements may be different. In addition, as a foreign private issuer we are exempt from the proxy rules under the Exchange Act.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses to us.

        We would lose our foreign private issuer status if a majority of our common shares are held in the U.S. and we fail to meet the additional requirements necessary to avoid loss of foreign private issuer status. If we are not a foreign private issuer, we would not be eligible to use the MJDS, if we regain eligibility, or other foreign issuer forms and would be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. In addition, we may lose the ability to rely upon exemptions from NASDAQ corporate governance requirements that are available to foreign private issuers.

As of the date of this Annual Report, we do not have the ability to use the MJDS, which may result in significant additional costs and expenses to us and make it more difficult to raise capital in the public markets.

        At this time, we are not eligible to use MJDS. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly more than the costs incurred as a Canadian foreign private issuer eligible to use MJDS. MJDS allows eligible Canadian issuers to use MJDS forms to offer securities publicly in the United States using a Canadian prospectus that is subject to review only by Canadian securities regulatory authorities. To be eligible to use MJDS, an issuer must have a public float of at least $75 million. As of the date of filing this Annual Report our public float is below $75 million. If we continue to be unable to use MJDS, it may be more difficult and costly for us to raise capital in the public markets.

The financial reporting obligations of being a public company in the U.S. are expensive and time consuming, and place significant additional demands on our management.

        The obligations of being a public company in the U.S. require significant additional expenditures and place additional demands on our management. In particular, should we meet the requirements for eligibility to use MJDS, Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC rules and regulations implementing Section 404 require an annual evaluation of our internal controls over financial reporting to be attested to by an independent auditing firm. If an independent auditing firm is unable to provide us with an attestation and an unqualified report as to the effectiveness of our internal controls, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our common shares.

An investor may be unable to bring actions or enforce judgments against us and certain of our directors and officers.

        DragonWave is incorporated under the laws of Canada, and our principal executive offices are located in Canada. Our directors and officers, and our independent public accounting firm, reside outside of the United States and all or a substantial portion of our assets and the assets of these persons are located outside the United States. Consequently, it may not be possible for an investor to effect service of process within the United States on us or those persons. Furthermore, it may not be possible for an investor to enforce judgments obtained in United States courts based upon the civil liability provisions of United States federal securities laws or other laws of the United States against those persons or us.

We do not currently intend to pay dividends on our common shares and, consequently, a shareholder's ability to achieve a return on investment will depend on appreciation in the price of our common shares.

        We have never declared or paid any dividends on our common shares. We currently intend to retain any future earnings to fund the development and growth of our business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon many factors, including our results of operations, capital requirements

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and other factors as the board of directors deems relevant. In addition, the covenants provided by us related to our debt facilities with Comerica Bank and Export Development Canada restrict our ability to make payments of dividends on our common shares.

We believe that we are not currently a passive foreign investment company (a "PFIC") for U.S. federal income tax purposes, but this factual determination is made annually and could change in the future.

        Based in part on current operations and financial projections, we are not classified as a PFIC for U.S. federal income tax purposes for our 2017 fiscal year. However, an annual determination will need to be made as to whether we are a PFIC based on the types of income we earn and the types and value of our assets from time to time, all of which are subject to change. Therefore, we cannot assure holders of our common shares that we will not be a PFIC for our current taxable year or any future taxable year. A non-U.S. corporation generally will be considered a PFIC for any taxable year if either (1) at least 75% of its gross income is passive income or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income. The market value of our assets may be determined in large part by the market price of our common shares, which is likely to fluctuate. If we were to be treated as a PFIC for any taxable year, certain adverse U.S. federal income tax consequences could apply to U.S. holders of our common shares.

        U.S. holders of our common shares are urged to consult their tax advisors with respect to the U.S. federal, state, local and non-U.S. tax consequences of the acquisition, ownership, and disposition of the common shares as may be applicable to their particular circumstances.

The acquisition of, investment in and disposition of our common shares and other securities has tax consequences.

        Prospective investors should be aware that the acquisition, holding and/or disposition of our common shares and other securities has tax consequences both in the United States and Canada that are not described herein.

        Purchasers should consult their own tax advisors with respect to the tax consequences of the acquisition, ownership, and disposition of our common shares and other securities as may be applicable to their particular circumstances.

Future sales of common shares by our existing shareholders could cause our share price to fall.

        If our shareholders sell substantial amounts of our common shares in the public market, the market price of our common shares could fall. The perception among investors that these sales will occur could also produce this effect.

Our management has broad discretion over the use of proceeds from the equity offerings that the Company has completed and will have broad discretion over the use of proceeds from any financing we complete in the future. If we do not use the proceeds effectively to develop and grow our business, an investment in our common shares could suffer.

        Our management has broad discretion in how it uses the net proceeds received by us from our equity offerings completed in 2016 and 2017 (as discussed in additional detail below), as well as any offering we have completed or may complete in the future, and there can be no assurance that such proceeds will be used efficiently or effectively. We may spend these proceeds in ways that do not increase our operating results or market value, which would adversely affect our business, results of operations and financial condition. Pending their use, we may invest the net proceeds from any offering in a manner that does not produce income or that loses value.

        Further, if we do not restrict our investment of a sufficient portion of the net proceeds from the sale of our common shares, pending their use, to investments that are not "investment securities" within the meaning of the United States Investment Company Act of 1940, we may inadvertently become subject to regulation as an investment company under that Act. If such an event were to occur, the consequences to us would be material and adverse.

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Certain Canadian laws could delay or deter a change of control.

        The Investment Canada Act (Canada) subjects an acquisition of control of DragonWave by a non-Canadian to government review if the value of our assets as calculated pursuant to the legislation exceeds a certain threshold amount. A reviewable acquisition may not proceed unless the relevant Minister (of Canada's federal government) is satisfied that the investment is likely to be a net benefit to Canada. This could prevent or delay a change of control and may eliminate or limit strategic opportunities for shareholders to sell their common shares.

ITEM 4.    Information on the Company.

A.    History & Business Developments

Name, Address and Incorporation

        DragonWave Inc. was incorporated on February 24, 2000 by Certificate and Articles of Incorporation issued under the Canada Business Corporations Act (the "CBCA"). DragonWave's last financial year ended on February 28, 2017. The head office of DragonWave is located at 411 Legget Drive, Suite 600, Ottawa, Ontario, Canada K2K 3C9.

Business Description

        Founded in 2000, we are a leading provider of high-capacity wireless Ethernet equipment used in emerging internet protocol ("IP") networks. We design, develop, market and sell proprietary, carrier-grade microwave radio frequency networking equipment (often referred to as "links"), that wirelessly transmit broadband voice, video and other data between two points. Our wireless carrier-Ethernet links, which are based on a native Ethernet platform, function as a wireless extension to an existing fiber and global optic core telecommunications network. The principal application for our products is the backhaul function in a wireless communications network. Backhaul links connect the large amounts of network traffic aggregated by base stations and other collection points on the edge of the network to the high-capacity fiber optic infrastructure at the core of the network. Additional applications for our products include point-to-point transport applications in private networks, including municipal and enterprise applications.

        Our products principally perform the backhaul function in a communication service provider's network, connecting high-traffic points of aggregation such as high-capacity wireless base stations (3G+ cellular, WiFi, Long-Term Evolution ("LTE")) small cells and large "out of territory" enterprises to nodes on the fiber optic core network.

        Our line of wireless carrier-Ethernet links is marketed under the Horizon trade names. Our products are carrier-grade and operate primarily in licensed spectrum bands to minimize interference.

        In 2011, we introduced our Avenue solution, which was designed to provide high levels of spectral efficiency and reliability for carrier-grade delivery of advanced applications and services. The Avenue solution is a small device, utilizing a small antenna, to integrate microcellular backhaul, third-party base stations, power supply, battery backup, switching, and management in an all-in-one, environmentally shielded enclosure. This is a hardened, all-outdoor, zoning-friendly and fully integrated solution that was designed specifically for service providers to deploy microcellular coverage with high-performance backhaul.

        On June 1, 2012, we acquired our Harmony product line from Nokia pursuant to the NSN Transaction (as defined below). The Harmony product line is a multi-service wireless platform enabling time-division multiplexing (TDM) and packet-based services across wireless or wireline infrastructure. Harmony is rebranded by Nokia as FlexiPacket.

        In 2013, we introduced our Harmony Lite and Avenue Link Lite products lines. These product lines are DragonWave's first products in the sub-6GHz bands. The Lite products operate in licensed and unlicensed bands, and provide line of sight (LoS), and non-line of sight connectivity. The Lite product line is an important part of our small cell backhaul offering in the Avenue family.

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        In 2014, we introduced our Harmony Eband product. Harmony Eband operates in the 70/80 GHz bands. It provides capacities of up to 2.5 Gbps, and operates in low cost bands, providing mobile operators with a much lower total cost of ownership and scalability strategy. Although the 70/80 GHz market is still evolving, we think it will expand quickly and we expect this expansion to be sustained.

        Also in 2014, we introduced Harmony Enhanced, a high capacity, long reach, multi-service radio operating in the 6-42 GHz spectrum bands. Harmony Enhanced merges the performance and reliability of DragonWave's flagship Harmony Radio and Horizon Compact+ into a next-generation, ultra high-capacity microwave system.

        In January 2016, we introduced Harmony Enhanced^MC, an ultra-high capacity, multi-service microwave system operating in the 6-42 GHz spectrum bands that provides dual channel support and extended reach. Harmony Enhanced^MC delivers the next level of capacity by introducing integrated dual carrier and fully integrated XPIC capabilities into a single Outdoor Unit (ODU) antenna configuration. With its integrated switch, and the industry's first 10GE port on a wireless backhaul radio, Harmony Enhanced^MC delivers a true all-outdoor, Ethernet solution with excellent system gain and spectral efficiency.

        The demand for our products is driven by global trends, including IP convergence and pressure on backhaul capacity caused by increased functionality of mobile devices, the shift in demand from voice to multimedia content and services, growing demand for wireless coverage, increasing numbers of subscribers, and investment in radio access network spectrum. In our target markets, network traffic is shifting from legacy TDM traffic to IP-based traffic to improve network efficiency and enable IP-based services.

        Principally, we target the global wireless communications service provider market and, in particular, those service providers offering high-capacity wireless communication services, including traditional cellular service providers and emerging broadband wireless access (BWA) service providers. These service providers offer high-speed digital communication services over wireless access networks, employing IP-based wireless network access technologies such as advanced (3G, 4G and 5G) cellular technologies, as well as WiFi. The market addressed by these wireless service providers is characterized by significant growth in number of subscribers, coverage area, and bandwidth requirements per subscriber, and a corresponding need to reduce the cost per bit of the backhaul network. (See Cisco® Visual Networking Index (VNI) Global Mobile Data Traffic Forecast Update dated February 3, 2016, http://www.cisco.com/c/en/us/solutions/collateral/service- provider/visual-networking-index-vni/mobile-white-paper-c11-520862.html). We also target other markets, including wireless extension of fixed-line networks to directly connect high-bandwidth end-customers to the core network, and private networks of large multi-site organizations such as Fortune 500 enterprises, municipalities and government organizations.

        The key elements of our solutions include: high performance; carrier-grade availability; cost-competitiveness; support of legacy networking standards; and the availability of advanced network management and wireless network IP planning.

        We commenced commercial deployment of our products in 2002 and, as of February 28, 2017, have shipped approximately 162,487 links (each link contains 2-4 units). In the fiscal year ended February 28, 2017, we delivered products to 173 customers, in 56 countries. Customers included: Nokia, Sprint, Reliance Jio Infocomm (India) ("Reliance Jio"), TESSCO (United States), Samsung, Alliance Communications (United States) and Xplornet (Canada).

Strategic Review Process

        Our board of directors reviews our corporate strategy on an ongoing basis. The board of directors continues to review all strategic and financial alternatives that may be available, including a potential sale of the Company, debt or equity financing, business combinations, joint ventures and strategic alliances, and ways to optimize our stand alone plan. To assist in the strategic and financial elements of this review, CIBC World Markets Inc. has been engaged as adviser to the board and H. C. Wainwright & Co. has been engaged to investigate financing options for the Company. We have recently engaged Alvarez & Marsal Canada Securities to provide consulting service in connection with a review of our strategic alternatives and to assist us with our assessment and management of our short term liquidity requirements and obligations in connection with our credit agreements.

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Mergers & Acquisitions and Joint Ventures

Acquisition of Microwave Transport Business of NSN and Relationship with Nokia

        On November 4, 2011, we and our wholly-owned subsidiary incorporated in Luxembourg, DragonWave S.à r.l., entered into a master acquisition agreement (the "Original Master Acquisition Agreement") with Nokia Siemens Networks B.V. to acquire certain assets and liabilities of NSN (now Nokia), namely its microwave transport business, including the associated operational support systems (OSS) and related support functions. The details of this proposed acquisition of certain assets and liabilities of NSN were disclosed in our press release dated November 4, 2011 and material change report dated November 14, 2011. On May 3, 2012, we announced that the terms of the proposed transaction had been revised pursuant to an Amended and Restated Master Acquisition Agreement (the "Amended and Restated Master Acquisition Agreement") dated May 3, 2012. On June 1, 2012, we announced the closing of the transaction (the "NSN Transaction") contemplated by the Amended and Restated Master Acquisition Agreement.

        Consideration paid on closing by DragonWave S.à r.l. was $12.7 million in cash and DragonWave common shares with a market value of $5.3 million. The cash payment was made in Euros.

        The fair values of the assets acquired and liabilities assumed by us in the NSN Transaction are as follows (in thousands USD$):

Tangible Assets
Cash	—
Accounts receivable	—
Inventory	11,378
Lease holiday	2,093
Other current assets	2,564
Capital assets	6,115
Tangible Assets Acquired	22,150
Tangible Liabilities
Accounts payable	—
Accrued liabilities	2,484
Capital lease obligation	4,162
Tangible Liabilities Acquired	6,646
Fair Value of Net Tangible Assets	15,504
Intangible Assets
Customer relationships	1,745
Developed technology	10,800
Intangible Assets Acquired	12,545
Goodwill	—
Gain on purchase of business	(19,397	)
Purchase Price	8,652
Purchase Price
Cash	12,730
Common shares of DragonWave	5,279
Other consideration	1,205
Contingent receivable	(10,562	)
	8,652

        The purchase price set out in the table above consisted of the following components: (a) cash delivered on closing; (b) DragonWave common shares delivered on closing with a fair value of $5.3 million which reflects that Nokia was subject to a lock-up provision restricting sale or disposition of the shares, subject to customary

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exceptions; (c) other consideration deferred for specific tangible assets; and (d) a contingent receivable which was based on business performance in the twelve months following closing.

        The NSN Transaction was financed through a combination of cash on our balance sheet and increased debt facilities provided by Comerica Bank and Export Development Canada.

        We recognized a one-time gain on purchase of business of $19.4 million in the year ended February 28, 2013 due to the difference between the cumulative tangible and intangible net assets and the purchase price.

        As part of the NSN Transaction, we acquired Nokia's Chinese operations associated with its microwave transport business. The acquisition was completed on December 1, 2012 and at that time approximately 100 employees based in Shanghai transferred to DragonWave.

        The microwave transport assets of Nokia in Italy, including Nokia employees based in Italy, were excluded from the acquisition. On closing, we entered into a services agreement with Nokia for outsourced R&D, product management, sales support and operations functions. This was aimed at enhancing our ability to continue to deliver on critical customer deliveries.

        The Amended and Restated Master Acquisition Agreement entered into on May 3, 2012 included an arrangement with Nokia for additional consideration that was contingent on actual sales of products achieved in the first eighteen months subsequent to the acquisition date. The initial $10.6 million value of the contingent receivable was increased during the year ended February 28, 2013 based on a change in fair value offset by payments received and foreign exchange. The contingent receivable balance carried on the balance sheet as at February 28, 2013 was $13.8 million.

        On April 10, 2013, we announced changes to our operational framework with Nokia (the "Renewed Framework"). Under the terms of the Renewed Framework, on April 12, 2013, Nokia paid $13.8 million to us which settled the balance of our contingent receivable. Nokia took on additional commitments and costs so that we could continue to develop and supply the microwave product line we acquired from Nokia. The services agreement, pursuant to which Nokia provided research and development and certain other services to us since June 1, 2012, was terminated. As a result, we reduced accounts payable by $13.3 million. We also eliminated capital assets with a net book value of $0.6 million and the corresponding capital lease obligation associated with the Italian operations in the amount of $1.3 million. During the year ended February 28, 2014, we also reduced a capital lease obligation associated with our operations in India by $0.4 million based on a revised agreement with Nokia.

        Under the terms of the Renewed Framework, we also recorded a liability for a termination fee for $8.7 million at May 31, 2014 which was scheduled to be paid in several tranches. During the first quarter of fiscal 2015, we revised the estimated termination fee and entered into a revised payment schedule with Nokia consisting of quarterly payments through fiscal year 2015 and 2016. To the date of this Annual Report we have paid $4.4 million, and the termination liability is currently valued at $3.3 million.

        When the NSN Transaction was completed, many aspects of our business were substantially changed, including our revenue profile, product offering, mix of geographic markets, distribution channels, contract manufacturing arrangements, R&D activities and employee base.

        In April 2015, Nokia announced its proposed combination with Alcatel-Lucent, which has a vertically integrated microwave business unit. The combination was finalized on January 14, 2016. Following the finalization of the combination, we announced that we have reshaped our channel strategy. Our revised strategy primarily positions our latest and new products directly to customers. We will continue to provide software maintenance and level 3 hardware support to Nokia for the large installed base of network elements deployed by both our Company and Nokia to date. In addition, we expect to sell the Harmony FlexiPacket Multiradio (Harmony Radio) product family and legacy products through the Nokia channel to customers who wish to continue with this platform, although we do expect these sales levels to decrease over time. To facilitate these ongoing activities, our global framework agreements will continue in place.

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DragonWave's Joint Venture in India

        On October 19, 2010, DragonWave and Himachal Futuristic Communications Ltd. ("HFCL"), one of India's leading telecommunication equipment manufacturers and turnkey service providers, announced the formation of a joint venture to provide leading packet microwave solutions to the Indian market. DragonWave owns 50.1% of the equity in DragonWave HFCL India Private Limited (the "Joint Venture Company") and the balance of the equity is owned by HFCL. We do not control the board of the Joint Venture Company.

        The Joint Venture Company, based in Delhi, utilizes HFCL's local market knowledge and expertise to sell and market DragonWave products in India. HFCL has a telecommunication equipment manufacturing facility at Solan, Himachal Pradesh.

        With the completion of India's 3G and BWA radio-access spectrum auctions, service providers are rolling out 3G and 4G IP-based networks in order to support the bandwidth and service requirements of the new High-Speed Packet Access ("HSPA"), LTE base stations that will use this spectrum.

        The Joint Venture Company had sales in fiscal 2017 of $3.6 million primarily as a result of locally sourced material and the provision of installation and commission services to Reliance Jio, as well as the sale of hardware through the Nokia channel in the region.

Equity Offerings & Transactions (Over the Last Three Fiscal Years)

Offerings of Units

        On March 17, 2017 we completed an at-the-market registered direct offering and a concurrent private placement to institutional investors in the United States. Under the terms of the offering, we issued and sold 1,198,666 Common Shares at $1.50 for aggregate gross proceeds of $1.79 million. The total net proceeds after deducting commission and expenses was $1.6 million. Concurrently in a private placement, we issued warrants to purchase 599,333 Common Shares at an exercise price of $1.50, which are not exercisable for six months and one day from issuance and which will expire five and a half years from the date of issuance.

        On August 8, 2016, we completed a public offering previously announced on August 3, 2016. The common shares were offered (the "Registered Offering") by us pursuant to an effective shelf registration statement on Form F-1 (File No. 333-212428), which was declared effective by the U.S. Securities and Exchange Commission (the "SEC") on August 2, 2016 (the "Registration Statement"). Under the terms of the offering, we issued and sold 1,760,880 Class A units at $3.35 and 30,164 Class B units at $3.34, for aggregate gross proceeds of $6.0 million. Concurrent with the underwritten public offering in the United States, we issued an additional 63,000 Class A Units on a private placement basis to purchasers in Canada for additional gross proceeds of $0.2 million. The total net proceeds after deducting commission and expenses was $5.5 million. Each Class A unit consisted of one common share, one five-year warrant (the "Long-Term Warrant") to purchase one common share and two six-month warrants (the "Short-Term Warrant"). Each Class B unit consisted of a pre-funded warrant (the "Pre-Funded Warrant") to purchase one common share, one Long-Term Warrant and two Short-Term Warrants. The Long-Term Warrants have an exercise price of $4.37 per share, are exercisable immediately and will expire on August 8, 2021. The Short-Term Warrants have an exercise price of $4.00 per share, are exercisable immediately and expired on February 8, 2017. The Pre-Funded Warrants are exercisable immediately with no expiration date, are deemed purchased for a price of $3.34 per underlying common share by virtue of purchasing a Class B Unit and have an exercise price of $0.01 per share. The Pre Funded Warrants were fully exercised on August 25, 2016. As of the date of this Annual Report there are 1,854,044 Long-Term Warrants outstanding.

        On April 11, 2016, we completed an equity offering previously announced on April 7, 2016. In connection with this offering, we entered into securities purchase agreements (each a "Purchase Agreement") with certain institutional investors providing for the issuance and sale by us of 599,998 common shares and a price per share equal to US$7.25. The common shares were offered (the "Registered Offering") by us pursuant to an effective shelf registration statement on Form F-3 (File No. 333-209969), which was declared effective by the U.S. Securities and Exchange Commission (the "SEC") on March 14, 2016 (the "Registration Statement"). In a concurrent private placement (the "Private Placement" and, together with the Registered Offering, the "April 2016 Offering"), we issued warrants to purchase 299,999 common shares at an exercise price of $8.50 per

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share (the "April 2016 Warrants"). The April 2016 Warrants expire on April 11, 2021 at an exercise price of $8.50. The net proceeds of the April 2016 Offering is US$4.09 million, after placement agent fees and estimated Offering expenses payable by us, and excluding any proceeds we may receive upon exercise of the warrants. The Company expects that any exercise of the warrants will result in the cash proceeds from the exercise of such warrants being paid to the Company. The April 2016 Warrants cannot be exercised until October 12, 2016 and if, any time after October 13, 2016, there is no effective registration statement registering the common shares issuable upon exercise of the April 2016 Warrants, the April 2016 Warrants can be cashlessly exercised. As of the date of this Annual Report there are 299,999 of the April 2016 Warrants outstanding.

        On September 23, 2013, we completed a public offering (the "2013 Offering") of units ("2013 Units"). The 2013 Offering, on a pre-Consolidation basis, consisted of the issue and sale of 11,910,000 2013 Units at a price of $2.10 per 2013 Unit for aggregate gross proceeds of approximately $25.0 million. Each 2013 Unit consisted of one common share and three quarters of one warrant (each whole warrant, a "2013 Warrant")(on a pre-Consolidation basis). On a pre-Consolidation basis, each whole 2013 Warrant originally entitled the holder to purchase one of our common shares at an exercise price of $2.70 per share until September 23, 2018, subject to certain adjustments. In connection with the 2014 Offering, and pursuant to the terms of the 2013 Warrants, the exercise price of the 2013 Warrants was changed to $1.30 per share (on a pre-Consolidation basis). Subsequent to the Consolidation, 25 whole 2013 Warrants entitle the holder to purchase one common share at an exercise price of $32.50 per share. In connection with the August 2016 Offering, and pursuant to the terms of the 2013 Warrants, the exercise price of the 2013 Warrants was changed, such that 25 whole 2013 Warrants entitle the holder to purchase one common share at a price of $2.80 per share. The form of 2013 Warrant setting out the terms of the 2013 Warrants was filed under our profile on SEDAR at www.sedar.com on September 17, 2013, under the category "Documents incorporated by reference not previously filed – English". As of the date of this Annual Report there are 738,750 of the 2013 Warrants outstanding exercisable for up to 29,550 common shares.

        The net proceeds of the 2013 Offering, after deducting commissions and listing expenses, were $22.4 million. The net proceeds from the 2013 Offering were used to strengthen our balance sheet, to fund working capital and for general corporate purposes.

        The 2013 Warrants contain a cashless exercise feature pursuant to which the holder may, in its sole discretion, exercise the 2013 Warrant in whole or in part and, in lieu of making the cash payment on account of the aggregate exercise price, elect instead to receive upon such exercise the net number of common shares determined according to the formula set forth in the form of Warrant and defined in the form of 2013 Warrant as the "Net Number". Since November 12, 2013, an aggregate of 6,843,750 2013 Warrants have been exercised and 9,200,454 common shares, on a pre-Consolidation basis, have been issued pursuant to such cashless exercises.

Product and Business Developments (Over the Last Three Years)

Fiscal Year 2017 (March 1, 2016 until February 28, 2017)

•

On February 6, 2017, we announced another competitive customer win for our industry-leading Harmony Enhanced radios by Italian wireless Internet service provider (WISP) Fidoka Srl.

•

On February 1, 2017, we presented an updated operating plan to our credit facility partners. The updated plan reduces operating costs by 30%, in order to achieve cash flow break even at anticipated revenue and margin levels.

•

On January 25, 2017, we announced that we have reduced the exercise price of our outstanding six-month warrants (the "Short-Term Warrants") issued in our public offering completed in August 2016. Pursuant to the terms of the Short-Term Warrants, DragonWave has elected to reduce the exercise price of the Short-Term Warrants to US $1.50 per share, commencing on January 25, 2017 and continuing until the expiration of the warrants on February 8, 2017.

•

On December 14, 2016, we announced that the Listing Qualifications Staff of The NASDAQ Stock Market issued a letter granting us an extension until April 17, 2017 to regain compliance with NASDAQ

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Listing Rule 5550(b)(1), which requires listed companies to maintain a minimum of $2,500,000 in shareholders' equity.

•

On November 21, 2016, we announced that we have won 2016 Fierce Innovation Awards: Telecom Edition, a carrier-reviewed awards program from the publisher of FierceWireless, FierceTelecom and FierceCable.

•

On November 7, 2016 we announced that we have signed an extension to a multi-million dollar project with a Tier 1 mobile operator in Argentina together with our local partner Trans Industrias Electronicas S.A.

•

On October 28, 2016, we announced that we have been selected as a finalist in this year's Fierce Innovation Awards: Telecom Edition, a carrier-reviewed awards program from the publisher of FierceWireless, FierceTelecom and FierceCable.

•

On October 26, 2016, we announced that we have completed more than 10 successful trials with Harmony Enhanced MC, successfully operating at double the capacity of a traditional microwave system, while enabling smaller antennas. These trials have resulted in multiple order activity and demand from 8 customers that include a Tier 1 carrier, enterprise end-users and distributors.

•

On October 24, 2016, we announced that Australia's leading telecommunications and information services company is deploying our Harmony Radio links and Hub 800 adaptable, multi-service nodal switches as part of an ongoing upgrade to its mission critical services network.

•

On October 21, 2016, we announced that on October 17, 2016, we received a written notice from the Listing Qualifications Staff of The NASDAQ Stock Market notifying us that we no longer comply with NASDAQ Listing Rule 5550(b)(1) due to our failure to maintain a minimum of $2,500,000 in shareholders' equity or any alternatives to such requirement.

•

On October 19, 2016, we announced that Sprint has selected our microwave backhaul equipment for network deployment as part of the company's densification and optimization strategy.

•

On September 28, 2016, we announced that mobile operator Blue Wireless has ordered 100 Horizon Compact+ and Horizon Quantum packet microwave radio links currently being deployed as part of its ongoing network expansion.

•

On August 8, 2016, we announced that we closed the underwritten public offering of common shares and warrants. The gross proceeds to DragonWave from this offering were US$6.0 million not including any future proceeds from the exercise of the warrants.

•

On June 22, 2016, we announced that all of management's nominees listed in the management proxy circular of DragonWave dated May 20, 2016 were elected as directors of DragonWave to hold office until the next annual general meeting of shareholders of DragonWave or until their successors are elected or appointed.

•

On June 15, 2016, we announced that Erik Boch, CTO and VP Engineering is leaving his position to take on a new role outside of DragonWave.

•

On April 19, 2016, we announced that we received a first direct order from an existing customer, Eding Telecom, who previously purchased FlexiPacket MultiRadio (FPMR) though a channel.

•

On April 14, 2016, we announced that we have successfully completed five customer trials of the newly launched Harmony Enhanced MC dual carrier product.

•

On April 13, 2016, we announced that we closed a registered direct offering previously announced on April 7, 2016.

•

On April 7, 2016, we announced that we are raising US$4.35 million in gross proceeds in a registered direct offering and a concurrent private placement to institutional investors in the United States.

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•

On April 5, 2016, we announced the launch of our Harmony Care services offering. Harmony Care will provide legacy support to our installed base of over 400,000 units, including the product line acquired in the 2012 acquisition of Nokia's Microwave unit.

•

On March 30, 2016, we announced that we have launched a new online eCommerce store to better serve our customers.

•

On March 29, 2016, we announced a joint initiative with Mitel (TSX:MNW)(NASDAQ:MITL) focused on advancing the development of 5G networking.

Fiscal Year 2016 (March 1, 2015 until February 29, 2016)

•

On February 29, 2016, we announced that we regained full compliance with NASDAQ's minimum bid price listing requirement.

•

On February 2, 2016, we confirmed the Consolidation of our common shares on the basis of twenty-five (25) pre-Consolidation shares for one (1) post-Consolidation share.

•

On January 25, 2016, we announced the expansion of our product portfolio with the introduction of Harmony Enhanced^MC, an ultra-high capacity, multi-service microwave system operating in the 6-42 GHz spectrum bands that provides dual channel support and extended reach.

•

On January 19, 2016, we and Xi'an Potevio Communications, an ICT subsidiary company of China Potevio Corporation, announced the completion of the first stage deployment of DragonWave's Harmony Enhanced solutions to a Tier One Mobile Operator in the People's Republic of China.

•

On December 16, 2015, we announced that we have reshaped our channel strategy to primarily position our latest and new products directly to customers.

•

On September 1, 2015, we announced that our request to transfer the listing of our securities from The NASDAQ Global Market to The NASDAQ Capital Market was approved by the Staff of the NASDAQ Listing Qualifications Department, and effective with the open of trading on August 28, 2015.

•

On August 26, 2015, we announced that Russell Frederick, Vice President and Chief Financial Officer, was leaving the Company due to personal reasons. Patrick Houston assumed Mr. Frederick's duties in the role of Interim Chief Financial Officer.

•

On August 4, 2015, we announced an update to the market on a number of items that were all converging at the same time: we have entered an agreement with Nokia to address the impact of reduced demand being experienced through this channel in the first half of fiscal year 2016; we also confirmed that we are implementing further cost saving measures to reduce expenses; we provided the status of major carrier activity in North America, India and Europe; we updated our revenue expectations for the second quarter of fiscal year 2016.

•

On June 4, 2015, we announced that we have received follow-on purchase orders for Horizon Compact+ radio systems from a major Indian Telecom and Broadband Service Provider.

•

On May 15, 2015, we announced that we have signed a supply agreement for DragonWave microwave radio systems and related services with a leading Indian telecommunications company. Under this new supply agreement, DragonWave has received initial purchase orders to provide more than 3,000 turnkey links of its next-generation Harmony Enhanced high-capacity, long-reach microwave radio system to support the mobile operator's upgrade and expansion of its nationwide 3G and 4G wireless services in India.

•

On April 22, 2015, we announced that we have signed a Master Purchase Agreement for Technical Products and Related Services with a tier one North American carrier.

•

On April 7, 2015, we announced Saudi Telecom Company (STC), the largest network operator in the Kingdom of Saudi Arabia, has entered into a supply agreement for DragonWave products to support its enterprise network expansion.

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•

On March 5, 2015, we announced that we received a notice from The NASDAQ Stock Market that the Company was not in compliance with NASDAQ's Listing Rule 5450(a)(1), as the minimum bid price of DragonWave's common shares had closed below US$1.00 per share for 30 consecutive business days.

•

On March 3, 2015, we announced entry into Nokia's newly formed MicroWave Backhaul EcoSystem.

Fiscal Year 2015 (March 1, 2014 until February 28, 2015)

•

On February 19, 2015, we provided an update on the growing business momentum for our small cell product line.

•

On November 25, 2014, we announced orders in excess of $10 million for the month of November from a Tier One North American mobile operator.

•

On November 5, 2014, we announced that WIGO S.A., a Lima-based Wi-Fi service provider, has deployed Horizon Quantum and Horizon Compact+ links to interconnect base stations and MPLS nodes at speeds up to 800 Mbps in the 18 GHz and 13 GHz frequency bands.

•

On October 22, 2014, we announced that we have received follow on purchase orders for Horizon Compact+ from a major Indian Telecom and Broadband Service Provider.

•

On September 4, 2014, we announced the commencement of trading on NASDAQ under the symbol "DRWIW" of the 2014 Warrants.

•

On September 3, 2014, we announced the introduction of Harmony Enhanced, a high capacity, long reach, multi-service radio operating in the 6-42 GHz spectrum bands.

•

On August 21, 2014, we announced the completion of a series of extensive outdoor small cell backhaul propagation tests that have been conducted with a 3rd party for street level characterization.

•

On August 1, 2014, we announced that we closed the 2014 Offering, described above.

•

On June 17, 2014, we announced that our Horizon Quantum and Horizon Compact+ products have received Federal Information Processing Standard (FIPS) 140-2 Level 1 certification.

•

On May 28, 2014, we announced the finalization of a frame agreement with Reliance Jio, a subsidiary of Reliance Industries Limited (RIL). As part of the agreement DragonWave has provided 5,000 turnkey Horizon Compact+ links in support of the Indian operator's plan to roll out extensive, nationwide 4G/LTE networks.

•

On May 12, 2014, we announced that we have opened a service and repair center in Delhi, India. The center will be supported by DragonWave's joint venture DragonWave HFCL and will provide full, in-country repair service and support for DragonWave's entire product portfolio.

B.    An Overview of Our Business

Markets

Principal Markets

        We target customers principally in the global communications service provider market, including broadband service providers and mobile service providers. In the broadband service provider market, our products are used to connect to the core of the network in both mature, developed markets as an extension or alternative to existing broadband infrastructure, and in emerging markets that possess limited broadband infrastructure as an alternative to deployment of wireline infrastructure. In the mobile service provider market, our products are used by service providers that provide emerging high-capacity mobile services to end-users. We also target enterprise and municipal/government customers that own or operate private networks requiring point-to-point applications. Our principal markets are described below.

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Communications Service Provider Markets

Broadband Service Provider Market

        Broadband is a high-speed digital communications service that delivers high-bandwidth connection for sending and receiving large amounts of voice, video and other data to business customers. At current capacities, broadband services are typically delivered either by fiber or high capacity microwave solutions.

        Communications service providers provide broadband connectivity to business customers both "in territory" where they own the infrastructure connecting their points of presence and end-users, and "out of territory", where they must lease or build this access infrastructure. The leased lines model is generally not optimal for service providers, due to high lease costs and the fact that, in many cases, lines must be leased from direct competitors. As a result, these service providers have an economic and strategic imperative to find a cost-effective alternative to leased lines. The Ethernet microwave transport technologies that we provide are often used as an alternative to fiber.

Mobile Service Provider Market

        Wireless communications services are the delivery of voice, video and other data communications to users of wireless devices for network connectivity for fixed and/or mobile applications. Within this market, we focus on service providers offering high-capacity services based upon 4G LTE, with many starting to prepare their 5G networks.

        In wireless networks, mobile wireless handsets and other subscriber devices connect to a network of wireless base stations, which are in turn interconnected by backhaul network solutions to the fiber optic core network. Cellular and other mobile networking technologies have evolved to provide higher bandwidth and IP networking capabilities. We believe that in markets where subscriber growth is most rapid, service providers will focus on building new networks to provide basic mobile data and voice connectivity, and in markets where the subscriber base is mature, service providers will focus on expanding the capacity of existing networks to roll out advanced data and video services which require higher network bandwidth per subscriber. Both scenarios create increased demand for backhaul capacity.

        4G wireless technologies comprise a range of technologies that enable the provision of high-speed wireless access services for subscriber devices such as handsets, tablets and laptops. The primary 4G wireless technology is the all IP-based Long Term Evolution (LTE) standard. LTE enables users to utilize voice services as well as high bandwidth applications such as downloading music and other content such as maps and video, exchanging email, multimedia messaging, and a broad array of Internet applications.

        There are two primary forms of LTE deployments:

•

Macro Cellular LTE – LTE is an advanced 3G+ technology for both global system for mobile communications (GSM) and code division multiple access (CDMA) cellular service providers. Approved in 2008, LTE is defined by the 3G Partnership Project with the latest release being 3GPP Release 11, also known as LTE Advanced. With typical download speeds of approximately 6 Mbps, LTE is considerably higher bandwidth than HSPA (evolved from GSM) and Evolution-Data Optimized (EV-DO) (evolved from CDMA). LTE is an IP networking technology that mobile operators are evolving to globally. Macro Cellular LTE deployments are installed primarily on towers and building times, like a traditional 2G/3G network, and primarily collocated with existing 3G network equipment.

•

Outdoor Small Cell LTE – Outdoor Small cells are being planned by some mobile network operators for deployment to increase total network capacity in high usage areas, such as urban metros. The deployments are on non-traditional locations, such as light poles, and will be very dependent on high capacity wireless backhaul. Some small deployments of outdoor small cells have started, but initially have tried to leverage existing fiber infrastructure as much as possible. As these deployments gain momentum, we expect there to be a stronger reliance on wireless backhaul.

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Enterprise and Government/Municipal/Public Safety Markets

        We also target large organizations, such as enterprises and government/municipal bodies, with diverse locations that require or own high bandwidth communications networks. This market includes the education sector (distance learning and Internet access for schools), the health sector (remote imaging and campus networks) and municipalities that deploy networks for city-wide public Internet access and/or government and emergency services. In this market, we target our products at organizations that build their own communications networks rather than lease services from service providers. We believe that as bandwidth demand continues to grow, these organizations will increasingly consider the implementation of private networks to reduce service lease costs. Examples of our end-customers that have deployed private networks include CommTel Network Solutions Pty Ltd (Australia), Knoxville Utility Board (United States), JP Elektroprivreda BiH (Bosnia), SAAB (Sweden National Security Communication Network), The City of Barrie (Ontario, Canada), South Wales Fire Department (U.K.), The Palm Springs School District (California, United States), South Georgia Regional Information Technical Authority (Georgia, United States), Nexus Systems (Louisiana, United States), City of Joliet (Illinois, United States), City of Plano (Texas, United States), City of Hoffman Estates (Illinois, United States), City of Melrose Park (Illinois, United States), Crane Naval Base (Indiana, United States), Ventura County (California, United States), the Dubai Police (Dubai, U.A.E.) and the WireIE (Canada).

Distribution Methods

        We distribute our products and services both directly and indirectly through channel partners. This strategy permits us to broaden our customer coverage, while at the same time retaining contact with our customer base and managing costs. The sales cycles can be lengthy and often include network studies and trials of our equipment in laboratory and field environments. Because our products are utilized in large network deployments, the sales are project based and accordingly are highly variable from quarter to quarter.

        Our sales and business development team of 29 employees is organized across four geographic regions: North America, Europe, the Middle East and Africa ("EMEA"), Asia-Pacific and the Caribbean and Latin America ("CALA"). These employees are currently based in the United States, Canada, Mexico, the United Kingdom, Italy, the Netherlands, Russia, the United Arab Emirates, South Africa, China and Argentina. Our sales and business development team is comprised of dedicated personnel assigned to specific customer accounts. Sales personnel have extensive knowledge of network infrastructure. In addition to monitoring closely the target markets for potential network deployments and new customer opportunities, our sales team builds on our existing relationships with our customers' network planning organizations, including participating in business case development and technical analysis of projects.

Direct Sales Strategy

        Our direct customers are typically service providers that operate networks in large geographical areas. The sales cycle to this class of customer typically involves a trial (or trials), and typically requires nine to twelve months from first contact before orders are received. However, the sales cycle can be longer, particularly in green field situations. Once the order stage is reached, a supply agreement is usually established and multiple orders are processed under one master supply agreement. Master supply agreements provide the framework for future business and do not generally include any volume commitments.

        The sales team targets service providers across the world and our products have been deployed in numerous countries including: across Europe (in France, Germany, Sweden, Spain, Italy, Cyprus and the United Kingdom), the Middle East and Africa (in the United Arab Emirates, Saudi Arabia, Jordan, Kuwait, Israel, Lebanon, Nigeria and South Africa), CALA (Peru, Mexico), and Asia (India, Pakistan, China and Australia).

        Our direct sales and business development team primarily focuses on Tier 1 service providers, such as Reliance Jio, Sprint, Xplornet, and WireIE. This channel represented approximately 49% of revenue for the fiscal year ended February 28, 2017 (fiscal year ended February 29, 2016 – 39%).

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Indirect Sales Channel Strategy

Nokia Channel

        Following the NSN transaction, we added Nokia to our distribution process. This relationship provided a historically large indirect sales channel in which the product lines we purchased in the NSN Transaction, as well as other product lines we offer, were sold through Nokia's worldwide channel. Effective January 14, 2016, Nokia combined with Alcatel-Lucent, which has a vertically integrated microwave business unit. During the fiscal year ended February 28, 2017, revenue from the Nokia channel represented 25% of our total revenue (fiscal year ended February 29, 2016 – 44%). We expect the revenue derived from this channel will continue to rapidly decline. See "Acquisition of Microwave Transport Business of NSN and Relationship with Nokia" for a description of our current relationship with Nokia.

        DragonWave is strategically approaching customers that had been served through the Nokia channel to pursue a direct relationship both for legacy care services and for new products.

Other Indirect Channels

        Our indirect sales channel consists primarily of distributors and regional value-added resellers ("VARs"), and is involved in both channel initiated sales (sales initiated and serviced by third parties) and channel fulfilled sales (sales initiated by our direct sales team and serviced by third party resellers). Our principal North American distributors are TESSCO Technologies Inc., Talley Inc., Alliance Communications Corporation and Hutton Communications Inc. These distributors have been selected based on geographic coverage and access to markets. Within North America, the VARs are identified by our distributors. We have agreements with several regional VARs in North America. Outside of North America, we select the VARs directly. We qualify our VARs based on experience deploying microwave equipment, contacts in our target customer segments, and financial stability. We provide ongoing training to our VARs, and our VARs work with our dedicated account managers, participate in co-operative marketing programs for customer sales. Our personnel assist our VARs with initial installations of our products to provide quality assurance to end-customers.

        We also work with OEMs (original equipment manufacturers), including system integrators and network equipment vendors, to assist them in providing complete network solutions for their end-customers, who are primarily Tier 1 service providers.

        In EMEA and Asia-Pacific, we have agreements with regional VARs in the United Kingdom, Ireland, Spain, France, Germany, Belgium, the Netherlands, Sweden, Norway, Hungary, the Czech Republic, Russia, Israel, Saudi Arabia, United Arab Emirates, Kuwait, South Africa, Australia, Pakistan and Singapore.

        Our indirect sale channel represented approximately 26% of revenue for the fiscal year ended February 28, 2017 (fiscal year ended February 29, 2016 – 17%).

Our Production and Repair Capabilities

        We outsource most of our manufacturing and certain elements of the supply chain management and distribution functions. Outsourcing these functions allows us to focus on designing, developing, selling and supporting our products. In addition, we are able to leverage the economies of scale and expertise of specialized outsourced manufacturers, reduce manufacturing and supply chain risk and reduce distribution costs.

        We have several providers of outsourced manufacturing, repair and logistic services including: Plexus Corp. ("Plexus"), C.R. & CS.R.L. ("CRC"), Radio Design Ltd ("RD"), Jabil Circuit ("Jabil"), Lloyd Douglas Solutions ("LDS"), and Panalpina World Transport LTD ("Panalpina").

•

Jabil is an electronics manufacturing services company headquartered in St. Petersburg, Florida with facilities located around the world. Our products are manufactured and repaired at Jabil facilities in Penang, Malaysia, and San Jose, California.

•

Plexus is an electronics manufacturing services company headquartered in Neenah, Wisconsin with manufacturing facilities located around the world. Plexus provides product design, supply chain and materials management, manufacturing, test, fulfillment and aftermarket solutions to branded product

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companies in the wireline networking, wireless infrastructure, medical, industrial and defense/security/aerospace market sectors. Our products are manufactured at Plexus facilities in Boise, Idaho and Penang, Malaysia.

•

Panalpina headquartered in Basel, Switzerland provides logistics services for us globally as well as at facilities located in Prague, Czech Republic and Johor, Malaysia.

•

CRC is an electronic services company headquartered in Sulbiate Monza e Brianza, Italy providing DragonWave with engineering, repair, supply chain management and logistic services.

•

RD is a wireless infrastructure company headquartered in Shipley, West Yorkshire England with facilities around the world providing DragonWave repair services primarily in India.

•

LDS provides manufacturing and repair services to us from its manufacturing and repair facility located in Kanata, Ontario.

        We have allocated manufacturing of our products (including components) among key suppliers to reduce the risks associated with using a single supply source and to ensure competitive pricing and levels of service. Using multiple suppliers also enables us to respond more rapidly to increases in demand for our products.

Our Competitive Environment

        We face competition in our target markets from two types of microwave equipment suppliers: Hybrid equipment suppliers and Ethernet equipment suppliers.

        There is a broad range of microwave equipment suppliers for backhaul applications that are, like us, focused on Ethernet-based products in IP networks. These suppliers are our main competitors and include SIAE Microelettronica, Ceragon Networks Ltd., NEC Corporation and Aviat Networks, Inc. (formerly Harris Stratex Networks, Inc.). We encounter these competitors in network builds focused on IP traffic. We believe that our high bandwidth capability/flexibility, industry leading system gain, broad small cell portfolio, performance and simplicity differentiate our solution from products offered by our competitors.

        We also face competition from full service network integrators such as Huawei, Ericsson, and Nokia (through its newly acquired Alcatel-Lucent microwave division), who have developed competing Ethernet-based products for IP networks.

        The telecommunications equipment industry has experienced significant consolidation among its participants, and we expect this trend to continue. These consolidations have increased the size and resources of our competitors. Most recently, our principal channel partner Nokia acquired Alcatel-Lucent. As indicated above, Alcatel-Lucent has a vertically integrated microwave business unit.

        Our assessment of our competitive position, as described above, is based, among other factors, on our knowledge of the telecommunications equipment industry and communications with our customers.

Our Products

        Our principal commercialized product lines are Harmony, Horizon, Avenue and NetViewer.

Harmony Product Family

        The Harmony product line is a multi-service wireless platform enabling TDM and packet-based services across wireless or wireline infrastructure. This product line was originally acquired through the NSN Transaction, and is currently resold by Nokia under the brand name "Flexipacket". This product is unique in that it has true hybrid capabilities, with software upgradability to an all-IP network.

Harmony First Mile 200

        Harmony First Mile 200 is a reliable and flexible indoor unit (IDU) of the Harmony family, which can be used for tail or chain application in the mobile backhaul. It can be connected to the Harmony Radio outdoor units (ODU) to carry traditional E1/T1 and Ethernet traffic. The Harmony First Mile 200 directly powers the

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Harmony Radio, offers flexible protection architectures including Hot-Standby and ring capability. The Harmony First Mile 200 also provides multiple end-to-end synchronization options.

Harmony Hub 800

        With the Harmony Hub 800, we deliver a multi-service platform that provides packet, pseudowire and hybrid capabilities. Hub 800 is a reliable and flexible indoor unit (IDU), which can be used for tail, hub and edge application in the mobile backhaul. It provides up to 12 ODU directions with high capacity TDMoP (up to 128E1s) and full protection scenario, and is able to have interface to SDH network as well. The Hub 800 uses a multi-slot structure, and provides microwave integration with the Harmony Radio. Optional cards are used to fit the requirements of different applications. The Harmony Hub 800 also provides multiple end-to-end synchronization options.

Harmony Enhanced

        Harmony Enhanced is the next generation of the Harmony Radio and Horizon Compact+ integrated into a single platform. Harmony Enhanced was launched in September 2014, and the complete frequency coverage of this platform will continue development during the fiscal year ending February 28, 2018. Harmony Enhanced is DragonWave's high capacity, single channel system in the 6-42GHz frequency bands, offering new 4096QAM modulation support, and Bandwidth Accelerator Plus, which is the combination of both header and bulk compression. The Harmony Enhanced also enables future scalability by being MIMO-ready. Harmony Enhanced is an all-outdoor radio, with integrated Ethernet switching, including 4 GigE ports, MPLS-TP and H-QoS support. Harmony Enhanced will support the longest all-outdoor reach in the industry through the optional high power system.

Harmony Enhanced^MC

        Harmony Enhanced^MC is the next generation of the Horizon Quantum, evolved into an all outdoor platform. Harmony Enhanced^MC was launched in February, 2016, and the complete frequency coverage of this platform will continue development during the fiscal year ending February 28, 2018. Harmony Enhanced^MC is DragonWave's highest capacity radio, delivering >3Gbp sis a single radio, and >6Gbps on a single antenna in the 6-42GHz frequency bands, through dual channel capability, integrate XPIC, 4096QAM modulation support, and Bandwidth Accelerator Plus, which is the combination of both header and bulk compression. Harmony Enhanced^MC will improve operator total cost of ownership by enabling smaller antennas and resulting tower lease costs through its industry leading system gain. The Harmony Enhanced^MC also enables future scalability by being MIMO-ready. Harmony Enhanced is an all-outdoor radio, with integrated Ethernet switching, including 4 ports including and a 10GE port, MPLS-TP and H-QoS support.

Harmony Radio Lite

        The Harmony Radio Lite is a sub-6 Ghz product with near and non-line of sight capabilities in the licensed and unlicensed bands. With an all-outdoor architecture and integrated 6" antennas, the Harmony Radio Lite is optimized for 3G and 4G small cell backhaul. The Harmony Radio Lite is a differentiated platform with SynchE, 1588, low delay and low PDV capabilities. In addition, the Harmony Radio Lite can be deployed as an integrated ODU with the Harmony First Mile 200 or Harmony Hub 800, and provides end to end Ethernet capabilities within the Harmony product family.

Harmony Eband

        Harmony Eband is, a compact, lightweight, low energy consumption radio operating in the 70-80 GHz spectrum. The Harmony Eband is ideally suited for mobile backhaul markets, providing reach comparable to a 23-38 GHz offering, higher capacity and a lower OPEX expansion solution.

        Harmony Eband allows operators to tap into readily available spectrum that is generally lower cost and more lightly licensed than lower frequencies and it is equipped with a number of features that increase spectral efficiency and extend the radio's reach, while also providing extensive networking capabilities compliant with the latest Carrier Ethernet standards. Harmony Eband's industry leading performance is demonstrated by operation

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up to 64 QAM to achieve throughput of 2.5 Gbps full duplex in 500 MHz mode. Spectral efficiency is further enhanced by both payload and header compression to deliver capacity of up to 4 Gbps. Additionally, Harmony Eband features the DragonWave Reach Extender, which leverages Waveform and Modulation Adaptivity (WMA) and MIMO to extend the radio's reach and deliver 3-6 KM links with high availability. With an ultra-low delay mode and a CPRI interface, the Harmony Eband radio is also an ideal solution for front haul applications.

Harmony Trunk

        The Harmony Trunk is a traditional microwave system used for high-capacity multi-channel applications. This product is primarily used in emerging markets, and offers all-indoor configurations in a rack mount system. It operates in the sub-11 GHz bands, with focus on reach capabilities, and both packet and hybrid configurations. We work in partnership with Fujitsu to provide our Harmony Trunk product and we act as an integrator/reseller of this product through our established sales channels.

Horizon Product Family

        We commenced commercial production of our Horizon product line in 2007. Our Horizon product line was designed as a next-generation product to follow our AirPair product line, which was introduced in 2002 and is now in its end of life stage.

        Our Horizon product family is an Ethernet microwave portfolio and consists of Horizon Compact+ and Horizon Quantum. Key features across our Horizon product line include adaptive modulation, ring/mesh support, advanced prioritization, jumbo frames, flow control, ATPC (adaptive transmission power control) and layer 2 transparencies.

Horizon Compact+

        In February 2011, we launched the Horizon Compact+ globally. Horizon Compact+ is the evolution of our Horizon Compact product. Horizon Compact+ is an all-outdoor platform that is fully interoperable with Horizon Compact, enabling rapid adoption by existing customers.

        As the first all-outdoor system to include 2048 QAM, Horizon Compact+ has industry leading capacity and spectral efficiency capabilities. Building on the capacity increases enabled by our previously announced Bandwidth Accelerator technology, this spectrum-doubling capability increases the data bandwidth of Horizon Compact+ to as high as 2 Gbps. This industry leading spectral efficiency, offers a significant total cost of ownership benefit, especially in markets with high spectrum costs, such as Europe, India and Asia.

        Horizon Compact+ offers all the packet-based features of Horizon Compact, and introduces SynchE, as well as up to 4 ports of Ethernet access. Horizon Compact+ operates in licensed spectrum from 6 to 60 GHz.

Horizon Quantum

        In September 2009, we launched our Horizon Quantum product in North America and in February 2010, we launched Horizon Quantum in Europe. We have designed Horizon Quantum to provide significantly increased bandwidth capacity of up to 4 Gbps per link. Horizon Quantum is a native Ethernet implementation supporting sub-0.1-ms latencies and is optimized for the rollout of LTE services. Horizon Quantum is a half-rack-unit device incorporating a Bandwidth Accelerator feature that enables superior spectral efficiency by up to a factor of 2.5 times as compared to conventional systems. The combination of these features results in a five times improvement in rack density per unit of available bandwidth capacity. Horizon Quantum also integrates key nodal intelligence that enables network operations to be streamlined and simplified to yield significant cost efficiencies. For example, Horizon Quantum incorporates integrated switching capability enabling aggregation and switching to optimize ring-and-mesh network deployments by requiring reduced network equipment to be deployed, powered and maintained. Horizon Quantum also incorporates our standard user-scalable bandwidth enabling simple and remote scaling, without truck rolls, providing our customers with key operational-cost benefits.

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Avenue

        Our Avenue portfolio comprises three microcellular solutions ranging from an access microcell backhaul link (Avenue Link Lite), to a high capacity aggregation link (Avenue Link) to the industry's first fully-integrated microcellular platform (Avenue Site), with multi-beam backhaul and independently-aligned antenna array, Ethernet switching, power supply, battery backup and a slot for a 3G/4G micro base station; all within a single zoning-friendly enclosure.

        Our Avenue solutions are integrated within environmentally hardened enclosures, optimized for street-level deployments. Engineered to provide the greatest flexibility for mobile operators, our Avenue products can be deployed on any number of structures including street lamps, traffic light poles, or building sides. Our Avenue solutions are designed to blend into the urban environment, meeting the size, weight and aesthetic requirements set by city zoning officials.

NetViewer

        NetViewer is a multi-service, multi-product network management platform, sold directly and through the Nokia channel. The NetViewer platform supports the Harmony product line and the Horizon and Avenue product lines. NetViewer enables provisioning, management, monitoring, and configuration across the line of products in a single graphical user interface (GUI)-based system. NetViewer also manages legacy Nokia microwave products. NetViewer is an industry leading end-end Ethernet provisioning engine.

The Components for Our Products

        Our product solution consists of links. Each link is comprised of two radios, two modems, and two antennas and includes our proprietary embedded software and FPGA (field-programmable gate array) firmware. Our links incorporate commercially available electronic components sourced from third party suppliers, including FPGAs, monolithic microwave integrated circuits and microprocessors. The antennas used in our wireless carrier Ethernet links are manufactured by third party suppliers.

        Component pricing is impacted by a number of factors including the volume we are purchasing, the demand in the industry for similar products which can limit supply, and economic factors such as the price of oil which can impact the landed cost of our components.

        The manufacturing of our products depends on obtaining adequate supplies of third party components on a timely basis. We source several key components used in the manufacture of our products from a limited number of suppliers, and in some instances, a single source supplier. Because certain components have longer lead times, we often pre-order components based on sales forecasts. This can result in oversupply or undersupply of components if actual sales are different from forecast sales. See "Part I – Item 3. Key Information – D. Risk Factors".

Intellectual Property

        In accordance with industry practice, we seek to protect our proprietary rights through a combination of patent, copyright, trade-mark and trade secret laws and contractual provisions.

        Patent law offers some protection for our current and future products and may protect certain elements of our manufacturing processes. Our patent strategy is focused on protecting novel elements of the following aspects of our product and manufacturing design, such as:

•

core design features (including certain circuits and algorithms required for advanced, low-cost point-to-point radio implementations);

•

implementation technologies (consisting of the proprietary aspects of our manufacturing design that permit low-cost automated assembly and testing);

•

certain key Ethernet microwave networking technologies for high-speed, high-performance metro Ethernet networking applications (including bandwidth scaling feature (marketed as "Flex"), mesh rapid link shutdown feature, mesh node packaging/integration); and

40

•

other key features of our products (including Flex functionality, RF-loopback, mesh nodes and tri-mode mesh panel features).

        Our patent portfolio consists of 69 patents: 29 issued U.S. patents, 2 issued Canadian patents, and 38 issued European patents. We have a total of 26 pending patent applications: 7 pending European applications and 19 pending U.S. applications.

        In connection with the NSN Transaction, we use certain patents and other intellectual property rights owned by Nokia under license and in connection with the disposition of Axerra, we use certain patents and other intellectual property rights owned by the acquirers of Axerra under license.

        The executable code for our software and firmware, the embedded software and firmware in our hardware products and our manufacturing designs are protected under trade secret law and as unpublished, copyrighted works. Software is only provided to our customers in binary format, subject to industry standard source code escrow arrangements with key customers. We license the use of our product to our customers and resellers. These licenses contain standard provisions prohibiting the unauthorized reproduction, disclosure, reverse engineering or transfer of our product. In addition, we are designing product changes intended to enable the implementation of encrypted embedded firmware to further enhance our ability to protect our intellectual property. We recognize, however, that effective copyright protection may not be available in some countries in which we distribute products.

        Our general practice is to enter into confidentiality and non-disclosure agreements with our employees, consultants, manufacturers, suppliers, customers, channel partners and others to attempt to limit access to and distribution of our proprietary information. In addition, our practice is to enter into agreements with our employees that include an assignment to us of all intellectual property developed by each of them in the course of their employment.

        We have registered trade-marks DRAGONWAVE and HORIZON in Canada and AVENUE in the U.S. We have a registered trade-mark for DRAGONWAVE in China and in the European Union and have a pending trade-mark application in India for DRAGONWAVE. We have a pending trade-mark application in India for AVENUE. In connection with the Renewed Framework, we have been granted an exclusive license, without the right to grant sub-licenses, to use the trade-marks HUB800 and FIRSTMILE200 and an exclusive license for certain field of use and a non-exclusive license for certain other fields of use, without the right to grant sub-licenses, to use the trade-marks LITE and NETVIEWER.

"See "Part I – Item 3. Key Information – D. Risk Factors".

Research and Development Activities

        Our ability to develop technologically superior and cost-effective solutions relative to our competitors can only be achieved through our continued research and development ("R&D") efforts.

        Our R&D activities take place at our headquarters in Ottawa, Ontario, Canada and in Shanghai, China. We currently have approximately 58 personnel in our engineering group, representing approximately 36% of our total personnel. The majority of our engineering staff hold degrees in engineering. A large number of our senior engineering personnel have worked together for several years and have been responsible for the development of our products. Our R&D team works closely with our diverse customer base, and incorporates feedback from our direct and indirect sales teams into our product development plans to improve our products and address emerging market requirements.

        There are currently 23 employees in Shanghai, 20 of which are in R&D.

        Our R&D expenses have historically been, and will continue to be, a significant portion of our overall cost structure as we will continue to invest in new product features and new platforms to better serve the current and future needs of our customers. We invested 18% and 16% of our revenues in R&D during fiscal year 2017 and fiscal year 2016, respectively.

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        For further analysis on Research and Development, see the management's discussion and analysis of the Company's consolidated results of operations and financial condition for the three and twelve months ended February 28, 2017 incorporated by reference into this Annual Report as Exhibit 15.1.

Cycles

        There is no seasonal effect on our sales patterns; however, quarterly results may fluctuate especially when multi-year or multi-quarter projects are booked.

Economic Dependence

        In the fiscal year ended February 28, 2017, Nokia and two other customers each contributed over 10% of our revenue. Specifically, revenue through the Nokia channel represented approximately 25% of our total revenue during the fiscal year ended February 28, 2017. Our other key customers accounted for 14% and 13% of revenue respectively in the fiscal year ended February 28, 2017.

        As noted above, following Nokia's announced combination with Alcatel-Lucent, which has a vertically integrated microwave business unit, we announced that we have reshaped our channel strategy. Our revised strategy primarily positions our latest and new products directly to customers. See "Acquisition of Microwave Transport Business of NSN and Relationship with Nokia", "Competitive Conditions" and "Risk Factors" above.

        We supply products to our customers, including Nokia, on a purchase order basis and, accordingly, customers are generally under no ongoing obligation to buy our products. If one or more of our customers discontinues its relationship with us for any reason, or reduces or postpones current or expected purchases of our products or services, our business, results of operations and financial condition could be materially adversely affected.

        "Part I – Item 4. Information on the Company – A. History & Business Developments – Mergers & Acquisitions and Joint Ventures – Acquisition of Microwave Transport Business of NSN and Relationship with Nokia".

Environmental Protection

        Environmental protection requirements currently have no material financial or operational effect on our capital expenditures, earnings or competitive position, and are not expected to have any material effect in future years. While we are currently unaware of any negative effects associated with our products, allegations of health and safety risks associated with wireless products have been publicized from time to time.

        See "Part I – Item 3. Key Information – D. Risk Factors".

Employees

        As of February 28, 2017, we had 160 full-time employees and contractors. The following is a breakdown of our employees and contractors by main category of activity and geographic location:

Category of Activity	February 28, 2017		Geographic Location
General and administrative:		15	Canada, China
Operations:		41	Canada, Global
Research and development:		58	Canada, China
Sales and marketing/customer support:		46	Global
Total:		160

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C.    Corporate Structure

        The intercorporate relationships between DragonWave and its material subsidiaries are set out in the chart below. As noted below, DragonWave has a 50.1% equity interest in DragonWave HFCL India Private Limited. DragonWave does not control the board of DragonWave HFCL India Private Limited.

D.    Property, Plants and Equipment

        Our corporate headquarters are located in Ottawa, Ontario where we lease and occupy 26,329 square feet of space. The lease for our office expires in November 2021. Our headquarters do not include product manufacturing facilities. The aggregate monthly rental payment for our corporate headquarters, together with the maintenance fees, is approximately $47,996.

        We also lease and occupy 18,357 square feet of space in another office in Ottawa, Ontario, mainly as a warehousing and testing facility. The lease for this space expires in November 2021 and the aggregate monthly rental payment is $28,169, including maintenance fees.

        In Shanghai, China, we lease and occupy 14,272 square feet of space for research and development activities. The lease expires in September 2017 and the aggregate monthly rental payment is $19,923, including maintenance fees.

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        We also lease space in other regions to support the sales and marketing activities of our branches and subsidiaries in those regions.

ITEM 4A.    Unresolved Staff Comments.

        None.

ITEM 5.    Operating and Financial Review and Prospects.

A.    Operating Results

        DragonWave is a leading provider of high-capacity packet microwave solutions that drive next-generation IP networks. DragonWave's carrier-grade point-to-point packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies, enterprises and other organizations to meet their increasing bandwidth requirements rapidly and affordably. The principal application of DragonWave's products is mobile network backhaul. Additional applications include leased line replacement, last mile fiber extension and enterprise networks.

        Historically, our financial results have fluctuated on a quarterly basis and we expect that quarterly financial results will continue to fluctuate in the future. The results of operations for interim periods should not be relied upon as an indication of the results to be expected or achieved in any future period or any fiscal year as a whole. Fluctuations in results reflect the project nature of network installations, including for end-customers we supply through Nokia. In addition, results may vary as a result of the timing of staffing, infrastructure additions required to support growth, and material costs required to support design initiatives.

        During fiscal year 2017, neither inflation nor deflation had a material impact on our operations. However, in light of the uncertain global economic outlook we cannot provide any assurance that there will be no

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significant variations on our operations, or the business operations of our customers and suppliers in the future which may have a material impact on our results of operations.

	Twelve Months Ended
	February 28 2017			February 29 2016			February 28 2015
REVENUE
Hardware and other		32,742			70,491			148,429
Services		11,174			15,804			9,337
		43,916			86,295			157,766
COST OF SALES
Hardware and other		25,672			58,991			123,641
Services		5,477			8,917			3,360
		31,149			67,908			127,001
Gross profit before inventory provisions (note 1)		12,767			18,387			30,765
		29.1%			21.3%			19.5%
Inventory provision		953			4,416			2,771
Gross profit		11,814			13,971			27,994
		26.9%			16.2%			17.7%
EXPENSES
Research and development		7,825			13,406			18,657
Selling and marketing		7,363			10,572			13,975
General and administrative		12,734			13,798			15,085
		27,922			37,776			47,717
Loss before other items		(16,108	)		(23,805	)		(19,723	)
Other Expenses
Goodwill impairment		—			(11,927	)		—
Restructuring Costs		—			(1,549	)		—
Amortization of deferred financing cost		(442	)		—			—
Amortization of intangible assets		(369	)		(577	)		(1,188	)
Accretion expense		(102	)		(205	)		(168	)
Interest expense		(1,464	)		(2,014	)		(1,557	)
Warrant issuance expenses		(561	)		—			(221	)
Change in fair value of warrant liability		4,242			1,119			2,007
Gain on change in estimate		—			—			67
Gain on sale of fixed assets		—			—			18
Foreign exchange gain (loss)		(110	)		(331	)		846
Loss before income taxes		(14,914	)		(39,289	)		(19,919	)
Income tax expense		783			2,275			717
Net Loss and comprehensive loss		(15,697	)		(41,564	)		(20,636	)
Net loss (income) attributable to non-controlling interest		(191	)		(740	)		(884	)
Net Loss attributable to shareholders		(15,888	)		(42,304	)		(21,520	)
Basic & Diluted loss per share		(3.26	)		(14.01	)		(7.90	)
Basic & Diluted weighted average shares outstanding		4,879,738			3,019,259			2,724,467

Note 1: Gross profit before inventory provisions is a non-GAAP financial measure. See "Use of Non-GAAP Performance Measures" in Exhibit 15.1 to this Annual Report.

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        The principal differences between the twelve months ended February 28, 2017 and February 29, 2016 are explained as follows:

•

In the twelve months ended February 28, 2017 the most significant contributors to the decrease in revenue over the same period in the prior fiscal year were decreases in sales through the Nokia channel, decreases in hardware sales to a Tier 1 carrier in India and lower service revenue related to installations to a Tier 1 carrier in the United States.

•

Our gross profit percentage was higher during the twelve months ended February 28, 2017 compared to the same period in fiscal year 2016 primarily because of a shift in customer mix.

•

Operating expenses in the twelve months ended February 28, 2017 were $9.9 million lower than they were in the same periods in the previous year primarily as a result of restructuring initiatives taken in fiscal year 2016 which reduced the size of the staff internationally and cut spending on contractors and material purchased for the creation of prototypes.

        The principal differences between the twelve months ended February 28, 2017 and February 28, 2015 are explained as follows:

•

The reduction in revenue can be primarily attributed to reduced sales through the Nokia channel in addition to reduced sales to a Tier 1 carrier in India.

•

The gross profit percentage improved due to decreases in material costs and a change in customer mix with a less significant percentage of the total revenue coming from lower margin customers.

•

Operating expenses decreased primarily as a result of decreased spending across a number of areas, most significantly compensation related spending following the restructuring initiatives in fiscal year 2016.

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Our Revenue

        Our revenue for fiscal year ended February 28, 2017 was $43.9 million, compared with $86.3 million for the fiscal year ended February 29, 2016. Approximately 75% of our sales comes from hardware sales of the Harmony and Horizon product lines along with the related software upgrades. In fiscal year 2017, approximately 25% of our sales were derived from services including installation and network design services. We prepare consolidated financial statements, which include the revenue from DragonWave HFCL, our 50.1% owned subsidiary. All intercompany accounts and transactions have been eliminated upon consolidation.

        We analyze our sales according to geographic region and target product development and sales strategies by region. The following tables presents total revenues by geographic location though direct and indirect sales and through our channel partner, Nokia:

	For the year ended
	February 28, 2017								February 29. 2016								February 28. 2015
	Direct & Indirect Sales		OEM Sales through Nokia		Total		% of Total Revenue		Direct & Indirect Sales		OEM Sales through Nokia		Total		% of Total Revenue		Direct & Indirect Sales		OEM Sales through Nokia		Total		% of Total Revenue
Canada		2,648		—		2,648		6%		2,255		—		2,255		3%		4,358		—		4,358		3%
Europe, Middle East and Africa		4,825		10,287		15,112		34%		6,753		31,109		37,862		44%		12,554		61,467		74,021		47%
India		4,391		301		4,692		11%		13,993		3,787		17,780		21%		26,291		10,854		37,145		24%
United States		13,261		—		13,261		30%		19,577		19		19,596		23%		23,451		—		23,451		15%
Rest of world		7,661		542		8,203		19%		6,095		2,707		8,802		10%		6,825		11,966		18,791		12%
		32,786		11,130		43,916		100%		48,673		37,622		86,295		100%		73,479		84,287		157,766		100%

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        During each of the periods presented below, revenue is comprised of product sales and services, as indicated:

	For the year ended
	February 28, 2017				February 29, 2016				February 28, 2015
	Amount		%		Amount		%		Amount		%
Hardware and other		32,742		75%		70,491		82%		148,429		94%
Services		11,174		25%		15,804		18%		9,337		6%
Total Revenue		43,916		100%		86,295		100%		157,766		100%

        Hardware and other sales include both the microwave backhaul equipment shipped and the related software upgrades. The Services category includes software maintenance contracts, extended warranty programs and site planning and installation services. Hardware and related software sales revenue declined, primarily as a result of decreases in sales through the Nokia Channel. The change in services revenue relates to the timing of installation services contracts with Tier 1 carriers in both India and the United States.

        While revenue was down in the year ended February 28, 2017, a number of changes were observed which indicated that our increasing focus on direct business with higher margin customers and geographies is beginning to succeed. A new customer in the Middle East added to our direct revenue as did hardware sales to a Tier 1 customer in the USA. While sales in North America were down on the year overall, the fourth quarter saw an increase in revenue as order activity from distributors increased. The significant impact of the decrease in sales through the Nokia channel following the acquisition of Alcatel Lucent by Nokia is evident in the variance in the twelve months ended February 28, 2017 compared to the same period in the prior year.

	Twelve Months
Services revenue for the period ended February 29, 2016		15,804
Tier 1 carrier in the United States		(2,522	)
Tier 1 carrier and repair centre in India		(1,450	)
Nokia		(1,605	)
Warranty programs		999
Other		(52	)
Total Change		(4,630	)
Services revenue for the period ended February 28, 2017		11,174

        Services revenue from installations with Tier1 carriers in both the United States and India declined in fiscal year 2017 as the installations were completed. Warranty and maintenance programs previously sold to Nokia also declined in keeping with the decline in the business overall.

        For further analysis on our results of operations, see management's discussion and analysis of the Company's consolidated results of operations and financial condition for the three and twelve months ended February 28, 2017 incorporated by reference into this Annual Report as Exhibit 15.1, and the Company's consolidated results of operations and financial condition for the three and twelve months ended February 29, 2016 incorporated by reference into this Annual Report as Exhibit 15.2.

B.    Liquidity and Capital Resources

        Since our initial public offering in April 2007 (our"IPO"), we have financed our operations primarily through the proceeds of our IPO and other follow-on public offerings and debt arrangements.

        Our IPO raised net proceeds of CAD$26.9 million. This was followed by seven further public offerings: (1) an offering in September 2007 which raised net proceeds of CAD$22.1 million, (2) our NASDAQ initial public offering in October 2009 which raised net proceeds of CAD$70.5 million, (3) an offering in September 2013 an offering which raised net proceeds of $22.4 million, (4) an offering in August 2014 which raised net proceeds of $24.0 million, (5) an offering in April 2016 which raised net proceeds of $4.0 million,

48

(6) an offering in August 2016 which raised net proceeds of $5.3 million, and an offering in March 2017 which raised net proceeds of $1.6 million.

        We have an asset based credit facility with Comerica Bank and Export Development Canada. The original credit facility matured on June 1, 2016, however, we have been operating under a fourth forbearance agreement which expired on April 1, 2017. We have not yet come to agreement on a fifth forbearance agreement. We had drawn $17.0 million on the facility as at February 28, 2017 (February 29, 2016 – $22.2 million), and $1.8 million against our letter of credit facility (February 29, 2016 – $1.9 million). The original credit facility which matured on June 1, 2016 is secured by a first priority charge on all of our assets and our principal direct and indirect subsidiaries. The terms of the credit facility include other customary terms, conditions, covenants, representations and warranties. Credit availability is subject to ongoing compliance with borrowing covenants and short term assets on hand.

        The fourth forbearance agreement which was signed on October 12, 2016 identified new minimum covenant levels reflecting our revised financial plans. The forbearance agreement included a requirement to hold a minimum of $1.0 million at Comerica Bank, reduces the facility commitment from $40.0 million to $30.0 million, includes additional compliance requirements and implements more frequent monitoring. As part of this forbearance agreement, we agreed to issue warrants to purchase 375,000 common shares to the lenders at an exercise price of $4.00 per share. These warrants will expire five years from the date of issuance. We are in ongoing negotiations with our lending partners to put in place a new long term debt facility.

        As of the date of this Annual Report, the Company's fourth forbearance agreement had expired, and a new forbearance agreement has not yet been agreed.

        The consolidated financial statements for the year ended February 28, 2017 have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and the disbursement of liabilities and commitments in the normal course of business in the foreseeable future. We have a history of losses and have consumed significant cash resources in the past, and have continued to do so in the year ended February 28, 2017. During the last two fiscal years, additional pressure has been placed on our liquidity position as a result of reduced revenue from a significant Original Equipment Manufacturer ("OEM") channel and a dispute over inventory shipped to a customer in India in June 2015.

        We have been able to make progress in restructuring the business. This progress includes the following highlights:

        Operational improvements:

•

Selected by Sprint for our network densification and optimization strategy;

•

Improved the gross profit percentage in three and twelve months ended February 28, 2017 by 21.7% and by 10.7% respectively compared to the same periods in the prior fiscal year;

•

Reduced operating expenses by 11.5% and by 26.1% in the three and twelve months ended February 28, 2017 compared to the same periods in the previous year primarily through a reduction in staff levels internationally;

        Debt Facility:

•

Reduced outstanding debt on our credit facility from a high of $32.8 million as at August 31, 2015 to $17.0 million as at February 28, 2017 by leveraging our working capital;

        New Capital:

•

Raised $9.5 million in cash (net of commissions and expenses) with a public offering in August 2016 and a registered direct offering in April 2016, which in both cases included common shares and warrants;

•

Received $4.2 million in cash from the exercise of warrants during the twelve months ended February 28, 2017; and

        Other:

•

Initiated arbitration proceedings to seek resolution to its customer dispute in India.

49

        Despite the progress identified above, we remain in breach of the original terms of its debt facility, and have not yet been able to achieve a quarterly break even level. See Note 11 in the consolidated financial statements for the year ended February 28, 2017 for further details on the debt facility. The continued consumption of cash has raised substantial doubt about our ability to continue as a going concern. Management's plans to restructure the business, improve our financial results and overcome these difficulties include initiatives in a number of areas, including:

•

Targeting our sales efforts to direct and indirect opportunities in markets with higher gross margins, and lower working capital requirements;

•

Adjusting our business focus and resources away from Nokia in order to support new sales channels;

•

Renegotiating the terms of existing debt facilities, or finding new debt providers;

•

Actively investigating and pursuing alternative forms of financing;

•

Seeking to reduce fixed and variable operating expenses further, by tightly controlling discretionary spending and headcount growth;

•

Continuing to collect accounts receivable from customers in a timely manner;

•

Reducing inventory levels in both raw material and finished goods inventory;

•

Working closely with vendors to ensure supply continuity; and

•

Investigating strategic and financial alternatives that may be available including a potential sale of the Company, alternative debt and equity, and business combinations.

        In addition, we no longer comply with Nasdaq Listing Rule 5550(b)(1) due to our failure to maintain a minimum of $2.5 million in shareholders' equity or any alternatives to such requirement, and we were granted an extension to April 17, 2017 to remedy the deficiency. We did not regain compliance but have requested a hearing before the Nasdaq Listing Qualifications Panel to seek a further extension. There can be no assurance that the Panel will ultimately grant an extension of the compliance period. Continued listing of its common shares on the Nasdaq increases our ability to raise additional capital in the future. Trading of our securities under the symbol "DRWI" on the Toronto Stock Exchange, our primary listing, is not impacted by this decision.

        These plans may be difficult to achieve. They are dependent on a number of key assumptions including the timing of significant new customer projects, success in arbitration with the customer located in India, and accommodations from our suppliers and credit lenders. It is possible that the plans described above may not be fully executed or may occur too slowly to solve our current liquidity concerns. There can be no assurance that the existing financing facility can be renegotiated or that any other forms of financing can be arranged on satisfactory terms. These consolidated financial statements do not include any adjustments to the accounts and classification of assets and liabilities that may be necessary if we are unable to continue as a going concern. Such adjustments could be material. For further analysis on Liquidity and Capital Resources, see the management's discussion and analysis of the Company's consolidated results of operations and financial condition for the three and twelve months ended February 28, 2017 incorporated by reference into this Annual Report as Exhibit 15.1, and the Company's consolidated results of operations and financial condition for the three and twelve months ended February 29, 2016 incorporated by reference into this Annual Report as Exhibit 15.2.

C.    Research and Development

        We continue to believe that investment in R&D is pivotal to our ability to develop technologically superior and cost-effective solutions relative to our competitors.

        Our R&D activities take place both at our headquarters in Ottawa, Ontario, Canada and in Shanghai, China. We currently have approximately 58 employees in our engineering group, representing approximately 36% of our total personnel.

        Our R&D expenses have historically been, and will continue to be, a significant portion of our overall cost structure as we will continue to invest in new product features and new platforms to better serve the current and

50

future needs of our customers. We invested 18% and 16% of our revenues in R&D during fiscal year 2017 and fiscal year 2016, respectively.

        For further analysis on Research and Development, see the management's discussion and analysis of the Company's consolidated results of operations and financial condition for the three and twelve months ended February 28, 2017 incorporated by reference into this Annual Report as Exhibit 15.1.

D.    Trend Information

        For a description of the trend information relevant to us see discussions in Parts A and B of Item 5. "Operating and Financial Review and Prospects"

E.    Off-Balance Sheet Arrangements

(Actual Dollars)

City	Country	Lessor	Lease Expiry	Cost per Month
Dubai	UAE	TECOM Investments FZ-LLC	November, 2017	$	3,450
Luxembourg City	Luxembourg	ME Business Solutions S.à r.l.	Month to Month	$	1,600
Ottawa (Warehouse & Operations at Terry Fox Drive + Office Space at 411 Legget Drive)	Canada	Kanata Research Park	November, 2021	$	74,400
Shanghai	China	Shanghai Lingang Economic
		Development Group	September, 2017	$	19,300
Gurgaon	India	Narinder Singh & Songs (P) LTD	March, 2018	$	4,300

        The leases listed above are arranged at market pricing levels in all jurisdictions and the lease periods listed above represent a commitment for the time period indicated. We are actively seeking sub-lease arrangements in a number of locations as part of our efforts to reduce costs. There can be no assurance that we will secure sub-leases or that sub-lease terms will be favorable.

        We use an outsourced manufacturing model in which most of the component acquisition and assembly of our products is executed by third parties. Generally, we provide the supplier with a purchase order 90 days in advance of expected delivery. We are responsible for the financial impact of any changes to the product requirements within this period. In some cases when a product has been purchased by a contract manufacturer but not pulled on for a build after a certain amount of time, we provide a deposit against that inventory, but do not take ownership of it.

        Our contract manufacturers currently have inventory intended for use in the production of our products, and we have purchase orders in place for raw materials and manufactured products with these contract manufacturers as well. All of this material is considered to be part of the normal production process and we take provisions against any portion of that inventory that we do not expect to be fully used based on current forecasts and projections. As mentioned previously, we would generally be responsible for the cost of the material approved to be purchased on our behalf by our contract manufacturers should those forecasts or projections change.

        As at February 28, 2017, we have provisions totaling $2.7 million on inventory held by contract manufacturers that we do not expect to be fully used.

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F.    Tabular Disclosure of Contractual Obligations

        Future minimum operating lease payments which relate to office and warehouse space in various countries as at February 28, 2017 per fiscal year are as follows:

2018	1,074
2019	915
2021	905
Thereafter	1,565
	4,459

ITEM 6.    Directors, Senior Management, and Employees.

A.    Directors and Senior Management

Name, Occupation and Security Holding

        Our directors as at February 28, 2017 were as follows:

Name and Municipality of Residence	Principal Occupation	Director Since	Holdings of Outstanding Common Shares as at February 28, 2017
PETER ALLEN Ottawa, Ontario, Canada	Chief Executive Officer, DragonWave Inc.	March 4, 2004	18,346
CLAUDE HAW(1)(2)(3)(4) Ottawa, Ontario, Canada	President of Venture Coaches	November 10, 2003	1,200
LORI O'NEILL(1)(2)(3) Ottawa, Ontario, Canada	Independent Consultant and Corporate Director	June 13, 2013	800
CESAR CESARATTO(1)(2)(3) Gatineau, Quebec, Canada	Retired	June 12, 2012	1,600

(1)

As of February 28, 2017, the audit committee members are Lori O'Neill (Chair), Claude Haw and Cesar Cesaratto.

(2)

As of February 28, 2017, compensation committee members are Cesar Cesaratto (Chair), Claude Haw and Lori O'Neill.

(3)

As of February 28, 2017, the nominating and governance committee members are Claude Haw (Chair), Lori O'Neill and Cesar Cesaratto.

(4)

Chairman of the board of directors.

        Our directors, as at the date of this Annual Report, are Peter Allen, Claude Haw, Lori O'Neill and Cesar Cesaratto. Each of our directors holds office until the next annual meeting of shareholders or until his successor is duly elected or appointed, unless his office becomes vacant by resignation, death, removal or other cause.

        Our directors and executive officers, as a group, beneficially own, or control or direct, directly or indirectly, a total of 36,434 common shares, representing 0.4284% of the total outstanding common shares as of the date of this Annual Report.

52

        Our executive officers as at February 28, 2017 were, and as except as otherwise noted, as of the date hereof are, as follows:

Name and Municipality of Residence	Offices with the Company
PETER ALLEN Ottawa, Ontario, Canada	President, Chief Executive Officer and Director
PATRICK HOUSTON Ottawa, Ontario, Canada	Chief Financial Officer
BARRY DAHAN London, England, United Kingdom	Executive Vice President, Global Sales
DAVID FARRAR Ottawa, Ontario, Canada	Vice President, Operations
GREG FRIESEN Ottawa, Ontario, Canada	Vice President, Product Management
INGRID MAG Ottawa, Ontario, Canada	Vice President, Product Development
TOM MCLELLAN Ottawa, Ontario, Canada	Vice President, Services

        In May 2017, both Greg Friesen and Tom McLellan resigned from DragonWave. No new executive officers have been identified to the date of this Annual Report.

        As at the date of this Annual Report, our board of directors has three standing committees: the audit committee, the compensation committee and the nominating and governance committee. Detailed information regarding the mandate and procedures of the audit committee can be found below under "Part I – Item 6. Directors, Senior Management and Employees – C. Board Practices – Audit Committee", as required by National Instrument 52-110 – Audit Committees promulgated under applicable securities legislation.

        We have also established a disclosure committee composed of members of management, namely Peter Allen and Patrick Houston.

        The principal occupations of our directors and executive officers as at February 28, 2017, for at least the five preceding years are as follows:

Directors

        Cesar Cesaratto:    Mr. Cesaratto has more than 40 years of experience in the information technology industry. Mr. Cesaratto joined Nortel Networks Limited ("Nortel"), a communications equipment design and manufacturing company, in 1970 and assumed increasingly senior management roles during his 31 year career with Nortel, culminating in the role of President, Wireless Solutions for Europe, Middle East and Africa. Mr. Cesaratto retired from Nortel in 2001 and has continued to be active in the technology sector. He is currently a member of an angel investment group dedicated to the development of technology start-up companies. He was recently chairman of the board of directors of Applied Micro Circuits Corporation (2002 to 2017), was a director of Tundra Semiconductor Corporation (2007 to 2009), Gennum Corporation (2002 to 2006) and Breconridge Manufacturing Solutions (2007 to 2010). He also serves on the Board of two private start-up companies. Mr. Cesaratto holds a Bachelor of Engineering in Electrical Engineering from McGill University.

        Claude Haw, Director:    Claude Haw is President of Venture Coaches, a private consulting and investment company, which he founded in 2000. From 2009 to 2011 he was President and Chief Executive Officer of the Ottawa Centre for Regional Innovation (OCRI), Ottawa's leading economic development organization. From 2003 to early 2007, Mr. Haw was also a general partner at Skypoint Capital Corporation, an Ottawa based venture capital firm. Prior to Venture Coaches, Mr. Haw held a number of executive positions at Newbridge Networks Corporation, including Vice President of Corporate Business Development. In this role, he managed

53

strategic investment programs in more than 20 companies. Mr. Haw has also held senior management positions at Mitel Networks Corporation and Leigh Instruments Ltd. Mr. Haw serves on the board of directors of two private companies, Signority Inc. and Rent Frock Repeat Inc., as well as on the board of a not-for-profit association, Public Services Health and Safety Association. Mr. Haw holds a Bachelor of Electrical Engineering degree from Lakehead University in Thunder Bay, Ontario, Canada and has completed the Canadian Securities Course. He has completed the ICD Director Education Program and attained the ICD.D designation in 2012. Mr. Haw was also recognized for his contribution to Canadian innovation with the Queen Elizabeth II Diamond Jubilee Medal in 2012.

        Lori O'Neill, Director:    Lori O'Neill is a CPA, CA and CPA (Illinois) and currently provides financial consulting services to growth companies. During over 25 years as partner in a global professional services firm, Ms. O'Neill assisted growth companies from startups to multinationals, supporting complex transactions, private and public equity offerings, mergers and acquisitions in Canada and the U.S. Ms. O'Neill is a board member and chair of the Audit Committee of the Ontario Lottery and Gaming Corporation, Defence Construction Canada, Pagecloud Inc., The Pythian Group, Ashbury College, University of Ottawa Heart Institute, Startup Canada, and as a member of the board of directors of Hydro Ottawa. Ms. O'Neill graduated from Carleton University with a Bachelor of Commerce Highest Honours in 1988, achieved her CA designation in 1990, her CPA designation in 2003, was recognized as "Top Forty under Forty" in 1999 by the Ottawa Business Journal, and completed the ICD Director Education Program attaining the ICD.D designation in 2012.

Peter Allen is also a director and his biographical information is set out below.

Executive Officers

        Peter Allen, President and Chief Executive Officer:    Prior to joining DragonWave in 2004, Peter Allen was President and CEO of Innovance Inc. ("Innovance"), a private reconfigurable optical networking company. Prior to 2000, Peter was the Vice President of Business Development for the Optical Networks Division of Nortel Networks Limited ("Nortel"), holding leadership responsibility for Nortel's optical components business as well as business development responsibility for system activities. At Nortel, Peter led a 5,000-employee global operation spanning R&D, manufacturing and sales and marketing. Peter has also held managerial positions at Ford Motor Company and Rothmans International plc, and has lived and worked in North America, Europe and Africa.

        Patrick Houston, Chief Financial Officer:    Patrick Houston oversees the accounting, business support, treasury, financial planning and analysis at DragonWave. Patrick joined the Company in 2007 and has served in various senior roles in both finance and operations. Patrick has over 12 years of experience in various finance roles in both industry and public practice. Prior to DragonWave, Patrick was with Deloitte LLP where he was a Senior Associate. Patrick is a Certified Public Accountant and holds a Bachelor of Commerce degree from the University of Ottawa.

        Barry Dahan, Executive Vice President, Global Sales:    Barry Dahan has 30 years' experience in the International Telecom industry in various roles. Prior to joining DragonWave in 2011, Barry was tasked with building the business and infrastructure for Starent Networks. Barry was employed with ALU and Nortel in various Executive / Leadership roles. Since 2010, Barry has been investing in private growth companies. Barry holds a Business Degree in Finance as well as a bachelor in engineering from Polytechnique in Canada.

        David Farrar, Founder & Vice President, Operations:    Prior to co-founding DragonWave in February 2000, David Farrar was employed by Newbridge, where he held senior management positions in product management, R&D, operations, and information technology. Prior to joining Newbridge, David was Director of Engineering at Synapse Corporation, a private data communications design company, and an Engineering Manager at Mitel. David holds a Bachelor of Science in Electrical Engineering from the University of Waterloo in Waterloo, Ontario, Canada.

        Greg Friesen, Vice President, Product Management:    Prior to joining DragonWave in 2004, Greg Friesen held senior product management, business development, network design and planning roles, at a number of communications firms, including Innovance (2000-2004), Nortel (1997-2000), and Fundy Telecom (1996). As

54

Senior Product Manager at Innovance he was responsible for all product definition, architecture, and network design. He has been involved in the planning and engineering of over 10 nationwide network deployments. Greg has authored numerous papers and magazine articles in publications including Microwave Journal, Telecommunications, Xchange, Telephony Online, Last Mile, AGL, Radio World, and has spoken at numerous industry conferences such as WiMax World, CTIA, Telecom Next, ISPCon and UTC. Greg holds two granted patents in the networking area. Greg holds a Bachelor of Science in Electrical Engineering from the University of Saskatchewan in Saskatoon, Saskatchewan, Canada.

        Ingrid Mag, Vice President, Product Development:    Ingrid Mag is the Vice President of Product Development at DragonWave, responsible for all product development activity. Ingrid has over 24 years of design and senior management experience in the RF design and telecommunications industries. She has over 14 years tenure at DragonWave primarily focused on leading product development teams. Her leadership has been instrumental in delivering the majority of the Horizon product line and in the recent launches of the Harmony product line. Prior to joining DragonWave, Ingrid worked for 2 years at Sirenza Microdevices and more than 5 years at Nortel Networks in senior RF design roles. Previously, Ingrid worked for over 2 years at COM DEV International. Ingrid holds a Bachelor of Applied Science in Electrical Engineering from the University of Waterloo. She has a microwave integrated circuit packaging patent and has co-authored several papers.

        Tom McLellan, Vice President, Services:    Tom McLellan joined DragonWave in February 2010, to lead the Services and Customer Support Team. Prior to joining DragonWave, Tom spent close to 30 years with Nortel, in a diverse number of roles. He ran the Global Product Support team for several years, an organization of 1200 people worldwide supporting all aspects of Nortel's product portfolio, Optical, Wireless and Carrier Wireline to Enterprise IP. During his tenure at Nortel he also held roles at Bell Northern Research as Director of its Carrier Platform business, as well as Project Management and Verification roles, managing teams in a wide number of locations, including Raleigh, North Carolina, Dallas, Texas and Santa Clara, California in the U.S., Istanbul, Maidenhead in the United Kingdom and Beijing, China. Tom has a C&G of London Institute Diploma in Telecommunications and graduated with a BSc in Electrical and Electronic Engineering from Glasgow, Scotland.

B.    Compensation

        The following table sets forth all amounts of compensation earned by the directors of the Corporation (other than Peter Allen who was not separately compensated for his service as director and whose compensation is reflected in the "Summary Compensation Table" under "Information on Executive Compensation" below) for the financial year ended February 28, 2017.

Name of Director	Fees Earned(1)		Option Based Awards(2)		Share Based Awards	Non-equity Incentive Plan Compensation	Pension Value	All other compensation	Total compensation
Claude Haw (Chair)	$	50,130	$	20,310	Nil	Nil	Nil	Nil	$	70,440
Cesar Cesaratto	$	28,009	$	20,310	Nil	Nil	Nil	Nil	$	48,319
Lori O'Neill	$	29,038	$	20,310	Nil	Nil	Nil	Nil	$	49,348

(1)

All compensation was paid in CAD dollars. The amount disclosed above is the USD equivalent of the Canadian dollar amount paid based on an average exchange rate for the 2017 fiscal year of 0.7621 (1.3122).

(2)

Option based award values are calculated at their market value established using the Black-Scholes methodology, which has been chosen as the method to value options as it is the most widely recognized methodology and is accepted as a US generally accepted accounting standard. The Black-Scholes methodology considers various factors including historical share prices, price volatility and interest rates.

55

        The following table sets forth compensation information for the fiscal year ended February 28, 2015, the fiscal year ended February 29, 2016 and the fiscal year ended February 28, 2017 for the Corporation's Named Executive Officers.

					Non-equity incentive plan compensation ($)
Name and principal position	Fiscal Year ended Feb. 28/29	Salary ($)	Share- based awards ($)	Option- based awards ($)(1)(2)	Annual incentive plans	Long-term incentive plans	Pension value ($)	All other compensation ($)	Total compensation ($)
Peter Allen	2017	$218,529(6)	Nil	$73,063	Nil	Nil	Nil	Nil	$291,592
President and Chief	2016	$308,445(6)	Nil	$84,226	Nil	Nil	Nil	Nil	$392,670
Executive Officer	2015	$365,196(6)	Nil	$108,211	Nil	Nil	Nil	Nil	$473,407
Patrick Houston(4)	2017	$169,348(6)	Nil	$62,925	Nil	Nil	Nil	Nil	$232,273
Chief Financial Officer	2016	$123,503(6)	Nil	$20,449	Nil	Nil	Nil	Nil	$143,952
Erik Boch(5)	2017	$53,507(6)	Nil	$22,370	Nil	Nil	Nil	$3,235(9)	$79,112
Vice President,	2016	$186,473(6)	Nil	$39,858	Nil	Nil	Nil	Nil	$226,331
Engineering and	2015	$231,559(6)	Nil	$75,747	Nil	Nil	Nil	Nil	$307,306
Chief Technology
Officer
Barry Dahan	2017	$186,256(7)	Nil	$50,758	$106,067(3)	Nil	Nil	Nil	$343,081
Executive Vice	2016	$224,205(7)	Nil	$28,027	$124,350(3)	Nil	Nil	Nil	$445,109
President, Global	2015	$261,104(7)	Nil	$32,463	$306,931(3)	Nil	Nil	Nil	$532,212
Sales
David Farrar	2017	$175,668(6)	Nil	$54,814	Nil	Nil	Nil	$2,128(10)	$232,610
Vice President,	2016	$186,473(6)	Nil	$39,858	Nil	Nil	Nil	$1,104(10)	$227,435
Operations	2015	$231,559(6)	Nil	$75,747	Nil	Nil	Nil	$4,377(10)	$311,683
Ingrid Mag(8)	2017	$152,164(6)	Nil	$60,306	Nil	Nil	Nil	Nil	$212,470
Vice President,
Product
Development

(1)

Option based award values are calculated at their fair market value established using the Black Scholes methodology, which has been chosen as the method to value options as it is the most widely recognized methodology and is accepted as a US generally accepted accounting standard. The Black Scholes methodology considers various factors including historical share prices, price volatility and interest rates.

(2)

Foreign currency is translated at the average rate for the 2017 fiscal year. CAD to USD is 0.7621 (1.3122).

(3)

Non equity incentive plan compensation consists of sales commission.

(4)

Mr. Houston was appointed as Interim Chief Financial Officer effective on August 26, 2015, and as Chief Financial Officer effective October 28, 2015.

(5)

Mr. Boch resigned as a director and officer of the Corporation effective on July 4, 2016.

(6)

All compensation, with the exception of Mr. Dahan, is paid in CAD dollars. All compensation is translated at the average rate for the 2017 fiscal year, 2016 fiscal year and the 2015 fiscal year. The rates used were CAD to USD, 0.7621 (1.3122), CAD to USD, 0.7684 (1.3014), CAD to USD, 0.8929 (1.1199), respectively.

(7)

Mr. Dahan's compensation is paid in Great Britain pounds sterling ("GBP"). His compensation is translated at the average rate for the 2017 fiscal year, 2016 fiscal year and the 2015 fiscal year. The rates used were GBP to USD, 1.3304 (0.7517), GBP to USD, 1.5149 (0.6601), GBP to USD, 1.6319 (0.6128), respectively.

(8)

Ms. Mag was appointed as Vice President of Product Development on June 16, 2016.

(9)

Represents Mr. Boch's stock option benefit upon the exercise of stock options based on the fair market value of the Common Shares on the exercise date of CAD$3.96, and an exchange rate of CAD to USD of 0.7780 (1.2853).

(10)

Represents the value vested of the Corporation's matching contributions in fiscal 2016 while Mr. Farrar participated in the ESPP.

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C.   Board Practices

        The Corporation and its Board are committed to exercising effective corporate governance in the conduct of the Corporation's business and the Board's affairs. National Instrument 58-101 – Disclosure of Corporate Governance Practices (the "National Instrument") promulgated by the applicable Canadian securities regulatory authorities requires reporting issuers to disclose their approach to corporate governance and relate their corporate governance practices to specific guidelines. The National Instrument serves as the reference point for this Statement of Corporate Governance Practices.

Overview

        The Board is responsible for managing the business and affairs of the Corporation. It is the Board's belief that good corporate governance improves corporate performance and benefits all shareholders.

Board of Directors

        The Board is currently comprised of four directors. Directors of the Corporation are elected annually by the shareholders. The composition of the Board, assuming the election of the director nominees of management, provides a mix of skills and experience, including a diversity of geographic bases and cultural groups, to guide the strategy and operations of the Corporation, which the board considers important considering the increasingly global nature of the Corporation's stakeholders.

        The Board has concluded that three of the four current directors (namely Cesar Cesaratto, Claude Haw and Lori O'Neill) are "independent" within the meaning of the National Instrument and NASDAQ rules. The definitions of "independence" in the National Instrument and NASDAQ rules generally focus on whether a director, directly or indirectly, has a material relationship with an issuer that could reasonably be expected to interfere with the exercise of that director's independent judgment, provided that employees and certain other categories of individuals are considered to have material relationships with an issuer.

        The Board determines, on an annual basis, whether Board members are "independent" within the meaning of the National Instrument and NASDAQ rules. On May 26, 2017, the Board undertook its annual determination of the independence status of each of the directors in relation to the solicitation of proxies for this Meeting. If all of management's nominees are elected at the Meeting, three of the four directors (namely Cesar Cesaratto, Claude Haw and Lori O'Neill) will be "independent" within the meaning of the National Instrument and NASDAQ rules. Peter Allen is not "independent" as a result of his being an executive officer of the Corporation. The Board believes that the extensive knowledge of the Corporation's business and industry brought to the Corporation by Mr. Allen is beneficial to the other directors and contributes to the effectiveness of the Board.

        At each Board meeting, the "independent" directors have the ability to hold in camera sessions without the presence of the non-independent directors and other members of the Corporation's management, a process intended to facilitate open and candid discussion among the "independent" directors. Although not regularly scheduled, the Board exercises its ability to hold such in camera sessions whenever any "independent" director deems it necessary. For the period of March 1, 2016 through February 28, 2017 the Board met in person on four occasions and conducted one formal in camera session.

        Claude Haw, an "independent" director, serves as the Board's Chair. In addition to chairing all Board meetings, the Chair's role is to facilitate and chair discussions among the Corporation's "independent" directors, facilitate communication between the "independent" directors and the Corporation's management, and, if and when necessary, act as a spokesperson on behalf of the Board in dealing with the press and members of the public. The Chair's responsibilities and duties are described in detail in a position description developed by the Board in co-operation with the current Chair. The existence of the position of Chair is not intended in any way to inhibit discussions among the directors or between any of them and the Corporation's management. The Chair, the Nominating and Governance Committee, the Audit Committee, the Compensation Committee, the Disclosure Committee and the Board at large are responsible for ensuring that the Board effectively discharges its mandate.

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Majority Voting for Directors

        The Board believes that each of its members should have the confidence and support of the Corporation's shareholders. On May 2, 2012, as recommended by the Nominating and Governance Committee, the Board adopted a majority voting policy for the election of directors at the Meeting. This policy provides that in an uncontested election, any nominee for director who receives more "withheld" votes than "for" votes will tender his or her resignation to the Board, effective on acceptance by the Board. The Board will refer the resignation to the Nominating and Governance Committee for consideration. The Board will promptly accept the resignation unless the Nominating and Governance Committee determines that there are extraordinary circumstances relating to the composition of the Board or the voting results that should delay the acceptance of the resignation or justify rejecting it. In any event, it is expected that the resignation will be accepted (or in rare cases rejected) within 90 days of the Meeting.

Mandate of the Board

        On February 23, 2007, the Board adopted a written mandate of directors' duties and responsibilities. A copy of the Corporation's Mandate for the Board of Directors is available on the Corporation's website at www.dragonwaveinc.com.

        The Board has the authority to retain independent legal, accounting and other consultants. The Board may request any officer or employee of the Corporation or outside counsel or the external/internal auditors to attend a meeting of the Board or to meet with any member of, or consultant to, the Board.

Board Committees

        The Board of Directors has established the Audit Committee, the Compensation Committee, the Nominating and Governance Committee and the Disclosure Committee to assist the Board in efficiently carrying out its responsibilities. The Board does not currently have an executive committee. In January 2013, the Strategy Committee was formed to assist the Board of Directors in monitoring the Corporation's progress in achieving its goals and objectives and for the setting the direction in response to changing circumstances and specifically to investigate, review, consider and advise the Board of Directors in relation to the Corporation's strategy. In April 2015, the Strategy Committee was dissolved and the full board continues to monitor the Corporation's progress and to investigate, review, consider the Corporation's strategy.

Audit Committee

        The mandate, role, responsibilities and procedures of the Audit Committee are set forth in the Corporation's Audit Committee Charter. The Audit Committee is responsible for, among other things, reviewing the Corporation's financial reporting procedures, internal controls and the performance of the Corporation's external auditors. The Audit Committee is also responsible for reviewing quarterly financial statements, the annual financial statements and related press releases prior to their approval by the full Board and certain other documents required by regulatory authorities. The Audit Committee Charter addresses in detail the relationship between the Audit Committee, the Corporation's external auditors and management of the Corporation, and contemplates direct communication channels between the Audit Committee and the external auditors. The Audit Committee is empowered to retain persons having special competence as necessary to assist it in fulfilling its responsibilities. Each of the Audit Committee members must be "independent" within the meaning of the National Instrument, NASDAQ rules and Rule 10A 3 under the United States Securities Exchange Act of 1934, as amended (the "Exchange Act").

        The Audit Committee is currently comprised of three "independent" directors: Lori O'Neill (Committee Chair), Claude Haw and Cesar Cesaratto, each of whom is "independent", including within the meaning of Rule 10A-3 of the Exchange Act. Each audit committee member is "financially literate" within the meaning of National Instrument 52-110 – Audit Committees ("NI 52-110") and each of Lori O'Neill and Claude Haw is an "audit committee financial expert", as defined by U.S. Securities and Exchange Commission rules.

        A copy of the Corporation's Audit Committee Charter is available on the Corporation's website at www.dragonwaveinc.com

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Compensation Committee

        The Compensation Committee makes recommendations to the Board on executive compensation, including the compensation of the President and Chief Executive Officer. The responsibilities of the Compensation Committee also include oversight of the Corporation's equity compensation plans and management succession strategy. Each of the Compensation Committee members must be "independent" within the meaning of the National Instrument and NASDAQ rules.

        The Compensation Committee is currently composed of three "independent" directors: Cesar Cesaratto (Committee Chair), Claude Haw and Lori O'Neill.

        The members of the Compensation Committee have direct experience with matters related to compensation policies and practices. Mr. Haw, in particular, has been a member of the Compensation Committee since November 2003, and has been directly involved with compensation matters as a member of the compensation committees of Meriton Networks Corporation from 2000 to 2008. He has also served as a member of the compensation committee for Accedian and Teradici Corporation.

        The members of the Compensation Committee have a breadth and depth of experience with both public and private companies that enables them to make decisions on the suitability of our compensation policies and practices. As noted above in their respective biographies, each member of the Compensation Committee has held executive positions with entities in the technology sector and each is well positioned to make determinations with respect to the compensation policies and practices of the Corporation. Moreover, if the Compensation Committee determines that additional information is required in order to make a decision with respect to any compensation policy or practice, the Compensation Committee has the authority to engage external consultants at the expense of the Corporation.

        The Compensation Committee meets a minimum of twice every year and after each meeting reports to the Board the results of its activities and any reviews undertaken. The Compensation Committee makes recommendations to the Board as deemed appropriate.

Nominating and Governance Committee

        Pursuant to the Nominating and Governance Committee Charter, the mandate of the Nominating and Governance Committee is to assist the directors of the Corporation in carrying out the Board's oversight responsibility for ensuring that the strategic direction of the Corporation is reviewed annually and that the Board and each of its committees carry out their respective functions in accordance with an appropriate process. The Nominating and Governance Committee is responsible for governance issues and for identifying, recruiting, nominating, endorsing, recommending the appointment of, and orienting, new directors and committee members, as well as the ongoing training and education of existing directors. The Nominating and Governance Committee is also responsible for assessing the effectiveness of the Board as a whole, each committee of the Board, and the contribution of each individual director. At least every two years, this includes a survey of board effectiveness, which was most recently conducted and reported on to the Board in May 2015. As part of this review process, the Board also discussed and considered the constitution of the Board and the committees of the Board, including board size, split between executive and non-executive members, diversity of directors and skills and experience relevant to the Corporation.

        The Nominating and Governance Committee is responsible for annually recommending to the Board whether a director should be nominated for re-election based upon the Nominating and Governance Committee's consideration of his or her performance in office and any other factors deemed relevant. The Chair of the Board, the Chief Executive Officer and other individual directors may also identify potential candidates as directors and the Nominating and Governance Committee or the full Board, as the case may be, may review such candidates and make appropriate recommendations. Following the resignation of Mr. Robert Pons in April 2015 and Mr. Russell Frederick in August 2015, the Nominating and Governance Committee considered the size and composition of the Board in light of the challenges facing the Corporation. The Nominating and Governance Committee recommended that the Board maintain four directors and not seek to replace the departed directors at this point in time. The Nominating and Governance Committee may recommend that the Board appoint an additional director should the circumstances of the Corporation warrant the addition of a new

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director to the Board. The Nominating and Governance Committee has developed a competency matrix that will assist the Committee and the Board in identifying and assessing candidates for appointment to the Board.

        The Nominating and Governance Committee also monitors the size and composition of the Board and its committees to ensure effective decision making and reports to the full Board on any resulting recommendations.

        The Nominating and Governance Committee also reviews the Corporation's Insider Trading Policy, Disclosure Policy and Code of Business Conduct and Ethics and is responsible for recommending changes and any action that may be required or desired to respond to any breach of any such policy or code. On May 2, 2012, the Nominating and Governance Committee recommended that the Board adopt amendments to the Corporation's Insider Trading Policy to restrict the purchase of certain financial instruments by directors, officers and employees of the Corporation.

        Each of the Nominating and Governance Committee members must be "independent" within the meaning of the National Instrument and NASDAQ rules. The Nominating and Governance Committee is currently composed of three "independent" directors: Claude Haw (Committee Chair), Cesar Cesaratto and Lori O'Neill.

        The full Board will continue to be directly involved in corporate governance matters upon the recommendation of the Nominating and Governance Committee and where otherwise appropriate.

        A copy of the Corporation's Nominating and Governance Committee Charter is available on the Corporation's website at www.dragonwaveinc.com and otherwise may be obtained free of charge upon request from Investor Relations at the Corporation's head office located at 411 Legget Drive, Suite 600, Ottawa, Ontario, K2K 3C9.

Disclosure Committee

        The Corporation has adopted a written Disclosure Policy and has formed a Disclosure Committee consisting of members of senior management (namely, Peter Allen and Patrick Houston) in order to oversee the Corporation's disclosure practices and generally regulate the manner in which the Corporation and its directors, officers, employees and other representatives interact with shareholders and other stakeholders, analysts and the public. The Corporation's Disclosure Policy has been established in accordance with relevant disclosure requirements set out in applicable Canadian securities legislation. The Disclosure Committee was formed in February 2007 and meets periodically on an as-needed basis throughout the year.

        A copy of the Corporation's Disclosure Committee Charter and Disclosure Policy is available on the Corporation's website at www.dragonwaveinc.com and otherwise may be obtained free of charge upon request from Investor Relations at the Corporation's head office located at 411 Legget Drive, Suite 600, Ottawa, Ontario, K2K 3C9.

Position Descriptions

        The Board has adopted written position descriptions for the Chair of the Board and the chairs of each of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee. The Board and the Chief Executive Officer have jointly developed and adopted a written position description for the Chief Executive Officer.

Term Limits and Board Renewal

        The Corporation has not adopted term limits for its directors or other mechanisms for Board renewal. The Nominating and Governance Committee, on an annual basis, reviews the size, composition, mandate and performance of the Board and the various committees of the Board, and makes recommendations for appointment, removal of directors or other adjustments as appropriate. The Nominating and Governance Committee has considered whether to propose that the Board adopt term limits for directors and has determined not to do so after consideration of a number of factors, including the significant advantages associated with the continued involvement of long-serving directors who have gained a deep understanding of the Corporation's projects, operations and objectives during their tenure; the experience, corporate memory and perspective of such directors; the professional experience, areas of expertise and personal character of members

60

of the Board; and the current needs and objectives of the Corporation. Within that context, the Nominating and Governance Committee has developed a competency matrix to be used in determining the needs of the Board.

Diversity and Inclusion

        At least every two years, the Nominating and Governance Committee conducts a survey of board effectiveness, which was most recently conducted and reported on to the Board in May 2015. As part of this review process, the Board also discussed and considered the constitution of the Board and the committees of the Board, including board size, split between executive and non-executive members, diversity of directors and skills and experience relevant to the Corporation. The Corporation does not currently have a written policy relating to the identification and nomination of women directors, and does not have specific targets with respect to the representation of women on its Board or in executive officer positions based on any particular personal experience or characteristic, including gender. The review conducted by Nominating and Governance Committee in May 2015 and the Board discussion concerning the diversity of directors and the skills and experience relevant to the Corporation included considerations related to the gender representation on the Board and at the executive level. The Nominating and Governance Committee has developed a competency matrix to help determine qualifications to prioritize in candidates, and to assist Board of Directors in identifying the highest quality candidates for the Board. Due to the current limited size of the Board, it has not adopted a written policy relating to the identification and nomination of women directors, but will consider adopting such a policy, and targets, in the future. The Corporation focuses on choosing the most appropriate candidate for each position having regard to the experience, skillset, educational background, gender, ethnicity and other personal characteristics of both the candidate and, as applicable, the Board and management team as a whole and, as a result, the Corporation has not adopted a target regarding the number of women on the Board as gender is one of many attributes to be considered in determining the composition of the Board. Currently, one of four members of the Board (or 25%) is a woman, being Lori O'Neill, who also serves as Chair of our Audit Committee.

        With respect to executive roles, the Corporation is sensitive to the value of having representation of women, as well as other underrepresented groups. Disclosure rules define an "executive officer" to include a vice-president in charge of a principal business unit, division or function, or a person performing a policy-making function for the issuer. Based on this limited definition, the Corporation only has five executive officers. As a result, one (25%) of the Corporation's "executive officers" is a women. The Corporation has not adopted a target regarding the number of women in executive officer positions, as the Board and management are confident that women will continue to progress in our organization over time.

Skills and Experience of the Board

        As noted above, the Nominating and Governance Committee has developed a "competency" matrix in which directors indicate their strongest experience in the eight key competencies identified as important for a company like DragonWave. Each director must indicate in which four (4) of these competencies the director

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believes he or she possesses the greatest strength. The table below illustrates the mix of experiences in these competencies of our four nominee directors.

        The definitions of the core competencies set out above are:

•

Accounting and Finance: experience with, or understanding of, financial accounting and reporting, corporate finance and familiarity with financial internal controls, and IFRS

•

CEO/Senior Management: experience as a CEO or senior executive

•

Governance: experience in corporate governance principles and practices

•

HR/Compensation: experience in, or understanding of, compensation plans, leadership development, talent management, succession planning and human resource principles and practices generally

•

International Business Development: experience in the successful development of business outside of Canada and the United States

•

Investment Banking/M&A: experience in investment banking and/or major transactions

•

Risk Management: experience in, or understanding of, internal risk controls, risk assessment, risk management and/or reporting

•

Telecommunications: senior executive experience in the telecommunications industry

Orientation and Continuing Education

        Pursuant to the Corporation's Nominating and Governance Committee Charter, the Nominating and Governance Committee monitors and recommends training and development programs for the Board and individual directors. The Corporation encourages its directors to pursue continuing education relating to their positions as members of the Board. From time to time, management arranges for the Corporation's external advisors to provide materials to, or meet with, the Board in order to address continuing education topics such as governance and continuous disclosure obligations. The meetings in which new directors participate (including the annual review sessions of strategic plans and budgets), as well as informal discussions with other directors

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and the Corporation's senior management, also permit new directors to rapidly familiarize themselves with the Corporation's operations and history.

Ethical Business Conduct

        The Corporation is committed to a culture of honesty, integrity and accountability and strives to operate its business in accordance with the highest ethical standards and applicable laws, rules and regulations. In furtherance of the foregoing, the Corporation has adopted a written Code of Business Conduct and Ethics (the "Code of Conduct") which governs the behaviour of its directors, officers and employees. The Code of Conduct provides that all directors, officers and employees must avoid any situation that constitutes a conflict of interest or the appearance of a conflict of interest with the Corporation.

        As required by the CBCA, directors formally disclose to the Board any material transactions or arrangements in which the director has an interest, and interested directors refrain from voting on such transaction or agreement.

        The full Board is responsible for monitoring compliance with the Code of Conduct, for regularly assessing its adequacy, for interpreting the Code of Conduct in any particular situation and for approving any changes to the Code of Conduct from time to time. The Code of Conduct provides that all directors, officers and employees of the Corporation are required to immediately report any violation of the Code of Conduct or any applicable law, rule or regulation to the Audit Committee or to a third party engaged by the Corporation. In 2011, the Corporation enhanced the independence and accessibility of the process related to reporting any possible violations of applicable laws, rules or regulations or the Code of Conduct, by engaging a third party intake service provider, EthicsPoint, to run a web and phone based ethics helpline. Web based reports are routed initially to EthicsPoints. There have been no reports made through EthicsPoint since its engagement by the Corporation and the Corporation is considering other approaches for addressing matters related to compliance with the Code of Conduct. A copy of the Code of Conduct is available on SEDAR at www.sedar.com, or the Corporation's website at www.dragonwaveinc.com, and otherwise may be obtained free of charge upon request from Investor Relations at the Corporation's head office located at 411 Legget Drive, Suite 600, Ottawa, Ontario, K2K 3C9. Any amendments to our Code of Conduct, and all waivers of the Code of Conduct with respect to any of the officers covered by it, will be posted on our website within four business days of such amendment or waiver and shall be provided in print to any shareholder who requests them.

        The Corporation has also adopted an Insider Trading Policy which governs the conduct of directors, officers, employees and other insiders of the Corporation with respect to the trading of the Corporation's securities, particularly when in possession of material information concerning the Corporation and its affairs that has not been generally disclosed to the public. Among other matters, the Insider Trading Policy sets out prohibited trading activities, establishes guidelines for identifying insiders of the Corporation and describes reporting requirements applicable to insiders. As noted above, the Insider Trading Policy was amended by the Board on May 2, 2012.

Compensation

        The Board, acting on the recommendations of the Compensation Committee which is composed entirely of "independent" directors, reviews the adequacy of management's and the directors' compensation, as determined based on reviews of the competitive marketplace, to ensure that such compensation is current and reflective of the roles of each director. Additional disclosure relating to compensation matters is found above under "Information on Executive Compensation" and "Board Committees – Compensation Committee".

Assessment

        In general, since the directors work closely as a group throughout the year, the Chair, the full Board and each committee thereof are able to continuously assess whether each director is contributing towards the fulfillment of the Mandate for the Board and otherwise performing his or her duties at the highest level. As noted above, the Nominating and Governance Committee also administered a Board effectiveness survey which was presented to the Board in May 2015. Directors are also asked to self-identify and confirm their skills competencies pursuant to the competency matrix set out above.

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D.    Employees

        As of February 28, 2017 we had 160 full-time employees and contractors in comparison to 171 and 268 full time employees and contractors during the two previous year-end periods. A three year breakdown of our employees and contractors by main category of activity and geographic location is as follows:

Category of Activity	February 28, 2017		February 29, 2016		February 28, 2015		Geographic Location
General and administrative		15		14		20	Canada, China
Operations		41		40		55	Canada, Global
Research and development		58		68		127	Canada, China
Sales and marketing/customer support		46		49		66	North America, Europe, the Middle East, Asia, Africa, South America
Total		160		171		268

E.    Share Ownership

        The following table sets forth information with respect to the beneficial ownership of our common shares as of the date of this Annual Report by each of our directors and all our directors and executive officers as a group as at that date. As used in this table, beneficial ownership means the sole or shared power to vote or direct the voting or to dispose of or direct the sale of any security. A person is deemed to be the beneficial owner of securities that can be acquired within 60 days upon the exercise of any option, warrant or right.

Name of Director	Common Shares
Claude Haw (Chair)		1,200
Cesar Cesaratto		1,600
Lori O'Neill		800

Name of Executive Officer	Common Shares
Peter Allen		18,346
Patrick Houston		5
Barry Dahan		—
Dave Farrar		14,483
Ingrid Mag		282

Outstanding Option-Based Awards for Directors as at February 28, 2017

        The following table sets forth all unexercised options outstanding as of February 28, 2017 for each director of the Corporation (other than Peter Allen whose unexercised options are reflected in the table titled

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"Outstanding Option Based Awards and Share Based Awards as at February 28, 2017" under "Information on Executive Compensation" below).

Name of Director	Number of Common Shares underlying unexercised options		Option exercise price (CAD$)		Option expiration date	Aggregate value of unexercised in-the- money options as at February 28, 2017 (US$)(1)(2)
Claude Haw (Chair)		4,500	$	3.66	September 14, 2021	Nil
		3,375	$	6.22	May 18, 2021
		2,793	$	3.00	November 23, 2020
		231	$	53.75	July 18, 2019
		580	$	56.00	May 8, 2018
		540	$	73.50	July 11, 2017
Cesar Cesaratto		4,500	$	3.66	September 14, 2021	Nil
		3,375	$	6.22	May 18, 2021
		1,567	$	3.00	November 23, 2020
		231	$	53.75	July 18, 2019
		580	$	56.00	May 8, 2018
		540	$	73.50	July 11, 2017
Lori O'Neill		4,500	$	3.66	September 14, 2021	Nil
		3,375	$	6.22	May 18, 2021
		1,339	$	3.00	November 23, 2020
		231	$	53.75	July 18, 2019
		580	$	70.00	May 8, 2018

(1)

The closing market price of the Common Shares on the Toronto Stock Exchange (the "TSX") on February 28, 2017 was CAD$1.80 per Common Share.

(2)

Foreign currency is translated at the closing rate for the 2017 fiscal year. CAD to USD is 0.7548 (1.3249).

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Outstanding Option-Based Awards and Share-Based Awards as at February 28, 2017

        The following table sets forth all unexercised options outstanding as of February 28, 2017 for each Named Executive Officer.

	Option-Based Awards					Share-Based Awards
Name of Executive Officer	Number of Common Shares underlying unexercised options	Option exercise price (CAD $)		Option expiration date	Aggregate value of unexercised in-the-money options as at February 28, 2017 (US $)(1)(2)	Number of Common Shares that have not vested	Market value of share-based awards that have not vested as at February 28, 2017 ($)(1)(2)
Peter Allen	25,000	$	3.66	September 14, 2021	Nil	Nil	Nil
	6,750	$	6.22	May 18, 2021
	12,206	$	3.00	November 23, 2020
	8,000	$	19.25	May 21, 2020
	4,000	$	53.75	July 21, 2019
	4,800	$	30.25	November 19, 2018
	1,400	$	51.75	October 9, 2018
	2,800	$	56.00	May 8, 2018
	1,600	$	73.50	July 11, 2017
Patrick Houston(3)	20,000	$	3.66	September 14, 2021	Nil	Nil	Nil
	6,750	$	6.22	May 18, 2021
	4,057	$	3.00	November 23, 2020
	2,000	$	4.00	October 15, 2020
	1,292	$	19.25	May 21, 2020
	1,000	$	53.75	July 9, 2019
	280	$	30.25	November 19, 2018
	400	$	51.75	October 9, 2018
	840	$	56.00	May 8, 2018
	500	$	73.50	July 11, 2017
Erik Boch(4)	Nil		Nil	Nil	Nil	Nil	Nil
Barry Dahan	14,000	$	3.66	September 14, 2021	Nil	Nil	Nil
	6,750	$	6.22	May 18, 2021
	5,577	$	3.00	November 23, 2020
	2,400	$	19.25	May 21, 2020
	1,200	$	53.75	July 21, 2019
	1,400	$	30.25	November 19, 2018
	600	$	51.75	October 9, 2018
	1,000	$	56.00	May 8, 2018
	1,200	$	73.50	July 11, 2017
Dave Farrar	16,000	$	3.66	September 14, 2021	Nil	Nil	Nil
	6,750	$	6.22	May 18, 2021
	4,538	$	3.00	November 23, 2020
	4,000	$	19.25	May 21, 2020
	2,800	$	53.75	July 21, 2019
	2,800	$	30.25	November 19, 2018
	1,400	$	51.75	October 9, 2018
	2,000	$	56.00	May 8, 2018
	1,200	$	73.50	July 11, 2017
Ingrid Mag(5)	20,000	$	3.66	September 14, 2021	Nil	Nil	Nil
	5,000	$	7.34	July 13, 2021
	1,948	$	3.00	November 23, 2020
	600	$	19.25	May 21, 2020
	560	$	53.75	July 9, 2019
	160	$	30.25	November 19, 2018
	240	$	51.75	October 9, 2018
	560	$	56.00	May 8, 2018
	260	$	73.50	July 11, 2017

(1)

The closing market price of the Common Shares on the TSX on February 28, 2017 was CAD$1.80 per Common Share.

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(2)

Foreign currency is translated at the closing rate for the 2017 fiscal year. CAD to USD is 0.7548 (1.3249).

(3)

Mr. Houston was appointed as Interim Chief Financial Officer effective on August 26, 2015, and as Chief Financial Officer effective on October 28, 2015.

(4)

Mr. Boch resigned as a director and officer of the Corporation effective on July 4, 2016.

(5)

Ms. Mag was appointed as Vice President of Product Development on June 16, 2016.

Share-Based Awards

Description of the Share Based Compensation Plan

        After a review of the Corporation's compensation policies in May 2014, the Board of Directors recommended that shareholders approve the Share Based Compensation Plan which replaced the Sixth Amended and Restated Key Employee Stock Option Plan (the "Old Option Plan"). This recommendation was made to bring the Corporation's compensation policies in line with trends in compensation practice, which includes a move away from stock options to other forms of equity based compensation.

        The following disclosure is a summary of the Share Based Compensation Plan and is qualified in its entirety by reference to the Share Based Compensation Plan, a copy of which is set out in Appendix B to the Management Information Circular dated May 23, 2014 of the Corporation and filed under the Corporation's profile on SEDAR. Capitalized terms used but not defined in the following disclosure shall have the meanings ascribed thereto in the Share Based Compensation Plan. The following is not a comprehensive discussion of all of the terms and conditions of the Share Based Compensation Plan. Readers are advised to review the full text of the Share Based Compensation Plan to fully understand all terms and conditions of the plan.

        As described above, subject to the adjustment provisions provided for in the Share Based Compensation Plan and the applicable rules and regulations of all regulatory authorities to which the Corporation is subject (including any stock exchange), the total number of Common Shares reserved for issuance pursuant to the Share Based Compensation Plan shall not exceed 10% of the issued and outstanding Common Shares, provided that the maximum number of Bonus Shares (as defined in the Share Based Compensation Plan) issued in any 12 month period shall not exceed 1.0% of the total number of issued and outstanding Common Shares (calculated on a non diluted basis). Should the Corporation issue additional Common Shares in the future, the number of Common Shares issuable under the Share Based Compensation Plan will increase accordingly. For purposes of calculating the available pool of Common Shares for awards under the Share Based Compensation Plan, Common Shares issuable upon the exercise of options granted under the Old Option Plan that are outstanding as of June 20, 2014 will not be available for grant. However, the following will not be counted in calculating the available pool of Common Shares:

i.

Common Shares issued pursuant to the exercise of options granted under the Share Based Compensation Plan, which shall be returned to the pool of Common Shares and may be made subject to additional awards granted pursuant to the Share Based Compensation Plan;



ii.

Common Shares issued pursuant to the exercise of options granted under the Old Option Plan, which shall be returned to the pool of Common Shares and may be made subject to additional awards granted pursuant to the Share Based Compensation Plan;



iii.

Common Shares issued pursuant to the settlement of vested awards, which shall be returned to the pool of Common Shares and may be made subject to additional awards granted pursuant to the Share Based Compensation Plan;



iv.

(Bonus Shares (as defined in the Share Based Compensation Plan);



v.

Common Shares which by reason of the expiration, cancellation or termination of an unexercised option are no longer subject to purchase pursuant to an Option granted under the Share Based Compensation Plan, which shall be returned to the pool of Common Shares and may be made subject to additional awards granted pursuant to the Share Based Compensation Plan; and



vi.

Common Shares which by reason of the expiration without vesting of a PSU, RSU, or DSU (as defined below), or by reason of the cancellation of a PSU, RSU or DSU are no longer subject to issuance,

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which shall be returned to the pool of Common Shares and may be made subject to additional awards granted pursuant to the Share Based Compensation Plan.

        For purposes of the above, if an award entitles the holder to receive or purchase Common Shares, the number of Common Shares covered by such award or to which such award relates will be counted on the date of grant of such award against the aggregate number of Common Shares available for granting awards under the Share Based Compensation Plan.

        Common Shares will not be deemed to have been issued pursuant to the Share Based Compensation Plan with respect to any portion of an award that is settled in cash.

        The Share Based Compensation Plan includes provision for granting of performance based share units ("PSUs"), RSUs, deferred share units ("DSUs"), Bonus Shares (as defined in the Share Based Compensation Plan) and options to purchase Common Shares. Settlement of vested PSUs, RSUs and DSUs is effected by delivering Common Shares acquired in the open market and/or issued from treasury, or by making a cash payment equal to the number of PSUs, RSUs or DSUs multiplied by the volume weighted average trading price of the Common Shares on the applicable stock exchange for the five trading days preceding the settlement date, or by a combination of these methods. The manner of settlement for RSUs, PSUs and DSUs is determined by the Compensation Committee in its sole discretion.

        As of the date of this Annual Report, options to purchase 418,694 Common Shares (representing approximately 4.92% of the issued and outstanding Common Shares at the date of this Annual Report) are outstanding under the Share Based Compensation Plan and 371,442 Common Shares (representing approximately 4.37% of the issued and outstanding Common Shares at the date of this Annual Report) are available for future grants under the Share Based Compensation Plan. Should the Corporation issue additional Common Shares in the future, the number of Common Shares issuable under the Share Based Compensation Plan will increase accordingly.

        All awards granted pursuant to the Share Based Compensation Plan will be subject to all statutory tax withholdings under applicable tax laws.

        PSUs.    PSUs are performance based share units which are granted to participants in the Share Based Compensation Plan based on either individual and corporate performance criteria, or a combination thereof. Performance objectives are established at the beginning of each fiscal year and the participant is awarded a number of share units based on measured performance against these objectives at the end of the year. The share units are paid out to the participant at some later date but no later than three years from the year in which the PSUs were granted. Subject to the terms of any applicable grant, non vested PSUs are forfeited if the participant voluntarily leaves his or her employment with the Corporation.

        The Corporation believes that PSUs will provide it with a transparent and objective tool for rewarding performance, while providing participants with a defined incentive award.

        RSUs.    RSUs are share units which are granted to participants which vest over time. RSUs may, at the discretion of the Board or the Compensation Committee, include performance objectives. The share units are paid out to the participant at some later date but no later than three years from the year in which the RSUs were granted. Subject to the terms of any applicable grant, non vested RSUs are forfeited if the participant voluntarily leaves his or her employment with the Corporation.

        DSUs.    The proposed Share Based Compensation Plan also makes provision for the use of DSUs as payment of directors' fees. A DSU is a notional share that has the same value as one Common Share. Under the proposed plan, directors may choose, with the consent of the Corporation, and subject to restrictions and procedures imposed by applicable law, to take all or part of their fees in DSUs.

        DSUs may be paid out to directors as Common Shares in the Corporation or in cash, at the discretion of the Board, when they retire from the Board. Subject to compliance with applicable tax laws, a retiring director may be able to defer the payment of such awards and decide to receive all or a portion of the cash payout the following year. The Corporation believes that the use of DSUs can have the advantage of encouraging higher

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levels of share ownership by the directors, thereby aligning their interests more closely with that of the Corporation while also preserving cash for the Corporation.

        Bonus Shares.    The proposed Share Based Compensation Plan permits Common Shares to be issued as a discretionary bonus to participants. The maximum number of Common Shares issued as Bonus Shares in any 12 month period cannot exceed 1.0% of the total number of issued and outstanding Common Shares (calculated on a non diluted basis).

        Administration.    Under the Share Based Compensation Plan, the Board may, at any time, appoint a committee to, among other things, interpret, administer and implement the Share Based Compensation Plan on behalf of the Board of Directors in accordance with such terms and conditions as the Board may prescribe, consistent with the Share Based Compensation Plan. The Compensation Committee will administer the Share Based Compensation Plan.

        Eligible Persons.    Under the Share Based Compensation Plan, awards may be granted to any Non Employee Director, Officer, Employee or Consultant (all as defined in the Share Based Compensation Plan), or any of its Related Entities (as defined in the Share Based Compensation Plan). As used in this summary and the Share Based Compensation Plan, a participant is an eligible person to whom an award has been granted under the Share Based Compensation Plan. With regard to options granted to participants who are subject to the tax rules imposed by the United States Internal Revenue Code of 1986, as amended (the "IRC"), the options may be either "incentive stock options" (as defined in Section 422 of the IRC or "nonstatutory stock options." Under the IRC, the maximum number of options which can first become eligible to be exercised in any calendar year is limited to U.S. $100,000 (based on the fair market value of the Common Shares on the date of grant). Any amount in excess of this figure will be nonstatutory stock options.

        Exercise Price of Options.    The exercise price per Common Share for options is fixed by the Compensation Committee but under no circumstances can the exercise price at the time of the grant be less than the fair market value of the Common Shares determined in accordance with the terms of the Share Based Compensation Plan. The exercise price of "incentive stock options" (as defined in Section 422 of the IRC) granted to shareholders owning 10% or more of the Corporation must equal 110% of the fair market value of the Common Shares on the date of grant.

        Term of Options.    Subject to certain extensions in the case of a blackout period, the term of options granted will be determined by the Board or the Compensation Committee and specified in the option agreement pursuant to which such option is granted, provided that the date cannot be the earlier of: (i) the date which is the 10th anniversary of the date on which such option is granted; and (ii) the last date permitted under the applicable rules and regulations of all regulatory authorities to which the Corporation is subject. Any "incentive stock option" (as defined in Section 422 of the IRC) granted to a 10% shareholder in the preceding paragraph may have a maximum term of only five years.

        If the term of any options granted pursuant to the Share Based Compensation Plan is scheduled to expire: (i) at a time when the holder of the option is subject to restrictions on trading of securities of the Corporation under a trading "blackout" established by the Corporation (pursuant to the disclosure policy of the Corporation then in effect or otherwise) or pursuant to any lock-up agreement or other similar trading restriction (a "Blackout Period"); or (ii) within ten business days after the termination of a Blackout Period, the terms of the option will, notwithstanding the scheduled expiry date of the term of such Option, expire as of the date that is ten business days following the end of the applicable Blackout Period (the "Revised Expiry Date") and shall continue to be exercisable, convertible or otherwise remain outstanding for the benefit of the holder, as applicable, at any time up to the applicable time on the Revised Expiry Date.

        Limit on Incentive Stock Option Awards.    The maximum number of Common Shares issuable upon the exercise of "incentive stock options" (as defined in Section 422 of the IRC) under the Share Based Compensation Plan is 84,000.

        Vesting of PSUs and RSUs.    The Board or the Compensation Committee may determine the vesting schedule of any PSU or RSU at the time of grant. PSUs vest based on performance criteria as determined by the Board or Compensation Committee. RSUs generally vest in three annual increments. Subject to the terms of

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any applicable grant in the event that the participant terminates employment with the Corporation or its subsidiaries by reason of Eligible Retirement (as defined in the Share Based Compensation Plan), death or total disability (as determined by the Compensation Committee in good faith) (each an "Accelerated Vesting Event"), the non vested PSU or RSU will: (i) in the case of Eligible Retirement or death being the Accelerated Vesting Event, immediately become 100% vested, or (ii) in the case of total disability being the Accelerated Vesting Event, vest on the sixtieth (60th) day following the participant's termination.

        Subject to the terms of any applicable grant if the participant terminates employment with the Corporation and its subsidiaries for any reason other than such Eligible Retirement, total disability or death or termination without cause, any non vested PSUs and/or RSUs granted thereunder will be immediately cancelled without liability or compensation therefor and be of no further force and effect. For clarity, where the participant voluntarily terminates his/her employment with the Corporation or is otherwise terminated by the Corporation for cause, all non vested PSUs and RSUs of the participant shall be immediately cancelled without compensation or liability therefor and be of no further force and effect.

        In the case of termination without cause, all unvested PSUs and RSUs immediately become 100% vested on the termination date.

        Settlement of Vested Units.    Payment to the participant in respect of vested RSUs or PSUs will be as soon as practicable following the date on which the RSUs or PSUs become vested; provided that the settlement date shall not be later than the third anniversary of the date of grant and all payments in respect of vested units in the participant's notional account maintained by the Corporation shall be paid in full on or before December 31 of the same calendar year.

        Vesting of DSUs.    Subject to the vesting provisions otherwise stipulated by the Board or the Compensation Committee, where a participant is terminated for cause or where a non employee director resigns or is otherwise removed as a result of losing his/her eligibility to serve on the Board due to an order by a regulatory body or stock exchange or for culpable conduct as determined by the Compensation Committee, all unvested DSUs in the participant's notional account maintained by the Corporation shall be immediately cancelled without liability or compensation therefor and be of no further force and effect (unless otherwise determined by the Compensation Committee).

        Assignability.    Awards granted under the Share Based Compensation Plan are non transferable and non assignable to anyone other than to the estate of a participant in the event of death and then only in accordance with the terms of the Share Based Compensation Plan.

        Termination Provisions.    Subject to the terms of the Share Based Compensation Plan and any particular award granted under such plan, the following table describes the impact of certain events upon the rights of

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holders under the Share Based Compensation Plan. See also the discussion above under "Vesting of PSUs and RSUs" and "Vesting of DSUs".

Event	Effect on Award
Termination without cause of an Employee, Officer, or Non-Employee Director	Any options held at the date of the event shall be exercisable until the earlier of 30 days after the date of the event and the date on which the particular option otherwise expires.
Eligible Retirement	Vested options may be exercised until the earlier of 30 days after the date of the event or the date on which the option otherwise expires.
Death of an Employee, Non-Employee Director or Consultant	Any non-vested portion of any outstanding award shall immediately terminate and no further vesting shall occur.
	Any vested option shall expire upon the earlier of the expiry date of the award or 120 days after the date of the event.
Disability of an Employee, Officer, or Non-Employee Director	Any non-vested portion of any outstanding award shall immediately terminate and no further vesting shall occur. Any vested option shall expire upon the earlier of the expiry date of the award or 30 days after the date of the event.
Termination for cause of an Employee, Officer or Non-Employee Director	Any non-vested award granted outstanding on date of the event and all rights thereunder shall terminate and no further vesting shall occur.
Resignation of an Employee or Officer	Any options held that are exercisable at the date of the event shall be exercisable until the earlier of 30 days after the date of the event or the date on which the option otherwise expires.
Termination for cause, breach of fiduciary duty or for retirement which is not Eligible Retirement	Any options held at the event date, whether or not exercisable on the date of the event, immediately expire and are cancelled on such date at a time determined by the Granting Authority, in its sole discretion.

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        Procedure for Amending.    The Share Based Compensation Plan may be amended, altered or discontinued by the Board at any time, subject to obtaining any necessary approval of any applicable regulatory authority including, any rules imposed by any stock exchange or other quotation system upon which the Common Shares are traded, and to the extent otherwise imposed by applicable law and/or the rules of such stock exchange or other quotation system, and such amendment, alteration, or discontinuance shall be subject to the approval of the shareholders in accordance with the rules, regulations and policies of any applicable stock exchange at a duly constituted meeting of shareholders of the Corporation. In addition to the extent necessary or desirable to comply with applicable law or any rules imposed by any stock exchange or quotation system upon which the Common Shares are traded, the Share Based Compensation Plan shall be subject to the re approval of shareholders of the Corporation pursuant to a duly authorized meeting of shareholders held no later than June 20, 2024.

        Other Material Information.    Appropriate adjustments to the Share Based Compensation Plan and to awards granted thereunder will be made by the Corporation to give effect to adjustments in the number and type of Common Shares (or other securities or other property) resulting from subdivisions, consolidations, substitutions, or reclassifications of Common Shares, payment of share dividends or other prescribed changes in the Corporation's capital. In the event of any merger, acquisition, amalgamation, arrangement or other scheme of reorganization that results in a Change of Control, the Board or the Compensation Committee may, subject to the terms of any applicable grant, take any action with respect to outstanding awards that it deems necessary or desirable, including the acceleration of any vesting provisions.

        The Share Based Compensation Plan does not limit participation by insiders or provide for a maximum number of shares that may be issued to any one participant in the Share Based Compensation Plan.

Description of the Old Option Plan

        Following the approval of the Share Based Compensation Plan, no further options will be granted under the Old Option Plan but the options granted under the Old Option Plan will continue to be governed by the terms of the Old Option Plan. The Old Option Plan was established to attract, retain and provide an incentive to the employees, directors, officers and consultants of the Corporation or its related entities (which includes any individual or company that controls or is controlled by the Corporation, or that is controlled by the same person or company that controls the Corporation), and to advance the Corporation's interests by providing these persons with the opportunity, through stock options, to acquire an ownership interest in the Corporation.

        The Old Option Plan is administered by the Compensation Committee, or if a Compensation Committee is not appointed, by the Board (in either case, the "Plan Administrator").

        As of the date of this Annual Report, options to purchase 60,299 Common Shares (representing approximately 0.71% of the issued and outstanding Common Shares at the date of this Annual Report) are outstanding under the Old Option Plan. No future grants will be made under the Old Option Plan.

        Under the Old Option Plan, unless otherwise determined by the Board, options vest as to 25% on the first anniversary of the date of grant and thereafter, as to 1/36th of the remaining 75% of the optioned shares on the last day of each month, such that the option is fully vested on that date which is four years from the date of the grant.

        No option granted under the Old Option Plan shall extend for a period longer than seven years from the date of grant, provided that options granted prior to June 15, 2010 shall expire, subject to accelerated terms as provided for in the Old Option Plan, in accordance with the terms of the option. The Old Option Plan contains provisions governing the termination of options in the event of a termination of employment or service of a director, officer, consultant or employee. In such circumstances, unvested options terminate immediately. Vested options expire 120 days after the death of the participant or 30 days after the termination of the participant's service "without cause" or by reason of voluntary resignation (or earlier if the option was otherwise due to expire). In the case of termination of the participant's services "for cause", or by reason of the breach of the participant's fiduciary duty to the Corporation or consulting arrangement with the Corporation, vested options terminate immediately.

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        If an option expires (other than an expiry by reason of the termination of the participant's services "for cause", or by reason of the breach of the participant's fiduciary duty to the Corporation or consulting arrangement with the Corporation) during or within ten days after a period during which a participant is prohibited from exercising options pursuant to the Corporation's insider trading policy, as in effect from time to time (a "Black Out Period"), the participant may elect for the term of such option to be extended to the date which is ten business days after the last day of the Black Out Period; provided that the expiration date as extended will not in any event be beyond the later of: (i) December 31 of the calendar year in which the option was otherwise due to expire; and (ii) the 15th day of the third month following the month in which the option was otherwise due to expire.

        In the event of a "Corporate Event" (as defined below), the Board in its sole discretion (but subject to obtaining the prior approval of the TSX if required by the rules, regulations and policies of the TSX) may, without any action or consent of the participants, provide for: (a) the continuation or assumption of outstanding options by or to the successor to all or substantially all of the assets or capital shares of the Corporation, or any other successor of the business of the Corporation as determined by the Board (the "Acquirer"); (b) the substitution of options for options and/or shares of restricted stock and/or other securities of the Acquirer; (c) the substitution of options with a cash incentive program of the Acquirer; (d) the acceleration of the vesting of options and, in the case of outstanding options the right to exercise such options, to a date prior to or on the date of the Corporate Event, and the expiration of outstanding options to the extent not timely exercised by the date of the Corporate Event or such other date as may be designated by the Board; (e) the cancellation of all or any portion of the outstanding options by a cash payment and/or other consideration receivable by the holders of Common Shares as a result of the Corporate Event equal to the excess, if any, of the fair market value (as determined by the Board), on the date of the Corporate Event, over the exercise price of the Common Shares subject to the outstanding options or portion thereof being cancelled; or (f) such other actions or combinations of the foregoing actions as it deems fair and reasonable in the circumstances. A "Corporate Event" is defined as: (i) a merger, amalgamation, consolidation, reorganization or arrangement of the Corporation with or into another corporation (other than a merger, amalgamation, consolidation, reorganization or arrangement of the Corporation with one or more of its Related Entities); (ii) a tender offer for all or substantially all of the outstanding Common Shares; (iii) the sale of all or substantially all of the assets of the Corporation; or (iv) any other acquisition of the business of the Corporation as determined by the Board.

        The Old Option Plan contains additional restrictions that are only applicable to options which are characterized as "incentive stock options" for the purposes of the IRC. In the case of incentive stock option grants to holders of 10% or more of the Common Shares, the exercise price of such incentive stock options must be not less than 110% of the fair market value of the Common Shares (provided that such fair market value shall not be less than the 5 day volume weighted trading price on the date of grant).

        Except in the case of death of an optionee or in accordance with the applicable law, options are not assignable without the consent of the Corporation, provided that with the prior written consent of the Plan Administrator and subject to such conditions as the Plan Administrator may designate, allow options, other than incentive stock options, to be transferred or assigned to a registered retirement savings plan (RRSP), registered retirement income fund (RRIF) or tax free savings account (TFSA).

ESPP

        The ESPP was established on July 17, 2008 (the "Effective Date") following approval of the ESPP at the Corporation's 2008 annual and special meeting of shareholders.

        The ESPP is open for participation to all employees (including directors and officers who are under a permanent full time or part time contract of employment with the Corporation) of the Corporation and any subsidiary subject to certain provisions contained within the ESPP.

Summary of ESPP

        Pursuant to the ESPP, 20,000 Common Shares (approximately 0.24% of the 8,504,346 issued and outstanding Common Shares as of the date of this Annual Report) are reserved for issuance under the ESPP. All Common Shares purchased or issued pursuant to the ESPP come from the treasury of the Corporation.

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        The Board has full power and authority to administer the ESPP on behalf of the Corporation, including the power and authority to delegate the administration of the ESPP to the Compensation Committee. The Board determines questions of interpretation or application of the ESPP and its decisions are final and binding on all participants. Board members receive no additional compensation for their services in administering the ESPP.

        Eligible employees become participants in the ESPP by delivering to the Corporation an election to purchase shares prior to the commencement of the applicable purchase period. Each participant contributes to the ESPP, at the participant's option, an amount equal to or between the following minimum and maximum amounts (in whole percentages): a minimum of one percent (1%) of the participant's basic compensation, and a maximum of ten percent (10%) of the participant's basic compensation. The contributions are made through payroll deductions at the end of each employee's bi weekly or monthly pay period, as applicable. The Corporation, as agent of the participant, makes such deductions and pays the participant's contribution to the Administrator (as such term is defined in the ESPP).

        On the last business day of each month, the Administrator purchases Common Shares from the Corporation based on the contributions received from each participant during the preceding month (the "Participant Shares"). The purchase price of the Participant Shares is the volume weighted average closing trading price of the Common Shares on the TSX for the five trading days immediately preceding the last business day of such month. The Administrator deposits the Participant Shares into an account in the name of the participant and holds such shares on behalf of such participant.

        The Corporation matches a portion of each employee's participation in the ESPP by issuing additional Common Shares to each participant (through the Administrator). Specifically, on the last business day of each month, the Corporation issues to the Administrator that number of Common Shares (the "Matching Shares") equal to twenty five percent (25%) of the aggregate number of Participant Shares purchased by the Administrator on behalf of the participants for such month for each participant. The Matching Shares are deposited into a trust account by the Administrator on behalf of the Corporation.

        The Participant Shares purchased on behalf of each participant vest immediately to the benefit of such participant. Subject to provisions in the ESPP relating to a change in control of the Corporation, the Matching Shares vest one year from the date of issuance of such Matching Shares.

        In the event of a change of control of the Corporation, the Board, in its sole discretion (but subject to obtaining the prior approval of the TSX if required by the rules, regulations and policies of the TSX) may, without any action or consent of the participants in the ESPP, provide for: (a) the continuation of the vesting period with regard to any unvested Matching Shares; (b) the substitution of any unvested Matching Shares for shares of the acquirer; (c) the substitution of any unvested Matching Shares with a cash incentive program of the acquirer; (d) the acceleration of the vesting period to a date prior to or on the date of the change of control; (e) the cancellation of all or any portion of any unvested Matching Shares by a cash payment and/or other consideration receivable by the holders of any unvested Matching Shares as a result of the change in control equal to the market price of the unvested Matching Shares on the date of the change of control; or (f) such other actions or combinations of the foregoing actions as it deems fair and reasonable in the circumstances.

        Upon the termination of employment of any participant for any reason, any unvested Matching Shares held by the Administrator for such participant are forfeited by such participant. A participant whose employment is terminated for any reason other than death must withdraw or otherwise transfer all of their Participant Shares and vested Matching Shares in such participant's account within ninety (90) days of such termination of employment. The participant may also request that the Administrator sell the Participant Shares and vested Matching Shares in the participant's account and distribute the cash proceeds to the participant. In the event of the death of a participant, the Participant Shares and vested Matching Shares in such participant's account are distributed to such participant's estate in accordance with the instructions of such participant's legal representative. Such distribution may take the form of a distribution of the cash realized from the sale of such Participant Shares and vested Matching Shares by the Administrator if so requested by the legal representative of the participant's estate.

        The Corporation reserves the right to discontinue use of payroll deductions at any time such action is deemed advisable. The ESPP will terminate on the date which is ten (10) years from the Effective Date (as such

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term is defined in the ESPP), unless earlier terminated by the Board. No right or interest of any participant in or under the ESPP may be assigned by such participant.

        No Common Shares are issuable under the ESPP at any time to any Insider (as such term is defined in the ESPP) if such issuance, together with all of the Corporation's previously established or proposed Share Compensation Arrangements (as such term is defined in the ESPP), including the ESPP, could result, at any time, in: (i) the number of Common Shares issued to Insiders pursuant to the ESPP, together with all of such other Share Compensation Arrangements, within any one (1) year period exceeding ten percent (10%) of the issued and outstanding Common Shares; or (ii) the number of Common Shares issuable to Insiders at any time pursuant to the ESPP and all such other Share Compensation Arrangements exceeding ten percent (10%) of the issued and outstanding Common Shares.

        Amendments to the ESPP generally require the consent of the TSX and the shareholders of the Corporation given at a duly constituted meeting. However, the following amendments to the ESPP may be made by the Board without TSX or other stock exchange approval and without shareholder approval: (a) amendments of a technical, clerical or "housekeeping" nature, or to clarify any provision of the ESPP, including without limiting the generality of the foregoing, any amendment for the purpose of curing any ambiguity, error or omission in the ESPP or to correct or supplement any provision of the ESPP that is inconsistent with any other provision of the ESPP; (b) suspension or termination of the ESPP; (c) amendments to respond to changes in legislation, regulations, instruments (including National Instrument 45 106), stock exchange rules (including the rules, regulations and policies of the TSX) or accounting or auditing requirements; (d) amendments respecting administration of the ESPP; (e) any amendment to the definition of "Employee" in the ESPP; (f) any amendment to the definition of "Subsidiary" in the ESPP and the consequential amendments to Appendix "B" of the ESPP; (g) changes to the vesting provisions for any outstanding Unvested Matching Shares (as defined in the ESPP); (h) amendments to the participant contribution provisions of the ESPP; (i) amendments to the withdrawal and suspension provisions of the ESPP; (j) amendments to the number or percentage of Matching Shares contributed by the Corporation; (k) amendments to the termination provisions of the ESPP; (l) adjustments to reflect stock dividends, stock splits, reverse stock splits, share combinations or other alterations of the capital stock of the Corporation; and (m) any other amendment, whether fundamental or otherwise, not requiring shareholder approval under applicable law (including, without limitation, the rules, regulations and policies of the TSX).

        Shareholder approval will be required for the following types of amendments of the ESPP: (a) amendments to the number of Common Shares issuable under the ESPP, including an increase to the fixed maximum number of Common Shares or a change from a fixed maximum number of Common Shares to a fixed maximum percentage; and (b) amendments required to be approved by shareholders under applicable law (including, without limitation, the rules, regulations and policies of the TSX).

ITEM 7.    Major Shareholders and Related Party Transactions.

A.    Major Shareholders.

        The common shares are the only class of shares of the Company authorized and, therefore, the only shares eligible to vote. To our knowledge, there is only one person who beneficially owns, directly or indirectly, or exercises control or direction over, common shares carrying more than 5% of the voting rights attached to the 8,504,346 shares outstanding at June 8, 2017.

Name	Number of Common Shares		Percentage of Outstanding Common Shares
Timothy J. McDonald		525,515		6.18%

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B.    Related Party Transactions.

        We purchased repair services from a network repair company which has a member who serves on both companies' board of directors. During the years ended February 28, 2017 and February 29, 2016 we paid a nominal amount relating to the purchase of services from this repair facility.

        All transactions are in the normal course of business and have been recorded at the exchange amount.

Interests of management and others in material transactions

        No person or company, for which we are required under National Instrument 51-102 – Continuous Disclosure Obligations to disclose such information, has any material interest, direct or indirect, in any transaction completed in the three most recently completed financial years or the current financial year that has or is reasonably expected to materially affect us.

C.    Interests of Experts and Counsel.

        Not applicable.

ITEM 8.    Financial Information.

A.    Consolidated Financial Statements and Other Financial Information.

        See "Part III – Item 18. Financial Statements" for a list of all financial statements filed as part of this Annual Report.

Export Sales

        During the year ended February 28, 2017, our sales to end users located outside of Canada amounted to $41.3 million, or 94% of our $43.9 million revenues for this year.

Legal proceedings

        It is common in our industry to receive notices alleging patent infringement arising in the normal course of business. We have set up internal procedures to deal with such notices, which include assessing the merits of each notice and seeking, where appropriate, a business resolution. Where a business resolution cannot be reached, litigation may be necessary. The ultimate outcome of any litigation is uncertain, and regardless of outcome, litigation can have an adverse impact on our business because of defense costs, negative publicity, diversion of management resources and other factors. Our failure to obtain any necessary license or other rights on commercially reasonable terms or litigation arising out of intellectual property claims could materially adversely affect our business. For the fiscal year ended February 28, 2017 and as of the date of this Annual Report, we are not party to any litigation related to intellectual property rights.

        In January 2016, a customer in India, Bharti Airtel Limited, initiated an arbitration process with the Company through an arbitral tribunal to resolve a dispute over inventory (with a value of $4.7 million) shipped to this customer in June 2015. The customer has now submitted its claim statement, which discloses an aggregate claim amount of approximately $6.4 million in respect of, among other things, damages claimed with respect to lost revenue, import duties, and inventory replacement costs. We feel that the claim has no merit. We submitted a counter-claim in June 2016 and several hearings have taken place subsequent to that time. As of the date of this Annual Report, the outcome of this matter is not determinable. We do not believe that we will incur a loss related to this claim. Under the generally accepted accounting principles applicable to us, we are not required to make any accrual in our financial statements with respect to any loss if it is not probable that a loss has been incurred. Based on these rules, we have not booked any accrual in our financial statements with respect to this dispute.

Dividends

        We currently intend to retain any future earnings to fund the development and growth of our business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends

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will be at the discretion of our board of directors and will depend upon many factors, including our results of operations, capital requirements and other factors that our board of directors deems relevant. There are no restrictions in our articles preventing us from declaring dividends or paying dividends to our shareholders. However, our debt facilities with Comerica Bank and Export Development Canada contain covenants restricting our ability to make payments of dividends on our common shares. We have not paid any dividends during our last three financial years.

ITEM 9.    The Offer and Listing.

Trading Price and Volume

        Our common shares are publicly traded on the TSX under the symbol "DRWI". Trading of the common shares on the TSX commenced with the closing of our initial public offering on April 19, 2007. Our common shares are also traded on the NASDAQ Capital Market under the symbol "DRWI". Trading of our common shares on NASDAQ commenced on October 15, 2009. Effective on August 28, 2015, our NASDAQ listing was transferred from The NASDAQ Global Market to The NASDAQ Capital Market. See "Risk Factors – Risks Related to our Common Shares & Warrants" for risks related to the trading of our common shares on NASDAQ.

        The ranges of our common shares on the TSX and NASDAQ for the annual high and low market prices during the five most recent full financial years ended February 28/29 are as follows:

	DRWI.TO Common Shares – TSX				DRWI.NSDQ Common Shares – NASDAQ
Annual	High		Low		High		Low
2013		112.50		42.50		114.25		43.75
2014		92.00		28.25		89.50		27.00
2015		68.75		24.75		63.75		19.50
2016		28.00		2.00		22.50		1.50
2017		13.96		1.70		10.66		1.30

        The ranges of our common shares on the TSX and NASDAQ for the quarterly high and low market prices during the two most recent full financial years ended February 28/29 are as follows:

	DRWI.TO Common Shares – TSX				DRWI.NSDQ Common Shares – NASDAQ
	High		Low		High		Low
Quarterly 2016
First Quarter		28.00		16.25		22.50		12.50
Second Quarter		20.00		6.50		16.00		4.75
Third Quarter		8.25		2.50		6.50		1.75
Fourth Quarter		5.75		2.00		4.25		1.50
Quarterly 2017
First Quarter		13.96		2.70		10.66		1.85
Second Quarter		8.82		3.77		6.83		2.88
Third Quarter		6.56		2.68		4.93		2.06
Fourth Quarter		4.00		1.70		3.00		1.30

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        The volume of trading and price ranges of our common shares on the TSX and NASDAQ for the last twelve months of the fiscal year ending February 28, 2017 are set out in the following table:

	DRWI.TO Common Shares – TSX		DRWI.NSDQ Common Shares – NASDAQ
Month	Price Range (CAD)	Average Daily Volume	Price Range (USD)	Average Daily Volume
March 2016	2.70 – 6.28	12,355	1.85 – 4.99	135,090
April 2016	6.10 – 13.96	129,579	4.67 – 10.66	763,165
May 2016	4.54 – 7.75	23,239	3.51 – 6.23	105,852
June 2016	5.01 – 6.90	9,012	3.77 – 5.44	44,199
July 2016	4.75 – 8.82	29,239	3.68 – 6.83	148,675
August 2016	3.77 – 5.40	16,073	2.88 – 4.50	59,392
September 2016	3.18 – 4.05	4,913	2.40 – 3.10	28,625.38
October 2016	2.68 – 6.56	108,765	2.06 – 4.93	1,896,970
November 2016	3.83 – 5.11	22,980	2.85 – 3.80	168,271
December 2016	3.40 – 4.00	15,214	2.50 – 3.00	52,418
January 2017	2.03 – 3.95	42,453	1.55 – 3.00	110,971
February 2017	1.70 – 2.43	42,750	1.30 – 1.90	215,425

ITEM 10.   Additional Information.

A.    Share Capital

        Not applicable.

B.    Memorandum and Articles of Association

Articles of Incorporation and By-laws

        The Company's Articles of Incorporation are on file with Corporations Canada under Corporation Number 351766-7. Our Articles of Incorporation and by-laws do not include a stated purpose and do not place any restrictions on the business that the Company may carry on.

Directors

        A director of our Company need not be a shareholder. In accordance with our by-laws and the CBCA, at least 25% of our directors must be residents of Canada. In order to serve as a director, a person must be a natural person at least 18 years of age, of sound mind and not bankrupt. Neither our Articles of Incorporation or by-laws, nor the CBCA, impose any mandatory retirement requirements for directors.

        Our by-laws and the CBCA authorize the directors from time to time to determine the remuneration for their services. There is no requirement for an independent quorum.

        A director who is a party to, or who is a director or officer of or has a material interest in any person who is a party to, a material contract or transaction or proposed material contract or transaction with our Company must disclose to the Company the nature and extent of his or her interest at the time and in the manner provided by the CBCA The CBCA prohibits such a director from voting on any resolution to approve the contract or transaction unless the contract or transaction:

•

relates primarily to his or her remuneration as a director, officer, employee or agent of the Company or an affiliate;

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•

is for indemnity or insurance for director's liability as permitted by the CBCA; or

•

is with an affiliate.

        Our board of directors may, on behalf of the Company and without authorization of our shareholders:

•

borrow money upon the credit of the Company;

•

issue, reissue, sell or pledge debt obligations of the Company; give a guarantee on behalf of the Company to secure performance of an obligation of any person; and

•

mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the Company, owned or subsequently acquired, to secure any obligation of the Company.

        These borrowing powers may be varied by the Company's by-laws or its Articles of Incorporation. However, our by-laws and Articles of Incorporation do not contain any restrictions on or variations of these borrowing powers.

Common Shares

        Our Articles of Incorporation authorize the issuance of an unlimited number of common shares. They do not authorize the issuance of any other class of shares.

        The holders of the common shares of our Company are entitled to receive notice of and to attend all meetings of the shareholders of our Company and have one vote for each common share held at all meetings of the shareholders of our Company. Our directors are elected at each annual meeting of shareholders and do not stand for re-election at staggered intervals.

        The Company may from time to time pay dividends on the issued and outstanding common shares in the capital of the Company, as and when declared by our board of directors, from any assets properly applicable to the payment of dividends. The Company may pay a dividend by issuing fully paid common shares of the Company and, subject to the foregoing, the Company may pay a dividend in money or property. The board of directors shall not declare and the Company shall not pay a dividend if there are reasonable grounds for believing that: (a) the Company is, or would after the payment be, unable to pay its liabilities as they become due; or (b) the realizable value of the Company's assets would thereby be less than the aggregate of its liabilities and stated capital of all classes of shares.

        In the event of the liquidation, dissolution or winding-up of the Company or other distribution of assets of the Company among shareholders for the purpose of winding-up its affairs, subject to the prior rights of any other class of shares ranking senior to the common shares, the holders of common shares shall be entitled to receive the remaining assets of the Company. The Company has not issued any shares which rank senior to the common shares.

        There are no redemption provisions and no liability for further capital calls associated with the Company's common shares.

Actions Necessary to Change Rights of Shareholders

        In order to change the rights of our shareholders, we would need to amend our Articles of Incorporation to effect the change. Such an amendment would require the affirmative vote of holders of two-thirds of the shares cast at a duly called special meeting of shareholders. For certain amendments such as those creating of a class of preferred shares, a shareholder is entitled to dissent in respect of such a resolution amending our articles and, if the resolution is adopted and the Company implements such changes, demand payment of the fair value of its shares.

Meetings of Shareholders

        An annual meeting of shareholders is held each year for the purpose of considering the financial statements and reports, electing directors, appointing auditors and for the transaction of other business as may be brought before the meeting. The board of directors has the power to call a special meeting of shareholders at any time. A

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quorum at any meeting of shareholders shall be persons present not being less than two in number and holding or representing more than twenty-five percent (25%) of the total number of issued and outstanding common shares of the Company.

        Notice of the time and place of each meeting of shareholders must be given not less than 21 days, nor more than 60 days, before the date of each meeting to each director, to the auditor and to each shareholder who at the close of business on the record date for notice is entered in the securities register as the holder of one or more shares carrying the right to vote at the meeting. Notice of meeting of shareholders called for any other purpose other than consideration of the minutes of an earlier meeting, financial statements and auditor's report, election of directors and reappointment of the incumbent auditor, must state the nature of the business in sufficient detail to permit the shareholder to form a reasoned judgment on and must state the text of any special resolution or by-law to be submitted to the meeting.

        The only persons entitled to be present at a meeting of shareholders are those entitled to vote, the directors of the Company and the auditor of the Company. Any other person may be admitted only on the invitation of the chairman of the meeting or with the consent of the meeting. In circumstances where a court orders a meeting of shareholders, the court may direct how the meeting may be held, including who may attend the meeting.

Limitations on Right to Own Securities

        There is no limitation imposed by the laws of Canada or by the by-laws or Articles of Incorporation of the Company on the right of a non-resident to hold or vote the common shares, other than as provided in the Investment Canada Act. The Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain acquisitions of "control" of the Company by a "non-Canadian". The threshold for acquisitions of control is generally defined as being one-third or more of the voting shares of the Company. "Non-Canadian" generally means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by non-Canadian.

Change of Control

        There are no provisions in our by-laws or Articles of Incorporation that would have an effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company. Our by-laws do not contain a provision governing the ownership threshold above which shareholder ownership must be disclosed.

C.    Material Contracts

        The Original Master Acquisition Agreement is a material contract which was entered into in the financial year ended February 29, 2012, and, as noted above, this agreement has been superseded and replaced by the Amended and Restated Master Acquisition Agreement, particulars of which are set out above under "General Development of the Business – History & Business Developments – Mergers & Acquisitions and Joint Ventures".

        On June 1, 2012, we entered into an asset based credit facility with Comerica Bank and Export Development Canada. The credit facility matured on June 1, 2016. We entered into forbearance agreements on December 15, 2015, April 26, 2015, July 12, 2016 and October 12, 2016, the last of which expired on April 1, 2017. We have not yet come to agreement on a fifth forbearance agreement. We had drawn $17.0 million on the facility as at February 28, 2017 (February 29, 2016 – $22.2 million), and $1.8 million against our letter of credit facility (February 29, 2016 – $1.9 million). The original credit facility is secured by a first priority charge on all of our assets and our principal direct and indirect subsidiaries. The terms of the credit facility include other customary terms, conditions, covenants, representations and warranties. Credit availability is subject to ongoing compliance with borrowing covenants and short term assets on hand.

        The fourth forbearance agreement which was signed on October 12, 2016 identified new minimum covenant levels reflecting our revised financial plans. The forbearance agreement included a requirement to hold a minimum of $1.0 million at Comerica Bank, reduces the facility commitment from $40.0 million to $30.0 million,

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includes additional compliance requirements and implements more frequent monitoring. As part of this forbearance agreement, we agreed to issue warrants to purchase 375,000 common shares to the lenders at an exercise price of $4.00 per share. These warrants will expire five years from the date of issuance. We are in ongoing negotiations with our lending partners to put in place a new long term debt facility.

        Other than as described above, there are no other material contracts which were entered into in the financial years ended February 28, 2017 or February 29, 2016.

D.    Exchange Controls

        There are no governmental laws, decrees, regulations or other legislation, including foreign exchange controls, in Canada which may affect the export or import of capital or that may affect the remittance of dividends, interest or other payments to non-resident holders of the Company's securities.

E.    Taxation

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS FOR NON-RESIDENTS OF CANADA

        The following summary describes the principal Canadian federal income tax considerations generally applicable to a purchaser who acquires, as a beneficial owner, common shares and who, at all relevant times, for the purposes of the application of the Income Tax Act (Canada) (the"Tax Act") and the regulations thereunder, (1) is not, and is not deemed to be, resident in Canada; (2) does not use or hold, and is not deemed to use or hold, the common shares in a business carried on in Canada; (3) deals at arm's length with us; (4) is not affiliated with us or a subsequent purchaser of the common shares; and (5) holds the common shares as capital property (a"Non-Resident Holder"). Generally, the common shares will be capital property to a Non-Resident Holder provided the Non-Resident Holder does not acquire or hold those common shares in the course of carrying on a business or as part of an adventure or concern in the nature of trade.

        Special rules, which are not discussed in this summary, may apply to a Non-Resident Holder that is an insurer that carries on an insurance business in Canada and elsewhere.

        This summary is based on the current provisions of the Tax Act, and counsel's understanding of the current administrative policies and assessing practices of the Canada Revenue Agency ("CRA") published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the"Proposed Amendments") and assumes that all Proposed Amendments will be enacted in the form proposed. However, no assurances can be given that the Proposed Amendments will be enacted as proposed, or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative policy or assessing practice whether by legislative, regulatory, administrative or judicial action nor does it take into account tax legislation or considerations of any province, territory or foreign jurisdiction, which may differ from those discussed herein.

        This summary is of a general nature only and is not, and is not intended to be, legal or tax advice to A Non-Resident Holder. This summary is not exhaustive of all Canadian federal income tax considerations. Accordingly, Non-Resident Holders should consult their own tax advisors with respect to their particular circumstances.

Currency Conversion

        Generally, for purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of the common shares must be converted into Canadian dollars based on the exchange rates as determined in accordance with the Tax Act. The amount of dividends required to be included in the income of, and capital gains or capital losses realized by, a Non-Resident Holder may be affected by fluctuations in exchange rates.

Dividends

        Dividends paid or credited or deemed to be paid or credited to a Non-Resident Holder by us will be subject to Canadian withholding tax at the rate of 25 per cent of the gross amount of the dividend, subject to any

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reduction in the rate of withholding to which the Non-Resident Holder is entitled under any applicable income tax convention between Canada and the country in which the Non-Resident Holder is resident. For example, where the Non-Resident Holder is a U.S. resident entitled to benefits under the Canada-U.S. Income Tax Convention (1980) and is the beneficial owner of the dividends, the applicable rate of Canadian withholding tax is generally reduced to 15 per cent.

Dispositions

        A Non-Resident Holder will not be subject to tax under the Tax Act on any capital gain realized on a disposition or deemed disposition of our common shares, unless the common share is or is deemed to be "taxable Canadian property" to the Non-Resident Holder for the purposes of the Tax Act and the Non-Resident Holder is not entitled to relief under an applicable income tax convention between Canada and the country in which the Non-Resident Holder is resident.

        Generally, provided the common shares are listed on a "designated stock exchange" as (defined in the Tax Act) (which includes the TSX and NASDAQ) at the time of disposition, the common shares will not constitute taxable Canadian property of a Non-Resident Holder, unless at any time during the 60-month period immediately preceding the disposition:(i)(a) the Non-Resident Holder, (b) persons with whom the Non-Resident Holder did not deal at arm's length, (c) partnerships in which the Non-Resident Holder or a person described in (b) holds a membership interest directly or indirectly through one or more partnerships, or (d) the Non-Resident Holder together with such persons, owned 25% or more of our common shares, and (ii) more than 50% of the fair market value of the common shares was derived directly or indirectly from one or any combination of: (a) real or immovable property situated in Canada, (b)"Canadian resources properties" (as defined in the Tax Act), (c)"timber resource properties" (as defined in the Tax Act), and (d) options in respect of, or interests in or for civil law rights in, property described in (a) to (c), whether or not such property exists. Notwithstanding the foregoing, our common shares may otherwise be deemed to be taxable Canadian property to a Non-Resident Holder for purposes of the Tax Act. Non-Resident Holders whose common shares constitute taxable Canadian property should consult with their own tax advisors.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS FOR U.S. HOLDERS

        This section describes the material United States federal income tax considerations of the acquisition, ownership and disposition of our common shares. This summary addresses only persons or entities that are "U.S. holders" (as defined below). This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax consequences that may apply to a U.S. holder arising from or relating to the acquisition, ownership, and disposition of our common shares. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. holder that may affect the U.S. federal income tax consequences to such U.S. holder. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any U.S. holder. This summary does not address the U.S. state and local, U.S. federal estate and gift, or foreign tax consequences or the alternative minimum tax provisions of the Code (as defined below). Each U.S. holder should consult its own financial advisor, legal counsel, or accountant regarding the U.S. federal income, U.S. state and local, and foreign tax consequences arising from and relating to the acquisition, ownership, and disposition of common shares.

        This section does not apply to you if you are a member of a class of holders subject to special rules, including, but not limited to:

•

U.S. holders that are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts;

•

U.S. holders that are financial institutions, insurance companies, real estate investment trusts, or regulated investment companies;

•

U.S. holders that are dealers in securities or currencies or U.S. holders that are traders in securities that elect to apply a mark-to-market accounting method;

•

U.S. holders that have a "functional currency" other than the U.S. dollar;

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•

U.S. holders that own common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position;

•

U.S. holders who use common shares as security for a loan;

•

U.S. holders that acquired common shares in connection with the exercise of employee stock options or otherwise as compensation for services;

•

U.S. holders that hold common shares other than as capital assets within the meaning of Section 1221 of the Code;

•

U.S. expatriates or former residents of the U.S.; and

•

U.S. holders that own (directly, indirectly, or by attribution) 10% or more of the total combined voting power of our outstanding shares.

        This section is based on the Internal Revenue Code of 1986, as amended (the"Code"), its legislative history, existing and proposed regulations under the Code, published rulings and court decisions, the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the"Canada-U.S. Tax Convention"), all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive basis.

        This summary is not binding upon the Internal Revenue Service (the"IRS") and no rulings have been or will be sought from the IRS regarding any matters discussed in this summary. In that regard, there can be no assurance that one or more of the tax considerations described in this summary will not be challenged by the IRS or a U.S. court.

        If a partnership (or other entity or arrangement treated as a partnership for United States federal income tax purposes) holds our common shares, the United States federal income tax treatment of a partner (or member) will generally depend on the status of the partner and the tax treatment of the partnership (or other entity). A partner in a partnership (or member of such other entity) holding our common shares should consult its tax advisor with regard to the U.S. federal income tax treatment of an investment in our common shares.

        You are a U.S. holder if you are a beneficial owner of a common share and you are:

•

an individual who is a citizen or resident (including a lawful permanent resident alien holding a green card) of the United States as determined for U.S. federal income tax purposes;

•

a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of Columbia;

•

an estate whose income is subject to U.S. federal income tax regardless of its source; or

•

a trust if it (1) is subject to the primary supervision of a federal, state or local court within the United States and one or more United States persons are authorized to control all substantial decisions of the trust or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

        The United States federal income tax consequences of the acquisition, ownership and disposition of our common shares can be very complex and, in certain cases, uncertain or potentially unfavorable to a U.S. holder. Accordingly, each prospective investor considering an acquisition of, or who acquires common shares is strongly urged to consult its own tax advisor with respect to the United States federal, state or local income and alternative minimum tax, United States federal estate or gift, or foreign tax consequences of such acquisition, ownership and disposition of common shares in light of its own particular facts and circumstances.

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U.S. Holders

Taxation of Distributions

        Under the U.S. federal income tax laws, and subject to the passive foreign investment company ("PFIC") rules discussed below, if you are a U.S. holder, a distribution of cash, if any, paid on a common share, including a constructive distribution, generally will be included in your gross income as a dividend (without reduction for any amounts withheld in respect of Canadian federal income tax) to the extent of our current or accumulated "earnings and profits" (as computed under United States federal income tax rules).

        If you are a non-corporate U.S. holder, dividends paid to you that constitute qualified dividend income will be taxable to you at a maximum tax rate of 23.8% (including the 3.8% tax on net investment income discussed below) provided that you hold our common shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meet other holding period requirements. Dividends we pay with respect to our common shares should be qualified dividend income provided that we are not a PFIC in the year the dividend is paid or the previous taxable year.

        You must include any Canadian tax withheld from the dividend payment in this gross amount even though you do not in fact receive the withheld amount. The dividend is taxable to you when you receive the dividend, actually or constructively. The dividend will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations. The amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S. dollar value of the Canadian dollar payments made, determined at the spot Canadian dollar/U.S. dollar rate on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes.

        To the extent that a distribution paid on our common shares is in excess of our current and accumulated "earnings and profits" (as determined for U.S. federal income tax purposes), such distribution generally will be treated as a non-taxable return of capital to the extent of your adjusted tax basis in our common shares, with any excess treated as a gain from the sale or exchange of the Shares.

        A U.S. holder that pays (whether directly or through withholding) Canadian income tax with respect to distributions by us generally will be entitled, at the election of such U.S. holder, to receive either a deduction or a credit for such Canadian income tax paid. Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. holder's U.S. federal income tax liability that such U.S. holder's "foreign source" taxable income bears to such U.S. holder's worldwide taxable income. In applying this limitation, a U.S. holder's various items of income and deduction must be classified, under complex rules, as either "foreign source" or "U.S. source." Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the maximum 20% tax rate.

        For foreign tax credit purposes, dividends will be income from sources outside the United States and will, depending on your circumstances, be either "passive category" or "general category" income for purposes of computing the foreign tax credit allowable to you. However, the amount of a distribution with respect to our common shares that is treated as a "dividend" may be lower for U.S. federal income tax purposes than it is for Canadian federal income tax purposes, potentially resulting in a reduced foreign tax credit allowance to a U.S. holder. The foreign tax credit rules are complex, and each U.S. holder should consult its own U.S. tax advisor regarding the foreign tax credit rules.

Taxation of Sale, Exchange or other Taxable Disposition

        Subject to the PFIC rules discussed below, if you are a U.S. holder and you sell or otherwise dispose of your common shares, you will recognize gain or loss for United States federal income tax purposes equal to the difference between the United States dollar value of the amount that you realize and your tax basis, determined in United States dollars, in your common shares. Any such gain or loss will be capital gain or loss if our common shares are held by you as capital assets. Any such gain or loss generally will be United States source income or

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loss for purposes of applying the United States foreign tax credit rules unless the gain is subject to tax in Canada and is re-sourced as "foreign source" under the Convention and such U.S. holder elects to treat such gain as "foreign source." Capital gain of a non-corporate U.S. holder is generally taxed at a maximum rate of 23.8% (including the 3.8% tax on net investment income discussed below) where the U.S. holder has a holding period greater than one year. Deductions for capital losses are subject to limitations.

PFIC Rules

        If we are considered to be a PFIC, as that term is defined in Section 1297 of the Code, at any time during a U.S. holder's holding period, the following sections will generally describe the United States federal income tax consequences to a U.S. holder in relation to the acquisition, ownership and disposition of common shares.

        We generally will be regarded as a PFIC for United States federal income tax purposes if, for a taxable year, either (i) 75% or more of our gross income for such taxable year is passive income or (ii) on the basis of a quarterly average, 50% or more of the assets held by us either produce passive income or are held for the production of passive income, based on the fair market value of such assets. "Passive income" includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. If a foreign corporation (such as DragonWave) owns, directly or indirectly, at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes of the PFIC tests described above as owning its proportionate share of the assets of the other corporation, and as receiving directly its proportionate share of the other corporation's income. In addition, under certain attribution rules, if we are a PFIC, U.S. holders will be deemed to own their proportionate share of the our subsidiaries which are PFICs (such subsidiaries referred to as "Subsidiary PFICs"), and will be subject to U.S. federal income tax on (i) a distribution on the shares of a Subsidiary PFIC and (ii) a disposition of shares of a Subsidiary PFIC, both as if the holder directly held the shares of such Subsidiary PFIC.

        PFIC classification is fundamentally factual in nature, generally cannot be determined until the close of the taxable year in question, and is determined annually. Consequently, there can be no assurance that we have never been and will not become a PFIC for any taxable year during which U.S. holders hold common shares.

        In any given taxable year for which we are classified as a PFIC, during which a U.S. holder holds common shares, a U.S. holder would be subject to increased tax liability (possibly including a non-deductible interest charge) upon the sale or other disposition of our common shares or upon the receipt of certain distributions treated as "excess distributions," unless such U.S. holder elects to be taxed currently, by making a Mark-to-Market or a Qualified Electing Fund ("QEF") Election. An excess distribution generally would be any distribution to a U.S. holder with respect to common shares during a single taxable year over 125% of the average annual distributions received by such U.S. holder with respect to our common shares during the three preceding taxable years or, if shorter, during such U.S. holder's holding period for our common shares. In addition, certain special, generally adverse rules would apply to our common shares if we are a PFIC. For example, under certain proposed Treasury regulations, a "disposition" for this purpose may include, under certain circumstances, transfers at death, gifts, pledges, transfers pursuant to tax-deferred reorganizations and other transactions with respect to which gain ordinarily would not be recognized. In addition, if we are treated as a PFIC, dividends paid by us will not be eligible for taxation at the preferential tax rates described above under the heading "Taxation of Distributions".

        If a U.S. holder owns our common shares during any year in which we are a PFIC, such U.S. holder must also file IRS Form 8621 regardless of whether such holder makes a Mark-to-Market or QEF Election.

        Under the PFIC rules:

•

the gain or excess distribution will be allocated ratably over the applicable holding period for your common shares;

•

the amount allocated to the taxable year in which you realized the gain or excess distribution will be taxed as ordinary income;

•

the amount allocated to each prior year, with certain exceptions, will be taxed at the highest tax rate in effect for that year; and

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•

the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such year. A U.S. holder that is not a corporation must treat such interest as non-deductible personal interest.

        If we were a PFIC, a U.S. holder might be able to make a Mark-to-Market Election with respect to our common shares to mitigate some of these adverse tax consequences. A U.S. holder that holds stock of a PFIC generally may make a Mark-to-Market Election with respect to its stock if the stock constitutes "marketable stock". Marketable stock is stock that is regularly traded (other than in de minimis quantities) on a U.S. or non-U.S. exchange or other market that the U.S. Treasury Department determines has trading, listing, financial disclosure, and other rules adequate to carry out the purposes of the Mark-to-Market Election. The common shares should constitute marketable stock with respect to which a Mark-to-Market Election could be made. In such case, a U.S. holder would generally include as ordinary income or loss the difference between the fair market value of our common shares at the end of the taxable year and the adjusted tax basis of our common shares (but loss could only be included to the extent of the net amount of previously included income as a result of the Mark-to-Market Election). If a U.S. holder made the election, the U.S. holder's tax basis in our common shares would be adjusted to reflect any such income or loss amounts. Any gain recognized on the sale or other disposition of common shares would be treated as ordinary income. A U.S. holder should consult their own tax advisors regarding the availability and advisability of making a Mark-to-Market Election with respect to our common shares in their particular circumstances in the event the Company is or becomes a PFIC. A Mark-to-Market Election would not be available for any Subsidiary PFIC.

        The QEF Election, if available, generally would allow a U.S. holder to avoid the consequences of the PFIC rules but would require such holder to include its pro rata share of the Company's ordinary income and net capital gain in income currently, whether or not distributed. However, the Company does not intend to provide

        U.S. holders with such information as may be required to make a QEF Election effective in the event it is a PFIC.

The PFIC rules are complex and in certain cases, uncertain. Each U.S. holder is strongly urged to consult its tax advisor regarding application and operation of the PFIC rules, including the availability and advisability of, and procedure for, making the Mark-to-Market and/or QEF Elections.

Additional Tax on Passive Income

        Certain individuals, estates and trusts whose income exceeds certain thresholds will be required to pay a 3.8% Medicare surtax on "net investment income" including, among other things, dividends and net gain from disposition of property (other than property held in certain trades or businesses). U.S. holders should consult their own tax advisors regarding the effect, if any, of this tax on their ownership and disposition of common shares.

Withholding Requirements Relating to Foreign Accounts

        Withholding taxes may apply to certain types of payments made to "foreign financial institutions" (as specially defined under applicable rules) and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on, and gross proceeds from the sale or other disposition of, common shares paid to a foreign financial institution or to a foreign non-financial foreign entity, unless (1) the foreign financial institution undertakes certain diligence and reporting, (2) the non-financial foreign entity either certifies it does not have any substantial United States owners or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in clause (1) above, it must enter into an agreement with the United States Treasury requiring, among other things, that it undertake to identify accounts held by certain United States persons or United States-owned foreign entities, annually report certain information about such accounts, and withhold 30% on payments to non-compliant foreign financial institutions and certain other account holders.

        The IRS has issued administrative guidance providing that the withholding provisions described above will generally apply to payments of dividends on common shares made on or after July 1, 2014, and to payments of

86

gross proceeds from a sale or other disposition of such shares on or after January 1, 2017. U.S. holders should consult their tax advisors regarding these withholding provisions.

Backup Withholding and Information Reporting

        Under U.S. federal income tax law and Treasury regulations, certain categories of U.S. holders must file information returns with respect to their investment in, or involvement in, a foreign corporation. Penalties for failure to file certain of these information returns are substantial. U.S. holders who acquire or hold common shares should consult with their own tax advisors regarding the requirements of filing information returns, and if applicable, any Mark-to-Market Election or QEF Election.

        If the holder is a non-corporate U.S. holder, then payments to it made within the United States, or by a United States payor or United States middleman, of dividends on or proceeds arising from the sale or other taxable disposition of common shares, and/or proceeds arising from the sale or other taxable disposition of common shares, generally will be subject to information reporting and backup withholding (currently at the rate of 28%), where such U.S. holder fails to furnish its correct United States taxpayer identification number (generally on IRS Form W-9), and to make certain certifications, or otherwise fails to establish an exemption from backup withholding. Any amounts withheld under the backup withholding rules from a payment to a U.S. holder generally may be refunded (or credited against its United States federal income tax liability, if any) provided the required information is furnished to the IRS in a timely manner. Each U.S. holder should consult its own tax advisor regarding the backup withholding tax.

F.    Dividends and Paying Agents

        Not applicable.

G.    Statements by Experts

        Not applicable.

H.    Documents on Display

        The documents referred to and/or incorporated by reference in this Annual Report can be obtained free of charge upon request from Investor Relations at the Company's head office located at 411 Legget Drive, Suite 600, Ottawa, Ontario, K2K 3C9, Canada.

        We are required to file financial statements and other information with the securities regulatory authorities electronically through the Canadian System for Electronic Document Analysis and Retrieval (SEDAR), which can be viewed at www.sedar.com.

        We are subject to the informational requirements of the U.S. Exchange Act and files reports and other information with the SEC. You may read and copy any of the Company's reports and other information at, and obtain copies upon payment of prescribed fees from, the Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C., U.S., 20549. In addition, the SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC at http://www.sec.gov. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

I.    Subsidiary Information

        Not applicable.

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ITEM 11.    Quantitative and Qualitative Disclosures About Market Risk.

Quantitative and Qualitative Disclosure About Market Risk

Interest rate risk

        Cash, cash equivalents and our debt facility, which has interest rates with market rate fluctuations, expose us to interest rate risk on these financial instruments. Net interest expense, excluding deferred financing costs, recognized during the three and twelve months ended February 28, 2017 was $0.4 million and $1.4 million on our cash, cash equivalents and debt facility (three and twelve months ended February 29, 2016 – expense of $0.4 million and $2.0 million).

Credit risk

        In addition to trade receivables and other receivables, we are exposed to credit risk on our cash and cash equivalents in the event that our counterparties do not meet their obligations. We do not use credit derivatives or similar instruments to mitigate this risk and, as such, the maximum exposure is the full carrying value or fair value of the financial instrument. We minimize credit risk on cash and cash equivalents by transacting with only reputable financial institutions and customers.

Foreign exchange risk

        Foreign exchange risk arises because of fluctuations in exchange rates. To mitigate exchange risk, we may utilize forward contracts to secure exchange rates with the objective of offsetting fluctuations in our operating expenses incurred in foreign currencies with gains or losses on the forward contracts. As at February 28, 2017 and February 29, 2016, we had no forward contracts in place. All foreign currency gains and losses related to forward contracts are included in foreign exchange gain (loss) in the consolidated statement of operations.

        As of February 28, 2017, if the U.S. dollar had appreciated 1% against all foreign currencies, with all other variables held constant, the impact of this foreign currency change on our foreign denominated financial instruments would have resulted in a $43 thousand decrease in after tax net loss for the three and twelve months ended February 28, 2017 (three and twelve months ended February 29, 2016 – increase of $27 thousand) with an equal and opposite effect if the U.S. dollar had depreciated 1% against all foreign currencies at February 28, 2017.

ITEM 12.    Description of Securities Other Than Equity Securities.

A.    Debt Securities

        Not applicable.

B.    Warrants and Rights

        Not applicable.

C.    Other Securities

        Not applicable.

D.    American Depositary Shares

        Not applicable.

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PART II

ITEM 13.    Defaults, Dividend Arrearages and Delinquencies.

        None.

ITEM 14.    Material Modifications to the Rights of Security Holders and Use of Proceeds.

A.

Not applicable.

B.

Not applicable.

C.

Not applicable.

D.

Not applicable.

E.    Use of Proceeds

2017 Offering

        On March 17, 2017 we completed an at-the-market registered direct offering and a concurrent private placement to institutional investors in the United States. Under the terms of the offering, we issued and sold 1,198,666 Common Shares at $1.50 for aggregate gross proceeds of $1.79 million. The total net proceeds after deducting commission and expenses was $1.6 million. Concurrently in a private placement, we issued warrants to purchase 599,333 Common Shares at an exercise price of $1.50, which are not exercisable for six months and one day from issuance and which will expire five and a half years from the date of issuance.

August 2016 Offering

        On August 8, 2016, we completed a public offering previously announced on August 3, 2016. The common shares were offered (the "Registered Offering") by us pursuant to an effective shelf registration statement on Form F-1 (File No. 333-212428), which was declared effective by the U.S. Securities and Exchange Commission (the "SEC") on August 2, 2016 (the "Registration Statement"). Under the terms of the offering, we issued and sold 1,760,880 Class A units at $3.35 and 30,164 Class B units at $3.34, for aggregate gross proceeds of $6.0 million. Concurrent with the underwritten public offering in the United States, we issued an additional 63,000 Class A Units on a private placement basis to purchasers in Canada for additional gross proceeds of $0.2 million. The total net proceeds after deducting commission and expenses was $5.5 million. Each Class A unit consisted of one common share, one five-year warrant (the "Long-Term Warrant") to purchase one common share and two six-month warrants (the "Short-Term Warrant"). Each Class B unit consisted of a pre-funded warrant (the "Pre-Funded Warrant") to purchase one common share, one Long-Term Warrant and two Short-Term Warrants. The Long-Term Warrants have an exercise price of $4.37 per share, are exercisable immediately and will expire on August 8, 2021. The Short-Term Warrants have an exercise price of $4.00 per share, are exercisable immediately and expired on February 8, 2017. The Pre-Funded Warrants are exercisable immediately with no expiration date, are deemed purchased for a price of $3.34 per underlying common share by virtue of purchasing a Class B Unit and have an exercise price of $0.01 per share. The Pre Funded Warrants were fully exercised on August 25, 2016.

April 2016 Offering

        On April 6, 2016, we entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain institutional investors (the "Purchasers") providing for the issuance and sale by us of 599,998 common shares and a price per share equal to US$7.25. The shares were being offered (the "Registered Offering") by us pursuant to an effective shelf registration statement on Form F-3 (File No. 333-209969), which was declared effective by the Securities and Exchange Commission (the "SEC") on March 14, 2016 (the "Registration Statement"). In a concurrent private placement (the "Private Placement" and, together with the Registered Offering, the "Offerings"), we issued warrants to purchase 299,999 common shares at an exercise price of US$8.50 per share. The warrants are exercisable six months and one day after the date of issuance and expire five years from the date of issuance. The net proceeds of the Offerings is US$4.09 million, after placement agent

89

fees and estimated Offering expenses payable by us, and excluding any proceeds we may receive upon exercise of the warrants.

2014 Offering

        On August 1, 2014 we completed the 2014 Offering. Under the terms of the 2014 Offering, we issued and sold 15,927,500 2014 Units at CAD$1.80 per 2014 Unit for aggregate gross proceeds of $26.2 million (CAD$28.7 million). After deducting commissions and expenses, we realized net proceeds of $24.0 million. Each 2014 Unit consisted of one common share of the Company and one half of one 2014 Warrant. Each whole 2014 Warrant originally entitled the holder to purchase one of our common shares at an exercise price of CAD$2.25 per share until August 1, 2016. Upon issuance, we recognized a liability in the amount of $2.6 million for the 2014 Warrants. The shelf registration statement was declared effective on August 29, 2013. The file number is 333-190674. The 2014 Offering had CIBC acting as the sole book-runner for the offering and H.C. Wainwright & Co., LLC acting as lead manager (together, the "underwriters").

2013 Offering

        On September 23, 2013, pursuant to the 2013 Offering, we issued 11,910,000 common shares and 8,932,500 2013 Warrants for proceeds, before deducting fees and expenses, of approximately $25.0 million. After deducting fees and expenses, we realized net proceeds of $22.4 million. The 2013 Units were offered at a price of $2.10 per 2013 Unit. Each 2013 Unit consisted of one common share and three quarters of one 2013 Warrant. Each whole 2013 Warrant originally entitled the holder to purchase one common share at an exercise price of $2.70 per share until September 23, 2018, subject to certain adjustments. In connection with the 2014 Offering, and pursuant to the terms of such warrants, the exercise price of the 2013 Warrants issued in the 2013 Offering was changed to $1.30 per share. As at September 23, 2013 we recognized a liability in the amount of $6.4 million for the 2013 Warrants. The shelf registration statement was declared effective on August 29, 2013. The file number is 333-190674. The 2013 Offering had Canaccord Genuity acting as the sole book running manager.

Use of Proceeds

        Proceeds from the 2017 Offering, 2016 Offerings, 2014 Offering and 2013 Offering were used to fund the operations of the business.

ITEM 15.    Controls and Procedures.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

        At the end of the period covered by this Annual Report for the year ended February 28, 2017 and up to June 8, 2017, an evaluation was carried out under the supervision of, and with the participation of, our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, which are our principal executive officer and principal financial officer, respectively, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act. Based upon that evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective as at February 28, 2017 to give reasonable assurance that the information we are required to disclose in reports that we file or submit under the Exchange Act and/or applicable Canadian securities legislation is (i) recorded, processed, summarized and reported, within the time periods specified in the U.S. Securities and Exchange Commission's as well as in accordance with applicable Canadian securities legislation rules and forms, and (ii) accumulated and communicated to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Management's Report on Internal Control over Financial Reporting

        Our management is also responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) as well as National

90

Instrument 52-109 of the Canadian Securities Administrators. These controls are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes. Under the supervision and with the participation of our management, including our principal executive officer, our CEO, and principal financial officer, our CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework). Based on our evaluation under the framework in Internal Control – Integrated Framework, our management concluded that our internal control over financial reporting was effective and that there are no material weaknesses in the Company's disclosure controls and procedures as of February 28, 2017.

Changes in Internal Control over Financial Reporting

        During the period covered by this Annual Report, no changes occurred in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16.    RESERVED

ITEM 16A.    Audit Committee Financial Expert.

Audit Committee

        We have a separately designated standing Audit Committee established in accordance with section 3(a)(58)(A) of the Exchange Act and NASDAQ Rule 5605(c)(2). Our Audit Committee is composed of Lori O'Neill (Chair), Claude Haw, and Cesar Cesaratto, each of whom, in the opinion of the directors, is financially literate and independent as determined under National Instrument 52-110 (Audit Committees) ("NI 52-110"), Rule 10A-3 of the Exchange Act and NASDAQ Rule 5605(a)(2).

        The Audit Committee assists the board of directors in fulfilling its responsibilities for oversight of financial and accounting matters. In addition to recommending the auditors to be nominated and reviewing the compensation of the auditors, the Audit Committee is responsible for overseeing the work of the auditors and pre-approving non-audit services. The Audit Committee also reviews our annual and interim financial statements and news releases containing information taken from our financial statements prior to their release. The Audit Committee is responsible for reviewing the acceptability and quality of our financial reporting and accounting standards and principles and any proposed material changes to them or their application.

        The Audit Committee has a published charter, which is available at www.sedar.com and on our website, www.dragonwaveinc.com.

Audit Committee Financial Expert

        Our board of directors has determined that each of Lori O'Neill and Claude Haw qualifies as an "audit committee financial expert" within the meaning of the SEC's rules and each of the members of the Audit Committee is independent as determined under Exchange Act Rule 10A-3 and NASDAQ Rule 5605(a)(2).

ITEM 16B.    Code of Ethics.

        We have adopted a Code of Business Conduct and Ethics (the"Code of Ethics") that is applicable to each of our employees, including our principal executive officer, principal financial officer, principal accounting officer or controller. Our Code of Ethics is available at on our website at www.dragonwaveinc.com.

        Any amendments to our Code of Ethics, and all waivers of the Code of Ethics with respect to any of the officers covered by it, will be posted on our website within four business days of such amendment or waiver and shall be provided in print to any shareholder who requests them.

        There have been no waivers or implicit waivers to the Code of Ethics during the fiscal year ended February 28, 2017.

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ITEM 16C.    Principal Accountant Fees and Services.

        The following table sets out the fees billed to us by EY LLP and its affiliates for professional services for the year ended February 28, 2017 and the year ended February 29, 2016. During these years, EY LLP was our only external auditor.

        The aggregate fees billed by EY LLP were as follows:

	Year Ended February 28, 2017		Year Ended February 29, 2016
Audit Fees	$	289,900	$	289,129
Audit Related Fees	$	45,715	$	1,600
Tax Fees	$	93,130	$	84,366
All Other Fees	$	—	$	39,364
TOTAL	$	428,745	$	414,459

PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES PROVIDED BY
INDEPENDENT AUDITORS

        In addition to recommending the auditors to be nominated and reviewing the compensation of the auditors, the Audit Committee is responsible for overseeing the work of the auditors and pre-approving non-audit services. As a matter of practice, the Audit Committee, and/or the Audit Committee Chairman acting on behalf of the Audit Committee, will generally pre-approve all audit and permitted non-audit services to be performed by our external auditors. None of the fees reported above under the heading "Part II – Item 16C. Principal Accountant Fees and Services" that were paid to Ernst & Young LLP were approved by our Audit Committee pursuant to the de minimis exception provided by Section (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

ITEM 16D.    Exemptions from the Listing Standards for Audit Committees.

        Not applicable.

ITEM 16E.    Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

        On April 9, 2010, the Toronto Stock Exchange (the"TSX") accepted the Company's notice of intention to repurchase up to 3,508,121 common shares (10 percent of the Company's issued and outstanding common shares) through a normal course issuer bid ("NCIB"). The NCIB was effective April 13, 2010 and expired April 12, 2011. Daily purchases over the facilities of the NASDAQ were limited to 25% of the average daily trading volume of the common shares on NASDAQ other than pursuant to block purchase exemptions. Daily purchases over the facilities of the TSX were limited to 25% of the average daily trading volume of the common shares on TSX other than pursuant to block purchase exemptions. Except in the case of an exempt purchase, the prices that the Company paid for the common shares purchased was the market price of the shares at the time of acquisition.

        During fiscal year 2011, the Company acquired 1,865,549 common shares pursuant to the NCIB at prevailing market prices. These shares were purchased for cancellation at an aggregate cost of $10.7 million of which $9.0 million was charged to share capital, based on the historical weighted per share value at the date of purchase, and the balance of $1.7 million was charged to deficit.

ITEM 16F.    Change in Registrant's Certifying Accountant.

        Not applicable.

ITEM 16G.    Corporate Governance.

        Our common shares are quoted for trading on the NASDAQ Capital Market under the symbol DRWI. NASDAQ Marketplace Rule 5615(a)(3) permits a foreign private issuer to follow its home country practice in lieu of certain of the requirements of the Rule 5600 Series. A foreign private issuer that follows a home country

92

practice in lieu of one or more provisions of the Rule 5600 Series is required to disclose in its annual report filed with the SEC, or on its website, each requirement of the Rule 5600 Series that it does not follow and describe the home country practice followed by the issuer in lieu of such NASDAQ corporate governance requirements.

        We do not follow Marketplace Rule 5620(c), but instead follow our home country practice. The NASDAQ minimum quorum requirement under Rule 5620(c) for a meeting of shareholders is 33.33% of the outstanding common shares. In addition, Rule 5620(c) requires that an issuer listed on NASDAQ state its quorum requirement in its governing documents. Our quorum requirement is set forth in our by-laws. A quorum for a meeting of our shareholders is two persons present in person or by proxy who, in the aggregate, hold at least 25% of the issued shares entitled to be voted at the meeting. The foregoing is consistent with the laws, customs and practices in Canada and the rules of the Toronto Stock Exchange.

ITEM 16H.    Mine Safety Disclosure.

        Not applicable.

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PART III

ITEM 17.    Financial Statements.

        We have responded to Item 18 in lieu of responding to this item.

ITEM 18.    Financial Statements.

        The Consolidated Financial Statements of the Company for the years ended February 28, 2017 and February 29, 2016 including the reports of our independent registered public accounting firm thereon are set forth beginning on page F-1.

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F-1

INDEPENDENT AUDITORS' REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of
DragonWave Inc.

        We have audited the accompanying consolidated financial statements of DragonWave Inc., which comprise the consolidated balance sheets as at February 28, 2017 and February 29, 2016 and the consolidated statements of operations and comprehensive loss, cash flows and changes in equity (deficiency) for each of the years in the two-year period ended February 28, 2017, and a summary of significant accounting policies and other explanatory information.

Management's responsibility for the consolidated financial statements

        Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with United States generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' responsibility

        Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

        An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

        We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

        In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of DragonWave Inc. as at February 28, 2017 and February 29, 2016, and the results of its operations and its cash flows for each of the years in the two-year period ended February 28, 2017 in accordance with United States generally accepted accounting principles.

Emphasis of matter

        The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Ottawa, Canada
May 26, 2017

/s/ Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants

F-2

CONSOLIDATED BALANCE SHEETS

Expressed in US$000's except share amounts

	Note		As at February 28, 2017			As at February 29, 2016
Assets
Current Assets
Cash and cash equivalents		4		4,073			4,277
Trade receivables		5		11,876			18,986
Inventory		6		21,415			22,702
Other current assets		7		1,791			2,777
				39,155			48,742
Long-term Assets
Property and equipment		8		2,517			3,702
Intangible assets		9		336			623
				2,853			4,325
Total Assets		11		42,008			53,067
Liabilities
Current Liabilities
Debt facility		11		17,030			22,152
Accounts payable and accrued liabilities		10		25,206			23,832
Deferred revenue				539			1,944
Deferred tax liability		19		148			294
Warrant liability		12, 16		—			117
				42,923			48,339
Long-term Liabilities
Deferred revenue				435			498
Warrant liability		12, 16		1,090			3
				1,525			501
Commitments and contingencies		14
Shareholders' Equity (Deficiency)
Capital stock		12		229,995			221,128
Contributed surplus		12		10,503			9,235
Deficit				(234,113	)		(218,225	)
Accumulated other comprehensive loss				(9,618	)		(9,618	)
Total Shareholders' Equity (Deficiency)				(3,233	)		2,520
Non-controlling interest		3		793			1,707
Total Equity (Deficiency)				(2,440	)		4,227
Total Liabilities and Equity (Deficiency)				42,008			53,067
Shares issued and outstanding		12		7,305,219			3,020,069

(Signed) CLAUDE HAW
Director
(Signed) LORI O'NEILL
Director

See Note 1: Nature of Business, Basis of Presentation and Going Concern
See accompanying notes

F-3

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Expressed in US$000's except share and per share amounts

			Twelve months ended
	Note		February 28, 2017			February 29, 2016
REVENUE
Hardware and other		17, 18		32,742			70,491
Services		17, 18		11,174			15,804
				43,916			86,295
COST OF SALES
Hardware and other		6		25,672			58,991
Services		6		5,477			8,917
Inventory provision		6		953			4,416
				32,102			72,324
Gross profit				11,814			13,971
EXPENSES
Research and development		8, 12		7,825			13,406
Selling and marketing		8, 12		7,363			10,572
General and administrative		5, 8, 12		12,734			13,798
				27,922			37,776
Loss before other items				(16,108	)		(23,805	)
Goodwill impairment				—			(11,927	)
Restructuring costs				—			(1,549	)
Amortization of deferred financing cost		11		(442	)		—
Amortization of intangible assets		9		(369	)		(577	)
Accretion expense				(102	)		(205	)
Interest expense		11, 16		(1,464	)		(2,014	)
Warrant issuance expenses				(561	)		—
Change in fair value of warrant liability		12		4,242			1,119
Foreign exchange loss				(110	)		(331	)
Loss before income taxes				(14,914	)		(39,289	)
Income tax expense		19		783			2,275
Net loss and comprehensive loss				(15,697	)		(41,564	)
Net income attributable to non-controlling interest				(191	)		(740	)
Net loss and comprehensive loss attributable to shareholders				(15,888	)		(42,304	)
Net loss and comprehensive loss per share
Basic and diluted		13		(3.26	)		(14.01	)
Weighted average shares outstanding
Basic and diluted		13		4,879,738			3,019,259

See Note 1: Nature of Business, Basis of Presentation and Going Concern
See accompanying notes

F-4

CONSOLIDATED STATEMENTS OF CASH FLOWS

Expressed in US$000's

			Twelve months ended
	Note		February 28, 2017			February 29, 2016
Operating activities
Net loss				(15,697	)		(41,564	)
Items not affecting cash
Goodwill impairment				—			11,927
Amortization of deferred financing cost		11		442			—
Amortization of property and equipment		8		1,791			1,931
Amortization of intangible assets		9		369			577
Accretion expense				102			205
Change in fair value of warrant liability		12		(4,242	)		(1,119	)
Stock-based compensation		12		750			988
Unrealized foreign exchange loss				114			485
Deferred income tax expense				(146	)		1,841
				(16,517	)		(24,729	)
Changes in non-cash working capital items		15		9,344			18,236
				(7,173	)		(6,493	)
Investing activities
Acquisition of property and equipment				(606	)		(1,311	)
Acquisition of intangible assets				(82	)		(406	)
				(688	)		(1,717	)
Financing activities
Repayments on capital lease obligation				(55	)		(507	)
Proceeds from debt facility		11		—			1,300
Repayment of debt facility		11		(5,122	)		(11,548	)
Dividend paid to non-controlling interest in DW-HFCL		3		(1,105	)		—
Issuance of warrants		12		5,809			—
Issuance of common shares, net				8,244			35
				7,771			(10,720	)
Effect of foreign exchange on cash and cash equivalents				(114	)		(485	)
Net decrease in cash and cash equivalents				(204	)		(19,415	)
Cash and cash equivalents at beginning of period				4,277			23,692
Cash and cash equivalents at end of period				4,073			4,277
Cash paid during the period for interest				1,320			2,335
Cash paid during the period for taxes				1,061			522

See Note 1: Nature of Business, Basis of Presentation and Going Concern
See accompanying notes

F-5

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIENCY)

Expressed in US$000's except share amounts

	Common Shares		Capital Stock		Contributed Surplus			Deficit			AOCL			Non-controlling Interest			Equity (Deficiency)
Balance as at February 28, 2015		3,011,632	$	220,952	$	8,388		$	(175,921	)	$	(9,618	)	$	967		$	44,768
Stock-based compensation		—		—		988			—			—			—			988
Exercise of restricted share units		2,400		133		(133	)		—			—			—			—
Share issuance — ESPP		6,037		43		(8	)		—			—			—			35
Net income (loss)		—		—		—			(42,304	)		—			740			(41,564	)
Balance as at February 29, 2016		3,020,069	$	221,128	$	9,235		$	(218,225	)	$	(9,618	)	$	1,707		$	4,227
Stock-based compensation		—		—		750			—			—			—			750
Share issuance		2,423,878		4,232		—			—			—			—			4,232
Exercise of pre-funded warrants		30,164		—		—			—			—			—			—
Exercise of warrants		1,811,578		4,562		—			—			—			—			4,562
Exercise of options		18,220		69		(26	)		—			—			—			43
Share issuance — ESPP		1,310		4		—			—			—			—			4
Fair value of warrants to Comerica		—		—		544			—			—			—			544
Dividend paid to non-controlling interest in DW-HFCL		—		—		—			—			—			(1,105	)		(1,105	)
Net income (loss)		—		—		—			(15,888	)		—			191			(15,697	)
Balance as at February 28, 2017		7,305,219	$	229,995	$	10,503		$	(234,113	)	$	(9,618	)	$	793		$	(2,440	)

See Note 1: Nature of Business, Basis of Presentation and Going Concern
See accompanying notes

F-6

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Expressed in US$000's except share and per share amounts

1. NATURE OF BUSINESS, BASIS OF PRESENTATION AND GOING CONCERN

        DragonWave Inc. [the "Company"], incorporated under the Canada Business Corporations Act in February 2000, is a provider of high-capacity packet microwave solutions that drive next-generation IP networks.

        The Company's common shares are traded on the Toronto Stock Exchange under the trading symbol DRWI and on the NASDAQ Capital Market under the symbol DRWI.

        These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: DragonWave Corp., incorporated in the state of Delaware, USA; DragonWave PTE. LTD., incorporated in Singapore; DragonWave S.à r.l., incorporated in Luxembourg; DragonWave Telecommunication Technology (Shanghai) Co., Ltd., incorporated in China; DragonWave Mexico S.A. de C.V., incorporated in Mexico; Axerra Networks Asia Pacific Limited, incorporated in Hong Kong; DragonWave India Private Limited, incorporated in India; and DragonWave Inc.'s majority owned subsidiary, DragonWave HFCL India Private Limited, incorporated in India. All intercompany accounts and transactions have been eliminated upon consolidation.

        The consolidated financial statements of the Company have been prepared in United States dollars following United States Generally Accepted Accounting Principles ["U.S. GAAP"].

        The consolidated financial statements for the year ended February 28, 2017 have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the disbursement of liabilities and commitments in the normal course of business in the foreseeable future. The Company has a history of losses and has consumed significant cash resources in the past, and has continued to do so in the year ended February 28, 2017. During the last two fiscal years, additional pressure has been placed on the Company's liquidity position as a result of reduced revenue from a significant Original Equipment Manufacturer ["OEM"] channel and a dispute over inventory shipped to a customer in India in June 2015.

        The Company has been able to make progress in restructuring the business. This progress includes the following highlights:

Operational improvements:

•

Selected by Sprint for its network densification and optimization strategy;

•

Improved the gross profit percentage in fiscal year 2017 to 26.9% from 16.2% in fiscal year 2016;

•

Reduced operating expenses by 26% in the twelve months of fiscal year 2017 compared to the same period in the previous year primarily through reduction in staff levels internationally;

Debt Facility:

•

Reduced outstanding debt on the Company's credit facility by $5,122 and $10,248 in the twelve months ending February 28, 2017 and February 29, 2016, respectively, by leveraging its working capital;

New Capital:

•

Raised $9,502 in cash (net of commissions and expenses) with a public offering in August 2016 and a registered direct offering in April 2016 which in both cases included common shares and warrants;

•

Received $4,180 in cash from the exercise of warrants during the twelve months ended February 28, 2017;

F-7

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

1. NATURE OF BUSINESS, BASIS OF PRESENTATION AND GOING CONCERN (Continued)

Other:

•

Initiated arbitration proceedings to seek resolution to its customer dispute in India.

        Despite the progress identified above, the Company remains in breach of the original terms of its debt facility, and has not yet been able to achieve a quarterly break-even level. See Note 11 for further details on the debt facility. The continued consumption of cash has raised substantial doubt about DragonWave Inc.'s ability to continue as a going concern. Management's plans to restructure the business, improve its financial results and overcome these difficulties include initiatives in a number of areas, including:

•

Targeting its sales efforts to direct and indirect opportunities in markets with higher gross margins, and lower working capital requirements;

•

Adjusting its business focus and resources away from Nokia in order to support new sales channels;

•

Renegotiating the terms of existing debt facilities, or finding new debt providers;

•

Actively investigating and pursuing alternative forms of financing;

•

Seeking to reduce fixed and variable operating expenses further, by tightly controlling discretionary spending and headcount growth;

•

Continuing to collect accounts receivable from customers in a timely manner;

•

Reducing inventory levels in both raw material and finished goods inventory;

•

Working closely with vendors to ensure supply continuity; and

•

Investigating strategic and financial alternatives that may be available including a potential sale of the Company, alternative debt and equity, and business combinations.

        In addition, the Company no longer complies with Nasdaq Listing Rule 5550(b)(1) due to its failure to maintain a minimum of $2,500 in shareholders' equity or any alternatives to such requirement, and was granted an extension to April 17, 2017 to remedy the deficiency. The Company did not regain compliance and has requested a hearing before the Nasdaq Listing Qualifications Panel to request a further extension. There can be no assurance that the Panel will ultimately grant an extension of the compliance period. Continued listing of its common shares on the Nasdaq increases the Company's ability to raise additional capital in the future. Trading of the Company's securities under the symbol "DRWI" on the Toronto Stock Exchange, the Company's primary listing, is not impacted by this decision.

        These plans may be difficult to achieve. They are dependent on a number of key assumptions including the timing of significant new customer projects, success in arbitration with the customer located in India, and accommodations from the Company's suppliers and credit lenders. It is possible that the plans described above may not be fully executed or may occur too slowly to solve the Company's current liquidity concerns. There can be no assurance that the existing financing facility can be renegotiated or that any other forms of financing can be arranged on satisfactory terms. These consolidated financial statements do not include any adjustments to the accounts and classification of assets and liabilities that may be necessary if the Company is unable to continue as a going concern. Such adjustments could be material.

F-8

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

2. SIGNIFICANT ACCOUNTING POLICIES

Use of accounting estimates

        The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company's management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent amounts of assets and liabilities as at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Actual results could differ from the estimates made by management.

        The following includes estimates by management: allowance for doubtful accounts, inventory allocations, inventory provisions, accrued liabilities, warranty provisions, warrant liability, property and equipment amortization, tax valuation allowance, impairment of long-lived assets, vendor specific objective evidence, estimated selling price and estimated returns as it relates to revenue recognition, and stock-based compensation.

        These estimates and assumptions are based on management's historical experience, best knowledge of current events and conditions and actions that the Company may undertake in the future. Certain of these estimates require subjective or complex judgments by management about matters that are uncertain and changes in those estimates could materially impact the amounts reported in the consolidated financial statements and accompanying notes.

Foreign currency translation

        The Company's operations and balances denominated in foreign currencies, including those of its foreign subsidiaries that are primarily a direct and integral component or extension of the Company's operations, are translated into US dollars ["USD"] using the following: monetary assets and liabilities are translated at the period end exchange rate, non-monetary assets are translated at the historical exchange rate, and revenue and expense items are translated at the average exchange rate. Gains or losses resulting from the translation adjustments are included in the consolidated statements of operations and comprehensive loss.

Revenue recognition

        The Company derives revenue from the sale of broadband wireless backhaul equipment, which includes embedded software and a license to use said software and extended product warranties. Software is considered to be incidental to the product. Services range from installation and training to basic consulting. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred and there are no significant remaining vendor obligations, collection of receivables is reasonably assured and the fee is fixed and determinable. Where conditions to final acceptance of the product are specified by the customer, revenue is deferred until acceptance criteria have been met.

        The Company's sales agreements may also contain multiple elements. Accordingly, the Company is required to determine the appropriate accounting, including whether the deliverables specified in a multiple element arrangement should be treated as separate units of accounting for revenue recognition purposes, the fair value of these separate units of accounting and when to recognize revenue for each element. For arrangements involving multiple elements, the Company allocates revenues to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence ["VSOE"] if available, third party evidence ["TPE"] if VSOE is not available, or estimated selling price ["ESP"] if neither VSOE nor TPE is available. In multiple element arrangements, revenues are allocated to each separate unit of accounting for each of the deliverables using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. The Company has determined the selling price for both the undelivered items and the delivered items using ESP.

F-9

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

        The Company generates revenue through direct sales and sales to distributors. The Company defers the recognition of a portion of sales to distributors based on estimated sales return and stock rotation granted to customers on products in the same period the related revenues are recorded. These estimates are based on historical sales returns, stock rotations and other known factors.

        Revenue from engineering services or development agreements is recognized according to the specific terms and acceptance criteria as services are rendered.

        Revenue associated with extended warranty and advanced replacement warranty is recognized ratably over the life of the contracted service.

        The Company accrues estimated potential product liability as warranty costs when revenue on the sale of equipment is recognized. Warranty liability is estimated based on recent actual return experience and repair costs. Where product defects have been identified that would cause the cost or warranty experience to change, additional warranty costs are recognized.

        Shipping and handling costs borne by the Company are recorded in cost of sales. Shipping and handling costs charged to customers are recorded as revenue, if billed at the time of shipment. Costs charged to customers after delivery are recorded in cost of sales.

Cash and cash equivalents

        The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Financial instruments

        The Company classifies its financial instruments as assets held at fair value, loans and receivables, other financial liabilities, or liabilities held at fair value. The classification depends on the purpose for which the financial instruments were acquired, their characteristics and management's intent. Management determines the classification of financial assets and liabilities at initial recognition and the classification is not changed subsequent to initial recognition.

        The Company designated its cash and cash equivalents and foreign exchange contracts as assets held at fair value, which are measured at fair value, with changes in fair value being recorded in net earnings. Trade receivables and other receivables have been classified as loans and receivables which are measured at amortized cost. Accounts payable, accrued liabilities and the debt facility have been classified as other financial liabilities, which are measured at amortized cost. Liabilities held at fair value include the warrant liability, which is measured at fair value, with changes in fair value being recorded in net loss.

        Transaction costs directly attributable to the acquisition of financial assets are recorded in net loss in the period in which they are incurred.

Inventory

        Inventory is valued at the lower of cost and net realizable value ["NRV"]. The cost of inventory is calculated on a standard cost basis, which approximates weighted average actual cost. NRV is determined as the market value for finished goods, replacement cost for raw materials, and finished goods market value less cost to complete for work in progress inventory.

F-10

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

        The Company regularly reviews inventory quantities on hand and records an impairment for excess and obsolete inventory based on factors including its estimated forecast of product demand, the stage of the product life cycle and production requirements for the units in question.

        Indirect manufacturing costs and direct labour expenses are allocated systematically to the total production inventory.

        The Company carries inventory for the purposes of supporting its product warranty. Standard warranty is typically 13 to 36 months, but the Company earns revenue by providing enhanced and extended warranty and repair service during and beyond the standard warranty period. Customer service inventory consists of both component parts and finished units.

Income taxes

        Income taxes are accounted for using the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based on differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes that are more likely than not to be realized. Deferred income tax assets and liabilities are measured using enacted tax rates that apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The Company provides a valuation allowance against its deferred tax assets when it believes that it is more likely than not that the assets will not be realized.

        The Company determines whether it is more likely than not that an uncertain tax position will be sustained upon examination by the tax authorities. The tax benefit of any uncertain tax position that meets the more likely than not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon successful resolution. To the extent a full benefit is not expected to be realized, an income tax liability is effectively established. The Company recognizes accrued interest and penalties on unrecognized tax benefits as interest expense.

        Management periodically reviews the Company's provision for income taxes and valuation allowance to determine whether the overall tax estimates are reasonable. When management performs its assessments of the provision and valuation allowance, it may be determined that an adjustment is required. This adjustment may have a material impact on the Company's financial position and results of operations.

Property and equipment

        Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the anticipated useful lives of the assets as follows:

Test equipment, research and development equipment	4 - 5 years
Computer hardware	2 years
Production fixtures	3 years
Leasehold improvements	5 years
Other	3 - 5 years

Intangible assets

        Intangible assets include software and are amortized over their estimated useful life of between 2 and 3 years.

F-11

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Impairment of long-lived assets

        The Company reviews long-lived assets ["LLA"] such as property, equipment and intangible assets with finite useful lives for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. These events and circumstances may include significant decreases in the market price of an asset or asset group, significant changes in the extent or manner in which an asset or asset group is being used by the Company or in its physical condition, a significant change in legal factors or in the business climate, a history or forecast of future operating or cash flow losses, significant disposal activity, a significant decline in the Company's share price, a significant decline in revenue or adverse changes in the economic environment.

        The LLA impairment requires the Company to identify its asset groups and test impairment of each asset group separately. To conduct the LLA impairment test, the asset group is tested for recoverability using undiscounted cash flows over the remaining useful life of the primary asset. If forecasted net cash flows are less than the carrying amount of the asset group, an impairment charge is measured by comparing the fair value of the asset group to its carrying value. Determining the Company's asset groups and related primary assets requires significant judgment by management. Different judgments could yield different results.

        When indicators of impairment exist, LLA impairment is tested using a two-step process. The Company performs a cash flow recoverability test as the first step, which involves comparing the asset group's estimated undiscounted future cash flows to the carrying amount of its net assets. If the net cash flows of the asset group exceed the carrying amount of its net assets, LLA are not considered to be impaired. If the carrying amount exceeds the net cash flows, there is an indication of potential impairment and the second step of the LLA impairment test is performed to measure the impairment amount. The second step involves determining the fair value of the asset group. Fair values are determined using valuation techniques that are in accordance with U.S. GAAP, including the market approach, income approach and cost approach. If the carrying amount of the asset group's net assets exceeds the fair value of the Company, then the excess represents the maximum amount of potential impairment that will be allocated to the asset group, with the limitation that the carrying value of each separable asset cannot be reduced to a value lower than its individual fair value. The total impairment amount allocated is recognized as a non-cash impairment loss.

        The Company reviews any changes in events and circumstances that have occurred on a quarterly basis to determine if indicators of LLA impairment exist.

Share-based compensation plan and employee share purchase plan

        The Company accounts for stock options granted to employees using the fair value method calculated by the Black-Scholes option pricing model. In accordance with the fair value method, the Company recognizes estimated compensation expense related to stock options over the vesting period of the options granted, with the related credit being charged to contributed surplus. The Company estimates the volatility at the date of grant based on the volatility of a group of comparator companies.

        The employee share purchase plan includes provisions to allow employees to purchase common shares. The Company will match the employees' contribution at a rate of 25%. Proceeds from employees are received and the cost of the matching shares is recorded in share capital, with the related debit applied to contributed surplus at the time the shares are issued. The shares contributed by the Company will vest 12 months after issuance with a corresponding compensation expense recognized in loss.

F-12

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Research and development

        Research costs are expensed as incurred. Development costs are expensed as incurred unless they meet generally accepted accounting criteria for deferral and amortization. Development costs incurred prior to establishment of technological feasibility do not meet these criteria, and are expensed as incurred.

Loss per share

        Basic loss per share is calculated by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. For all periods presented, the net loss available to common shareholders equates to the net loss.

        In the computation of diluted earnings per share, the Company includes the number of additional common shares that would have been outstanding if the dilutive potential equity instruments had been issued.

Non-controlling interest

        Non-controlling interest consists of the minority-owned portion of the Company's 50.1% owned subsidiary, DragonWave HFCL India Private Limited.

FUTURE ACCOUNTING PRONOUNCEMENTS

        In May 2014, the Financial Accounting Standards Board ["FASB"] issued ASU No. 2014-9, "Revenue from Contracts with Customers". The amendments in this Update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and create new Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers. In August 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers" which reflects decisions reached by the FASB at its meeting earlier in the year to defer the effective date to fiscal years beginning after December 15, 2017, with early adoption permitted for the year beginning after December 15, 2016. The Company is currently assessing the impact this amendment will have on its consolidated financial statements.

        In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements – Going Concern". The update provides U.S. GAAP guidance on management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company is currently assessing the impact this amendment will have on its consolidated financial statements.

        In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes". The amendments in this update eliminate the current requirement for companies to separate deferred income tax liabilities and assets into current and non-current amounts in a classified statement of financial position. Instead, companies will be required to classify all deferred tax liabilities and assets as non-current. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial statements.

F-13

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

        In February 2016, the FASB issued ASU No. 2016-02, "Leases". The amendments in this Update create Topic 842, Leases, and supersede the lease requirements in Topic 840, Leases. The Update will require companies to recognize a right-of-use asset and a lease liability in their balance sheets, while still distinguishing between finance leases and operating leases. For finance leases, the lessee would recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income, and for operating leases, the lessee would recognize a straight-line lease expense. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact this amendment will have on its consolidated financial statements.

        In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting". The amendments in this Update simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company is currently assessing the impact this amendment will have on its consolidated financial statements.

        In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash". The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial statements.

3. NON-CONTROLLING INTEREST

DragonWave HFCL India Private Limited

        Non-controlling interest consists of the minority owned portion of the Company's 50.1% owned subsidiary, DragonWave HFCL India Private Limited. During the year ended February 28, 2017, DragonWave HFCL India Private Limited paid a dividend excluding withholding taxes totaling $1,839 to its shareholders. The Company received $921 and the minority-owned portion received $918.

4. CASH AND CASH EQUIVALENTS

        The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

	February 28, 2017				February 29, 2016
Currency	USD Amount		% of Total		USD Amount		% of Total
US dollar		2,320		57.0%		1,600		37.4%
Canadian dollar		44		1.1%		39		0.9%
Indian rupee		1,279		31.4%		2,317		54.2%
Other		430		10.5%		321		7.5%
Total Cash and Cash Equivalents		4,073		100.0%		4,277		100.0%

F-14

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

4. CASH AND CASH EQUIVALENTS (Continued)

        In accordance with the fourth forbearance agreement which is valid until April 1, 2017 the Company is required to have a minimum of $1,000 held at Comerica Bank [2016 – $1,000].

        The Company could elect to repatriate funds from its foreign subsidiaries and this may result in withholding taxes.

5. TRADE RECEIVABLES

        The Company is exposed to credit risk with respect to trade receivables in the event that its counterparties do not meet their obligations. The Company minimizes its credit risk with respect to trade receivables by performing credit reviews for each of its customers. The Company's allowance for doubtful accounts reflects the Company's assessment of collectability across its global customer base.

	February 28, 2017			February 29, 2016
Trade receivables		12,099			19,209
Allowance for doubtful accounts		(223	)		(223	)
Total trade receivables		11,876			18,986

        As at February 28, 2017, three customers exceeded 10% of the total receivable balance. These customers represented 21%, 17% and 15% of the trade receivables balance [2016 – two customers represented 52% and 16% of the trade receivables balance].

        Included in general and administrative expenses is an expense of $82 related to bad debt expense for the year ended February 28, 2017 [2016 – expense of $240].

6. INVENTORY

        Inventory consists of the following:

	February 28, 2017		February 29, 2016
Raw materials		2,844		2,389
Work in progress		2,089		614
Finished goods		14,384		16,986
Total production inventory		19,317		19,989
Inventory held for customer service/warranty		2,098		2,713
Total inventory		21,415		22,702

        Cost of sales for the year ended February 28, 2017 was $32,102 [2016 – $72,324], which included $22,982 of product costs [2016 – $56,296]. The remaining costs of $9,120 [2016 – $16,028] related principally to the costs of sub-contractors for services, warehousing, freight, warranty, overhead and other direct costs of sales.

        For the year ended February 28, 2017, the Company recognized an impairment loss on inventory of $953 [2016 – $4,416], which included an impairment loss of $648 for inventory held by contract manufacturers that it does not expect to be fully used [2016 – $1,497].

F-15

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

6. INVENTORY (Continued)

        The Company allocates overhead and labour to inventory. Included in cost of sales for the year ended February 28, 2017 were overhead and labour allocations of $753 [2016 – $1,746]. Included in inventory at February 28, 2017 were overhead and labour allocations of $454 [2016 – $551].

        The Company uses an outsourced manufacturing model in which most of the component acquisition and assembly of its products is executed by third parties. The Company's contract manufacturers currently have inventory intended for use in the production of its products, and the Company has purchase orders or demand forecasts in place for raw materials and manufactured products with these contract manufacturers. When a product has been purchased by a contract manufacturer but not pulled on for a build after a certain amount of time, the Company may be required to take ownership of it. The value of the inventory held by the Company's primary contract manufacturer as at February 28, 2017 was $12,939 [2016 – $16,848].

7. OTHER CURRENT ASSETS

        Other current assets consist of the following:

	February 28, 2017		February 29, 2016
Deposits on inventory		368		670
Prepaid expenses		840		1,355
Indirect taxes receivable		388		610
Deferred financing costs		—		18
Receivable from contract manufacturers and other items		195		124
Total other current assets		1,791		2,777

8. PROPERTY AND EQUIPMENT

        Property and equipment are apportioned as follows:

	February 28, 2017						February 29, 2016
	Cost		Accumulated Amortization		Net Book Value		Net Book Value
Test equipment, research and development equipment		24,627		22,736		1,891		2,655
Computer hardware		3,717		3,656		61		213
Production fixtures		2,633		2,228		405		559
Leasehold improvements		1,081		1,031		50		103
Other		1,600		1,490		110		172
Total		33,658		31,141		2,517		3,702

F-16

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

8. PROPERTY AND EQUIPMENT (Continued)

        Amortization expense relating to the above property and equipment was allocated to operating expenses as follows:

	February 28, 2017		February 29, 2016
Research and development		290		364
Selling and marketing		34		40
General and administrative		1,467		1,527
		1,791		1,931

        Amortization expense includes amortization of assets recorded under capital lease.

9. INTANGIBLE ASSETS

        Intangible assets are apportioned as follows:

	February 28, 2017						February 29, 2016
	Cost		Accumulated Amortization		Net Book Value		Net Book Value
Software		7,094		6,758		336		623

        For the year ended February 28, 2017, the Company recognized amortization of intangible assets of $369 [2016 – $577]. The Company estimates that it will recognize $181 and $155, respectively, for the next two succeeding years.

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

        Accounts payable and accrued liabilities are apportioned as follows:

	February 28, 2017		February 29, 2016
Trade payables		14,726		11,858
Accrued liabilities		5,061		5,830
Termination fee		3,351		3,337
Payroll related accruals		1,033		1,257
Warranty accrual		697		926
Income taxes payable		303		555
Capital lease obligation		35		69
Total accounts payable and accrued liabilities		25,206		23,832

        On April 10, 2013, the Company announced changes to its existing operational framework with Nokia. Included in the changes was an agreement to a termination fee in the amount of $8,668 to be paid to Nokia in installments. Payments totaling $4,351 were made by the year ended February 29, 2016. As at February 28, 2017, the liability is valued at $3,351 and is considered short term in nature [2016 – $3,337 short term].

F-17

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Continued)

        Warranty accrual:

        The Company records a liability for future warranty costs based on management's best estimate of probable claims within the Company's product warranties. The accrual is based on the terms of the warranty, which vary by customer, product, or service and historical experience of returns and cost of repairs. The Company regularly evaluates the appropriateness of the remaining accrual.

        The following table details the changes in the warranty accrual for the respective years:

	February 28, 2017			February 29, 2016
Balance at the beginning of the period		926			678
Accruals		1,314			2,057
Utilization		(1,543	)		(1,809	)
Balance at the end of the period		697			926

11. DEBT FACILITY

        On October 12, 2016, the Company signed a fourth forbearance agreement which is valid until April 1, 2017 against a credit facility with Comerica Bank and Export Development Canada which matured on June 1, 2016.

        This asset-based credit facility was for a total of $40,000 plus $4,000 for letters of credit and foreign exchange facilities. Credit availability is subject to ongoing compliance with borrowing covenants and short-term assets on hand. The Company had drawn $17,030 on the facility as at February 28, 2017 [2016 – $22,152] and $1,845 against its letter of credit facility [2016 – $1,853].

        The credit facility that was extended on January 6, 2014, matured on June 1, 2016 and is secured by a first priority charge on all of the assets of the Company and its principal direct and indirect subsidiaries. The terms of the credit facility include other customary terms, conditions, covenants, and representations and warranties. Borrowing options under the credit facility include US dollar, Canadian dollar, and Euro loans. Interest rates vary with market rate fluctuations, with loans bearing interest in the range of 3% to 4% above the applicable base rates. Direct costs associated with obtaining the debt facility such as closing fees, registration and legal expenses have been capitalized and were expensed over the original 30-month term of the facility. During the year ended February 28, 2017, the weighted average debt outstanding was $17,916 [2016 – $29,765] and the Company recognized $1,300 in interest expense related to the debt facility [2016 – $2,007] and expensed $18 in deferred financing cost [2016 – $55].

        The credit facility contains financial covenants including minimum tangible net worth requirements, minimum cash levels to be held at Comerica Bank and minimum liquidity ratio requirements. The credit facility also imposes certain restrictions on the Company's ability to acquire capital assets above a threshold over a trailing six-month period.

        The fourth forbearance agreement identified new minimum covenant levels reflecting the Company's revised financial plans. The forbearance agreement includes a requirement to hold a minimum of $1,000 at Comerica Bank. In addition, the forbearance agreement reduces the facility commitment from $40,000 to $30,000, includes additional compliance requirements and implements more frequent monitoring. Warrants to purchase 375,000 common shares were agreed to be issued to the lenders at an exercise price of $4.00 per share and will expire five years from the date of issuance. The expense associated with the warrant issuance was calculated using a Black-Scholes warrant pricing model and recognized rateably over the term of the

F-18

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

11. DEBT FACILITY (Continued)

forbearance agreement which expired on April 1, 2017. In the twelve months ending February 28, 2017, the Company recognized an expense of $442 in deferred financing costs relating to these warrants.

        As at May 26, 2017, the Company's fourth forbearance agreement had expired, and a new forbearance agreement has not yet been agreed.

12. SHAREHOLDERS' EQUITY

Number of shares authorized

        The Company has an unlimited amount of common shares authorized for issuance.

        On September 23, 2013, the Company completed a public offering. Under the terms of the offering, the Company issued and sold 11,910,000 units at $2.10 on a pre-consolidation basis, for aggregate gross proceeds of $25,011. After deducting commissions and listing expenses, the Company realized net proceeds of $22,434. Each unit consisted of one common share of the Company and three quarters of one warrant. Each whole warrant entitles the holder to purchase 1/25^th of one common share at an exercise price of $2.80 per share following the August 8, 2016 public offering, until September 23, 2018, subject to certain adjustments. Upon issuance, the Company recognized a liability in the amount of $6,425 for the warrants. See Warrants section for further details.

        On February 2, 2016, the Company effected a share consolidation of the Company's common shares at a ratio of 1-for-25. As a result of the share consolidation, every 25 shares of the issued and outstanding common shares consolidated into one newly-issued outstanding common share. Each fractional share remaining after the share consolidation was cancelled. The number of outstanding stock options and restricted share units were proportionately adjusted by the consolidation ratio and the exercise prices correspondingly increased by the same consolidation ratio. All shares and exercise prices are presented on a post-consolidation basis in these consolidated financial statements.

        On April 11, 2016, the Company completed a registered direct offering. Under the terms of the offering, the Company issued and sold 599,998 units at $7.25, for aggregate gross proceeds of $4,350. After deducting commissions and listing expenses, the Company realized net proceeds of $4,014. Each unit consisted of one common share of the Company and one half of one warrant. Each whole warrant entitles the holder to purchase one common share of the Company at an exercise price of $8.50 per share until April 11, 2021. Upon issuance, the Company recognized a liability in the amount of $1,137 for the warrants. See Warrants section for further details.

        On August 8, 2016 the Company completed a public offering. Under the terms of the offering, the Company issued and sold 1,760,880 Class A units at $3.35 and 30,164 Class B units at $3.34, for aggregate gross proceeds of $6,000. After deducting commissions and expenses, the Company realized net proceeds of $5,277. Concurrent with the underwritten public offering in the United States, the Company issued an additional 63,000 Class A Units on a private placement basis to purchasers in Canada for additional gross proceeds of $211. Each Class A unit consisted of one common share, one five-year warrant [the "Long-Term Warrant"] to purchase one common share and two six-month warrants [the "Short-Term Warrant"]. Each Class B unit consisted of a pre-funded warrant [the "Pre-Funded Warrant"] to purchase one common share, one Long-Term Warrant and two Short-Term Warrants. The Long-Term Warrants have an exercise price of $4.37 per share, are exercisable immediately and will expire on August 8, 2021. The Short-Term Warrants have an exercise price of $4.00 per share, are exercisable immediately and expired on February 8, 2017. The Pre-Funded Warrants are exercisable immediately with no expiration date, are deemed purchased for a price of $3.34 per underlying common share by virtue of purchasing a Class B Unit and have an exercise price of $0.01 per share. Upon

F-19

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

12. SHAREHOLDERS' EQUITY (Continued)

issuance, the Company recognized a liability in the amount of $4,672 for the warrants. See Warrants section for further details.

Share-based compensation plan

        On June 20, 2014, the Shareholders approved the adoption of a new Share-based Compensation Plan [the "Plan"] to replace the Previous Plan. The Plan includes provision for granting of performance share units ["PSUs"], restricted share units ["RSUs"], deferred share units ["DSUs"], Bonus Shares (as defined in the Plan) and options to purchase common shares. Settlement of vested PSUs, RSUs and DSUs is effected by delivering common shares acquired in the open market and/or issued from treasury, or by making a cash payment equal to the number of PSUs, RSUs or DSUs multiplied by the volume weighted average trading price of the common shares on the applicable stock exchange for the five trading days preceding the settlement date, or by a combination of these methods. The manner of settlement for RSUs, PSUs and DSUs is determined by the Compensation Committee in its sole discretion. Options are granted with an exercise price equal to the fair value of the common shares of the Company, and generally vest at a rate between six months to four years from the date of the option grant. All remaining outstanding options expire five years from the grant date, or upon termination of employment. The maximum number of common shares issuable under the Plan is 730,522, which represents 10% of the common shares issued and outstanding as at February 28, 2017.

        The following is a summary of stock option activity:

	February 28, 2017					February 29, 2016
	Options			Weighted Average Exercise Price (CAD)		Options			Weighted Average Exercise Price (CAD)
Opening balance		276,728		$	32.82		159,421		$	76.34
Granted		324,895		$	4.36		172,974		$	8.64
Exercised		(18,220	)	$	3.05		—		$	—
Expired		(54,079	)	$	61.43		(55,667	)	$	82.34
Closing balance		529,324		$	13.45		276,728		$	32.82

        The following table shows the weighted average values used in determining the fair value of options granted during the three months ended February 28, 2017 and February 29, 2016:

	February 28, 2017		February 29, 2016
Volatility		75.0%		95.6%
Risk-free rate		1.05%		0.58%
Dividend yield		Nil		Nil
Average expected life		4 yrs		4 yrs

        The 324,895 options granted during the year ended February 28, 2017 were determined to have a fair value of $773 [2016-172,974 options valued at $683].

F-20

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

12. SHAREHOLDERS' EQUITY (Continued)

        The following table summarizes the various exercise prices inherent in the Company's stock options outstanding and exercisable on February 28, 2017:

Exercise Price				Options Outstanding						Options Exercisable
Low (CAD)		High (CAD)		Quantity of options		Weighted average remaining contractual life (yrs)		Weighted average exercise price (CAD)		Quantity of options		Weighted average remaining contractual life (yrs)		Weighted average exercise price (CAD)
$	3.00	$	3.34		84,639		3.75	$	3.00		83,389		3.73	$	3.00
$	3.35	$	3.83		232,990		4.54	$	3.66		—		—		—
$	3.84	$	6.78		75,050		4.20	$	6.16		725		3.63	$	4.00
$	6.79	$	46.88		63,688		2.95	$	21.19		37,477		2.61	$	24.01
$	46.89	$	73.50		72,957		1.54	$	57.59		62,745		1.45	$	58.21
					529,324		3.76	$	13.45		184,336		2.73	$	26.07

        The Company has recognized $750 for the year ended February 28, 2017 as compensation expense for stock-based grants, with a corresponding credit to contributed surplus [2016 – $941]. Stock compensation expense was allocated to operating expenses as follows:

	February 28, 2017		February 29, 2016
Research and development		182		172
Selling and marketing		239		204
General and administrative		329		565
		750		941

        As at February 28, 2017, compensation costs not yet recognized relating to stock option awards outstanding are $1,276 [2016 – $1,476] net of estimated forfeitures. Performance vesting awards will vest as performance conditions are met. Compensation will be adjusted for subsequent changes in estimated forfeitures.

        The total intrinsic value of options exercised during the year ended February 28, 2017 is $29 [2016 – nil].

        The intrinsic value associated with outstanding and fully vested options as at February 28, 2017 is nil [2016 – nil].

Restricted Share Units

        The Company has recognized nil for the year ended February 28, 2017 as compensation expense for RSUs, with a corresponding credit to contributed surplus [2016 – $39].

Restricted shares and employee share purchase plan

        The Company launched an Employee Share Purchase Plan ["ESPP"] on October 20, 2008. The plan includes provisions to allow employees to purchase common shares. The Company will match the employees' contribution at a rate of 25%. During the year ended February 28, 2017, a total of 1,051 common shares were purchased by employees at fair market value, while the Company issued 259 common shares, net of forfeitures,

F-21

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

12. SHAREHOLDERS' EQUITY (Continued)

as its matching contribution during the year ended February 28, 2017. The shares contributed by the Company will vest 12 months after issuance.

        The Company records an expense equal to the fair value of shares granted pursuant to the ESPP over the period the shares vest, with a corresponding credit to contributed surplus. The total fair value of the shares earned during the year ended February 28, 2017 was $8 [2016 – $13]. The fair value of the unearned ESPP shares as at February 28, 2017 was $1 [2016 – $8]. The number of shares held for release, and still restricted under the plan, as at February 28, 2017 was 259 [2016-978].

Warrants

        Effective May 30, 2007, the Company granted warrants to purchase up to 5,050 common shares of the Company at a price of $88.75 CAD per share. The warrants expire 10 years after the date of issuance. The warrants vested based on the achievement of pre-determined business milestones and resulted in 31,562 warrants being eligible for exercise. Each whole warrant entitles the holder to purchase 1/25^th of one common share of the Company.

        On September 23, 2013, the Company completed a public offering. Under the terms of the offering, the Company issued and sold 11,910,000 units at $2.10 on a pre-consolidation basis, for aggregate gross proceeds of $25,011. Equity issuance expenses relating to the offering totaled $2,576, of which $662 was expensed as the proportionate warrant costs. Each unit consisted of one common share of the Company and three quarters of one warrant (warrants issued – 8,932,500). Each whole warrant entitles the holder to purchase 1/25^th of one common share of the Company at an exercise price of $2.80 per share until September 23, 2018 following the August 8, 2016 equity financing undertaken by the Company. In the event of a fundamental transaction, the Company may be required to settle the warrants with a cash payment. As a result, the Company recognized a warrant liability of $6,425, which represented the estimated fair value of the liability as at September 23, 2013. The warrant liability is adjusted quarterly to its estimated fair value. Increases or decreases in the fair value of the warrants are presented as "Change in fair value of warrant liability" in the consolidated statements of operations and comprehensive loss. As at February 28, 2017, 738,750 warrants were outstanding. During the year ended February 28, 2017, the Company realized a loss in the amount of $75 in the consolidated statement of operations and comprehensive loss which represented the change in fair value of the remaining warrant liability of $7.

        On August 1, 2014, the Company completed a public offering. Under the terms of the offering, the Company issued and sold 15,927,500 units at $1.80 CAD on a pre-consolidation basis for aggregate gross proceeds of $28,670 CAD. Each unit consisted of one common share of the Company and one half of one warrant. Each whole warrant entitles the holder to purchase 1/25^th of one common share of the Company at an exercise price of $56.25 CAD per share until August 1, 2016, subject to certain adjustments. Equity issuance expenses relating to the offering totaled $2,275, of which $221 was expensed as the proportionate warrant costs. As a result of the offering, the Company issued warrants totaling 7,963,750 and recognized a warrant liability of $2,551, which represented the estimated fair value of the liability as at August 1, 2014. During the year ended February 28, 2017, the Company realized a gain in the amount of $117 in the consolidated statements of operations and comprehensive loss which represented the change in fair value of the warrant liability.

        On April 11, 2016, the Company completed a registered direct offering. Under the terms of the offering, the Company issued and sold 599,998 units at $7.25, for aggregate gross proceeds of $4,350. Each unit consisted of one common share of the Company and one half of one warrant. Each whole warrant entitles the holder to purchase one common share of the Company at an exercise price of $8.50 per share until April 11, 2021, subject to certain adjustments. Equity issuance expenses relating to the offering totaled $428 of which $92 was expensed

F-22

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

12. SHAREHOLDERS' EQUITY (Continued)

as the proportionate warrant costs. As a result of the offering, the Company issued 299,999 warrants and recognized a warrant liability of $1,137, which represented the estimated fair value of the liability as at April 11, 2016. During the year ended February 28, 2017, the Company realized a gain in the amount of $1,038 in the consolidated statements of operations and comprehensive loss, which represented the change in fair value of the remaining warrant liability of $99.

        On August 8, 2016, the Company completed a public offering. Under the terms of the offering, the Company issued and sold 1,760,880 Class A units at $3.35 and 30,164 Class B units at $3.34, for aggregate gross proceeds of $6,000. After deducting commissions and expenses, the Company realized net proceeds of $5,277. Concurrent with the underwritten public offering in the United States, the Company issued an additional 63,000 Class A Units on a private placement basis to purchasers in Canada for additional gross proceeds of $211. Each Class A unit consisted of one common share, one Long-Term Warrant to purchase one common share and two Short-Term Warrants. Each Class B unit consisted of a Pre-Funded Warrant to purchase one common share, one Long-Term Warrant and two Short-Term Warrants. The Long-Term Warrants have an exercise price of $4.37 per share, are exercisable immediately and will expire on August 8, 2021. The Short-Term Warrants have an exercise price of $4.00 per share, are exercisable immediately and expired on February 8, 2017. The Pre-Funded Warrants are exercisable immediately with no expiration date, are deemed purchased for a price of $3.34 per underlying common share by virtue of purchasing a Class B Unit and have an exercise price of $0.01 per share. The Pre-Funded Warrants were fully exercised on August 25, 2016. Equity issuance expenses relating to the offering totaled $723, of which $469 was expensed as the proportionate warrant costs. As a result of the offering, the Company issued 1,854,044 Long-Term Warrants and 3,708,088 Short-Term Warrants and recognized a warrant liability of $4,672, which represented the estimated fair value of the liability as at August 31, 2016. As at February 28, 2017, 1,854,044 Long-Term Warrants were outstanding. During the year ended February 28, 2017 the Company realized a gain in the amount of $3,162 in the consolidated statements of operations and comprehensive loss, which represented the change in fair value of the remaining warrant liability of $984.

        The following is a summary of granted warrants:

	February 28, 2017
	Warrants Granted		Shares Purchasable		Exercise Price		Termination date
May 2007 Issuance		31,562		1,262	$	88.75 CAD		May 30, 2017
September 2013 Issuance		738,750		29,550	$	2.80		September 23, 2018
April 2016 Issuance		299,999		299,999	$	8.50		April 11, 2021
August 2016 Issuance – Long-Term Warrants		1,854,044		1,854,044	$	4.37		August 8, 2021
Sub-total warrants issued and outstanding		2,924,355		2,184,855
Comerica Warrants – granted but not issued		375,000		375,000	$	4.00		five years from issuance date
Total warrants granted		3,299,355		2,559,855

        The warrants to Comerica were granted but not issued at February 28, 2017. See Note 11 for further details on these warrants.

F-23

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

13. NET LOSS PER SHARE

        Basic loss per share is calculated by dividing net loss available to shareholders by the weighted average number of common shares outstanding during the period. In the computation of diluted earnings per share, the Company includes the number of additional common shares that would have been outstanding if the dilutive potential equity instruments had been issued.

        As at February 28, 2017, a total of 529,324 options and 3,299,355 warrants have been excluded from the diluted net loss per share calculations, as their effect would have been anti-dilutive.

        The following table illustrates the net loss per share during the year ended February 28, 2017 and February 29, 2016 excluding the effect of outstanding options and warrants:

	Twelve months ended
	February 28, 2017			February 29, 2016
Net loss attributable to shareholders		(15,888	)		(42,304	)
Weighted average number of shares outstanding		4,879,738			3,019,259
Basic net loss / dilutive net loss per share	$	(3.26	)	$	(14.01	)

14. COMMITMENTS AND CONTINGENCIES

        Future minimum operating lease payments per fiscal year that relate to office and warehouse space in various countries as at February 28, 2017 are as follows:

2018	1,074
2019	915
2020	905
2021	905
Thereafter	660
	4,459

        For the year ended February 28, 2017, the Company incurred rental expenses of $1,357 [2016 – $1,590].

        In January 2016, a customer in India initiated an arbitration process with the Company to resolve the dispute over inventory shipped to this customer in June 2015, with a carrying amount of $4,707. The customer has now submitted its claim statement, which discloses an aggregate claim amount of approximately $6,425 in respect of, among other things, damages claimed with respect to lost revenue, import duties, and inventory replacement costs. The Company believes that the claim has no merit. The Company has not recognized the revenue related to this shipment and has recorded the cost of the inventory provided to the customer as an asset with a value of $4,600. The Company has not received any payment with respect to this inventory. The Company submitted a counter-claim in June 2016 for the full value of the contract and damages. Frequent arbitration meetings have been held to date and are planned during the first half of calendar 2017. No decision has been made as of the date of this report and the outcome of this matter is not determinable.

        In the normal course of business, the Company is subject to patent infringement complaints. The Company defends itself vigorously in these matters and does not believe any known complaint is material.

        See Note 6 for the discussion on the purchase order commitments with contract manufacturers.

F-24

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

15. SUPPLEMENTAL CASH FLOW INFORMATION

	February 28, 2017			February 29, 2016
Changes in non-cash working capital balances:
Trade receivables		7,110			29,640
Inventory		1,287			1,592
Other current assets		986			3,074
Accounts payable and accrued liabilities		1,429			(16,880	)
Deferred revenue		(1,468	)		810
		9,344			18,236

16. FINANCIAL INSTRUMENTS

        Financial instruments are classified into one of the following categories: assets held at fair value, loans and receivables, other financial liabilities, or liabilities held at fair value.

Categories for financial assets and liabilities

        The following table summarizes the carrying values of the Company's financial instruments:

	February 28, 2017		February 29, 2016
Assets held at fair value (A)		4,073		4,277
Loans and receivables (B)		12,071		19,110
Other financial liabilities (C)		41,201		44,434
Liabilities held at fair value (D)		1,090		120

(A)

Includes cash and cash equivalents

(B)

Includes trade receivables and other miscellaneous receivables

(C)

Includes accounts payable and accrued liabilities, payroll-related accruals, debt facility and termination fee

(D)

Includes warrant liability

        The Company classifies its fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The accounting standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The inputs fall into three levels that may be used to measure fair value.

        Level 1 – Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.

        Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

        Level 3 – Significant unobservable inputs that are supported by little or no market activity.

        Cash and cash equivalents are measured using Level 1 inputs.

F-25

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

16. FINANCIAL INSTRUMENTS (Continued)

        The warrant liability is classified as Level 3 as it is measured at fair value calculated by the Black-Scholes model using significant unobservable inputs. Significant assumptions used as at February 28, 2017 for the warrants include a dividend yield of 0%, volatility of 75%, and a risk-free spot rate term structure.

        The Company held the following Level 3 financial instruments carried at fair value on the consolidated balance sheet.

	February 28, 2017		February 29, 2016
	Level 3		Level 3
Financial Liabilities
Warrant liability		1,090		3

        A reconciliation of the Level 3 warrant liability measured at fair value for the year ended February 28, 2017 follows:

	Level 3
	Warrants			$
Balance at February 29, 2016		2,088,750			3
Issuance of warrants		5,862,131			5,809
Exercise of warrants		(3,107,572	)		(527	)
Expiry of warrants and change in fair value of warrant liability		(1,950,516	)		(4,195	)
Balance at February 28, 2017		2,892,793			1,090

Interest rate risk

        Cash and cash equivalents and the Company's debt facility, which has interest rates with market rate fluctuations, expose the Company to interest rate risk on these consolidated financial instruments. Interest expense, excluding deferred financing costs, recognized during the year ended February 28, 2017 was $1,446 on the Company's cash and cash equivalents, and debt facility [2016 – expense of $1,959].

Credit risk

        In addition to trade receivables and other receivables, the Company is exposed to credit risk on its cash and cash equivalents in the event that its counterparties do not meet their obligations. The Company does not use credit derivatives or similar instruments to mitigate this risk and, as such, the maximum exposure is the full carrying value or fair value of the financial instrument. The Company minimizes credit risk on trade receivables and other receivables, and cash and cash equivalents by transacting with only reputable financial institutions and customers.

Foreign exchange risk

        Foreign exchange risk arises because of fluctuations in exchange rates. As at February 28, 2017, if the US dollar had appreciated by 1% against all foreign currencies to which the Company is exposed, with all other variables held constant, the impact of this foreign currency change on the Company's foreign denominated financial instruments would have resulted in a decrease in after-tax net loss of $43 for the year ended February 28, 2017 [2016 – increase of $27], with an equal and opposite effect if the US dollar had depreciated by 1% against all foreign currencies as at February 28, 2017.

F-26

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

16. FINANCIAL INSTRUMENTS (Continued)

Liquidity risk

        A risk exists that the Company will encounter difficulty in satisfying its financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. As at February 28, 2017, the Company had cash and cash equivalents totaling $4,073 [2016 – $4,277]. See Note 1 for further discussion of liquidity risk associated with the Company and Note 11 for details of the debt facility requirement.

17. SEGMENTED INFORMATION

        The Company operates in one operating segment – broadband wireless backhaul equipment.

        The following table presents total net book value of property, equipment and intangible assets by geographic location:

	February 28, 2017				February 29, 2016
	Amount		%		Amount		%
Canada		1,586		56%		1,860		43%
Malaysia		786		28%		1,492		34%
Other		481		16%		973		23%
Total		2,853		100%		4,325		100%

        The Company analyzes its sales according to geographic region and targets product development and sales strategies by region. The following tables present total revenue by geographic location through direct and indirect sales and through its OEM partner, Nokia:

	Year Ended February 28, 2017								Year Ended February 29, 2016
	Direct & Indirect Sales		OEM Sales through Nokia		Total		% of Total Revenue		Direct & Indirect Sales		OEM Sales through Nokia		Total		% of Total Revenue
Canada		2,648		—		2,648		6%		2,255		—		2,255		3%
Europe, Middle East and Africa		4,825		10,287		15,112		34%		6,753		31,109		37,862		44%
India		4,391		301		4,692		11%		13,993		3,787		17,780		21%
United States		13,261		—		13,261		30%		19,577		19		19,596		23%
Rest of World		7,661		542		8,203		19%		6,095		2,707		8,802		9%
		32,786		11,130		43,916		100%		48,673		37,622		86,295		100%

        The Company has shown revenue by the customers' purchasing entities' geographic location, except in cases where the geographic location of the product deployment is explicitly known.

18. ECONOMIC DEPENDENCE

        For the year ended February 28, 2017, the Company was dependent on three key customers with respect to revenue. These customers represented approximately 25%, 14% and 13% of sales during that twelve month period [2016 – three customers represented 44%, 15% and 11%].

F-27

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

19. INCOME TAXES

        The components of the Company's income (loss) before income taxes, by taxing jurisdiction, were as follows:

	February 28, 2017			February 29, 2016
Canada		(14,156	)		(22,994	)
Luxembourg		(2,004	)		(7,222	)
India		728			1,756
China		414			706
Other		104			(11,535	)
		(14,914	)		(39,289	)

        Income tax expense, both current and deferred, relates to jurisdictions outside of Canada where losses are not sufficient to cover the tax liability in the region. For the year ended February 28, 2017, the current income tax expenses were $931 [2016 – $434] and the deferred income tax expense (recovery) was ($148) [2016 – $1,841].

        The reported income tax provision differs from the amount computed by applying the Canadian statutory rate to the net loss, for the following reasons:

	2017			2016
Loss before income taxes		(14,914	)		(39,289	)
Statutory income tax rate		26.5%			26.5%
Expected income tax recovery		(3,952	)		(10,412	)
Foreign tax rate differences		563			578
Non-deductible expenses and non-taxable income		(785	)		37
Change in valuation allowances		4,967			6,043
Share issue costs		(156	)		—
Goodwill impairment		—			4,420
Foreign bank, minimum and withholding taxes		353			—
Prior year adjustments		(183	)		1,444
Other		(24	)		165
		783			2,275

F-28

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

19. INCOME TAXES (Continued)

        The Company's deferred tax assets and liabilities include the following significant components:

	2017			2016
Income tax loss carryforwards		44,541			39,322
Capital loss		19,011			19,011
Research and development tax credits		13,180			13,180
SR&ED expenditures		6,872			6,872
Book and tax differences on assets		960			1,256
Share issue expenses		529			443
Income and expense reserves		194			236
Total gross deferred tax assets		85,287			80,320
Valuation allowance		(85,287	)		(80,320	)
Income and expense reserves		(148	)		(294	)
Net deferred tax liability		(148	)		(294	)

        As at February 28, 2017, the Company had cumulative tax loss carryforwards in the following jurisdictions: Canada – $155,054, United States – $7,783, Luxembourg – $38,165. The Company also has capital losses being carried forward in the following jurisdictions: Canada – $16,302; United States – $45,543.

        The losses in Canada expire starting in fiscal 2031 until fiscal 2037. The losses in Luxembourg can be carried forward indefinitely. Income tax benefits relating to the losses in Canada and Luxembourg have not been recognized in the consolidated financial statements as the recognition requirements under the liability method of accounting for income taxes have not been met.

        The losses in the U.S. expire between fiscal 2022 and fiscal 2032. Internal Revenue Code Section 382 imposes an annual limitation on the use of a company's net operating loss carryforwards when a company has an ownership change. The acquisition of Axerra Networks, Inc. by the Company resulted in an ownership change as understood by Section 382. As a result, the annual restriction of the amount of losses of Axerra Networks, Inc. that may be used has been calculated as $521.

        As at February 28, 2017, the Company had $14,720 of investment tax credits available to reduce future federal Canadian income taxes payable. These investment tax credits begin to expire in 2022. In addition, the Company had provincial research and development tax credits of $2,361, which are available to reduce future provincial income taxes payable. These provincial tax credits begin to expire in 2029. The tax benefit of the federal and provincial tax credits has not been recognized in the consolidated financial statements.

        As at February 28, 2017, the Company has not recorded any liabilities associated with uncertain tax positions.

        The Company remains subject to examination by tax authorities in Canada for years 2011 to 2017 and in the major jurisdictions for tax years 2012 to 2017.

20. COMPARATIVE FIGURES

        Certain comparative figures have been reclassified to conform to the presentation adopted in the current fiscal year. The Company reclassified an amount of $902 from hardware revenue to service revenue to conform with the current fiscal year presentation.

F-29

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US$000's except share and per share amounts

21. SUBSEQUENT EVENT

        On March 17, 2017, the Company issued 1,198,666 common shares in a Registered Direct Offering, and concurrently in a private placement, issued warrants to purchase 599,333 common shares exercisable in the future at an exercise price of $1.50. The price per common share and one half of a warrant was $1.50 and resulted in total gross proceeds to the Company of $1,798. The warrants are not exercisable for six months and one day from issuance and will expire five years from the date of issuance.

F-30

F-31

INDEPENDENT AUDITORS' REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of
DragonWave Inc.

        We have audited the accompanying consolidated financial statements of DragonWave Inc., which comprise the consolidated balance sheets as at February 29, 2016 and February 28, 2015 and the consolidated statements of operations, comprehensive loss, cash flows and changes in equity for each of the years in the two-year period ended February 29, 2016, and a summary of significant accounting policies and other explanatory information.

Management's responsibility for the consolidated financial statements

        Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with United States generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' responsibility

        Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

        An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

        We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

        In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of DragonWave Inc. as at February 29, 2016 and February 28, 2015, and the results of its operations and its cash flows for each of the years in the two-year period ended February 29, 2016 in accordance with United States generally accepted accounting principles.

Emphasis of matter

        The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has recurring losses from operations and has a capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Ottawa, Canada
May 18, 2016

/s/ Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants

F-32

CONSOLIDATED BALANCE SHEETS

Expressed in US $000's except share amounts

	Note		As at February 29, 2016			As at February 28, 2015
Assets
Current Assets
Cash and cash equivalents		4		4,277			23,692
Trade receivables		5		18,986			48,626
Inventory		6		22,702			24,294
Other current assets		7		2,777			5,895
				48,742			102,507
Long Term Assets
Property and equipment		8		3,702			4,322
Deferred tax asset		20		—			1,485
Deferred financing cost				—			18
Intangible assets		9		623			794
Goodwill		9		—			11,927
				4,325			18,546
Total Assets		11		53,067			121,053
Liabilities
Current Liabilities
Debt facility		11		22,152			—
Accounts payable and accrued liabilities		10		23,557			40,677
Deferred revenue				1,944			830
Deferred tax liability		20		294			—
Warrant liability		13, 17		117			—
				48,064			41,507
Long Term Liabilities
Debt facility		11		—			32,400
Other long term liabilities		12		773			1,139
Warrant liability		13, 17		3			1,239
				776			34,778
Commitments		15
Shareholders' equity
Capital stock		13		221,128			220,952
Contributed surplus		13		9,235			8,388
Deficit				(218,225	)		(175,921	)
Accumulated other comprehensive loss				(9,618	)		(9,618	)
Total Shareholders' equity				2,520			43,801
Non-controlling interests		3		1,707			967
Total Equity				4,227			44,768
Total Liabilities and Equity				53,067			121,053
Shares issued & outstanding		14		3,020,069			3,011,632

(Signed) CLAUDE HAW
Director
(Signed) LORI O'NEILL
Director

See Note 1: Nature of Business, Basis of Presentation and Going Concern
See accompanying notes

F-33

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Expressed in US $000's except share and per share amounts

			Twelve months ended
	Note		February 29, 2016			February 28, 2015
REVENUE
Hardware and other		18		71,393			150,432
Services		18		14,902			7,334
				86,295			157,766
COST OF SALES
Hardware and other		6		58,991			123,950
Services		6		8,917			3,051
Inventory provision		6		4,416			2,771
				72,324			129,772
Gross profit				13,971			27,994
EXPENSES
Research and development				13,406			18,657
Selling and marketing				10,572			13,975
General and administrative				13,798			15,085
				37,776			47,717
Loss before other items				(23,805	)		(19,723	)
Goodwill impairment		9		(11,927	)		—
Restructuring costs		22		(1,549	)		—
Amortization of intangible assets		9		(577	)		(1,188	)
Accretion expense				(205	)		(168	)
Interest expense		11, 17		(2,014	)		(1,557	)
Warrant issuance expenses				—			(221	)
Gain on change in estimate				—			67
Gain on sale of fixed assets				—			18
Fair value adjustment — warrant liability		13		1,119			2,007
Foreign exchange (loss) gain				(331	)		846
Loss before income taxes				(39,289	)		(19,919	)
Income tax expense		20		2,275			717
Net loss and comprehensive loss				(41,564	)		(20,636	)
Net income attributable to non-controlling interest				(740	)		(884	)
Net loss and comprehensive loss attributable to shareholders				(42,304	)		(21,520	)
Net loss and comprehensive loss per share
Basic and diluted		14		(14.01	)		(7.90	)
Weighted average shares outstanding
Basic and diluted		14		3,019,259			2,724,467

See accompanying notes

F-34

CONSOLIDATED STATEMENTS OF CASH FLOWS

Expressed in US $000's

			Twelve months ended
	Note		February 29, 2016			February 28, 2015
Operating activities
Net loss				(41,564	)		(20,636	)
Items not affecting cash
Goodwill impairment		9		11,927			—
Amortization of property and equipment		8		1,931			2,320
Amortization of intangible assets		9		577			1,188
Accretion expense				205			168
Interest expense				—			28
Gain on change in estimate				—			(67	)
Gain on contract amendment				—			(530	)
Fair value adjustment – warrant liability		13		(1,119	)		(2,007	)
Stock-based compensation		13		988			1,270
Unrealized foreign exchange loss				485			913
Deferred income tax expense				1,841			59
				(24,729	)		(17,294	)
Changes in non-cash working capital items		16		18,236			(14,343	)
				(6,493	)		(31,637	)
Investing activities
Acquisition of property and equipment				(1,311	)		(3,474	)
Acquisition of intangible assets				(406	)		(347	)
				(1,717	)		(3,821	)
Financing activities
Repayments on capital lease obligation				(507	)		(739	)
Contribution by non-controlling interest in DW-HFCL		3		—			164
Proceeds from issuance of warrant				—			2,551
Proceeds from debt facility		11		1,300			17,400
Repayment of debt facility		11		(11,548	)		—
Issuance of common shares, net				35			21,695
				(10,720	)		41,071
Effect of foreign exchange on cash and cash equivalents				(485	)		(913	)
Net increase / (decrease) in cash and cash equivalents				(19,415	)		4,700
Cash and cash equivalents at beginning of period				23,692			18,992
Cash and cash equivalents at end of period				4,277			23,692
Cash paid during the year for interest				2,335			1,190
Cash paid during the year for taxes				522			802

See accompanying notes

F-35

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Expressed in US $000's except share amounts

	Common Shares		Capital Stock		Contributed Surplus			Deficit			AOCL			Non- Controlling Interest			Equity
Balance at February 28, 2014		2,320,349	$	198,593	$	7,118		$	(154,505	)	$	(9,682	)	$	(81	)	$	41,443
Stock-based compensation		—		—		1,270			—			—			—			1,270
Public offering		637,100		21,631		—			—			—			—			21,631
Exercise of warrants		52,042		664		—			—			—			—			664
Share issuance		2,141		64		—			104			64			—			232
Other comprehensive loss		—		—		—			—			—			164			164
Net (loss) / income		—		—		—			(21,520	)		—			884			(20,636	)
Balance at February 28, 2015		3,011,632	$	220,952	$	8,388		$	(175,921	)	$	(9,618	)	$	967		$	44,768
Stock-based compensation		—		—		988			—			—			—			988
Exercise of restricted share units		2,400		133		(133	)		—			—			—			—
Share issuance		6,037		43		(8	)		—			—			—			35
Net (loss)/income		—		—		—			(42,304	)		—			740			(41,564	)
Balance at February 29, 2016		3,020,069	$	221,128	$	9,235		$	(218,225	)	$	(9,618	)	$	1,707		$	4,227

See accompanying notes

F-36

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Expressed in US $000's except share and per share amounts

1. NATURE OF BUSINESS, BASIS OF PRESENTATION AND GOING CONCERN

        DragonWave Inc. [the "Company"], incorporated under the Canada Business Corporations Act in February 2000, is a provider of high-capacity packet microwave solutions that drive next-generation IP networks.

        The Company's common shares are traded on the Toronto Stock Exchange under the trading symbol DWI and on the NASDAQ Capital Market under the symbol DRWI.

        The Company's warrants issued from the public issuance on August 1, 2014 are traded on the Toronto Stock Exchange under the symbol DWI.WT and on the NASDAQ Capital Market under the symbol DRWIW.

        These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: DragonWave Corp., incorporated in the state of Delaware, USA, DragonWave PTE. LTD., incorporated in Singapore, DragonWave S.à r.l., incorporated in Luxembourg, DragonWave Telecommunication Technology (Shanghai) Co., Ltd., incorporated in China, DragonWave Mexico S.A. de C.V., incorporated in Mexico, Axerra Networks Asia Pacific Limited, incorporated in Hong Kong, DragonWave India Private Limited, incorporated in India and DragonWave Inc.'s majority owned subsidiary, DragonWave HFCL India Private Limited, incorporated in India. All intercompany accounts and transactions have been eliminated upon consolidation.

        The consolidated financial statements of the Company have been prepared in United States dollars following United States Generally Accepted Accounting Principles ["U.S. GAAP"].

        The consolidated financial statements for the year ended February 29, 2016 has been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the disbursement of liabilities and commitments in the normal course of business in the foreseeable future. The Company has a history of losses and has consumed significant cash resources in the past, and has continued to do so in the year ended February 29, 2016. Recently, additional pressure has been placed on the Company's liquidity position as a result of reduced revenue from a significant OEM channel and a dispute over inventory shipped to a customer in India in June 2015.

        The Company has been able to make progress in restructuring the business. This progress includes the following highlights:

•

Reduced operating expenses by 33% in the fourth quarter of fiscal year 2016 compared to the same period in the previous year primarily through reduction in international staff levels;

•

Raised $4,350 in equity in a registered direct offering on April 7, 2016;

•

Reduced outstanding debt on the Company's credit facility by $10,248 between February 28, 2015 and February 29, 2016 by leveraging its working capital;

•

Negotiated forbearance terms with its credit facility partners;

•

Initiated arbitration proceedings to seek resolution to its customer dispute in India.

        Despite the progress identified above, the Company remains in breach of the terms of its debt facility and is currently operating under its second forbearance period. See Note 11 for further details on the debt facility. No long term debt facility agreement has been reached. The continued consumption of cash has raised substantial doubt about DragonWave Inc.'s ability to continue as a going concern. Management's plans to restructure the business and overcome these difficulties include initiatives in a number of areas including:

•

Targeting its sales efforts to direct and indirect opportunities in markets with higher gross margins, and lower working capital requirements;

F-37

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

1. NATURE OF BUSINESS, BASIS OF PRESENTATION AND GOING CONCERN (Continued)

•

Adjusting its business focus and resources away from Nokia in order to support new sales channels;

•

Renegotiating the terms of existing debt facilities;

•

Continuing to minimize fixed and variable operating expenses, by tightly controlling discretionary spending and headcount growth;

•

Actively investigating and pursuing alternative forms of financing;

•

Reducing inventory levels in both raw material and finished goods inventory; and,

•

Working closely with vendors to ensure supply continuity.

        These plans may be difficult to achieve. They are dependent on a number of key assumptions including the timing of significant new customer projects, and success in arbitration with the customer located in India. It is possible that the plans described above may not be fully executed or may occur too slowly to solve the Company's current liquidity concerns. There can be no assurance that the existing financing facility can be renegotiated or that any other forms of financing can be arranged on satisfactory terms. These consolidated financial statements do not include any adjustments to the accounts and classification of assets and liabilities that may be necessary if the Company is unable to continue as a going concern. Such adjustments could be material.

2. SIGNIFICANT ACCOUNTING POLICIES

Use of accounting estimates

        The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company's management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent amounts of assets and liabilities as at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Actual results could differ from the estimates made by management.

        The following include estimates by management: allowance for doubtful accounts, inventory allocations, inventory provisions, accrued liabilities, warranty provisions, warrant liability, property and equipment amortization, tax valuation allowance, impairment of intangible assets and goodwill, vendor specific objective evidence, estimated selling price and estimated returns as it relates to revenue recognition, and stock-based compensation.

        These estimates and assumptions are based on management's historical experience, best knowledge of current events and conditions and actions that the Company may undertake in the future. Certain of these estimates require subjective or complex judgments by management about matters that are uncertain and changes in those estimates could materially impact the amounts reported in the consolidated financial statements and accompanying notes.

Foreign currency translation

        The Company's operations and balances denominated in foreign currencies, including those of its foreign subsidiaries which are primarily a direct and integral component or extension of the Company's operations, are translated into US dollars (USD) using the following: monetary assets and liabilities are translated at the period end exchange rate, non-monetary assets are translated at the historical exchange rate, and revenue and expense items are translated at the average exchange rate. Gains or losses resulting from the translation adjustments are included in the consolidated statement of operations.

F-38

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue recognition

        The Company derives revenue from the sale of broadband wireless backhaul equipment which includes embedded software and a license to use said software and extended product warranties. Software is considered to be incidental to the product. Services range from installation and training to basic consulting. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred and there are no significant remaining vendor obligations, collection of receivables is reasonably assured and the fee is fixed and determinable. Where conditions to final acceptance of the product is specified by the customer, revenue is deferred until acceptance criteria have been met.

        The Company's sales agreements may also contain multiple elements. Accordingly, the Company is required to determine the appropriate accounting, including whether the deliverables specified in a multiple element arrangement should be treated as separate units of accounting for revenue recognition purposes, the fair value of these separate units of accounting and when to recognize revenue for each element. For arrangements involving multiple elements, the Company allocates revenues to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence ("VSOE") if available, third party evidence ("TPE") if VSOE is not available, or estimated selling price ("ESP") if neither VSOE nor TPE is available. In multiple element arrangements, revenues are allocated to each separate unit of accounting for each of the deliverables using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. The Company has determined the selling price for both the undelivered items and the delivered items using ESP.

        The Company generates revenue through direct sales and sales to distributors. The Company defers the recognition of a portion of sales to distributors based on estimated sales return and stock rotation granted to customers on products in the same period the related revenues are recorded. These estimates are based on historical sales returns; stock rotations and other known factors.

        Revenue associated with extended warranty and advanced replacement warranty is recognized ratably over the life of the contracted service.

        Revenue from engineering services or development agreements is recognized according to the specific terms and acceptance criteria as services are rendered.

        The Company accrues estimated potential product liability as warranty costs when revenue on the sale of equipment is recognized. Warranty liability is estimated based on recent actual return experience and repair costs. Where product defects have been identified which would cause the cost or warranty experience to change, additional warranty costs are recognized.

        Shipping and handling costs borne by the Company are recorded in cost of sales. Shipping and handling costs charged to customers are recorded as revenue, if billed at the time of shipment. Costs charged to customers after delivery are recorded in cost of sales.

        The Company generates revenue through royalty agreements as a result of the use of its Intellectual Property. Royalty revenue is recognized as it is earned.

Cash and cash equivalents

        The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

F-39

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments

        The Company classifies its financial instruments as assets held at fair value, loans and receivables, other financial liabilities, or liabilities held at fair value. The classification depends on the purpose for which the financial instruments were acquired, their characteristics and management's intent. Management determines the classification of financial assets and liabilities at initial recognition and the classification is not changed subsequent to initial recognition.

        The Company designated its cash and cash equivalents and foreign exchange contracts as assets held at fair value which are measured at fair value, with changes in fair value being recorded in net earnings. Trade receivables and other receivables have been classified as loans and receivables which are measured at amortized cost. Accounts payable, accrued liabilities and the debt facility have been classified as other financial liabilities, which are measured at amortized cost. Liabilities held at fair value include the warrant liability which is measured at fair value, with changes in fair value being recorded in net earnings.

        Transaction costs directly attributable to the acquisition of financial assets are recorded in net loss in the period in which they are incurred.

Inventory

        Inventory is valued at the lower of cost and net realizable value ["NRV"]. The cost of inventory is calculated on a standard cost basis, which approximates average actual cost. NRV is determined as the market value for finished goods, replacement cost for raw materials, and finished goods market value less cost to complete for work in progress inventory.

        The Company regularly reviews inventory quantities on hand and records a provision for excess and obsolete inventory based on factors including its estimated forecast of product demand, the stage of the product life cycle and production requirements for the units in question.

        The Company carries inventory for the purposes of supporting its product warranty. Standard warranty is typically 13 to 36 months but the Company earns revenue by providing enhanced and extended warranty and repair service during and beyond the standard warranty period. Customer service inventory consists of both component parts and finished units.

        Indirect manufacturing costs and direct labour expenses are allocated systematically to the total production inventory.

Income taxes

        Income taxes are accounted for using the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based on differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes that are more likely than not to be realized. Deferred income tax assets and liabilities are measured using enacted tax rates that apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The Company provides a valuation allowance against its deferred tax assets when it believes that it is more likely than not that the assets will not be realized.

        The Company determines whether it is more likely than not that an uncertain tax position will be sustained upon examination by the tax authorities. The tax benefit of any uncertain tax position that meets the more likely than not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon successful resolution. To the extent a full benefit is not expected to be realized, an income tax liability is

F-40

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

effectively established. The Company recognizes accrued interest and penalties on unrecognized tax benefits as interest expense.

        Management periodically reviews the Company's provision for income taxes and valuation allowance to determine whether the overall tax estimates are reasonable. When management performs its assessments of the provision and valuation allowance, it may be determined that an adjustment is required. This adjustment may have a material impact on the Company's financial position and results of operations.

Property and equipment

        Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the anticipated useful lives of the assets as follows:

Test equipment and research and development equipment	4 - 5 years
Computer hardware	2 years
Production fixtures	3 years
Leasehold improvements	5 years
Furniture and fixtures	5 years
Communication equipment	3 years
Other	3 - 5 years

        Management evaluates the carrying value of its property and equipment assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. To the extent the estimated undiscounted future net cash inflows attributable to the asset are less than the carrying amount, an impairment loss is recognized. The amount of impairment loss to be recorded is the difference between the asset's carrying value and fair value.

Goodwill and intangible assets

        Intangible assets include Infrastructure Systems Software and Computer Software and are amortized over their estimated useful life of 2 and 3 years. Management evaluates the carrying value of its intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. To the extent the estimated undiscounted future net cash inflows attributable to the asset are less than the carrying amount, an impairment loss is recognized. The amount of impairment loss to be recorded is the difference between the asset's carrying value and the net discounted estimated future cash flows.

        Goodwill represents the excess of the purchase price over the estimated fair value of net tangible and intangible assets acquired in business combinations. The Company reviews the carrying value of goodwill on an annual basis or more frequently if circumstances indicate that it is more likely than not that the fair value of the goodwill is below its carrying amount. The goodwill impairment test is a two-step process which requires management to make judgmental assumptions regarding fair value. The Company looks at any qualitative factors that would suggest that further analysis is required. The first step consists of estimating the fair value of its reporting unit. When the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not to be impaired and the second step of the impairment test is unnecessary. If the fair value is less than the carrying amount, the Company compares the implied fair value of the goodwill, determined as if a purchase had just occurred, to the carrying amount to determine the amount of impairment charge to be recorded. Changes in the estimates and assumptions used in assessing the projected cash flows could materially affect the results of management's evaluation.

F-41

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Share based compensation plan and employee share purchase plan

        The Company has a share based compensation plan and an employee share purchase plan which are described in note 13. The Company accounts for stock options granted to employees using the fair value method. In accordance with the fair value method, the Company recognizes estimated compensation expense related to stock options over the vesting period of the options granted, with the related credit being charged to contributed surplus.

        The Company launched an employee share purchase plan on October 20, 2008. The plan includes provisions to allow employees to purchase common shares. The Company will match the employees' contribution at a rate of 25%. Proceeds from employees are received and the cost of the matching shares are recorded in share capital, with the related debit applied to contributed surplus at the time the shares are issued. The shares contributed by the Company will vest 12 months after issuance with a corresponding compensation expense recognized in loss.

Research and development

        Research costs are expensed as incurred. Development costs are expensed as incurred unless they meet generally accepted accounting criteria for deferral and amortization. Development costs incurred prior to establishment of technological feasibility do not meet these criteria, and are expensed as incurred.

Loss per share

        Basic loss per share is calculated by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. For all periods presented, the net loss available to common shareholders equates to the net loss.

        In the computation of diluted earnings per share, the Company includes the number of additional common shares that would have been outstanding if the dilutive potential equity instruments had been issued.

Non-controlling interest

        Non-controlling interest consists of the minority owned portion of the Company's 50.1% owned subsidiary, DragonWave HFCL India Private Limited.

FUTURE ACCOUNTING PRONOUNCEMENTS

        In May 2014, the FASB issued ASU No. 2014-9, "Revenue from Contracts with Customers". The amendments in this Update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and create new Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers. In August 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers" which reflects decisions reached by the FASB at its meeting earlier in the year to defer the effective date to fiscal years beginning after December 15, 2017, with early adoption permitted for the year beginning after December 15, 2016. The Company is currently assessing the impact this amendment will have on the Company's consolidated financial statements.

F-42

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

        In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements – Going Concern". The update provides U.S. GAAP guidance on management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company is currently assessing the impact this amendment will have on the Company's consolidated financial statements.

        In February 2016, the FASB issued ASU No. 2016-02, "Leases". The amendments in this Update create Topic 842, Leases, and supersede the lease requirements in Topic 840, Leases. The Update will require companies to recognize a right-of-use (ROU) asset and a lease liability in their balance sheets, while still distinguishing between finance leases and operating leases. For finance leases, the lessee would recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income, and for operating leases, the lessee would recognize a straight-line lease expense. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact this amendment will have on the Company's consolidated financial statements.

3. BUSINESS COMBINATIONS

DragonWave HFCL India Private Limited

        Non-controlling interest consists of the minority owned portion of the Company's 50.1% owned subsidiary, DragonWave HFCL India Private Limited. During the year ended February 29, 2016, the minority owner, HFCL, made a capital contribution of nil (2015 – $164).

4. CASH AND CASH EQUIVALENTS

        The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

	February 29, 2016								February 28, 2015
Native Currency	Native Currency $		Foreign Exchange Rate to USD		USD Amount		% of Total		USD Amount		% of Total
US Dollar		1,600		1.000		1,600		37.4%		15,010		63.4%
Canadian Dollar		53		0.736		39		0.9%		4,106		17.3%
Indian Rupee		158,951		0.015		2,317		54.2%		2,497		10.5%
Other						321		7.5%		2,079		8.8%
Total Cash and Cash Equivalents						4,277		100.0%		23,692		100.0%

        The Company is required to have a minimum of $1,000 held at Comerica Bank [2015 – $10,000].

F-43

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

5. TRADE RECEIVABLES

        The Company is exposed to credit risk with respect to trade receivables in the event that its counterparties do not meet their obligations. The Company minimizes its credit risk with respect to trade receivables by performing credit reviews for each of its customers. The Company's allowance for doubtful accounts reflects the Company's assessment of collectability across its global customer base.

	February 29, 2016			February 28, 2015
Trade receivables		19,209			49,295
Allowance for doubtful accounts		(223	)		(669	)
Total trade receivables		18,986			48,626

        As at February 29, 2016, two customers exceeded 10% of the total receivable balance. These customers represented 52% and 16% of the trade receivables balance [2015 – two customers represented 37% and 34% of the trade receivables balance].

        Included in general and administrative expenses is an expense of $240 related to bad debt expense for the year ended February 29, 2016 [2015 – expense of $160].

6. INVENTORY

        Inventory is comprised of the following:

	February 29, 2016		February 28, 2015
Raw materials		2,389		7,469
Work in progress		614		577
Finished goods		16,986		13,709
Total production inventory		19,989		21,755
Inventory held for customer service/warranty		2,713		2,539
Total inventory		22,702		24,294

        Cost of sales for the year ended February 29, 2016 was $72,324 [2015 – $129,772], which included $56,296 of product costs [2015 – $115,309]. The remaining costs of $16,028 [2015 – $14,463] related principally to warehousing, freight, warranty, overhead and other direct costs of sales.

        For the year ended February 29, 2016, the Company recognized an impairment loss on inventory of $4,416 [2015 – $2,771]. This impairment loss related primarily to raw material and finished goods for certain older product lines.

        The Company allocates overhead and labour to inventory. Included in cost of sales for the year ended February 29, 2016 were overhead and labour allocations of $1,746 [2015 – $3,860]. Included in inventory at February 29, 2016 were overhead and labour allocations of $551 [2015 – $461].

        The Company uses an outsourced manufacturing model in which most of the component acquisition and assembly of its products is executed by third parties. The Company's contract manufacturers currently have inventory intended for use in the production of its products, and the Company has purchase orders or demand

F-44

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

6. INVENTORY (Continued)

forecasts in place for raw materials and manufactured products with these contract manufacturers. The value of the inventory held by the Company's primary contract manufacturer at February 29, 2016 was $16,848 [February 28, 2015 – $13,565]

7. OTHER CURRENT ASSETS

        Other current assets are comprised of the following:

	February 29, 2016		February 28, 2015
Deposits on inventory		670		1,240
Prepaid expenses		1,355		2,082
Indirect taxes		610		1,079
Income tax receivable		—		390
Deferred financing costs		18		55
Deferred tax asset		—		61
Receivable from contract manufacturers and other items		124		988
Total other current assets		2,777		5,895

8. PROPERTY AND EQUIPMENT

        Property and equipment are apportioned as follows:

	February 29, 2016						February 28, 2015
	Cost		Accumulated Amortization		Net Book Value		Net Book Value
Test and research and development equipment		24,236		21,581		2,655		3,056
Computer hardware		3,702		3,489		213		260
Production fixtures		2,433		1,874		559		661
Leasehold improvements		1,081		978		103		146
Furniture and fixtures		864		761		103		145
Communication equipment		289		285		4		8
Other		448		383		65		46
Total property and equipment		33,053		29,351		3,702		4,322

        Depreciation expense relating to the above property and equipment was allocated to operating expenses as follows:

	February 29, 2016		February 28, 2015
Research and development ("R&D")		364		1,067
Selling and marketing ("S&M")		40		56
General and administrative ("G&A")		1,527		1,197
Total		1,931		2,320

F-45

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

8. PROPERTY AND EQUIPMENT (Continued)

        Depreciation expense includes amortization of assets recorded under capital lease.

9. INTANGIBLE ASSETS AND GOODWILL

        Intangible assets and goodwill are apportioned as follows:

	February 29, 2016								February 28, 2015
	Cost		Accumulated Amortization		Impairment		Net Book Value		Net Book Value
Infrastructure Systems Software and Computer Software		7,046		6,423		—		623		794
Goodwill		11,927		—		11,927		—		11,927

        For the year ended February 29, 2016, the Company recognized amortization of intangible assets of $577 [2015 – $1,188]. The Company estimates that it will recognize $305, $304 and $14 respectively for the next three succeeding years.

        The Company tests goodwill for impairment annually on August 31 and whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Consistent with the Company's assessment that it has only one reporting unit, the Company tests goodwill for impairment at the entity level. The Company tests goodwill using a two-step process. The Company looks at any qualitative factors that would suggest that further analysis is required. The Company determined that the continuing decline of DragonWave's market capitalization and continued losses in fiscal year 2016 warranted further analysis. The first step consists of estimating the fair value of the Company's single reporting unit and comparing that to the carrying amount of the Company's net assets. At August 31, 2015 management used both an income-based and market-based approach to value the single reporting unit. Under the income-based approach, the Company used a discounted cash flow methodology, while under the market-based approach, the Company considered its market capitalization in addition to an estimated control premium based on a review of comparative market transactions. In the second step, the Company compared the implied carrying value of the goodwill to the values determined previously in the process and concluded that its goodwill was fully impaired. As a result, the Company recorded a non-cash impairment charge of $11,927 in the three month period ended August 31, 2015.

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

        Accounts payable and accrued liabilities are apportioned as follows:

	February 29, 2016		February 28, 2015
Trade payables		11,858		23,474
Accrued liabilities		5,830		9,394
Termination fee		3,337		4,227
Payroll related accruals		1,257		2,076
Warranty accrual		651		335
Income taxes payable		555		657
Capital lease obligation		69		514
Total accounts payable and accrued liabilities		23,557		40,677

F-46

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Continued)

        On April 10, 2013, the Company announced changes to its existing operational framework with Nokia. Included in the changes was an agreement to a termination fee in the amount of $8,668 to be paid to Nokia in installments. During the year ended February 28, 2015, the Company revised the termination fee liability which resulted in a gain of $301. Payments totaling $3,287 were made during the year ended February 28, 2015. During the year ended February 29, 2016 the Company made a payment of $1,119. As at February 29, 2016 the liability is valued at $3,337 and is considered short term in nature [2015 – $4,383; short term: $4,227 and long term: $156].

        Warranty accrual:

        The Company records a liability for future warranty costs based on management's best estimate of probable claims within the Company's product warranties. The accrual is based on the terms of the warranty, which vary by customer, product, or service and historical experience. The Company regularly evaluates the appropriateness of the remaining accrual.

        The following table details the changes in the warranty accrual for the respective periods:

	February 29, 2016			February 28, 2015
Balance at the beginning of the period		678			619
Accruals		2,057			1,031
Utilization		(1,809	)		(972	)
Ending Balance		926			678
Short term Portion		651			335
Long term Portion		275			343

11. DEBT FACILITY

        The Company has established a credit facility with Comerica Bank and Export Development Canada. As at February 29, 2016, this asset based credit facility was for a total of $40,000 plus $4,000 for letters of credit and foreign exchange facilities. Credit availability is subject to ongoing compliance with borrowing covenants and short term assets on hand. The Company had drawn $22,152 on the facility as at February 29, 2016 [2015 – $32,400], and $1,853 against its letter of credit facility [2015 – $1,864].

        The credit facility which was extended on January 6, 2014, matures on June 1, 2016 and is secured by a first priority charge on all of the assets of DragonWave Inc. and its principal direct and indirect subsidiaries. The terms of the credit facility include other customary terms, conditions, covenants, and representations and warranties. Borrowing options under the credit facility include US dollar, Canadian dollar, and Euro loans. Interest rates vary with market rate fluctuations, with loans bearing interest in the range of 3% to 4% above the applicable base rates. Direct costs associated with obtaining the debt facility such as closing fees, registration and legal expenses have been capitalized and will be amortized over the 30 month term of the facility. During the year ended February 29, 2016 the weighted average debt outstanding was $29,765 [2015 – $20,304] and the Company recognized $2,007 in interest expense related to the debt facility [2015 – $1,401] and expensed $55 in deferred financing cost [2015 – $187].

        The credit facility contains financial covenants including minimum tangible net worth requirements, minimum cash levels to be held at Comerica bank and minimum liquidity ratio requirements. The credit facility also imposes certain restrictions on the Company's ability to acquire capital assets above a threshold over a trailing six month period.

F-47

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

11. DEBT FACILITY (Continued)

        The Company has in place a forbearance agreement until May 18, 2016, which identifies new minimum covenant levels reflecting the Company's revised financial plans. The forbearance agreement includes a requirement to hold a minimum of $1,000 at Comerica Bank. In addition, the forbearance agreement reduces the facility commitment from $40,000 to $35,000 and implements more frequent monitoring. Subsequent to February 29, 2016, DragonWave Inc. repaid $3,285 on the debt facility. As of May 18, 2016 the Company is in compliance with the financial terms of the forbearance agreement.

12. OTHER LONG TERM LIABILITIES

        Other long term liabilities are apportioned as follows:

	February 29, 2016		February 28, 2015
Warranty accrual		275		343
Deferred revenue		498		578
Termination fee		—		156
Capital lease obligation		—		62
Total other long term liabilities		773		1,139

13. SHAREHOLDERS' EQUITY

Number of shares authorized

        The Company has an unlimited amount of common shares authorized for issuance.

        On September 23, 2013 the Company completed a public equity offering. Under the terms of the offering, the Company issued and sold 11,910,000 units at $2.10 on a pre-consolidation basis, for aggregate gross proceeds of $25,011. After deducting commissions and listing expenses, the Company realized net proceeds of $22,434. Each unit consisted of one common share of the Company and three quarters of one warrant. Each whole warrant entitles the holder to purchase one common share of the Company at an exercise price of $2.70 per share, subsequently changed to purchase 1/25^th of one common share at an exercise price of $67.50 per share following the share consolidation, until September 23, 2018, subject to certain adjustments. Upon issuance, the Company recognized a liability in the amount of $6,425 for the warrants, see Warrants section for further details.

        On August 1, 2014 the Company completed a public equity offering. Under the terms of the offering, the Company issued and sold 15,927,500 units at $1.80 CAD on a pre-consolidation basis, for aggregate gross proceeds of $28,670 CAD. After deducting commissions and listing expenses, the Company realized net proceeds of $23,960 ($26,184 CAD). Each unit consisted of one common share of the Company and one half of one warrant. Each whole warrant entitles the holder to purchase one common share of the Company at an exercise price of $2.25 CAD per share, subsequently changed to purchase 1/25^th of one common share at an exercise price of $56.25 CAD per share following the share consolidation, until August 1, 2016. Upon issuance, the Company recognized a liability in the amount of $2,551 for the warrants, see Warrants section for further details.

        On February 2, 2016, the Company effected a share consolidation of the Company's common shares at a ratio of 1-for-25. As a result of the share consolidation, every 25 shares of the issued and outstanding common shares consolidated into one newly-issued outstanding common share. Each fractional share remaining after the share consolidation was cancelled. The number of outstanding stock options and restricted share units were

F-48

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

13. SHAREHOLDERS' EQUITY (Continued)

proportionately adjusted by the consolidation ratio and the exercise prices correspondingly increased by the same consolidation ratio. All shares and exercise prices are presented on a post-consolidation basis in these consolidated financial statements.

Share based compensation plan

        The Company had previously established the DragonWave Inc. Key Employee Stock Option/Stock Issuance Plan (the "Previous Plan") applicable to full-time employees, directors and consultants of the Company for purchase of common shares. Options are granted with an exercise price equal to the fair value of the common shares of the Company, and generally vest at a rate of 25% one year from the date of the option grant, and 1/36^th of the remaining 75% per additional month of full-time employment with the Company. All remaining outstanding options expire five years from the grant date, or upon termination of employment. The maximum number of common shares issuable under the previous plan was 10% of the common shares issued and outstanding.

        On June 20, 2014 the Shareholders approved the adoption of a new Share Based Compensation Plan (the "Plan") to replace the Previous Plan. The Plan includes provision for granting of performance share units ("PSUs"), restricted share units ("RSUs"), deferred share units ("DSUs"), Bonus Shares (as defined in the Plan) and options to purchase common shares. Settlement of vested PSUs, RSUs and DSUs is effected by delivering common shares acquired in the open market and/or issued from treasury, or by making a cash payment equal to the number of PSUs, RSUs or DSUs multiplied by the volume weighted average trading price of the common shares on the applicable stock exchange for the five trading days preceding the settlement date, or by a combination of these methods. The manner of settlement for RSUs, PSUs and DSUs is determined by the Compensation Committee in its sole discretion. The maximum number of common shares issuable under the Plan is 302,007, which represents 10% of the common shares issued and outstanding as at February 29, 2016.

        The following is a summary of stock option activity:

	February 29, 2016					February 28, 2015
	Options			Weighted Average Exercise Price (CAD)		Options			Weighted Average Exercise Price (CAD)
Opening balance		159,421		$	76.34		127,149		$	92.70
Granted		172,974		$	8.64		43,156		$	52.76
Forfeited		(55,667	)	$	82.34		(10,884	)	$	173.94
Closing balance		276,728		$	32.82		159,421		$	76.34

        The following table shows the weighted average values used in determining the fair value of options granted during the years ended February 29, 2016 and February 28, 2015:

	February 29, 2016		February 28, 2015
Volatility		95.6%		75.8%
Risk free rate		0.58%		1.35%
Dividend yield		Nil		Nil
Average expected life		3.97 yrs		4 yrs

F-49

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

13. SHAREHOLDERS' EQUITY (Continued)

        The 172,974 options granted during the year ended February 29, 2016 were determined to have a fair value of $683 [2015 – 43,156 options valued at $1,204].

        The following table summarizes the various exercise prices inherent in the Company's stock options outstanding and exercisable on February 29, 2016:

Exercise Price				Options Outstanding						Options Exercisable
Low (CAD)		High (CAD)		Quantity of options		Weighted average remaining contractual life (yrs)		Weighted average exercise price (CAD)		Quantity of options		Weighted average remaining contractual life (yrs)		Weighted average exercise price (CAD)
$	3.00	$	3.25		102,737		4.73	$	3.00		51,616		4.73	$	3.00
$	3.26	$	16.88		4,017		4.73	$	3.97		969		4.86	$	3.50
$	16.89	$	21.00		50,016		4.22	$	19.25		—		0.00	$	0.00
$	21.01	$	46.88		19,764		2.78	$	30.54		17,567		2.74	$	30.55
$	46.89	$	52.88		15,589		2.44	$	51.80		10,244		2.40	$	51.81
$	52.89	$	54.88		33,245		3.37	$	53.75		14,579		3.37	$	53.75
$	54.89	$	62.13		21,677		2.19	$	56.00		15,287		2.19	$	56.00
$	62.14	$	79.25		16,705		1.41	$	73.32		14,941		1.40	$	73.35
$	79.26	$	169.25		12,978		0.22	$	166.23		12,978		0.22	$	166.23
					276,728		3.60	$	32.82		138,181		3.10	$	44.28

        The Company has recognized $941 for the year ended February 29, 2016 as compensation expense for stock-based grants, with a corresponding credit to contributed surplus [2015 – $1,177]. Stock compensation expense was allocated to operating expenses as follows:

	February 29, 2016		February 28, 2015
Research and development		172		297
Sales and marketing		204		333
General and administrative		565		547
Total		941		1,177

        As at February 29, 2016, compensation costs not yet recognized relating to stock option awards outstanding is $1,476 [2015 – $1,926] net of estimated forfeitures. Performance vesting awards will vest as performance conditions are met. Compensation will be adjusted for subsequent changes in estimated forfeitures.

Restricted Share Units (RSU's)

        The Company has entered into restricted stock agreements with certain of its independent directors. These units which were issued during July 2014 were subject to each director's continued engagement on the Board for a period of one year from the date of issuance. All of the originally issued RSUs vested during the second quarter of fiscal year 2016 with the exception of 800 RSUs which were cancelled on April 14, 2015.

F-50

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

13. SHAREHOLDERS' EQUITY (Continued)

        The following table sets forth the summary of restricted share activity under the Company's Share Based Compensation Plan for the year ended February 29, 2016:

	Year ended February 29, 2016
	RSU's			Weighted Average Price (CAD)
RSU balances at February 28, 2014		—			—
Granted		3,200		$	53.75
RSU balances at February 28, 2015		3,200		$	53.75
Forfeited		(800	)	$	53.75
Vested		(2,400	)	$	53.75
RSU balances at February 29, 2016		—			—

        The Company has recognized $39 for the year ended February 29, 2016 as compensation expense for restricted share units, with a corresponding credit to contributed surplus [2015 – $93].

Restricted shares & employee share purchase plan

        The Company launched an Employee Share Purchase Plan ["ESPP"] on October 20, 2008. The plan includes provisions to allow employees to purchase common shares. The Company will match the employees' contribution at a rate of 25%. During the year ended February 29, 2016 a total of 5,207 common shares were purchased by employees at fair market value, while the Company issued 1,227 common shares, net of forfeitures, as its matching contribution during the year ended February 29, 2016. The shares contributed by the Company will vest 12 months after issuance.

        The Company records an expense equal to the fair value of shares granted pursuant to the employee share purchase plan over the period the shares vest, with a corresponding credit to contributed surplus. The total fair value of the shares earned during the year ended February 29, 2016 was $13 [2015 – $13]. The fair value of the unearned ESPP shares as at February 29, 2016 was $8 [2015 – $13]. The number of shares held for release, and still restricted under the plan at February 29, 2016 was 978 [2015 – 440].

Warrants

        Effective May 30, 2007, the Company granted warrants to purchase up to 5,050 common shares of the Company at a price of $88.75 CAD per share. The warrants expire 10 years after the date of issuance. The warrants vested based on the achievement of pre-determined business milestones and resulted in 31,562 warrants being eligible for exercise. Each whole warrant entitles the holder to purchase 1/25^th of one common share of the Company.

        On September 23, 2013 the Company completed a public equity offering. Under the terms of the offering, the Company issued and sold 11,910,000 units at $2.10 on a pre-consolidation basis, for aggregate gross proceeds of $25,011. Equity issuance expenses relating to the offering totaled $2,576 of which $662 was expensed as the proportionate warrant costs. Each unit consisted of one common share of the Company and three quarters of one warrant (warrants issued – 8,932,500). Each whole warrant entitles the holder to purchase 1/25^th common share of the Company at an exercise price of $67.50 per share until September 23, 2018. On August 1, 2014 the warrant exercise price was adjusted to $32.50 as a result of a subsequent equity financing undertaken by the

F-51

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

13. SHAREHOLDERS' EQUITY (Continued)

Company. In the event of a fundamental transaction the Company may be required to settle the warrants with a cash payment. As a result, the Company recognized a warrant liability of $6,425 which represented the estimated fair value of the liability as at September 23, 2013. The warrant liability is adjusted quarterly to its estimated fair value. Increases or decreases in the fair value of the warrants are presented as "Fair value adjustment – warrant liability" in the consolidated statement of operations. As at February 29, 2016, 2,088,750 warrants were outstanding and the liability for warrants was decreased to $3. In the year ended February 29, 2016 the Company realized a gain in the amount of $600 in the consolidated statement of operations which represented the change in fair value of the remaining warrant liability of $3.

        On August 1, 2014 the Company completed a public equity offering. Under the terms of the offering, the Company issued and sold 15,927,500 units at $1.80 CAD on a pre-consolidation basis for aggregate gross proceeds of $28,670 CAD. Each unit consisted of one common share of the Company and one half of one warrant. Each whole warrant entitles the holder to purchase 1/25^th of one common share of the Company at an exercise price of $56.25 CAD per share until August 1, 2016, subject to certain adjustments. Equity issuance expenses relating to the offering totaled $2,275 of which $221 was expensed as the proportionate warrant costs. As a result of the offering, the Company issued warrants totaling 7,963,750 and recognized a warrant liability of $2,551 which represented the estimated fair value of the liability as at August 1, 2014. During the year ended February 29, 2016 the Company realized a gain in the amount of $519 in the consolidated statement of operations which represented the change in fair value of the remaining warrant liability of $117.

        The following is a summary of outstanding warrants:

	February 29, 2016
	Warrants Outstanding		Shares Purchasable		Exercise Price
May 2007 Issuance		31,562		1,262	$	88.75
September 2013 Issuance		2,088,750		83,550	$	32.50
August 2014 Issuance		7,963,750		318,550	$	56.25	CAD

14. NET LOSS PER SHARE

        Basic loss per share is calculated by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. In the computation of diluted earnings per share, the Company includes the number of additional common shares that would have been outstanding if the dilutive potential equity instruments had been issued.

        As at February 29, 2016 a total of 276,728 options and 10,084,062 warrants have been excluded from the diluted net loss per share calculations, as their effect would have been anti-dilutive.

        The following table illustrates the dilutive impact on net loss per share during the year ended including the effect of outstanding options and warrants:

	Year ended
	February 29, 2016			February 28, 2015
Net loss attributable to shareholders		(42,304	)		(21,520	)
Weighted average number of shares outstanding		3,019,259			2,724,467
Basic net loss/dilutive net loss per share	$	(14.01	)	$	(7.90	)

F-52

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

15. COMMITMENTS AND CONTINGENCIES

        Future minimum operating lease payments which relate to office and warehouse space in various countries as at February 29, 2016 per fiscal year are as follows:

2017	1,144
2018	134
2019	10
	1,288

        In January 2016, a customer in India initiated an arbitration process with the Company to resolve the dispute over inventory shipped to this customer in June 2015, with a value of $4,707. The customer has submitted a claim statement which the Company feels has no merit. The Company will submit a counter-claim in June 2016. Since the arbitration hearing is set for July 2016, the outcome of this matter is not determinable as of the date of this report.

        See Note 6 for the discussion on the purchase order commitments with contract manufacturers.

16. SUPPLEMENTAL CASH FLOW INFORMATION

	Year ended
	February 29, 2016			February 28, 2015
Changes in non-cash working capital balances:
Trade receivables		29,640			(31,218	)
Inventory		1,592			6,122
Other current assets		3,074			65
Accounts payable and accrued liabilities		(16,880	)		10,173
Deferred revenue		1,114			(154	)
Other long term liabilities		(304	)		669
		18,236			(14,343	)

17. FINANCIAL INSTRUMENTS

        Financial instruments are classified into one of the following categories: assets held at fair value, loans and receivables, other financial liabilities, or liabilities held at fair value.

F-53

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

17. FINANCIAL INSTRUMENTS (Continued)

Categories for financial assets and liabilities

        The following table summarizes the carrying values of the Company's financial instruments:

	February 29, 2016		February 28, 2015
Assets held at fair value (A)		4,277		23,692
Loans and receivables (B)		19,110		49,614
Other financial liabilities (C)		44,434		71,728
Liabilities held at fair value (D)		120		1,239

(A)

Includes cash and cash equivalents

(B)

Includes trade receivables and other miscellaneous receivables

(C)

Includes accounts payable, accrued liabilities, payroll related accruals, debt facility and termination fee

(D)

Warrant liability

        The Company classifies its fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The accounting standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The inputs fall into three levels that may be used to measure fair value.

        Level  1 – Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.

        Level  2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

        Level  3 – Significant unobservable inputs which are supported by little or no market activity.

        Cash and cash equivalents are measured using Level 1 inputs.

        The August 1, 2014 warrant liability is classified as Level 1 as the warrants are traded on the Toronto Stock Exchange and on the NASDAQ Capital Market.

        The September 23, 2013 warrant liability is classified as Level 3 as it is measured at fair value using significant unobservable inputs. Significant assumptions used at February 29, 2016 for the warrants include a dividend yield of 0%, a 1% assumption that the fundamental transaction will happen every year, volatility of 60%, and a risk free spot rate term structure.

        As at February 29, 2016 the Company held the following Level 3 financial instruments carried at fair value on the consolidated balance sheet.

	Level 3		Total
Financial Liabilities
Warrant liability		3		3

F-54

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

17. FINANCIAL INSTRUMENTS (Continued)

        As at February 28, 2015, the Company held the following Level 3 financial instruments carried at fair value on the consolidated balance sheet.

	Level 3		Total
Financial Liabilities
Warrant liability		603		603

        A reconciliation of the Level 3 warrant liability measured at fair value for the year ended February 29, 2016 follows:

	Warrants		$
Balance at February 28, 2015		2,088,750		603
Fair value adjustment – warrant liability		—		(600	)
Balance at February 29, 2016		2,088,750		3

Interest rate risk

        Cash and cash equivalents and the Company's debt facility which has interest rates with market rate fluctuations expose the Company to interest rate risk on these financial instruments. Net interest expense, excluding deferred financing costs, recognized during the year ended February 29, 2016 was $1,959 on the Company's cash, cash equivalents, and debt facility [2015 – expense of $1,369].

Credit risk

        In addition to trade receivables and other receivables, the Company is exposed to credit risk on its cash and cash equivalents in the event that its counterparties do not meet their obligations. The Company does not use credit derivatives or similar instruments to mitigate this risk and, as such, the maximum exposure is the full carrying value or fair value of the financial instrument. The Company minimizes credit risk on trade receivables and other receivables, and cash and cash equivalents by transacting with only reputable financial institutions and customers.

Foreign exchange risk

        Foreign exchange risk arises because of fluctuations in exchange rates. To mitigate exchange risk, the Company may utilize forward contracts to secure exchange rates with the objective of offsetting fluctuations in the Company's operating expenses incurred in foreign currencies with gains or losses on the forward contracts.

        As of February 29, 2016, if the US dollar had appreciated 1% against all foreign currencies to which the Company is exposed, with all other variables held constant, the impact of this foreign currency change on the Company's foreign denominated financial instruments would have resulted in an increase in after-tax net loss of $27 for the year ended February 29, 2016 [2015 – decrease of $42], with an equal and opposite effect if the US dollar had depreciated 1% against all foreign currencies at February 29, 2016.

F-55

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

17. FINANCIAL INSTRUMENTS (Continued)

Liquidity risk

        A risk exists that the Company will encounter difficulty in satisfying its financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. As at February 29, 2016, the Company had cash and cash equivalents totaling $4,277 [2015 – $23,692]. See Note 1 for further discussion of liquidity risk associated with the Company and Note 11 for details of the debt facility requirement.

18. SEGMENTED INFORMATION

        The Company operates in one operating segment–broadband wireless backhaul equipment.

        The following table presents total net book value of property and equipment, intangible assets and goodwill by geographic location:

	Year Ended
	February 29, 2016				February 28, 2015
	Amount		%		Amount		%
Canada		1,860		43%		2,017		12%
United States		—		0%		11,927		70%
Malaysia		1,492		34%		2,004		12%
Other		973		23%		1,095		6%
Total		4,325		100%		17,043		100%

        The Company analyzes its sales according to geographic region and targets product development and sales strategies by region. The following table presents total revenues by geographic location through direct and indirect sales and through its Original Equipment Manufacturer (OEM) partner, Nokia:

	Year Ended February 29, 2016								Year Ended February 28, 2015
	Direct & Indirect Sales		OEM Sales through Nokia		Total		% of total revenue		Direct & Indirect Sales		OEM Sales through Nokia		Total		% of total revenue
Canada		2,255		—		2,255		3%		4,358		—		4,358		3%
Europe, Middle East & Africa		6,753		31,109		37,862		44%		12,554		61,467		74,021		47%
India		13,993		3,787		17,780		21%		26,291		10,854		37,145		24%
United States		19,577		19		19,596		23%		23,451		—		23,451		15%
Rest of World		6,095		2,707		8,802		9%		6,825		11,966		18,791		11%
		48,673		37,622		86,295		100%		73,479		84,287		157,766		100%

        The Company has shown revenue by the customers' purchasing entities' geographic location, except in cases where the geographic location of the product deployment is explicitly known.

F-56

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

18. SEGMENTED INFORMATION (Continued)

        During each of the periods presented, revenue is comprised of:

	For the year ended
	February 29, 2016				February 28, 2015
	Amount		%		Amount		%
Product Sales		71,393		83%		150,432		95%
Services		14,902		17%		7,334		5%
Total Revenue		86,295		100%		157,766		100%

19. ECONOMIC DEPENDENCE

        For the year ended February 29, 2016, the Company was dependent on three key customers with respect to revenue. These customers represented approximately 44%, 15% and 11% of sales during that twelve month period [2015 – two customers represented 53% and 16%].

20. INCOME TAXES

        The components of the Company's income (loss) before income taxes, by taxing jurisdiction, were as follows:

	February 28, 2016			February 28, 2015
Canada		(22,994	)		(24,558	)
Luxembourg		(7,222	)		322
India		1,756			2,721
China		706			991
Other		(11,535	)		605
		(39,289	)		(19,919	)

        Income tax expense, both current and deferred, relates to jurisdictions outside of Canada where losses are not sufficient to cover the tax liability in the region. For the year ended February 29, 2016, the current income tax expenses was $434 [2015 – $658] and the deferred income tax expense was $1,841 [2015 – $59].

F-57

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

20. INCOME TAXES (Continued)

        The reported income tax provision differs from the amount computed by applying the Canadian statutory rate to the net income (loss), for the following reasons:

	2016			2015
Income (loss) before income taxes		(39,289	)		(19,919	)
Statutory income tax rate		26.5	%		26.5	%
Expected income tax expense		(10,412	)		(5,279	)
Change in valuation allowances		6,043			6,682
Goodwill impairment		4,420			—
Prior year adjustments		1,444			859
Foreign tax rate differences		578			(177	)
Other		165			66
Non-deductible expenses and non-taxable income		37			(105	)
Share issue costs		—			(435	)
Research and development tax credits		—			(894	)
		2,275			717

        The Company's deferred tax assets and liabilities include the following significant components:

	2016			2015
Income tax loss carryforwards		39,322			32,643
Capital Loss		19,011			19,015
Research and development tax credits		13,180			14,052
SR&ED Expenditures		6,872			7,845
Book and tax differences on assets		1,256			1,486
Share issue expenses		443			591
Income and expense reserves		236			192
Total gross deferred tax assets		80,320			75,824
Valuation allowance		(80,320	)		(74,278	)
Income and expense reserves		(294	)
Net deferred tax (liability)/asset		(294	)		1,546

        As at February 29, 2016, the Company had cumulative tax loss carryforwards in the following jurisdictions: Canada – $136,221, United States – $7,888, Luxembourg – $36,077. The Company also has capital losses being carried forward in the following jurisdictions: Canada – $16,302; United States – $45,543.

        The losses in Canada expire starting in fiscal 2031 until fiscal 2036. The losses in Luxembourg can be carried forward indefinitely. Income tax benefits relating to the losses in Canada and Luxembourg have not been recognized in the consolidated financial statements as the recognition requirements under the liability method of accounting for income taxes have not been met.

        The losses in the U.S. expire between fiscal 2022 and fiscal 2032. Internal Revenue Code Section 382 imposes an annual limitation on the use of a company's net operating loss carryforwards when a company has an ownership change. The acquisition of Axerra Networks, Inc by the Company resulted in an ownership change as

F-58

DragonWave Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Expressed in US $000's except share and per share amounts

20. INCOME TAXES (Continued)

understood by Section 382. As a result, the annual restriction of the amount of losses of Axerra Networks, Inc that may be used has been calculated as $521.

        As at February 29, 2016, the Company had $14,720 of investment tax credits available to reduce future federal Canadian income taxes payable. These investment tax credits begin to expire in 2022. In addition, the Company had provincial research and development tax credits of $2,361, which are available to reduce future provincial income taxes payable. These provincial tax credits begin to expire in 2029. The tax benefit of the federal and provincial tax credits has not been recognized in the consolidated financial statements.

        As at February 29, 2016, the Company has not recorded any liabilities associated with uncertain tax positions.

        The Company remains subject to examination by tax authorities in Canada for years 2009 to 2016 and in the other jurisdictions for tax years 2011 to 2016.

        No deferred income taxes have been provided on undistributed earnings or relating to cash held in foreign jurisdictions, as the Company has determined that any income or withholding taxes on repatriation would either not be significant, or the Company has decided to permanently reinvest the earnings in the foreign jurisdiction.

21. COMPARATIVE FIGURES

        Certain comparative figures have been reclassified to conform to the presentation adopted in the current fiscal year.

22. RESTRUCTURING COSTS

        In September 2015, the Company implemented a restructuring plan in line with its objective of reducing its net losses and cash usage. The plan included a 23% reduction of the workforce across a variety of functional areas of the business. The restructuring plan impacted staff primarily in China and Canada, and to a lesser extent other countries globally. The corresponding reduction in compensation related spending is intended to help better align the Company's costs with its revenues.

        Restructuring charges of $1,549 related to severance costs have been recognized during the year ended February 29, 2016 [2015 – nil]. As at February 29, 2016 the Company has paid $1,257 in restructuring costs and has a liability of $292 related to restructuring activities on the consolidated balance sheet [2015 – nil].

23. SUBSEQUENT EVENT

        On April 11, 2016, the Company issued 599,998 common shares in a Registered Direct Offering, and concurrently in a private placement, issued warrants to purchase 299,999 common shares exercisable in the future at an exercise price of $8.50. The price per common share and one half of a warrant was $7.25 and resulted in total gross proceeds to the Company of $4,350 million. The warrants are not exercisable for six months and one day from issuance and will expire five years from the date of issuance.

        The exercise price of the September 23, 2013 warrants was adjusted to $6.76 as a result of the Offering.

F-59

ITEM 19.    Exhibits.

1.0	Restated Articles of Incorporation of the Company (filed as Exhibit 1.0 on Form 20-F filed with the Securities and Exchange Commission on May 27, 2015)
1.1	Amendment to Restated Articles of Incorporation (filed as Exhibit 99.3 on Form 6-K filed on February 2, 2016)
1.2	Composite Form of By-Laws (as amended) of the Company (filed as Exhibit 1.1 on Form 20-F filed with the Securities and Exchange Commission on May 27, 2015)
4.1	DragonWave Inc. Employee Share Purchase Plan (filed as Exhibit 4.1 on Form S-8 filed with the Securities and Exchange Commission on February 24, 2010)
4.2	DragonWave Inc. Sixth Amended and Restated Key Employee Stock Option Plan (filed as Appendix C to Exhibit 99.1 on Form 6-K filed with the Securities and Exchange Commission on May 17, 2013)
4.3	DragonWave Inc. Share Based Compensation Plan (filed as Exhibit 4.2 on Form S-8 with the Securities and Exchange Commission on July 8, 2014)
4.4	Master Acquisition Agreement, dated as of 4 November 2011, by and between Nokia Siemens Networks B.V., DragonWave Inc. and DragonWave S.A.R.L. (filed as Exhibit 99.1 on Form 6-K filed with the Securities and Exchange Commission on November 15, 2011)
4.6	Amended and Restated Master Acquisition Agreement, dated as of May 3, 2012, by and between Nokia Siemens Networks B.V., DragonWave Inc. and DragonWave S.A.R.L. (filed as Exhibit 99.1 on Form 6-K filed with the Securities and Exchange Commission on May 11, 2012)
4.7	Revolving Credit Agreement, dated June 1, 2012 between DragonWave Inc. and Comerica Bank
4.8	Fourth Forbearance Agreement, dated October 12, 2016 between DragonWave Inc. and Comerica Bank
8.1	List of subsidiaries
12.1	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1	Management's discussion and analysis of the Company's consolidated results of operations and financial condition for the three and twelve months ended February 28, 2017
15.2	Management's discussion and analysis of the Company's consolidated results of operations and financial condition for the three and twelve months ended February 29, 2016

101.INS XBRL	Instance Document
101.SCH XBRL	Taxonomy Extension Schema Document
101.CAL XBRL	Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL	Taxonomy Extension Definition Linkbase Document
101.LAB XBRL	Taxonomy Extension Label Linkbase Document
101.PRE XBRL	Taxonomy Extension Presentation Linkbase Document

SIGNATURES

        The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

DRAGONWAVE INC.
By:	/s/ PETER ALLEN Peter Allen President and Chief Executive Officer

Date: June 8, 2017

EX-4.7

Exhibit 4.7

EXECUTION COPY

REVOLVING CREDIT AGREEMENT

Made as of June 1, 2012

Between

DragonWave Inc.

(“Borrower”)

and

COMERICA BANK

(“Administrative Agent” and “Lender”)

and

EXPORT DEVELOPMENT CANADA

(“Lender”)

TABLE OF CONTENTS

RECITALS	1
ARTICLE 1 — DEFINITIONS	1
Section 1.1 Certain Defined Terms	1
Section 1.2 Interest Act (Canada)	31
Section 1.3 Limitation on Interest	31
Section 1.4 Currency Calculations	31
Section 1.5 Accounting Terms and Determinations	31
ARTICLE 2 — REVOLVING CREDIT	32
Section 2.1 Commitment	32
Section 2.2 Commitment Increase	32
Section 2.3 Accrual of Interest and Maturity; Evidence of Indebtedness	34
Section 2.4 Requests for and Refundings and Conversions of Advances	35
Section 2.5 Disbursement of Advances	37
Section 2.6 Swing Line	38
Section 2.7 Hedging Transactions	42
Section 2.8 Interest Payments; Default Interest	43
Section 2.9 Optional Prepayments	44
Section 2.10 US Base Rate Advance in Absence of Election or Upon Default	45
Section 2.11 Canadian Prime Rate Advance in Absence of Election or Upon Default	45
Section 2.12 Revolving Credit Facility Fee	46
Section 2.13 Mandatory Repayment of Revolving Credit Advances	46
Section 2.14 Optional Reduction or Termination of Revolving Credit Aggregate Commitment	47
Section 2.15 Use of Proceeds of Advances	48
ARTICLE 3 — LETTERS OF CREDIT	48
Section 3.1 Letters of Credit	48
Section 3.2 Conditions to Issuance	49
Section 3.3 Notice	50
Section 3.4 Letter of Credit Fees	50
Section 3.5 Increased Costs	51
Section 3.6 Other Fees	52
Section 3.7 Participation Interests in and Drawings and Demands for Payment Under Letters of Credit	52
Section 3.8 Obligations Irrevocable	54
Section 3.9 Risk Under Letters of Credit	55
Section 3.10 Indemnification	56
Section 3.11 Right of Reimbursement	57
ARTICLE 4 — CONDITIONS	58
Section 4.1 Conditions of Initial Advances	58
Section 4.2 Continuing Conditions	62
ARTICLE 5 — REPRESENTATIONS AND WARRANTIES	62
Section 5.1 Corporate Existence and Authority	62
Section 5.2 Due Authorization	62
Section 5.3 Corporate Documents and Corporate Existence	63

i

Section 5.4 Good Title; Leases; Assets; No Liens	63
Section 5.5 Taxes	63
Section 5.6 No Defaults	64
Section 5.7 Enforceability of Agreement and Loan Documents	64
Section 5.8 Compliance with Laws	64
Section 5.9 Non-contravention	64
Section 5.10 Litigation	64
Section 5.11 Consents, Approvals and Filings, Etc.	65
Section 5.12 Agreements Affecting Financial Condition	65
Section 5.13 No Investment Company or Margin Stock	65
Section 5.14 ERISA; Canadian Pension Plans	65
Section 5.15 Conditions Affecting Business or Properties	66
Section 5.16 Environmental and Safety Matters	66
Section 5.17 Subsidiaries	67
Section 5.18 Material Contracts	67
Section 5.19 Intellectual Property	67
Section 5.20 Inbound Licences	67
Section 5.21 Tradenames	68
Section 5.22 Capital Structure	68
Section 5.23 Accuracy of Information	68
Section 5.24 Solvency	68
Section 5.25 Employee Matters	69
Section 5.26 No Misrepresentation	69
ARTICLE 6 — AFFIRMATIVE COVENANTS	69
Section 6.1 Financial Statements	69
Section 6.2 Certificates; Other Information	70
Section 6.3 Payment of Obligations	71
Section 6.4 Conduct of Business and Maintenance of Existence; Compliance with Laws	71
Section 6.5 Maintenance of Property; Insurance	72
Section 6.6 EDC Insurance	72
Section 6.7 Inspection of Property; Books and Records, Discussions	73
Section 6.8 Notices	73
Section 6.9 Hazardous Material Laws	74
Section 6.10 Registration of Intellectual Property Rights	74
Section 6.11 Consent of Inbound Licensors	75
Section 6.12 Financial Covenants	75
Section 6.13 Governmental and Other Approvals	76
Section 6.14 Compliance with ERISA and Canadian Pension Plans; ERISA Notices	76
Section 6.15 Defense of Collateral	77
Section 6.16 Future Subsidiaries; Additional Collateral	77
Section 6.17 Accounts	79
Section 6.18 Use of Proceeds	79
Section 6.19 Further Assurances and Information	79
ARTICLE 7 — NEGATIVE COVENANTS	79
Section 7.1 Limitation on Debt	80
Section 7.2 Limitation on Liens	80
Section 7.3 Acquisitions	81

ii

Section 7.4 Limitation on Mergers, Dissolution, Sale of Assets, etc,	81
Section 7.5 Restricted Payments	82
Section 7.6 Limitation on Capital Expenditures	82
Section 7.7 Limitation on Investments, Loans and Advances	83
Section 7.8 Transactions with Affiliates	83
Section 7.9 Sale-Leaseback Transactions	84
Section 7.10 Limitations on Other Restrictions	84
Section 7.11 Modification of Certain Agreements	84
Section 7.12 Earn-outs	84
Section 7.13 Fiscal Year	84
Section 7.14 Negative Covenants regarding Certain Subsidiaries	85
ARTICLE 8 — DEFAULTS	87
Section 8.1 Events of Default	87
Section 8.2 Exercise of Remedies	89
Section 8.3 Rights Cumulative	89
Section 8.4 Waiver by the Borrower of Certain Laws	90
Section 8.5 Waiver of Defaults	90
Section 8.6 Set Off	90
Section 8.7 Receiver	90
ARTICLE 9 — PAYMENTS, RECOVERIES AND COLLECTIONS	91
Section 9.1 Payment Procedure	91
Section 9.2 Application of Proceeds of Collateral	92
Section 9.3 Pro-rata Recovery	93
Section 9.4 Treatment of a Defaulting Lender; Reallocation of Defaulting
Lender’s Fronting Exposure	93
Section 9.5 Currency Matters	94
ARTICLE 10 — CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS	94
Section 10.1 Reimbursement of Prepayment Costs	94
Section 10.2 Circumstances Affecting LIBOR Rate, BBA LIBOR Rate or CDOR Rate Availability	95
Section 10.3 Laws Affecting LIBOR Rate, BBA LIBOR Rate or CDOR Rate Availability	95
Section 10.4 Increased Cost of Advances Carried at the LIBOR Rate, BBA LIBOR Rate or CDOR Rate	96
Section 10.5 Capital Adequacy and Other Increased Costs	96
Section 10.6 Right of Lenders to Fund through Branches and Affiliates	97
Section 10.7 Margin Adjustment	97
Section 10.8 Illegality	98
ARTICLE 11 — AGENT	99
Section 11.1 Appointment of the Agent	99
Section 11.2 Deposit Account with the Agent or any Lender	99
Section 11.3 Scope of the Agent’s Duties	99
Section 11.4 Successor Agent	100
Section 11.5 Credit Decisions	100
Section 11.6 Authority of the Agent to Enforce This Agreement	100
Section 11.7 Indemnification of the Agent	101
Section 11.8 Knowledge of Default	101

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Section 11.9 The Agent’s Authorization; Action by Lenders	102
Section 11.10 Enforcement Actions by the Agent	102
Section 11.11 Collateral Matters	102
Section 11.12 The Agents in their Individual Capacities	103
Section 11.13 The Agent’s Fees	103
Section 11.14 Documentation Agent or other Titles	103
Section 11.15 Patriot Act, AML Laws, and Customer Identification Program	104
ARTICLE 12 — MISCELLANEOUS	104
Section 12.1 Accounting Principles	104
Section 12.2 Consent to Jurisdiction	105
Section 12.3 Law of Ontario	105
Section 12.4 Interest	105
Section 12.5 Closing Costs and Other Costs; Indemnification	105
Section 12.6 Notices	107
Section 12.7 Further Action	108
Section 12.8 Successors and Assigns; Participations; Assignments	108
Section 12.9 Counterparts	111
Section 12.10 Amendment and Waiver	111
Section 12.11 Confidentiality	113
Section 12.12 Substitution or Removal of Lenders	114
Section 12.13 Withholding Taxes	115
Section 12.14 Taxes and Fees	116
Section 12.15 WAIVER OF JURY TRIAL	116
Section 12.16 Patriot Act and AML Laws Notice	117
Section 12.17 Complete Agreement; Conflicts	117
Section 12.18 Severability	117
Section 12.19 Table of Contents and Headings; Section References	117
Section 12.20 Construction of Certain Provisions	117
Section 12.21 Independence of Covenants	118
Section 12.22 Electronic Transmissions	118
Section 12.23 Advertisements	118
Section 12.24 Reliance on and Survival of Provisions	118
Section 12.25 Judgment Currency	119

iv

EXHIBITS & SCHEDULES

Exhibit A — Form of Request for Revolving Credit Advance

Exhibit B — Form of Revolving Credit Note

Exhibit C — Form of Swing Line Note

Exhibit D — Form of Request for Swing Line Advance

Exhibit E — Form of Notice of Issuance of Letters of Credit

Exhibit F — Swing Line Participation Certificate

Exhibit G — Form of Collateral Coverage Certificate

Exhibit H — Form of Assignment Agreement

Exhibit I — Form of Covenant Compliance Report

Schedule 1.1(11) — Applicable Margin Grid

Schedule 1.2 — Percentages and Allocations of Revolving Credit Commitment Amount

Schedule 1.3 — Compliance Information

Schedule 4.2 — Conditions

Schedule 5.4(2) — Real and Leased Property

Schedule 5.5 — Taxes

Schedule 5.8 — Compliance With Laws

Schedule 5.10 — Litigation

Schedule 5.11 — Consents

Schedule 5.14(1) — ERISA; Canadian Pension Plans

Schedule 5.14(2) — Benefit Plans

Schedule 5.16 — Environmental

Schedule 5.17 — Subsidiaries

Schedule 5.18 — Material Contracts

Schedule 5.19 — Intellectual Property

Schedule 5.20 — Inbound Licences

Schedule 5.21 — Tradenames

Schedule 5.22 — Capital Structure

Schedule 5.25 — Employee Matters

Schedule 7.1(3) — Limitation on Debt

Schedule 7.2(3) — Limitation on Liens

Schedule 7.7(2) — Limitation on Investments, Loans and Advances

Schedule 7.8 — Transactions with Affiliates

Schedule 12.6(1) — Notices

v

REVOLVING CREDIT AGREEMENT

This Revolving Credit Agreement (“Agreement”) is made as of the 1st day of June, 2012, by and among the financial institutions from time to time signatory hereto (individually a “Lender,” and any and all such financial institutions collectively the “Lenders”), Comerica Bank, as the Administrative Agent for the Lenders (in such capacity, the “Agent”) and DragonWave Inc., as borrower (the “Borrower”).

RECITALS

A.            The Borrower has requested that the Lenders extend to it credit and letters of credit on the terms and conditions set forth herein.

B.            The Lenders are prepared to extend such credit as aforesaid, but only on the terms and conditions set forth in this Agreement.

FOR VALUE RECEIVED, the parties agree as follows:

ARTICLE 1 — DEFINITIONS

Section 1.1 Certain Defined Terms

For the purposes of this Agreement the following terms will have the following meanings:

(1)           “Account(s)” shall mean any account or account receivable as defined under the PPSA, including without limitation, with respect to any Person, any right of such Person to payment for goods sold or leased or for services rendered.

(2)           “Account Control Agreement(s)” shall mean those certain account control agreements, or similar agreements that are delivered pursuant to Section 6.17 of this Agreement or otherwise, as the same may be amended, restated or otherwise modified from time to time.

(3)           “Account Debtor” shall mean the party who is obligated on or under any Account.

(4)           “Advance(s)” shall mean, as the context may indicate, a borrowing requested by the Borrower, and made by the Revolving Credit Lenders under Section 2.1 hereof, or the Swing Line Lender under Section 2.6 hereof, including without limitation any readvance, refunding or conversion of such borrowing pursuant to Section 2.4, or Section 2.6 hereof, and any advance deemed to have been made in respect of a Letter of Credit under Section 3.7(3) hereof, and shall include, as applicable, a US Base Rate Advance, a Eurodollar-based Advance, a Canadian Prime Rate Advance, a CDOR-based Advance and a BBA LIBOR-based Advance.

(5)           “Affected Lender” shall have the meaning set forth in Section 12.12 hereof.

(6)           “Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling (including but not limited to all directors and officers of such Person), controlled by, or under direct or indirect common control with such Person. A Person shall be deemed to control another Person for the purposes of this definition if such Person possesses, directly or

indirectly, the power (i) to vote 10% or more of the Equity Interests having ordinary voting power for the election of directors or managers of such other Person or (ii) to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise.

(7)           “Agent” shall have the meaning set forth in the preamble, and include any successor agents appointed in accordance with Section 11.4 hereof.

(8)           “AML Laws” means the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as the same may be amended from time to time, and including all regulations thereunder, and any applicable anti-money laundering, anti-terrorist financing, government sanction and “know your client” laws, in each case including any guidelines or orders thereunder, pursuant to which the Agent or any Lender may be required to obtain, verify and record information regarding the Borrower and its directors, authorized signing officers, direct or indirect shareholders or other Persons in control of the Borrower, and the transactions contemplated hereby.

(9)           “Applicable Fee Percentage” shall mean, as of any date of determination thereof, the applicable percentage used to calculate certain of the fees due and payable hereunder, determined by reference to the appropriate columns in the Pricing Matrix attached to this Agreement as Schedule 1.1(11).

(10)         “Applicable Interest Rate” shall mean (i) with respect to each Revolving Credit Advance, the Eurodollar-based Rate, the Canadian Prime Rate, the US Base Rate, the CDOR Rate or the BBA LIBOR-based Rate, and (ii) with respect to each Swing Line Advance, the US Base Rate, in each case as selected by the Borrower from time to time subject to the terms and conditions of this Agreement.

(11)         “Applicable Margin” shall mean, as of any date of determination thereof, the applicable interest rate margin, determined by reference to the appropriate columns in the Pricing Matrix attached to this Agreement as Schedule 1.1(11), such Applicable Margin to be adjusted solely as specified in Section 10.7 hereof.

(12)         “Applicable Measuring Period” shall mean the period of four consecutive fiscal quarters ending on the applicable date of determination.

(13)         “Assignment Agreement” shall mean an Assignment Agreement substantially in the form of Exhibit H hereto.

(14)         “Authorized Signer” shall mean each person who has been authorized by the Borrower to execute and deliver any requests for Advances hereunder pursuant to a written authorization delivered to the Agent and whose signature card or incumbency certificate has been received by the Agent.

(15)         “Bankruptcy Code” shall mean Title 11 of the United States Code and the rules promulgated thereunder.

(16)         “BBA LIBOR Rate” shall mean with respect to the principal amount of any BBA LIBOR-based Advance outstanding hereunder, the sum of (a) the per annum rate of interest

2

determined on the basis of the rate for deposits in euros for a period equal to the relevant Euro- Interest Period, commencing on the first day of such Euro-Interest Period, appearing on the “Reuters Screen LIBOR01 Page” as defined in the International Swap Dealer Association, Inc. definitions, as modified and amended from time to time, as of 11:00 a.m. (London time) (or soon thereafter as practical), two (2) Business Days prior to the first day of such Euro-Interest Period and, if such day is not a Business Day, then on the immediately preceding Business Day (as adjusted by the Agent after 11:00 a.m. (London time) to reflect any error in the posted rate of interest or in the posted average annual rate of interest) plus (b) 0.125% per annum. In the event that such rate does not appear on the Reuters Screen LIBOR01 Page (or otherwise on such Service), the “BBA LIBOR Rate” shall be determined by reference to such other publicly available service for displaying LIBOR rates as may be agreed upon by the Agent and the Borrower, or, in the absence of such agreement, the “BBA LIBOR Rate” shall, instead, be the per annum rate equal to the average (rounded upward, if necessary, to the nearest one-sixteenth of one percent (1/16%)) of the rate at which the Agent could borrow funds in the European interbank market at or about 11:00 a.m. (London time) (or soon thereafter as practical), two (2) Business Days prior to the first day of such Euro-Interest Period in the European interbank market in an amount comparable to the principal amount of the relevant BBA LIBOR-based Advance which is to bear interest at such BBA LIBOR-based Rate and for a period equal to the relevant Euro-Interest Period.

(17)         “BBA LIBOR-based Advance” shall mean any Advance which bears interest at the BBA LIBOR-based Rate.

(18)         “BBA LIBOR-based Rate” shall mean a per annum interest rate which is equal to the sum of the Applicable Margin, plus the BBA LIBOR Rate.

(19)         “BIA” shall mean the Bankruptcy and Insolvency Act (Canada), as now and hereafter in effect and any successors to such statute.

(20)         “Borrower” shall have the meaning set forth in the preamble to this Agreement.

(21)         “Borrower’s Agent Account” shall mean the account at the Agent in the name of the Borrower in which the Minimum Cash Balance is maintained.

(22)         “Business Day” shall mean any day other than a Saturday or a Sunday on which commercial banks are open for domestic and international business (including dealings in foreign exchange) in Toronto, Ontario or Detroit, Michigan, and in the case of a Business Day which relates to a Eurodollar-based Advance or BBA LIBOR-based Advance, on which dealings are carried on in the London interbank Eurodollar market.

(23)         “Canadian Benefit Plans” shall mean all material employee benefit plans or arrangements maintained or contributed to by the Borrower or any Canadian Subsidiaries that are not Canadian Pension Plans, including all profit sharing, savings, supplemental retirement, retiring allowance, severance, pension, deferred compensation, welfare, bonus, incentive compensation, phantom stock, legal services, supplementary unemployment benefit plans or arrangements and all life, health, dental and disability plans and arrangements in which the employees or former employees of the Borrower or any Canadian Subsidiaries participate or are eligible to participate but excluding all stock option or stock purchase plans, plans established by statute or administered by a Governmental Authority, including the Canada Pension Plan or the

3

Quebec Pension Plan, or plans administered pursuant to applicable provincial health tax, workers’ compensation and employment insurance legislation.

(24)         “Canadian Dollars” and “Cdn$” shall mean lawful money of Canada.

(25)         “Canadian Pension Event” means (a) the filing of a notice or amendment with a Governmental Authority to terminate in whole or in part a Canadian Pension Plan; (b) the institution of proceedings by any Governmental Authority to terminate in whole or in part or have a trustee appointed to administer a Canadian Pension Plan; or (c) any other event or condition which might constitute grounds for the termination of, winding up or partial termination of winding up or the appointment of trustee to administer, any Canadian Pension Plan.

(26)         “Canadian Pension Plans” means each pension plan, if any, required to be registered under Canadian federal or provincial law that is maintained or contributed to by a Credit Party or any Subsidiary of any Credit Party for its Canadian employees or former Canadian employees, but does not include a Canadian Union Plan, the Canada Pension Plan or the Quebec Pension Plan as maintained by the Government of Canada or the Province of Quebec, respectively.

(27)         “Canadian Prime Rate” shall mean for any day, that rate of interest which is equal to the Applicable Margin plus the per annum interest rate established by the Agent as its prime rate for Canadian Dollar denominated commercial loans made by the Agent in Canada to its borrowers as such rate may vary from time to time, which Canadian Prime Rate shall change simultaneously with any change in such announced rate.

(28)         “Canadian Prime Rate Advance” shall mean any Advance which bears interest at the Canadian Prime Rate.

(29)         “Canadian Subsidiary” shall mean a direct or indirect Subsidiary of the Borrower incorporated or otherwise organized under the laws of Canada, or any province or other political subdivision thereof, and “Canadian Subsidiaries” shall mean any or all of them.

(30)         “Canadian Union Plan” means any registered pension plan, if any, for the benefit of Canadian employees or former Canadian employees of a Credit Party or any of its Subsidiaries that is not maintained, sponsored or administered by a Credit Party or any of its Subsidiaries, but to which a Credit Party or any of its Subsidiaries is required to contribute pursuant to a collective agreement.

(31)         “Capital Expenditures” shall mean, for any period, with respect to any Person (without duplication), the aggregate of all expenditures incurred by such Person and its Subsidiaries during such period for the acquisition or leasing (pursuant to a Capitalized Lease) of fixed or capital assets or additions to equipment, plant and property that should be capitalized under GAAP on a consolidated balance sheet of such Person and its Subsidiaries but excluding expenditures made in connection with the reinvestment of Insurance Proceeds and condemnation awards.

(32)         “Capitalized Lease” shall mean, as applied to any Person, any lease of any property (whether real, personal or mixed) with respect to which the discounted present value of the rental

4

obligations of such Person as lessee thereunder, in conformity with GAAP, is required to be capitalized on the balance sheet of that Person.

(33)         “Cash Collateral Pledge Agreement” means the cash collateral pledge agreement made by the Borrower in favour of the Agent with respect to the Pledged Cash Amount.

(34)         “CCAA” shall mean the Companies’ Creditors Arrangement Act (Canada), as now and hereafter in effect and any successors to such statute.

(35)         “CDOR-based Advance” shall mean an Advance denominated in Canadian Dollars made by the Lenders to the Borrower that bears interest at the CDOR-based Rate.

(36)         “CDOR-based Rate” shall mean in respect of any Contract Period applicable to a CDOR Rate-based Advance, the (a) Applicable Margin plus (b) the CDOR Rate.

(37)         “CDOR Rate” shall mean the Canadian deposit offered rate which, in turn means on any day the sum of (a) the annual rate of interest determined with reference to the arithmetic average of the discount rate quotations of all institutions listed in respect of a period equal to the relevant Contract Period for Canadian Dollar-denominated bankers’ acceptances displayed and identified as such on the “Reuters Screen CDOR Page” as defined in the International Swap Dealer Association, Inc. definitions, as modified and amended from time to time, as of 10:00 a.m. (Toronto time) two (2) Business Days before the first day of such Contract Period and, if such day is not a Business Day, then on the immediately preceding Business Day (as adjusted by the Agent after 10:00 a.m. (Toronto time) to reflect any error in the posted rate of interest or in the posted average annual rate of interest) plus (b) 0.10% per annum; provided that if such rates are not available on the Reuters Screen CDOR Page on any particular day, then the Canadian deposit offered rate component of such rate on that day shall be calculated as the cost of funds quoted by the Agent to raise Canadian dollars for a period equal to the relevant Contract Period as of 10:00 a.m. (Toronto time) on two (2) Business Days before the first day of such Contract Period for commercial loans or other extensions of credit to businesses of comparable credit risk; or if such day is not a Business Day, then as quoted by the Agent on the immediately preceding Business Day. No adjustment shall be made to account for the difference between the number of days in a year on which the rates referred to in this definition are based and the number of days in a year on the basis of which interest is calculated in the Agreement.

(38)         “Change in Law” shall mean the occurrence, after the Effective Date, of any of the following: (i) the adoption or introduction of, or any change in any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect and whether or not applicable to any Lender or Agent on such date, or (ii) any change in interpretation, administration or implementation of any such law, treaty, rule or regulation by any Governmental Authority, or (iii) the issuance, making or implementation by any Governmental Authority of any interpretation, administration, request, regulation, guideline, or directive (whether or not having the force of law), including any risk-based capital guidelines. For purposes of this definition, (x) a change in law, treaty, rule, regulation, interpretation, administration or implementation shall include, without limitation, any change made or which becomes effective on the basis of a law, treaty, rule, regulation, interpretation administration or implementation then in force, the effective date of which change is delayed by the terms of such law, treaty, rule, regulation, interpretation, administration or implementation, (y) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173) and all requests, rules, regulations,

5

guidelines, interpretations or directives promulgated thereunder or issued in connec tion therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or promulgated, whether before or after the Effective Date and (z) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or any Canadian or United States regulatory authorities, in each case pursuant to Basel III, shall each be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.

(39)         “Change of Control” shall mean an event or series of events whereby any Person or Persons “acting or in concert” (within the meaning of the Securities Act (Ontario)) shall either (x) acquire beneficial ownership of more than 30% of the outstanding shares of Borrower having ordinary voting power in the election of directors of Borrower or (y) obtain the power (whether or not exercised) to elect a majority of Borrower’s directors.

(40)         “Collateral” shall mean all property or rights in which a security interest, mortgage, lien, hypothec or other encumbrance for the benefit of the Lenders is or has been granted or arises or has arisen, under or in connection with this Agreement, the other Loan Documents, or otherwise to secure the Indebtedness.

(41)         “Collateral Access Agreement” shall mean an agreement in form and substance satisfactory to the Agent in its reasonable discretion, pursuant to which a mortgagee or lessor of real property on which Collateral is stored or otherwise located, or a warehouseman, processor or other bailee of inventory or other property owned by any Credit Party, that acknowledges the Liens under the Collateral Documents and subordinates or waives any Liens held by such Person on such property and, includes such other agreements with respect to the Collateral as the Agent may require in its reasonable discretion, as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time.

(42)         “Collateral Coverage Certificate” shall mean a collateral coverage certificate, in substantially the form of Exhibit G attached hereto, executed by a Responsible Officer of the Borrower.

(43)         “Collateral Coverage Obligors” shall mean the Borrower, DW Corp. and DW Luxembourg, and “Collateral Coverage Obligor” shall mean any of them, as the context shall indicate.

(44)         “Collateral Coverage Amount” shall mean, as of any date of determination thereof for any period, an amount equal to the sum of (i) unrestricted cash pledged by the Borrower in favour of the Agent pursuant to the Cash Collateral Pledge Agreement, plus (ii) eighty percent (80%) of Eligible Accounts that are not Eligible Insured Accounts, plus (iii) ninety percent (90%) of Eligible Insured Accounts; provided that (x) the Collateral Coverage Amount shall be determined on the basis of the most current Collateral Coverage Certificate required or permitted to be submitted hereunder, and (y) the amount determined as the Collateral Coverage Amount shall be subject to, without duplication, any reserves for contras/offsets, drop ship receivables, potential offsets due to customer deposits, discount arrangements, chargebacks, disputed accounts (or potential chargebacks or disputed accounts), and such other reserves as reasonably established by the Agent, at the direction or with the concurrence of the Majority Revolving Lenders from time to time, including, without limitation any reserves or other adjustments established by the Agent or the Majority Lenders on the basis of any subsequent collateral audits

6

conducted hereunder, all in accordance with ordinary and customary asset-based lending standards, as reasonably determined by the Agent and the Majority Lenders.

(45)         “Collateral Coverage Ratio” shall mean, as of any date of determination thereof for any period, the Collateral Coverage Amount divided by total Indebtedness of the Borrower owed to the Lenders.

(46)         “Collateral Documents” shall mean the Security Agreements, the Pledge Agreements, the Account Control Agreements, the Collateral Access Agreements, and all other security documents (and any joinders thereto) executed by any Credit Party in favour of the Agent on or after the Effective Date, in connection with any of the foregoing collateral documents, in each case, as such collateral documents may be amended, restated, supplemented, replaced or otherwise modified from time to time.

(47)         “Comerica Bank” shall mean Comerica Bank, a Texas banking association, and an authorized foreign bank under the Bank Act (Canada), and its successors or assigns.

(48)         “Commitments” shall mean Revolving Credit Aggregate Commitment.

(49)         “Commitment Increase” shall mean an increase in the Commitments in accordance with Section 2.2(1).

(50)         “Consolidated” (or “consolidated”) shall mean, when used with reference to any financial term in this Agreement, the aggregate for two or more Persons of the amounts signified by such term for all such Persons determined on a consolidated basis in accordance with GAAP, applied on a consistent basis. Unless otherwise specified herein, “Consolidated” shall refer to the Borrower and its Subsidiaries, determined on a Consolidated basis.

(51)         “Consolidated EBITDA” shall mean for any period, Consolidated Net Income for such period plus (without duplication and only to the extent reflected as a charge or reduction in the statement of such Consolidated Net Income for such period and not excluded from Consolidated Net Income pursuant to the definition thereof), (a) Income Tax expense, as reflected on the books of the Borrower and its Subsidiaries for such period, (b) Consolidated Interest Expense, plus payable in kind interest accrued during such period, (c) depreciation and amortization expense, (d) losses arising from the sale or write-down of capital assets or the write-down of goodwill, (e) non-cash losses, expenses and other charges, other than non-cash losses, expenses or other charges resulting from write-downs or write-offs of Accounts or Inventory, (f) non-cash extraordinary losses, (g) unrealized losses related to Hedging Agreements, (h) other losses to the extent such losses are reflected as such in Consolidated Net Income for such period and which are reimbursed by an insurer or indemnitor or other third party, (i) non-cash compensation to employees (in each case to the extent deducted in determining Consolidated Net Income), (j) all bonuses and severance amounts paid during such period in an aggregate amount not to exceed $4,000,000 and (k) Transition Costs in an aggregate amount not to exceed $12,000,000; and minus, to the extent included in Consolidated Net Income, (w) unrealized gains related to Hedging Agreements, (x) gains arising from the sale or write-down of capital assets or the write- down of goodwill, (y) gains arising from the write-up of assets and (z) any extraordinary gains (as determined in accordance with GAAP) realized other than in the ordinary course of business; provided, however, that there shall be deducted from Consolidated EBITDA, in the fiscal period when paid, the amount of all cash items not otherwise deducted in determining Consolidated Net

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Income (or loss) to the extent that such items were previously added back to EBITDA as non- cash items on a prior measurement date.

(52)         “Consolidated Interest Expense” shall mean for any period the total cash interest expense of the Borrower and its Subsidiaries paid (or required to be paid) in cash during such period, net of cash interest income received during such period, on a Consolidated basis, determined in accordance with GAAP.

(53)         “Consolidated Net Income” shall mean for any period, the consolidated net income (or loss) of the Borrower and its Subsidiaries (including for certainty DragonWave Pte Ltd.’s 50.1% interest in the DragonWave HFCL India Private Ltd.), determined on a Consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary or is amalgamated with, merged into or consolidated with the Borrower or any Subsidiary, and (b) except in respect of DragonWave HFCL India Private Ltd., the income (or deficit) of any Person in which any Person has a joint interest, except to the extent that any such income is actually received by the Borrower or any of its Subsidiaries from such Person in the form of dividends or similar distributions.

(54)         “Contract Period” shall mean, a period of one, two or three months (or any shorter or longer periods agreed to in advance by the Borrower, the Agent and the Revolving Credit Lenders), as selected by the Borrower in accordance with Section 2.4 hereof, commencing on the date of a CDOR-based Advance, or refunding of or conversion to a CDOR-based Advance, and expiring on a Business Day; provided that any Contract Period that would otherwise extend beyond the Revolving Credit Maturity Date shall end on the Business Day immediately preceding such Revolving Credit Maturity Date.

(55)         “Contractual Obligation” shall mean, as to any Person, any provision of any security issued by such Person or of any material agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

(56)         “Covenant Compliance Report” shall mean the report to be furnished by the Borrower to the Agent pursuant to Exhibit I hereof, substantially in the form attached hereto as Exhibit I and certified by a Responsible Officer of the Borrower, in which report the Borrower shall set forth the information specified therein and which shall include a statement of then applicable level for the Applicable Margin and Applicable Fee Percentages as specified in Schedule 1.1(11) attached to this Agreement.

(57)         “CRA” means the Canada Revenue Agency.

(58)         “Credit Parties” shall mean the Borrower and the Guarantors, and “Credit Party” shall mean any one of them, as the context indicates or otherwise requires.

(59)         “Daily Adjusting LIBOR Rate” shall mean for any day a per annum interest rate which is equal to the quotient of the following:

(a)the LIBOR Rate;

divided by

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(b)a percentage (expressed as a decimal) equal to 1.00 minus the maximum rate on such date at which Agent is required to maintain reserves on “Euro-currency Liabilities” as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation or definition is modified, and as long as Agent is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes Eurodollar loans, the rate at which such reserves are required to be maintained on such category;

such sum to be rounded upward, if necessary, in the discretion of the Agent, to the seventh decimal place.

(60)         “Debt” shall mean as to any Person, without duplication (a) all Funded Debt of a Person, (b) all Guarantee Obligations of such Person, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (d) all indebtedness of such Person arising in connection with any Hedging Transaction entered into by such Person, (e) all recourse Debt of any partnership of which such Person is the general partner, and (f) any Off Balance Sheet Liabilities.

(61)         “Debtor Relief Laws” means the Bankruptcy Code, Insolvency Laws and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States, Canada or other applicable jurisdictions from time to time in effect.

(62)         “Default” shall mean any event that with the giving of notice or the passage of time, or both, would constitute an Event of Default under this Agreement.

(63)         “Defaulting Lender” shall mean a Lender that, as determined by the Agent (with notice to the Borrower of such determination), (a) has failed to perform any of its funding obligations hereunder, including, without limitation, in respect of its Percentage of any Advances or participations in Letters of Credit or Swing Line Advances, within one Business Day of the date required to be funded by it hereunder, (b) has notified the Borrower, the Agent or any Lender that it does not intend to comply with its funding obligations or has made a public statement to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit, (c) has failed, within one Business Day after request by the Agent, to confirm in a manner satisfactory to the Agent that it will comply with its funding obligations, or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, interim receiver, receiver manager, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Canada Deposit Insurance Corporation, the Federal Deposit Insurance Corporation or any other state, provincial, territorial, federal or other governmental or regulatory authority acting in such a capacity in Canada or the United States; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority unless deemed so by the Agent in its sole discretion.

(64)         “Deficiency Amount” shall have the meaning set forth in Section 6.12(4).

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(65)         “Distributions” is defined in Section 7.5 hereof.

(66)         “Dollar Amount” shall mean (a) with respect to Dollars or an amount denominated in Dollars, such amount, and (b) with respect to an amount of Canadian Dollars or EUR or an amount denominated in Canadian Dollars or EUR, the amount of Dollars that may be purchased with such amount of Canadian Dollars or EUR, respectively, in the interbank foreign exchange market, at the most favourable spot rate of exchange (including all related costs of conversion) applicable to the relevant transaction determined by the Agent to be available to it at or about 11:00 a.m. Toronto time or London time, respectively, (i) on the date on which such calculation is required to be made hereunder or (ii) with respect to any Advance, on which it would be necessary to fund the applicable Advance on the applicable date contemplated in this Agreement.

(67)         “Dollars”, “US$” and the sign “$” shall mean lawful money of the United States of America.

(68)         “DW Corp.” shall mean DragonWave Corp., a corporation formed under the laws of Delaware.

(69)         “DW Italy” shall mean DragonWave S.r.l., a società a responsabilità limitata formed under the laws of Italy, with a registered office in Via Gabrio Casati 1, Milan, Italy, registered with the Companies Register of Milan under fiscal code no. 07614570963.

(70)         “DW Luxembourg” shall mean DragonWave S.A.R.L., a société à responsabilité limitée formed under the laws of the Grand Duchy of Luxembourg, with a registered office at 9B, boulevard Prince Henri, L-1724 Luxembourg, registered with the Luxembourg Trade and Companies Register under number B 164312.

(71)         “EDC” shall mean Export Development Canada.

(72)         “Effective Date” shall mean the date on which all the conditions precedent set forth in Sections 4.1 and 4.2 have been satisfied.

(73)         “Electronic Transmission” shall mean each document, instruction, authorization, file, information and any other communication transmitted, posted or otherwise made or communicated by e-mail or E-Fax, or otherwise to or from an E-System or other equivalent service.

(74)         “Eligible Accounts” shall mean an Account as to which the following is true and accurate as of the date that such Account is included in the applicable Collateral Coverage Certificate:

(a)such Account arose in the ordinary course of the business of a Collateral Coverage Obligor out of either (i) a bona fide sale of Inventory and intangibles by such Collateral Coverage Obligor, and in such case such Inventory has in fact been shipped to the applicable Account Debtor or the Inventory has otherwise been accepted by the applicable Account Debtor, or (ii) services performed by such Collateral Coverage Obligor under an enforceable contract (written or oral), and in such case such services have in fact been performed for the applicable Account Debtor and accepted by such Account Debtor;

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(b)such Account represents a legally valid and enforceable claim which is due and owing to a Collateral Coverage Obligor by the applicable Account Debtor and for such amount as is represented by the Borrower to the Agent in the applicable Collateral Coverage Certificate;

(c)it is evidenced by an invoice dated not later than three (3) Business Days after the date of the delivery or shipment of the related Inventory giving rise to such Account and not more than ninety (90) days have passed since the invoice corresponding to such Account was issued;

(d)the unpaid balance of such Account (or portion thereof) that is included in the applicable Collateral Coverage Certificate is not subject to any defense or counterclaim that has been asserted by the applicable Account Debtor, or any setoff, contra account, credit, allowance or adjustment by the Account Debtor because of returned, inferior or damaged Inventory or services, or for any other reason, except for customary discounts allowed by the applicable Collateral Coverage Obligor in the ordinary course of business for prompt payment, and, to the extent there is any agreement between the applicable Collateral Coverage Obligor, the related Account Debtor and any other Person, for any rebate, discount, concession or release of liability in respect of such Account, in whole or in part, the amount of such rebate, discount, concession or release of liability shall be excluded from the Borrowing Base;

(e)the applicable Collateral Coverage Obligor has granted to the Agent pursuant to or in accordance with the Collateral Documents (except to the extent not required to do so thereunder) a first priority perfected security interest in such Account and such Account has not been sold, transferred or otherwise assigned or encumbered by such Collateral Coverage Obligor, as applicable, to or in favour of any Person other than pursuant to or in accordance with the Collateral Documents or this Agreement;

(f)it is not owing by any Account Debtor who, as of the date of determination, has failed to pay twenty-five percent (25%) or more of the aggregate amount of its Accounts owing to any Collateral Coverage Obligor within ninety (90) days since the original invoice date corresponding to such Accounts;

(g)it is not an Account owing by any Account Debtor which alone would exceed twenty-five percent (25%) of the Collateral Coverage Obligors’ aggregate Eligible Accounts owing from all Account Debtors unless otherwise approved in writing by the Agent (provided that only the amount of such Account exceeding the 25% threshold would be excluded as an Eligible Account);

(h)such Account is not represented by any note, trade acceptance, draft or other negotiable instrument or by any chattel paper, except to the extent any such note, trade acceptance, draft, other negotiable instrument or chattel paper has been endorsed and delivered by any Collateral Coverage Obligor pursuant to or in accordance with the Collateral Documents or this Agreement and/or otherwise in a manner satisfactory to the Agent on or prior to such Account’s inclusion in any applicable Collateral Coverage Certificate;

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(i)the Collateral Coverage Obligors have not received, with respect to such Account, any notice of the dissolution, liquidation, termination of existence, insolvency, business failure, appointment of a receiver, interim receiver or receiver manager for any part of the property of, assignment for the benefit of creditors by, or the filing of a petition in bankruptcy or the commencement of any proceeding under any bankruptcy or insolvency laws by or against, such Account Debtor;

(j)it is not an account billed in advance, payable on delivery, for consigned goods, for guaranteed sales, for unbilled sales, payable at a future date, bonded or insured by a surety company or subject to a retainage or holdback by the Account Debtor;

(k)the Account Debtor on such Account is not:

(i)an Affiliate of any Credit Party;

(ii)the United States of America or Canada or any department, agency, or instrumentality thereof (unless the applicable Collateral Coverage Obligor has assigned its right to payment of such Account to the Agent in a manner satisfactory to the Agent so as to comply with the provisions of the Federal Assignment of Claims Act or the Financial Administration Act (Canada));

(iii)a citizen or resident of any jurisdiction other than one of the United States or Canada; or

(iv)an Account Debtor whose Accounts the Agent, acting in its reasonable credit judgment, has deemed not to constitute Eligible Accounts because the collectability of such Accounts is or is reasonably expected to be impaired; and

(l)such Account satisfies any other eligibility criteria established from time to time by the Agent in its sole discretion or at the direction of the Majority Lenders.

Any Account, which is at any time an Eligible Account but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be an Eligible Account.

(75)         “Eligible Assignee” shall mean (a) a Lender; (b) an Affiliate of a Lender; (c) any Person (other than a natural person) that is or will be engaged in the business of making, purchasing, holding or otherwise investing in commercial loans or similar extensions of credit in the ordinary course of its business, provided that such Person is administered or managed by a Lender, an Affiliate of a Lender or an entity or Affiliate of an entity that administers or manages a Lender; or (d) any other Person (other than a natural person) approved by the (i) the Agent (and in the case of an assignment of a commitment under the Revolving Credit, the Issuing Lender and Swing Line Lender), and (ii) unless a Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that (x) notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower, or any of the Borrower’s Affiliates or Subsidiaries; and (y) no assignment shall be made to a Defaulting Lender (or any Person who would be a Defaulting Lender if such Person was a Lender

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hereunder) without the consent of the Agent, and in the case of an assignment of a commitment under the Revolving Credit, the Issuing Lender and the Swing Line Lender.

(76)         “Eligible Insured Accounts” shall mean, without duplication, any Eligible Account that meets the criteria for an Eligible Account (other than the criterion set forth in subsection (k)(iii) of the definition of Eligible Account) of the applicable Collateral Coverage Obligor that is the subject of accounts receivables insurance provided by EDC, provided that (i) the insurance policies relating to such Eligible Accounts are in form and substance acceptable to the Agent, and (ii) the proceeds of any insurance policy relating to such Eligible Accounts are assigned to the Agent; further provided that (x) notwithstanding subsection (c) of the definition of “Eligible Accounts”, an Eligible Insured Account shall include an Account that it is evidenced by an invoice dated not more than one hundred and eighty (180) days have passed since the invoice was issued, (y) notwithstanding subsection (f) of the definition of “Eligible Accounts”, an Eligible Insured Account shall include an Account that remains unpaid until one hundred and eighty (180) days after the date that the original invoice corresponding to such Account was issued, and (z) notwithstanding subsection (g) of the definition of “Eligible Accounts”, an Eligible Insured Account shall include Accounts from NSN that comprise an amount equal up to eighty percent (80%) of the Collateral Coverage Obligors’ aggregate Eligible Accounts owing from all Account Debtors.

(77)         “Equity” shall mean, for any period, the amount which would, in accordance with GAAP, be classified on the consolidated balance sheet of a Person at such time as shareholders’ equity of such Person.

(78)         “Equity Interest” shall mean (i) in the case of any corporation, all capital stock and any securities exchangeable for or convertible into capital stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, quotas, rights or other equivalents of corporate stock (however designated) in or to such association or entity, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distribution of assets of, the issuing Person, and including, in all of the foregoing cases described in clauses (i), (ii), (iii) or (iv), any warrants, rights or other options to purchase or otherwise acquire any of the interests described in any of the foregoing cases.

(79)         “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, or any successor act or code and the regulations in effect from time to time thereunder.

(80)         “E-System” shall mean any electronic system and any other Internet or extranet-based site, whether such electronic system is owned, operated, hosted or utilized by the Agent, any of its Affiliates or any other Person, providing for access to data protected by passcodes or other security system.

(81)         “EUR”, “euro” and “€” means the single currency of any member state of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.

(82)         “Euro-Interest Period” shall mean, for any Eurodollar-based Advance or BBA LIBOR- based Advance, an Interest Period of one, two or three months (or any shorter or longer periods

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agreed to in advance by the Borrower, the Agent and the Lenders) as selected by the Borrower, for such Eurodollar-based Advance or BBA LIBOR-based Advance pursuant to Section 2.4 hereof, as the case may be.

(83)         “Eurodollar-based Advance” shall mean any Advance which bears interest at the Eurodollar-based Rate.

(84)         “Eurodollar-based Rate” shall mean a per annum interest rate which is equal to the sum of the Applicable Margin, plus the greater of (a) the LIBOR Floor and (b) the quotient of:

(i)the LIBOR Rate, divided by

(ii)a percentage equal to 100% minus the maximum rate on such date at which the Agent is required to maintain reserves on ‘Eurocurrency Liabilities’ as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation or definition is modified, and as long as the Agent is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category,

such sum to be rounded upward, if necessary, in the discretion of the Agent, to the seventh decimal place.

(85)         “Event of Default” shall mean each of the Events of Default specified in Section 8.1 hereof.

(86)         “Existing Letter of Credit” shall mean letter of credit no 657145-01 issued by Comerica Bank in favour of Commercial International Bank (Egypt) SAE at the request of the Borrower in the amount of US$100,000 with a maturity date of October 5, 2012.

(87)         “Federal Funds Effective Rate” shall mean, for any day, a fluctuating interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent, all as conclusively determined by the Agent, such sum to be rounded upward, if necessary, in the discretion of the Agent, to the nearest whole multiple of 1/100th of 1%.

(88)         “Fee Letter” shall mean the fee letter by and between the Borrower and Comerica Bank dated as of October 21, 2011 relating to the Indebtedness hereunder, as amended, restated, supplemented, replaced or otherwise modified from time to time.

(89)         “Fees” shall mean the Revolving Credit Facility Fee, the Letter of Credit Fees and the other fees and charges (including any agency fees and upfront fees) payable by the Borrower to the Lenders, the Issuing Lender or the Agent hereunder or under the Fee Letter or any other letter regarding fees between the Borrower and the Agent and/or a Lender.

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(90)         “Fiscal Year” shall mean the twelve-month period ending on the last day of February.

(91)         “Fronting Exposure” shall mean, at any time there is an Defaulting Lender, (a) with respect to the Issuing Lender, such Defaulting Lender’s Percentage of the outstanding Letter of Credit Obligations with respect to Letters of Credit issued by such Issuing Lender, and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Percentage of outstanding Swing Line Advances made by the Swing Line Lender.

(92)         “Funded Debt” of any Person shall mean, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services as of such date (other than operating leases and trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices) or which is evidenced by a note, bond, debenture or similar instrument, (b) the principal component of all obligations of such Person under Capitalized Leases, (c) all reimbursement obligations (actual, contingent or otherwise) of such Person in respect of letters of credit, bankers acceptances or similar obligations issued or created for the account of such Person, (d) all liabilities of the type described in (a), (b) and (c) above that are secured by any Liens on any property owned by such Person as of such date even though such Person has not assumed or otherwise become liable for the payment thereof, the amount of which is determined in accordance with GAAP; provided however that so long as such Person is not personally liable for any such liability, the amount of such liability shall be deemed to be the lesser of the fair market value at such date of the property subject to the Lien securing such liability and the amount of the liability secured, and (e) all Guarantee Obligations in respect of any liability which constitutes Funded Debt; provided, however that Funded Debt shall not include any indebtedness under any Hedging Transaction prior to the occurrence of a termination event with respect thereto.

(93)         “GAAP” shall mean, as of any applicable date of determination, generally accepted accounting principles in the United States of America, as applicable on such date, consistently applied.

(94)         “Governmental Authority” shall mean the government of the United States or Canada or any other nation, or of any political subdivision thereof, whether state, provincial, territorial, municipal or local, and any agency, authority, instrumentality, regulatory body, court, tribunal, arbitrator, commission, central bank or other entity exercising executive, legislative, judicial, quasi-judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including without limitation any supranational bodies such as the European Union or the European Central Bank).

(95)         “Governmental Obligations” shall mean direct general obligations of the United States of America or Canada or any agency or instrumentality thereof or obligations the payment of principal of and interest on which is unconditionally guaranteed by the United States of America or Canada or any agency or instrumentality thereof.

(96)         “Grantor Licences” means all agreements pursuant to which the Credit Parties have granted rights or an option to acquire rights to use any Intellectual Property.

(97)         “Guarantee Obligation” shall mean as to any Person (the “guaranteeing person”) any obligation of the guaranteeing Person in respect of any obligation of another Person (the “primary obligor”) (including, without limitation, any bank under any letter of credit), the

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creation of which was induced by a reimbursement agreement, guaranty agreement, keepwell agreement, purchase agreement, counterindemnity or similar obligation issued by the guaranteeing person, in either case guaranteeing or in effect guaranteeing any Debt, leases, dividends or other obligations (the “primary obligations”) of the primary obligor in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the applicable Person in good faith.

(98)         “Guarantor(s)” shall mean each Subsidiary of the Borrower which has executed and delivered to the Agent a Guarantee (or a joinder to a Guarantee), and as of the Effective Date, the Guarantors are DW Corp. and DW Luxembourg.

(99)         “Guarantee” shall mean, collectively, the guarantee agreements executed and delivered by the applicable Guarantors on the Effective Date pursuant to Section 4.1 hereof and those guarantee agreements executed and delivered from time to time after the Effective Date (whether by execution of joinder agreements or otherwise) pursuant to Section 6.16 hereof or otherwise, as amended, restated, supplemented or otherwise modified from time to time.

(100)      “Hazardous Material” shall mean any hazardous or toxic waste, substance or material defined or regulated as such in or for purposes of the Hazardous Material Laws.

(101)      “Hazardous Material Law(s)” shall mean all laws, codes, ordinances, rules, regulations and other governmental restrictions and requirements issued by any Governmental Authority or quasi-governmental authority or body pertaining to any substance or material which is regulated for reasons of health, safety or the environment and which is present or alleged to be present on or about or used in any facilities owned, leased or operated by any Credit Party, or any portion thereof including, without limitation, those relating to soil, surface, subsurface ground water conditions and the condition of the indoor and outdoor ambient air; any so-called “superfund” or “superlien” law; and any other United States or Canadian federal, provincial, territorial, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning, any Hazardous Material, as now or at any time during the term of the Agreement in effect.

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(102)      “Hedging Agreement” shall mean any agreement relating to a Hedging Transaction entered into between the Borrower and any Lender or an Affiliate of a Lender.

(103)      “Hedging Obligations” shall mean the mark to market amount determined by multiplying (i) the aggregate amount, in Dollars, of Hedging Agreements remaining outstanding as of any date of determination, by (ii) the applicable Foreign Exchange Reserve Percentage as of such date, which “Foreign Exchange Reserve Percentage” shall be a percentage as determined by the Agent, in its sole discretion from time to time.

(104)      “Hedging Participation” shall have the meaning set out in Section 2.7(3).

(105)      “Hedging Transaction” means each foreign exchange transaction and foreign exchange forward rate transaction (including any option with respect to any of these transactions and any combination of any of the foregoing).

(106)      “Hedging Transaction Notional Amount” shall mean the notional amount of up to Fifty Million Dollars (US$50,000,000).

(107)      “Hereof”, “hereto”, “hereunder” and similar terms shall refer to this Agreement and not to any particular paragraph or provision of this Agreement.

(108)      “Income Taxes” shall mean for any period the aggregate amount of taxes based on income or profits for such period with respect to the operations of the Borrower and its respective Subsidiaries (including, without limitation, all corporate franchise, capital stock, net worth and value-added taxes assessed by federal, provincial, territorial, state and local governments) determined in accordance with GAAP on a Consolidated basis (to the extent such income and profits were included in computing Consolidated Net Income).

(109)      “Indebtedness” shall mean all indebtedness and liabilities (including without limitation principal, interest (including without limitation interest accruing at the then applicable rate provided in this Agreement or any other applicable Loan Document after an applicable maturity date and interest accruing at the then applicable rate provided in this Agreement or any other applicable Loan Document after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Credit Parties whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), fees, expenses and other charges) arising under this Agreement or any of the other Loan Documents, whether direct or indirect, absolute or contingent, of any Credit Party to any of the Lenders or Affiliates thereof, or to the Agent, in any manner and at any time, whether arising under this Agreement, the Guarantee or any of the other Loan Documents (including without limitation, payment obligations under Hedging Transactions evidenced by Hedging Agreements), due or hereafter to become due, now owing or that may hereafter be incurred by any other Credit Party to any of the Lenders or Affiliates thereof, or to the Agent, and which shall be deemed to include protective advances made by the Agent with respect to the Collateral under or pursuant to the terms of any Loan Document and any liabilities of any Credit Party to the Agent or any Lender arising in connection with any Lender Products, in each case whether or not reduced to judgment, with interest according to the rates and terms specified, and any and all consolidations, amendments, renewals, replacements, substitutions or extensions of any of the foregoing; provided, however that for purposes of calculating the Indebtedness outstanding under this Agreement or any of the

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other Loan Documents, the direct and indirect and absolute and contingent obligations of the Credit Parties (whether direct or contingent) shall be determined without duplication.

(110)      “Insolvency Event” means, with respect to any Person, (a) the commencement of a voluntary case by such Person seeking relief under the Bankruptcy Code or any Insolvency Laws or the seeking of relief by such Person under any bankruptcy or insolvency or analogous law in any jurisdiction outside of the United States or Canada; (b) the commencement of an involuntary case or proceeding against such Person under the Bankruptcy Code, any Insolvency Laws or any bankruptcy or insolvency or analogous law in any jurisdiction outside of the United States or Canada and the petition is not dismissed within 60 days after commencement of the case or proceeding or any order of relief or other order approving any such case or proceeding is entered; (c) such Person applies for or consents to the appointment of a receiver, interim receiver, receiver and manager, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any substantial part of its property; (d) such Person commences (including by way of applying for or consenting to the appointment of, or the taking of possession by, a rehabilitator, receiver, interim receiver, receiver and manager, custodian, trustee, conservator or liquidator (collectively, a “conservator”) of such Person or all or any substantial portion of its property) any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency, liquidation, rehabilitation, conservatorship, compromise or similar law of any jurisdiction whether now or hereafter in effect relating to such Person; (e) any such proceeding of the type set forth in clause (d) above is commenced against such Person to the extent such proceeding is consented to by such Person or remains undismissed for a period of 60 days; (f) such Person is adjudicated by a court of competent jurisdiction to be insolvent or bankrupt; (g) such Person suffers any appointment of any receiver, interim receiver, receiver and manager, trustee, custodian, conservator, liquidator, rehabilitator or similar officer or the like for it or any substantial part of its property that continues undischarged or unstayed for a period of 60 days; (h) such Person makes a general assignment for the benefit of creditors or generally does not pay or admits in writing its inability to pay its debts as such debts become due; or (i) any corporate (or similar organizational) action is taken by such Person under any applicable corporate or other organizational law to initiate any of the foregoing.

(111)      “Insolvency Laws” shall mean each of the BIA, the CCAA and the Winding-Up and Restructuring Act (Canada), each as now and hereafter in effect, any successors to such statutes and any other applicable insolvency or other similar law of any jurisdiction, including any law of any jurisdiction permitting a debtor to obtain a stay or a compromise of the claims of its creditors against it.

(112)      “Insurance Proceeds” shall mean the cash proceeds received by any Credit Party from any insurer in respect of any damage or destruction of any property or asset net of reasonable fees and expenses (including without limitation reasonable attorneys fees and expenses) incurred solely in connection with the recovery thereof.

(113)      “Intellectual Property” shall mean all copyrights, patents, industrial designs, trademarks, trade secrets, tradenames, know-how, environmental technology, biotechnology, confidential information, trade-names, goodwill, copyrights, integrated circuit topographies, software and any and all other forms of intellectual and industrial property now owned or licensed or hereafter owned, acquired or licensed by the Credit Parties, including trade secrets, software, source code, object code and any and all software documentation, whether owned or

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licensed, and all benefits, options and rights to use any of the foregoing, including all User Licences, securities, instruments and, when the context permits, all registrations and applications that have been made or shall be made or filed in any office in any jurisdiction in respect of the foregoing, and all reissues, extensions and renewals thereof.

(114)      “Intercompany Note” shall mean any promissory note issued or to be issued by any Credit Party to evidence an intercompany loan in form and substance satisfactory to the Agent.

(115)      “Interest Period” shall mean (a) with respect to a Eurodollar-based Advance, a Euro- Interest Period, commencing on the day a Eurodollar-based Advance is made, or on the effective date of an election of the Eurodollar-based Rate made under Section 2.4 hereof, and (b) with respect to a BBA LIBOR-based Advance, a Euro-Interest Period, commencing on the day a BBA LIBOR-based Advance is made, or on the effective date of an election of the BBA LIBOR-based Rate made under Section 2.4 hereof; and (c) with respect to a CDOR-based Advance, a Contract Period, commencing on the day a CDOR-based Advance is made, or on the effective date of an election of the CDOR-based Rate made under Section 2.4 hereof; provided, however that (i) any Interest Period which would otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day, except that as to an Interest Period in respect of a Eurodollar- based Advance or BBA LIBOR-based Advance, if the next succeeding Business Day falls in another calendar month, such Interest Period shall end on the next preceding Business Day, (ii) when an Interest Period in respect of a Eurodollar-based Advance or BBA LIBOR-based Advance begins on a day which has no numerically corresponding day in the calendar month during which such Interest Period is to end, it shall end on the last Business Day of such calendar month, and (iii) no Interest Period in respect of any Advance shall extend beyond the Revolving Credit Maturity Date.

(116)      “Internal Revenue Code” shall mean the Internal Revenue Code of 1986 of the United States of America, as amended from time to time, and the regulations promulgated thereunder.

(117)      “Inventory” shall mean any inventory as defined under the PPSA.

(118)      “Investment” shall mean, when used with respect to any Person, (a) any loan, investment or advance made by such Person to any other Person (including, without limitation, any Guarantee Obligation) in respect of any Equity Interest, Debt, obligation or liability of such other Person and (b) any other investment made by such Person (however acquired) in Equity Interests in any other Person, including, without limitation, any investment made in exchange for the issuance of Equity Interest of such Person and any investment made as a capital contribution to such other Person.

(119)      “Issuing Lender” shall mean Comerica Bank in its capacity as issuer of one or more Letters of Credit hereunder, or its successor designated by the Borrower and the Revolving Credit Lenders.

(120)      “Issuing Office” shall mean such office as Issuing Lender shall designate as its Issuing Office.

(121)      “ITA” shall mean the Income Tax Act (Canada), as amended, and any successor thereto and any regulations promulgated thereunder.

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(122)      “LC Hedging Aggregate Obligations” shall mean the Letter of Credit Obligations and the Hedging Obligations.”

(123)      “LC Hedging Aggregate Sublimit” shall mean Five Million Dollars (US$5,000,000), subject to reduction or termination under Section 2.13, Section 2.14 or Section 8.2 hereof.

(124)      “Lender Products” shall mean any one or more of the following types of services or facilities extended to the Credit Parties by any Lender: (i) credit cards, (ii) credit card processing services, (iii) debit cards, (iv) purchase cards, (v) Automated Clearing House (ACH) transactions, (vi) cash management, including controlled disbursement services, and (vii) establishing and maintaining deposit accounts.

(125)      “Lenders” shall have the meaning set forth in the preamble, and shall include the Revolving Credit Lenders, the Swing Line Lenders and any assignee which becomes a Lender pursuant to Section 12.8 hereof.

(126)      “Letter of Credit Agreement” shall mean, collectively, the letter of credit application and related documentation executed and/or delivered by the Borrower in respect of each Letter of Credit, in each case satisfactory to the Issuing Lender, as amended, restated, supplemented or otherwise modified from time to time.

(127)      “Letter of Credit Documents” shall have the meaning ascribed to such term in Section 3.8(a) hereof.

(128)      “Letter of Credit Fees” shall mean the fees payable in connection with Letters of Credit pursuant to Section 3.4(1) and (2) hereof.

(129)      “Letter of Credit Obligations” shall mean at any date of determination, the sum of (a) the aggregate undrawn amount of all Letters of Credit then outstanding, and (b) the aggregate amount of Reimbursement Obligations which remain unpaid as of such date.

(130)      “Letter of Credit Payment” shall mean any amount paid or required to be paid by the Issuing Lender in its capacity hereunder as issuer of a Letter of Credit as a result of a draft or other demand for payment under any Letter of Credit.

(131)      “Letter(s) of Credit” shall mean any standby letters of credit issued by Issuing Lender at the request of or for the account of the Borrower pursuant to Article 3 hereof.

(132)      “LIBOR Floor” shall mean one percent (1.00%).

(133)      “LIBOR Rate” shall mean,

(a)with respect to the principal amount of any Eurodollar-based Advance outstanding hereunder, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to the relevant Euro-Interest Period, commencing on the first day of such Euro-Interest Period, appearing on Page BBAM of the Bloomberg Financial Markets Information Service as of 11:00 a.m. (Toronto time) (or soon thereafter as practical), two (2) Business Days prior to the first day of such Euro-Interest Period.  In the event that such rate does not appear on

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Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service), the “LIBOR Rate” shall be determined by reference to such other publicly available service for displaying LIBOR rates as may be agreed upon by the Agent and the Borrower, or, in the absence of such agreement, the “LIBOR Rate” shall, instead, be the per annum rate equal to the average (rounded upward, if necessary, to the nearest one-sixteenth of one percent (1/16%)) of the rate at which the Agent is offered dollar deposits at or about 11:00 a.m. (Toronto time) (or soon thereafter as practical), two (2) Business Days prior to the first day of such Euro- Interest Period in the interbank LIBOR market in an amount comparable to the principal amount of the relevant Eurodollar-based Advance which is to bear interest at such Eurodollar-based Rate and for a period equal to the relevant Euro-Interest Period; and

(b)with respect to the principal amount of any Advance carried at the Daily Adjusting LIBOR Rate outstanding hereunder, the per annum rate of interest determined on the basis of the rate for deposits in Dollars for a period equal to one (1) month appearing on Page BBAM of the Bloomberg Financial Markets Information Service as of 11:00 a.m. (Toronto time) (or soon thereafter as practical)  on such day, or if such day is not a Business Day, on the immediately preceding Business Day. In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service), the “LIBOR Rate” shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be agreed upon by the Agent and the Borrower, or, in the absence of such agreement, the “LIBOR Rate” shall, instead, be the per annum rate equal to the average of the rate at which the Agent is offered dollar deposits at or about 11:00 a.m. (Toronto time) (or soon thereafter as practical) on such day in the interbank eurodollar market in an amount comparable to the principal amount of the Indebtedness hereunder which is to bear interest at such “LIBOR Rate” and for a period equal to one (1) month.

(134)      “Lien” shall mean any security interest in or lien on or against any property arising from any pledge, assignment, hypothecation, mortgage, security interest, deposit arrangement, trust receipt, conditional sale or title retaining contract, sale and leaseback transaction, Capitalized Lease, consignment or bailment for security, or any other type of lien, charge, encumbrance, title exception, preferential or priority arrangement affecting property that has the practical effect of creating a security interest (including with respect to stock, any stockholder agreements, voting rights agreements, buy-back agreements and all similar arrangements), whether based on common law or statute.

(135)      “Loan Documents” shall mean, collectively, this Agreement, the Notes (if issued), the Letter of Credit Agreements, the Letters of Credit, the Guarantees, the Collateral Documents, each Hedging Agreement, and any other documents, certificates or agreements that are executed and required to be delivered pursuant to any of the foregoing documents, as such documents may be amended, restated or otherwise modified from time to time.

(136)      “MAA” shall mean the Master Acquisition Agreement dated as of November 4, 2011 between the Borrower, NSN and DW Luxembourg, together with all schedules and exhibits

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attached and annexed thereto, as the same may be amended, modified or supplemented from time to time.

(137)      “Majority Lenders” shall mean at any time, Lenders holding more than 66 2/3% of the Revolving Credit Aggregate Commitment (or, if the Revolving Credit Aggregate Commitment has been terminated (whether by maturity, acceleration or otherwise), the aggregate principal amount outstanding under the Revolving Credit); provided that, for purposes of determining Majority Lenders hereunder, the Letter of Credit Obligations, the Hedging Obligations and principal amount outstanding under the Swing Line shall be allocated among the Revolving Credit Lenders based on their respective Revolving Credit Percentages; provided further that so long as there are fewer than three Lenders, considering any Lender and its Affiliates as a single Lender, “Majority Lenders” shall mean all Lenders. The Commitments of, and portion of the Indebtedness attributable to, any Defaulting Lender shall be excluded for purposes of making a determination of “Majority Lenders”.

(138)      “Material Adverse Effect” shall mean a material adverse effect on (a) the condition (financial or otherwise), business, performance, operations, properties or prospects of the Credit Parties taken as a whole, (b) the ability of any Credit Party to perform its obligations under this Agreement, the Notes (if issued) or any other Loan Document to which it is a party, or (c) the validity or enforceability of this Agreement, any of the Notes (if issued) or any of the other Loan Documents or the rights or remedies of the Agent or the Lenders hereunder or thereunder.

(139)      “Material Contract” shall mean (i) each agreement or contract to which any Credit Party is a party or in respect of which any Credit Party has any liability, that by its terms (without reference to any indemnity or reimbursement provision therein) provides for aggregate future guaranteed payments in respect of any such individual agreement or contract of at least $5,000,000 and (ii) any other agreement or contract the loss of which would be reasonably likely to result in a Material Adverse Effect, and shall, for greater certainty, include the MAA; provided that Material Contracts shall not be deemed to include any Pension Plans, collective bargaining agreements, or casualty or liability or other insurance policies maintained in the ordinary course of business.

(140)      “Material Subsidiary” means any Subsidiary of the Borrower that (a) accounts for at least 5% of the Consolidated EBITDA of the Borrower, or (b) has assets (including cash balances) of greater than $1,000,000; provided that (i)”Material Subsidiary” shall not include any Subsidiary of a US Subsidiary that is a “controlled foreign corporation” as defined in the Internal Revenue Code, however such exclusion is permitted only as it relates to the granting of security by the “controlled foreign corporation”, not as it relates to the ability of the US Subsidiary to pledge 65% of its ownership interests in the “controlled foreign corporation”, and (ii) the Subsidiaries of the Borrower (other than the Guarantors) referred to in Section 7.14 hereof shall not be Material Subsidiaries as of the Effective Date regardless of any non- compliance with the provisions of this definition, however, if such Subsidiaries breach any threshold set out in Section 7.14 hereof, they shall be treated as Material Subsidiaries and shall be immediately subject to compliance with the provisions of Section 6.16 hereof.

(141)      “Minimum Cash Balance” means, as of the Effective Date, US$25,000,000, and on and after December 1, 2012, US$30,000,000, which amount shall be maintained by the Borrower in the Borrower’s Agent Account.

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(142)      “Multiemployer Plan” shall mean a Pension Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

(143)      “Net Revolving Credit Aggregate Commitment” shall mean Thirty-Five Million Dollars (US$35,000,000), subject to reduction or termination under Section 2.13, Section 2.14 or Section 8.2 hereof and subject to increase pursuant to Section 2.2.

(144)      “Non-Defaulting Lender” shall mean any Lender that is not, as of the date of relevance, a Defaulting Lender

(145)      “Notes” shall mean the Revolving Credit Notes and the Swing Line Note.

(146)      “NSN” shall mean Nokia Siemens Networks B.V., a Dutch company.

(147)      “NSN Transaction” shall mean the acquisition by DW Luxembourg of the microwave transport business from NSN and/or its Subsidiaries pursuant to the MAA.

(148)      “Off Balance Sheet Liability(ies)” of a Person shall mean (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivables sold by such Person, (ii) any liability under any sale and leaseback transaction which is not a Capitalized Lease, (iii) any liability under any so-called “synthetic lease” transaction entered into by such Person, or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of Debt or any of the liabilities set forth in subsections (i)-(iii) of this definition, but which does not constitute a liability on the balance sheets of such Person.

(149)      “PBGC” shall mean the Pension Benefit Guaranty Corporation or any successor thereto.

(150)      “Pension Plan” shall mean any plan established and maintained by a Credit Party, or contributed to by a Credit Party, which is qualified under Section 401(a) of the Internal Revenue Code and subject to the minimum funding standards of Section 412 of the Internal Revenue Code.

(151)      “Percentage” shall mean, as applicable, the Revolving Credit Percentage or the Weighted Percentage.

(152)      “Permitted Investments” shall mean with respect to any Person:

(a)Governmental Obligations;

(b)Obligations of a state or commonwealth of the United States or the obligations of the District of Columbia or any possession of the United States, or any political subdivision of any of the foregoing, which are described in Section 103(a) of the Internal Revenue Code, or Obligations of Canada or any province or territory thereof, and are graded in any of the highest three (3) major grades as determined by at least one Rating Agency; or secured, as to payments of principal and interest, by a letter of credit provided by a financial institution or insurance provided by a bond insurance company which in each case is itself or its debt is rated in one of the highest three (3) major grades as determined by at least one Rating Agency;

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(c)Banker’s acceptances, commercial accounts, demand deposit accounts, certificates of deposit, other time deposits or depository receipts issued by or maintained with any Lender or any Affiliate thereof, or any bank, trust company, savings and loan association, savings bank or other financial institution whose deposits are insured by the Canada Deposit Insurance Corporation or the Federal Deposit Insurance Corporation and whose reported capital and surplus equal at least $250,000,000, provided that such minimum capital and surplus requirement shall not apply to demand deposit accounts maintained by any Credit Party in the ordinary course of business;

(d)Commercial paper rated at the time of purchase within the two highest classifications established by not less than two Rating Agencies, and which matures within 270 days after the date of issue;

(e)Secured repurchase agreements against obligations itemized in paragraph (a) above, and executed by a bank or trust company or by members of the association of primary dealers or other recognized dealers in United States or Canadian government securities, the market value of which must be maintained at levels at least equal to the amounts advanced; and

(f)Any fund or other pooling arrangement which exclusively purchases and holds the investments itemized in (a) through (e) above.

(153)“Permitted Liens” shall mean with respect to any Person:

(a)Liens for (i) taxes or governmental assessments or charges or (ii) customs duties in connection with the importation of goods to the extent such Liens attach to the imported goods that are the subject of the duties, in each case (x) to the extent not yet due, (y) as to which the period of grace, if any, related thereto has not expired or (z) which are being contested in good faith by appropriate proceedings, provided that in the case of any such contest, any proceedings for the enforcement of such liens have been suspended and adequate reserves with respect thereto are maintained on the books of such Person in conformity with GAAP;

(b)carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, processor’s, landlord’s liens or other like liens arising in the ordinary course of business which secure obligations that are not overdue for a period of more than 30 days or which are being contested in good faith by appropriate proceedings, provided that in the case of any such contest, (x) any proceedings commenced for the enforcement of such Liens have been suspended and (y) appropriate reserves with respect thereto are maintained on the books of such Person in conformity with GAAP;

(c)(i) Liens incurred in the ordinary course of business to secure the performance of statutory obligations arising in connection with progress payments or advance payments due under contracts with any Governmental Agency entered into in the ordinary course of business and (ii) Liens incurred or deposits made in the ordinary course of business to secure the performance of statutory obligations (not otherwise permitted under subsection (g) of this definition), bids, leases, fee and expense arrangements with trustees and fiscal agents, trade contracts, surety and

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appeal bonds, performance bonds and other similar obligations (exclusive of obligations incurred in connection with the borrowing of money, any lease- purchase arrangements or the payment of the deferred purchase price of property), provided, that in each case full provision for the payment of all such obligations has been made on the books of such Person as may be required by GAAP;

(d)any attachment or judgment lien that remains unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a period ending on the earlier of (i) thirty (30) consecutive days from the date of its attachment or entry (as applicable) or (ii) the commencement of enforcement steps with respect thereto, other than the filing of notice thereof in the public record;

(e)minor survey exceptions or minor encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or zoning or other restrictions as to the use of real properties, or any interest of any lessor or sublessor under any lease permitted hereunder which, in each case, does not materially interfere with the business of such Person;

(f)Liens arising in connection with worker’s compensation, unemployment insurance, old age pensions and social security benefits and similar statutory obligations (excluding Liens arising under ERISA), provided that no enforcement proceedings in respect of such Liens are pending and provisions have been made for the payment of such liens on the books of such Person as may be required by GAAP;

(g)continuations of Liens that are permitted under subsections (a)-(g) hereof, provided such continuations do not violate the specific time periods set forth in subsections (b) and (d) and provided further that such Liens do not extend to any additional property or assets of any Credit Party or secure any additional obligations of any Credit Party;

(h)leases, licenses or subleases (to the extent that such leases, licenses or subleases create a lien, security interest or charge) granted to others not interfering in any material respect with the business of any Credit Party;

(i)any interest or title of a lessor (including interest of a lessor of goods located in Canada under an operating lease for a term of more than one year, to the extent that applicable personal property security law provides that such interest shall constitute a security interest in such goods) or sublessor, and Liens arising from precautionary UCC financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) solely evidencing such lessor’s interest, leases permitted by this Agreement;

(j)normal and customary rights of setoff upon deposits of cash in favour of banks or other depository institutions holding such deposits;

(k)Prior Claims; and

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(l)Liens in favour of the Agent for the benefit of the Lenders created pursuant to the Loan Documents.

(154)      “Person” shall mean a natural person, corporation, limited liability company, partnership, limited liability partnership, trust, incorporated or unincorporated organization, joint venture, joint stock company, firm or association or a government or any agency or political subdivision thereof or other entity of any kind.

(155)      “Pledge Agreement(s)” shall mean, collectively, those certain local law pledge agreements executed and delivered by the Borrower and the Guarantors on the Effective Date pursuant to Section 4.1 hereof, if any, and executed and delivered from time to time after the Effective Date by any Credit Party pursuant to Section 6.16 hereof or otherwise (whether by execution of a joinder agreement to any existing security agreement or otherwise), and any agreements, instruments or documents related thereto, in each case as shall be advisable or necessary under applicable law to create and perfect (subject to applicable local law limitations as advised by counsel to the Agent or other counsel reasonably acceptable to Agent) liens on the assets of any Credit Party and securing the Advances to the Borrower and otherwise in form and substance reasonably satisfactory to Agent, as amended, restated, supplemented, replaced or otherwise modified from time to time.

(156)      “Pledged Cash Amount” means the amount of the unrestricted cash required to be pledged by the Borrower in favour of the Agent in order to maintain, from the Effective Date until November 30, 2012, a Collateral Coverage Ratio of 1.10: 1:00, and after November 30, 2012, a Collateral Coverage Ratio of 1.25: 1:00.

(157)      “Pledged Collateral” shall have the meaning set forth in Section 6.12(4).

(158)      “PPSA” means the Personal Property Security Act (Ontario), including the regulations thereto and related Minister’s orders.

(159)      “Prime Rate” shall mean the per annum rate of interest announced by the Agent, at its main office from time to time as its “prime rate” for Dollar denominated commercial loans (it being acknowledged that such announced rate may not necessarily be the lowest rate charged by the Agent to any of its customers), which Prime Rate shall change simultaneously with any change in such announced rate.

(160)      “Prior Claims” shall mean all Liens created by the applicable Canadian federal, provincial, territorial or local law (in contrast with Liens voluntarily granted or other Liens not created under Canadian law) which rank or are capable of ranking prior or pari passu with the Agent’s or the Lenders’ security interests or other Liens against all or part of the Collateral, including for amounts owing for employee source deductions (such as Canada pension plan, Quebec pension plan and employment insurance), goods and services taxes, sales taxes, municipal taxes, workers’ compensation, pension fund obligations and overdue rents, in each case which are unregistered and which secure obligations and amounts that are not overdue, or as to which the period of grace, if any, related thereto has not expired, or which are being contested in good faith by appropriate proceedings, provided that in the case of any such contest, any proceedings for the enforcement of such Liens have been suspended and adequate reserves with respect thereto are maintained on the books of such Person in conformity with GAAP.

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(161)      “Pro Forma Balance Sheet” shall mean the pro forma consolidated balance sheet of the Borrower which has been certified by a Responsible Officer of the Borrower that it fairly presents in all material respects the pro forma adjustments reflecting the transactions (including payment of all fees and expenses in connection therewith) contemplated by this Agreement, the NSN Transaction and the other Loan Documents, including the statement of the operations of the Borrower.

(162)      “Pro Forma Projected Financial Information” shall mean, as to any proposed acquisition, a statement executed by the Borrower (supported by reasonable detail) setting forth the total consideration to be paid or incurred in connection with the proposed acquisition, and pro forma combined projected financial information for the Credit Parties and the acquisition target (if applicable), consisting of projected balance sheets as of the proposed effective date of the acquisition and as of the end of at least the next succeeding three (3) Fiscal Years following the acquisition and projected statements of income and cash flows for each of those years, including sufficient detail to permit calculation of the ratios described in Section 6.10 hereof, as projected as of the effective date of the acquisition and as of the ends of those Fiscal Years and accompanied by (i) a statement setting forth a calculation of the ratio so described, (ii) a statement in reasonable detail specifying all material assumptions underlying the projections and (iii) such other information as the Agent or the Lenders shall reasonably request.

(163)      “Purchasing Lender” shall have the meaning set forth in Section 12.12.

(164)      “Rating Agency” shall mean Moody’s Investor Services, Inc., Standard and Poor’s Ratings Services, Fitch Ratings Ltd., DBRS Limited, their respective successors or any other internationally recognized statistical rating organization which is acceptable to the Agent.

(165)      “Register” is defined in Section 12.8(7) hereof.

(166)      “Reimbursement Obligation(s)” shall mean the aggregate amount of all unreimbursed drawings under all Letters of Credit (excluding for the avoidance of doubt, reimbursement obligations that are deemed satisfied pursuant to a deemed disbursement under Section 3.7(3)).

(167)      “Request for Advance” shall mean a Request for Revolving Credit Advance or a Request for Swing Line Advance, as the context may indicate or otherwise require.

(168)      “Request for Revolving Credit Advance” shall mean a request for a Revolving Credit Advance issued by the Borrower under Section 2.4 of this Agreement in the form attached hereto as Exhibit A .

(169)      “Request for Swing Line Advance” shall mean a request for a Swing Line Advance issued by the Borrower under Section 2.6(2) of this Agreement in the form attached hereto as Exhibit D.

(170)      “Requirement of Law” shall mean as to any Person, the certificate and articles of incorporation, amalgamation or continuance and bylaws, the partnership agreement, joint venture agreement or other organizational or governing documents of such Person and any law, treaty, rule or regulation or determination of an arbitration or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

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(171)      “Responsible Officer” shall mean, with respect to any Person, the chief executive officer, chief financial officer, treasurer, president or controller of such Person, or with respect to compliance with financial covenants, the chief financial officer or the treasurer of such Person, or any other officer of such Person having substantially the same authority and responsibility.

(172)      “Revolving Credit” shall mean the revolving credit loans to be advanced to the Borrower by the applicable Revolving Credit Lenders pursuant to Article 2 hereof, in an aggregate amount (subject to the terms hereof), not to exceed, at any one time outstanding, the Revolving Credit Aggregate Commitment.

(173)      “Revolving Credit Advance” shall mean a borrowing requested by the Borrower and made by the Revolving Credit Lenders under Section 2.1 of this Agreement, including without limitation any readvance, refunding or conversion of such borrowing pursuant to Section 2.4 hereof and any deemed disbursement of an Advance in respect of a Letter of Credit under Section 3.7(3) hereof, and may include, subject to the terms hereof, US Base Rate Advances, Eurodollar-based Advances, Canadian Prime Rate Advances, CDOR-based Advances and BBA LIBOR-based Advances.

(174)      “Revolving Credit Aggregate Commitment” shall mean Forty Million Dollars (US$40,000,000), subject to reduction or termination under Section 2.13, Section 2.14 or Section 8.2 hereof and subject to increase pursuant to Section 2.2.

(175)      “Revolving Credit Commitment Amount” shall mean with respect to any Revolving Credit Lender, (i) if the Revolving Credit Aggregate Commitment has not been terminated, the amount specified opposite such Revolving Credit Lender’s name in the column entitled “Revolving Credit Commitment Amount” on Schedule 1.2, as adjusted from time to time in accordance with the terms hereof; and (ii) if the Revolving Credit Aggregate Commitment has been terminated (whether by maturity, acceleration or otherwise), the amount equal to its Percentage of the aggregate principal amount outstanding under the Revolving Credit (including the outstanding Letter of Credit Obligations, the Hedging Obligations and any outstanding Swing Line Advances).

(176)      “Revolving Credit Facility Fee” shall mean the fee payable to the Agent for distribution to the Revolving Credit Lenders in accordance with Section 2.12 hereof.

(177)      “Revolving Credit Lenders” shall mean the financial institutions from time to time parties hereto as lenders of the Revolving Credit.

(178)      “Revolving Credit Maturity Date” shall mean the earlier to occur of (i) June 1, 2014, and (ii) the date on which the Revolving Credit Aggregate Commitment shall terminate in accordance with the provisions of this Agreement.

(179)      “Revolving Credit Notes” shall mean the revolving credit notes described in Section 2.3 hereof, made by the Borrower to each of the Revolving Credit Lenders in the form attached hereto as Exhibit B , as such notes may be amended or supplemented from time to time, and any other notes issued in substitution, replacement or renewal thereof from time to time.

(180)      “Revolving Credit Percentage” means, with respect to any Revolving Credit Lender, the percentage specified opposite such Revolving Credit Lender’s name in the column entitled

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“Revolving Credit Percentage” on Schedule 1.2, as adjusted from time to time in accordance with the terms hereof.

(181)      “Security Agreements” shall mean, collectively, those certain local law security agreement(s), executed and delivered by the Borrower and the Guarantors on the Effective Date pursuant to Section 4.1 hereof, if any, and executed and delivered from time to time after the Effective Date by any Credit Party pursuant to Section 6.16 hereof or otherwise (whether by execution of a joinder agreement to any existing security agreement or otherwise), as amended, restated, supplemented, replaced or otherwise modified from time to time and including any joinders agreements executed in connection therewith pursuant to Section 6.16 hereof or otherwise, in each case as shall be advisable or necessary under applicable law to create and perfect (subject to applicable local law limitations as advised by counsel to the Agent or counsel reasonably acceptable to Agent) liens on the assets of the Borrower and the Guarantors and securing the Advances to the Borrower and otherwise in form and substance reasonably satisfactory to Agent.

(182)      “Subsidiary(ies)” shall mean any other corporation, association, joint stock company, business trust, limited liability company, partnership, joint venture or any other business entity of which more than fifty percent (50%) of the outstanding voting stock, share capital, membership, partnership or other interests, as the case may be, is owned either directly or indirectly by any Person or one or more of its Subsidiaries, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by any Person and/or its Subsidiaries. Unless otherwise specified to the contrary herein or the context otherwise requires, Subsidiary(ies) shall refer to the Subsidiary(ies) of the Borrower.

(183)      “Swing Line” shall mean the revolving credit loans to be advanced to the Borrower by the Swing Line Lender pursuant to Section 2.6 hereof, in an aggregate amount (subject to the terms hereof), not to exceed, at any one time outstanding, the Swing Line Maximum Amount.

(184)      “Swing Line Advance” shall mean a borrowing requested by the Borrower and made by Swing Line Lender pursuant to Section 2.6 hereof, subject to the terms hereof, as a US Base Rate Advance or a Canadian Prime Rate Advance.

(185)      “Swing Line Lender” shall mean Comerica Bank in its capacity as lender of the Swing Line under Section 2.6 of this Agreement, or its successor as subsequently designated hereunder.

(186)      “Swing Line Maximum Amount” shall mean Three Million Dollars (US$3,000,000).

(187)      “Swing Line Note” shall mean the swing line note which may be issued by the Borrower to Swing Line Lender pursuant to Section 2.6(2)(b) hereof in the form attached hereto as Exhibit C , as such note may be amended or supplemented from time to time, and any note or notes issued in substitution, replacement or renewal thereof from time to time.

(188)      “Swing Line Participation Certificate” shall mean the Swing Line Participation Certificate delivered by the Agent to each Revolving Credit Lender pursuant to Section 2.6(5)(b) hereof in the form attached hereto as Exhibit F.

(189)      “Tangible Net Worth” shall mean, for any period, with respect to any Person (without duplication), the aggregate sum of (a) Equity, and (b) Indebtedness which is subordinate to the

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Obligations, less the aggregate of (i) goodwill and (ii) all other assets normally regarded as intangible under GAAP in each case, net of amortization.

(190)      “Transition Costs” shall mean amounts incurred by any Credit Party for costs and expenses in connection with the integration of the assets and business acquired as part of the NSN Transaction under the MAA.

(191)      “Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code as in effect in any applicable state; provided that, unless specified otherwise or the context otherwise requires, such terms shall refer to the Uniform Commercial Code as in effect in the State of California.

(192)      “USA Patriot Act” is defined in Section 5.8.

(193)      “US Base Rate” shall mean for any day, that rate of interest which is equal to the sum of the Applicable Margin plus the greatest of (a) the Prime Rate for such day, (b) the Federal Funds Effective Rate in effect on such day, plus one percent (1.0%), and (c) the Daily Adjusting LIBOR Rate plus one percent (1.0%); provided, however, for purposes of determining the US Base Rate during any period that LIBOR Rate is unavailable as determined under Sections 10.2 or 10.3 hereof, the US Base Rate shall be determined using, for clause (c) hereof, the Daily Adjusting LIBOR Rate in effect immediately prior to the LIBOR Rate becoming unavailable pursuant to Sections 10.2 or 10.3.

(194)      “US Base Rate Advance” shall mean an Advance which bears interest at the US Base Rate.

(195)      “US Subsidiary” shall mean any Subsidiary of the Borrower incorporated or organized under the laws of the United States of America, or any state or other political subdivision thereof or which is considered to be a “disregarded entity” for United States federal income tax purposes and which is not a “controlled foreign corporation” as defined under Section 957 of the Internal Revenue Code, in each case provided such Subsidiary is owned by the Borrower or a Subsidiary of the Borrower, and “US Subsidiaries” shall mean any or all of them.

(196)      “User Licences” means all agreements pursuant to which a Credit Party has obtained rights or an option to acquire rights to use any Intellectual Property.

(197)      “Weighted Percentage” shall mean with respect to any Lender, its weighted percentage calculated by dividing (i) its Revolving Credit Commitment Amount, by (ii) the Revolving Credit Aggregate Commitment (or, if the Revolving Credit Aggregate Commitment has been terminated (whether by maturity, acceleration or otherwise), the aggregate principal amount outstanding under the Revolving Credit, including any outstanding Letter of Credit Obligations, Hedging Obligations and outstanding Swing Line Advances). Schedule 1.2 reflects each Lender’s Weighted Percentage and may be revised by the Agent from time to time to reflect changes in the Weighted Percentages of the Lenders.

(198)      “Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

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Section 1.2 Interest Act (Canada)

For the purposes of disclosure under the Interest Act (Canada), if and to the extent applicable, whenever interest is to be paid hereunder and such interest is to be calculated on the basis of a period of less than a calendar year, the yearly rate of interest to which the rate determined pursuant to such calculation is equivalent is the rate so determined multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by the number of days in such period.

Section 1.3 Limitation on Interest.

If any provision of this Agreement or of any of the other Loan Documents would obligate any Credit Party to make any payment of interest or other amount payable to the Lenders in an amount or calculated at a rate which would be prohibited by law or would result in a receipt by the Lenders of interest at a criminal rate (as such terms are construed under the Criminal Code (Canada)) then, notwithstanding such provisions, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or so result in a receipt by the Lenders of interest at a criminal rate, such adjustment to be effected, to the extent necessary, as follows: (1) firstly, by reducing the amount or rate of interest required to be paid to the Lenders, and (2) thereafter, by reducing any fees, commissions, premiums and other amounts required to be paid to the Lenders which would constitute “interest” for purposes of Section 347 of the Criminal Code (Canada). Notwithstanding the foregoing, and after giving effect to all adjustments contemplated thereby, if the Lenders shall have received an amount in excess of the maximum permitted by that section of the Criminal Code (Canada), the Credit Parties shall be entitled, by notice in writing to the Agent, to obtain reimbursement from the Lenders in an amount equal to such excess and, pending such reimbursement, such amount shall be deemed to be an amount payable by the Lenders to the Borrower. Any amount or rate of interest referred to in this Section 1.3 shall be determined in accordance with generally accepted actuarial practices and principles as an effective annual rate of interest over the term that the applicable Credit remains outstanding on the assumption that any charges, fees or expenses that fall within the meaning of “interest” (as defined in the Criminal Code (Canada)) shall, if they relate to a specific period of time, be pro- rated over that period of time and otherwise be pro-rated over the period from the Effective Date to the applicable maturity date, and, in the event of a dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by the Agent shall be conclusive absent manifest error for the purposes of such determination.

Section 1.4 Currency Calculations

For purposes of preparing the Collateral Coverage Certificate, financial statements, calculating financial covenants and determining compliance with covenants expressed in Dollars, Canadian Dollars or Euros shall be converted to Dollars on a weighted average in accordance with GAAP.

Section 1.5 Accounting Terms and Determinations

Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder (including without limitation determinations made pursuant to the exhibits hereto) shall be made, and all financial statements required to be

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delivered hereunder shall be prepared on a consolidated basis in accordance with GAAP applied on a basis consistent with the most recent audited consolidated financial statements of the Borrower and its Subsidiaries delivered to Agent and each of the Lenders. If at any time any change in GAAP , including the adoption into GAAP or otherwise of the International Financial Reporting Standards, or in the application thereof, would affect the computation of any financial ratio or financial requirement set forth in any Loan Document, and the Borrower or the Majority Lenders shall so request, the Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Majority Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Agent and the Lenders financial statements and other documents required under this Agreement which include a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. All amounts used for purposes of financial calculations required to be made herein shall be without duplication. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of any Loan Party at “fair value”, as defined therein.

ARTICLE 2 — REVOLVING CREDIT.

Section 2.1 Commitment

Subject to the terms and conditions of this Agreement (including without limitation Section 2.4 hereof), each Revolving Credit Lender severally and for itself alone agrees to make Advances of the Revolving Credit in Dollars to the Borrower from time to time on any Business Day during the period from the Effective Date hereof until (but excluding) the Revolving Credit Maturity Date in an aggregate amount, not to exceed at any one time outstanding such Lender’s Revolving Credit Percentage of the Revolving Credit Aggregate Commitment. Subject to the terms and conditions set forth herein, advances, repayments and readvances may be made under the Revolving Credit.

Section 2.2 Commitment Increase

(1)           Commitment Increase. The Borrower may, at any time and from time to time, but not more frequently than twice annually, add additional financial institutions as Lenders under this Agreement and/or, by agreement with any existing Lender, increase the Revolving Credit Commitment Amount of such existing Lender, and the Revolving Credit Aggregate Commitment shall thereby be increased by the amounts of the Revolving Credit Commitment Amount of any such additional Lenders and/or the amounts of the increases in the Revolving Credit Commitment Amount of any such existing Lenders, provided that:

(a)No Default or Event of Default shall have occurred and be continuing at the time of any such addition of a new Lender and/or increase in the Revolving Credit Commitment Amount of an existing Lender;

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(b)After giving effect to any such addition of a new Lender and/or increase in the Revolving Credit Commitment Amount of an existing Lender, the Revolving Credit Aggregate Commitment shall not be greater than US$60,000,000;

(c)The Agent, Issuing Lender and Swing Line Lender shall have consented, acting reasonably, to the identity and allocation of any such new Lender or to the allocation to any existing Lender resulting in an increased Revolving Credit Commitment Amount to such Lender;

(d)Any fees or other compensation payable to a new Lender (including facility or upfront fees) shall not be greater (in absolute terms or as a percentage) than the equivalent fees or other compensation paid to the existing Lenders in connection with their Commitments;

(e)The Borrower shall have delivered to the Agent:

(i)A certificate signed by a Responsible Person on behalf of the Borrower, effective as of the date of the increase in the Revolving Credit Aggregate Commitment as contemplated herein, confirming and certifying (A) the accuracy of the statement in (a) above, (B) the resolutions of the Credit Parties and all other authorizations necessary to authorize the increase in the Revolving Credit Aggregate Commitment in the manner contemplated herein and the execution, delivery and performance by the Credit Parties of all Loan Documents required to give effect to same and the transactions contemplated thereby, and (C) no Governmental Approvals or other consents, approvals or authorizations of any other Person are required for such increase in the Revolving Credit Aggregate Commitment (except as have been obtained and are in full force and effect); and

(ii)Such Loan Documents as the Agent may reasonably require to give effect to the increase in the Revolving Credit Aggregate Commitment, together with a legal opinion of counsel for the Credit Parties satisfactory to the Agent with respect to any Loan Document executed in connection with the increase in the Revolving Credit Aggregate Commitment and any Loan Documents executed in connection therewith.

For greater certainty, any Lender that becomes a party to this Agreement in accordance with this Section 2.2 shall be a “Lender” under this Agreement and shall have all of the rights and obligations of a “Lender” under this Agreement and the other Loan Documents.

(2)           Adjustments Between Lenders.  Subject to the following sentence of this Section 2.2(2), concurrent with the addition of any financial institution as a new Lender or the increase in the Revolving Credit Commitment Amount of any existing Lender, such new Lender or existing Lender shall purchase from each other Lender such portion of the outstanding Indebtedness owed to each such other Lender as may be determined by the Agent, acting reasonably, as is necessary, to ensure that the outstanding Indebtedness owed to all Lenders (including any such new Lender) are in accordance with the Revolving Credit Percentage of the Lenders and any such new Lender shall execute such documentation as is required by the Agent, acting reasonably, to incorporate such new Lender as a Lender under, and upon and subject to all

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the terms and conditions of, this Agreement.  Notwithstanding the foregoing, (a) there shall not be any purchases made or indemnifications given in respect of any Eurodollar-based Advance, BBA LIBOR-Advance or CDOR-based Advance outstanding at the time of the increase in the Revolving Credit Aggregate Commitment, however if any Advance or repayment is made prior to the end of the applicable Interest Period or Contract Period of any such any Eurodollar-based Advance, BBA LIBOR-Advance or CDOR-based Advance, the Agent will make adjustments between the Lenders so as to ensure that the outstanding Indebtedness owed to all Lenders (including any such new Lender) are as near as practicable in accordance with the Revolving Credit Percentages of the Lenders (given that such Eurodollar-based Advances, BBA LIBOR- Advances or CDOR-based Advances remain outstanding), and (b) provided that any request for an additional financial institution as a Lender or an increase in the Revolving Credit Agreement Commitment may not be made after the first anniversary of the Effective Date. Nothing in this Section 2.2(2) shall obligate any Lender to make available borrowings in excess of its Revolving Credit Commitment Amount at any time.

Section 2.3 Accrual of Interest and Maturity; Evidence of Indebtedness.

(1)           The Borrower hereby unconditionally promises to pay to the Agent for the account of each Revolving Credit Lender the then unpaid principal amount of each Revolving Credit Advance (plus all accrued and unpaid interest) of such Revolving Credit Lender to the Borrower on the Revolving Credit Maturity Date and on such other dates and in such other amounts as may be required from time to time pursuant to this Agreement. Subject to the terms and conditions hereof, each Revolving Credit Advance shall, from time to time from and after the date of such Advance (until paid), bear interest at its Applicable Interest Rate.

(2)           Each Revolving Credit Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Borrower to the appropriate lending office of such Revolving Credit Lender resulting from each Revolving Credit Advance made by such lending office of such Revolving Credit Lender from time to time, including the amounts of principal and interest payable thereon and paid to such Revolving Credit Lender from time to time under this Agreement.

(3)           The Agent shall maintain the Register pursuant to Section 12.8(6), and a subaccount therein for each Revolving Credit Lender, in which Register and subaccounts (taken together) shall be recorded (i) the amount of each Revolving Credit Advance made hereunder, the type thereof and each Euro-Interest Period applicable to any Eurodollar-based Advance or BBA LIBOR-based Advance or Contract Period applicable to any CDOR-based Advance, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Revolving Credit Lender hereunder in respect of the Revolving Credit Advances and (iii) both the amount of any sum received by the Agent hereunder from the Borrower in respect of the Revolving Credit Advances and each Revolving Credit Lender’s share thereof.

(4)           The entries made in the Register maintained pursuant to paragraph (c) of this Section 2.3 shall, absent manifest error, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Revolving Credit Lender or the Agent to maintain the Register or any account, as applicable, or any error therein, shall not in any manner affect the obligation of

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the Borrower to repay the Revolving Credit Advances (and all other amounts owing with respect thereto) made to the Borrower by the Revolving Credit Lenders in accordance with the terms of this Agreement.

(5)           The Borrower agrees that, upon written request to the Agent by any Revolving Credit Lender, the Borrower will execute and deliver, to such Revolving Credit Lender, at the Borrower’s own expense, a Revolving Credit Note evidencing the outstanding Revolving Credit Advances owing to such Revolving Credit Lender.

Section 2.4 Requests for and Refundings and Conversions of Advances

The Borrower may request an Advance of the Revolving Credit, a refund of any Revolving Credit Advance in the same type of Advance or to convert any Revolving Credit Advance to any other type of Revolving Credit Advance only by delivery to the Agent of a Request for Revolving Credit Advance executed by an Authorized Signer for the Borrower, subject to the following:

(1)           each such Request for Revolving Credit Advance shall set forth the information required on the Request for Revolving Credit Advance, including without limitation:

(a)the proposed date of such Revolving Credit Advance (or the refunding or conversion of an outstanding Revolving Credit Advance), which must be a Business Day;

(b)whether such Advance is a new Revolving Credit Advance or a refunding or conversion of an outstanding Revolving Credit Advance; and

(c)whether such Revolving Credit Advance is to be a US Base Rate Advance, a Eurodollar-based Advance, Canadian Prime Rate Advance, CDOR-based Advance or a BBA LIBOR-based Advance, and, with respect to a Eurodollar- based Advance or BBA LIBOR-based Advance, the first Euro-Interest Period applicable thereto; and with respect to the CDOR-based Advance, the first Contract Period applicable thereto, provided, however, that the initial Revolving Credit Advance made under this Agreement shall be a US Base Rate Advance or Canadian Prime Rate Advance, which may then be converted into a Eurodollar- based Advance or CDOR-based Advance, respectively, in compliance with this Agreement;

(2)           each such Request for Revolving Credit Advance shall be delivered to the Agent by 12:00 p.m. (Toronto time) three (3) Business Days prior to the proposed date of the Revolving Credit Advance, except in the case of a US Base Rate Advance or a Canadian Prime Rate Advance, for which the Request for Revolving Credit Advance must be delivered by 12:00 p.m. (Toronto time) on the proposed date for such Revolving Credit Advance;

(3)           on the proposed date of such Revolving Credit Advance, the sum of (x) the aggregate principal amount of all Revolving Credit Advances and Swing Line Advances outstanding on such date, in each case after giving effect to all outstanding requests for Revolving Credit Advances and Swing Line Advances, shall not exceed the Net Revolving Credit Aggregate Commitment;

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(4)           in the case of a US Base Rate Advance or Canadian Prime Rate Advance, the principal amount of the initial funding of such Advance, as opposed to any refunding or conversion thereof, shall be at least US$ or CAN$300,000 or the remainder available under the Revolving Credit Aggregate Commitment if less than US$ or CAN$300,000;

(5)           in the case of a Eurodollar-based Advance, BBA LIBOR-based Advance or CDOR-based Advance, the principal amount of such Advance, plus the amount of any other outstanding Revolving Credit Advance to be then combined therewith having the same Euro-Interest Period or Contract Period, respectively, if any, shall be at least US$ or CAN$ or € 500,000 (or a larger integral multiple of US$ or CAN$ or € 100,000) or the remainder available under the Net Revolving Credit Aggregate Commitment if less than US$ or CAN$ or € 500,000 and at any one time there shall not be in effect more than four (4) different Euro-Interest Periods or Contract Periods, respectively; and

(6)           a Request for Revolving Credit Advance, once delivered to the Agent, shall not be revocable by the Borrower and shall constitute a certification by the Borrower as of the date thereof that:

(a)all conditions to the making of Revolving Credit Advances set forth in this Agreement have been satisfied, and shall remain satisfied to the date of such Revolving Credit Advance (both before and immediately after giving effect to such Revolving Credit Advance);

(b)there is no Default or Event of Default in existence, and none will exist upon the making of such Revolving Credit Advance (both before and immediately after giving effect to such Revolving Credit Advance); and

(c)the representations and warranties of the Credit Parties contained in this Agreement and the other Loan Documents are true and correct in all material respects and shall be true and correct in all material respects as of the date of the making of such Revolving Credit Advance (both before and immediately after giving effect to such Revolving Credit Advance), other than any representation or warranty that expressly speaks only as of a different date.

The Agent, acting on behalf of the Revolving Credit Lenders, may also, at its option, lend under this Section 2.4 upon the telephone or email request of an Authorized Signer of the Borrower to make such requests and, in the event the Agent, acting on behalf of the Revolving Credit Lenders, makes any such Advance upon a telephone or email request, an Authorized Signer shall fax or deliver by electronic file to the Agent, on the same day as such telephone or email request, an executed Request for Revolving Credit Advance. The Borrower hereby authorizes the Agent to disburse Advances under this Section 2.4 pursuant to the telephone or email instructions of any person purporting to be an Authorized Signer. Notwithstanding the foregoing, the Borrower acknowledges that the Borrower shall bear all risk of loss resulting from disbursements made upon any telephone or email request. Each telephone or email request for an Advance from an Authorized Signer for the Borrower shall constitute a certification of the matters set forth in the Request for Revolving Credit Advance form as of the date of such requested Advance.

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Section 2.5 Disbursement of Advances.

(1)           Upon receiving any Request for Revolving Credit Advance from the Borrower under Section 2.4 hereof, the Agent shall promptly notify each Revolving Credit Lender by electronic mail, facsimile, wire, telex or telephone (confirmed by electronic mail, facsimile, wire, telecopy or telex) of the amount of such Advance being requested and the date such Revolving Credit Advance is to be made by each Revolving Credit Lender in an amount equal to its Revolving Credit Percentage of such Advance. Unless such Revolving Credit Lender’s commitment to make Revolving Credit Advances hereunder shall have been suspended or terminated in accordance with this Agreement, each such Revolving Credit Lender shall make available the amount of its Revolving Credit Percentage of each Revolving Credit Advance in immediately available funds to the Agent, as follows:

(a)for US Base Rate Advances, at the office of the Agent located at the office of the Agent located in Toronto, Ontario, not later than 3:00 p.m. (Toronto time) on the date of such Advance;

(b)for Canadian Prime Rate Advances or CDOR-based Advances, at the office of the Agent located in Toronto, Ontario, not later than 3:00 p.m. (Toronto time) on the date of such Advance; and

(c)for Eurodollar-based Advances or BBA LIBOR-based Advances, at the office of the Agent located in Toronto, Ontario, not later than 3:00 p.m. (Toronto time) on the date of such Advance.

(2)           Subject to submission of an executed Request for Revolving Credit Advance by the Borrower without exceptions noted in the compliance certification therein, the Agent shall make available to the Borrower the aggregate of the amounts so received by it from the Revolving Credit Lenders in like funds and currencies:

(a)for US Base Rate Advances, not later than 4:00 p.m. (Toronto time) on the date of such Revolving Credit Advance, by credit to an account of the Borrower maintained with the Agent or to such other account or third party as the Borrower may reasonably direct in writing, provided such direction is timely given;

(b)for Canadian Prime Rate Advances or CDOR-based Advances, not later than 4:00 p.m. (Toronto time) on the date of such Revolving Credit Advance, by credit to an account of the Borrower maintained with the Agent or to such other account or third party as the Borrower may direct, provided such direction is timely given; and

(c)for Eurodollar-based Advances or BBA LIBOR-based Advances, not later than 4:00 p.m. (London time) on the date of such Revolving Credit Advance, by credit to an account of the Borrower maintained with the Agent or to such other account or third party as the Borrower may direct, provided such direction is timely given.

(3)           The Agent shall deliver the documents and papers received by it for the account of each Revolving Credit Lender to such Revolving Credit Lender. Unless the Agent shall have been notified by any Revolving Credit Lender prior to the date of any proposed Revolving Credit

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Advance that such Revolving Credit Lender does not intend to make available to the Agent such Revolving Credit Lender’s Percentage of such Advance, the Agent may assume that such Revolving Credit Lender has made such amount available to the Agent on such date, as aforesaid. The Agent may, but shall not be obligated to, make available to the Borrower the amount of such payment in reliance on such assumption. If such amount is not in fact made available to the Agent by such Revolving Credit Lender, as aforesaid, the Agent shall be entitled to recover such amount on demand from such Revolving Credit Lender. If such Revolving Credit Lender does not pay such amount forthwith upon the Agent’s demand therefor and the Agent has in fact made a corresponding amount available to the Borrower, the Agent shall promptly notify the Borrower and the Borrower shall pay such amount to the Agent, if such notice is delivered to the Borrower prior to 3:00 p.m. (Toronto time) on a Business Day, on the day such notice is received, and otherwise on the next Business Day, and such amount paid by the Borrower shall be applied as a prepayment of the Revolving Credit (without any corresponding reduction in the Revolving Credit Aggregate Commitment), reimbursing the Agent for having funded said amounts on behalf of such Revolving Credit Lender. The Borrower shall retain its claim against such Revolving Credit Lender with respect to the amounts repaid by it to the Agent and, if such Revolving Credit Lender subsequently makes such amounts available to the Agent, the Agent shall promptly make such amounts available to the Borrower as a Revolving Credit Advance. The Agent shall also be entitled to recover from such Revolving Credit Lender or the Borrower, as the case may be, but without duplication, interest on such amount in respect of each day from the date such amount was made available by the Agent to the Borrower, to the date such amount is recovered by the Agent, at a rate per annum equal to:

(a)in the case of such Revolving Credit Lender, for the first two (2) Business Days such amount remains unpaid, the Federal Funds Effective Rate, and thereafter, at the rate of interest then applicable to such Revolving Credit Advances; and

(b)in the case of the Borrower, the rate of interest then applicable to such Advance of the Revolving Credit.

Until such Revolving Credit Lender has paid the Agent such amount, such Revolving Credit Lender shall have no interest in or rights with respect to such Advance for any purpose whatsoever. The obligation of any Revolving Credit Lender to make any Revolving Credit Advance hereunder shall not be affected by the failure of any other Revolving Credit Lender to make any Advance hereunder, and no Revolving Credit Lender shall have any liability to the Borrower or any of its Subsidiaries, the Agent, any other Revolving Credit Lender, or any other party for another Revolving Credit Lender’s failure to make any loan or Advance hereunder.

Section 2.6 Swing Line

(1)           Swing Line Advances. The Swing Line Lender may, on the terms and subject to the conditions hereinafter set forth, but shall not be required to, make one or more Advances (each such advance being a “Swing Line Advance”) to the Borrower from time to time on any Business Day during the period from the Effective Date hereof until (but excluding) the Revolving Credit Maturity Date in an aggregate amount not to exceed at any one time outstanding the Swing Line Maximum Amount. Subject to the terms set forth herein, advances, repayments and readvances may be made under the Swing Line.

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(2)           Accrual of Interest and Maturity; Evidence of Indebtedness.

(a)Swing Line Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Borrower to Swing Line Lender resulting from each Swing Line Advance from time to time, including the amount and date of each Swing Line Advance, its Applicable Interest Rate, its Interest Period, if any, and the amount and date of any repayment made on any Swing Line Advance from time to time. The entries made in such account or accounts of Swing Line Lender shall be prima facie evidence, absent manifest error, of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of Swing Line Lender to maintain such account, as applicable, or any error therein, shall not in any manner affect the obligation of the Borrower to repay the Swing Line Advances (and all other amounts owing with respect thereto) in accordance with the terms of this Agreement.

(b)The Borrower agrees that, upon the written request of Swing Line Lender, the Borrower will execute and deliver to Swing Line Lender a Swing Line Note.

(c)The Borrower unconditionally promises to pay to the Swing Line Lender the then unpaid principal amount of such Swing Line Advance (plus all accrued and unpaid interest) on the Revolving Credit Maturity Date and on such other dates and in such other amounts as may be required from time to time pursuant to this Agreement.  Subject to the terms and conditions hereof, each Swing Line Advance shall, from time to time after the date of such Advance (until paid), bear interest at its Applicable Interest Rate.

(3)           Requests for Swing Line Advances. The Borrower may request a Swing Line Advance by the delivery to the Swing Line Lender of a Request for Swing Line Advance executed by an Authorized Signer for the Borrower, subject to the following:

(a)each such Request for Swing Line Advance shall set forth the information required on the Request for Advance, including without limitation the proposed date of such Swing Line Advance, which must be a Business Day;

(b)on the proposed date of such Swing Line Advance, after giving effect to all outstanding requests for Swing Line Advances made by the Borrower as of the date of determination, the aggregate principal amount of all Swing Line Advances outstanding on such date shall not exceed the Swing Line Maximum Amount;

(c)on the proposed date of such Swing Line Advance, after giving effect to all outstanding requests for Revolving Credit Advances and Swing Line Advances requested by the Borrower on such date of determination, the aggregate principal amount of all Revolving Credit Advances and the Swing Line Advances outstanding on such date on such date shall not exceed the Net Revolving Credit Aggregate Commitment;

(d)the principal amount of the initial funding of such Advance, as opposed to any refunding or conversion thereof, shall be at least Two Hundred and Fifty

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Thousand Dollars (US$250,000) or such lesser amount as may be agreed to by the Swing Line Lender;

(e)each such Request for Swing Line Advance shall be delivered to the Swing Line Lender by 3:00 p.m. (Toronto time) on the proposed date of the Swing Line Advance;

(f)each Request for Swing Line Advance, once delivered to Swing Line Lender, shall not be revocable by the Borrower, and shall constitute and include a certification by the Borrower as of the date thereof that:

(i)all conditions to the making of Swing Line Advances set forth in this Agreement shall have been satisfied and shall remain satisfied to the date of such Swing Line Advance (both before and immediately after giving effect to such Swing Line Advance);

(ii)there is no Default or Event of Default in existence, and none will exist upon the making of such Swing Line Advance (both before and immediately after giving effect to such Swing Line Advance); and

(iii)the representations and warranties of the Credit Parties contained in this Agreement and the other Loan Documents are true and correct in all material respects and shall be true and correct in all material respect as of the date of the making of such Swing Line Advance (both before and immediately after giving effect to such Swing Line Advance), other than any representation or warranty that expressly speaks only as of a different date;

(4)           Disbursement of Swing Line Advances. Upon receiving any executed Request for Swing Line Advance from the Borrower and the satisfaction of the conditions set forth in Section 2.6(4) hereof, Swing Line Lender shall, at its option, make available to the Borrower the amount so requested in Dollars not later than 4:00 p.m. (Toronto time) on the date of such Advance, by credit to an account of the Borrower maintained with the Agent or to such other account or third party as the Borrower may reasonably direct in writing, subject to applicable law, provided such direction is timely given. Swing Line Lender shall promptly notify the Agent of any Swing Line Advance by electronic mail, facsimile, telephone, telex or telecopier.

(5)           Refunding of or Participation Interest in Swing Line Advances.

(a)The Agent, at any time in its sole and absolute discretion, may, in each case on behalf of the Borrower (which hereby irrevocably directs the Agent to act on their behalf) request each of the Revolving Credit Lenders (including the Swing Line Lender in its capacity as a Revolving Credit Lender) to make an Advance of the Revolving Credit to the Borrower, in an amount equal to such Revolving Credit Lender’s Revolving Credit Percentage of the aggregate principal amount of the Swing Line Advances outstanding on the date such notice is given (the “Refunded Swing Line Advances”). The applicable Revolving Credit Advances used to refund any Swing Line Advances shall be US Base Rate Advances. In connection with the making of any such Refunded Swing Line Advances or the

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purchase of a participation interest in Swing Line Advances under Section 2.6(5)(b) hereof, the Swing Line Lender shall retain its claim against the Borrower for any unpaid interest or fees in respect thereof accrued to the date of such refunding. Unless any of the events described in Section 8.1(i) hereof shall have occurred (in which event the procedures of Section 2.6(5)(b) shall apply) and regardless of whether the conditions precedent set forth in this Agreement to the making of a Revolving Credit Advance are then satisfied (but subject to Section 2.6(5)(b)), each Revolving Credit Lender shall make the proceeds of its Revolving Credit Advance available to the Agent for the benefit of the Swing Line Lender at the office of the Agent specified in Section 2.5(1) hereof prior to 11:00 a.m. (Toronto time) on the Business Day next succeeding the date such notice is given, in immediately available funds. The proceeds of such Revolving Credit Advances shall be immediately applied to repay the Refunded Swing Line Advances, subject to Section 10.1 hereof.

(b)If, prior to the making of an Advance of the Revolving Credit pursuant to Section 2.6(5)(a) hereof, one of the events described in Section 8.1(i) hereof shall have occurred, each Revolving Credit Lender will, on the date such Advance of the Revolving Credit was to have been made, purchase from the Swing Line Lender an undivided participating interest in each Swing Line Advance that was to have been refunded in an amount equal to its Revolving Credit Percentage of such Swing Line Advance. Each Revolving Credit Lender within the time periods specified in Section 2.6(5)(a) hereof, as applicable, shall immediately transfer to the Agent, for the benefit of the Swing Line Lender, in immediately available funds, an amount equal to its Revolving Credit Percentage of the aggregate principal amount of all Swing Line Advances outstanding as of such date. Upon receipt thereof, the Agent will deliver to such Revolving Credit Lender a Swing Line Participation Certificate evidencing such participation.

(c)Each Revolving Credit Lender’s obligation to make Revolving Credit Advances to refund Swing Line Advances, and to purchase participation interests, in accordance with Section 2.6(5)(a) and Section 2.6(5)(b), respectively, shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (A) any set-off, counterclaim, recoupment, defense or other right which such Revolving Credit Lender may have against Swing Line Lender, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of any Default or Event of Default; (C) any adverse change in the condition (financial or otherwise) of the Borrower or any other Person; (D) any breach of this Agreement or any other Loan Document by the Borrower or any other Person; (E) any inability of the Borrower to satisfy the conditions precedent to borrowing set forth in this Agreement on the date upon which such Revolving Credit Advance is to be made or such participating interest is to be purchased; (F) the termination of the Revolving Credit Aggregate Commitment hereunder; or (G) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. If any Revolving Credit Lender does not make available to the Agent the amount required pursuant to Section 2.6(5)(a) and Section 2.6(5)(b) hereof, as the case may be, the Agent on behalf of the Swing Line Lender, shall be entitled to recover such amount on

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demand from such Revolving Credit Lender, together with interest thereon for each day from the date of non-payment until such amount is paid in full (x) for the first two (2) Business Days such amount remains unpaid, at the Federal Funds Effective Rate and (y) thereafter, at the rate of interest then applicable to such Swing Line Advances. The obligation of any Revolving Credit Lender to make available its pro rata portion of the amounts required pursuant to Section 2.6(5)(a) and Section 2.6(5)(b) hereof shall not be affected by the failure of any other Revolving Credit Lender to make such amounts available, and no Revolving Credit Lender shall have any liability to any Credit Party, the Agent, the Swing Line Lender, or any other Revolving Credit Lender or any other party for another Revolving Credit Lender’s failure to make available the amounts required under Section 2.6(5)(a) and Section 2.6(5)(b) hereof.

(d)Notwithstanding the foregoing, no Revolving Credit Lender shall be required to make any Revolving Credit Advance to refund a Swing Line Advance or to purchase a participation in a Swing Line Advance if at least two (2) Business Days prior to the making of such Swing Line Advance by the Swing Line Lender, the officers of the Swing Line Lender immediately responsible for matters concerning this Agreement shall have received written notice from the Agent or any Lender that Swing Line Advances should be suspended based on the occurrence and continuance of a Default or Event of Default and stating that such notice is a “notice of default”; provided, however that the obligation of the Revolving Credit Lenders to make or refund such Swing Line Advance or purchase a participation in such Swing Line Advance) shall be reinstated upon the date on which such Default or Event of Default has been waived by the requisite Lenders.

Section 2.7 Hedging Transactions

(1)           The Borrower may incur Hedging Obligations under the Revolving Credit Facility pursuant to Hedging Agreements in connection with Hedging Transactions up to the Hedging Transaction Notional Amount.

(2)           Neither the Agent or any Revolving Credit Lender (or their Affiliates) shall be obligated to enter into any Hedging Agreement. Nothing in this Agreement shall be construed to require or authorize any Revolving Credit Lender to issue any Hedging Agreement, it being recognized that the Agent shall be the sole counterparty to any Hedging Agreement entered into under this Agreement.

(3)           Upon the entering into by the Agent of each Hedging Agreement hereunder, and except as otherwise agreed to by the Revolving Credit Lenders, each Revolving Credit Lender shall automatically acquire a pro rata participation interest in any amount to be paid to the Agent in its capacity as the sole counterparty to a Hedging Agreement as a result of an early termination of such Hedging Agreement for which the Borrower is the defaulting party, in each case based on its respective Revolving Credit Percentage (the “Hedging Participation”), provided that EDC shall at no time acquire a Hedging Participation in excess of its pro rata participation interest of the LC Hedging Aggregate Sublimit after deducting EDC’s pro rata participation interest of the Letter of Credit Obligations from such LC Hedging Aggregate Sublimit.

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(4)           To the extent that the LC Hedging Aggregate Obligations exceed the LC Hedging Aggregate Sublimit, the Borrower shall provide cash collateral in support of any such excess in an amount equal to the lesser of (i) 105% of the amount by which the LC Hedging Aggregate Obligations exceeds the LC Hedging Aggregate Sublimit, and (ii) the amount of such remaining excess, with such cash collateral to be provided on the basis set forth in Section 8.2 hereof. EDC hereby agrees that any cash collateral delivered by the Borrower as security for any LC Hedging Aggregate Obligations shall be first applied to repay any outstanding LC Hedging Aggregate Obligations in excess of LC Hedging Aggregate Sublimit.

Section 2.8 Interest Payments; Default Interest

(1)           Interest on the unpaid balance of all US Base Rate Advances of the Revolving Credit and the Swing Line from time to time outstanding shall accrue from the date of such Advance to the date repaid, at a per annum interest rate equal to the US Base Rate, and shall be payable in immediately available funds quarterly in arrears commencing on September 1, 2012, and on the first day of each March, June, September and December thereafter. Whenever any payment under this Section 2.8(1) shall become due on a day which is not a Business Day, the date for payment thereof shall be extended to the next Business Day. Interest accruing at the US Base Rate shall be computed on the basis of a 360 day year and assessed for the actual number of days elapsed, and in such computation effect shall be given to any change in the interest rate resulting from a change in the US Base Rate on the date of such change in the US Base Rate.

(2)           Interest on the unpaid balance of all Canadian Prime Rate Advances of the Revolving Credit from time to time outstanding shall accrue from the date of such Advance to the date repaid, at a per annum interest rate equal to the Canadian Prime Rate, and shall be payable in immediately available funds quarterly in arrears commencing on September 1, 2012, and on the first day of each March, June, September and December thereafter. Whenever any payment under this Section 2.8(1) shall become due on a day which is not a Business Day, the date for payment thereof shall be extended to the next Business Day. Interest accruing at the Canadian Prime Rate shall be computed on the basis of a 365 day year and assessed for the actual number of days elapsed, and in such computation effect shall be given to any change in the interest rate resulting from a change in the Canadian Prime Rate on the date of such change in the Canadian Prime Rate.

(3)           Interest on each Eurodollar-based Advance of the Revolving Credit shall accrue at its Eurodollar-based Rate and shall be payable in immediately available funds on the last day of the Euro-Interest Period applicable thereto (and, if any Euro-Interest Period shall exceed three months, then on the last Business Day of the third month of such Euro-Interest Period, and at three month intervals thereafter). Interest accruing at the Eurodollar-based Rate shall be computed on the basis of a 360 day year and assessed for the actual number of days elapsed from the first day of the Euro-Interest Period applicable thereto to but not including the last day thereof.

(4)           Interest on each BBA LIBOR-based Advance of the Revolving Credit shall accrue at its BBA LIBOR -based Rate and shall be payable in immediately available funds on the last day of the Euro-Interest Period applicable thereto (and, if any Euro-Interest Period shall exceed three months, then on the last Business Day of the third month of such Euro-Interest Period, and at three month intervals thereafter). Interest accruing at the BBA LIBOR -based Rate shall be

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computed on the basis of a 360 day year and assessed for the actual number of days elapsed from the first day of the Euro-Interest Period applicable thereto to but not including the last day thereof.

(5)           Interest on each CDOR-based Advance of the Revolving Credit shall accrue at its CDOR-based Rate and shall be payable in immediately available funds on the last day of the Contract Period applicable thereto (and, if any Contract Period shall exceed three months, then on the last Business Day of the third month of such Contract Period, and at three month intervals thereafter). Interest accruing at the CDOR —based Rate shall be computed on the basis of a 365 day year and assessed for the actual number of days elapsed from the first day of the Contract Period applicable thereto to but not including the last day thereof.

(6)           Notwithstanding anything to the contrary in the preceding sections, all accrued and unpaid interest on any Revolving Credit Advance refunded or converted pursuant to Section 2.4 hereof and any Swing Line Advance refunded pursuant to Section 2.6(5) hereof, shall be due and payable in full on the date such Advance is refunded or converted.

(7)           In the case of any Event of Default under Section 8.1(i), immediately upon the occurrence thereof, and in the case of any other Event of Default and in each case until the Event of Default is cured or waived in accordance with this Agreement, immediately upon receipt by the Agent of notice from the Majority Lenders, interest shall be payable on demand on all Revolving Credit Advances and Swing Line Advances from time to time outstanding at a per annum rate equal to the Applicable Interest Rate in respect of each such Advance plus, in the case of Eurodollar-based Advances, BBA LIBOR —based Advances and CDOR-based Advances, two percent (2%) for the remainder of the then existing Interest Period, if any, and at all other such times, and for all US Base Rate Advances and Canadian Prime Rate Advances from time to time outstanding, at a per annum rate equal to the US Base Rate or Canadian Prime Rate Advances, as applicable, plus two percent (2%).

Section 2.9 Optional Prepayments.

(1)           (i) The Borrower may prepay all or part of the outstanding principal of any US Base Rate Advance(s) of the Revolving Credit at any time, provided that, after giving effect to any partial prepayment, the aggregate balance of US Base Rate Advance(s) of the Revolving Credit remaining outstanding shall be at least two hundred and fifty thousand (US$250,000), (ii) the Borrower may prepay all or part of the outstanding principal of any Canadian Prime Rate Advance(s) of the Revolving Credit at any time, provided that, after giving effect to any partial prepayment, the aggregate balance of Canadian Prime Rate Advance(s) of the Revolving Credit remaining outstanding shall be at least two hundred and fifty thousand (Cdn.$250,000), (iii) subject to Section 2.12 hereof, the Borrower may prepay all or part of the outstanding principal of any Eurodollar-based Advance of the Revolving Credit at any time (subject to not less than five (5) Business Day’s notice to Agent), provided that, after giving effect to any partial prepayment, the unpaid portion of such Advance which is to be refunded or converted under Section 2.4 hereof shall be at least three hundred thousand (US$300,000), (iv) subject to Section 2.12 hereof, the Borrower may prepay all or part of the outstanding principal of any CDOR-based Advance of the Revolving Credit at any time (subject to not less than five (5) Business Day’s notice to Agent) provided that, after giving effect to any partial prepayment, the unpaid portion of such Advance which is to be refunded or converted under Section 2.4 hereof

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shall be at least three hundred thousand (Cdn.$300,000), and (v) subject to Section 2.12 hereof, the Borrower may prepay all or part of the outstanding principal of any BBA LIBOR-based Advance of the Revolving Credit at any time (subject to not less than five (5) Business Day’s notice to Agent), provided that, after giving effect to any partial prepayment, the unpaid portion of such Advance which is to be refunded or converted under Section 2.4 hereof shall be at least three hundred thousand (US$300,000).

(2)           (i) The Borrower may prepay all or part of the outstanding principal of any Swing Line Advance carried at the US Base Rate at any time, provided that, after giving effect to any partial prepayment, the aggregate balance of US Base Rate Advance(s) remaining outstanding shall be at least one hundred thousand (US$100,000), and (i) the Borrower may prepay all or part of the outstanding principal of any Swing Line Advance carried at the Canadian Prime Rate at any time, provided that, after giving effect to any partial prepayment, the aggregate balance of Canadian Prime Rate Advance(s) remaining outstanding shall be at least one hundred thousand (Cdn.$100,000).

(3)           Any prepayment of a US Base Rate Advance or Canadian Prime Rate Advance made in accordance with this Section shall be without premium or penalty and any prepayment of any other type of Advance shall be subject to the provisions of Section 10.1 hereof, but otherwise without premium or penalty.

Section 2.10 US Base Rate Advance in Absence of Election or Upon Default

If, (a) as to any outstanding Eurodollar-based Advance or BBA LIBOR-based Advance of the Revolving Credit, the Agent has not received payment of all outstanding principal and accrued interest on the last day of the Interest Period applicable thereto, or does not receive a timely Request for Advance meeting the requirements of Section 2.4 hereof with respect to the refunding or conversion of such Advance, or (b) if on the last day of the applicable Interest Period a Default or an Event of Default shall have occurred and be continuing, then, on the last day of the applicable Interest Period the principal amount of any Eurodollar-based Advance or BBA LIBOR-based Advance, as the case may be, which has not been prepaid shall be converted automatically to a US Base Rate Advance and the Agent shall thereafter promptly notify the Borrower of said action.  All accrued and unpaid interest on any Advance converted to a US Base Rate Advance under this Section 2.10 shall be due and payable in full on the date such Advance is converted.

Section 2.11 Canadian Prime Rate Advance in Absence of Election or Upon Default

If, (a) as to any outstanding CDOR-based Advance of the Revolving Credit, the Agent has not received payment of all outstanding principal and accrued interest on the last day of the Contract Period applicable thereto, or does not receive a timely Request for Advance meeting the requirements of Section 2.4 hereof with respect to the refunding or conversion of such Advance, or (b) if on the last day of the applicable Contract Period a Default or an Event of Default shall have occurred and be continuing, then, on the last day of the applicable Contract Period the principal amount of any CDOR-based Advance or which has not been prepaid shall be converted automatically to a Canadian Prime Rate Advance and the Agent shall thereafter promptly notify the Borrower of said action. All accrued and unpaid interest on any Advance converted to a Canadian Prime Rate Advance under this Section 2.10 shall be due and payable in full on the date such Advance is converted.

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Section 2.12 Revolving Credit Facility Fee

From the Effective Date to the Revolving Credit Maturity Date, the Borrower shall pay to the Agent for distribution to the Revolving Credit Lenders pro-rata in accordance with their respective Revolving Credit Percentages, a Revolving Credit Facility Fee quarterly in arrears commencing September 1, 2012, and on the first day of March, June, September and December thereafter (in respect of the prior three months or any portion thereof). The Revolving Credit Facility Fee payable to each Revolving Credit Lender shall be determined by multiplying the Applicable Fee Percentage times the Revolving Credit Aggregate Commitment then in effect (whether used or unused). The Revolving Credit Facility Fee shall be computed on the basis of a year of three hundred sixty (360) days and assessed for the actual number of days elapsed. Whenever any payment of the Revolving Credit Facility Fee shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next Business Day. Upon receipt of such payment, the Agent shall make prompt payment to each Revolving Credit Lender of its share of the Revolving Credit Facility Fee based upon its respective Revolving Credit Percentage. It is expressly understood that the Revolving Credit Facility Fees described in this Section are not refundable.

Section 2.13 Mandatory Repayment of Revolving Credit Advances.

(1)           If at any time and for any reason other than as a result of currency fluctuations the aggregate outstanding principal amount of Revolving Credit Advances plus Swing Line Advances, plus the LC Hedging Aggregate Obligations shall exceed the Revolving Credit Aggregate Commitment, the Borrower shall immediately reduce any pending request for a Revolving Credit Advance on such day by the amount of such excess and, to the extent any excess remains thereafter, repay any Revolving Credit Advances and Swing Line Advances in an amount equal to the lesser of the outstanding amount of such Advances and the amount of such remaining excess, with such amounts to be applied between the Revolving Credit Advances and Swing Line Advances as determined by the Agent and then, to the extent that any excess remains after payment in full of all Revolving Credit Advances and Swing Line Advances, to provide cash collateral in support of any LC Hedging Aggregate Obligations in an amount equal to the lesser of (x) 105% of the amount of such LC Hedging Aggregate Obligations and (y) the amount of such remaining excess, with such cash collateral to be provided on the basis set forth in Section 8.2 hereof. The Borrower acknowledges that, in connection with any repayment required hereunder, it shall also be responsible for the reimbursement of any prepayment or other costs required under Section 10.1 hereof.  Any payments made pursuant to this Section shall be applied first to outstanding US Base Rate Advances under the Revolving Credit, second to outstanding Canadian Prime Rate Advances under the Revolving Credit, third to Swing Line Advances carried at the US Base Rate, fourth to Eurodollar-based Advances of the Revolving Credit to, fifth to CDOR-based Advances of the Revolving Credit, and sixth to BBA LIBOR- based Advances of the Revolving Credit.

(2)           If at any time and for any reason the aggregate outstanding principal amount of Revolving Credit Advances plus Swing Line Advances, plus the LC Hedging Aggregate Obligations shall exceed 105% of the Revolving Credit Aggregate Commitment due to currency fluctuations only, the Borrower shall immediately reduce any pending request for a Revolving Credit Advance on such day by the amount of such excess and, to the extent any excess remains thereafter, repay any Revolving Credit Advances and Swing Line Advances in an amount equal

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to the lesser of the outstanding amount of such Advances and the amount of such remaining excess, with such amounts to be applied between the Revolving Credit Advances and Swing Line Advances as determined by the Agent and then, to the extent that any excess remains after payment in full of all Revolving Credit Advances and Swing Line Advances, to provide cash collateral in support of any LC Hedging Aggregate Obligations in an amount equal to the lesser of (x) 105% of the amount of such LC Hedging Aggregate Obligations and (y) the amount of such remaining excess, with such cash collateral to be provided on the basis set forth in Section 8.2 hereof. The Borrower acknowledges that, in connection with any repayment required hereunder, it shall also be responsible for the reimbursement of any prepayment or other costs required under Section 10.1 hereof.  Any payments made pursuant to this Section shall be applied first to outstanding US Base Rate Advances under the Revolving Credit, second to outstanding Canadian Prime Rate Advances under the Revolving Credit, third to Swing Line Advances carried at the US Base Rate, fourth to Eurodollar-based Advances of the Revolving Credit to, fifth to CDOR-based Advances of the Revolving Credit, and sixth to BBA LIBOR- based Advances of the Revolving Credit.

(3)           To the extent that, on the date any mandatory repayment of the Revolving Credit Advances under this Section 2.13 or payment pursuant to the terms of any of the Loan Documents is due, the Indebtedness under the Revolving Credit or any other Indebtedness to be prepaid is being carried, in whole or in part, at the Eurodollar-based Rate, BBA LIBOR-based Advance or CDOR-based Rate and no Default or Event of Default has occurred and is continuing, the Borrower may deposit the amount of such mandatory prepayment in a cash collateral account to be held by the Agent, for and on behalf of the Revolving Credit Lenders, on such terms and conditions as are reasonably acceptable to the Agent and upon such deposit the obligation of the Borrower to make such mandatory prepayment shall be deemed satisfied. Subject to the terms and conditions of said cash collateral account, sums on deposit in said cash collateral account shall be applied (until exhausted) to reduce the principal balance of the Revolving Credit on the last day of each Euro-Interest Period or Contract Period attributable to the Eurodollar-based Advances, BBA LIBOR-based Advance or CDOR-based Advances, as applicable, of such Revolving Advance, thereby avoiding breakage costs under Section 10.1 hereof; provided, however, that if a Default or Event of Default shall have occurred at any time while sums are on deposit in the cash collateral account, the Agent may, in its sole discretion, elect to apply such sums to reduce the principal balance of such Eurodollar-based Advances, BBA LIBOR-based Advance or CDOR-based Advance prior to the last day of the applicable Euro-Interest Period or Contract Period, and the Borrower will be obligated to pay any resulting breakage costs under Section 10.1.

Section 2.14 Optional Reduction or Termination of Revolving Credit Aggregate Commitment

The Borrower may, upon at least five (5) Business Days’ prior written notice to the Agent, permanently reduce the Revolving Credit Aggregate Commitment in whole at any time, or in part from time to time, without premium or penalty, provided that: (i) each partial reduction of the Revolving Credit Aggregate Commitment shall be in an aggregate amount equal to or greater than Five Million Dollars (US$5,000,000); (ii) each reduction shall be accompanied by the payment of the Revolving Credit Facility Fee, if any, accrued and unpaid to the date of such reduction; (iii) the Borrower shall prepay in accordance with the terms hereof the amount, if any, by which the aggregate unpaid principal amount of Revolving Credit Advances and Swing Line

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Advances (including, without duplication, any deemed Advances made under Section 3.7 hereof) outstanding hereunder, plus the LC Hedging Aggregate Obligations, exceeds the amount of the then applicable Revolving Credit Aggregate Commitment as so reduced, together with interest thereon to the date of prepayment; (iv) no reduction shall reduce the Revolving Credit Aggregate Commitment to an amount which is less than the aggregate undrawn amount of any LC Hedging Aggregate Obligations outstanding at such time; and (v) no such reduction shall reduce the Swing Line Maximum Amount unless the Borrower so elects, provided that the Swing Line Maximum Amount shall at no time be greater than the Revolving Credit Aggregate Commitment; provided, however that if the termination or reduction of the Revolving Credit Aggregate Commitment requires the prepayment of a Eurodollar-based Advance, BBA LIBOR- based Advance or CDOR-based Advance and such termination or reduction is made on a day other than the last Business Day of the then current Interest Period applicable to such Eurodollar- based Advance, BBA LIBOR-based Advance or such CDOR-based Advance, then, pursuant to Section 10.1, the Borrower shall compensate the Revolving Credit Lenders and/or the Swing Line Lender for any losses or, so long as no Default or Event of Default has occurred and is continuing, the Borrower may deposit the amount of such prepayment in a collateral account as provided in Section 2.13(3). Reductions of the Revolving Credit Aggregate Commitment and any accompanying prepayments of Advances of the Revolving Credit shall be distributed by the Agent to each Revolving Credit Lender in accordance with such Revolving Credit Lender’s Revolving Percentage thereof, and will not be available for reinstatement by or readvance to the Borrower, and any accompanying prepayments of Advances of the Swing Line shall be distributed by Agent to the Swing Line Lender and will not be available for reinstatement by or readvance to the Borrower. Any reductions of the Revolving Credit Aggregate Commitment hereunder shall reduce each Revolving Credit Lender’s portion thereof proportionately (based on the applicable Percentages), and shall be permanent and irrevocable. Any payments made pursuant to this Section shall be applied first to outstanding US Base Rate Advances under the Revolving Credit, second to outstanding Canadian Prime Rate Advances under the Revolving Credit, third to Swing Line Advances carried at the US Base Rate, fourth to Eurodollar-based Advances of the Revolving Credit to, fifth to CDOR-based Advances of the Revolving Credit, and sixth to BBA LIBOR-based Advances of the Revolving Credit.

Section 2.15 Use of Proceeds of Advances

Advances of the Revolving Credit shall be used to finance the completion of the NSN Transaction (including any earn-out or other post-acquisition payments provided for in the MAA) and to finance the Credit Parties’ working capital requirements.

ARTICLE 3 — LETTERS OF CREDIT.

Section 3.1 Letters of Credit

Subject to the terms and conditions of this Agreement, Issuing Lender may through the Issuing Office, at any time and from time to time from and after the date hereof until thirty (30) days prior to the Revolving Credit Maturity Date, upon the written request of the Borrower accompanied by a duly executed Letter of Credit Agreement and such other documentation related to the requested Letter of Credit as the Issuing Lender may require, issue Letters of Credit in Dollars, Canadian Dollars or EUR for the account of the Borrower, in an aggregate amount for all Letters of Credit issued hereunder at any one time outstanding not to exceed the LC Hedging

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Aggregate Sublimit. Each Letter of Credit shall be in a minimum face amount of One Hundred Thousand Dollars (US$100,000) (or such lesser amount as may be agreed to by Issuing Lender) and each Letter of Credit (including any renewal thereof) shall expire not later than the first to occur of (i) thirteen (13) months after the date of issuance thereof and (ii) ten (10) Business Days prior to the Revolving Credit Maturity Date in effect on the date of issuance thereof. The submission of all applications in respect of and the issuance of each Letter of Credit hereunder shall be subject in all respects to such industry rules and governing law as are acceptable to the Issuing Lender. In the event of any conflict between this Agreement and any Letter of Credit Document other than any Letter of Credit, this Agreement shall control.

Section 3.2 Conditions to Issuance

No Letter of Credit shall be issued (including the renewal or extension of any Letter of Credit previously issued) at the request and for the account of the Borrower unless, as of the date of issuance (or renewal or extension) of such Letter of Credit:

(a)(i) after giving effect to the Letter of Credit requested, the Letter of Credit Obligations on such date plus the aggregate amount of the Hedging Obligations on such date does not exceed the LC Hedging Aggregate Sublimit, and (ii) after giving effect to the Letter of Credit requested, the Letter of Credit Obligations on such date plus the Hedging Obligations on such date plus the aggregate amount of all Revolving Credit Advances and Swing Line Advances (including all Advances deemed disbursed by the Agent under Section 3.7(3) hereof in respect of the Borrower Reimbursement Obligations) hereunder requested or outstanding on such date do not exceed the Revolving Credit Aggregate Commitment;

(b)the representations and warranties of the Credit Parties contained in this Agreement and the other Loan Documents are true and correct in all material respects and shall be true and correct in all material respects as of date of the issuance of such Letter of Credit (both before and immediately after the issuance of such Letter of Credit), other than any representation or warranty that expressly speaks only as of a different date;

(c)there is no Default or Event of Default in existence, and none will exist upon the issuance of such Letter of Credit;

(d)the Borrower shall have delivered to Issuing Lender at its Issuing Office, not less than three (3) Business Days prior to the requested date for issuance (or such shorter time as the Issuing Lender, in its sole discretion, may permit), the Letter of Credit Agreement related thereto, together with such other documents and materials as may be required pursuant to the terms thereof, and the terms of the proposed Letter of Credit shall be reasonably satisfactory to Issuing Lender;

(e)no order, judgment or decree of any court, arbitrator or Governmental Authority shall purport by its terms to enjoin or restrain Issuing Lender from issuing the Letter of Credit requested, or any Revolving Credit Lender from taking an assignment of its Revolving Credit Percentage thereof pursuant to Section 3.7 hereof, and no law, rule, regulation, request or directive (whether or not having the force of law) shall prohibit the Issuing Lender from issuing, or any Revolving

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Credit Lender from taking an assignment of its Revolving Credit Percentage of, the Letter of Credit requested or letters of credit generally;

(f)there shall have been (i) no introduction of or change in the interpretation of any law or regulation, (ii) no declaration of a general banking moratorium by banking authorities in Canada, Ontario, the United States, Texas or the respective jurisdictions in which the Revolving Credit Lenders, the Borrower and the beneficiary of the requested Letter of Credit are located, and (iii) no establishment of any new restrictions by any central bank or other governmental agency or authority on transactions involving letters of credit or on banks generally that, in any case described in this clause (e), would make it unlawful or unduly burdensome for the Issuing Lender to issue or any Revolving Credit Lender to take an assignment of its Revolving Credit Percentage of the requested Letter of Credit or letters of credit generally;

(g)if any Revolving Credit Lender is a Defaulting Lender, the Issuing Lender has entered into arrangements satisfactory to it to eliminate the Fronting Exposure with respect to the participation in the Letter of Credit Obligations by such Defaulting Lender, including creation of a cash collateral account on terms satisfactory to Agent or delivery of other security to assure payment of such Defaulting Lender’s Percentage of all outstanding Letter of Credit Obligations; and

(h)Issuing Lender shall have received the issuance fees required in connection with the issuance of such Letter of Credit pursuant to Section 3.4 hereof.

Each Letter of Credit Agreement submitted to Issuing Lender pursuant hereto shall constitute the certification by the Borrower of the matters set forth in Section 4.2 hereof. The Agent shall be entitled to rely on such certification without any duty of inquiry.

Section 3.3 Notice

The Issuing Lender shall deliver to the Agent, concurrently with or promptly following its issuance of any Letter of Credit, a true and complete copy of each Letter of Credit. Promptly upon its receipt thereof, the Agent shall give notice, substantially in the form attached as Exhibit E , to each Revolving Credit Lender of the issuance of each Letter of Credit, specifying the amount thereof, whether it is in Dollars, Canadian Dollars or EUR and the amount of such Revolving Credit Lender’s Percentage thereof.

Section 3.4 Letter of Credit Fees

(1)           The Borrower shall pay letter of credit fees as follows:

(a)A per annum letter of credit fee with respect to the undrawn amount of each Letter of Credit issued pursuant hereto (based on the amount of each Letter of Credit) in the amount of the Applicable Fee Percentage (determined with reference to Schedule 1.1(11) to this Agreement) shall be paid to the Agent for distribution to the Revolving Credit Lenders in accordance with their Revolving Credit Percentages.

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(b)A letter of credit facing fee on the face amount of each Letter of Credit shall be paid to the Agent for distribution to the Issuing Lender for its own account based upon the Applicable Margin.

(2)All payments by the Borrower to the Agent for distribution to the Issuing Lender or the Revolving Credit Lenders under this Section 3.4 shall be made in US Dollars, Canadian Dollars or EUR in immediately available funds at the Issuing Office or such other office of the Agent as may be designated from time to time by written notice to the Borrower by the Agent. The fees described in clauses (a)(i) and (ii) above (i) shall be non-refundable under all circumstances, (ii) in the case of fees due under clause (a)(i) above, shall be payable quarterly in advance on the first day of March, June, September and December) and (iii) in the case of fees due under clause (a)(ii) above, shall be payable upon the issuance of such Letter of Credit and quarterly in advance thereafter. The fees due under clause (a)(i) above shall be determined by multiplying the Applicable Fee Percentage times the undrawn amount of the face amount of each such Letter of Credit on the date of determination, and shall be calculated on the basis of a 360 day year and assessed for the actual number of days from the date of the issuance thereof to the stated expiration thereof. The parties hereto acknowledge that, unless the Issuing Lender otherwise agrees, any increase to the face amount or extension of a Letter of Credit issued hereunder shall be treated as a new Letter of Credit for the purposes of the letter of credit facing fee.

Section 3.5  Increased Costs

(1)If any Change in Law shall either (i) impose, modify or cause to be deemed applicable any reserve, special deposit, limitation or similar requirement against letters of credit issued or participated in by, or assets held by, or deposits in or for the account of, the Issuing Lender or any Revolving Credit Lender or (ii) impose on the Issuing Lender or any Revolving Credit Lender any other condition regarding this Agreement, the Letters of Credit or any participations in such Letters of Credit, and the result of any event referred to in clause (i) or (ii) above shall be to increase the cost or expense to the Issuing Lender or such Revolving Credit Lender of issuing or maintaining or participating in any of the Letters of Credit (which increase in cost or expense shall be determined by the Issuing Lender’s or such Revolving Credit Lender’s reasonable allocation of the aggregate of such cost increases and expenses resulting from such events), then, upon demand by the Issuing Lender or such Revolving Credit Lender, as the case may be, subject to Section 3.5(2) below, the Borrower shall, within thirty (30) days following demand for payment, pay to Issuing Lender or such Revolving Credit Lender, as the case may be, from time to time as specified by the Issuing Lender or such Revolving Credit Lender, additional amounts which shall be sufficient to compensate the Issuing Lender or such Revolving Credit Lender for such increased cost and expense (together with interest on each such amount from ten days after the date such payment is due until payment in full thereof at the US Base Rate), provided that if the Issuing Lender or such Revolving Credit Lender could take any reasonable action, without cost or administrative or other burden or restriction to such Lender, to mitigate or eliminate such cost or expense, it agrees to do so within a reasonable time after becoming aware of the foregoing matters. Each demand for payment under this Section 3.5 shall be accompanied by a certificate of Issuing Lender or the applicable Revolving Credit Lender setting forth the amount of such increased cost or expense incurred by the Issuing Lender or such Revolving Credit Lender, as the case may be, as a result of any event mentioned in clause (i) or (ii) above, and in reasonable detail, the methodology for calculating and the calculation of such amount, which

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certificate shall be prepared in good faith and shall be conclusive evidence, absent manifest er ror, as to the amount thereof.

(2)Failure or delay on the part of the Issuing Lender or any Revolving Credit Lender to demand compensation pursuant to this Section 3.5 shall not constitute a waiver of such Lender’s right to demand such compensation, except that the Borrower shall not be required to compensate the Issuing Lender or any Revolving Credit Lender pursuant to this Section 3.5 for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefore, unless the Change in Law giving rise to such increased costs or reductions is retroactive, in which case the 180 day period referred to above shall be extended to include the period of retroactive effect thereof.

Section 3.6 Other Fees

In connection with the Letters of Credit, and in addition to the Letter of Credit Fees, the Borrower shall pay, for the sole account of the Issuing Lender, standard documentation, administration, payment and cancellation charges assessed by Issuing Lender or the Issuing Office, at the times, in the amounts and on the terms set forth or to be set forth from time to time in the standard fee schedule of the Issuing Office in effect from time to time.

Section 3.7 Participation Interests in and Drawings and Demands for Payment Under Letters of Credit.

(1)Upon issuance by the Issuing Lender of each Letter of Credit hereunder (and on the Effective Date with respect to each Existing Letter of Credit), each Revolving Credit Lender shall automatically acquire a pro rata participation interest in such Letter of Credit and each related Letter of Credit Payment based on its respective Revolving Credit Percentage.

(2)If the Issuing Lender shall honour a draft or other demand for payment presented or made under any Letter of Credit, the Borrower agrees to pay to the Issuing Lender an amount equal to the amount paid by the Issuing Lender in respect of such draft or other demand under such Letter of Credit and all reasonable expenses paid or incurred by the Agent relative thereto not later than 1:00 p.m. (Toronto time), in Dollars, on (i) the Business Day that  the Borrower received notice of such presentment and honour, if such notice is received prior to 11:00 a.m. (Toronto time) or (ii) the Business Day immediately following the day that the Borrower received such notice, if such notice is received after 11:00 a.m. (Toronto time).

(3)If the Issuing Lender shall honour a draft or other demand for payment presented or made under any Letter of Credit, but the Borrower does not reimburse the Issuing Lender as required under Section 3.7(2) above and the Revolving Credit Aggregate Commitment has not been terminated (whether by maturity, acceleration or otherwise), the Borrower shall be deemed to have immediately requested that the Revolving Credit Lenders make a US Base Rate Advance of the Revolving Credit (which Advance may be subsequently converted at any time into a Eurodollar-based Advance pursuant to Section 2.4 hereof) in the principal amount equal to the amount paid by the Issuing Lender in respect of such draft or other demand under such Letter of Credit and all reasonable expenses paid or incurred by the Agent relative thereto. The Agent will promptly notify the Revolving Credit Lenders of such deemed request, and each such Lender

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shall make available to the Agent an amount equal to its pro rata share (based on its Revolving Credit Percentage) of the amount of such Advance.

(4)If the Issuing Lender shall honour a draft or other demand for payment presented or made under any Letter of Credit, but the Borrower does not reimburse the Issuing Lender as required under Section 3.7(2) above, and (i) the Revolving Credit Aggregate Commitment has been terminated (whether by maturity, acceleration or otherwise), or (ii) any reimbursement received by the Issuing Lender from the Borrower is or must be returned or rescinded upon or during any bankruptcy, reorganization or similar process of any Credit Party or otherwise, then the Agent shall notify each Revolving Credit Lender, and each Revolving Credit Lender will be obligated to pay the Agent for the account of the Issuing Lender its pro rata share (based on its Revolving Credit Percentage) of the amount paid by the Issuing Lender in respect of such draft or other demand under such Letter of Credit and all reasonable expenses paid or incurred by the Agent relative thereto (but no such payment shall diminish the obligations of the Borrower hereunder). Upon receipt thereof, the Agent will deliver to such Revolving Credit Lender a participation certificate evidencing its participation interest in respect of such payment and expenses. To the extent that a Revolving Credit Lender fails to make such amount available to the Agent by 11:00 a.m. (Toronto time) on the Business Day next succeeding the date such notice is given, such Revolving Credit Lender shall pay interest on such amount in respect of each day from the date such amount was required to be paid, to the date paid to the Agent, at a rate per annum equal to the Federal Funds Effective Rate.  The failure of any Revolving Credit Lender to make its pro rata portion of any such amount available to the Agent shall not relieve any other Revolving Credit Lender of its obligation to make available its pro rata portion of such amount, but no Revolving Credit Lender shall be responsible for failure of any other Revolving Credit Lender to make such pro rata portion available to the Agent.

(5)In the case of any Advance made under Section 3.7(3), each such Advance shall be disbursed notwithstanding any failure to satisfy any conditions for disbursement of any Advance set forth in Article 2 hereof or Article 4 hereof, and, to the extent of the Advance so disbursed, the Reimbursement Obligation of the Borrower to the Agent under Section 3.7(3) shall be deemed satisfied (unless, in each case, taking into account any such deemed Advances, the aggregate outstanding principal amount of Advances of the Revolving Credit and the Swing Line, plus the Letter of Credit Obligations (other than the Reimbursement Obligations to be reimbursed by this Advance), plus the Hedging Obligations on such date exceed the then applicable Revolving Credit Aggregate Commitment).

(6)If the Issuing Lender shall honour a draft or other demand for payment presented or made under any Letter of Credit, the Issuing Lender shall provide notice thereof to the Borrower on the date such draft or demand is honoured, and to each Revolving Credit Lender on such date unless the Borrower shall have satisfied its reimbursement obligations by payment to the Agent (for the benefit of the Issuing Lender) as required under this Section 3.7.  The Issuing Lender shall further use reasonable efforts to provide notice to the Borrower prior to honouring any such draft or other demand for payment, but such notice, or the failure to provide such notice, shall not affect the rights or obligations of the Issuing Lender with respect to any Letter of Credit or the rights and obligations of the parties hereto, including without limitation the obligations of the Borrower under this Section 3.7.

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(7)Notwithstanding the foregoing however no Revolving Credit Lender shall be deemed to have acquired a participation in a Letter of Credit if the officers of the Issuing Lender immediately responsible for matters concerning this Agreement shall have received written notice from the Agent or any Lender at least two (2) Business Days prior to the date of the issuance or extension of such Letter of Credit or, with respect to any Letter of Credit subject to automatic extension, at least five (5) Business Days prior to the date that the beneficiary under such Letter of Credit must be notified that such Letter of Credit will not be renewed, that the issuance or extension of Letters of Credit should be suspended based on the occurrence and continuance of a Default or Event of Default and stating that such notice is a “notice of default”; provided, however that the Revolving Credit Lenders shall be deemed to have acquired such a participation upon the date on which such Default or Event of Default has been waived by the requisite Revolving Credit Lenders, as applicable. In the event that the Issuing Lender receives such a notice, the Issuing Lender shall have no obligation to issue any Letter of Credit until such notice is withdrawn by the Agent or such Lender or until the requisite Lenders have waived such Default or Event of Default in accordance with the terms of this Agreement.

(8)Nothing in this Agreement shall be construed to require or authorize any Revolving Credit Lender to issue any Letter of Credit, it being recognized that the Issuing Lender shall be the sole issuer of Letters of Credit under this Agreement.

(9)In the event that any Revolving Credit Lender becomes a Defaulting Lender, the Issuing Lender may, at its option, require that the Borrower enter into arrangements satisfactory to Issuing Lender to eliminate the Fronting Exposure with respect to the participation in the Letter of Credit Obligations by such Defaulting Lender, including creation of a cash collateral account on terms satisfactory to Agent or delivery of other security to assure payment of such Defaulting Lender’s Percentage of all outstanding Letter of Credit Obligations.

Section 3.8 Obligations Irrevocable

The obligations of Borrower to make payments to the Agent for the account of Issuing Lender or the Revolving Credit Lenders with respect to Letter of Credit Obligations under Section 3.7 hereof, shall be unconditional and irrevocable and not subject to any qualification or exception whatsoever, including, without limitation:

(a)Any lack of validity or enforceability of any Letter of Credit, any Letter of Credit Agreement, any other documentation relating to any Letter of Credit, this Agreement or any of the other Loan Documents (the “Letter of Credit Documents”);

(b)Any amendment, modification, waiver, consent, or any substitution, exchange or release of or failure to perfect any interest in collateral or security, with respect to or under any Letter of Credit Document;

(c)The existence of any claim, setoff, defense or other right which the Borrower may have at any time against any beneficiary or any transferee of any Letter of Credit (or any persons or entities for whom any such beneficiary or any such transferee may be acting), the Agent, the Issuing Lender or any Revolving Credit Lender or any other Person, whether in connection with this Agreement, any of the Letter of

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Credit Documents, the transactions contemplated herein or therein or any unrelated transactions;

(d)Any draft or other statement or document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect, other than in respect of the gross negligence or wilful misconduct of the Issuing Lender;

(e)Payment by the Issuing Lender to the beneficiary under any Letter of Credit against presentation of documents which do not comply with the terms of such Letter of Credit, including failure of any documents to bear any reference or adequate reference to such Letter of Credit, other than in respect of the gross negligence or wilful misconduct of the Issuing Lender;

(f)Any failure, omission, delay or lack on the part of the Agent, Issuing Lender or any Revolving Credit Lender or any party to any of the Letter of Credit Documents or any other Loan Document to enforce, assert or exercise any right, power or remedy conferred upon the Agent, Issuing Lender, any Revolving Credit Lender or any such party under this Agreement, any of the other Loan Documents or any of the Letter of Credit Documents, or any other acts or omissions on the part of the Agent, Issuing Lender, any Revolving Credit Lender or any such party; or

(g)Any other event or circumstance that would, in the absence of this Section 3.8, result in the release or discharge by operation of law or otherwise of the Borrower from the performance or observance of any obligation, covenant or agreement contained in Section 3.7 hereof.

No setoff, counterclaim, reduction or diminution of any obligation or any defense of any kind or nature which the Borrower has or may have against the beneficiary of any Letter of Credit shall be available hereunder to the Borrower against the Agent, Issuing Lender or any Revolving Credit Lender. With respect to any Letter of Credit, nothing contained in this Section 3.8 shall be deemed to prevent the Borrower, after satisfaction in full of the absolute and unconditional obligations of the Borrower hereunder with respect to such Letter of Credit, from asserting in a separate action any claim, defense, set off or other right which they (or any of them) may have against the Agent, Issuing Lender or any Revolving Credit Lender in connection with such Letter of Credit.

Section 3.9 Risk Under Letters of Credit.

(1)In the administration and handling of Letters of Credit and any security therefor, or any documents or instruments given in connection therewith, Issuing Lender shall have the sole right to take or refrain from taking any and all actions under or upon the Letters of Credit.

(2)Subject to other terms and conditions of this Agreement, Issuing Lender shall issue the Letters of Credit and shall hold the documents related thereto in its own name and shall make all collections thereunder and otherwise administer the Letters of Credit in accordance with Issuing Lender’s regularly established practices and procedures and will have no further obligation with respect thereto. In the administration of Letters of Credit, Issuing Lender shall not be liable for

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any action taken or omitted on the advice of counsel, accountants, app raisers or other experts selected by Issuing Lender with due care and Issuing Lender may rely upon any notice, communication, certificate or other statement from the Borrower, beneficiaries of Letters of Credit, or any other Person which Issuing Lender believes to be authentic. Issuing Lender will, upon request, furnish the Revolving Credit Lenders with copies of Letter of Credit Documents related thereto.

(3)In connection with the issuance and administration of Letters of Credit and the assignments hereunder, Issuing Lender makes no representation and shall have no responsibility with respect to (i) the obligations of the Borrower or the validity, sufficiency or enforceability of any document or instrument given in connection therewith, or the taking of any action with respect to same, (ii) the financial condition of, any representations made by, or any act or omission of the Borrower or any other Person, or (iii) any failure or delay in exercising any rights or powers possessed by Issuing Lender in its capacity as issuer of Letters of Credit in the absence of its gross negligence or wilful misconduct. Each of the Revolving Credit Lenders expressly acknowledges that it has made and will continue to make its own evaluations of the Borrower’s creditworthiness without reliance on any representation of Issuing Lender or Issuing Lender’s officers, agents and employees.

(4)If at any time Issuing Lender shall recover any part of any unreimbursed amount for any draw or other demand for payment under a Letter of Credit, or any interest thereon, the Agent or Issuing Lender, as the case may be, shall receive same for the pro rata benefit of the Revolving Credit Lenders in accordance with their respective Percentages and shall promptly deliver to each Revolving Credit Lender its share thereof, less such Revolving Credit Lender’s pro rata share of the costs of such recovery, including court costs and attorney’s fees. If at any time any Revolving Credit Lender shall receive from any source whatsoever any payment on any such unreimbursed amount or interest thereon in excess of such Revolving Credit Lender’s Percentage of such payment, such Revolving Credit Lender will promptly pay over such excess to the Agent, for redistribution in accordance with this Agreement.

Section 3.10 Indemnification

The Borrower hereby indemnifies and agrees to hold harmless the Revolving Credit Lenders, the Issuing Lender and the Agent and their respective Affiliates, and the respective officers, directors, employees and agents of such Persons (each an “L/C Indemnified Person”), from and against any and all claims, damages, losses, liabilities, costs or expenses of any kind or nature whatsoever which the Revolving Credit Lenders, the Issuing Lender or the Agent or any such Person may incur or which may be claimed against any of them by reason of or in connection with any Letter of Credit (collectively, the “L/C Indemnified Amounts”), and none of the Issuing Lender, any Revolving Credit Lender or the Agent or any of their respective officers, directors, employees or agents shall be liable or responsible for:

(a)the use which may be made of any Letter of Credit or for any acts or omissions of any beneficiary in connection therewith;

(b)the validity, sufficiency or genuineness of documents or of any endorsement thereon, even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged;

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(c)payment by the Issuing Lender to the beneficiary under any Letter of Credit against presentation of documents which do not strictly comply with the terms of any Letter of Credit (unless such payment resulted from the gross negligence or wilful misconduct of the Issuing Lender), including failure of any documents to bear any reference or adequate reference to such Letter of Credit;

(d)any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit; or

(e)any other event or circumstance whatsoever arising in connection with any Letter of Credit.

It is understood that in making any payment under a Letter of Credit the Issuing Lender will rely on documents presented to it under such Letter of Credit as to any and all matters set forth therein without further investigation and regardless of any notice or information to the contrary.

No Borrower shall be required to indemnify any L/C Indemnified Person for any L/C Indemnified Amounts to the extent such amounts result from the gross negligence or wilful misconduct of such L/C Indemnified Person or any officer, director, employee or agent of such L/C Indemnified Person and the Agent and the Issuing Lender shall be liable to the Borrower to the extent, but only to the extent, of any direct, as opposed to consequential or incidental, damages suffered by the Borrower which were caused by the gross negligence or wilful misconduct of the Issuing Lender or any officer, director, employee or agent of the Issuing Lender or by the Issuing Lender’s wrongful dishonour of any Letter of Credit after the presentation to it by the beneficiary thereunder of a draft or other demand for payment and other documentation strictly complying with the terms and conditions of such Letter of Credit.

Section 3.11 Right of Reimbursement

Each Revolving Credit Lender agrees to reimburse the Issuing Lender on demand, pro rata in accordance with its respective Revolving Credit Percentage, for (i) the reasonable out-of- pocket costs and expenses of the Issuing Lender to be reimbursed by the Borrower pursuant to any Letter of Credit Agreement or any Letter of Credit, to the extent not reimbursed by the Borrower or any other Credit Party and (ii) any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, fees, reasonable out-of-pocket expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against Issuing Lender in any way relating to or arising out of this Agreement (including Section 3.7(3) hereof), any Letter of Credit, any documentation or any transaction relating thereto, or any Letter of Credit Agreement, to the extent not reimbursed by the Borrower, except to the extent that such liabilities, losses, costs or expenses were incurred by Issuing Lender as a result of Issuing Lender’s gross negligence or willful misconduct or by the Issuing Lender’s wrongful dishonor of any Letter of Credit after the presentation to it by the beneficiary thereunder of a draft or other demand for payment and other documentation strictly complying with the terms and conditions of such Letter of Credit.

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ARTICLE 4 — CONDITIONS.

The obligations of the Lenders to make Advances or loans pursuant to this Agreement and the obligation of the Issuing Lender to issue Letters of Credit are subject to the following conditions:

Section 4.1 Conditions of Initial Advances

The obligations of the Lenders to make initial Advances or loans pursuant to this Agreement and the obligation of the Issuing Lender to issue initial Letters of Credit, in each case, on the Effective Date only, are subject to the following conditions:

(1)Notes, this Agreement and the other Loan Documents.  The Borrower shall have executed and delivered to the Agent for the account of each Lender requesting Notes, the Revolving Credit Notes or the Swing Line Notes, as applicable; the Borrower shall have executed and delivered this Agreement; and each Credit Party shall have executed and delivered the other Loan Documents to which such Credit Party is required to be a party (including all schedules and other documents to be delivered pursuant hereto); and such Notes (if any), this Agreement and the other Loan Documents shall be in full force and effect.

(2)Corporate Authority. The Agent shall have received, with a counterpart thereof for each Lender, from each Credit Party and such other parties requested by the Agent in its reasonable discretion , a certificate of its Secretary, Assistant Secretary or other officers of such Credit Party dated as of the Effective Date as to:

(a)corporate resolutions (or the equivalent) of each Credit Party (or other party) authorizing the transactions contemplated by this Agreement and the other Loan Documents approval of this Agreement and the other Loan Documents, in each case to which such Credit Party (or other party) is party, and authorizing the execution and delivery of this Agreement and the other Loan Documents, and in the case of the Borrower, authorizing the execution and delivery of requests for Advances and the issuance of Letters of Credit hereunder,

(b)the incumbency and signature of the officers or other authorized persons of such Credit Party (or other party) executing any Loan Document and in the case of the Borrower, the officers who are authorized to execute any Requests for Advance, or requests for the issuance of Letters of Credit,

(c)a certificate of good standing or continued existence (or the equivalent thereof) from the jurisdiction of its formation or incorporation, and from every state, province or other jurisdiction of the Credit Party (or other party) where the Agent is taking security from such Credit Party, which jurisdictions are listed on Schedule 4.2 attached hereto, and

(d)copies of the certificate or articles of incorporation, amalgamation, continuance (or similar document) and bylaws or other constitutional documents of each Credit Party (or other party), as in effect on the Effective Date.

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(3)Collateral Documents, Guaranties and other Loan Documents. The Agent shall have received the following documents, each in form and substance satisfactory to the Agent and fully executed by each party thereto:

(a)The following Collateral Documents, each in form and substance acceptable to the Agent and fully executed by each party thereto and dated as of the Effective Date:

(i)the Security Agreements, executed and delivered by the applicable Credit Parties, together with, to the extent applicable, any notices, acknowledgments or other certifications necessary to perfect the security interests or pledges created therein;

(ii)the Pledge Agreements, executed and delivered by the applicable Credit Parties, together with, to the extent applicable, originals of all certificated pledged Equity Interests or intercompany notes and executed, undated endorsements or powers of attorney in relation thereto;

(iii)the Guarantees, executed and delivered by the Guarantors;

(iv)the Cash Collateral Pledge Agreement, executed and delivered by the Borrower; and

(v)the Account Control Agreements, executed and delivered by the applicable Credit Parties and the applicable deposit banks;

(b)For each real property location (including each warehouse or other storage location) leased by any Credit Party as a lessee (such locations being disclosed and identified as such on Schedule 5.4(2) hereto), (i) a true, complete and accurate copy of the fully executed applicable lease bailment or warehouse agreement, as the case may be; and (ii) a Collateral Access Agreement with respect to each location, as may be required by the Agent in its reasonable discretion.

(4)Lien Searches.  The Agent shall have received

(a)certified copies of uniform commercial code search reports certified by a party acceptable to the Agent, and certified searches under the PPSA, Bank Act (Canada), BIA and other applicable Canadian federal and provincial laws, each dated a date reasonably prior to the Effective Date, listing all effective financing statements or security registrations in all appropriate jurisdictions which name any Credit Party (under their present names or under any previous names used within five (5) years prior to the date hereof) as debtors, together with (x) copies of such financing statements or registrations (where applicable), and (y) authorized Uniform Commercial Code (Form UCC-3) Termination Statements, financing change statements for discharge or equivalent in any other jurisdiction, if any, necessary to release all Liens and other rights of any Person in any Collateral described in the Collateral Documents previously granted by any Person (other than Liens permitted by Section 7.2 of this Agreement),

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(b)intellectual property search reports results from the Canadian Intellectual Property Office, the United States Patent and Trademark Office and the United States Copyright Office for the Credit Parties (or other party) dated a date reasonably prior to the Effective Date, and

(c)any documents (including, without limitation, financing statements, amendments to financing statements, financing change statements and assignments of financing statements, stock powers executed in blank and any endorsements, extracts of shareholder registers and copies of existing pledge agreement, pledge notices and acknowledgements) requested by the Agent and reasonably required to be provided in connection with the Collateral Documents to create, in favour of the Agent (for and on behalf of the Lenders), a first priority perfected security interest in the Collateral thereunder, subject to the Liens permitted under Section 7.2 hereof, shall have been filed, registered or recorded, or shall have been delivered to the Agent in proper form for filing, registration or recordation.

(5)Insurance. The Agent shall have received evidence reasonably satisfactory to it that the Credit Parties (or other parties) have obtained the insurance policies required by Section 6.5 hereof and that such insurance policies are in full force and effect.

(6)Compliance with Certain Documents and Agreements. Each Credit Party shall have each performed and complied in all material respects with all agreements and conditions contained in this Agreement and the other Loan Documents, to the extent required to be performed or complied with by such Credit Party. No Person (other than the Agent, Lenders and Issuing Lender) party to this Agreement or any other Loan Document shall be in material default in the performance or compliance with any of the terms or provisions of this Agreement or the other Loan Documents or shall be in material default in the performance or compliance with any of the material terms or material provisions of, in each case to which such Person is a party.

(7)Opinions of Counsel. The Credit Parties shall furnish the Agent prior to the initial Advance under this Agreement, with signed copies for each Lender, opinions of counsel to the Credit Parties, including opinions of local counsel to the extent deemed necessary by the Agent acting reasonably, in each case dated on or about the Effective Date and covering such matters as reasonably required by and otherwise reasonably satisfactory in form and substance to the Agent and each of the Lenders.

(8)Payment of Fees. The Borrower shall have paid to Comerica Bank any Fees due under the terms of the Fee Letter or otherwise, along with any other fees, costs or expenses due and outstanding to the Agent or the Lenders as of the Effective Date (including reasonable fees, disbursements and other charges of counsel to the Agent in all applicable jurisdictions).

(9)Pro Forma Balance Sheet and Financial Statements. The Borrower shall have delivered to the Lenders and the Agent, in form and substance satisfactory to the Agent: (a) the Pro Forma Balance Sheet, (b) audited financial statements of the Borrower for the Fiscal Year ending February 28, 2011, and presented in accordance with GAAP, and the monthly financial statements prepared by the Borrower for December 1, 2011 and January 1, 2012 (if available) and (c) monthly projections of the Borrower through January 1, 2013, in form acceptable to the Agent.

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(10)Appraisals; Audits; Due Diligence. The Agent and Lenders shall have received, in each case in form and substance satisfactory to the Agent, (a) an audit of all accounts receivable and inventory of the Borrower and its respective Subsidiaries, and (b) such other reports or due diligence materials as the Agent and the Majority Lenders may reasonably request.

(11)Material Contracts. The Agent shall have received copies of all Material Contracts described on 5.18 hereof, as well as all material agreements and certificates delivered under the MAA in consummation of the NSN Transaction. The Agent shall have received a certified copy of the MAA.

(12)NSN Transaction. The Agent shall have received a certificate of a Responsible Officer of the Borrower dated the Effective Date (or, if different, the date of the initial Advance hereunder), stating that all conditions precedent to the closing of the NSN Transaction have been met, the purchase price payable on the closing of the NSN Transaction is less than US$35,000,000 and the Advances made on the date hereof will be used by the Corporation in connection with the funding of the purchase price for the NSN Transaction and for working capital purposes.

(13)Minimum Cash Balance. The Agent shall have confirmed that the Minimum Cash Balance is deposited in the Borrower’s Agent Account.

(14)Pledged Cash Amount.  The Agent shall have confirmed that the Pledged Cash Amount is in place (which Pledged Cash Amount may include the Minimum Cash Balance) or has made satisfactory arrangements for the Pledged Cash Amount to be in place on the date of the initial Advance, in accordance with the requirements of this Agreement and the Cash Collateral Pledge Agreement.

(15)EDC Insurance. The Agent shall have received evidence reasonably satisfactory to it that the Credit Parties have obtained the accounts receivable insurance policies from EDC in connection with the Eligible Insured Accounts required by Section 6.6 and that such insurance policies are in full force and effect.

(16)Governmental and Other Approvals. The Agent shall have received copies of all authorizations, consents, approvals, licenses, qualifications or formal exemptions, filings, declarations and registrations with, any court, governmental agency or regulatory authority or any securities exchange or any other person or party (whether or not governmental) received by any Credit Party in connection with the transactions contemplated by the Loan Documents to occur on the Effective Date, except where failure to have obtained such authorizations, consents or approvals could not reasonably be expected to have a Material Adverse Effect.

(17)No Litigation. No action, suit or other proceeding shall be pending or threatened before any Governmental Authority which could result in a Material Adverse Effect on any Credit Party or any of their respective businesses, assets, financial condition or results of operations.

(18)No Material Adverse Change. There shall have been no material adverse change in the financial condition, properties, business, results or operations of the Borrower from that shown in the financial statements delivered to the Agent prior to the Effective Date.

(19)Closing Certificate. The Agent shall have received, with a signed counterpart for each Lender, a certificate of a Responsible Officer of the Borrower dated the Effective Date (or, if

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different, the date of the initial Advance hereunder), stating that to the best of his or her respective knowledge after due inquiry, (a) the conditions set forth in this Article 4 have been satisfied to the extent required to be satisfied by any Credit Party; (b) the representations and warranties made by the Credit Parties in this Agreement or any of the other Loan Documents, as applicable, are true and correct in all material respects; (c) no Default or Event of Default shall have occurred and be continuing; (d) since October 21, 2011, nothing shall have occurred which has had, or could reasonably be expected to have, a Material Adverse Effect; and (e) there shall have been no material adverse change to the Pro Forma Balance Sheet.

(20)Customer Identification Forms. The Agent shall have received completed customer identification forms (forms to be provided by the Agent to the Borrower) from the Borrower and each Guarantor.

Section 4.2 Continuing Conditions

The obligations of each Lender to make Advances (including the initial Advance) under this Agreement and the obligation of the Issuing Lender to issue any Letters of Credit shall be subject to the continuing conditions that:

(1)No Default or Event of Default shall exist as of the date of the Advance or the request for the Letter of Credit, as the case may be; and

(2)Each of the representations and warranties contained in this Agreement and in each of the other Loan Documents shall be true and correct in all material respects as of the date of the Advance or Letter of Credit (as the case may be) as if made on and as of such date (other than any representation or warranty that expressly speaks only as of a different date).

ARTICLE 5 — REPRESENTATIONS AND WARRANTIES.

The Borrower represents and warrants to the Agent, the Lenders, the Swing Line Lender and the Issuing Lender as follows:

Section 5.1 Corporate Existence and Authority

Each Credit Party is a corporation (or other business entity) duly organized and existing in good standing under the laws of the province, territory, state, country or jurisdiction of its incorporation or formation, as applicable, and each Credit Party is duly qualified and authorized to do business as a foreign corporation in each jurisdiction where the character of its assets or the nature of its activities makes such qualification and authorization necessary, except where failure to be so qualified or be in good standing could not reasonably be expected to have a Material Adverse Effect. Each Credit Party has all requisite corporate, limited liability or partnership power and authority to own all its property (whether real, personal, tangible or intangible or of any kind whatsoever) and to carry on its business.

Section 5.2 Due Authorization

Execution, delivery and performance of this Agreement, and the other Loan Documents, to which each Credit Party is party, and the issuance of the Notes by the Borrower (if requested) are within such Person’s corporate, limited liability or partnership power, have been duly

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authorized, are not in contravention of any law applicable to s uch Credit Party or the terms of such Credit Party’s organizational documents and, except as have been previously obtained or as referred to in Section 5.11, below, do not require the consent or approval of any governmental body, agency or authority or any other third party except to the extent that such consent or approval is not material to the transactions contemplated by the Loan Documents.

Section 5.3 Corporate Documents and Corporate Existence

As to each Credit Party, (a) it is an organization as described on Schedule 1.3 hereto and has provided the Agent and the Lenders with complete and correct copies of its certificate and articles of incorporation, amalgamation or continuance, by-laws or operating agreement and all other applicable charter and other organizational documents, and, if applicable, a good standing certificate or certificate of existence or status and (b) its correct legal name, business address, type of organization and jurisdiction of organization, tax identification number and other relevant identification numbers are set forth on Schedule 1.3 hereto.

Section 5.4 Good Title; Leases; Assets; No Liens

(1)Each Credit Party, to the extent applicable, has good and valid title (or, in the case of real property, good and marketable title or fee simple title) to all assets owned by it, subject only to the Liens permitted under Section 7.2 hereof, and each Credit Party has a valid leasehold or interest as a lessee or a licensee in all of its leased real property or assets leased (as lessee), in each case to the extent that such assets are necessary for the continued operation of the Credit Parties’ businesses in substantially the manner as such businesses were operated immediately prior to the Effective Date;

(2)Schedule 5.4(2) hereof identifies all of the real property owned or leased, as lessee thereunder, by the Credit Parties on the Effective Date, including all warehouse or bailee locations;

(3)To the best knowledge of the Borrower, no material condemnation, eminent domain or expropriation action has been commenced or threatened against any such owned or leased real property; and

(4)There are no Liens on and no financing statements on file with respect to any of the assets owned by the Credit Parties, except for the Liens permitted under Section 7.2 hereof.

Section 5.5 Taxes

Except as set forth on Schedule 5.5 hereof, each Credit Party has filed on or before their respective due dates or within the applicable grace periods, all federal, provincial, territorial, state, municipal, local and other tax returns which are required to be filed or has obtained extensions for filing such tax returns and is not delinquent in filing such returns in accordance with such extensions and has paid all material taxes which have become due pursuant to those returns or pursuant to any assessments received by any such Credit Party, as the case may be, to the extent such taxes have become due, except to the extent such taxes are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate provision has been made on the books of such Credit Party as may be required by GAAP.

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Section 5.6 No Defaults

No Credit Party is in default under or with respect to any agreement, instrument or undertaking to which is a party or by which it or any of its property is bound which would cause or would reasonably be expected to cause a Material Adverse Effect.

Section 5.7 Enforceability of Agreement and Loan Documents

This Agreement and each of the other Loan Documents to which any Credit Party is a party (including without limitation, each Request for Advance), have each been duly executed and delivered by its duly authorized officers and constitute the valid and binding obligations of such Credit Party, enforceable against such Credit Party in accordance with their respective terms, except as enforcement thereof may be limited by applicable bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or similar laws affecting the enforcement of creditor’s rights, generally and by general principles of equity (regardless of whether enforcement is considered in a proceeding in law or equity).

Section 5.8 Compliance with Laws

(a)  Except as disclosed on Schedule 5.8, each Credit Party has complied with all applicable federal, provincial, territorial, state, municipal and local laws, ordinances, codes, rules, regulations and guidelines (including consent decrees and administrative orders) including but not limited to Hazardous Material Laws, and is in compliance with any Requirement of Law, except to the extent that failure to comply therewith could not reasonably be expected to have a Material Adverse Effect; and (b) neither the extension of credit made pursuant to this Agreement or the use of the proceeds thereof by the Credit Parties will violate any AML Laws, the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto, or The United and Strengthening America by providing appropriate Tools Required to Intercept and Obstruct Terrorism (“USA Patriot Act”) Act of 2001, Public Law 10756, October 26, 2001 or Executive Order 13224 of September 23, 2001 issued by the President of the United States (66 Fed. Reg. 49049 (2001)).

Section 5.9 Non-contravention

The execution, delivery and performance of this Agreement and the other Loan Documents (including each Request for Advance) to which each Credit Party is a party are not in contravention of the terms of any indenture, agreement or undertaking to which such Credit Party is a party or by which it or its properties are bound where such violation could reasonably be expected to have a Material Adverse Effect.

Section 5.10 Litigation

Except as set forth on Schedule 5.10 hereof, there is no suit, action, proceeding, including, without limitation, any bankruptcy proceeding or governmental investigation pending against or to the knowledge of the Borrower, threatened against any Credit Party (other than any suit, action or proceeding in which a Credit Party is the plaintiff and in which no counterclaim or cross-claim against such Credit Party has been filed), or any judgment, decree, injunction, rule, or order of any court, government, department, commission, agency, instrumentality or arbitrator

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outstanding against any Credit Party, nor is any Credit Party in violation of any applicable law, regulation, ordinance, order, injunction, decree or requirement of any governmental body or court which could in any of the foregoing events reasonably be expected to have a Material Adverse Effect.

Section 5.11 Consents, Approvals and Filings, Etc

Except as set forth on Schedule 5.11 hereof, no material authorization, consent, approval, license, qualification or formal exemption from, nor any filing, declaration or registration with, any court, Governmental Authority or any securities exchange or any other Person (whether or not governmental) is required in connection with (a) the execution, delivery and performance: (i) by any Credit Party of this Agreement and any of the other Loan Documents to which such Credit Party is a party or (ii) by the Credit Parties of the grant of Liens granted, conveyed or otherwise established (or to be granted, conveyed or otherwise established) by or under this Agreement or the other Loan Documents, as applicable, and (b) otherwise necessary to the operation of its business, except in each case for (x) such matters which have been previously obtained, and (y) such filings to be made concurrently herewith or promptly following the Effective Date as are required by the Collateral Documents to perfect Liens in favour of the Agent. All such material authorizations, consents, approvals, licenses, qualifications, exemptions, filings, declarations and registrations which have previously been obtained or made, as the case may be, are in full force and effect and, to the best knowledge of the Borrower, are not the subject of any attack or threatened attack (in each case in any material respect) by appeal or direct proceeding or otherwise.

Section 5.12 Agreements Affecting Financial Condition

No Credit Party is party to any agreement or instrument or subject to any charter or other corporate restriction which could reasonably be expected to have a Material Adverse Effect.

Section 5.13 No Investment Company or Margin Stock

No Credit Party is an “investment company” within the meaning of the Investment Company Act of 1940, as amended. No Credit Party is engaged principally, or as one of its important activities, directly or indirectly, in the business of extending credit for the purpose of purchasing or carrying margin stock. None of the proceeds of any of the Advances will be used by any Credit Party to purchase or carry margin stock. Terms for which meanings are provided in Regulation U of the Board of Governors of the Federal Reserve System or any regulations substituted therefor, as from time to time in effect, are used in this paragraph with such meanings.

Section 5.14 ERISA; Canadian Pension Plans

(1)As of the Effective Date, no Credit Party maintains or contributes to any Pension Plan subject to Title IV of ERISA, except as set forth on Schedule 5.14(1) hereto or otherwise disclosed to the Agent in writing.  There is no accumulated funding deficiency within the meaning of Section 412 of the Internal Revenue Code or Section 302 of ERISA, or any outstanding liability with respect to any Pension Plans owed to the PBGC other than future premiums due and owing pursuant to Section 4007 of ERISA, and no “reportable event” as defined in Section 4043(c) of ERISA has occurred with respect to any Pension Plan other than an

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event for which the notice requirement has been waived by the PBGC.  None of the Credit Parties has engaged in a prohibited transaction with respect to any Pension Plan, other than a prohibited transaction for which an exemption is available and has been obtained, which could subject such Credit Parties to a material tax or penalty imposed by Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA.  Each Pension Plan is being maintained and funded in accordance with its terms and is in material compliance with the requirements of the Internal Revenue Code and ERISA. No Credit Party has had a complete or partial withdrawal from any Multiemployer Plan that has resulted or could reasonably be expected to have resulted in any Withdrawal Liability and, except as notified to the Agent in writing following the Effective Date, no such Multiemployer Plan is in reorganization (within the meaning of Section 4241 of ERISA) or insolvent (within the meaning of Section 4245 of ERISA).

(2)As of the Effective Date, Schedule 5.14(2) sets forth all Canadian Benefit Plans (other than, for greater certainty, universal plans created by and to which any Credit Party is obligated to contribute by statute), Canadian Pension Plans and Canadian Union Plans adopted by the Borrower and each Subsidiary. Each of the Canadian Pension Plans and the Canadian Union Plans are duly registered under the ITA and all other applicable laws which require registration and no event has occurred which is reasonably likely to cause the loss of such registered status. All material obligations of Borrower and each Subsidiary (including fiduciary, funding, investment and administration obligations) required to be performed in connection with the Canadian Pension Plans and Canadian Union Plans and the funding agreements therefor and all applicable laws have been performed in a timely fashion. All employer and employee payments, contributions or premiums required to be remitted, paid to or in respect of each Canadian Pension Plan, Canadian Union Plan or Canadian Benefit Plan by Borrower or any Subsidiary have been paid in a timely fashion in accordance with the terms thereof, any funding agreement and all applicable laws. There are no outstanding disputes concerning the assets of the Canadian Pension Plans, Canadian Union Plans or the Canadian Benefit Plans. The pension fund under each Canadian Pension Plan or Canadian Union Plan is exempt from the payment of any income tax and there are no taxes, penalties or interest owing in respect of any pension fund.  All material reports and disclosures relating to the Canadian Pension Plans and Canadian Union Plans required by those plans and any applicable laws to be filed or distributed have been filed or distributed in a timely manner.   No Canadian Pension Event has occurred.

Section 5.15 Conditions Affecting Business or Properties

Neither the respective businesses nor the properties of any Credit Party is affected by any fire, explosion, accident, strike, lockout or other dispute, drought, storm, hail, earthquake, embargo, Act of God, or other casualty (except to the extent such event is covered by insurance sufficient to ensure that upon application of the proceeds thereof, no Material Adverse Effect could reasonably be expected to occur) which could reasonably be expected to have a Material Adverse Effect.

Section 5.16 Environmental and Safety Matters

Except as set forth in Schedule 5.10, Schedule 5.11 and Schedule 5.16:

(1)all facilities and property owned or leased by the Credit Parties are in compliance in all material respects with all Hazardous Material Laws;

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(2)to the best knowledge of the Borrower, there have been no unresolved and outstanding past, and there are no pending or threatened:

(a)claims, complaints, notices or requests for information received by any Credit Party with respect to any alleged violation of any Hazardous Material Law, or

(b)written complaints, notices or inquiries to any Credit Party regarding potential liability of any Credit Parties under any Hazardous Material Law; and

(3)to the best knowledge of the Borrower, no conditions exist at, on or under any property now or previously owned or leased by any Credit Party which, with the passage of time, or the giving of notice or both, are reasonably likely to give rise to liability under any Hazardous Material Law or create a significant adverse effect on the value of the property.

Section 5.17 Subsidiaries

Except as disclosed on Schedule 5.17 hereto as of the Effective Date, and thereafter, except as disclosed to the Agent in writing from time to time, no Credit Party has any Subsidiaries.

Section 5.18 Material Contracts

Schedule 5.18 attached hereto is an accurate and complete list of all Material Contracts in effect on or as of the Effective Date to which any Credit Party is a party or is bound, including, for greater certainty, the MAA.

Section 5.19 Intellectual Property

Schedule 5.19 contains a true and accurate list of all Intellectual Property (except for unregistered Intellectual Property) and Grantor Licenses owned, used or licensed by any Credit Party during the five-year period ending as of the Effective Date. The Credit Parties possess all Intellectual Property, Grantor Licenses, franchises, licenses permits and rights in respect of the foregoing, adequate for the conduct of their business substantially as now conducted without known conflict with any rights of others. To the best knowledge of the Borrower, none of the Borrower and its Subsidiaries is infringing in any material respect on the rights of any person with respect to any Intellectual Property or Grantor Licenses and none of the Borrower and its Subsidiaries knows of any fact which is likely to result in the successful assertion against the Borrower or any Subsidiary of a claim for such an infringement. The Credit Parties taken as a whole do not derive in any given month more than 5% of their aggregate gross revenue from the sale, licensing, rendering or disposition of any specific item of Intellectual Property licensed from an arm’s length third party.

Section 5.20 Inbound Licences

Except as disclosed on Schedule 5.20, no Credit Party is a party to, or is bound by, any inbound license or other agreement, the failure, breach, or termination of which could reasonably be expected to cause a Material Adverse Effect, or that prohibits or otherwise restricts such Credit Party from granting a security interest in such Credit Party’s interest in such license or agreement or any other property.

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Section 5.21 Tradenames

Schedule 5.21 contains a true and accurate list of all trade names and any and all other names used by any Credit Party during the five-year period ending as of the Effective Date.

Section 5.22 Capital Structure

Schedule 5.22 attached hereto sets forth all issued and outstanding Equity Interests of each Credit Party, including the number of authorized, issued and outstanding Equity Interests of each Credit Party, the par value of such Equity Interests and the holders of such Equity Interests, all on and as of the Effective Date. All issued and outstanding Equity Interests of each Credit Party are duly authorized and validly issued, fully paid, nonassessable (if applicable), free and clear of all Liens (except for Permitted Liens) and such Equity Interests were issued in compliance with all applicable federal, provincial, territorial, state and foreign laws concerning the issuance of securities.  Except as disclosed on Schedule 5.22, there are no preemptive or other outstanding rights, options, warrants, conversion rights or similar agreements or understandings for the purchase or acquisition from any Credit Party, of any Equity Interests of any Credit Party.

Section 5.23 Accuracy of Information

(1)The consolidated audited financial statements for the Fiscal Year ended February 28, 2011, furnished to the Agent and the Lenders prior to the Effective Date fairly present in all material respects the financial condition of the Borrower and its respective Subsidiaries and the results of their operations for the periods covered thereby, and have been prepared in accordance with GAAP. The projections, the Pro Forma Balance Sheet and the other pro forma financial information delivered to the Agent prior to the Effective Date are based upon good faith estimates and assumptions believed by management of the Borrower to be accurate and reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein.

(2)Since October 21, 2011, there has been no material adverse change in the business, operations, condition, property or prospects (financial or otherwise) of the Credit Parties, taken as a whole.

(3)To the best knowledge of the Credit Parties, as of the Effective Date, (i) the Credit Parties do not have any material contingent obligations (including any liability for taxes) not disclosed by or reserved against in the opening balance sheet to be delivered hereunder, and (ii) there are no unrealized or anticipated losses from any present commitment of the Credit Parties which contingent obligations and losses in the aggregate could reasonably be expected to have a Material Adverse Effect.

Section 5.24 Solvency

After giving effect to the consummation of the transactions contemplated by this Agreement and other Loan Documents, each Credit Party will be solvent, able to pay its indebtedness as it matures and will have capital sufficient to carry on its businesses and all

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business in which it is about to engage. This Agreement is being executed and delivered by the Borrower to the Agent and the Lenders in good faith and in exchange for fair, equivalent consideration. The Credit Parties do not intend to nor does management of the Credit Parties believe the Credit Parties will incur debts beyond their ability to pay as they mature. The Credit Parties do not contemplate filing a petition in bankruptcy or for an arrangement or reorganization under the Bankruptcy Code, any Debtor Relief Law or any similar law of any jurisdiction now or hereafter in effect relating to any Credit Party, nor does any Credit Party have any knowledge of any threatened bankruptcy or insolvency proceedings against a Credit Party.

Section 5.25 Employee Matters

Except as could not reasonably be expected to have a Material Adverse Effect, there are no strikes, slowdowns, work stoppages, unfair labor practice complaints, grievances, arbitration proceedings or controversies pending or, to the best knowledge of the Borrower, threatened against any Credit Party by any employees of any Credit Party, other than non-material employee grievances or controversies arising in the ordinary course of business. Set forth on Schedule 5.25 are all union contracts or agreements to which any Credit Party is party as of the Effective Date and the related expiration dates of each such contract.

Section 5.26 No Misrepresentation

Neither this Agreement nor any other Loan Document, certificate, information or report furnished or to be furnished by or on behalf of a Credit Party to the Agent or any Lender in connection with any of the transactions contemplated hereby or thereby, contains a misstatement of material fact, or omits to state a material fact required to be stated in order to make the statements contained herein or therein, taken as a whole, not misleading in the light of the circumstances under which such statements were made. There is no fact, other than information known to the public generally, known to any Credit Party after diligent inquiry, that could reasonably be expect to have a Material Adverse Effect that has not expressly been disclosed to the Agent in writing.

ARTICLE 6 — AFFIRMATIVE COVENANTS.

The Borrower covenants and agrees, so long as any Lender has any commitment to extend credit hereunder, or any of the Indebtedness (other than indemnification obligations for which no claim has been asserted) remains outstanding and unpaid, that it will, and, as  applicable, it will cause each of the Guarantors to:

Section 6.1 Financial Statements

Furnish to the Agent, in form and detail satisfactory to the Agent, with sufficient copies for each Lender, the following documents:

(1)as soon as available, but in any event within ninety (90) days after the end of each Fiscal Year, a copy of the audited Consolidated financial statements of the Borrower and its Consolidated Subsidiaries as at the end of such Fiscal Year and the related audited Consolidated statements of income, stockholders equity, and cash flows of the Borrower and its Consolidated Subsidiaries for such Fiscal Year or partial Fiscal Year and underlying assumptions, setting forth in each case in comparative form the figures for the previous Fiscal Year, certified as being fairly

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stated in all material respects by an independent, nationally recognized chartered accountant or certified public accounting firm reasonably satisfactory to the Agent; and

(2)as soon as available, but in any event within thirty (30) days after the end of each month (including the last month of each fiscal quarter and each Fiscal Year, which, for such months, shall be a Borrower-prepared draft) subject to standard audit adjustments, commencing with the first full month after the Effective Date, the Borrower prepared unaudited Consolidated balance sheets of the Borrower and its Consolidated Subsidiaries as at the end of such month and the related unaudited statements of income, stockholders equity and cash flows of the Borrower and its Consolidated Subsidiaries for the portion of the Fiscal Year through the end of such fiscal month, setting forth in each case in comparative form (i) the figures for the corresponding periods in the previous year and (ii) the figures for the relevant period set forth in the projections delivered for such year pursuant to Section 6.2(4), and certified by a Responsible Officer of the Borrower as being fairly stated in all material respects; and

all such financial statements to be complete and correct in all material respects and to be prepared in reasonable detail and in accordance with GAAP throughout the periods reflected therein and with prior periods (except as approved by a Responsible Officer and disclosed therein), provided however that the financial statements delivered pursuant to clause (2) hereof will not be required to include footnotes and will be subject to change from audit and year-end adjustments.

Section 6.2 Certificates; Other Information

Furnish to the Agent, in form and detail acceptable to the Agent, with sufficient copies for each Lender, the following documents:

(1)Within ten (10) Business Days after and as of the most recent month-end or more frequently as reasonably requested by the Agent or the Majority Lenders, a Collateral Coverage Certificate, duly executed by a Responsible Officer of the Borrower;

(2)Within thirty (30) days after and as of the most recent month-end or more frequently as reasonably requested by the Agent or the Majority Lenders, a Covenant Compliance Report, duly executed by a Responsible Officer of the Borrower;

(3)Promptly upon receipt thereof, copies of all significant reports submitted by the Credit Parties’ firm(s) of chartered accountants or certified public accountants in connection with each annual, interim or special audit or review of any type of the financial statements or related internal control systems of the Credit Parties made by such accountants, including any comment letter submitted by such accountants to management in connection with their services;

(4)Within thirty (30) days after the end of each Fiscal Year, projections for the Credit Parties for the next succeeding Fiscal Year, on a quarterly basis and for the following Fiscal Year on an annual basis, including a balance sheet, as at the end of each relevant period and for the period commencing at the beginning of the Fiscal Year and ending on the last day of such relevant period, such projections certified by a Responsible Officer of the Borrower as being based on reasonable estimates and assumptions taking into account all facts and information known (or reasonably available to any Credit Party) by a Responsible Officer of the Borrower;

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(5)Within thirty (30) days after and as of the end of each month, including the last month of each Fiscal Year, or more frequently as requested by the Agent or the Majority Lenders, the monthly aging of the accounts receivable and accounts payable of the Credit Parties;

(6)Within thirty (30) days after and as of the end of each fiscal quarter, or more frequently as requested by the Agent or the Majority Lenders, a report signed by a Responsible Officer of the Borrower, in form reasonably acceptable to the Agent, listing any applications or registrations that any Credit Party has made or filed in respect of any patents, copyrights, trademarks, industrial designs, tradenames or any other intellectual property and the status of any outstanding applications or registrations, as well as any material change in the Credit Parties’ intellectual property from the prior-delivered report;

(7)Within five (5) days after such information is released, all material public filings including but not limited to management discussion and analysis and quarterly financial statement reporting; provided the Borrower does not need to provide copies of such public filing material to the extent that it is published on SEDAR;

(8)Any additional information as required by any Loan Document, and such additional schedules, certificates and reports respecting all or any of the Collateral, the items or amounts received by the Credit Parties in full or partial payment thereof, and any goods (the sale or lease of which shall have given rise to any of the Collateral) possession of which has been obtained by the Credit Parties, all to such extent as the Agent may reasonably request from time to time, any such schedule, certificate or report to be certified as true and correct in all material respects by a Responsible Officer of the applicable Credit Party and shall be in such form and detail as the Agent may reasonably specify; and

(9)Such additional financial and/or other information as the Agent, any Lender or EDC may from time to time reasonably request, promptly following such request.

Section 6.3 Payment of Obligations

Pay, discharge or otherwise satisfy, at or before maturity or before they become delinquent, as the case may be, all of its material obligations of whatever nature, including without limitation all assessments, governmental charges, claims for labor, supplies, rent or other obligations, except where the amount or validity thereof is currently being appropriately contested in good faith and reserves in conformity with GAAP with respect thereto have been provided on the books of the Credit Parties.

Section 6.4 Conduct of Business and Maintenance of Existence; Compliance with Laws.

(1)Continue to engage in their respective business and operations substantially as conducted by the Borrower and its Subsidiaries (including but not limited to the business and operations acquired pursuant to the NSN Transaction) on and prior to the Effective Date, except as otherwise permitted pursuant to Section 7.4 or as may be agreed to by the Agent from time to time in its reasonable discretion;

(2)Preserve, renew and keep in full force and effect its existence and maintain its qualifications to do business in each jurisdiction where such qualifications are necessary for its

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operations, except as otherwise permitted pursuant to Section 7.4 or where the failure to do so would not constitute a Material Adverse Effect;

(3)Take all action it deems necessary in its reasonable business judgment to maintain all rights, privileges, licenses and franchises necessary for the normal conduct of its business except where the failure to so maintain such rights, privileges or franchises could not, either singly or in the aggregate, reasonably be expected to have a Material Adverse Effect;

(4)Comply with all Contractual Obligations and Requirements of Law, except to the extent that failure to comply therewith could not, either singly or in the aggregate, reasonably be expected to have a Material Adverse Effect; and

(5)(i) Continue to be a Person whose property or interests in property is not blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Order”), (ii) not engage in the transactions prohibited by Section 2 of that Order or become associated with Persons such that a violation of Section 2 of the Order would arise, and (iii) not become a Person on the list of Specially Designated National and Blocked Persons, or (iv) otherwise not become subject to the limitation of any OFAC regulation or executive order.

Section 6.5 Maintenance of Property; Insurance

(a)  Keep all material property it deems, in its reasonable business judgment, useful and necessary in its business in working order (ordinary wear and tear excepted); (b) maintain insurance coverage with financially sound and reputable insurance companies on physical assets and against other business risks in such amounts and of such types as are customarily carried by companies similar in size and nature (including without limitation casualty and public liability and property damage insurance), and in the event of acquisition of additional property, real or personal, or of the incurrence of additional risks of any nature, increase such insurance coverage in such manner and to such extent as prudent business judgment and present practice or any applicable Requirements of Law would dictate; (c) in the case of all insurance policies covering any Collateral, such insurance policies shall provide that the loss payable thereunder shall be payable to the applicable Credit Party, and to the Agent (as mortgagee, or, in the case of personal property interests, lender loss payee) as their respective interests may appear; (d) in the case of all  public liability insurance policies, such policies shall list the Agent as an additional insured, as the Agent may reasonably request; and (e) if requested by the Agent, certificates evidencing such policies, including all endorsements thereto, to be deposited with the Agent, such certificates being in form and substance reasonably acceptable to the Agent.

Section 6.6 EDC Insurance

(a) Maintain accounts receivable insurance coverage with EDC (or other financially sound and reputable insurance companies, to be determined by the Agent in its sole discretion) in such amounts and with such conditions as are customarily carried by companies similar in size and nature; (b) such accounts receivable insurance policies shall provide that the loss payable thereunder shall be payable to the applicable Credit Party, and to the Agent (as lender loss payee) as their respective interests may appear; and (c) if requested by the Agent, certificates evidencing

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such policies, including all endorsements thereto, to be deposited with the Agent, such certificates being in form and substance reasonably acceptable to the Agent.

Section 6.7 Inspection of Property; Books and Records, Discussions

Permit the Agent and each Lender, through their authorized attorneys, accountants and representatives, upon reasonable notice, (a) at all reasonable times during normal business hours, upon the request of the Agent or such Lender, to examine each Credit Party’s books, accounts, records, ledgers and assets and properties; (b) from time to time, during normal business hours, upon the request of the Agent, to conduct full or partial collateral audits of the Accounts and Inventory of the Credit Parties and appraisals of all or a portion of the fixed assets (including real property) of the Credit Parties, such audits and appraisals to be completed by an appraiser as may be selected by the Agent and consented to by the Borrower (such consent not to be unreasonably withheld), with all reasonable costs and expenses of such audits to be reimbursed by the Credit Parties, provided that so long as no Event of Default or Default exists, no Credit Party shall be required to reimburse the Agent for such audits or appraisals more frequently than twice each Fiscal Year; (c) during normal business hours and at their own risk, to enter onto the real property owned or leased by any Credit Party to conduct inspections, investigations or other reviews of such real property; and (d) at reasonable times during normal business hours and at reasonable intervals, to visit all of the Credit Parties’ offices, discuss each Credit Party’s respective financial matters with their respective officers, as applicable, and, by this provision, the Borrower authorizes, and will cause each of their respective Subsidiaries to authorize, its independent certified or chartered public accountants to discuss the finances and affairs of any Credit Party and examine any of such Credit Party’s books, reports or records held by such accountants, except that at any such discussions, such Credit Party shall be present, unless such discussions relate to confirmations of loan balances and account balances by Agent and/or the Lenders .

Section 6.8 Notices

Promptly give written notice to the Agent of:

(1)the occurrence of any Default or Event of Default of which any Credit Party has knowledge;

(2)any (a) litigation or proceeding existing at any time between any Credit Party and any Governmental Authority or other third party, or any investigation of any Credit Party conducted by any Governmental Authority, which in any case if adversely determined would have a Material Adverse Effect or (b) any material adverse change in the financial condition of any Credit Party since the date of the last audited financial statements delivered pursuant to Section 6.1(1) hereof;

(3)the occurrence of any event which any Credit Party believes could reasonably be expected to have a Material Adverse Effect, promptly after concluding that such event could reasonably be expected to have such a Material Adverse Effect;

(4)promptly after becoming aware thereof, the taking by the CRA, the Internal Revenue Service or any foreign taxing jurisdiction of a written tax position (or any such tax position taken by any Credit Party in a filing with the CRA, the Internal Revenue Service or any foreign taxing

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jurisdiction) which could reasonably be expected to have a Material Adverse Effect, setting forth the details of such position and the financial impact thereof; and

(5)(a) all jurisdictions in which any Credit Party proposes to become qualified after the Effective Date to transact business, (b) the acquisition or creation of any new Subsidiaries or Material Subsidiaries, (c) any material change after the Effective Date in the authorized and issued Equity Interests of any Credit Party or any other material amendment to any Credit Party’s constating documents, charter, by-laws or other organizational documents, such notice, in each case, to identify the applicable jurisdictions, capital structures or amendments as applicable, provided that such notice shall be given not less than ten (10) Business Days prior to the proposed effectiveness of such changes, acquisition or creation, as the case may be (or such shorter period to which the Agent may consent).

Each notice pursuant to this Section 6.8 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and, in the case of notices referred to in clauses (1), (2), (3) and (4) hereof stating what action the applicable Credit Party has taken or proposes to take with respect thereto.

Section 6.9 Hazardous Material Laws

(1)Use and operate all of its facilities and properties in material compliance with all applicable Hazardous Material Laws, keep all material required permits, approvals, certificates, licenses and other authorizations required under such Hazardous Material Laws in effect and remain in compliance therewith, and handle all Hazardous Materials in material compliance with all applicable Hazardous Material Laws;

(2)(i) Promptly notify the Agent and provide copies upon receipt of all written claims, complaints, notices or inquiries received by any Credit Party relating to its facilities and properties or compliance with Hazardous Material Laws which, if adversely determined, could reasonably be expected to have a Material Adverse Effect and (ii) promptly cure and have dismissed with prejudice to the reasonable satisfaction of the Agent and the Majority Lenders any material actions and proceedings relating to compliance with Hazardous Material Laws to which any Credit Party is named a party, other than such actions or proceedings being contested in good faith and with the establishment of reasonable reserves;

(3)To the extent necessary to comply in all material respects with Hazardous Material Laws, remediate or monitor contamination arising from a release or disposal of Hazardous Material, which solely, or together with other releases or disposals of Hazardous Materials could reasonably be expected to have a Material Adverse Effect; and

(4)Provide such information and certifications which the Agent or any Lender may reasonably request from time to time to evidence compliance with this Section 6.9.

Section 6.10 Registration of Intellectual Property Rights

Permit the Agent to audit the Intellectual Property Collateral to confirm compliance with the covenants under the Security Agreements and the Credit Parties shall reimburse and indemnify the Agent for all reasonable costs and reasonable expenses incurred in the reasonable exercise of its rights hereunder, provided that so long as no Event of Default exists, no Credit

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Party shall be required to reimburse the Agent for such audit more frequently than once per year. Borrower shall promptly give the Agent written notice of any applications or registrations of intellectual property rights filed with the United States Patent and Trademark Office and United States Copyright Office, including the date of such filing and the registration or application numbers, if any.

Section 6.11 Consent of Inbound Licensors

Prior to entering into or becoming bound by any inbound license or agreement (other than over-the-counter software that is commercially available to the public or the inbound licenses or agreements with NSN, Nokia or Siemens in existence at the Effective Date), the failure, breach, or termination of which could reasonably be expected to cause a Material Adverse Effect, (i) provide written notice to the Agent of the material terms of such license or agreement with a description of its likely impact on the applicable Credit Party’s business or financial condition; and (ii) in good faith take such actions as the Agent may reasonably request to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (A) such Credit Party’s interest in such licenses or contract rights to be deemed Collateral and for the Agent to have a security interest in it that might otherwise be restricted by the terms of the applicable license or agreement, whether now existing or entered into in the future, and (B) the Agent to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with the Agent’s rights and remedies under this Agreement and the other Loan Documents, provided, however, that the failure to obtain any such consent or waiver shall not constitute a default under this Agreement.

Section 6.12 Financial Covenants.

(1)Minimum Cash Balance Covenant. The Borrower shall maintain at all times the Minimum Cash Balance which shall include any amounts held by the Agent as Pledged Cash Collateral.

(2)Minimum Tangible Net Worth. The Borrower shall maintain the following minimum Tangible Net Worth as set forth below:

Period	Minimum Tangible Net Worth
Effective Date to July 31, 2012	$	70,000,000
August 1, 2012 to December 31, 2012	$	65,000,000
January 1, 2013 to November 30, 2013	$	60,000,000
December 1, 2013 to April 30, 2014	$	65,000,000
May 1, 2014 to the Revolving Credit Maturity Date	$	70,000,000

provided that (i) Tangible Net Worth for any quarter shall increase by the aggregate of 50% of the previous quarter’s positive Consolidated Net Income, and (ii) Tangible Net Worth for any quarter shall increase by the aggregate of 50% of the amount of all of the Borrower’s Equity

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raises by way of public offering during such quarter. For greater certainty, any Equity issued by the Borrower to NSN as part of the NSN Transaction shall not be included for the purposes of (ii) above.

(3)Collateral Coverage Ratio. The Borrower shall maintain from the Effective Date until August 31, 2012, a minimum Collateral Coverage Ratio of 1.10: 1:00, and on and after September 1, 2012, a minimum Collateral Coverage Ratio of 1.25: 1:00.

(4)Pledged Cash Amount Covenant. The Borrower shall deliver and pledge to the Agent the Pledged Cash Amount. The Pledged Cash Amount shall be determined on the Effective Date and a monthly basis upon the delivery of the Collateral Coverage Certificate and Covenant Compliance Report.  If the amount maintained as unrestricted cash pledged in favour of the Agent (the “Pledged Collateral”) at the end of a month is less than the Pledged Cash Amount as required to maintain the Collateral Coverage Ratio as evidenced by the Covenant Compliance Report corresponding to such month, the Borrower shall deliver to the Agent concurrently with delivery of the Collateral Coverage Certificate, an amount equal to the difference between the Pledged Cash Amount and the current Pledged Collateral (the “Deficiency Amount”). Upon delivery of the Deficiency Amount to the Agent, such Deficiency Amount shall form part of the Pledged Collateral.   If the amount maintained as Pledged Collateral at the end of a month exceeds the Pledged Cash Amount as calculated in the Covenant Compliance Report corresponding to such month, the Agent shall release to the Borrower a portion of the Pledged Collateral equal to the difference between the current Pledged Collateral and the Pledged Cash Amount.

Section 6.13 Governmental and Other Approvals

Apply for, obtain and/or maintain in effect, as applicable, all authorizations, consents, approvals, licenses, qualifications, exemptions, filings, declarations and registrations (whether with any court, governmental agency, regulatory authority, securities exchange or otherwise) which are necessary or reasonably requested by the Agent in connection with the execution, delivery and performance by any Credit Party of, as applicable, this Agreement, the other Loan Documents, or any other documents or instruments to be executed and/or delivered by any Credit Party, as applicable in connection therewith or herewith, except where the failure to so apply for, obtain or maintain could not reasonably be expected to have a Material Adverse Effect.

Section 6.14 Compliance with ERISA and Canadian Pension Plans; ERISA Notices

(a)Comply in all material respects with all material requirements imposed by ERISA and the Internal Revenue Code, including, but not limited to, the minimum funding requirements for any Pension Plan, except to the extent that any noncompliance could not reasonably be expected to have a Material Adverse Effect.

(b)Except to the extent any non-compliance could not reasonably be expected to have a Material Adverse Effect, for each existing Canadian Pension Plan or Canadian Union Plan, ensure that such plan retains its registered status under and is administered in a timely manner in all material respects in accordance with the applicable pension plan text, funding agreement, the ITA and all other applicable laws.  Except to the extent any non-compliance could not reasonably be expected

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to have a Material Adverse Effect, for each Canadian Pension Plan or Canadian Union Plan hereafter adopted or contributed to by any Credit Party which is required to be registered under the ITA or any other applicable laws, each Credit Party shall use its commercially reasonable efforts to seek and receive confirmation in writing from the applicable regulatory authorities to the effect that such plan is unconditionally registered under the ITA and such other applicable laws. Except to the extent any non-compliance could not reasonably be expected to have a Material Adverse Effect, for each existing Canadian Pension Plan, Canadian Union Plan and Canadian Benefit Plan hereafter adopted or contributed to by any Credit Party, each Credit Party shall in a timely fashion perform in all material respects all obligations (including fiduciary, funding, investment and administration obligations) required to be performed by any Credit Party in connection with such plan and the funding therefor. For each Canadian Pension Plan or Canadian Union Plan of the Credit Parties and any of their Subsidiaries, each Credit Party shall ensure that amounts required to be paid it are paid when due pursuant to applicable laws, except to the extent any non-compliance could not reasonably be expected to have a Material Adverse Effect.

(c)Promptly notify the Agent upon the occurrence of any of the following events in writing: (i) any Canadian Pension Event, (ii) the termination, other than a standard termination, as defined in ERISA, of any Pension Plan subject to Subtitle C of Title IV of ERISA by any Credit Party; (iii) the appointment of a trustee by a United States District Court to administer any Pension Plan subject to Title IV of ERISA; (iv) the commencement by the PBGC, of any proceeding to terminate any Pension Plan subject to Title IV of ERISA; (v) in respect of any Pension Plan, the failure of any Credit Party to make any payment required under Section 412 of the Internal Revenue Code or Section 302 of ERISA; (vi) the withdrawal of any Credit Party from any Multiemployer Plan if any Credit Party reasonably believes that such withdrawal would give rise to the imposition of Withdrawal Liability with respect thereto; or (vii) the occurrence of (x) a “reportable event” which is required to be reported by a Credit Party under Section 4043 of ERISA other than any event for which the reporting requirement has been waived by the PBGC or (y) a “prohibited transaction” as defined in Section 406 of ERISA or Section 4975 of the Internal Revenue Code other than a transaction for which an exemption has been obtained.

Section 6.15 Defense of Collateral

Defend the Collateral from any Liens other than Liens permitted by Section 7.2 hereof.

Section 6.16 Future Subsidiaries; Additional Collateral.

(1)With respect to each Person which becomes a Material Subsidiary, subsequent to the Effective Date (including any existing Subsidiary that becomes a Material Subsidiary), cause such new Material Subsidiary to execute and deliver to the Agent, for and on behalf of each of the Lenders (unless waived by Agent):

(a)within thirty (30) days after the date such Person becomes a Material Subsidiary (or such longer time period as the Agent may determine), a Guarantee, or in the

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event that a Guarantee already exists, a joinder agreement to the Guarantee whereby such Material Subsidiary becomes obligated as a Guarantor under the Guarantee; and

(b)within thirty (30) days after the date such Person becomes a Material Subsidiary (or such longer time period as the Agent may determine), a Security Agreement or a joinder agreement to the Security Agreement, whereby such Material Subsidiary grants a Lien over its assets (other than Equity Interests which should be governed by this Section 6.16(2)) as set forth in the Security Agreement, and such Material Subsidiary shall take such additional actions as may be necessary to ensure a valid first priority perfected Lien over such assets of such Material Subsidiary is granted to the Agent, subject only to the other Liens permitted pursuant to Section 7.2 of this Agreement; and

(c)not later than thirty (30) days or such later time period as may be agreed upon with the Agent, execute or use its commercially reasonable efforts to cause to be executed, at the Agent’s option, unless otherwise waived by the Agent, a Collateral Access Agreement with respect to any leasehold interests and/or other documents required to be delivered in connection therewith, each in form and substance reasonably acceptable to the Agent together with such other documentation as may be reasonably required by the Agent;

(2)With respect to the Equity Interests of each Person which becomes a Material Subsidiary subsequent to the Effective Date (including any existing Subsidiary that becomes a Material Subsidiary), cause the Credit Party that holds such Equity Interests to execute and deliver an amendment to the Security Agreement or Pledge Agreement, as applicable, and take such actions as may be necessary to ensure a valid first priority perfected Lien is granted to the Agent over one hundred percent (100%) of the Equity Interests (or 65% of the Equity Interests with respect to any Subsidiary that is a non-US Subsidiary, the Equity Interests of which are held by a US Subsidiary) of such Material Subsidiary held by a Credit Party (subject only to Permitted Liens), such amendment to Security Agreement or Pledge Agreement to be executed and delivered (unless waived by Agent) within thirty (30) days after the date such Person becomes a Subsidiary, as the case may be (or such longer time period as Agent may determine; and

(3)With respect to the acquisition of any material leasehold interest in real property by any Credit Party after the Effective Date, not later than thirty (30) days after the acquisition is consummated or the owner of the applicable leasehold interest becomes a Subsidiary (or such longer time period as the Agent may determine), the applicable Credit Party shall deliver to the Agent a copy of the applicable lease agreement and shall execute or shall use its commercially reasonable efforts to cause to be executed, at the Agent’s option, unless otherwise waived by the Agent, a Collateral Access Agreement in form and substance reasonably acceptable to the Agent together with such other documentation as may be reasonably required by the Agent;

in each case in form reasonably satisfactory to the Agent, in its reasonable discretion, together with such supporting documentation, including without limitation corporate authority items, certificates and opinions of counsel, as reasonably required by the Agent. Upon the Agent’s request, the Credit Parties and the Material Subsidiary shall take, or cause to be taken, such

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additional reasonable steps as are necessary or advisable under applicable law to perfect and ensure the validity and priority of the Liens granted under this Section 6.16.

Section 6.17 Accounts

Maintain all deposit accounts and securities accounts of any Credit Party (a) located in Canada or the United States, with the Agent, and (b) located outside of Canada or the United States, with a financial institution approved by the Agent, provided that, with respect to any such accounts maintained with any financial institution (other than the Agent), such Credit Party (i) shall cause to be executed and delivered an Account Control Agreement (or other agreement necessary to provide the Agent with the right to direct the manner in which the account is administered after the occurrence of an Event of Default) in form and substance satisfactory to the Agent and (ii) has taken all other reasonable steps (y) necessary, or (z) in the opinion of the Agent, desirable to ensure that the Agent has control or a perfected security interest in such account.

Section 6.18 Use of Proceeds

Use all Advances of the Revolving Credit as set forth in Section 2.15 hereof. The Borrower shall not use any portion of the proceeds of any such advances for the purpose of purchasing or carrying any “margin stock” (as defined in Regulation U of the Board of Governors of the Federal Reserve System) in any manner which violates the provisions of Regulation T, U or X of said Board of Governors or for any other purpose in violation of any applicable statute or regulation.

Section 6.19 Further Assurances and Information

(1)Take such actions as the Agent or Majority Lenders may from time to time reasonably request to establish and maintain first priority perfected security interests in and Liens on all of the Collateral, subject only to those Liens permitted under Section 7.2 hereof, including executing and delivering such additional pledges, assignments, mortgages, lien instruments or other security instruments covering any or all of the Credit Parties’ assets as the Agent may reasonably require, such documentation to be in form and substance reasonably acceptable to the Agent, and prepared at the expense of the Borrower.

(2)Execute and deliver or cause to be executed and delivered to the Agent within a reasonable time following the Agent’s request, and at the expense of the Borrower, such other documents or instruments as the Agent may reasonably require to effectuate more fully the purposes of this Agreement or the other Loan Documents.

(3)Provide the Agent and the Lenders with any other information required by any AML Laws, Section 326 of the USA Patriot Act or necessary for the Agent and the Lenders to verify the identity of any Credit Party as required by Section 326 of the USA Patriot Act.

ARTICLE 7 — NEGATIVE COVENANTS.

The Borrower covenants and agrees that, so long as any Lender has any commitment to extend credit hereunder, or any of the Indebtedness (other than indemnification obligations for

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which no claim has been asserted) remains outstanding and unpaid, it will not, and, as applicable, it will not permit any of its Guarantors to:

Section 7.1 Limitation on Debt

Create, incur, assume or suffer to exist any Debt, except:

(1)Indebtedness of any Credit Party to the Agent and the Lenders under this Agreement and/or the other Loan Documents;

(2)Indebtedness pursuant to the MAA;

(3)any Debt existing on the Effective Date and set forth in Schedule 7.1(3) attached hereto and any renewals or refinancing of such Debt (provided that (i) the aggregate principal amount of such renewed or refinanced Debt shall not exceed the aggregate principal amount of the original Debt outstanding on the Effective Date (less any principal payments and the amount of any commitment reductions made thereon on or prior to such renewal or refinancing)), (ii) the renewal or refinancing of such Debt shall be on substantially the same or better terms as in effect with respect to such Debt on the Effective Date, and shall otherwise be in compliance with this Agreement, and (iii) at the time of such renewal or refinancing no Default or Event of Default has occurred and is continuing or would result from the renewal or refinancing of such Debt;

(4)Debt under any Hedging Transactions, provided that such transaction is entered into for risk management purposes and not for speculative purposes;

(5)Debt arising from judgments or decrees not deemed to be a Default or Event of Default under subsection (g) of Section 8.1; and

(6)Debt owing to a Person that is a Credit Party, but only to the extent permitted under Section 7.7 hereof.

Section 7.2 Limitation on Liens

Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for:

(1)Permitted Liens;

(2)Liens securing Debt permitted by Section 7.1(3), provided that (i) such Liens are created upon fixed or capital assets acquired by the applicable Credit Party after the date of this Agreement (including without limitation by virtue of a loan or a Capitalized Lease), (ii) any such Lien is created solely for the purpose of securing indebtedness representing or incurred to finance the cost of the acquisition of the item of property subject thereto, (iii) the principal amount of the Debt secured by any such Lien shall at no time exceed 100% of the sum of the purchase price or cost of the applicable property, equipment or improvements and the related costs and charges imposed by the vendors thereof and (iv) the Lien does not cover any property other than the fixed or capital asset acquired; and

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(3)other Liens, existing on the Effective Date, set forth on Schedule 7.2(3) and renewals and extensions thereof on substantially the same or better terms as in effect on the Effective Date and otherwise in compliance with this Agreement.

Regardless of the provisions of this Section 7.2, nothing in this Section 7.2 or in any provision of this Agreement is intended to, and shall not be construed as, subordinating or postponing, or as an agreement to subordinate or postpone, any Lien created by any of the Loan Documents to any such Permitted Liens or other Liens permitted by this Section 7.2.

Section 7.3 Acquisitions

Except for acquisitions permitted under Section 7.7 and the NSN Transaction, if any, purchase or otherwise acquire or become obligated for the purchase of all or substantially all or any material portion of the assets or business interests or a division or other business unit of any Person, or any Equity Interest of any Person, or any business or going concern.

Section 7.4 Limitation on Mergers, Dissolution, Sale of Assets, etc,

Enter into any merger, amalgamation or consolidation or convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets (including, without limitation, Equity Interests, receivables and leasehold interests), whether now owned or hereafter acquired or liquidate, wind up or dissolve, except:

(1)Inventory leased or sold in the ordinary course of business;

(2)obsolete, damaged, uneconomic or worn out machinery or equipment, or machinery or equipment no longer used or useful in the conduct of the applicable Credit Party’s business;

(3)mergers, amalgamations or consolidations of any Subsidiary of the Borrower with or into the Borrower or any Guarantor so long as the Borrower or one of the Guarantors shall be the continuing or surviving entity; provided that at the time of each such merger, amalgamation or consolidation, both before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or result from such merger, amalgamation or consolidation;

(4)any Subsidiary of the Borrower may liquidate or dissolve into the Borrower or a Guarantor if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower, so long as no Default or Event of Default has occurred and is continuing or would result therefrom;

(5)sales or transfers, including without limitation upon voluntary liquidation from any Credit Party to the Borrower or a Guarantor, provided that the Borrower or Guarantor takes such actions as the Agent may reasonably request to ensure the perfection and priority of the Liens in favour of the Lenders over such transferred assets;

(6)the sale or disposition of Permitted Investments and other cash equivalents in the ordinary course of business;

(7)dispositions of owned or leased vehicles in the ordinary course of business;

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(8)licences of any non-material intellectual property rights by any Credit Party in the ordinary course of business; and

(9)the abandonment or other disposition of non-material intellectual property rights that is, in the reasonable judgement of the Credit Party, no longer economically practical to maintain or useful in the conduct of the business of the Credit Parties taken as a whole.

The Lenders hereby consent and agree to the release by the Agent of any and all Liens on the property sold or otherwise disposed of in compliance with this Section 7.4.

Section 7.5 Restricted Payments

Declare or make any distributions, dividend, payment or other distribution of assets, properties, cash, rights, obligations or securities (collectively, “Distributions”) on account of any of its Equity Interests, as applicable, or purchase, redeem or otherwise acquire for value any of its Equity Interests, as applicable, or any warrants, rights or options to acquire any of its Equity Interests, now or hereafter outstanding (collectively, “Purchases”), except that:

(1)each Credit Party may pay cash Distributions to the Borrower; and

(2)each Credit Party may declare and make Distributions payable in the Equity Interests of such Credit Party, provided that the issuance of such Equity Interests does not otherwise violate the terms of this Agreement and no Default or Event of Default has occurred and is continuing at the time of making such Distribution or would result from the making of such Distribution; and

(3)the Borrower may purchase, redeem or otherwise acquire for value any of its Equity Interest upon the termination of the employment of any holder of Equity Interests in the Borrower or any of its Subsidiaries on the terms set forth in any equity compensation plan of the Borrower so long as no Default or Event of Default exists immediately before such purchase or redemption or would not exist after giving effect to such purchase or redemption.

Section 7.6 Limitation on Capital Expenditures

Make or commit to make (by way of the acquisition of securities of a Person or otherwise) any expenditure in respect of the purchase or other acquisition of fixed or capital assets (excluding any such asset acquired in connection with normal replacement and maintenance programs properly charged to current operations) except for Capital Expenditures, the amount of which in any period shall not exceed the amounts set out below:

Period	Capital Expenditures
December 1, 2012 to February 28, 2013	$	5,500,000
March 1, 2013 to May 31, 2013	$	4,500,000
June 1, 2013 to Revolving Credit Maturity Date	$	3,500,000

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Section 7.7 Limitation on Investments, Loans and Advances

Make or allow to remain outstanding any Investment (whether such investment shall be of the character of investment in shares of stock, evidences of indebtedness or other securities or otherwise) in, or any loans or advances to, any Person other than:

(1)Permitted Investments;

(2)Investments existing on the Effective Date and listed on Schedule 7.7(2) hereof;

(3)sales on open account in the ordinary course of business;

(4)intercompany loans or intercompany Investments made by any Credit Party to or in any Guarantor or the Borrower; provided that, in the case of any intercompany loans or intercompany Investments made by the Borrower in any Guarantor, the aggregate amount from time to time outstanding in respect thereof shall not exceed $1,000,000, except that the Borrower shall be permitted to make intercompany loans or intercompany Investments in DW Luxembourg and (upon DW Italy becoming a Guarantor) DW Italy in an aggregate amount from time to time not to exceed $5,000,000; and provided, further, that in each case, no Default or Event of Default shall have occurred and be continuing at the time of making such intercompany loan or intercompany Investment or result from such intercompany loan or intercompany Investment being made and that, if required by the Agent, any intercompany loans shall be evidenced by and funded under an Intercompany Note pledged to the Agent under the appropriate Collateral Documents;

(5)intercompany loans or intercompany Investments made by any Credit Party directly or indirectly to or in any Subsidiary which are not Credit Parties which so not violate the thresholds provided for in Section 7.14; provided that, in each case, no Default or Event of Default shall have occurred and be continuing at the time of making such intercompany loan or intercompany Investment or result from such intercompany loan or intercompany Investment being made; and that, if required by the Agent, any intercompany loans shall be evidenced by and funded under an Intercompany Note pledged to the Agent under the appropriate Collateral Documents;

(6)Investments in respect of Hedging Transactions provided that such transaction is entered into for risk management purposes and not for speculative purposes.

In valuing any Investments for the purpose of applying the limitations set forth in this Section 7.7 (except as otherwise expressly provided herein), such Investment shall be taken at the original cost thereof, without allowance for any subsequent write-offs or appreciation or depreciation, but less any amount repaid or recovered on account of capital or principal.

Section 7.8 Transactions with Affiliates

Except as set forth in Schedule 7.8, enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliates of the Credit Parties except: (a) subject to the restrictions and thresholds set out in Section 7.14 hereof, transactions with Affiliates that are the Borrower or Guarantors; (b) transactions otherwise permitted under this Agreement; and (c) transactions in the ordinary course of a Credit Party’s business and upon fair and reasonable terms no less favourable to such

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Credit Party than it would obtain in a comparable arms length transaction from unrelated third parties.

Section 7.9 Sale-Leaseback Transactions

Enter into any arrangement with any Person providing for the leasing by a Credit Party of real or personal property which has been or is to be sold or transferred by such Credit Party to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of such Credit Party, as the case may be, provided that if, at the time that a Credit Party acquires fixed or capital assets, such Credit Party intends to sell to and then lease such assets from another Person pursuant to a financing arrangement that would be permitted under Section 7.1(3), such transaction will not constitute a violation of this Section 7.9 so long as such transaction is consummated within sixty (60) days following the acquisition of such assets.

Section 7.10 Limitations on Other Restrictions

Except for this Agreement or any other Loan Document, enter into any agreement, document or instrument which would (i) restrict the ability of any Subsidiary of the Borrower to pay or make dividends or distributions in cash or kind to the Borrower or any Guarantor, to make loans, advances or other payments of whatever nature to any Credit Party, or to make transfers or distributions of all or any part of its assets to any Credit Party; or (ii) restrict or prevent any Credit Party from granting the Agent on behalf of Lenders Liens upon, security interests in and pledges of their respective assets, except to the extent such restrictions exist in documents creating Liens permitted by Section 7.2(2) hereunder.

Section 7.11 Modification of Certain Agreements

Make, permit or consent to any amendment or other modification to the constitutional documents of any Credit Party, any Material Contract except to the extent that any such amendment or modification (i) does not violate the terms and conditions of this Agreement or any of the other Loan Documents, (ii) does not materially adversely affect the interest of the Lenders as creditors and/or secured parties under any Loan Document and (iii) could not reasonably be expected to have a Material Adverse Effect.

Section 7.12 Earn-outs

Pay or otherwise advance, directly or indirectly, any fees, amounts, distributions, payment or other distribution of assets, properties, cash, rights, earn-outs or obligations to NSN or its Subsidiaries in connection with the MAA when the Borrower is not compliant with Section 6.12 or an Event of Default exists and is continuing or would or could result from the making of such payment.

Section 7.13 Fiscal Year

Permit the Fiscal Year of any Credit Party to end on a day other than the last day of February.

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Section 7.14 Negative Covenants regarding Certain Subsidiaries

(1)The Borrower shall not own any assets located in Malaysia, other than capital assets which shall not have a fair market value at any time exceeding US$3,000,000.

(2)The Borrower shall not own any assets located in the United Kingdom, through a branch, sales office or otherwise, which have a fair market value exceeding £150,000, other than deposit accounts which shall not have a balance at any time exceeding £150,000 and shall not have any liabilities arising from its activities in the United Kingdom other than leases with respect to leased premises with obligations thereunder not to exceed £150,000.

(3)The Borrower shall not own any assets located in the United Arab Emirates, through a branch, sales office or otherwise, which have a fair market value exceeding US$250,000, other than deposit accounts which shall not have a balance at any time exceeding US$100,000 and shall not have any liabilities arising from its activities in the United Arab Emirates other than leases with respect to leased premises with obligations thereunder not to exceed US$250,000.

(4)The Borrower shall not own any assets located in France, through a branch, sales office or otherwise, which have a fair market value exceeding €150,000 and shall not have any liabilities arising from its activities in France other than leases with respect to leased premises with obligations thereunder not to exceed €150,000.

(5)DW Luxembourg shall not own capital assets located in Germany with a fair market value exceeding €2,000,000.

(6)DW Luxembourg shall not own any assets located in the Netherlands, other than Inventory.

(7)DW Luxembourg shall not own Inventory located in the United Arab Emirates with a fair market value exceeding US$250,000.

(8)DW Luxembourg shall not own capital assets located in the People’s Republic of China with a fair market value exceeding €2,000,000.

(9)DW Luxembourg shall not own any assets located in India other than (a) capital assets located in India with a fair market value not exceeding US$3,500,000 or (b) inventory with a fair market value not exceeding US$13,000,000.

(10)DragonWave Ltd. shall not own any assets located in Israel other than (a) capital assets with a fair market value not exceeding US$1,000,000, (b) inventory with a fair market value not exceeding US$4,000,000, and it shall not have any liabilities arising from its activities in Israel other than leases with respect to leased premises and vehicles with obligations thereunder not to exceed US$5,000,000.

(11)Axerra Networks Asia Pacific Limited shall not own any assets located in Hong Kong, through a branch, sales office or otherwise, and shall not have any liabilities other than leases with respect to leased premises with obligations thereunder not to exceed US$100,000.

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(12)DragonWave Pte. Ltd. shall not own any assets located in Singapore other than (a) deposit accounts which shall not have a balance at any time exceeding US$2,000,000, and (b) 100% of the issued and outstanding shares of DragonWave Telecommunication Technology (Shanghai) Co., Ltd. and 50.1% interest in the joint venture known as DragonWave HFCL India Private Ltd., and it shall not have any liabilities other than leases with respect to leased premises with obligations thereunder not to exceed US$500,000.

(13)DragonWave Telecommunication Technology (Shanghai) Co., Ltd. shall not own any assets located in the People`s Republic of China other than (a) capital assets with a fair market value not exceeding €2,000,000 and (b) deposit accounts which shall not have a balance at any time exceeding US$3,000,000, and it shall not have any liabilities other than leases with respect to leased premises with obligations thereunder not to exceed US$1,500,000.

(14)DragonWave HFCL India Private Ltd. shall not own any assets located in India other than (a) capital assets with a fair market value not exceeding US$3,500,000, (b) deposit accounts which shall not have a balance at any time exceeding US$3,000,000, and it shall not have any liabilities other than leases with respect to leased premises with obligations thereunder not to exceed US$3,000,000.

(15)DragonWave — Comercio de Equipamentos de Telecomunicacao Ltda shall not own any assets located in Brazil other than (a) capital assets with a fair market value not exceeding US$200,000, and (b) deposit accounts which shall not have a balance at any time exceeding US$500,000, and it shall not have any liabilities other than leases with respect to leased premises with obligations thereunder not to exceed US$500,000.

(16)DW Corp. shall not own any Subsidiaries other than those existing on the Effective Date.

(17)The Borrower shall not permit DW Italy to acquire any assets, property or undertaking, or to receive the benefit of any intercompany loans from DW Luxembourg, until DW Italy has executed and delivered to the Agent, for and on behalf of each of the Lenders (a) a Guarantee whereby DW Italy becomes obligated as a Guarantor under the Guarantee; and (b) certain Security Agreements whereby DW Italy grants a Lien over its assets as set forth in the applicable Security Agreements (subject only to Permitted Liens), and DW Italy shall take such additional actions as may be necessary to ensure a valid first priority perfected Lien over such assets of DW Italy is granted to the Agent, subject only to Permitted Liens. Further, the Borrower shall cause DW Luxembourg to execute and deliver a Pledge Agreement and take such actions as may be necessary to ensure a valid first priority perfected Lien is granted to the Agent over one hundred percent (100%) of the Equity Interests of DW Italy (subject only to Permitted Liens). The Guarantee, the Security Agreements and the Pledge Agreement shall be, in each case, in form reasonably satisfactory to the Agent, in its reasonable discretion, together with such supporting documentation, including without limitation corporate authority items, certificates and opinions of counsel, as reasonably required by the Agent. Upon the Agent’s request, the Borrower, DW Luxembourg and DW Italy shall take, or cause to be taken, such additional reasonable steps as are necessary or advisable under applicable law to perfect and ensure the validity and priority of the Liens granted under this Section 7.14.

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ARTICLE 8 — DEFAULTS.

Section 8.1 Events of Default

The occurrence of any of the following events shall constitute an Event of Default hereunder:

(a)non-payment when due of (i) the principal or interest on the Indebtedness under the Revolving Credit (including the Swing Line) or (ii) any Reimbursement Obligation or (iii) any Fees, provided in the case of interest on the Indebtedness under the Revolving Credit, within three (3) Business Days after the same is due and payable;

(b)non-payment of any other amounts due and owing by the Borrower under this Agreement or by any Credit Party under any of the other Loan Documents to which it is a party, other than as set forth in subsection (a) above, within three (3) Business Days after the same is due and payable;

(c)default in the observance or performance of any of the conditions, covenants or agreements of the Borrower set forth in Sections 6.1, 6.2, 6.4(1) and (5), 6.5, 6.7, 6.8, 6.10, 6.16, 6.17, 6.18, 6.19 or Article 7 in its entirety, provided that an Event of Default arising from a breach of Sections 6.1 or 6.2 shall be deemed to have been cured upon delivery of the required item; and provided further that any Event of Default arising solely due to a breach of Section 6.8(1) shall be deemed cured upon the earlier of (x) the giving of the notice required by Section 6.8(1) and (y) the date upon which the Default or Event of Default giving rise to the notice obligation is cured or waived;

(d)default in the observance or performance of any of the other conditions, covenants or agreements set forth in this Agreement or any of the other Loan Documents by any Credit Party and continuance thereof for a period of thirty (30) consecutive days;

(e)any representation or warranty made by any Credit Party herein or in any certificate, instrument or other document submitted pursuant hereto proves untrue or misleading in any material adverse respect when made;

(f)(i) default by any Credit Party in the payment of any indebtedness for borrowed money, whether under a direct obligation or guarantee (other than Indebtedness hereunder) of any Credit Party in excess of US$ 5,000,000 (or the equivalent thereof in any currency other than Dollars) individually or in the aggregate when due and continuance thereof beyond any applicable period of cure and or (ii) failure to comply with the terms of any other obligation of any Credit Party with respect to any indebtedness for borrowed money (other than Indebtedness hereunder) in excess of US$ 100,000 (or the equivalent thereof in any currency other than Dollars) individually or in the aggregate, which continues beyond any applicable period of cure and which would permit the holder or holders thereto to accelerate such other indebtedness for borrowed money, or require the prepayment, repurchase, redemption or defeasance of such indebtedness;

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(g)the rendering of any final judgment(s) (not covered by adequate insurance from a solvent carrier which is defending such action without reservation of rights) for the payment of money in excess of the sum of US$ 5,000,000 (or the equivalent thereof in any currency other than Dollars) individually or in the aggregate against any Credit Party, and such judgments shall remain unpaid, unvacated, dishonoured or unstayed by appeal or otherwise for a period of thirty (30) consecutive days from the date of its entry;

(h)the occurrence of (i) any Canadian Pension Event, or (ii) a “reportable event”, as defined in ERISA, which is determined by the PBGC to constitute grounds for a distress termination of any Pension Plan subject to Title IV of ERISA maintained or contributed to by or on behalf of any Credit Party for the benefit of any of its employees or for the appointment by the appropriate United States District Court of a trustee to administer such Pension Plan and such reportable event is not corrected and such determination is not revoked within sixty (60) days after notice thereof has been given to the plan administrator of such Pension Plan (without limiting any of the Agent’s or any Lender’s other rights or remedies hereunder), or (iii) the termination or the institution of proceedings by the PBGC to terminate any such Pension Plan, or (iv) the appointment of a trustee by the appropriate United States District Court to administer any such Pension Plan, or (v) the reorganization (within the meaning of Section 4241 of ERISA) or insolvency (within the meaning of Section 4245 of ERISA) of any Multiemployer Plan, or receipt of notice from any Multiemployer Plan that it is in reorganization or insolvency, or the complete or partial withdrawal by any Credit Party from any Multiemployer Plan, which in the case of any of the foregoing, could reasonably be expected to have a Material Adverse Effect;

(i)except as expressly permitted under this Agreement, any Credit Party shall be dissolved (other than a dissolution of a Subsidiary of the Borrower which is not a Guarantor or the Borrower) or liquidated (or any judgment, order or decree therefor shall be entered) except as otherwise permitted herein; or if a creditors’ committee shall have been appointed for the business of any Credit Party; or if any Credit Party shall have made a general assignment for the benefit of creditors or shall have been adjudicated bankrupt and if not an adjudication based on a filing by a Credit Party, it shall not have been dismissed or stayed within sixty (60) days, or shall have filed a voluntary petition in bankruptcy or for reorganization or to effect a plan or arrangement with creditors or shall fail to pay its debts generally as such debts become due in the ordinary course of business (except as contested in good faith and for which adequate reserves are made in such party’s financial statements); or shall file an answer to a creditor’s petition or other petition filed against it, admitting the material allegations thereof for an adjudication in bankruptcy or for reorganization; or shall have applied for or permitted the appointment of a receiver or trustee or custodian for any of its property or assets; or such receiver, trustee or custodian shall have been appointed for any of its property or assets (otherwise than upon application or consent of a Credit Party ) and shall not have been removed within sixty (60) days; or if an order shall be entered approving any petition for reorganization of any Credit Party and shall not have been reversed, dismissed or stayed within sixty (60) days;

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(j)a Change of Control;

(k)any event or action occurs that has a Material Adverse Effect; or

(l)any Loan Document shall at any time for any reason cease to be in full force and effect (other than in accordance with the terms thereof or the terms of any other Loan Document), as applicable, or the validity, binding effect or enforceability thereof shall be contested by any party thereto (other than any Lender, the Agent, Issuing Lender or Swing Line Lender), or any Person shall deny that it has any or further liability or obligation under any Loan Document, or any such Loan Document shall be terminated (other than in accordance with the terms thereof or the terms of any other Loan Document), invalidated, revoked or set aside or in any way cease to give or provide to the Lenders and the Agent the benefits purported to be created thereby, or any Loan Document purporting to grant a Lien to secure any Indebtedness shall, at any time after the delivery of such Loan Document, fail to create a valid and enforceable Lien on any Collateral purported to be covered thereby or such Lien shall fail to cease to be a perfected Lien with the priority required in the relevant Loan Document.

Section 8.2 Exercise of Remedies

If an Event of Default has occurred and is continuing hereunder: (a) the Agent may, and shall, upon being directed to do so by the Majority Lenders, declare the Revolving Credit Aggregate Commitment terminated; (b) the Agent may, and shall, upon being directed to do so by the Majority Lenders, declare the entire unpaid principal Indebtedness, including the Notes, immediately due and payable, without presentment, notice or demand, all of which are hereby expressly waived by the Borrower; (c) upon the occurrence of any Event of Default specified in Section 8.1(i) and notwithstanding the lack of any declaration by the Agent under preceding clauses (a) or (b), the entire unpaid principal Indebtedness shall become automatically and immediately due and payable, and the Revolving Credit Aggregate Commitment shall be automatically and immediately terminated; (d) the Agent shall, upon being directed to do so by the Majority Lenders, demand immediate delivery of cash collateral, and the Borrower agrees to deliver such cash collateral upon demand, in an amount equal to 105% of the maximum amount that may be available to be drawn at any time prior to the stated expiry of all outstanding Letters of Credit, for deposit into an account controlled by the Agent; (e) the Agent may, and shall, upon being directed to do so by the Majority Lenders, notify the Borrower or any Credit Party that interest shall be payable on demand on all Indebtedness (other than Revolving Credit Advances with respect to which Section 2.6 hereof shall govern) owing from time to time to the Agent or any Lender, at a per annum rate equal to the then applicable US Base Rate or Canadian Prime Rate plus three percent (3%); and (f) the Agent may, and shall, upon being directed to do so by the Majority Lenders or the Lenders, as applicable (subject to the terms hereof), exercise any remedy permitted by this Agreement, the other Loan Documents or law.

Section 8.3 Rights Cumulative

No delay or failure of the Agent and/or Lenders in exercising any right, power or privilege hereunder shall affect such right, power or privilege, nor shall any single or partial exercise thereof preclude any further exercise thereof, or the exercise of any other power, right or

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privilege. The rights of the Agent and Lenders under this Agreement are cumulative and not exclusive of any right or remedies which Lenders would otherwise have.

Section 8.4 Waiver by the Borrower of Certain Laws

To the extent permitted by applicable law, the Borrower hereby agrees to waive, and does hereby absolutely and irrevocably waive and relinquish the benefit and advantage of any valuation, stay, appraisement, extension or redemption laws now existing or which may hereafter exist, which, but for this provision, might be applicable to any sale made under the judgment, order or decree of any court, on any claim for interest on the Notes, or any security interest or mortgage contemplated by or granted under or in connection with this Agreement. These waivers have been voluntarily given, with full knowledge of the consequences thereof.

Section 8.5 Waiver of Defaults

No Event of Default shall be waived by the Lenders except in a writing signed by an officer of the Agent in accordance with Section 12.10 hereof. No single or partial exercise of any right, power or privilege hereunder, nor any delay in the exercise thereof, shall preclude other or further exercise of their rights by the Agent or the Lenders. No waiver of any Event of Default shall extend to any other or further Event of Default. No forbearance on the part of the Agent or the Lenders in enforcing any of their rights shall constitute a waiver of any of their rights. The Borrower expressly agrees that this Section may not be waived or modified by the Lenders or the Agent by course of performance, estoppel or otherwise.

Section 8.6 Set Off

Upon the occurrence and during the continuance of any Event of Default, each Lender may at any time and from time to time, without notice to the Borrower but subject to the provisions of Section 9.3 hereof (any requirement for such notice being expressly waived by the Borrower), setoff and apply against any and all of the obligations of the Borrower now or hereafter existing under this Agreement, whether owing to such Lender, any Affiliate of such Lender or any other Lender or the Agent, any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of the Borrower and any property of the Borrower from time to time in possession of such Lender, irrespective of whether or not such deposits held or indebtedness owing by such Lender may be contingent and unmatured and regardless of whether any Collateral then held by the Agent or any Lender is adequate to cover the Indebtedness. Promptly following any such setoff, such Lender shall give written notice to the Agent and the Borrower of the occurrence thereof. The Borrower hereby grants to the Lenders and the Agent a lien on and security interest in all such deposits, indebtedness and property as collateral security for the payment and performance of all of the obligations of the Borrower under this Agreement. The rights of each Lender under this Section 8.6 are in addition to the other rights and remedies (including, without limitation, other rights of setoff) which such Lender may have.

Section 8.7 Receiver

Upon the occurrence of an Event of Default, the Agent may, without notice or consent and without regard to the adequacy of any security for the Indebtedness, obtain appointment of a receiver, interim receiver or receiver manager for the business of the Borrower, the Collateral

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(including, without limitation, the rents and profits derived from any Collateral), and the Borrower hereby consents to such appointment. This appointment will be in addition to any other rights, relief or remedies afforded the Agent and the Lenders. Such receiver, in addition to any other rights to which he is entitled, may sell any and all property of the Borrower for the benefit of the Agent and the Lenders pursuant to provisions of applicable law. The Agent may initiate receivership proceedings in any forum selected by Agent.

ARTICLE 9 — PAYMENTS, RECOVERIES AND COLLECTIONS.

Section 9.1 Payment Procedure

(1)All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise provided herein, all payments made by the Borrower of principal, interest or fees hereunder shall be made without setoff or counterclaim on the date specified for payment under this Agreement and must be received by the Agent not later than 1:00 p.m. (Toronto time) on the date such payment is required or intended to be made in the applicable currency of such Advance being Dollars, CAD Dollars or EUR, as applicable, in immediately available funds to the Agent at the Agent’s office located at Suite 2210, South Tower, Royal Bank Plaza, 200 Bay Street, Toronto, Ontario M5J 2J2 for the ratable benefit of the Revolving Credit Lenders in the case of payments in respect of the Revolving Credit, any Letter of Credit Obligations and Hedging Obligations. Any payment received by the Agent after 1:00 p.m. (Toronto time) shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. Upon receipt of each such payment, the Agent shall make prompt payment to each applicable Lender in like funds and currencies, of all amounts received by it for the account of such Lender.

(2)Unless the Agent shall have been notified in writing by the Borrower at least two (2) Business Days prior to the date on which any payment to be made by the Borrower is due that the Borrower does not intend to remit such payment, the Agent may, in its sole discretion and without obligation to do so, assume that the Borrower has remitted such payment when so due and the Agent may, in reliance upon such assumption, make available to each Revolving Credit Lender, on such payment date an amount equal to such Lender’s share of such assumed payment. If the Borrower has not in fact remitted such payment to the Agent, each Lender shall forthwith on demand repay to the Agent the amount of such assumed payment made available or transferred to such Lender, together with the interest thereon, in respect of each day from and including the date such amount was made available by the Agent to such Lender to the date such amount is repaid to the Agent at a rate per annum equal to the Federal Funds Effective Rate for the first two (2) Business Days that such amount remains unpaid, and thereafter at a rate of interest then applicable to such Revolving Credit Advances.

(3)Subject to the definition of “Interest Period” in Article 1 of this Agreement, whenever any payment to be made hereunder shall otherwise be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing interest, if any, in connection with such payment.

(4)All payments to be made by the Borrower under this Agreement or any of the Notes (including without limitation payments under the Swing Line and/or Swing Line Note) shall be made without setoff or counterclaim, as aforesaid, and, subject to full compliance by each Lender (and each assignee and participant pursuant to Section 12.8) with Section 12.13, without

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deduction for or on account of any present or future withholding or other taxes of any nature imposed by any Governmental Authority or of any political subdivision thereof or any federation or organization of which such Governmental Authority may at the time of payment be a member (other than any taxes on the overall income, net income, net profits or net receipts or similar taxes (or any franchise taxes imposed in lieu of such taxes) on the Agent or any Lender (or any branch maintained by the Agent or a Lender) as a result of a present or former connection between the Agent or such Lender and the Governmental Authority, political subdivision, federation or organization imposing such taxes), unless the Borrower is compelled by law to make payment subject to such tax. In such event, the Borrower shall:

(a)pay to the Agent for the Agent’s own account and/or, as the case may be, for the account of the Lenders such additional amounts as may be necessary to ensure that the Agent and/or such Lender or Lenders (including the Swing Line Lender) receive a net amount equal to the full amount which would have been receivable had payment not been made subject to such tax; and

(b)remit such tax to the relevant taxing authorities according to applicable law, and send to the Agent or the applicable Lender or Lenders (including the Swing Line Lender), as the case may be, such certificates or certified copy receipts as the Agent or such Lender or Lenders shall reasonably require as proof of the payment by the Borrower of any such taxes payable by the Borrower.

As used herein, the terms “tax”, “taxes” and “taxation” include all taxes, levies, imposts, duties, fees, deductions and withholdings or similar charges together with interest (and any taxes payable upon the amounts paid or payable pursuant to this Section 9.1) thereon. The Borrower shall be reimbursed by the applicable Lender for any payment made by the Borrower under this Section 9.1 if the applicable Lender is not in compliance with its obligations under Section 12.13 at the time of the Borrower’s payment.

Section 9.2 Application of Proceeds of Collateral

Notwithstanding anything to the contrary in this Agreement, in the case of any Event of Default under Section 8.1(i), immediately following the occurrence thereof, and in the case of any other Event of Default: (a) upon the termination of the Revolving Credit Aggregate Commitment, (b) the acceleration of any Indebtedness arising under this Agreement, (c) at the Agent’s option, or (d) upon the request of the Majority Lenders after the commencement of any remedies hereunder, the Agent shall apply the proceeds of any Collateral, together with any offsets, voluntary payments by any Credit Party or others and any other sums received or collected in respect of the Indebtedness first, to pay all incurred and unpaid fees and expenses of the Agent under the Loan Documents and any protective advances made by the Agent with respect to the Collateral under or pursuant to the terms of any Loan Document, next, to pay any fees and expenses owed to the Issuing Lender hereunder, next, to the Indebtedness under the Revolving Credit (including any Reimbursement Obligations), on a pro rata basis, next to any obligations owing by any Credit Party under any Hedging Agreements on a pro rata basis, next, to any other Indebtedness on a pro rata basis, and then, if there is any excess, to the Credit Parties, as the case may be.

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Section 9.3 Pro-rata Recovery

If any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of setoff or otherwise) on account of principal of, or interest on, any of the Advances made by it, or the participations in Letter of Credit Obligations, Hedging Obligations or Swing Line Advances held by it in excess of its pro rata share of payments then or thereafter obtained by all Lenders upon principal of and interest on all such Indebtedness, such Lender shall purchase from the other Lenders such participations in the Revolving Credit, the Letter of Credit Obligations and/or Hedging Obligations held by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably in accordance with the applicable Percentages of the Lenders; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing holder, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.

Section 9.4 Treatment of a Defaulting Lender; Reallocation of Defaulting Lender’s Fronting Exposure.

(1)The obligation of any Lender to make any Advance hereunder shall not be affected by the failure of any other Lender to make any Advance under this Agreement, and no Lender shall have any liability to the Borrower or any of their Subsidiaries, the Agent, any other Lender, or any other Person for another Lender’s failure to make any loan or Advance hereunder.

(2)If any Lender shall become a Defaulting Lender, then such Defaulting Lender’s right to vote in respect of any amendment, consent or waiver of the terms of this Agreement or such other Loan Documents, or to direct or approve any action or inaction by the Agent shall be subject to the restrictions set forth in Section 12.10.

(3)To the extent and for so long as a Lender remains a Defaulting Lender and notwithstanding the provisions of Section 9.3 hereof, the Agent shall be entitled, without limitation, (i) to withhold or setoff and to apply in satisfaction of those obligations for payment (and any related interest) in respect of which the Defaulting Lender shall be delinquent or otherwise in default to the Agent or any Lender (or to hold as cash collateral for such delinquent obligations or any future defaults) the amounts otherwise payable to such Defaulting Lender under this Agreement or any other Loan Document, (ii) if the amount of Advances made by such Defaulting Lender is less than its Percentage requires, apply payments of principal made by the Borrower amongst the Non-Defaulting Lenders on a pro rata basis until all outstanding Advances are held by all Lenders according to their respective Percentages and (iii) to bring an action or other proceeding, in law or equity, against such Defaulting Lender in a court of competent jurisdiction to recover the delinquent amounts, and any related interest. Performance by the Borrower of its obligations under this Agreement and the other Loan Documents shall not be excused or otherwise modified as a result of the operation of this Section, except to the extent expressly set forth herein. Furthermore, the rights and remedies of the Borrower, the Agent, the Issuing Lender, the Swing Line Lender and the other Lenders against a Defaulting Lender under this section shall be in addition to any other rights and remedies such parties may have against the Defaulting Lender under this Agreement or any of the other Loan Documents, applicable law or otherwise, and the Borrower does not waive any rights or remedies against any Defaulting Lender.

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(4)If any Lender shall become a Defaulting Lender, then, for so long as such Lender remains a Defaulting Lender, any Fronting Exposure shall be reallocated by the Agent at the request of the Swing Line Lender and/or the Issuing Lender among the Non-Defaulting Lenders in accordance with their respective Percentages of the Revolving Credit, but only to the extent that the sum of the aggregate principal amount of all Revolving Credit Advances made by each Non- Defaulting Lender, plus such Non-Defaulting Lender’s Percentage of the aggregate outstanding principal amount of Swing Line Advances, Letter of Credit Obligations and Hedging Obligations prior to giving effect to such reallocation plus such Non-Defaulting Lender’s Percentage of the Fronting Exposure to be reallocated does not exceed such Non- Defaulting Lender’s Percentage of the Revolving Credit Aggregate Commitment, and only so long as no Default or Event of Default has occurred and is continuing on the date of such reallocation.

Section 9.5 Currency Matters

Principal, interest, reimbursement obligations, fees, and all other amounts payable under this Agreement and the other Loan Documents to the Agent and the Lenders shall be payable in the currency in which such Indebtedness is denominated. Unless stated otherwise, all calculations, comparisons, measurements or determinations under this Agreement shall be made in Dollars. For the purpose of such calculations, comparisons, measurements or determinations, amounts denominated in other currencies shall be converted to the Dollar Amount on the date of calculation, comparison, measurement or determination.

ARTICLE 10 — CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS.

Section 10.1 Reimbursement of Prepayment Costs

If (i) the Borrower makes any payment of principal with respect to any Eurodollar-based Advance or CDOR-based Advance on any day other than the last day of the Interest Period applicable thereto (whether voluntarily, pursuant to any mandatory provisions hereof, by acceleration, or otherwise); (ii) the Borrower converts or refunds (or attempts to convert or refund) any such Advance on any day other than the last day of the Interest Period applicable thereto (except as described in Section 2.6(5)); (iii) the Borrower fails to borrow, refund or convert any Eurodollar-based Advance or CDOR-based Advance after notice has been given by the Borrower to the Agent in accordance with the terms hereof requesting such Advance; or (iv) or if the Borrower fails to make any payment of principal in respect of a Eurodollar-based Advance or CDOR-based Advance when due, the Borrower shall reimburse the Agent for itself and/or on behalf of any Lender, as the case may be, within ten (10) Business Days of written demand therefor for any resulting loss, cost or expense incurred (excluding the loss of any Applicable Margin) by the Agent and Lenders, as the case may be, as a result thereof, including, without limitation, any such loss, cost or expense incurred in obtaining, liquidating, employing or redeploying deposits from third parties, whether or not the Agent and Lenders, as the case may be, shall have funded or committed to fund such Advance. The amount payable hereunder by the Borrower to the Agent for itself and/or on behalf of any Lender, as the case may be, shall be deemed to equal an amount equal to the excess, if any, of (a) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, refunded or converted, for the period from the date of such prepayment or of such failure to borrow, refund or convert, through the last day of the relevant Interest Period, at the applicable rate of interest for said Advance(s) provided under this Agreement, over (b) the amount of interest (as reasonably determined by the

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Agent and Lenders, as the case may be) which would have accrued to the Agent and Lenders, as the case may be, on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. Calculation of any amounts payable to any Lender under this paragraph shall be made as though such Lender shall have actually funded or committed to fund the relevant Advance through the purchase of an underlying deposit in an amount equal to the amount of such Advance and having a maturity comparable to the relevant Interest Period or Contract Period, as applicable, provided, however, that any Lender may fund any Eurodollar-based Advance or CDOR-based Advance, as the case may be, in any manner it deems fit and the foregoing assumptions shall be utilized only for the purpose of the calculation of amounts payable under this paragraph. Upon the written request of the Borrower, the Agent and Lenders shall deliver to the Borrower a certificate setting forth the basis for determining such losses, costs and expenses, which certificate shall be conclusively presumed correct, absent manifest error.

Section 10.2 Circumstances Affecting LIBOR Rate, BBA LIBOR Rate or CDOR Rate Availability

If the Agent or the Majority Lenders (after consultation with the Agent) shall determine in good faith that, by reason of circumstances affecting the foreign exchange and interbank markets generally, deposits in eurodollars in the applicable amounts are not being offered to the Agent or such Lenders at the applicable LIBOR Rate, BBA LIBOR Rate or CDOR Rate, then the Agent shall forthwith give notice thereof to the Borrower.  Thereafter, until the Agent notifies  the Borrower that such circumstances no longer exist, (i) the obligation of Lenders to make Advances which bear interest at or by reference to the LIBOR Rate or CDOR Rate, and the right of the Borrower to convert an Advance to or refund an Advance as an Advance which bear interest at or by reference to the LIBOR Rate, BBA LIBOR Rate or CDOR Rate shall be suspended, (ii) effective upon the last day of each Euro-Interest Period or Contract Period, as applicable, related to any existing Eurodollar-based Advance, BBA LIBOR-based Advance or CDOR-Based Advance, each such Eurodollar-based Advance, BBA LIBOR-based Advance or CDOR-Based Advance shall automatically be converted into an Advance which bears interest at or by reference to the US Base Rate or Canadian Prime Rate, respectively (without regard to the satisfaction of any conditions to conversion contained elsewhere herein), and (iii) effective immediately following such notice, each Advance which bears interest at or by reference to the Daily Adjusting LIBOR Rate, BBA LIBOR Rate or CDOR Rate shall automatically be converted into an Advance which bears interest at or by reference to the US Base Rate or Canadian Prime Rate, respectively (without regard to the satisfaction of any conditions to conversion contained elsewhere herein).

Section 10.3 Laws Affecting LIBOR Rate, BBA LIBOR Rate or CDOR Rate Availability

If any Change in Law shall make it unlawful or impossible for any of the Lenders to honor its obligations hereunder to make or maintain any Advance which bears interest at or by reference to the LIBOR Rate, BBA LIBOR Rate or CDOR Rate, such Lender shall forthwith give notice thereof to the Borrower and to the Agent. Thereafter, (a) the obligations of the applicable Lenders to make Advances which bear interest at or by reference to the LIBOR Rate, BBA LIBOR Rate or CDOR Rate and the right of the Borrower to convert an Advance into or refund an Advance as an Advance which bears interest at or by reference to the LIBOR Rate, BBA LIBOR Rate or CDOR Rate shall be suspended and thereafter only the US Base Rate or

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Canadian Prime Rate, as applicable, shall be available, and (b) if any of the Lenders may not lawfully continue to maintain an Advance which bears interest at or by reference to the LIBOR Rat, BBA LIBOR Rate e or CDOR Rate, the applicable Advance shall immediately be converted to an Advance which bears interest at or by reference to the US Base Rate or Canadian Prime Rate, as applicable.

Section 10.4 Increased Cost of Advances Carried at the LIBOR Rate, BBA LIBOR Rate or CDOR Rate

If any Change in Law shall:

(1)subject any of the Lenders to any tax, duty or other charge with respect to any Advance or shall change the basis of taxation of payments to any of the Lenders of the principal of or interest on any Advance or any other amounts due under this Agreement in respect thereof (except for changes in the rate of tax on the overall net income of any of the Lenders); or

(2)impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any of the Lenders or shall impose on any of the Lenders or the foreign exchange and interbank markets any other condition affecting any Advance;

and the result of any of the foregoing matters is to increase the costs to any of the Lenders of maintaining any part of the Indebtedness hereunder as an Advance which bears interest at or by reference to the LIBOR Rate, BBA LIBOR Rate or CDOR Rate or to reduce the amount of any sum received or receivable by any of the Lenders under this Agreement in respect of an Advance which bears interest at or by reference to the LIBOR Rate, BBA LIBOR Rate or CDOR Rate, then such Lender shall promptly notify the Agent, and the Agent shall promptly notify the Borrower of such fact and demand compensation therefor and, within ten (10) Business Days after such notice, the Borrower agrees to pay to such Lender or Lenders such additional amount or amounts as will compensate such Lender or Lenders for such increased cost or reduction, provided that each Lender agrees to take any reasonable action, to the extent such action could be taken without cost or administrative or other burden or restriction to such Lender, to mitigate or eliminate such cost or reduction, within a reasonable time after becoming aware of the foregoing matters. The Agent will promptly notify the Borrower of any event of which it has knowledge which will entitle Lenders to compensation pursuant to this Section, or which will cause the Borrower to incur additional liability under Section 10.1 hereof, provided that the Agent shall incur no liability whatsoever to the Lenders or the Borrower in the event it fails to do so. A certificate of the Agent (or such Lender, if applicable) setting forth the basis for determining such additional amount or amounts necessary to compensate such Lender or Lenders shall accompany such demand and shall be conclusively presumed to be correct absent manifest error.

Section 10.5 Capital Adequacy and Other Increased Costs

(1)If any Change in Law affects or would affect the amount of capital required to be maintained by a Lender or the Agent (or any corporation controlling such Lender or the Agent) and such Lender or the Agent, as the case may be, determines that the amount of such capital is increased by, or based upon the existence of such Lender’s or the Agent’s obligations or

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Advances hereunder, the effect of such Change in Law is to result in such an increase, and such increase has the effect of reducing the rate of return on such Lender’s or the Agent’s (or such controlling corporation’s) capital as a consequence of such obligations or Advances hereunder to a level below that which such Lender or the Agent (or such controlling corporation) could have achieved but for such circumstances (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Lender or the Agent to be material (collectively, “Increased Costs”), then the Agent or such Lender shall notify the Borrower, and thereafter the Borrower shall pay to such Lender or the Agent, as the case may be, within ten (10) Business Days of written demand therefor from such Lender or the Agent, additional amounts sufficient to compensate such Lender or the Agent (or such controlling corporation) for any increase in the amount of capital and reduced rate of return which such Lender or the Agent reasonably determines to be allocable to the existence of such Lender’s or the Agent’s obligations or Advances hereunder. A statement setting forth the amount of such compensation, the methodology for the calculation and the calculation thereof which shall also be prepared in good faith and in reasonable detail by such Lender or the Agent, as the case may be, shall be submitted by such Lender or by the Agent to the Borrower, reasonably promptly after becoming aware of any event described in this Section 10.5 and shall be conclusively presumed to be correct, absent manifest error. No amounts shall be due under this Section 10.5 to the extent such amounts are due and payable under Section 10.4.

(2)Failure or delay on the part of the Lender to demand compensation pursuant to Sections 10.4 or 10.5 shall not constitute a waiver of such Lender’s right to demand such compensation, except that the Credit Parties shall not be required to compensate the Lenders pursuant to Sections 10.4 or 10.5 for any increased costs incurred or reductions suffered more than 180 days prior to the making of a Lender’s initial request for such additional amounts, unless the event giving rise to such increased costs or reductions is retroactive, in which case the 180 day period referred to above shall be extended to include the period of retroactive effect thereof.

Section 10.6 Right of Lenders to Fund through Branches and Affiliates

Each Lender (including without limitation the Swing Line Lender) may, if it so elects, fulfill its commitment as to any Advance hereunder by designating a branch or Affiliate of such Lender to make such Advance; provided that (a) such Lender shall remain solely responsible for the performances of its obligations hereunder and (b) no such designation shall result in any material increased costs to the Borrower.

Section 10.7 Margin Adjustment

Adjustments to the Applicable Margins and the Applicable Fee Percentages, based on Schedule 1.1(11), shall be implemented on a quarterly basis as follows:

(1)Such adjustments shall be given prospective effect only, effective as to all Advances outstanding hereunder, the Applicable Fee Percentage and the Letter of Credit Fee, upon the date of delivery of the financial statements under Sections 7.1(a) and 7.1(b) hereunder and the Covenant Compliance Report under Section 7.2(a) hereof, in each case establishing applicability of the appropriate adjustment and in each case with no retroactivity or claw-back. In the event the Borrower shall fail timely to deliver such financial statements or the Covenant Compliance Report and such failure continues for three (3) Business Days, then (but without affecting any Event of Default resulting therefrom) from the date delivery of such financial statements and

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report was required until such financial statements and report are delivered, the Applicable Margins and Applicable Fee Percentages shall be at the highest level on the Pricing Matrix attached to this Agreement as Schedule 1.1(11).

(2)Notwithstanding the foregoing, however, if, prior to the payment and discharge in full (in cash) of the Indebtedness (other than indemnification obligations for which no claim has been asserted) and the termination of any and all commitments hereunder, as a result of any restatement of or adjustment to the financial statements of the Borrower and any of its Subsidiaries (relating to the current or any prior fiscal period) or for any other reason, the Agent determines that the Applicable Margin and/or the Applicable Fee Percentages as calculated by the Borrower as of any applicable date of determination were inaccurate in any respect and a proper calculation thereof would have resulted in different pricing for any fiscal period, then (x) if the proper calculation thereof would have resulted in higher pricing for any such period, the Borrower shall automatically and retroactively be obligated to pay to the Agent, promptly upon demand by the Agent or the Majority Lenders, an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period and, if the current fiscal period is affected thereby, the Applicable Margin and/or the Applicable Fee Percentages for the current period shall be adjusted based on such recalculation; and (y) if the proper calculation thereof would have resulted in lower pricing for such period, the Agent and Lenders shall have no obligation to recalculate such interest or fees or to repay any interest or fees to the Borrower.

Section 10.8 Illegality

If any Lender determines that any applicable law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable lending office to make or maintain any Advance (or to maintain its obligation to make any Advance), to the Borrower or to receive the benefit of a Guarantee from a Guarantor, or receive the benefit of security over the assets or shares of such Borrower or Guarantor, or do business with such Borrower or Guarantor, then, on notice thereof by such Lender to the Borrower through the Agent, any obligation of such Lender with respect to the activity that is unlawful shall be suspended until such Lender notifies the Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to the Agent), either, at the direction of the Lender, (i) agree that the Borrower or such Guarantor shall not become the Borrower or such Guarantor with respect to the Lender and /or agree that the Lender shall not make or maintain any Advance (or maintain its obligation to make any Advance) to the Borrower or receive the benefit of a Guarantee from a Guarantor, or receive the benefit of security over the assets or shares of such Borrower or Guarantor, or do business with such Borrower or Guarantor or (ii) prepay (without prepayment penalty) or, if conversion would avoid the activity that is unlawful, convert any Advances in order to avoid the activity that is unlawful. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted. Each Lender agrees to designate a different lending office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender.

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ARTICLE 11 — AGENT

Section 11.1 Appointment of the Agent

Each Lender and the holder of each Note (if issued) irrevocably appoints and authorizes the Agent to act on behalf of such Lender or holder under this Agreement and the other Loan Documents and to exercise such powers hereunder and thereunder as are specifically delegated to the Agent by the terms hereof and thereof, together with such powers as may be reasonably incidental thereto, including without limitation the power to execute or authorize the execution of financing or similar statements or notices, and other documents. In performing its functions and duties under this Agreement, the Agent shall act solely as agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for any Credit Party.

Section 11.2 Deposit Account with the Agent or any Lender

The Borrower authorizes the Agent and each Lender, in the Agent’s or such Lender’s sole discretion, upon notice to the Borrower to charge its general deposit account(s), if any, maintained with the Agent or such Lender for the amount of any principal, interest, or other amounts or costs due under this Agreement when the same become due and payable under the terms of this Agreement or the Notes.

Section 11.3 Scope of the Agent’s Duties

The Agent shall have no duties or responsibilities except those expressly set forth herein, and shall not, by reason of this Agreement or otherwise, have a fiduciary relationship with any Lender (and no implied covenants or other obligations shall be read into this Agreement against the Agent). None of the Agent, its Affiliates nor any of their respective directors, officers, employees or agents shall be liable to any Lender for any action taken or omitted to be taken by it or them under this Agreement or any document executed pursuant hereto, or in connection herewith or therewith with the consent or at the request of the Majority Lenders (or all of the Lenders for those acts requiring consent of all of the Lenders) (except for its or their own willful misconduct or gross negligence), nor be responsible for or have any duties to ascertain, inquire into or verify (a) any recitals or warranties made by the Credit Parties or any Affiliate of the Credit Parties, or any officer thereof contained herein or therein, (b) the effectiveness, enforceability, validity or due execution of this Agreement or any document executed pursuant hereto or any security thereunder, (c) the performance by the Credit Parties of their respective obligations hereunder or thereunder, or (d) the satisfaction of any condition hereunder or thereunder, including without limitation in connection with the making of any Advance or the issuance of any Letter of Credit. The Agent and its Affiliates shall be entitled to rely upon any certificate, notice, document or other communication (including any cable, telegraph, telex, facsimile transmission or oral communication) believed by it to be genuine and correct and to have been sent or given by or on behalf of a proper person. The Agent may treat the payee of any Note as the holder thereof. The Agent may employ agents and may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable to the Lenders (except as to money or property received by them or their authorized agents), for the negligence or misconduct of any such agent selected by it with reasonable care or for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts.

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Section 11.4 Successor Agent

The Agent may resign as such at any time upon at least thirty (30) days prior notice to the Borrower and each of the Lenders. If the Agent at any time shall resign or if the office of the Agent shall become vacant for any other reason, Majority Lenders shall, by written instrument, appoint successor agent(s) (“Successor Agent”) satisfactory to such Majority Lenders and, so long as no Default or Event of Default has occurred and is continuing, to the Borrower (which approval shall not be unreasonably withheld or delayed); provided, however that any such successor Agent shall be a bank or a trust company or other financial institution which maintains an office in the United States or Canada, or a commercial bank organized under the laws of the United States, Canada or any state or province thereof, or any Affiliate of such bank or trust company or other financial institution which is engaged in the banking business, and shall have a combined capital and surplus of at least $500,000,000. Such Successor Agent shall thereupon become the Agent hereunder, as applicable, and the Agent shall deliver or cause to be delivered to any successor agent such documents of transfer and assignment as such Successor Agent may reasonably request. If a Successor Agent is not so appointed or does not accept such appointment before the resigning Agent’s resignation becomes effective, the resigning Agent may appoint a temporary successor to act until such appointment by the Majority Lenders and, if applicable, the Borrower, is made and accepted, or if no such temporary successor is appointed as provided above by the resigning Agent, the Majority Lenders shall thereafter perform all of the duties of the resigning Agent hereunder until such appointment by the Majority Lenders and, if applicable, the Borrower, is made and accepted. Such Successor Agent shall succeed to all of the rights and obligations of the resigning Agent as if originally named. The resigning Agent shall duly assign, transfer and deliver to such Successor Agent all moneys at the time held by the resigning Agent hereunder after deducting therefrom its expenses for which it is entitled to be reimbursed hereunder. Upon such succession of any such Successor Agent, the resigning Agent shall be discharged from its duties and obligations, in its capacity as the Agent hereunder, except for its gross negligence or willful misconduct arising prior to its resignation hereunder, and the provisions of this Article 11 shall continue in effect for the benefit of the resigning Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Agent.

Section 11.5 Credit Decisions

Each Lender acknowledges that it has, independently of the Agent and each other Lender and based on the financial statements of the Borrower and such other documents, information and investigations as it has deemed appropriate, made its own credit decision to extend credit hereunder from time to time. Each Lender also acknowledges that it will, independently of the Agent and each other Lender and based on such other documents, information and investigations as it shall deem appropriate at any time, continue to make its own credit decisions as to exercising or not exercising from time to time any rights and privileges available to it under this Agreement, any Loan Document or any other document executed pursuant hereto.

Section 11.6 Authority of the Agent to Enforce This Agreement

Each Lender, subject to the terms and conditions of this Agreement, grants the Agent full power and authority as attorney-in-fact to institute and maintain actions, suits or proceedings for the collection and enforcement of any Indebtedness outstanding under this Agreement or any other Loan Document and to file such proofs of debt or other documents as may be necessary to

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have the claims of the Lenders allowed in any proceeding relative to any Credit Party, or their respective creditors or affecting their respective properties, and to take such other actions which the Agent considers to be necessary or desirable for the protection, collection and enforcement of the Notes, this Agreement or the other Loan Documents.

Section 11.7 Indemnification of the Agent

The Lenders agree (which agreement shall survive the expiration or termination of this Agreement) to indemnify the Agent and its Affiliates (to the extent not reimbursed by the Borrower, but without limiting any obligation of the Borrower to make such reimbursement), ratably according to their respective Weighted Percentages, from and against any and all claims, damages, losses, liabilities, costs or expenses of any kind or nature whatsoever (including, without limitation, reasonable fees and expenses of house and outside counsel) which may be imposed on, incurred by, or asserted against the Agent and its Affiliates in any way relating to or arising out of this Agreement, any of the other Loan Documents or the transactions contemplated hereby or any action taken or omitted by the Agent and its Affiliates under this Agreement or any of the Loan Documents; provided, however, that no Lender shall be liable for any portion of such claims, damages, losses, liabilities, costs or expenses resulting from the Agent’s or its Affiliate’s gross negligence or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Agent and its Affiliates promptly upon demand for its ratable share of any reasonable out-of-pocket expenses (including, without limitation, reasonable fees and expenses of house and outside counsel) incurred by the Agent and its Affiliates in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any of the other Loan Documents, to the extent that the Agent and its Affiliates are not reimbursed for such expenses by the Borrower, but without limiting the obligation of the Borrower to make such reimbursement. Each Lender agrees to reimburse the Agent and its Affiliates promptly upon demand for its ratable share of any amounts owing to the Agent and its Affiliates by the Lenders pursuant to this Section, provided that, if the Agent or its Affiliates are subsequently reimbursed by the Borrower for such amounts, they shall refund to the Lenders on a pro rata basis the amount of any excess reimbursement. If the indemnity furnished to the Agent and its Affiliates under this Section shall become impaired as determined in the Agent’s reasonable judgment or the Agent shall elect in its sole discretion to have such indemnity confirmed by the Lenders (as to specific matters or otherwise), the Agent shall give notice thereof to each Lender and, until such additional indemnity is provided or such existing indemnity is confirmed, the Agent may cease, or not commence, to take any action. Any amounts paid by the Lenders hereunder to the Agent or its Affiliates shall be deemed to constitute part of the Indebtedness hereunder.

Section 11.8 Knowledge of Default

It is expressly understood and agreed that the Agent shall be entitled to assume that no Default or Event of Default has occurred and is continuing, unless the officers of the Agent immediately responsible for matters concerning this Agreement shall have received a written notice from a Lender or the Borrower specifying such Default or Event of Default and stating that such notice is a “notice of default”. Upon receiving such a notice, the Agent shall promptly notify each Lender of such Default or Event of Default and provide each Lender with a copy of such notice and shall endeavor to provide such notice to the Lenders within three (3) Business

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Days (but without any liability whatsoever in the event of its failure to do so). The Agent shall also furnish the Lenders, promptly upon receipt, with copies of all other notices or other information required to be provided by the Borrower hereunder.

Section 11.9 The Agent’s Authorization; Action by Lenders

Except as otherwise expressly provided herein, whenever the Agent is authorized and empowered hereunder on behalf of the Lenders to give any approval or consent, or to make any request, or to take any other action on behalf of the Lenders (including without limitation the exercise of any right or remedy hereunder or under the other Loan Documents), the Agent shall be required to give such approval or consent, or to make such request or to take such other action only when so requested in writing by the Majority Lenders or the Lenders, as applicable hereunder. Action that may be taken by the Majority Lenders, any other specified Percentage of the Lenders or all of the Lenders, as the case may be (as provided for hereunder) may be taken (i) pursuant to a vote of the requisite percentages of the Lenders as required hereunder at a meeting (which may be held by telephone conference call), provided that the Agent exercises good faith, diligent efforts to give all of the Lenders reasonable advance notice of the meeting, or (ii) pursuant to the written consent of the requisite percentages of the Lenders as required hereunder, provided that all of the Lenders are given reasonable advance notice of the requests for such consent.

Section 11.10 Enforcement Actions by the Agent

Except as otherwise expressly provided under this Agreement or in any of the other Loan Documents and subject to the terms hereof, the Agent will take such action, assert such rights and pursue such remedies under this Agreement and the other Loan Documents as the Majority Lenders or all of the Lenders, as the case may be (as provided for hereunder), shall direct; provided, however, that the Agent shall not be required to act or omit to act if, in the reasonable judgment of the Agent, such action or omission may expose the Agent to personal liability for which the Agent has not been satisfactorily indemnified hereunder or is contrary to this Agreement, any of the Loan Documents or applicable law. Except as expressly provided above or elsewhere in this Agreement or the other Loan Documents, no Lender (other than the Agent, acting in its capacity as agent) shall be entitled to take any enforcement action of any kind under this Agreement or any of the other Loan Documents.

Section 11.11 Collateral Matters.

(1)The Agent is authorized on behalf of all the Lenders, without the necessity of any notice to or further consent from the Lenders, from time to time to take any action with respect to any Collateral or the Collateral Documents which may be necessary to perfect and maintain a perfected security interest in and Liens upon the Collateral granted pursuant to the Loan Documents.

(2)The Lenders irrevocably authorize the Agent, in its reasonable discretion, to the full extent set forth in Section 12.10(4) hereof, (1) to release or terminate any Lien granted to or held by the Agent upon any Collateral (a) upon termination of the Revolving Credit Aggregate Commitment and payment in full of all Indebtedness (other than indemnification obligations for which no claim has been asserted) payable under this Agreement and under any other Loan Document; (b) constituting property (including, without limitation, Equity Interests in any

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Person) sold or to be sold or disposed of as part of or in connection with any disposition (whether by sale, by merger or by any other form of transaction and including the property of any Subsidiary that is disposed of as permitted hereby) permitted in accordance with the terms of this Agreement; (c) constituting property in which a Credit Party owned no interest at the time the Lien was granted or at any time thereafter; or (d) if approved, authorized or ratified in writing by the Majority Lenders, or all the Lenders, as the case may be, as provided in Section 12.10; (2) to subordinate the Lien granted to or held by the Agent on any Collateral to any other holder of a Lien on such Collateral which is permitted by Section 7.2(2) hereof; and (3) if all of the Equity Interests held by the Credit Parties in any Person are sold or otherwise transferred to any transferee other than the Borrower or a Subsidiary of the Borrower as part of or in connection with any disposition (whether by sale, by merger or by any other form of transaction) permitted in accordance with the terms of this Agreement, to release such Person from all of its obligations under the Loan Documents (including, without limitation, under any Guarantee). Upon request by the Agent at any time, the Lenders will confirm in writing the Agent’s authority to release particular types or items of Collateral pursuant to this Section 11.11(2).

Section 11.12 The Agents in their Individual Capacities

Comerica Bank and its Affiliates, successors and assigns shall each have the same rights and powers hereunder as any other Lender and may exercise or refrain from exercising the same as though such Lender were not the Agent. Comerica Bank and its Affiliates may (without having to account therefor to any Lender) accept deposits from, lend money to, and generally engage in any kind of banking, trust, financial advisory or other business with the Credit Parties as if such Lender were not acting as the Agent hereunder, and may accept fees and other consideration therefor without having to account for the same to the Lenders.

Section 11.13 The Agent’s Fees

Until the Indebtedness (other than indemnification obligations for which no claim has been asserted) has been repaid and discharged in full and no commitment to extend any credit hereunder is outstanding, the Borrower shall pay to the Agent, as applicable, any agency or other fee(s) set forth (or to be set forth from time to time) in the Fee Letter on the terms set forth therein. The agency fees referred to in this Section 11.13 shall not be refundable under any circumstances.

Section 11.14 Documentation Agent or other Titles

Any Lender identified on the facing page or signature page of this Agreement or in any amendment hereto or as designated with consent of the Agent in any assignment agreement as Lead Arranger, Documentation Agent, Syndications Agent or any similar titles, shall not have any right, power, obligation, liability, responsibility or duty under this Agreement as a result of such title other than those applicable to all Lenders as such. Without limiting the foregoing, the Lenders so identified shall not have or be deemed to have any fiduciary relationship with any Lender as a result of such title. Each Lender acknowledges that it has not relied, and will not rely, on the Lender so identified in deciding to enter into this Agreement or in taking or not taking action hereunder.

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Section 11.15 Patriot Act, AML Laws, and Customer Identification Program

(1)Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other AML Laws, including any programs involving any of the following items relating to or in connection with the Borrower or any of its Subsidiaries, any of their respective Affiliates or agents, the Loan Documents or the transactions hereunder: (i) any identify verification procedures, (ii) any record keeping, (iii) any comparisons with government lists, (iv) any customer notices or (v) any other procedures required under the CIP Regulations or such other laws.

(2)Each Lender or assignee or participant of a Lender that is not organized under the laws of the United States or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA Patriot Act and the applicable regulations because it is both (i) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United States or foreign country, and (ii) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall, upon request by the Agent, deliver to the Agent the certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and certifying to other matters as required by Section 313 of the USA Patriot Act and the applicable regulations in such form as is no less than the Agent reasonably believes is necessary for compliance therewith: (x) within 10 days after the Effective Date, and (y) upon request by the Agent, at such other times as are required under the USA Patriot Act.

(3)If the Agent has ascertained the identity of the Borrower or any authorized signatories of the Borrower for the purposes of applicable AML Laws, then the Agent (i) shall be deemed to have done so as an agent for each Lender, and this Agreement shall constitute a “written agreement” in such regard between each Lender and the Agent within the meaning of the applicable AML Laws; and (ii) shall provide to each Lender copies of all information obtained in such regard without any representation or warranty as to its accuracy or completeness. Notwithstanding the preceding sentence and except as may otherwise be agreed in writing, each Lender agrees that the Agent has no obligation to ascertain the identity of the Borrower or any authorized signatories of the Borrower on behalf of any Lender, or to confirm the completeness or accuracy of any information it obtains from the Borrower or any such authorized signatory in doing so.

ARTICLE 12 — MISCELLANEOUS.

Section 12.1 Accounting Principles

Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, it shall be done, unless otherwise specified herein, in accordance with GAAP.

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Section 12.2 Consent to Jurisdiction

The Borrower, the Agent and Lenders hereby irrevocably submit to the non-exclusive jurisdiction of any federal or Ontario court sitting in Toronto, Ontario in any action or proceeding arising out of or relating to this Agreement or any of the Loan Documents and the Borrower, the Agent and Lenders hereby irrevocably agree that all claims in respect of such action or proceeding may be heard and determined in any such federal or Ontario court. The Borrower irrevocably consents to the service of any and all process in any such action or proceeding brought in any court in or of the Province of Ontario by the delivery of copies of such process to it at the applicable addresses specified on the signature page hereto or by certified mail directed to such address or such other address as may be designated by it in a notice to the other parties that complies as to delivery with the terms of Section 12.6. Nothing in this Section shall affect the right of the Lenders and the Agent to serve process in any other manner permitted by law or limit the right of the Lenders or the Agent (or any of them) to bring any such action or proceeding against any Credit Party or any of their property in the courts with subject matter jurisdiction of any other jurisdiction. The Borrower irrevocably waives any objection to the laying of venue of any such suit or proceeding in the above described courts.

Section 12.3 Law of Ontario

This Agreement, the Notes and, except where otherwise expressly specified therein to be governed by local law, the other Loan Documents shall be governed by and construed and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein (without regard to its conflict of laws provisions). Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

Section 12.4 Interest

Subject to Section 1.3, in the event the obligation of the Borrower to pay interest on the principal balance of the Notes or on any other amounts outstanding hereunder or under the other Loan Documents is or becomes in excess of the maximum interest rate which the Borrower is permitted by law to contract or agree to pay, giving due consideration to the execution date of this Agreement, then, in that event, the rate of interest applicable thereto with respect to such Lender’s applicable Percentages shall be deemed to be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not of interest.

Section 12.5 Closing Costs and Other Costs; Indemnification.

(1)The Borrower shall pay or reimburse (a) the Agent and its Affiliates and their respective employees, agents, officers and directors for payment of, on demand, all reasonable costs and expenses, including, by way of description and not limitation, reasonable in-house and outside attorney fees and advances, appraisal and accounting fees, lien search fees, and required travel costs, incurred by the Agent and its Affiliates in connection with the commitment, consummation and closing of the loans contemplated hereby, or in connection with the

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administration or enforcement of this Agreement or the other Loan Documents (including the obtaining of legal advice regarding the rights and responsibilities of the parties hereto) or any refinancing or restructuring of the loans or Advances provided under this Agreement or the other Loan Documents, or any amendment or modification thereof requested by the Borrower, and (b) the Agent and its Affiliates and each of the Lenders, as the case may be, for all stamp and other taxes and duties payable or determined to be payable in connection with the execution, delivery, filing or recording of this Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby, and any and all liabilities with respect to or resulting from any delay in paying or omitting to pay such taxes or duties. Furthermore, all reasonable costs and expenses, including without limitation attorney fees, incurred by the Agent and its Affiliates and, after the occurrence and during the continuance of an Event of Default, by the Lenders in revising, preserving, protecting, exercising or enforcing any of its or any of the Lenders’ rights against the Borrower or any other Credit Party, or otherwise incurred by the Agent and its Affiliates and the Lenders in connection with any Event of Default or the enforcement of the loans (whether incurred through negotiations, legal proceedings or otherwise), including by way of description and not limitation, such charges in any court or bankruptcy proceedings or arising out of any claim or action by any person against the Agent, its Affiliates, or any Lender which would not have been asserted were it not for the Agent’s or such Affiliate’s or Lender’s relationship with the Borrower hereunder or otherwise, shall also be paid by the Borrower. All of said amounts required to be paid by the Borrower hereunder and not paid forthwith upon demand, as aforesaid, shall bear interest, from the date incurred to the date payment is received by the Agent, at the US Base Rate, plus three percent (3%).

(2)The Borrower agrees to indemnify and hold the Agent and each of the Lenders (and their respective Affiliates and their respective employees, agents, officers and directors) harmless from all loss, cost, damage, liability or expenses, including reasonable in-house and outside attorneys’ fees and disbursements (but without duplication of such fees and disbursements for the same services), incurred by the Agent and each of the Lenders by reason of an Event of Default, or enforcing the obligations of any Credit Party under this Agreement or any of the other Loan Documents, as applicable, or in the prosecution or defense of any action or proceeding concerning any matter growing out of or connected with this Agreement or any of the Loan Documents, excluding, however, any loss, cost, damage, liability or expenses to the extent arising as a result of the gross negligence or wilful misconduct of the party seeking to be indemnified under this Section 12.5(2).

(3)The Borrower agrees to defend, indemnify and hold harmless the Agent and each Lender (and their respective Affiliates), and their respective employees, agents, officers and directors from and against any and all claims, demands, penalties, fines, liabilities, settlements, damages, costs or expenses of whatever kind or nature (including without limitation, reasonable attorneys and consultants fees, investigation and laboratory fees, environmental studies required by the Agent or any Lender in connection with the violation of Hazardous Material Laws), court costs and litigation expenses, arising out of or related to (i) the presence, use, disposal, release or threatened release of any Hazardous Materials on, from or affecting any premises owned or occupied by any Credit Party in violation of or the non-compliance with applicable Hazardous Material Laws, (ii) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Materials, (iii) any lawsuit or other proceeding brought or threatened, settlement reached or governmental order or decree relating to such Hazardous Materials, and/or (iv) complying or coming into compliance with all Hazardous

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Material Laws (including the cost of any remediation or monitoring required in connection therewith) or any other Requirement of Law; provided, however, that the Borrower shall have no obligations under this Section 12.5(3) with respect to claims, demands, penalties, fines, liabilities, settlements, damages, costs or expenses to the extent arising as a result of the gross negligence or wilful misconduct of the Agent or such Lender, as the case may be. The obligations of the Borrower under this Section 12.5(3) shall be in addition to any and all other obligations and liabilities the Borrower may have to the Agent or any of the Lenders at common law or pursuant to any other agreement.

Section 12.6 Notices.

(1)Except as expressly provided otherwise in this Agreement (and except as provided in clause (b) below), all notices and other communications provided to any party hereto under this Agreement or any other Loan Document shall be in writing and shall be given by personal delivery, by mail, by reputable overnight courier or by facsimile and addressed or delivered to it at its address set forth on Schedule 12.6(1) or at such other address as may be designated by such party in a notice to the other parties that complies as to delivery with the terms of this Section 12.6(1) or posted to an E-System set up by or at the direction of the Agent (as set forth below). Any notice, if personally delivered or if mailed and properly addressed with postage prepaid and sent by registered or certified mail, shall be deemed given when received or when delivery is refused; any notice, if given to a reputable overnight courier and properly addressed, shall be deemed given two (2) Business Days after the date on which it was sent, unless it is actually received sooner by the named addressee; and any notice, if transmitted by facsimile, shall be deemed given when received. The Agent may, but, except as specifically provided herein, shall not be required to, take any action on the basis of any notice given to it by telephone, but the giver of any such notice shall promptly confirm such notice in writing or by facsimile, and such notice will not be deemed to have been received until such confirmation is deemed received in accordance with the provisions of this Section set forth above. If such telephonic notice conflicts with any such confirmation, the terms of such telephonic notice shall control. Any notice given by the Agent or any Lender to the Borrower shall be deemed to be a notice to all of the Credit Parties.

(2)Notices and other communications provided to the Agent and the Lenders party hereto under this Agreement or any other Loan Document may be delivered or furnished by electronic communication (including email and Internet or intranet websites) pursuant to procedures approved by the Agent. The Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications (including email and any E-System) pursuant to procedures approved by it. Unless otherwise agreed to in a writing by and among the parties to a particular communication, (i) notices and other communications sent to an email address shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, return email, or other written acknowledgment) and (ii) notices and other communications posted to any E- System shall be deemed received upon the deemed receipt by the intended recipient at its email address as described in the foregoing clause (i) of notification that such notice or other communication is available and identifying the website address therefore.

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Section 12.7 Further Action

The Borrower, from time to time, upon written request of the Agent will make, execute, acknowledge and deliver or cause to be made, executed, acknowledged and delivered, all such further and additional instruments, and take all such further action as may reasonably be required to carry out the intent and purpose of this Agreement or the Loan Documents, and to provide for Advances under and payment of the Notes, according to the intent and purpose herein and therein expressed.

Section 12.8 Successors and Assigns; Participations; Assignments.

(1)This Agreement shall be binding upon and shall inure to the benefit of the Borrower and the Lenders and their respective successors and assigns.

(2)The foregoing shall not authorize any assignment by the Borrower of its rights or duties hereunder, and, except as otherwise provided herein, no such assignment shall be made (or be effective) without the prior written approval of the Lenders.

(3)No Lenders may at any time assign or grant participations in such Lender’s rights and obligations hereunder and under the other Loan Documents except (i) by way of assignment to any Eligible Assignee in accordance with clause (4) of this Section, (ii) by way of a participation in accordance with the provisions of clause (5) of this Section or (iii) by way of a pledge or assignment of a security interest subject to the restrictions of clause (6) of this Section (and any other attempted assignment or transfer by any Lender shall be deemed to be null and void).

(4)Each assignment by a Lender of all or any portion of its rights and obligations hereunder and under the other Loan Documents, shall be subject to the following terms and conditions:

(a)each such assignment shall be made on a pro rata basis and shall be in a minimum amount of the lesser of (x) Five Million Dollars (US$5,000,000) or such lesser amount as the Agent and the Borrower (unless there is an Event of Default that has occurred and is continuing, in which case the Agent alone may determine such assignment), shall agree and (y) the entire remaining amount of assigning Lender’s aggregate interest in the Revolving Credit (and participations in any outstanding Letters of Credit); provided however that, after giving effect to such assignment, in no event shall the entire remaining amount (if any) of assigning Lender’s aggregate interest in the Revolving Credit (and participations in any outstanding Letters of Credit) be less than US$5,000,000; and

(b)the parties to any assignment shall execute and deliver to the Agent an Assignment Agreement substantially (as determined by the Agent) in the form attached hereto as Exhibit H (with appropriate insertions acceptable to the Agent), together with a processing and recordation fee in the amount, if any, required as set forth in the Assignment Agreement.

Until the Assignment Agreement becomes effective in accordance with its terms, and the Agent has confirmed that the assignment satisfies the requirements of this Section 12.8, the Borrower and the Agent shall be entitled to continue to deal solely and directly with the assigning Lender in connection with the interest so assigned.  From and after the effective date of each Assignment

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Agreement that satisfies the requirements of this Section 12.8, the assignee thereunder shall be deemed to be a party to this Agreement, such assignee shall have the rights and obligations of a Lender under this Agreement and the other Loan Documents (including without limitation the right to receive fees payable hereunder in respect of the period following such assignment) and the assigning Lender shall relinquish its rights and be released from its obligations under this Agreement and the other Loan Documents.

Upon request, the Borrower shall execute and deliver to the Agent, new Note(s) payable to the order of the assignee in an amount equal to the amount assigned to the assigning Lender pursuant to such Assignment Agreement, and with respect to the portion of the Indebtedness retained by the assigning Lender, to the extent applicable, new Note(s) payable to the order  of the assigning Lender in an amount equal to the amount retained by such Lender hereunder. The Agent, the Lenders and the Borrower acknowledges and agrees that any such new Note(s) shall be given in renewal and replacement of the Notes issued to the assigning lender prior to such assignment and shall not effect or constitute a novation or discharge of the Indebtedness evidenced by such prior Note, and each such new Note may contain a provision confirming such agreement.

(5)The Borrower and the Agent acknowledge that each of the Lenders may at any time and from time to time, subject to the terms and conditions hereof, grant participations in such Lender’s rights and obligations hereunder (on a pro rata basis only) and under the other Loan Documents to any Person (other than a natural person or to the Borrower or any of the Borrower’s Affiliates or Subsidiaries); provided that any participation permitted hereunder shall comply with all applicable laws and shall be subject to a participation agreement that incorporates the following restrictions:

(a)such Lender shall remain the holder of its Notes hereunder (if such Notes are issued), notwithstanding any such participation;

(b)a participant shall not reassign or transfer, or grant any sub-participations in its participation interest hereunder or any part thereof;

(c)such Lender shall retain the sole right and responsibility to enforce the obligations of the Credit Parties relating to the Notes and the other Loan Documents, including, without limitation, the right to proceed against any Guarantors, or cause the Agent to do so (subject to the terms and conditions hereof), and the right to approve any amendment, modification or waiver of any provision of this Agreement without the consent of the participant (unless such participant is an Affiliate of such Lender), except for those matters requiring the consent of each of the Lenders under Section 12.10(2) (provided that a participant may exercise approval rights over such matters only on an indirect basis, acting through such Lender and the Credit Parties, the Agent and the other Lenders may continue to deal directly with such Lender in connection with such Lender’s rights and duties hereunder). Notwithstanding the foregoing, however, in the case of any participation granted by any Lender hereunder, the participant shall not have any rights under this Agreement or any of the other Loan Documents against the Agent, any other Lender or any Credit Party; provided, however that the participant may have rights against such Lender in respect of such participation as may be set forth in the applicable participation agreement and all amounts payable

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by the Credit Parties hereunder shall be determined as if such Lender had not so ld such participation.  Each  such participant shall be entitled to the benefits of Article 10 of this Agreement to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to clause (d) of this Section, provided that no participant shall be entitled to receive any greater amount pursuant to such the provisions of Article 10 than the issuing Lender would have been entitled to receive in respect of the amount of the participation transferred by such issuing Lender to such participant had no such transfer occurred and each such participant shall also be entitled to the benefits of Section 8.6 hereof as though it were a Lender, provided that such participant agrees to be subject to Section 9.3 hereof as though it were a Lender; and

(d)each participant shall provide the relevant tax form required under Section 12.11.

(6)Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including its Notes, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledge or assignee for such Lender as a party hereto.

(7)The Agent shall maintain at its principal office a copy of each Assignment Agreement delivered to it and a register (the “Register”) for the recordation of the names and addresses of the Lenders, the Percentages of such Lenders and the principal amount of each type of Advance owing to each such Lender from time to time. The entries in the Register shall be conclusive evidence, absent manifest error, and the Borrower, the Agent, and the Lenders may treat each Person whose name is recorded in the Register as the owner of the Advances recorded therein for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender (but only with respect to any entry relating to such Lender’s Percentages and the principal amounts owing to such Lender) upon reasonable notice to the Agent and a copy of such information shall be provided to any such party on their prior written request. The Agent shall give prompt written notice to the Borrower of the making of any entry in the Register or any change in such entry.

(8)The Borrower authorizes each Lender to disclose to any prospective assignee or participant which has satisfied the requirements hereunder, any and all financial information in such Lender’s possession concerning the Credit Parties which has been delivered to such Lender pursuant to this Agreement, provided that each such prospective assignee or participant shall execute a confidentiality agreement consistent with the terms of Section 12.11 hereof or shall otherwise agree to be bound by the terms thereof.

(9)Nothing in this Agreement, the Notes or the other Loan Documents, expressed or implied, is intended to or shall confer on any Person other than the respective parties hereto and thereto and their successors and assignees and participants permitted hereunder and thereunder any benefit or any legal or equitable right, remedy or other claim under this Agreement, the Notes or the other Loan Documents.

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Section 12.9 Counterparts

This Agreement may be executed in several counterparts, and each executed copy shall constitute an original instrument, but such counterparts shall together constitute but one and the same instrument.

Section 12.10 Amendment and Waiver.

(1)No amendment or waiver of any provision of this Agreement or any other Loan Document, nor consent to any departure by any Credit Party therefrom, shall in any event be effective unless the same shall be in writing and signed by the Agent and the Majority Lenders (or by the Agent at the written request of the Majority Lenders) or, if this Agreement expressly so requires with respect to the subject matter thereof, by all Lenders (and, with respect to any amendments to this Agreement or the other Loan Documents, by any Credit Party or the Guarantors that are signatories thereto), and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. All references in this Agreement to “Lenders” or “the Lenders” shall refer to all Lenders, unless expressly stated to refer to Majority Lenders (or the like).

(2)Notwithstanding anything to the contrary herein,

(a)no amendment, waiver or consent shall increase the stated amount of any Lender’s commitment hereunder without such Lender’s consent;

(b)no amendment, waiver or consent shall, unless in writing and signed by the Lender or Lenders holding Indebtedness directly affected thereby, do any of the following:

(i)reduce the principal of, or interest on, any outstanding Indebtedness or any Fees or other amounts payable hereunder,

(ii)postpone any date fixed for any payment of principal of, or interest on, any outstanding Indebtedness or any Fees or other amounts payable hereunder,

(iii)change any of the provisions of this Section 12.10 or the definition of “Majority Lenders” or any other provision of any Loan Document specifying the number or percentage of Lenders required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender; provided that changes to the definition of “Majority Lenders” may be made with the consent of only the Majority Lenders to include the Lenders holding any additional credit facilities that are added to this Agreement with the approval of the appropriate Lenders, and,

(iv)any modifications to the definitions of “Collateral Coverage Amount”, “Eligible Accounts” and “Eligible Insured Accounts”;

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(c)no amendment, waiver or consent shall, unless in writing and signed by all Lenders, do any of the following:

(i)except as expressly permitted hereunder or under the Collateral Documents, release all or substantially all of the Collateral (provided that neither the Agent nor any Lender shall be prohibited thereby from proposing or participating in a consensual or non-consensual debtor-in- possession or similar financing), or release any material guarantee provided by any Person in favour of the Agent and the Lenders, provided however that the Agent shall be entitled, without notice to or any further action or consent of the Lenders, to release any Collateral which any Credit Party is permitted to sell, assign or otherwise transfer in compliance with this Agreement or the other Loan Documents or release any guarantee to the extent expressly permitted in this Agreement or any of the other Loan Documents (whether in connection with the sale, transfer or other disposition of the applicable Guarantor or otherwise),

(ii)increase the maximum duration of Interest Periods permitted hereunder; or

(iii)modify Sections 9.2 or 9.3 hereof;

(d)any amendment, waiver or consent that will (i) reduce the principal of, or interest on, the Swing Line Note, (ii) postpone any date fixed for any payment of principal of, or interest on, the Swing Line Note or (iii) otherwise affect the rights and duties of the Swing Line Lender under this Agreement or any other Loan Document, shall require the written concurrence of the Swing Line Lender;

(e)any amendment, waiver or consent that will affect the rights or duties of Issuing Lender under this Agreement or any of the other Loan Documents, shall require the written concurrence of the Issuing Lender; and

(f)any amendment, waiver, or consent that will affect the rights or duties of the Agent under this Agreement or any other Loan Document, shall require the written concurrence of the Agent.

(3)Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove of any amendment, consent, waiver or any other modification to any Loan Document (and all amendments, consents, waivers and other modifications may be effected without the consent of the Defaulting Lenders), except that the foregoing shall not permit, in each case without such Defaulting Lender’s consent, (i) an increase in such Defaulting Lender’s stated commitment amounts, (ii) the waiver, forgiveness or reduction of the principal amount of any Indebtedness owing to such Defaulting Lender (unless all other Lenders affected thereby are treated similarly), (iii) the extension of the final maturity date(s) of such Defaulting Lenders’ portion of any of the Indebtedness or the extension of any commitment to extend credit of such Defaulting Lender, or (iv) any other modification which requires the consent of all Lenders or the Lender(s) affected thereby which affects such Defaulting Lender more adversely than the other affected Lenders (other than a modification which results in a reduction of such Defaulting Lender’s Percentage of any Commitments or repayment of any amounts owing to such Defaulting Lender on a non pro-rata basis).

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(4)The Agent shall, upon the written request of the Borrower, execute and deliver to the Credit Parties such documents as may be necessary to evidence (1) the release of any Lien granted to or held by the Agent upon any Collateral: (a) upon termination of the Revolving Credit Aggregate Commitment and payment in full of all Indebtedness (other than in respect of contingent indemnification obligations for which no claim has been asserted) payable under this Agreement and under any other Loan Document; (b) which constitutes property (including, without limitation, Equity Interests in any Person) sold or to be sold or disposed of as part of or in connection with any disposition (whether by sale, by merger or by any other form of transaction and including the property of any Subsidiary that is disposed of as permitted hereby) permitted in accordance with the terms of this Agreement; (c) which constitutes property in which a Credit Party owned no interest at the time the Lien was granted or at any time thereafter; or (d) if approved, authorized or ratified in writing by the Majority Lenders, or all the Lenders, as the case may be, as provided in this Section 12.10; or (2) the release of any Person from its obligations under the Loan Documents (including without limitation the Guarantee) if all of the Equity Interests of such Person that were held by a Credit Party are sold or otherwise transferred to any transferee other than the Borrower or a Subsidiary of the Borrower as part of or in connection with any disposition (whether by sale, by merger or by any other form of transaction) permitted in accordance with the terms of this Agreement; provided that (i) the Agent shall not be required to execute any such release or subordination agreement under clauses (1) or (2) above on terms which, in the Agent’s opinion, would expose the Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty or such release shall not in any manner discharge, affect or impair the Indebtedness or any Liens upon any Collateral retained by any Credit Party, including (without limitation) the proceeds of the sale or other disposition, all of which shall constitute and remain part of the Collateral.

(5)Notwithstanding anything to the contrary herein the Agent may, with the consent of the Borrower only, amend, modify or supplement this Agreement or any of the other Loan Documents to cure any ambiguity, omission, mistake, defect or inconsistency

Section 12.11 Confidentiality

(1)Each Lender agrees that it will not disclose without the prior consent of the Borrower (other than to its employees, directors or officers, its Subsidiaries, another Lender, an Affiliate of a Lender or to its auditors, counsel or representatives) any information with respect to the Credit Parties which is furnished pursuant to this Agreement or any of the other Loan Documents; provided that any Lender may disclose any such information (a) as has become generally available to the public or has been lawfully obtained by such Lender from any third party under no duty of confidentiality to any Credit Party, (b) as may be required or appropriate in any report, statement or testimony submitted to, or in respect to any inquiry, by, any municipal, provincial, territorial, state or federal regulatory body having or claiming to have jurisdiction over such Lender, including the Board of Governors of the Federal Reserve System of the United States, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, Canada Deposit Insurance Corporation or similar organizations (whether in the United States, Canada or elsewhere) or their successors, (c) as may be required or appropriate in respect to any summons or subpoena or in connection with any litigation, (d) in order to comply with any law, order, regulation, ruling or other requirement of law applicable to such Lender, and (e) to any prospective assignee or participant in accordance with Section 12.8(6) hereof.

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(2)Each Lender acknowledges that the Borrower: (i) is permitted to reference this Agreement including any Schedules or Exhibits hereto (and any amendments hereto or thereto) in any and all public and private filings with applicable securities regulators and (ii) is permitted to publicly file a copy of this Agreement including any Schedules or Exhibits hereto (and any amendments hereto or thereto) with applicable securities regulators (subject to such redactions permitted by securities regulators as may reasonably be requested by the Lenders).

Section 12.12 Substitution or Removal of Lenders

(1)With respect to any Lender (i) whose obligation to make Eurodollar-based Advances or CDOR-based Advances has been suspended pursuant to Section 10.2 or Section 10.3, (ii) that has demanded compensation under Sections 3.5, 10.4 or 10.5, (iii) that has become a Defaulting Lender or (iv) that has failed to consent to a requested amendment, waiver or modification to any Loan Document as to which the Majority Lenders have already consented (in each case, an “Affected Lender”), then the Agent or the Borrower may, at the Borrower’s sole expense, require the Affected Lender to sell and assign all of its interests, rights and obligations under this Agreement, including, without limitation, its Commitments, to an assignee (which may be one or more of the Lenders) (such assignee shall be referred to herein as the “Purchasing Lender” or “Purchasing Lenders”) within two (2) Business Days after receiving notice from the Borrower requiring it to do so, for an aggregate price equal to the sum of the portion of all Advances made by it, interest and fees accrued for its account through but excluding the date of such payment, and all other amounts payable to it hereunder, from the Purchasing Lender(s) (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts, including without limitation, if demanded by the Affected Lender, the amount of any compensation that due to the Affected Lender under Sections 3.5, 10.1, 10.4 or 10.5 to but excluding said date), payable (in immediately available funds) in cash. The Affected Lender, as assignor, such Purchasing Lender, as assignee, the Borrower and the Agent, shall enter into an Assignment Agreement pursuant to Section 12.8 hereof, whereupon such Purchasing Lender shall be a Lender party to this Agreement, shall be deemed to be an assignee hereunder and shall have all the rights and obligations of a Lender with a Revolving Credit Percentage equal to its ratable share of the then applicable Revolving Credit Aggregate Commitment of the Affected Lender, provided, however, that if the Affected Lender does not execute such Assignment Agreement within (2) Business Days of receipt thereof, the Agent may execute the Assignment Agreement as the Affected Lender’s attorney-in-fact. Each of the Lenders hereby irrevocably constitutes and appoints the Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full power and authority in the name of such Lender or in its own name to execute and deliver the Assignment Agreement while such Lender is an Affected Lender hereunder (such power of attorney to be deemed coupled with an interest and irrevocable). In connection with any assignment pursuant to this Section 12.12, the Borrower or the Purchasing Lender shall pay to the Agent the administrative fee for processing such assignment referred to in Section 13.8.

(2)If any Lender is an Affected Lender of the type described in Section 12.10(2)(c) and (d) (any such Lender, a “Non-Compliant Lender”), the Borrower may, with the prior written consent of the Agent, and notwithstanding Section 9.3 of this Agreement or any other provisions requiring pro rata payments to the Lenders, elect to reduce any Commitments by an amount equal to the Non-Compliant Lender’s Percentage of the Commitment of such Impaired Lender and repay such Non-Compliant Lender an amount equal the principal amount of all Advances

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owing to it, all interest and fees accrued for its account through but excluding the date of such repayment, and all other amounts payable to it hereunder (including without limitation, if demanded by the Non-Compliant Lender, the amount of any compensation that due to the Non- Compliant Lender under Sections 3.5, 10.1, 10.4 or 10.5 to but excluding said date), payable (in immediately available funds) in cash, so long as, after giving effect to the termination of Commitments and the repayments described in this clause (b), any Fronting Exposure of such Non-Compliant Lender shall be reallocated among the Lenders that are not Non-Compliant Lenders in accordance with their respective Revolving Credit Percentages, but only to the extent that the sum of the aggregate principal amount of all Revolving Credit Advances made by each such Lender, plus such Lender’s Percentage of the aggregate outstanding principal amount of Swing Line Advances, Letter of Credit Obligations and Hedging Obligations prior to giving effect to such reallocation plus such Lender’s Percentage of the Fronting Exposure to be reallocated does not exceed such Lender’s Percentage of the Revolving Credit Aggregate Commitment, and with respect to any portion of the Fronting Exposure that may not be reallocated, the Borrower shall deliver to the Agent, for the benefit of the Issuing Lender and/or Swing Line Lender, as applicable, cash collateral or other security satisfactory to the Agent, with respect any such remaining Fronting Exposure.

Section 12.13 Withholding Taxes

(1)If any Lender is not a “united states person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code, such Lender shall promptly (but in any event prior to the initial payment of interest hereunder or prior to its accepting any assignment under Section 12.8 hereof, as applicable) deliver to the Agent two original executed copies of (i) Internal Revenue Service Form W-8BEN or any successor form specifying the applicable tax treaty between the United States and the jurisdiction of such Lender’s domicile which provides for the exemption from withholding on interest payments to such Lender, (ii) Internal Revenue Service Form W-8ECI or any successor form evidencing that the income to be received by such Lender hereunder is effectively connected with the conduct of a trade or business in the United States or (iii) other evidence satisfactory to the Agent that such Lender is exempt from United States income tax withholding with respect to such income; provided, however, that such Lender shall not be required to deliver to the Agent the aforesaid forms or other evidence with respect to Advances to the Borrower, if such Lender has assigned its entire interest hereunder (including its Revolving Credit Commitment Amount, any outstanding Advances hereunder and participations in Letters of Credit issued hereunder and any Notes issued to it by the Borrower), to an Affiliate which is incorporated under the laws of the United States or a state thereof, and so notifies the Agent. Such Lender shall amend or supplement any such form or evidence as required to insure that it is accurate, complete and non-misleading at all times. Promptly upon notice from the Agent of any determination by the CRA or the Internal Revenue Service that any payments previously made to such Lender hereunder were subject to United States income tax withholding when made, such Lender shall pay to the Agent the excess of the aggregate amount required to be withheld from such payments over the aggregate amount actually withheld by the Agent. In addition, from time to time upon the reasonable request and the sole expense of the Borrower, each Lender and the Agent shall (to the extent it is able to do so based upon applicable facts and circumstances), complete and provide the Borrower with such forms, certificates or other documents as may be reasonably necessary to allow the Borrower, as applicable, to make any payment under this Agreement or the other Loan Documents without any withholding for or on the account of any tax under Section 9.1(4) hereof (or with such withholding at a reduced rate),

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provided that the execution and delivery of such forms, certificates or other documents does not adversely affect or otherwise restrict the rights and benefits (including without limitation economic benefits) available to such Lender or the Agent, as the case may be, under this Agreement or any of the other Loan Documents, or under or in connection with any transactions not related to the transactions contemplated hereby.

(2)Any Lender (or assignee or participant permitted under Section 12.8 that is a “united states person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code shall promptly (but in any event prior to the initial payment of interest hereunder or prior to its accepting any assignment under Section 12.8 hereof, as applicable) deliver to the Agent and the Borrower two properly completed and duly executed originals of Internal Revenue Service Form W-9, or any subsequent versions thereof or successors thereto.

Section 12.14 Taxes and Fees

Should any tax (other than as a result of a Lender’s failure to comply with Section 12.13 or a tax based upon the net income or capitalization of any Lender or the Agent by any jurisdiction where a Lender or the Agent is or has been located), or recording or filing fee become payable in respect of this Agreement or any of the other Loan Documents or any amendment, modification or supplement hereof or thereof, the Borrower agrees to pay the same, together with any interest or penalties thereon arising from the Borrower’s actions or omissions, and agrees to hold the Agent and the Lenders harmless with respect thereto provided, however, that the Borrower shall not be responsible for any such interest or penalties which were incurred prior to the date that notice is given to the Credit Parties of such tax or fees. Notwithstanding the foregoing, nothing contained in this Section 12.14 shall affect or reduce the rights of any Lender or the Agent under Section 10.4 hereof. Each Credit Party will, and will cause each of its Subsidiaries to, withhold all employee withholdings and make all employer contributions to be withheld and made by it pursuant to applicable Law on account of the Canada Pension Plan and the Quebec Pension Plans, employment insurance and employee income taxes.

Section 12.15 WAIVER OF JURY TRIAL

THE LENDERS, THE AGENT AND THE BORROWER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTION OF ANY OF THEM. NEITHER THE LENDERS, THE AGENT NOR THE BORROWER SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE LENDERS AND THE AGENT OR THE BORROWER EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.

116

Section 12.16 Patriot Act and AML Laws Notice

The Agent and the Lenders that are subject to the AML Laws and USA Patriot Act hereby notify the Credit Parties, pursuant to AML Laws and section 326 of the USA Patriot Act, that if they or any of their Subsidiaries open an account, including any loan, deposit account, treasury management account, or other extension of credit with the Agent or any Lender, the Agent or the applicable Lender will request the applicable Person’s name, tax identification number, business address and other information necessary to identify such Person (and may request such Person’s organizational documents or other identifying documents) to the extent necessary for the Agent and the applicable Lender to comply with AML Laws and the USA Patriot Act.

Section 12.17 Complete Agreement; Conflicts

This Agreement, the Notes (if issued), any Requests for Revolving Credit Advance, Requests for Swing Line Advance and the Loan Documents contain the entire agreement of the parties hereto, superseding all prior agreements, discussions and understandings relating to the subject matter hereof, and none of the parties shall be bound by anything not expressed in writing. In the event of any conflict between the terms of this Agreement and the other Loan Documents, this Agreement shall govern.

Section 12.18 Severability

In case any one or more of the obligations of the Credit Parties under this Agreement, the Notes or any of the other Loan Documents shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining obligations of the Credit Parties shall not in any way be affected or impaired thereby, and such invalidity, illegality or unenforceability in one jurisdiction shall not affect the validity, legality or enforceability of the obligations of the Credit Parties under this Agreement, the Notes or any of the other Loan Documents in any other jurisdiction.

Section 12.19 Table of Contents and Headings; Section References

The table of contents and the headings of the various subdivisions hereof are for convenience of reference only and shall in no way modify or affect any of the terms or provisions hereof and references herein to “sections,” “subsections,” “clauses,” “paragraphs,” “subparagraphs,” “exhibits” and “schedules” shall be to sections, subsections, clauses, paragraphs, subparagraphs, exhibits and schedules, respectively, of this Agreement unless otherwise specifically provided herein or unless the context otherwise clearly indicates.

Section 12.20 Construction of Certain Provisions

If any provision of this Agreement or any of the Loan Documents refers to any action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person, whether or not expressly specified in such provision.

117

Section 12.21 Independence of Covenants

Each covenant hereunder shall be given independent effect (subject to any exceptions stated in such covenant) so that if a particular action or condition is not permitted by any such covenant (taking into account any such stated exception), the fact that it would be permitted by an exception to, or would be otherwise within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default.

Section 12.22 Electronic Transmissions

(1)Each of the Agent, the Credit Parties, the Lenders, and each of their Affiliates is authorized (but not required) to transmit, post or otherwise make or communicate, in its sole discretion, Electronic Transmissions in connection with any Loan Document and the transactions contemplated therein.  The Borrower and each other Credit Party hereby acknowledges and agrees that the use of Electronic Transmissions is not necessarily secure and that there are risks associated with such use, including risks of interception, disclosure and abuse and each indicates it assumes and accepts such risks by hereby authorizing the transmission of Electronic Transmissions.

(2)All uses of an E-System shall be governed by and subject to, in addition to Section 12.6 and this Section 12.22, separate terms and conditions posted or referenced in such E-System and related contractual obligations executed by the Agent, the Credit Parties and the Lenders in connection with the use of such E-System.

(3)All E-Systems and Electronic Transmissions shall be provided “as is” and “as available”. None of the Agent or any of its Affiliates, nor the Borrower or any of its respective Affiliates warrants the accuracy, adequacy or completeness of any E-Systems or Electronic Transmission, and each disclaims all liability for errors or omissions therein. No warranty of any kind is made by the Agent or any of its Affiliates, or the Borrower or any of its respective Affiliates in connection with any E-Systems or Electronic Transmission, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects.  The Agent, the Borrower and its Subsidiaries, and the Lenders agree that the Agent has no responsibility for maintaining or providing any equipment, software, services or any testing required in connection with any Electronic Transmission or otherwise required for any E-System. The Agent and the Lenders agree that the Borrower has no responsibility for maintaining or providing any equipment, software, services or any testing required in connection with any Electronic Transmission or otherwise required for any E-System.

Section 12.23 Advertisements

The Agent and the Lenders may disclose the names of the Credit Parties and the existence of the Indebtedness in general advertisements and trade publications.

Section 12.24 Reliance on and Survival of Provisions

All terms, covenants, agreements, representations and warranties of the Credit Parties to any of the Loan Documents made herein or in any of the Loan Documents or in any certificate, report, financial statement or other document furnished by or on behalf of any Credit Party in

118

connection with this Agreement or any of the Loan Documents shall be deemed to have been relied upon by the Lenders, notwithstanding any investigation heretofore or hereafter made by any Lender or on such Lender’s behalf, and those covenants and agreements of the Borrower set forth in Section 12.5 hereof (together with any other indemnities of any Credit Party contained elsewhere in this Agreement or in any of the other Loan Documents) and of Lenders set forth in Section 11.7 hereof shall survive the repayment in full of the Indebtedness and the termination of any commitment to extend credit.

Section 12.25 Judgment Currency

If for the purpose of obtaining judgment in any court it is necessary to convert any amount owing or payable to the Agent or any Lender under this Agreement from the currency in which it is due (for the purposes of this Section the “Agreed Currency”) into a particular currency (for the purposes of this Section the “Judgment Currency”), the rate of exchange applied in that conversion shall be that at which the Agent, in accordance with its normal procedures, could purchase the Agreed Currency with the Judgment Currency at or about noon on the Business Day immediately preceding the date on which judgment is given. The obligation of the Borrower and the Guarantors in respect of any amount owing or payable under this Agreement or any other Loan Document to the Agent or any Lender in the Agreed Currency shall, notwithstanding any judgment and payment in the Judgment Currency, be satisfied only to the extent that the Agent, in accordance with its normal procedures, could purchase the Agreed Currency with the amount of the Judgment Currency so paid at or about noon on the next Business Day following that payment; and if the amount of the Agreed Currency which the Agent could so purchase is less than the amount originally due in the Agreed Currency, each Borrower shall, as a separate obligation and notwithstanding the judgment or payment, indemnify the agent or the applicable Lender against any loss.

[Signatures Follow On Succeeding Page]

119

The parties have executed this  Agreement as of the date first set out above.

DRAGONWAVE INC., a Borrower
By:
		Name:
		Title:
By:
		Name:
		Title:
COMERICA BANK, as Administrative Agent and Lender
By:
		Name:
		Title:
By:
		Name:
		Title:
EXPORT DEVELOPMENT CANADA, as Lender
By:
		Name:
		Title :
By:
	Nam:
	Title:

Exhibit A — Form of Request for Revolving Credit Advance

No. Dated:         , 20     

TO:         Comerica Bank (“Agent”)

RE:Revolving Credit Agreement made as of the 1st day of June, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the financial institutions from time to time signatory thereto (individually a “Lender,” and any and all such financial institutions collectively, “Lenders”), Comerica Bank, as administrative agent for the Lenders (in such capacity, the “Agent”), and DragonWave Inc. as borrower (the “Borrower”).

(1)           Pursuant to the terms and conditions of the Credit Agreement, the Borrower hereby requests an Advance from the Lenders, as described herein:

Date of Advance:

o(check if applicable)

This Advance is or includes a whole or partial refunding/conversion of:

Advance No(s).

(2)Type of Advance (check only one):

oUS Base Rate Advance

oEurodollar-based Advance

oCanadian Prime Rate Advance

oCDOR-based Advance

oBBA LIBOR-based Advance

(3)Amount of Advance:                         $

(4)           Euro-Interest Period or Contract Period (applicable to Eurodollar-based Advances, BBA LIBOR-based Advances or CDOR-based Advances)            months

(5)Disbursement Instructions

oComerica Bank Account No.

oOther:

The Borrower certifies to the matters specified in Section 2.4(6) of the Credit Agreement.

A - 1

Capitalized terms used herein, except as defined to the contrary, have the meanings given them in the Credit Agreement.

	DRAGONWAVE INC., as Borrower
	By:
		Name:
		Title:
Agent Approval:

A - 2

Exhibit B — Form of Revolving Credit Note

$           , 20   

On or before the Revolving Credit Maturity Date, FOR VALUE RECEIVED, DragonWave Inc. (“Borrower”) promises to pay to the order of [insert name of applicable financial institution] (“Payee”) at Toronto, Ontario, care of Agent, in lawful money of the United States of America, so much of the sum of [Insert Amount derived from Percentages] Dollars ($      ), as may from time to time have been advanced by Payee and then be outstanding hereunder pursuant to the Revolving Credit Agreement made as of the 1st day of June, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the financial institutions from time to time signatory thereto (individually a “Lender,” and any and all such financial institutions collectively, “Lenders”), Comerica Bank, as administrative agent for the Lenders (in such capacity, the “Agent”), and Borrower. Each of the Revolving Credit Advances made hereunder shall bear interest at the Applicable Interest Rate from time to time applicable thereto under the Credit Agreement or as otherwise determined thereunder, and interest shall be computed, assessed and payable on the unpaid principal amount of each Revolving Credit Advance made by the Payee from the date of such Revolving Credit Advance until paid at the rate and at the times set forth in the Credit Agreement.

This Note is a note under which Revolving Credit Advances (including refundings and conversions), repayments and readvances may be made from time to time, but only in  accordance with the terms and conditions of the Credit Agreement. This Note evidences borrowings under, is subject to, is secured in accordance with, and may be  accelerated or matured under, the terms of the Credit Agreement, to which reference is hereby made. Capitalized terms used herein, except as defined to the contrary, shall have the meanings given them in the Credit Agreement.

This Note shall be interpreted and the rights of the parties hereunder shall be determined under the laws of, and enforceable in, the Province of Ontario and the federal laws of Canada applicable therein.

The Borrower hereby waives presentment for payment, demand, protest and notice of dishonor and nonpayment of this Note and agree that no obligation hereunder shall be discharged by reason of any extension, indulgence, release, or forbearance granted by any holder of this Note to any party now or hereafter liable hereon or any present or subsequent owner of any property, real or personal, which is now or hereafter security for this Note.

Nothing herein shall limit any right granted Payee by any other instrument or by law.

DRAGONWAVE INC., as Borrower
By:
	Name:
	Title:

B - 1

Exhibit C — Form of Swing Line Note

$           , 20   

On or before the Revolving Credit Maturity Date, FOR VALUE RECEIVED, DragonWave Inc. (the “Borrower”) promises to pay to the order of Comerica Bank (the “Swing Line Lender”) at Toronto, Ontario, care of Agent, in lawful money of the United States of America,  so  much  of  the  sum  of  [Insert  Amount  derived  from  Percentages]  Dollars    ($         ), as may from time to time have been advanced by the Swing Line Lender and then be outstanding hereunder pursuant to the Revolving Credit Agreement made as of the 1stday of June, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the financial institutions from time to time signatory thereto (individually a “Lender,” and any and all such financial institutions collectively, “Lenders”), Comerica Bank, as administrative agent for the Lenders (in such capacity, the “Agent”), and Borrower, together with interest thereon as hereinafter set forth. Each of the  Swing Line Advances made hereunder shall bear interest at the Applicable Interest Rate from time to time applicable thereto under the Credit Agreement or as otherwise determined thereunder, and interest shall be computed, assessed and payable on the unpaid principal amount of each Swing Line Advance made by the Swing Line Lender from the date of such Swing Line Advance until paid at the rates and at the times set forth in the Credit Agreement.

This Note is a Swing Line Note under which Swing Line Advances  (including  refundings and conversions), repayments and readvances may be made from time to time by the Swing Line Lender, but only in accordance with the terms and conditions of the Credit Agreement (including any applicable sublimits). This Note evidences borrowings under, is subject to, is secured in accordance with, and may be accelerated or matured under, the terms of the Credit Agreement to which reference is hereby made. Capitalized terms used herein, except  as defined to the contrary, shall have the meanings given them in the Credit Agreement.

This Note shall be interpreted and the rights of the parties hereunder shall be determined under the laws of, and enforceable in, the Province of Ontario and the federal laws of Canada applicable therein.

The Borrower hereby waives presentment for payment, demand, protest and notice of dishonor and nonpayment of this Note and agree that no obligation hereunder shall be discharged by reason of any extension, indulgence, release, or forbearance granted by any holder of this Note to any party now or hereafter liable hereon or any present or subsequent owner of any property, real or personal, which is now or hereafter security for this Note.

Nothing herein shall limit any right granted the Swing Line Lender by any other instrument or by law.

DRAGONWAVE INC., as Borrower
By:
	Name:
	Title:

C - 1

Exhibit D — Form of Request for Swing Line Advance

No. Dated:       

TO:         Comerica Bank (“Swing Line Lender”)

RE:Revolving Credit Agreement made as of the 1st day of June, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the financial institutions from time to time signatory thereto (individually a “Lender,” and any and all such financial institutions collectively, “Lenders”), Comerica Bank, as administrative agent for the Lenders (in such capacity, the “Agent”), and DragonWave Inc. as borrower (the “Borrower”).

Pursuant to the terms and conditions of the Credit Agreement, the Borrower hereby requests an Advance from the Swing Line Lender, as described herein:

Date of Advance:

(1)   o    (check if applicable) This Advance is or includes a whole or partial refunding/conversion of: Advance No(s).      

(2)Type of Advance (check only one):—

US Base Rate Advance

Canadian Prime Rate Advance

(3)Amount of Advance:

$

(4)Disbursement Instructions

Comerica Bank Account No.                

Other:            

Borrower certifies to the matters specified in Section 2.6(3)(f) of the Credit Agreement.

Capitalized terms used herein, except as defined to the contrary, have the meanings given them in the Credit Agreement.

DRAGONWAVE INC., as Borrower
By:
	Name:
	Title:

D - 1

Exhibit E — Form of Notice of Issuance of Letters of Credit

TO:Lenders

RE:Issuance of Letter of Credit pursuant to Article 3 of the Revolving Credit Agreement made as of the 1stday of June, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the financial institutions from time to time signatory thereto (individually a “Lender,” and any and all such financial institutions collectively, “Lenders”), Comerica Bank, as administrative agent for the Lenders (in such capacity, the “Agent”), and DragonWave Inc. as borrower (the “Borrower”).

On                 , 20   ,1Agent, in accordance with Article 3 of the Credit Agreement, issued its Letter of Credit number         , in favour of        2for the account of               .3The face amount of such Letter of Credit is $    . The amount of each Lender’s participation in such Letter of Credit is as follows:4

[Lender]	$
[Lender]	$
[Lender]	$
[Lender]	$

This  notification  is  delivered  this    day  of            , 20    ,  pursuant  to Section 3.3 of the Credit Agreement. Except as otherwise defined, capitalized terms used herein have the meanings given them in the Credit Agreement.

Signed:

COMERICA BANK, as Administrative Agent and Lender
By:
	Name: ·
	Title: ·

1 Date of Issuance

2Beneficiary

3Name of applicable Borrower

4Amounts based on Percentages

[This form of Letter of Credit Notice (including footnotes) is subject in all respects to the terms and conditions of the Credit Agreement which shall govern in the event of any inconsistencies or omissions.]

E - 1

Exhibit F – Swing Line Participation Certificate

TO:Lenders

RE:Purchase of a participation of a Swing Line Advance to Article 2.6(5) of the Revolving Credit Agreement made as of the    day of June, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the financial institutions from time to time signatory thereto (individually a “Lender,” and any and all such financial institutions collectively, “Lenders”), Comerica Bank, as administrative agent for the Lenders (in such capacity, the “Agent”), and DragonWave Inc. as borrower (the “Borrower”).

On                , 20    ,5Agent, receive a request from the Borrower to make a Swing Line Advance. Prior to the making of such Advance of the Revolving Credit pursuant to Section 2.6(5)(a), one of the events described in Section 8.1(i) of the Credit Agreement occurred, and as a result, the Agent hereby requests that each Revolving Credit Lender will, on [the date such Advance of the Revolving Credit was to have been made], purchase from the Swing Line Lender an undivided participating interest in each Swing Line Advance that was to have been refunded in an amount equal to its Revolving Credit Percentage of such Swing Line Advance.

The amount of each Lender’s participation in such Swing Line Advance is as follows:6

[Lender]	$
[Lender]	$
[Lender]	$
[Lender]	$

This  notification  is  delivered  this       day of     , 20       ,  pursuant  to Section 2.6(5)(b) of the Credit Agreement. Except as otherwise defined, capitalized terms used herein have the meanings given them in the Credit Agreement.

Signed:

COMERICA BANK, as Administrative Agent and Lender
By:
	Name: ·
	Title: ·

5 Date of Issuance

6 Amounts based on Percentages

F - 1

Exhibit G – Form of Collateral Coverage Certificate

SEE ATTACHED

G - 1

Collateral Coverage Certificate
(Amounts in USD)

TO:Comerica Bank, as Agent

RE:Revolving Credit Agreement made as of the 1stday of June, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the financial institutions from time to time signatory thereto (individually a “Lender,” and any and all such financial institutions collectively, “Lenders”), Comerica Bank, as administrative agent for the Lenders (in such capacity, the “Agent”),  and DragonWave Inc. as borrower (the “Borrower”).

This Collateral Coverage Certificate is furnished pursuant to Section 6.2(1) of the Credit Agreement and sets forth various information as of             , 20     (the “Computation Date”).

Borrower:	DragonWave Inc.
Loan Commitment	USD 40,000,000

ACCOUNTS RECEIVABLE

1	TOTAL ACCOUNTS RECEIVABLE (BOOK VALUE) AS OF	February 29, 2012			$	—
	ACCOUNTS RECIEVABLE DEDUCTIONS (without
	duplication)
2	Amounts over ninety (90) days		$	—
3	Credit Balances over ninety (90) days		$	—
4	Concentration limits 25%		$	—
	Concentration limits >25% - see list of Concentration
5	Exceptions*
6	Cross Age Rule (25%)		$	—
7	Foreign Accounts - see list of Foreign Account Exceptions*		$	—
8	Government Accounts		$	—
9	Contra Accounts		$	—
10	Promotion or Demo Accounts		$	—
11	Intercompany/Employee Accounts		$	—
12	Other (please explain below)		$	—
13	TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS				$	—

G - 2

14	Eligible Accounts (#1-#13)					$	—
15	LOAN VALUE OF ACCOUNTS RECEIVABLE	Advance Rate (% of #14)	80		%	$	—
	TOTAL INSURED ACCOUNTS RECEIVABLE (BOOK VALUE)
16	AS OF	February 29, 2012				$	—
	ACCOUNTS RECIEVABLE DEDUCTIONS (without duplication)
17	Amounts over ninety (180) days		$	—
18	Credit Balances over ninety (180) days		$	—
19	Concentration limits 25%		$	—
	Concentration limits >25% - see list of Concentration
20	Exceptions*		$	—
21	Cross Age Rule (25%)		$	—
22	Foreign Accounts - see list of Foreign Account Exceptions		$	—
23	Government Accounts		$	—
24	Contra Accounts - See list of Contra exceptions*		$	—
25	Promotion or Demo Accounts		$	—
26	Intercompany/Employee Accounts		$	—
27	Other (please explain below)		$	—
28	TOTAL INSURED ACCOUNTS RECEIVABLE DEDUCTIONS					$		—
29	Eligible Accounts (#16-#28)					$	—
30	LOAN VALUE OF INSURED ACCOUNTS RECEIVABLE	Advance Rate (% of #29)	90		%	$	—
	TOTAL LOAN VALUE OF ACCOUNTS RECEIVABLE AND INSURED ACCOUNTS
31	RECEIVABLE

G - 3

32		(Line #15 + Line #30)	$	—
33	LOAN COMMITMENT		USD 40,000,000
34	MAXIMUM LOAN AVAILABILITY	The lesser of line #33 and line #32	$	—
	Loan Balances
	35Outstanding under the $35MM line of credit		$	—
	36Outstanding LCs under the $5MM LC/FX Hedging line Outstanding mark to market FX under the $5MM LC/FX		$	—
37	Hedging Line		$	—
35	TOTAL OUTSTANDINGS	(Line #35 + Line #36 +Line #37)	$	—
36	AMOUNT OF PLEDGED CASH TO MAINTAIN THE 1.1X COLLATERAL COVERAGE RATIO		$	—

*Concentration Exceptions for Insured Accounts:

NSN - 80%

Foreign Account Exceptions:

None.

G - 4

The undersigned represents and warrants that the attached Schedule sets forth a true, complete and correct listing of the Eligible Accounts as of the date set forth below.

The undersigned further represents and warrants that the foregoing is true, complete and correct, and that the information in this Collateral Coverage Certificate complies with the representations and warranties made to the Agent.

COMMENTS:

DATED this      day of         , 20     .

DRAGONWAVE INC.
By:
	Name:
	Title:

G - 5

Exhibit H — Form of Assignment Agreement

Date:                            

To:Borrower
and

Comerica Bank (“Agent”)

Re:Revolving Credit Agreement made as of the 1stday of June, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the financial institutions from time to time signatory thereto (individually a “Lender,” and any and all such financial institutions collectively, “Lenders”), Comerica Bank, as administrative agent for the Lenders (in such capacity, the “Agent”), and DragonWave Inc. as borrower (the “Borrower”).

Ladies and Gentlemen:

Reference is made to Section 12.8 of the Credit Agreement. Unless otherwise defined herein or the context otherwise requires, all initially capitalized terms used herein without definition shall have the meanings specified in the Credit Agreement.

This Agreement constitutes notice to each of you of the proposed assignment7and delegation by [insert name of assignor] (the “Assignor”) to [insert name of assignee] (the “Assignee”), and, subject to the terms and conditions of the Credit Agreement, the Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, effective on the “Effective Date” (as hereafter defined) that undivided interest in each of Assignor’s rights and obligations under the Credit Agreement and the other Loan Documents in the amounts as set forth on the attached Schedule 1, such that, after giving effect  to the foregoing assignment and assumption, and the concurrent assignment by Assignor to Assignee on the date hereof, the Assignee’s interest in the Revolving Credit (and participations  in any outstanding Letters of Credit and Swing Line Advances) shall be as set forth in the attached Schedule 2 with respect to the Assignee.

The Assignor hereby instructs the Agent to make all payments from and including the Effective Date hereof in respect of the interest assigned hereby, directly to the Assignee. The Assignor and the Assignee agree that all interest and fees accrued up to, but not including, the Effective Date of the assignment and delegation being made hereby are the property of the Assignor, and not the Assignee. The Assignee agrees that, upon receipt of any such interest or fees accrued up to the Effective Date, the Assignee will promptly remit the same to the Assignor.

The Assignee hereby confirms that it has received a copy of the Credit Agreement and  the exhibits and schedules referred to therein, and all other Loan Documents which it considers necessary, together with copies of the other documents which were required to be delivered  under the Credit Agreement as a condition to the making of the loans thereunder.  The Assignee

7    [This form of Assignment Agreement (including footnotes) is subject in all respects to the terms and conditions of the Credit Agreement which shall govern in the event of any inconsistencies or omissions.]

H - 1

acknowledges and agrees that it: (a) has made and will continue to make such inquiries and has taken and will take such care on its own behalf as would have been the case had its Percentage been granted and its loans been made directly by such Assignee to the Borrower without the intervention of the Agent, the Assignor or any other Lender; and (b) has made and will continue to make, independently and without reliance upon the Agent, the Assignor or any other Lender, and based on such documents and information as it has deemed appropriate, its own credit analysis and decisions relating to the Credit Agreement. The Assignee further acknowledges and agrees that neither the Agent, nor the Assignor has made any representations or warranties about the creditworthiness of the Borrower or any other party to the Credit Agreement or any other of the Loan Documents, or with respect to the legality, validity, sufficiency or enforceability of the Credit Agreement, or any other of the Loan Documents. This assignment shall be made without recourse to or warranty by the Assignor, except as set forth herein.

Assignee represents and warrants that it is a Person to which assignments are permitted pursuant to Section 12.8 of the Credit Agreement.

Except as otherwise provided in the Credit Agreement, effective as of the Effective Date:

(a)the Assignee: (i) shall be deemed automatically to have become a party to the Credit Agreement and the other Loan Documents, to have assumed all of the Assignor’s obligations thereunder to the extent of the Assignee’s percentage referred to in the second paragraph of this Assignment Agreement, and to have all the rights and obligations of a party to the Credit Agreement and the other Loan Documents, as if it were an original signatory thereto to the extent specified in the second paragraph hereof; and (ii) agrees to be bound by the terms and conditions set forth in the Credit Agreement and the other Loan Documents as if it were an original signatory thereto; and

(b)the Assignor’s obligations under the Credit Agreement and the other Loan Documents shall be reduced by the Percentage referred to in the second paragraph of this Assignment Agreement.

As used herein, the term “Effective Date” means the date on which all of the following have occurred or have been completed, as reasonably determined by the Agent:

(a)the delivery to the Agent of an original of this Assignment Agreement executed by the Assignor and the Assignee;

(b)the payment to the Agent, of all accrued fees, expenses and other items for which reimbursement is then owing under the Credit Agreement;

(c)the payment to the Agent of the processing fee referred to in Section 12.8(4)(b) of the Credit Agreement; and

(d)all other restrictions and items noted in Section 12.8 of the Credit Agreement have been completed.

The Agent shall notify the Assignor and the Assignee, along with Borrower, of the Effective Date.

H - 2

The Assignee hereby advises each of you of the following administrative details with respect to the assigned loans:

(A)Address for Notices: Institution Name: Address:

Attention:

Telephone:

Facsimile:

(B)Payment Instructions:

(C)Proposed effective date of assignment.

The Assignee has delivered to the Agent (or is delivering to the Agent concurrently herewith) the tax forms referred to in Section 12.13 of the Credit Agreement to the extent required thereunder, and other forms reasonably requested by the Agent. The Assignor has delivered to the Agent (or shall promptly deliver to Agent following the execution hereof), the original of each Note held by the Assignor under the Credit Agreement.

The laws of the Province of Ontario shall govern the validity, interpretation and enforcement of this Agreement.

* * *

Signatures Follow on Succeeding Pages

H - 3

Please evidence your consent to and acceptance of the proposed assignment and delegation set forth herein by signing and returning counterparts hereof to the Assignor and the Assignee.

ASSIGNOR:
[                                                       ]
By:
	Name:
	Title:
ASSIGNEE:
[                                                       ]
By:
	Name:
	Title:

H - 4

ASSIGNMENT AGREEMENT ACCEPTED AND CONSENTED TO

this          day of             , 20     BY:

COMERICA BANK, as administrative agent
By:
	Name:
	Title:
DRAGONWAVE INC.*
By:
	Name:
	Title:

[*Borrower’s consent will be required except as specified in Section 12.8 of the Credit Agreement.]

H - 5

Exhibit I — Form of Covenant Compliance Report

TO:              Comerica Bank, as Agent

RE:              Revolving Credit Agreement made as of the 1st  day of June, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the financial institutions from time to time signatory thereto (individually a “Lender,” and any and all such financial institutions collectively, “Lenders”), Comerica Bank, as administrative agent for the Lenders (in such capacity, the “Agent”), and DragonWave Inc. as borrower (the “Borrower”).

This Covenant Compliance Report (“Report”) is furnished pursuant to Section 6.2(2) of the Credit Agreement and sets forth various information as of                  , 20                  (the “Computation Date”).

Please complete the information below:

I.          Compliance with Reporting Requirements

REPORTING COVENANT	REQUIRED TO BE DELIVERED	ACTUAL DATE OF DELIVERY	COMPLIES
Annual audited combined and combining balance sheets, statements of income, stockholders/members equity and cash flows of Borrower and its Consolidated Subsidiaries as required pursuant to Section 6.1(1) of the Credit Agreement	Within 120 days after each Fiscal Year end	,	YES NO
Monthly unaudited combined and combining balance sheets, statements of income, stockholders/members equity and cash flows of Borrower and its Consolidated Subsidiaries as required pursuant to Section 6.1(2) of the Credit Agreement	Within 30 days after the end of each month (except the last month of any fiscal quarter or Fiscal Year)	,	YES NO
Collateral Coverage Certificate in accordance with Section 6.2(1) of the Credit Agreement	Within 10 Business Days after the end of each month	,	YES NO
Covenant Compliance Report in accordance with Section 6.2(2) of the Credit Agreement	Within 30 days after the end of each month	,	YES NO

I - 1

Projections in accordance with Section 6.2(4) of the Credit Agreement	Within 30 days after the end of each Fiscal Year	,	YES NO
Monthly aging of the accounts receivable and accounts payable of the Credit Parties in accordance with Section 6.2(5) of the Credit Agreement	Within 30 days after the end of each month as of the end of each month	,	YES NO
Intellectual Property report listing any applications or registrations made by any Credit Party , status of any outstanding applications or registrations, and any material change in the Credit Parties’ intellectual property from the prior-delivered report in accordance with Section 6.2(6) of the Credit Agreement	Within 30 days after the end of each quarter	,	YES NO

II.Compliance with Financial Covenants

FINANCIAL COVENANT	REQUIRED AS OF THE COMPUTATION DATE	ACTUAL AS OF THE COMPUTATION DATE	COMPLIES
Minimum Cash Balance Covenant (Section 6.12(1))	$	$	YES NO
Minimum Tangible Net Worth (Section 6.12(2))	$	$	YES NO
Collateral Coverage Ratio (Section 6.12(3)) (calculations reflected on Schedule 1)	TO 1.00	TO 1.00	YES NO

III.Compliance with Negative Covenants

NEGATIVE COVENANT	REQUIRED AS OF THE COMPUTATION DATE	ACTUAL AS OF THE COMPUTATION DATE	COMPLIES
Capital Expenditures (Section 7. 6)			YES NO

I - 2

THE BORROWER REPRESENTATIVE HEREBY CERTIFIES THAT:

A.            To the best of my knowledge, all of the information set forth in this Report (including any Schedule attached hereto) is true and correct in all material respects.

B.            To the best of my knowledge, the representation and warranties of the Credit Parties contained in the Credit Agreement and in the Loan Documents are true and correct in all material respects with the same effect as though such representations and warranties had been made on and at the date hereof, except to the extent that such representations and warranties expressly relate to an earlier specific date, in which case such representations and warranties were true and correct in all material respects as of the date when made.

C.            I have reviewed the Credit Agreement and this Report is based on an examination sufficient to assure that this Report is accurate.

D.            To the best of my knowledge, except as stated below, no Default or Event of Default has occurred and is continuing on the date of this Report:

(Describe any existing Default or Event of Default and the notice and period of existence thereof and any action taken with respect thereto or contemplated to be taken by Borrowers or any other Credit Party.)

Capitalized terms used in this Report and in the Schedules hereto, unless specifically defined to the contrary, have the meanings given to them in the Credit Agreement.

I - 3

IN WITNESS WHEREOF, the Borrower has caused this Report to be executed and delivered this               day of                  ,                  .

DRAGONWAVE INC., as borrower
By:
	Name:
	Title:

I - 4

Schedule 1.1(11) — Applicable Margin Grid

Type of Rate	Applicable Margin
US Base Rate	3.00	%
Canadian Prime Rate	3.00	%
Eurodollar-based Rate	4.00	%
CDOR-based Rate	4.00	%
BBA LIBOR-based Rate	4.00	%
Letter of Credit Fee	3.00	%
Revolving Credit Facility Fee	0.25	%

1.1(11) - 1

Schedule 1.2 — Percentages and Allocations of Revolving Credit Commitment Amount

Revolving Credit Lender	Percentage		Revolving Credit Commitment Amount
Comerica Bank	50	%	$	20,000,000
EDC	50	%	$	20,000,000
TOTAL	100	%	$	40,000,000

1.2 - 1

Schedule 1.3 — Compliance Information

Credit Party	Business Address	Type of Organization	Jurisdiction of Organization	Tax Identification Number	Organizational Identification Number
DragonWave Inc.	411 Legget Dr., Suite 600 Ottawa, ON K2K 3C9 Canada	Incorporated Company	Canada	875503724RC0001	351766-7
DragonWave Corp.	200 Colonial Center Parkway Suite 330 Roswell, GA 30076 United States of America	Incorporated Company	Delaware	04-3597827	0963636
DragonWave S.à r.l.	9b, Boulevard Prince Henri L-1724, Luxembourg	Société à Responsabilité Limitée	Luxembourg	LU25089100	B164312

1.3 - 1

Schedule 4.2 — Conditions

1.	DragonWave Inc.	411 Legget Drive, Suite 600
		Ottawa, ON K2K 3C9
		Canada
		362 Terry Fox Drive Ottawa, ON K2K 2P5 Canada
		349 Terry Fox Drive Ottawa, ON K2K 2V6 Canada
		Unit 3, GF Brooklands Moons Moat Drive Moons Moat
		Redditch, Worcestershire B98 9HE
		United Kingdom
		120 avenue Charles de Gaulle
		92200 Neilly Sur Seine France
		DIC P07-EIB 05-F03-02
		Dubai
2.	DragonWave Corp.	200 Colonial Center Parkway, Suite 330
		Roswell, GA 30076
		United States of America
3.	DragonWave S.à r.l.	9b, Boulevard Prince Henri,
		L-1724 Luxembourg

4.2 - 1

Schedule 5.4(2) — Real and Leased Property

1.	DragonWave Inc.	None
2.	DragonWave Corp.	None
3.	DragonWave S.à r.l.	None

5.4(2) - 1

Schedule 5.5 — Taxes

1.	DragonWave Inc.	No evidence of non-compliance
2.	DragonWave Corp.	No evidence of non-compliance
3.	DragonWave S.à r.l.	No evidence of non-compliance

5.5 - 1

Schedule 5.8 — Compliance With Laws

1.	DragonWave Inc.	None
2.	DragonWave Corp.	None
3.	DragonWave S.à r.l.	None

5.8 - 1

Schedule 5.10 — Litigation

1.	DragonWave Inc.	None
2.	DragonWave Corp.	None
3.	DragonWave S.à r.l.	None

5.10 - 1

Schedule 5.11 — Consents

1.	DragonWave Inc.	None
2.	DragonWave Corp.	None
3.	DragonWave S.à r.l.	None

5.11 - 1

Schedule 5.14(1) — ERISA; Canadian Pension Plans

1.	DragonWave Inc.	None
2.	DragonWave Corp.	401k
3.	DragonWave S.à r.l.	None

5.14(1) - 1

Schedule 5.14(2) — Benefit Plans

1.	DragonWave Inc.	Great West Life
		(Medical, Long Term, Short Term and Life Insurance)
2.	DragonWave Corp.	None
3.	DragonWave S.à r.l.	None

5.14(2) - 1

Schedule 5.16 — Environmental

1.	DragonWave Inc.	None
2.	DragonWave Corp.	None
3.	DragonWave S.à r.l.	None

5.16 - 1

Schedule 5.17 — Subsidiaries

Credit Party	Subsidiary	Ownership Percentage
DragonWave Inc.	DragonWave Corp.	100	%
	DragonWave S.à r.l.	100	%
	DragonWave México, S.A. de C.V.	99.9	%
	DragonWave — Comércio De Equipamentos De Telecomunicação Ltda.	99.9	%
DragonWave Corp.	DragonWave Ltd.	100	%
	Axerra Networks Asia Pacific Limited	99.9	%
	DragonWave México, S.A. de C.V.	0.1	%
	DragonWave — Comércio De Equipamentos De Telecomunicação Ltda.	0.1	%
DragonWave S.à r.l.	DragonWave S.r.l.	100	%
	DragonWave Pte Ltd.	100	%
DragonWave Pte Ltd.	DragonWave Telecommunication	100	%
	Technology (Shanghai) Co., Ltd.
	DragonWave HFCL India Private Ltd.	50.1	%
DragonWave Ltd.	Axerra Networks Asia Pacific Limited	0.1	%

5.17 - 1

Schedule 5.18 — Material Contracts

1.               Amended and Restated Master Acquisition Agreement dated as of May 3, 2012 between DragonWave Inc., Nokia Siemens Networks B.V. and DragonWave S.à. r.l., together with all schedules and exhibits attached and annexed thereto, as the same has been amended to date and as may be amended, restated, modified or supplemented from time to time.

5.18 - 1

Schedule 5.19 — Intellectual Property

1.Grantor Licenses

Intellectual Property Assignment and License Agreement dated on or about the Effective Date between Nokia Siemens Networks B.V. and DragonWave S.à r.l.

2.Patents Owned by DragonWave Inc.

No.	Owner	Title	Patent Registration Number	Patent Registration Date	Jurisdiction
1.	DragonWave Inc.	Wireless communication path management methods and systems	2592079	August 9, 2011	CA
2.	DragonWave Inc.	Waveguide Filter	6657520	December 2, 2003	US
3.	DragonWave Inc.	Apparatus and method for controlling wireless communication signals	7454222	November 18, 2008	US
4.	DragonWave Inc.	Linarizer for a microwave power amplifier	6538509	March 25, 2003	US
5.	DragonWave Inc.	E-Plane Filter and a Method of Forming an E-Plane Filter	6876277	December 23, 2002	US
6.	DragonWave Inc.	An Intergrated Circuit, and an arrangement for interconnecting components of an integrated Circuit (Multifuction Reversible MMIC circuit)	7787838	August 31, 2010	US
7.	DragonWave Inc.	Sub-harmonic mixer	7084693	August 1, 2006	US
8.	DragonWave Inc.	MMIC Mixer with a Single Ended local Oscillator	6861891	March 1, 2005	US
9.	DragonWave Inc.	Apparatus and methods for controlling effective communication traffic rates	7957291	June 7, 2011	US
10.	DragonWave Inc.	Communication signal symbol timing error detection and recovery	8036332	October 10, 2011	US
11.	DragonWave Inc.	Multi-layer integrated RF/IF circuit board including a central non- conductive layer	7202419	April 10, 2007	US
12.	DragonWave Inc.	Multi-layer integrated RF/IF circuit board	7196274	March 27, 2007	US

5.19 - 1

3.Pending Patents Owned by DragonWave Inc.

No.	Owner	Title	Patent Application Number	Patent Filing Date	Jurisdiction
1.	DragonWave Inc.	Apparatus and methods for controlling effective communication traffic rates	2547310	May 19, 2006	CA
2.	DragonWave Inc.	Wireless communication path management methods and systems	5804977.6	July 19, 2007	EP
3.	DragonWave Inc.	Communication signal symbol timing error detection and recovery	8153503.1	March 28, 2008	EP
4.	DragonWave Inc.	Expedited communication traffic handling apparatus and methods	7800422.3	February 19, 2009	EP
5.	DragonWave Inc.	Radio Frequency loop-back technique	7719975	January 13, 2009	EP
6.	DragonWave Inc.	Dual-channel equalizing adaptive array with blind acquisition for interference rejection, equalizing and diversity combining	Not Yet Filed	Not Yet Filed	US
7.	DragonWave Inc.	A method for controlling packet jitter in wireless link frame cut-through and frame advancing	11/826979	July 19, 2007	US
8.	DragonWave Inc.	Wireless communication path management methods and systems	11/793680	June 22, 2007	US
9.	DragonWave Inc.	Operating state control in redundancy protection systems	12/382031	March 6, 2009	US
10.	DragonWave Inc.	Bridging for SONET/SDH automatic protection switching	12/382030	March 6, 2009	US
11.	DragonWave Inc.	Interference carrier regeneration and interference cancellation apparatus and methods	12/875315	September 3, 2010	US

5.19 - 2

			Patent Application
No.	Owner	Title	Number	Patent Filing Date	Jurisdiction
12.	DragonWave Inc.	A method for data aggregation over multiple wireless links	12/457286	June 5, 2009	US
13.	DragonWave Inc.	Wireless communication link bandwidth utilization monitoring	12/457287	June 5, 2009	US
14.	DragonWave Inc.	System and method for high precision clock recovery over packet networks (continuation)	12/649371	December 30, 2009	US
15.	DragonWave Inc.	Wireless network communication apparatus, methods, and integrated antenna structures	12/311359	March 27, 2009	US

5.19 - 3

4.Patents Owned By DragonWave S.à r.l.

No.	Owner	Title	Patent Grant Number	Patent Grant Date	Jurisdiction
1.	DragonWave S.à r.l.	A method and apparatus for identifying faults in a network that has generated a plurality of fault alarms	GB2406741	March 14, 2006	GB
2.	DragonWave S.à r.l.	A method and apparatus for identifying faults in a network that has generated a plurality of fault alarms	7176792	February 13, 2007	US
3.	DragonWave S.à r.l.	High spectral efficiency point-to-point radio system and relevant operating method	1382806	December 22, 2010	IT

5.19 - 4

5.Pending Patents Owned By DragonWave S.à r.l.

No.	Owner	Title	Patent Application Number	Patent Filing Date	Jurisdiction
1.	DragonWave S.à r.l.	Method and device for data processing	PCT/EP2010/055188	April 20, 2010	EP
2.	DragonWave S.à r.l.	High spectralefficiency point-to-point radio system and relevant operating method	08803229.7	August 26, 2008	EP

5.19 - 5

6.Trademarks

Owner	Trademark	Jurisdiction	Registration Number	Registration Date
DragonWave Inc.	DRAGONWAVE	Canada	TMA585382	July 16, 2003
		US	3503574	September 23, 2008
DragonWave Inc.	HORIZON	Canada	TMA745742	August 19, 2009
		US	3606664	April 14, 2009
DragonWave Inc.	AIRPAIR	Canada	TMA563401	June 13, 2002
		US	3789058	May 18, 2010
DragonWave Inc.	DRAGONWAVE FUSION	Canada	1508595 (Application Number)	December 20, 2010 (Filing Date)
		US	85/199691 (Application Number)	December 16, 2010 (Filing Date)
DragonWave Inc.	AVENUE	US	85/470939 (Application Number)	November 11, 2011 (Filing Date)
DragonWave Corp.	AXERRA	US	76170413	May 7, 2002
		EC	002133916	March 6, 2005
DragonWave Corp.	AXERRA NETWORKS	US	76178717	May 11, 2004
		EC	002134013	March 6, 2001
DragonWave Corp.	AXN	US	76170415	May 13, 2003
DragonWave Corp.	HPCR	US	78661350	April 3, 2007
DragonWave Corp.	THE PSEUDO-WIRE COMPANY	US	78444507	February 28, 2006
DragonWave Corp.	UNLOCK THE POWER OF YOUR IP NETWORK	US	76211745	March 30, 2004

5.19 - 6

Schedule 5.20 — Inbound Licences

1.	DragonWave Inc.	None
2.	DragonWave Corp.	None
3.	DragonWave S.à r.l.	None

5.20 - 1

Schedule 5.21 — Tradenames

1.	DragonWave Inc.	None
2.	DragonWave Corp.	None
3.	DragonWave S.à r.l.	None

5.21 - 1

Schedule 5.22 — Capital Structure

Credit Party	Authorized Equity Interests	Issued and Outstanding Equity Interests	Holders of Equity Interest	Agreements for the Acquisition of Equity Interests
DragonWave Inc.	Unlimited	35,545,247 CS	Multiple	N/A
DragonWave Corp.	Unlimited	100 CS	DragonWave Inc.	N/A
DragonWave S.à r.l.	Unlimited	74,300 CS and 271,000 PS	DragonWave Inc.	N/A

5.22 - 1

Schedule 5.25 — Employee Matters

1.	DragonWave Inc.	None
2.	DragonWave Corp.	None
3.	DragonWave S.à r.l.	None

5.25 - 1

Schedule 7.1(3) — Limitation on Debt

1.	DragonWave Inc.	None
2.	DragonWave Corp.	None
3.	DragonWave S.à r.l.	None

7.1(3) - 1

Schedule 7.2(3) — Limitation on Liens

1.Financing statement filed against DragonWave Inc. as registration number 20100128 1447 8077 1477 (reference file number 658975968) in favour of Pitney Bowes Global Financial Services pursuant to the Personal Property Security Act (Ontario) (“PPSA”) registering a lien in a photocopier.

2.Financing statement filed against DragonWave Inc. as registration number 20070801 1829 1651 3418 (reference file number 637822602) in favour of Pitney Bowes of Canada Ltd. pursuant to the PPSA registering a lien in certain photocopiers and peripherals (all items as defined and listed in Pitney Bowes Contracts #553300 and 553301).

7.2(3) - 1

Schedule 7.7(2) — Limitation on Investments, Loans and Advances

1.	DragonWave Inc.	RBC Dominion Securities
		World Exchange Plaza
		45 O’Conner St., Suite 900
		Ottawa, ON K1P 1A4
		Canadian Money Market Account
		Account No. 360-65667-1-3
		United States Money Market
		Account Account No. 501-62239-1-8
		Intercompany loan agreement dated October 22, 2012 between DragonWave Inc. and DragonWave Ltd.
2.	DragonWave Corp.	None
3.	DragonWave S.à r.l.	None

7.7(2) - 1

Schedule 7.8 — Transactions with Affiliates

1.	DragonWave Inc.	None
2.	DragonWave Corp.	None
3.	DragonWave S.à r.l.	None

7.8 - 1

Schedule 12.6(1) — Notices

Comerica Bank	Suite 2210, South Tower, Royal Bank Plaza,
	200 Bay Street, Toronto, Ontario M5J 2J2
	Telephone No.: 416-646-4797 Attention: Robert C. Rosen
DragonWave Inc.	411 Legget Drive, Suite 600 Ottawa, ON K2K 3C9 Canada
	Attention: Russell Frederick Telephone No.: 613-599-9991 X 2253
	Fax Number: 613-599-4225
DragonWave Corp.	411 Legget Drive, Suite 600
	Ottawa, ON K2K 3C9 Canada
	Attention: Russell Frederick Telephone No.: 613-599-9991 X 2253
	Fax Number: 613-599-4225
DragonWave S.à r.l.	411 Legget Drive, Suite 600
	Ottawa, ON K2K 3C9 Canada
	Attention: Russell Frederick Telephone No.: 613-599-9991 X 2253
	Fax Number: 613-599-4225

12.6(1) - 1

EX-4.8

Exhibit 4.8

333 West Santa Clara St.

12th Floor

Attn: ******

San Jose CA 95113

408-556-5838

+      Redacted portions of this document indicate confidential information that has been redacted as permitted by securities laws in Canada and, in particular, Part 12 of National Instrument 51-102 - Continuous Disclosure Obligations.

October 12, 2016

via overnight courier and facsimile

******

DragonWave, Inc.

411 Legget Drive

Suite 600

Ottawa, ON K2K 3C9

Canada

Fax: 613-599-4225

Telephone: 613-566-9991

RE: Fourth Forbearance Agreement

Dear Sirs/Mesdames:

Reference is made to the Credit Agreement made as of June 1, 2012 between DragonWave Inc. (“Borrower”), Comerica Bank and Export Development Canada, as lenders (collectively, “Lenders” and individually, a “Lender”), and Comerica Bank as agent for the Lenders (the “Agent”) as amended by the First Amendment to the Credit Agreement made as of December 27, 2012, the Second Amendment to the Credit Agreement made as of May 31, 2013, the Third Amendment to the Credit Agreement made as of January 6, 2014, the Fourth Amendment the Credit Agreement made as of May 13, 2014,  the Fifth Amendment the Credit Agreement made as of November 25, 2014 and the Sixth Amendment the Credit Agreement made as of May 8, 2015, (as the same may be further amended, varied, supplemented, restated, renewed, replaced or otherwise modified from time to time, the “Credit Agreement”). We also refer to the default letter dated October 16, 2015 wherein Agent gave notice to Borrower of the occurrence of certain Events of Default under the Credit Agreement (the “Default Letter”) and the Forbearance Agreement made as of December 15, 2015, between the Borrower, the Lenders and the Agent (the “Forbearance Agreement”), the Second Forbearance Agreement made as of April 26, 2015 (the “Second Forbearance Agreement”) and the Third Forbearance Agreement dated July 12, 2016 (the “Third Forbearance Agreement”, collectively with the Forbearance Agreement, the Second Forbearance Agreement, the Credit Agreement and the Loan Documents, the “Credit Loan Documents”).

All initially capitalized terms used herein, unless otherwise defined, shall have the meanings defined in the Credit Agreement and the other Loan Documents.

Agent hereby confirms that Events of Default have occurred and are continuing to exist under the Credit Agreement, including, without limitation, the following (the “Existing Defaults”):

a)Events of Default arising under Subsection 2.13(1) of the Credit Agreement as a result of the failure by the Borrower to pay when due the amount by which the Revolving Credit Advances plus Swing Line Advances exceed the lesser of (i) the then applicable Net

Revolving Credit Aggregate Commitment and (ii) the then applicable Borrowing Base (the “Borrowing Base Excess”), which Borrowing Base Excess was equal to $7,425,566  as of September 23, 2016 and Borrower’s subsequent failure to repay the Borrowing Base Excess in accordance with Subsection 2.13(1) of the Credit Agreement.

b)Events of Default arising under Subsection 6.12(2) of the Credit Agreement as a result of Borrower’s failure to maintain Minimum Tangible Net Worth of at least Twenty Two Million Five Hundred Thousand Dollars (US$22,500,000) as of August 31, 2015 when Borrower reported Tangible Net Worth of Twenty Million Two Hundred and Ninety One Thousand Dollars (US$20,291,000), as of October 30, 2015 when Borrower reported Tangible Net Worth of Thirteen Million Eight Hundred and Fifty Thousand and Five Hundred and Sixty One Dollars (US$13,850,561) and as of December 31, 2015 when Borrower reported Tangible Net Worth of Ten Million Two Hundred and Twelve Thousand and One Hundred and Ninety Three Dollars (US$ 10,212,193).

c)Events of Default arising under Subsection 6.12(3) of the Credit Agreement as a result of Borrower’s failure to maintain at all time a Minimum Liquidity Ratio of not less than 1.25:1.00 as of July 31, 2015 when Borrower reported a Minimum Liquidity Ratio of 1.23:1.00, as of October 30, 2015 when Borrower reported a Minimum Liquidity Ratio of 1.07:1.00, and as of December 31, 2015 when Borrower reported a Minimum Liquidity Ratio of 0.92; and

d)Events of Default arising under Subsection 6.12(1) of the Credit Agreement whereby Borrower is required to maintain the Minimum Cash Balance of not less than Ten Million Dollars (US$10,000,000) in the aggregate among accounts held at Agent. Borrower’s cash balances did not aggregate to Ten Million Dollars (US$10,000,000) or more on September 11, 2015 on September 24, 2015 and on each day from September 29, 2015 through to the date of the Default Letter.  In addition, on various dates between December 15, 2015 and January 29, 2016, the Borrower’s cash balances did not aggregate to Three Million Dollars (US$3,000,000) or more on as required pursuant to the terms of the Forbearance Agreement and did not aggregate to Eight Hundred Thousand Dollars (US$800,000) or more as required pursuant to the terms of the Third Forbearance Agreement.

1.Forbearance

a)The Forbearance Period (as defined in the Forbearance Agreement) has expired and the Borrower has requested that the Agent, on behalf of the Lenders further extend the Forbearance Period.

b)The Agent, on behalf of itself and Lenders, agrees that it shall not take any steps to enforce its rights or remedies against Borrower until the earlier of April 1, 2017 and the occurrence of a Termination Event, as defined below (the “Termination Date”) to the extent only that such rights or remedies are enforceable solely as a result of the Existing Defaults.

c)As consideration for the forbearance by the Agent and the Lenders until the Termination Date, the Borrower shall pay to the Agent, on behalf of the Lenders, a forbearance fee in the amount of US$100,000.00 on the earlier of (i) receipt by the Borrower of net proceeds from the Equity Raise; and (ii) December 10, 2016.

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d)As of the date hereof and continuing until the Termination Date (the “Fourth Forbearance Period”) and thereafter until the termination of the tolling arrangements hereof in the manner provided for at article 1(c), and whether or not demand for payment or a Notice of Intention to Enforce Security has previously been delivered by Agent, Agent, and Borrower hereby agree to toll and suspend the running of the applicable statutes of limitations, laches or other doctrines related to the passage of time in relation to the Credit Agreement, the other Loan Documents, the Obligations and any entitlements arising from the Credit Agreement, the other Loan Documents, the Obligations and any other related matters, and each of the parties confirms that this letter agreement (the “Agreement”) is intended to be an agreement to suspend or extend the basic limitation period, provided by Section 4 of the Limitations Act, 2002 (Ontario) as well as the ultimate limitation period provided by Section 15 of the Limitations Act, 2002 (Ontario) in accordance with the provisions of Section 22(2) of the Limitations Act, 2002 (Ontario) and as a business agreement in accordance with the provisions of Section 22(5) of the Limitations Act, 2002 (Ontario) and any contractual time limitation on the commencement of proceedings, any claims or defences based upon such applicable statute of limitations, contractual limitations, or any time-related doctrine including waiver, estoppel or laches.

e)The tolling provisions set out in article 1(b) of this Agreement will terminate upon either Borrower, or Agent on behalf of itself and the Lenders, providing the other party with 60 days written notice of an intention to terminate the tolling provisions hereof, and upon the expiry of such 60 day notice, and any time provided for under the statutes of limitations, laches, or any other doctrine related to the passage of time in relation to the Credit Agreement, the other Loan Documents, the Obligations or any entitlements arising from the Credit Agreement, the other Loan Documents, or the Obligations and any other related matters, will recommence running as of the effective date of such notice, and for greater certainty the time during which the limitation period is suspended pursuant to the tolling provisions of this Agreement shall not be included in the computation of any limitation period.

f)The Borrower shall reimburse the Agent for:

a.the consultancy fee paid by the Agent to Grant Thornton, on behalf of Borrower in the approximate amount of CAD$49,437.50 (the “Consultant Fee”). The Consultant Fee shall be payable by the Borrower to the Agent in two equal installments, with the first installment payable on or before Dec 10, 2016 and the second installment payable on or before January 13, 2017; and

b.all legal fees and costs incurred by Agent in respect of the preparation and negotiation of the Credit Loan Documents in the approximate amount of CAD$66,500.00 (“Legal Fees”). The Legal Fees shall be payable by the Borrower to the Agent in monthly installments of CAD$10,000.00 with the first monthly installment due and payable on November 1, 2016.

g)Upon the effectiveness of this Agreement through to the expiry of the Fourth Forbearance Period, the financial covenants set out in Section 6.12(2), 6.12(3) and 6.12(4) of the Credit Agreement are suspended and the Borrower shall not be required to comply with such financial covenants. For the avoidance of doubt, the Borrower shall be required to comply with all such financial covenants upon and after the occurrence of any Termination Event.

3

h)The Agent waives satisfaction of Section 3.2© of the Credit Agreement with respect to issuance of a Letter of Credit solely in order to replace Letter of Credit No. 66023201N, notwithstanding that the Borrower cannot meet the condition precedents to such issuance as set out in Section 3.2(c) of the Credit Agreement.

2.Amendments to the Credit Agreement

Effective on the date hereof:

a)Section 1.1 of the Credit Agreement is amended by deleting the definitions of “Minimum Cash Balance” and replacing such definitions with the following:

“Minimum Cash Balance” shall mean:

1.upon the delivery of this Agreement until the Termination Date, One Million Dollars (US$1,000,000.00);

2.from and after receipt by the Borrower of net proceeds from the Equity Raise in the amount of Five Million Dollars (US$5,000,000), Two Million Dollars (US$2,000,000.00);

3.from and after receipt by the Borrower of proceeds from the Equity Raise in the amount of Ten Million Dollars (US$10,000,000), Four Million Dollars (US$4,000,000.00); and

4.from and after the Termination Date, Ten Million Dollars (US$10,000,000);

in each case Minimum Cash Balance shall not include income or the cash in respect of the joint venture interest with Himachal Futuristic Communications Limited. The Minimum Cash Balance shall be maintained by the Borrower in the Borrower’s Agent Account.

“Revolving Credit Maturity Date” shall mean the earlier to occur of (i) April 1, 2017 and (ii) the date on which the Revolving Aggregate Commitment shall terminate in accordance with the provisions of this Agreement.

b)Schedule 1.1(11)-Applicable Margin Grid is amended with effect as of the date hereof,  by deleting “3.00%” adjacent to the column entitled “Canadian Prime Rate” and replacing such percentage with “3.50%”.

3.Termination Event

a)The occurrence of any default, Default or Event of Default under the Credit Agreement, the other Loan Documents or this Agreement, including a breach of any of the covenants set out herein but not including the Existing Defaults (the “Termination Event”).

b)The Borrower acknowledges and agrees that, upon the occurrence of a Termination Event, Agent’s agreement to forbear from exercising its rights and remedies in respect of the Existing Defaults shall terminate automatically without notice and without any action by the Agent or the Lenders.

4

c)With respect to an Event of Default of the requirement for to maintain the Minimum Cash Balance, the Borrower shall have two (2) Business Days to cure such default.

4.Covenants of the Borrower

The Borrower agrees that:

a)On or before December 14, 2016, or such later date as consented to by the Agent in its sole discretion,  the Borrower shall have received an amount of net proceeds from the issuance of common stock of the Borrower of not less than US$10,000,000 (the “Equity Raise”).

b)On or before October 26, 2016 or such later date as consented to by the Agent in its sole discretion, the Borrower shall have issued to the Agent directly, warrants providing for the right to purchase, within five years from the date hereof, 375,000 common shares of the Borrower at a purchase price of $4.00 per common share.

a)Commencing on the date hereof and continuing every other Monday thereafter during the Third Forbearance Period, Borrower shall deliver to Agent rolling 13-week cash flow projections (the “Projections”) in substantially the same format and prepared on substantially the same basis as the Projections attached as Schedule “A” hereto.

b)Borrower shall use its best efforts to grant in favor of the Agent and the Lenders a first ranking perfected lien, charge and security interest in and over all of Borrower’s direct and indirect interests in that certain Joint Venture Agreement between Himachal Futuristic Communications Limited and the Borrower entered into on or about October 18, 2010.

c)Agent may, at Agent’s option, conduct an audit of Borrower’s books and records not more frequently than once per quarter at Borrower’s expense, and Borrower agrees to cooperate in respect of such audits and provide Agent with unfettered access to Borrowers books and records for such purpose.

d)The Borrowing Base Excess shall not exceed:

i.from and after the date hereof, until October 31, 2016, US$7,000,000;

ii.from and after November 1, 2016 until November 30, 2016, US$5,500,000;

iii.from and after December 1, 2016 until January 12, 2017, US$3,500,000; and

iv.from and after January 13, 2017 until Termination of this Agreement, US$0.

5.Other

a)Borrower agrees that the Existing Defaults have occurred and are continuing and that the Existing Defaults have not been waived by Agent or the Lenders. Borrower acknowledges that the total amounts outstanding under the Credit Agreement and the Credit Loan Documents as at October 6, 2016 is US$17,029,952.17 (the “Indebtedness”)  plus accrued and unpaid interest, fees, costs, expenses, and all other amounts payable

5

under or in connection with the Credit Agreement, the other Loan Documents and this Agreement.

b)Borrower and the Guarantors each acknowledge and confirm that the Collateral Documents (i) have not been amended, (ii) continue in full force and effect, and (iii)

secure, among other things, and subject to any limitations set out therein all obligations, liabilities and indebtedness owing by Borrower to the Lenders, without limitation, all amounts outstanding under the Credit Agreement, the other Loan Documents and this Agreement.

c)The Guarantors acknowledge and agree that (i) the Credit Agreement, as amended to the date hereof, continues in full force and effect, and (ii) they have no claim for set-off, counter-claim or damages on any basis whatsoever against Agent or Lenders, and if there are any such claims, they are hereby expressly released and discharged.  The Guarantors acknowledge and agree that this Agreement shall not in any way whatsoever limit or lessen their liability as guarantors of the Borrower, and their guarantees remain in full force and effect, unamended, and are valid and enforceable against the Guarantors in accordance with their written terms. Each of the Guarantors hereby releases and forever discharges Agent and Lenders, and Agent’s and Lenders’ employees, officers, directors, agents and advisors and their representatives and successors from any and all manner of actions, causes of actions, suits, contracts, claims, demands, damages, costs and expenses of any nature or kind whatsoever, whether known or unknown, suspected or unsuspected whether at law or in equity, which the Guarantors ever had or now have or which the Guarantors or their administrators, officers, agents, successors and assigns hereafter can, shall or may have or by reason of any cause, matter or thing whatsoever existing up to the present time and relating to the Credit Agreement, the other Loan Documents, the Indebtedness, the Obligations, and the Collateral Documents or Agent’s or Lenders’ actions, errors or omissions with regard thereto.

d)Borrower hereby releases and forever discharges Agent and Lenders, and their successors and assigns of and from any and all manner of actions, causes of actions, suits, contracts, claims, demands, damages, costs and expenses of any nature or kind whatsoever, whether known or unknown, suspected or unsuspected whether at law or in equity, which Borrower ever had or now has or which it or its administrators, officers, agents, successors and assigns hereafter can, shall or may have or by reason of any cause, matter or thing whatsoever existing up to the present time and relating to the Credit Agreement, the other Loan Documents, the Indebtedness, the Obligations, and the Collateral Documents or Agent’s or Lenders’ actions, errors or omissions with regard thereto.

e)Borrower and the Guarantors agree to cooperate with Agent and to take any steps, deliver any documents and facilitate or authorize any registrations as may be reasonably requested by Agent, on behalf of itself and Lenders, to ensure the perfection and priority of the Collateral Documents, the protection and preservation of the collateral subject to the Collateral Documents, and to preserve the rights and interests of Lenders.  Borrower agrees to pay all reasonable costs, charges and expenses of Agent and Lenders (including, without limitation, reasonable legal fees on a substantial indemnity basis) associated with this Agreement, and Agent is hereby authorized to debit from time to time any account of Borrower with Agent or Lenders in respect of such costs, charges and expenses. If, on or after the Termination Date, Agent elects to proceed with the enforcement of the Collateral Documents, Borrower and the Guarantors shall co-operate fully with Agent

6

and any receiver and manager or agent appointed by Agent or the Court in connection with the enforcement of the Collateral Documents all with the view to assisting in the orderly realization of the collateral subject to the Collateral Documents and maximizing the net recovery therefrom.

f)The Borrower agrees to provide weekly verbal updates to the Agent, which update shall cover any topic reasonably requested by the Agent, including without limitation, cash flow forecasts, status of discussions with Sprint, Borrowing Base Certificates and vendor or customer issues.

g)Nothing herein, nor any continuation of credit or other act or omission to act on the part of Agent or Lenders is intended, nor shall be construed, to constitute a waiver of the Existing Defaults or a waiver of any other defaults, Defaults or Events of Default that currently exist (whether known or unknown) or may hereafter arise under the Credit Agreement, the other Credit Loan Documents, the Collateral Documents, or this Agreement.

h)Agent expressly reserves all of its rights and remedies under the Credit Agreement, the other Loan Documents, the Collateral Documents and applicable law including, without limitation, its right to demand payment as a result of any other defaults, Defaults or Events of Default (other than the Existing Defaults) that currently exist (whether known or unknown) or may hereafter arise under the Credit Agreement, the other Loan Documents or Collateral Documents. No delay on the part of Agent or Lenders in the exercise of any remedy, power, right or privilege under the Credit Agreement, the other Loan Documents or the Collateral Documents, or any other document, instrument or agreement entered into in connection therewith, shall impair such remedy, power, right, or privilege or be construed to be a waiver of any existing or future default, Default or Event of Default, and Agent hereby expressly reserves all of Agent’s and Lenders’ remedies, powers, rights or privileges under the Credit Agreement, the other Credit Loan Documents, the Collateral Documents, and each other document, instrument or agreement entered into in connection therewith, at law, in equity, or otherwise.

i)This Agreement may be executed in counterparts, each of which shall be deemed to be an original instrument, but all such counterparts together shall constitute one and the same instrument.  The parties may execute this Agreement by delivery of signature by facsimile or electronic transmittal, which shall be deemed binding on the parties.

6.Effectiveness

This Agreement shall not become effective until the date all of the following conditions have been satisfied or provided for in a manner satisfactory to Agent in its sole discretion (or such earlier date as determined by Agent in its sole discretion):

a)Payment of the Agent’s fee in the amount of US$30,000 in respect of the fee payable to the Agent for the period June 1, 2016 to May 30, 2017;

b)the Borrower has complied with all reporting requirements under the Credit Loan Documents;

c)delivery of a fully executed copy of this Agreement; and

7

d)delivery by Borrower of such other documents that the Agent, on behalf of itself and the Lenders, may reasonably request.

Sincerely,

Comerica Bank

By:

cc:Export Development Canada: ******

The terms and conditions in this Agreement are acknowledged and agreed to on this 12 day of October, 2016.

DRAGONWAVE INC.
By:
	Name:
	Title:
DRAGONWAVE CORP.
By:
	Name:
	Title:
DRAGONEWAVE S.à r.l.
By:
	Name:
	Title:

8

EX-8.1

Exhibit 8.1

Company Name	Jurisdiction of Incorporation	Ownership %
DragonWave Corp.	Delaware	100%
DragonWave S.à r.l.	Luxembourg	100%
DragonWave Mexico S.A. de C.V.	Mexico	DWI 99.9%, DWC 0.1%
DragonWave Pte. Ltd.	Singapore	100%
DragonWave Telecommunication Technology (Shanghai) Co., Ltd.	China	100%
DragonWave India Private Limited	India	100%
DragonWave HFCL India Private Limited	India	50.1%

EX-12.1

Exhibit 12.1

CERTIFICATION

I, Peter Allen, certify that:

1.I have reviewed this Annual Report on Form 20-F of DragonWave Inc.;

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.             The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)           Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)           Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.             The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent function):

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

By:	/s/ Peter Allen
	Peter Allen
	President and Chief Executive Officer
Date: June 8, 2017

EX-12.2

Exhibit 12.2

CERTIFICATION

I, Patrick Houston, certify that:

1.I have reviewed this Annual Report on Form 20-F of DragonWave Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent function):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

By:	/s/ Patrick Houston
	Patrick Houston
	Chief Financial Officer
Date: June 8, 2017

EX-13.1

Exhibit 13.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of DragonWave Inc. (the “Company”) on Form 20-F for the period ending February 28, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certify that to the best of our knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

By:	/s/ Peter Allen
	Peter Allen
	President and Chief Executive Officer
By:	/s/ Patrick Houston
	Patrick Houston
	Chief Financial Officer
Date: June 8, 2017

The certification set forth above is being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Annual Report on Form 20-F for the period ended February 29, 2016, or as a separate disclosure document of the Company or the certifying officers.

EX-15.1

Exhibit 15.1

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        The following is management's discussion and analysis ("MD&A") of DragonWave Inc.'s consolidated results of operations and financial condition for the three and twelve months ended February 28, 2017. This MD&A should be read in conjunction with our audited consolidated financial statements and corresponding notes for the three and twelve months ended February 28, 2017 and our Annual Information Form for the year ended February 28, 2017 (the "AIF") filed on SEDAR at www.sedar.com (SEDAR) and on EDGAR at www.sec.gov/edgar/searchedgar/companysearch.html (EDGAR). Our audited consolidated financial statements and corresponding notes for the three and twelve months ended February 28, 2017 are available on SEDAR and EDGAR.

        Our audited consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (GAAP) and are reported in United States dollars (USD). The information contained in this MD&A is dated as of May 26, 2017 and is current to that date, unless otherwise stated. Our fiscal year commences on March 1 of each year and ends on the last day of February of the following year.

        In this document, unless the context requires otherwise, "we", "us", "our", the "Company" and "DragonWave" all refer to DragonWave Inc. collectively with its direct and indirect subsidiaries. The contents of this MD&A have been approved by our Board of Directors, on the recommendation of our Audit Committee.

        We refer to both Nokia Solutions and Networks and its predecessor business Nokia Siemens Networks as "Nokia" in this MD&A. Nokia is a trademark of Nokia Corporation or its affiliates.

        Unless otherwise indicated, all currency amounts referenced in this MD&A are denominated in USD.

Forward-Looking Statements

        This MD&A contains "forward-looking information" and "forward-looking statements" within the meaning of applicable Canadian and U.S. securities laws. All statements in this MD&A, other than statements that are reporting results or statements of historical fact, are forward-looking statements which involve assumptions and describe our future plans, strategies and expectations. Forward-looking statements are generally identifiable by use of the words "may", "will", "should", "continue", "expect", "anticipate", "estimate", "believe", "intend", "plan" or "project" or the negative of these words or other variations of these words or comparable terminology. Forward-looking statements include, without limitation, statements regarding: our strategic plans and objectives; growth strategy; customer diversification and expansion initiatives; our expectations with respect to our relationships with channel partners; our expectations with respect to end-customer demand for our products; our expectations regarding the development of our target markets; and our plans, objectives and targets for operating cost reductions, revenue growth and margin performance. There can be no assurance that forward-looking statements will prove to be accurate and actual results or outcomes could differ materially from those expressed or implied in such statements. Important factors that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements are set forth in this MD&A under the heading "Risks and Uncertainties". Forward-looking statements are provided to assist external stakeholders in understanding management's expectations and plans relating to the future as of the date of this MD&A and may not be appropriate for other purposes. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements are made as of the date of this MD&A and we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent expressly required by law.

1

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Risks and Uncertainties

        We are exposed to risks and uncertainties in our business, including the risk factors set forth below:

•

limited cash resources and our dependence on our credit facilities and accommodations by our lenders and certain suppliers;

•

there is doubt about our ability to continue as a going concern due to recurring losses from operations, accumulated deficit and insufficient cash resources to meet our business objectives, all of which means that we may not be able to continue operations;

•

we have a history of losses;

•

our reliance on a small number of customers for a large percentage of revenue;

•

our ability to implement our ongoing program of operating cost reductions;

•

intense competition from several competitors;

•

competition from indirect competitors;

•

future revenue opportunities through our channel partners is uncertain;

•

our dependence upon our resellers in certain jurisdictions to provide localized support and other local services which assist us in avoiding certain costs and investments;

•

pressure on our pricing models from existing and potential customers and as a result of competition;

•

our need for working capital will intensify if we are successful in winning new business;

•

our dependence on our ability to develop new products, enhance existing products and execute product roll-outs on a basis that meets customer requirements;

•

our exposure to product warranty claims, and inventory and account receivables exposure in relation to recent product quality issues;

•

our ability to successfully manage our resources;

•

our dependence on our ability to manage our workforce and recruit and retain management and other qualified personnel;

•

quarterly revenue and operating results that are difficult to predict and can fluctuate substantially;

•

a lengthy and variable sales cycle;

•

our reliance on suppliers, including outsourced manufacturing, third party component suppliers and suppliers of outsourced services;

•

our ability to manage the risks related to increasingly complex engagements with channel partners and end-customers;

•

our exposure to credit risk for accounts receivable;

•

our dependence on the development and growth of the market for high-capacity wireless communications services;

•

the allocation of radio spectrum and regulatory approvals for our products;

•

the ability of our customers to secure a license for applicable radio spectrum;

•

changes in government regulation or industry standards that may limit the potential market for our products;

•

currency fluctuations;

•

our ability to protect our own intellectual property and potential harm to our business if we infringe the intellectual property rights of others;

•

risks associated with software licensed by us;

•

a change in our tax status or assessment by domestic or foreign tax authorities;

•

exposure to risks resulting from our international sales and operations, including the requirement to comply with export control and economic sanctions laws;

2

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

•

our exposure to potential product defects and product liability claims and health and safety risk relating to wireless products;

•

the impact that general economic weakness and volatility may be having on our customers;

•

losses or disruptions to operations resulting from a cybersecurity attack; and

•

disruption resulting from economic and geopolitical uncertainty.

Additional risks related specifically to our securities include:

•

risks associated with maintaining compliance with NASDAQ's continued listing requirements;

•

risks associated with our outstanding warrants and the impact that the terms of such warrants have on our ability to raise capital and to undertake certain business transactions;

•

risks associated with our ability to raise additional capital;

•

large fluctuations in the trading price of our common shares;

•

our actual financial results may vary from our publicly disclosed forecasts;

•

expense and risks associated with being a U.S. public company and possible loss of our foreign private issuer status;

•

expense and risks associated with the loss of our ability to use the multi-jurisdictional disclosure system ("MJDS") adopted by the United States and Canada;

•

an investor may not be able to bring actions or enforce judgment against us and certain of our directors and officers;

•

we do not currently intend to pay dividends on our common shares;

•

tax consequences associated with an investment in our securities;

•

future sales of common shares by our existing shareholders could cause our share price to fall;

•

our management's broad discretion over the use of proceeds of financings; and

•

certain Canadian laws could prevent or deter a change of control.

        See the discussion under "Recent Developments-Liquidity Discussion" in this MD&A, as well as the discussion under "Risk Factors" contained in our most recently filed AIF.

        Any of the risks referred to above could cause actual results or outcomes to differ materially from those discussed in forward-looking statements. Although we have attempted to identify important factors that could cause our actual results to differ materially from expectations, intentions, estimates or forecasts, there may be other factors that could cause our results to differ from what we currently anticipate, estimate or intend. Ongoing global economic uncertainty could impact forward-looking statements contained in this MD&A in an unpredictable and possibly detrimental manner. In light of these risks and uncertainties, the forward-looking events described in this MD&A might not occur or might not occur when stated.

Non-GAAP Performances Measures

        Readers are cautioned that this MD&A contains certain information that is not consistent with financial measures prescribed under GAAP. See discussion below under "Use of Non-GAAP Performance Measures".

3

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

SELECTED FINANCIAL INFORMATION

	Three Months Ended									Twelve Months Ended
	February 28 2017			February 29 2016			February 28 2015			February 28 2017			February 29 2016			February 28 2015
REVENUE
Hardware and other		6,847			8,601			40,939			32,742			70,491			148,429
Services		1,105			3,440			2,803			11,174			15,804			9,337
		7,952			12,041			43,742			43,916			86,295			157,766
COST OF SALES
Hardware and other		5,549			7,794			32,790			25,672			58,991			123,641
Services		633			1,563			1,268			5,477			8,917			3,360
		6,182			9,357			34,058			31,149			67,908			127,001
Gross profit before inventory provisions (note 1)		1,770			2,684			9,684			12,767			18,387			30,765
		22.3%			22.3%			22.1%			29.1%			21.3%			19.5%
Inventory provision		367			3,181			1,187			953			4,416			2,771
Gross profit		1,403			(497	)		8,497			11,814			13,971			27,994
		17.6%			(4.1%	)		19.4%			26.9%			16.2%			17.7%
EXPENSES
Research and development		1,798			2,425			4,271			7,825			13,406			18,657
Selling and marketing		1,637			1,858			3,745			7,363			10,572			13,975
General and administrative		3,283			3,311			3,288			12,734			13,798			15,085
		6,718			7,594			11,304			27,922			37,776			47,717
Loss before other items		(5,315	)		(8,091	)		(2,807	)		(16,108	)		(23,805	)		(19,723	)
Other Expenses
Goodwill impairment		—			—			—			—			(11,927	)		—
Restructuring Costs		—			(130	)		—			—			(1,549	)		—
Amortization of deferred financing cost		(442	)		—			—			(442	)		—			—
Amortization of intangible assets		(87	)		(96	)		(207	)		(369	)		(577	)		(1,188	)
Accretion expense		(1	)		(37	)		(59	)		(102	)		(205	)		(168	)
Interest expense		(382	)		(424	)		(452	)		(1,464	)		(2,014	)		(1,557	)
Warrant issuance expenses		—			—			—			(561	)		—			(221	)
Change in fair value of warrant liability		2,470			(69	)		979			4,242			1,119			2,007
Gain on change in estimate		—			—			(234	)		—			—			67
Gain on sale of fixed assets		—			—			—			—			—			18
Foreign exchange gain (loss)		(31	)		(307	)		327			(110	)		(331	)		846
Loss before income taxes		(3,788	)		(9,154	)		(2,453	)		(14,914	)		(39,289	)		(19,919	)
Income tax expense		137			129			(330	)		783			2,275			717
Net Loss and comprehensive loss		(3,925	)		(9,283	)		(2,123	)		(15,697	)		(41,564	)		(20,636	)
Net loss (income) attributable to non- controlling interest		66			152			(145	)		(191	)		(740	)		(884	)
Net Loss attributable to shareholders		(3,859	)		(9,131	)		(2,268	)		(15,888	)		(42,304	)		(21,520	)
Basic & Diluted loss per share		(0.60	)		(3.02	)		(0.75	)		(3.26	)		(14.01	)		(7.90	)
Basic & Diluted weighted average shares outstanding		6,396,309			3,019,712			3,011,065			4,879,738			3,019,259			2,724,467

Note 1: Gross profit before inventory provisions is a non-GAAP financial measure. See "Use of Non-GAAP Performance Measures".

4

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        The principal differences between the three and twelve months ended February 28, 2017 and February 29, 2016 are explained as follows:

•

In the three and twelve months ended February 28, 2017 the most significant contributors to the decrease in revenue over the same period in the prior fiscal year were decreases in sales through the Nokia channel, decreases in hardware sales to a Tier 1 carrier in India and lower service revenue related to installations to a Tier 1 carrier in the United States.

•

Our gross profit percentage was higher during the three months ended February 28, 2017 compared to the same period in fiscal year 2016 because inventory provisions were lower in the fourth quarter of fiscal year 2017. Our gross profit percentage was also higher during the twelve months ended February 28, 2017 compared to the same period in fiscal year 2016 primarily because of a shift in customer mix.

•

Operating expenses in the three and twelve months ended February 28, 2017 were $0.9 million and $9.9 million lower than they were in the same periods in the previous year primarily as a result of restructuring initiatives taken in fiscal year 2016 which reduced the size of the staff internationally and cut spending on contractors and material purchased for the creation of prototypes.

        The principal differences between the three and twelve months ended February 28, 2017 and February 28, 2015 are explained as follows:

•

The reduction in revenue can be primarily attributed to reduced sales through the Nokia channel in addition to reduced sales to a Tier 1 carrier in India.

•

The gross profit percentage improved due to decreases in material costs and a change in customer mix with a less significant percentage of the total revenue coming from lower margin customers.

•

Operating expenses decreased primarily as a result of decreased spending across a number of areas, most significantly compensation related spending following the restructuring initiatives in fiscal year 2016.

5

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Consolidated Balance Sheet Data

	As at February 28, 2017			As at February 29, 2016
Assets
Current Assets
Cash and cash equivalents		4,073			4,277
Trade receivables		11,876			18,986
Inventory		21,415			22,702
Other current assets		1,791			2,777
		39,155			48,742
Long Term Assets
Property and equipment		2,517			3,702
Intangible assets		336			623
		2,853			4,325
Total Assets		42,008			53,067
Liabilities
Debt facility		17,030			22,152
Accounts payable and accrued liabilities		25,206			23,832
Deferred revenue		539			1,944
Deferred tax liability		148			294
Warrant liability		—			117
		42,923			48,339
Long Term Liabilities
Deferred revenue		435			498
Warrant liability		1,090			3
		1,525			501
Shareholders' equity (deficiency)
Capital stock		229,995			221,128
Contributed surplus		10,503			9,235
Deficit		(234,113	)		(218,225	)
Accumulated other comprehensive loss		(9,618	)		(9,618	)
Total Shareholder's equity (deficiency)		(3,233	)		2,520
Non-controlling interests		793			1,707
Total Equity		(2,440	)		4,227
Total Liabilities and Equity		42,008			53,067
Shares issued & outstanding		7,305,219			3,020,069

6

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

SELECTED CONSOLIDATED QUARTERLY FINANCIAL INFORMATION

        The following table sets out selected financial information for each of our most recently completed eight fiscal quarters. In the opinion of management, this information has been prepared on the same basis as our audited consolidated financial statements, and all necessary adjustments have been included in the amounts stated below to present fairly the unaudited quarterly results when read in conjunction with our consolidated financial statements and related notes.

        Historically, our financial results have fluctuated on a quarterly basis and we expect that quarterly financial results will continue to fluctuate in the future. The results of operations for interim periods should not be relied upon as an indication of the results to be expected or achieved in any future period or any fiscal year as a whole. Fluctuations in results reflect the project nature of network installations. In addition, results may vary as a result of staffing levels, infrastructure additions required to support our operations and material costs required to support design initiatives.

	FY16												FY17
	May 31 2015			Aug 31 2015			Nov 30 2015			Feb 29 2016			May 31 2016			Aug 31 2016			Nov 30 2016			Feb 28 2017
Revenue		26,340			26,917			20,997			12,041			12,545			13,230			10,189			7,952
Gross Profit before inventory provisions (Note 1)		5,844			4,715			5,144			2,684			3,892			4,222			2,883			1,770
Gross Profit %		22.2%			17.5%			24.5%			22.3%			31.0%			31.9%			28.3%			22.3%
Inventory provisions		295			730			210			3,181			—			365			221			367
Gross Profit after inventory provisions		5,549			3,985			4,934			(497	)		3,892			3,857			2,662			1,403
Gross Profit % after inventory provisions		21.1%			14.8%			23.5%			(4.1%	)		31.0%			29.2%			26.1%			17.6%
Operating Expenses		10,963			10,530			8,689			7,594			7,261			6,921			7,022			6,718
Loss before other items — (gross profit less operating expenses)		(5,414	)		(6,545	)		(3,755	)		(8,091	)		(3,369	)		(3,064	)		(4,360	)		(5,315	)
Loss for the period		(5,824	)		(20,703	)		(5,754	)		(9,283	)		(4,038	)		(3,120	)2		(4,614	)2		(3,925	)
Net loss per share
Basic and Diluted		(1.98	)		(7.00	)		(3.02	)		(3.02	)		(1.23	)		(0.82	)2		(0.80	)2		(0.60	)
Weighted average number of shares outstanding
Basic & Diluted		3,011,941			3,014,892			3,018,034			3,019,712			3,346,378			4,085,920			5,732,584			6,396,309
Total Assets		113,587			88,327			69,241			53,067			48,418			50,031			45,311			42,008

Note 1: Gross profit before inventory provisions is a non-GAAP financial measure. See "Use of Non-GAAP Performance Measures".

Note 2: The loss for the period and net loss per share in Q2 FY17 and Q3 FY17 have been restated due to a change in the valuation of the August 2016 warrant liability at issuance date. An additional gain of $0.6 million was recognized in Q2 FY17 and a $0.5 million loss was recognized in Q3 FY17.

Overview

        DragonWave is a leading provider of high-capacity packet microwave solutions that drive next-generation IP networks. DragonWave's carrier-grade point-to-point packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies, enterprises and other organizations to meet their increasing bandwidth requirements rapidly and affordably. The principal application of DragonWave's

7

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

products is mobile network backhaul. Additional applications include leased line replacement, last mile fiber extension and enterprise networks.

        We support product lines branded under the names Horizon, Avenue and Avenue Lite, Harmony and Harmony Lite, Harmony Eband, Harmony Enhanced and Harmony Enhanced MC. The key elements of our solutions include: high performance; carrier-grade availability; cost-competitiveness; support of legacy networking standards; and the availability of advanced network management and wireless network IP planning.

        The demand for our products is driven by global trends, including IP convergence and pressure on backhaul capacity caused by increased functionality of mobile devices, the shift in demand from voice to multimedia content and services, growing demand for wireless coverage, increasing number of subscribers, and investment in radio access network spectrum. In our target markets, network traffic is shifting from legacy TDM traffic to IP-based traffic to improve network efficiency and enable IP-based services. Principally, we target the global wireless communications service provider market and, in particular, those service providers offering high-capacity wireless communication services, including traditional cellular service providers and emerging broadband wireless access (BWA) service providers.

        We sell our products both directly and indirectly through our channel partners.

        Our direct customers are typically service providers that operate networks in large geographical areas. The sales cycle to this class of customer typically involves a trial (or trials), and typically requires twelve to eighteen months from first contact before orders are received, but can be longer, particularly in greenfield situations. Once the order stage is reached, a supply agreement is usually established and multiple orders are processed under one master supply agreement. Master supply agreements provide the framework for future business and do not generally include any volume commitments.

        Our channel partners are distributors, value-added resellers and OEMs including system integrators and network equipment vendors. In 2012, we acquired Nokia's microwave product line. Nokia rebrands our Harmony product as FlexiPacket. During the three and twelve months ended February 28, 2017, the Nokia channel accounted for 12% and 25% of our sales. See "Recent Developments — Nokia Sales Channel Update" below.

        We also have a 50.1% owned subsidiary, DragonWave HFCL India Private Limited ("DragonWave HFCL") to address the Indian market. Because we have a controlling interest in the subsidiary we consolidate its results. Our sales of services and locally sourced material in India flowed through DragonWave HFCL and accounted for $0.2 million and $3.6 million of our total revenue in the three and twelve months ended February 28, 2017.

        We outsource most of our manufacturing and certain elements of the supply chain management and distribution functions. Outsourcing these functions allows us to focus on designing, developing, selling and supporting our products. Our research and development expenses have historically been, and will continue to be, a significant portion of our overall cost structure as we will continue to invest in new product features and new platforms to better serve the current and future needs of our customers.

        Our industry is global and highly competitive. We face competition in our target markets from two types of microwave equipment suppliers: hybrid equipment suppliers (including NEC Corporation, Nokia, Ericsson and Huawei) and suppliers, like us, of Ethernet equipment (including SIAE Microelettronica, Ceragon Networks Ltd. and Aviat Networks, Inc.). We also face competition from full service network integrators such as Huawei, NEC Corporation, Nokia and Ericsson, who have developed competing Ethernet-based products for IP networks.

8

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        Our business priorities include: managing resources to minimize cash demands; strengthening our balance sheet; maintaining our global reach while focusing on key revenue growth areas; maintaining and growing our relationships with channel partners; building on customer wins; and building toward leadership in outdoor smallcell backhaul.

        Our primary operational objective is to achieve cash flow break-even and reduce our net losses. To this end, we plan to focus on revenue opportunities with higher gross margin potential and lower working capital requirements, at the same time as we control our operational expense spending in order to stay in line with our current revenue levels.

Recent Developments

Highlights of Our Financial Results

        The following are key points on our results of operations for the fiscal year ended February 28, 2017, compared to the same periods in the prior fiscal year:

•

Our revenue decreased by $4.1 million and $42.4 million when comparing the three and twelve month periods ended February 28, 2017 and the three and twelve month periods ended February 29, 2016. The decreases were driven most significantly by the decrease in sales through the Nokia sales channel.

•

When looking at revenue in the fourth quarter of fiscal year 2017 compared to the third quarter of the same fiscal year, the impact of the decrease in sales through the Nokia channel is still evident as identified below:

Three months ended November 30, 2016	10,189
Decrease in direct sales to Tier 1 carriers located in India	(577	)
Decrease in sales through Nokia Channel	(1,272	)
Increase in direct and indirect sales in North America	623
Increase in direct sales in Europe, Middle East & Africa	80
Decrease in direct sales to the Rest of World	(1,091	)
Total Change	(2,237	)
Three months ended February 28, 2017	7,952

•

Our gross profit percentage in the fourth quarter of fiscal year 2017 increased to 17.6% from (4.1%) in the fourth quarter of fiscal year 2016 and to 26.9% from 16.2% in the full year ended February 28, 2017 compared to the same twelve month period in the previous year. On a year to date basis, the improvement was driven by a decrease in the proportion of sales made through lower margin customers, a shift toward the sale of higher capacity products and lower inventory provisions.

•

Operating expenses decreased as well. The following table highlights the key factors contributing to lower operating expenses.

9

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

USD millions

	Q4 FY2017 vs. Q4 FY2016			YTD FY2017 vs YTD FY2016
Key Drivers:
Compensation related spending		(0.2	)		(2.1	)
Professional fees, contractor services and insurance costs		(0.4	)		(6.0	)
Travel & Living		—			(0.7	)
Material spending on prototypes and software and other costs		(0.3	)		(1.1	)
		(0.9	)		(9.9	)

Other items impacting net loss

•

In the twelve months ended February 28, 2017, we recorded warrant issuance expenses associated with both the August 2016 public offering and the April, 2016 registered direct offering of $0.6 million.

•

A fair value adjustment gain of $2.5 million and $4.2 million was realized during the three and twelve months ended February 28, 2017, respectively as a result of a change in the warrant valuation on the warrants outstanding from the equity offerings completed in August 2016, April 2016, August 2014 and September 2013.

•

Other items before taxes impacting the loss in the three and twelve months ended February 28, 2017 totaled $0.9 million and $2.4 million and included amortization of deferred financing cost, amortization of software assets, accretion expense, interest expense, and a foreign exchange loss.

•

In the three and twelve months ended February 28, 2017 we recognized a tax expense of $0.1 million and $0.8 million related to tax liabilities in regions in which we are profitable but do not have loss carry-forwards available.

•

The net loss attributable to shareholders was $3.9 million and $15.9 million for the three and twelve months ended February 28, 2017.

Highlights of financing activities

•

In the three and twelve months ended February 28, 2017, we repaid nil and $5.1 million on our line of credit. The outstanding debt balance was $17.0 million at February 28, 2017.

•

We completed an underwritten public offering on August 8, 2016. Under the terms of the offering, we issued and sold 1,823,880 Class A units at $3.35 and 30,164 Class B units at $3.34. Each Class A unit consisted of one common share, one five-year warrant (the "Long-Term Warrant") to purchase one common share and two six-month warrants (the "Short-Term Warrant"). Each Class B unit consisted of a pre-funded warrant (the "Pre-Funded Warrant") to purchase one common share, one Long-Term Warrant and two Short-Term Warrants. The Long-Term Warrants have an exercise price of $4.37 per share, are exercisable immediately and will expire on August 8, 2021. The Short-Term Warrants have an exercise price of $4.00 per share, are exercisable immediately and will expire on February 8, 2017. The Pre-Funded Warrants are exercisable immediately with no expiration date, are deemed purchased for a price of $3.34 per underlying common share by virtue of purchasing a Class B Unit and have an exercise price of $0.01 per share. The net proceeds of the offering, after expenses, were $5.5 million.

10

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

•

Our cash balance at February 28, 2017 was $4.1 million which represented a $0.2 million decrease from the cash balance at February 29, 2016.

Liquidity and Cash Resources

        The consolidated financial statements for the year ended February 28, 2017 have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and the disbursement of liabilities and commitments in the normal course of business in the foreseeable future. We have a history of losses and have consumed significant cash resources in the past, and have continued to do so in the year ended February 28, 2017. During the last two fiscal years, additional pressure has been placed on our liquidity position as a result of reduced revenue from a significant Original Equipment Manufacturer ("OEM") channel and a dispute over inventory shipped to a customer in India in June 2015.

        We have been able to make progress in restructuring the business. This progress includes the following highlights:

Operational improvements:

•

Selected by Sprint for our network densification and optimization strategy.

•

Improved the gross profit percentage in three and twelve months ended February 28, 2017 by 21.7% and by 10.7% respectively compared to the same periods in the prior fiscal year;

•

Reduced operating expenses by 11.5% and by 26.1% in the three and twelve months ended February 28, 2017 compared to the same periods in the previous year primarily through a reduction in staff levels internationally;

Debt Facility:

•

Reduced outstanding debt on our credit facility from a high of $32.8 million as at August 31, 2015 to $17.0 million as at February 28, 2017 by leveraging our working capital;

New Capital:

•

Raised $9.5 million in cash (net of commissions and expenses) with a public offering in August 2016 and a registered direct offering in April 2016, which in both cases included common shares and warrants;

•

Received $4.2 million in cash from the exercise of warrants during the twelve months ended February 28, 2017; and

Other:

•

Initiated arbitration proceedings to seek resolution to its customer dispute in India.

        Despite the progress identified above, we remain in breach of the original terms of its debt facility, and have not yet been able to achieve a quarterly break-even level. See Note 11 for further details on the debt facility. The continued consumption of cash has raised substantial doubt about our ability to continue as a going concern.

11

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Management's plans to restructure the business, improve our financial results and overcome these difficulties include initiatives in a number of areas, including:

•

Targeting our sales efforts to direct and indirect opportunities in markets with higher gross margins, and lower working capital requirements;

•

Adjusting our business focus and resources away from Nokia in order to support new sales channels;

•

Renegotiating the terms of existing debt facilities, or finding new debt providers;

•

Actively investigating and pursuing alternative forms of financing;

•

Seeking to reduce fixed and variable operating expenses further, by tightly controlling discretionary spending and headcount growth;

•

Continuing to collect accounts receivable from customers in a timely manner;

•

Reducing inventory levels in both raw material and finished goods inventory;

•

Working closely with vendors to ensure supply continuity; and

•

Investigating strategic and financial alternatives that may be available including a potential sale of the Company, alternative debt and equity, and business combinations.

        In addition, we no longer comply with Nasdaq Listing Rule 5550(b)(1) due to our failure to maintain a minimum of $2.5 million in shareholders' equity or any alternatives to such requirement, and we were granted an extension to April 17, 2017 to remedy the deficiency. We did not regain compliance but have requested a hearing before the Nasdaq Listing Qualifications Panel to seek a further extension. There can be no assurance that the Panel will ultimately grant an extension of the compliance period. Continued listing of its common shares on the Nasdaq increases our ability to raise additional capital in the future. Trading of our securities under the symbol "DRWI" on the Toronto Stock Exchange, our primary listing, is not impacted by this decision.

        These plans may be difficult to achieve. They are dependent on a number of key assumptions including the timing of significant new customer projects, success in arbitration with the customer located in India, and accommodations from our suppliers and credit lenders. It is possible that the plans described above may not be fully executed or may occur too slowly to solve our current liquidity concerns. There can be no assurance that the existing financing facility can be renegotiated or that any other forms of financing can be arranged on satisfactory terms. These consolidated financial statements do not include any adjustments to the accounts and classification of assets and liabilities that may be necessary if we are unable to continue as a going concern. Such adjustments could be material.

Recent Customer Wins and Product Traction

        We continue to believe that our recently designed products, including Harmony Enhanced MC, position us well to win business in the current wireless backhaul market which is driven by operational efficiency and increased capacity requirements. As evidence of the ability to win business, in fiscal year 2017 we announced that Sprint had selected our microwave backhaul equipment for network deployment as part of the company's densification and optimization strategy. We believe our product solutions coupled with our extensive experience with this customer will be beneficial as this deployment progresses. We believe that business interest and order activity surrounding our new product offerings provide evidence of the competitive strength of these products in the current microwave backhaul market. These new products, for example are fueling increased sales in the fourth quarter to distributors in the North American market.

12

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Notification Letter from the Nasdaq Stock Market

        In order to maintain our listing on NASDAQ, we are required to comply with NASDAQ requirements, which include, but are not limited to, maintaining a minimum shareholders' equity. In particular, we are required to maintain a minimum of $2.5 million in shareholders' equity pursuant to NASDAQ Listing Rule 5550(b)(1) ("the Listing Rule"). On October 21, 2016, we received a notice from NASDAQ notifying us that we no longer comply with the Listing Rule. On December 14, 2016, Listing Qualifications Staff of NASDAQ issued a letter granting us an extension until April 17, 2017 to regain compliance. On April 21, 2017 we announced that while we did not regain compliance by the end of the granted compliance period we would be filing an appeal of the Nasdaq Listing Qualification Staff determination to delist the Company's securities from the Nasdaq Stock Market. On April 25, 2017, NASDAQ provided us with a formal notice that the Panel would consider our appeal at an oral hearing. The hearing will be held on June 1, 2017.

Arbitration Process in India

        An arbitration process has been initiated with a customer in India, Bharti Airtel Limited, through an arbitral tribunal to resolve a dispute over the customer's payment for inventory (with a sale value of $4.7 million) shipped to this customer in June, 2015. The customer submitted a claim statement, which discloses an aggregate claim amount of approximately $6.4 million in respect of, among other things, damages claimed with respect to lost revenue, import duties, and inventory replacement costs. We believe that the claim has no merit. We do not believe that we will incur a loss related to this claim. As a result, we have not recognized any expense associated with this claim in our financial statements. We have booked the value of the inventory provided to Bharti as an asset with a cost of $4.6 million. We have not received any payment with respect to this inventory. We submitted a counter-claim in June 2016 for the full value of the contract and damages. Several arbitration meetings have been held to date. The timing on a final decision has not been defined. No decision has been made as of the date of this report and the outcome of this matter is not determinable.

Nokia Sales Channel Update

        Following Nokia's announced combination with Alcatel-Lucent, which has a vertically integrated microwave business unit, we announced that we have reshaped our channel strategy. Our revised strategy primarily positions our latest and new products directly to customers. Sales through the Nokia channel may continue for some time but are expected to occur at a rapidly diminishing level.

        We negotiated a termination fee with Nokia in 2013, valued at $8.7 million which was to be paid in installments by us to Nokia. At February 28, 2017 the liability is valued at $3.4 million (February 29, 2016 — $3.3 million). The increase in the valuation of the liability since February 29, 2016 relates to changes in the foreign exchange rates between the EURO and USD.

Expense Reduction Actions

        As part of an overall plan to decrease our operating expenses we have reduced our global workforce both through restructuring initiatives and through attrition. Since the beginning of fiscal year 2016 the workforce has declined by approximately 40%. Coupled with this staff reduction has been a significant decline in the number of external contractors used to fulfill R&D program requirements, particularly in China. Material spending for prototype development has also been severely curtailed. As a result of these initiatives operating expenses have declined $9.9 million between the twelve months of fiscal year 2017 and the same period in the prior fiscal year. On February 1, 2017 we presented an updated operating plan to our credit facility partners. The updated plan

13

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

reduces operating costs by 30%, in order to achieve cash flow break even at anticipated revenue and margin levels. We continue to define our appropriate cost structure in order to profitability support the business going forward and we will take the appropriate actions in fiscal year 2018 to realize that structure.

Debt Facility

        In light of our liquidity issues, our credit facility and our relationship with our lenders is a primary focus for us.

        We have an asset based credit facility with Comerica Bank and Export Development Canada. The original credit facility matured on June 1, 2016, however, we have been operating under a fourth forbearance agreement which expired on April 1, 2017. We have not yet come to agreement on a fifth forbearance agreement. We had drawn $17.0 million on the facility as at February 28, 2017 (February 29, 2016 — $22.2 million), and $1.8 million against our letter of credit facility (February 29, 2016 — $1.9 million). The original credit facility which matured on June 1, 2016 is secured by a first priority charge on all of our assets and our principal direct and indirect subsidiaries. The terms of the credit facility include other customary terms, conditions, covenants, representations and warranties. Credit availability is subject to ongoing compliance with borrowing covenants and short term assets on hand.

        The fourth forbearance agreement which was signed on October 12, 2016 identified new minimum covenant levels reflecting our revised financial plans. The forbearance agreement included a requirement to hold a minimum of $1.0 million at Comerica Bank, reduces the facility commitment from $40.0 million to $30.0 million, includes additional compliance requirements and implements more frequent monitoring. As part of this forbearance agreement, we agreed to issue warrants to purchase 375,000 common shares to the lenders at an exercise price of $4.00 per share. These warrants will expire five years from the date of issuance. We are in ongoing negotiations with our lending partners to put in place a new long term debt facility.

Strategic Review Process

        Our Board of Directors reviews our corporate strategy on an ongoing basis. The Board continues to review all strategic and financial alternatives that may be available, including a potential sale of the Company, debt or equity financing, business combinations, joint ventures and strategic alliances, and ways to optimize our stand alone plan. CIBC World Markets Inc. has been engaged since January, 2014 to assist in the analysis of our strategic alternatives. They continue to be engaged in this capacity. HC Wainwright has been engaged to investigate financing options, and recently represented us in the registered direct offering in April, 2016 and the underwritten public offering in August, 2016, and the registered direct offering in March, 2017. These offerings are discussed further below. We have recently engaged Alvarez & Marsal Canada Securities to provide consulting service in connection with a review of our strategic alternatives and to assist us with our assessment and management of our short term liquidity requirements and obligations in connection with our credit agreements.

Share Consolidation

        The Board of Directors effected a share consolidation on February 2, 2016 ("the Consolidation") on the basis of twenty-five (25) pre-Consolidation shares for one (1) post-Consolidation share. The Consolidation of our common shares was intended to establish the basis for the shares to trade above US$1.00, as per the listing requirements of the Nasdaq. The Consolidation reduced the number of outstanding common shares from approximately 75,493,513 to approximately 3,019,717. Each fractional share remaining after the share

14

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

consolidation was cancelled. The number of outstanding warrants, stock options and restricted share units were proportionately adjusted by the consolidation ratio and the exercise prices correspondingly increased by the same consolidation ratio. All shares and exercise prices are presented on a post-consolidation basis in our unaudited interim consolidated financial statements and in this MD&A.

Equity Offerings

        On March 17, 2017 we completed a Registered Direct Offering and a concurrent private placement to institutional investors in the United States. Under the terms of the offering, we issued and sold 1,198,666 Common Shares at $1.50 for aggregate gross proceeds of $1.79 million. The total net proceeds after deducting commission and expenses was $1.6 million. Concurrently in a private placement, we issued warrants to purchase 599,333 Common Shares at an exercise price of $1.50, which are not exercisable for six months and one day from issuance and which will expire five and a half years from the date of issuance.

        On August 8, 2016 we completed a public offering. Under the terms of the offering, we issued and sold 1,760,880 Class A units at $3.35 and 30,164 Class B units at $3.34, for aggregate gross proceeds of $6.0 million. Concurrent with the underwritten public offering in the United States, we issued an additional 63,000 Class A Units on a private placement basis to purchasers in Canada for additional gross proceeds of $0.2 million. The total net proceeds after deducting commission and expenses was $5.5 million. Each Class A unit consisted of one common share, one five-year warrant (the "Long-Term Warrant") to purchase one common share and two six-month warrants (the "Short-Term Warrant"). Each Class B unit consisted of a pre-funded warrant (the "Pre-Funded Warrant") to purchase one common share, one Long-Term Warrant and two Short-Term Warrants. The Long-Term Warrants have an exercise price of $4.37 per share, are exercisable immediately and will expire on August 8, 2021. The Short-Term Warrants have an exercise price of $4.00 per share, are exercisable immediately and will expire on February 8, 2017. The Pre-Funded Warrants are exercisable immediately with no expiration date, are deemed purchased for a price of $3.34 per underlying common share by virtue of purchasing a Class B Unit and have an exercise price of $0.01 per share.

        On April 11, 2016 we completed a registered direct offering. Under the offering, we issued 599,998 common shares and concurrently in a private placement issued warrants to purchase 299,999 common shares exercisable until April 11, 2021 at an exercise price of $8.50. The price per common share and one half of a warrant was $7.25 and resulted in total gross proceeds of $4.35 million. The net proceeds of the offering, after expenses, were $4.0 million. We expect that any exercise of the warrants will result in the cash proceeds from the exercise of such warrants being paid to us. Rodman & Renshaw, a unit of H.C. Wainwright & Co., LLC acted as the exclusive placement agent for the registered direct offering.

15

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Adjusted Cashflow from Operations/Adjusted EBITDA

Please note: Adjusted Cashflow from Operations/Adjusted EBITDA is a non-GAAP measure. See "Use of Non-GAAP Performance Measures".

	FY17 Q4			FY17 Q3			FY17 Q2			FY17 Q1			FY16 Q4
Revenue		7,952			10,189			13,230			12,545			12,041
Cost of Sales		6,549			7,527			9,373			8,653			12,538
Gross Profit		1,403			2,662			3,857			3,892			(497	)
		17.6	%		26.1	%		29.2	%		31.0	%		(4.1	)%
Add:
Inventory Provisions		367			221			365			—			3,181
Gross profit before inventory provisions (Note 1)		1,770			2,883			4,222			3,892			2,684
		22.3	%		28.3	%		31.9	%		31.0	%		22.3	%
Operating Expenses		6,718			7,022			6,921			7,261			7,594
Less:
Amortization		(444	)		(420	)		(458	)		(469	)		(467	)
Stock-based compensation		(187	)		(188	)		(160	)		(215	)		(210	)
		6,087			6,414			6,303			6,577			6,917
Adjusted Cashflow from Operations/Adjusted EBITDA		(4,317	)		(3,531	)		(2,081	)		(2,685	)		(4,233	)

Note 1: Gross profit before inventory provisions is a non-GAAP financial measure. See "Use of Non-GAAP Performance Measures".

Comparison of the three and twelve months ended February 28, 2017 and February 29, 2016

Revenue

	Three Months Ended							Twelve Months Ended
	February 28 2017		February 29 2016		Variance			February 28 2017		February 29 2016		Variance
	$		$		$			$		$		$
Hardware and other		6,847		8,601		(1,754	)		32,742		70,491		(37,749	)
Services		1,105		3,440		(2,335	)		11,174		15,804		(4,630	)
		7,952		12,041		(4,089	)		43,916		86,295		(42,379	)

        Hardware and other sales include both the microwave backhaul equipment shipped and the related software upgrades. The Services category includes software maintenance contracts, extended warranty programs and site planning and installation services. Hardware and related software sales revenue declined, primarily as a result of decreases in sales through the Nokia Channel. The change in services revenue relates to the timing of installation services contracts with Tier 1 carriers in both India and the United States.

        While revenue was down in the fourth quarter, a number of changes were observed which indicated that our increasing focus on direct business with higher margin customers and geographies is beginning to succeed. A new customer in the Middle East added positively to our revenue as did hardware sales to a Tier 1 customer in

16

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

the USA. While sales in North America were down on the year overall, the fourth quarter saw an increase in revenue as order activity from distributors increased. The significant impact of the decrease in sales through the Nokia channel following the acquisition of Alcatel-Lucent by Nokia is evident in the variance in both the fourth quarter of fiscal year 2017 and the twelve months ended February 28, 2017 compared to the same periods in the prior year.

	Three Months			Twelve Months
Services revenue for the period ended February 29, 2016		3,440			15,804
Tier 1 carrier in the United States		(837	)		(2,522	)
Tier 1 carrier and repair centre in India		(703	)		(1,450	)
Nokia		(611	)		(1,605	)
Warranty programs		(52	)		999
Other		(132	)		(52	)
Total Change		(2,335	)		(4,630	)
Services revenue for the period ended February 28, 2017		1,105			11,174

        Services revenue from installations with Tier1 carriers in both the United States and India declined in fiscal year 2017 as the installations were completed. Warranty and maintenance programs previously sold to Nokia also declined in keeping with the decline in the business overall.

        We analyze our sales according to geographic region, and target our product development strategy and the location of our sales and marketing resources according to where we believe opportunity exists. The table below displays this information for the three and twelve months ended February 28, 2017 and February 29, 2016.

	Three Months Ended							Twelve Months Ended
	Feb 28, 2017		Feb 29, 2016		Variance			Feb 28, 2017		Feb 29, 2016		Variance
Nokia Channel Sales		986		5,615		(4,629	)		11,130		37,622		(26,492	)
India		205		1,245		(1,040	)		4,391		13,993		(9,602	)
North America		4,003		2,335		1,668			15,909		21,832		(5,923	)
Europe, Middle East & Africa		1,337		1,357		(20	)		4,825		6,753		(1,928	)
Rest of World		1,421		1,489		(68	)		7,661		6,095		1,566
Total		7,952		12,041		(4,089	)		43,916		86,295		(42,379	)

17

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Gross Profit

	Three Months Ended								Twelve Months Ended
	February 28 2017		February 29 2016			Variance			February 28 2017		February 29 2016		Variance
	$		$			$			$		$		$
Gross Profit before inventory provisions		1,770		2,684			(914	)		12,767		18,387		(5,620	)
(Note 1)		22.3%		22.3%			0.0%			29.1%		21.3%		7.8%
Inventory provisions		367		3,181			(2,814	)		953		4,416		(3,463	)
Gross Profit		1,403		(497	)		1,900			11,814		13,971		(2,157	)
		17.6%		(4.1)%			21.8%			26.9%		16.2%		10.7%

Note 1: Gross profit before inventory provisions is a non-GAAP financial measure. See "Use of Non-GAAP Performance Measures".

        Our gross profit percentage improved during the three and twelve months ended February 28, 2017 compared to the same periods in the prior fiscal year. While there was no change in the gross profit before inventory provisions in the three months ended February 28, 2017 compared to the same period in the prior fiscal year, there was a 7.8% increase in the gross profit before inventory provisions in the twelve months ended February 28, 2017 compared to fiscal year 2016. This improvement relates primarily to a shift in both product and customer mix. Specifically, a less significant portion of our sales are flowing through OEM channels, which traditionally have a lower margin. In addition a lower percentage of our sales are being derived from shipments to low margin geographic regions like India. In fiscal year 2016 we recognized an inventory provision associated primarily with products traditionally sold through the Nokia channel which we impaired in light of the significant drop in demand through that OEM partner.

Expenses

Research and Development ("R&D")

Three Months Ended							Twelve Months Ended
February 28 2017		February 29 2016		Variance			February 28 2017		February 29 2016		Variance
$		$		$			$		$		$
	1,798		2,425		(627	)		7,825		13,406		(5,581	)

        R&D spending is lower as a result of decreased spending following restructuring activities that took place in fiscal year 2016. The reductions in staff took place primarily in the first half of that fiscal year. Not only has there been a significant reduction in the size of our R&D staff in both China and Canada but we have scaled back the number of programs we are working on. As a result, R&D contractor spending and materials spending for prototype development and software have both decreased as well.

18

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Changes to R&D Expense in USD Millions:

	Q4 FY2017 vs. Q4 FY2016			YTD FY2017 vs YTD FY2016
Key Drivers:
Compensation related spending — international staff levels down by approximately 50%		(0.2	)		(3.2	)
Professional fees, contractor services and government incentives in China		(0.1	)		(0.3	)
Material spending on prototypes and software and other costs		(0.3	)		(2.1	)
		(0.6	)		(5.6	)

Sales and Marketing ("S&M")

Three Months Ended			Twelve Months Ended
February 28 2017	February 29 2016	Variance	February 28 2017	February 29 2016	Variance
$	$	$	$	$	$
1,637	1,858	(221)	7,363	10,572	(3,209)

        The S&M organization, which includes marketing, product line management, customer service and sales was also impacted by staff reductions in fiscal year 2016. With the objective of reducing spending in the organization we reduced travel & living disbursements as well as professional and consulting fees.

Changes to S&M expense in USD Millions:

	Q4 FY2017 vs. Q4 FY2016			YTD FY2017 vs YTD FY2016
Key Drivers:
Compensation related spending; results primarily from global staff reductions in FY2016; overall the staff has been reduced by approximately 20 people		—			(1.8	)
Professional fees and contractor spending		(0.1	)		(0.7	)
Lower spending on customer demos and travel & living		(0.1	)		(0.7	)
		(0.2	)		(3.2	)

19

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

General and Administrative ("G&A")

	Three Months Ended									Twelve Months Ended
	February 28 2017			February 29 2016			Variance			February 28 2017			February 29 2016			Variance
	$			$			$			$			$			$
Breakdown by functional area:
Finance, human resources and executive office		1,352			1,358			(6	)		5,057			5,960			(903	)
Operations organization
Gross operations spending		1,990			2,138			(148	)		8,164			9,635			(1,471	)
Portion to be recovered through Cost of Sales		(293	)		(494	)		201			(1,576	)		(3,432	)		1,856
DragonWave HFCL spending		234			309			(75	)		1,089			1,635			(546	)
		3,283			3,311			(28	)		12,734			13,798			(1,064	)

        G&A expenses have decreased across all functional areas, however, as sales have declined the recovery of direct operations spending through Cost of Sales has also declined.

Changes to G&A Expenses in USD Millions:

	Q4 FY2017 vs. Q4 FY2016			YTD FY2017 vs YTD FY2016
Key Drivers:
Compensation related spending		—			(1.2	)
Professional fees and insurance costs		(0.1	)		(1.0	)
Travel & Living		—			(0.2	)
DragonWave HFCL spending		(0.1	)		(0.2	)
Warehousing costs and consumable materials		(0.1	)		(0.4	)
Operations spending not recovered through Cost of Sales (due to decreased volumes)		0.3			1.9
		—			(1.1	)

Goodwill Impairment

Three Months Ended			Twelve Months Ended
February 28 2017	February 29 2016	Variance	February 28 2017	February 29 2016	Variance
$	$	$	$	$	$
—	—	—	—	(11,927)	11,927

20

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        We recorded a non-cash impairment charge of $11.9 million in the second quarter of fiscal year 2016 after performing our annual goodwill impairment test which indicated the carrying value of the goodwill was fully impaired.

Restructuring Costs

Three Months Ended			Twelve Months Ended
February 28 2017	February 29 2016	Variance	February 28 2017	February 29 2016	Variance
$	$	$	$	$	$
—	130	(130)	—	1,549	(1,549)

        In September 2015 we implemented a restructuring plan which included a 23% reduction of the workforce across a variety of functional areas of the business. The restructuring plan impacted staff primarily in China and Canada and, to a lesser extent, other countries globally. Restructuring charges took the form of severance paid to employees. There are no outstanding liabilities related to these restructuring charges.

Amortization of Deferred Financing Cost

Three Months Ended			Twelve Months Ended
February 28 2017	February 29 2016	Variance	February 28 2017	February 29 2016	Variance
$	$	$	$	$	$
442	—	442	442	—	442

        On October 12, 2016 we signed a fourth forbearance agreement with our lenders which included the issuance of warrants. These warrants provide the lender the right to purchase within five years 375,000 common shares of DragonWave Inc. at a purchase price of $4.00 per common share. The expense associated with the warrant issuance was calculated using a Black-Scholes warrant pricing model and recognized ratably over the term of the forbearance agreement which expired on April 1, 2017. The $0.4 million in deferred financing cost relates to the portion of the expense associated with the time period between October 12, 2016 and February 28, 2017.

Amortization of Intangible Assets

Three Months Ended			Twelve Months Ended
February 28 2017	February 29 2016	Variance	February 28 2017	February 29 2016	Variance
$	$	$	$	$	$
87	96	(9)	369	577	(208)

        The amortization of software has decreased as the net book value of infrastructure systems software and computer software has declined.

21

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Accretion Expense

Three Months Ended			Twelve Months Ended
February 28 2017	February 29 2016	Variance	February 28 2017	February 29 2016	Variance
$	$	$	$	$	$
1	37	(36)	102	205	(103)

        During the three and twelve months ended February 28, 2017 we incurred accretion expenses associated with a termination liability in connection with the termination of a services agreement with Nokia discussed above under "Recent Developments — Nokia Sales Channel Update". The accretion expense in the three and twelve months ended February 29, 2016 includes both the accretion expense associated with the termination liability and the accretion expense associated with a capital lease.

Interest Expense

Three Months Ended			Twelve Months Ended
February 28 2017	February 29 2016	Variance	February 28 2017	February 29 2016	Variance
$	$	$	$	$	$
382	424	(42)	1,464	2,014	(550)

        Interest expense relates primarily to interest on our debt facility, this expense decreased in the three and twelve month period ending February 28, 2017 compared with the same periods in the prior year because the weighted average debt outstanding decreased between fiscal year 2017 and fiscal year 2016.

        During the three and twelve months ended February 28, 2017 the weighted average debt outstanding was $17.0 million and $17.9 million (three and twelve months ended February 29, 2016 — $23.7 million and $29.8 million). Interest rates vary with market rate fluctuations, with loans bearing interest in the range of 3% to 4% above the applicable base rates.

Warrant Issuance Expenses

Three Months Ended			Twelve Months Ended
February 28 2017	February 29 2016	Variance	February 28 2017	February 29 2016	Variance
$	$	$	$	$	$
—	—	—	561	—	561

        In April 2016 and August 2016 we completed equity offerings which included the issuance of warrants. Of the total equity issuance costs, a portion was attributed to the warrants specifically and expensed to our consolidated statement of operations for the twelve months ended February 28, 2017.

22

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Fair Value Adjustment — Warrant Liability

(Gain)

Three Months Ended			Twelve Months Ended
February 28 2017	February 29 2016	Variance	February 28 2017	February 29 2016	Variance
$	$	$	$	$	$
(2,470)	69	(2,539)	(4,242)	(1,119)	(3,123)

        The warrant liability is required to be presented at its estimated fair value as at each balance sheet date. Increases or decreases in fair value of the warrants are included as a component of other income in our consolidated statement of operations. The income for the three and twelve months ended February 28, 2017 related to the warrants which were issued pursuant to the offerings in August 2016, April 2016, August 2014 and September 2013.

Foreign Exchange (Gain) Loss

Three Months Ended			Twelve Months Ended
February 28 2017	February 29 2016	Variance	February 28 2017	February 29 2016	Variance
$	$	$	$	$	$
31	307	(276)	110	331	(221)

        The foreign exchange losses result from the translation of foreign denominated monetary accounts and the strength of the USD relative to foreign currencies. During the three and twelve months ended February 28, 2017 the most significant impact on the foreign exchange loss came from the translation of the foreign denominated liabilities to the USD.

Income Taxes Expense

Three Months Ended			Twelve Months Ended
February 28 2017	February 29 2016	Variance	February 28 2017	February 29 2016	Variance
$	$	$	$	$	$
137	129	8	783	2,275	(1,492)

        The tax expense in both the three and twelve months ended February 28, 2017 reflects the anticipated payment of cash taxes in India and in entities which perform services for DragonWave internationally including in China. As well, in the fourth quarter of fiscal year 2017 we paid $0.2 million in withholding taxes on a dividend paid by DragonWave HFCL.

        In the prior fiscal year the tax expense is comprised of two elements. An expense of $0.1 million and $0.7 million was recognized for the anticipated payment of cash taxes in the three and twelve months ended February 29, 2016 respectively. The second element relates to the creation of a valuation allowance. As of February 29, 2015 our deferred tax assets related to net operating loss carry-forwards in the United States. During the twelve months ended February 29, 2016 we recorded an increase in the valuation allowance of

23

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

$1.5 million as management believed it was more likely than not that the related deferred tax assets would not be realized. There are no deferred tax assets recorded as at either February 28, 2017 or February 29, 2016.

Use of Non-GAAP Performance Measures

"Gross profit before inventory provisions"

        In this MD&A we break out "Gross profit before inventory provisions" as this measure allows management to evaluate our operational performance and compare to prior periods more effectively. "Gross profit before inventory provisions" does not have any standardized meaning prescribed by GAAP, it is therefore unlikely to be comparable to similar measures presented by other issuers and is not designed to replace other measures of financial performance or the statement of operations as an indicator of performance. This measure should not be considered in isolation or as a substitute for other measures of performance calculated according to GAAP. We believe that it is useful to compare gross profit results without the impact of inventory provisions, since our inventory provisions generally relate to discontinuance of products. We believe this non-GAAP measure also provides investors with a better ability to understand our operational performance. We calculate "Gross profit before inventory provisions" consistently over each fiscal period.

        The most directly comparable GAAP measure presented in our consolidated interim financial statements for the three and twelve months ended February 28, 2017 to "Gross profit before inventory provisions" is "Gross profit".

"Adjusted Cashflow from Operations/Adjusted EBITDA"

        In this MD&A we also break out "Adjusted Cashflow from Operations" also called "Adjusted EBITDA". This measure corresponds to earnings before interest, taxes, depreciation and amortization less elements that are non-cash in nature. Because it omits non-cash items, we feel that Adjusted Cashflow from Operations/Adjusted EBITDA better represents the cash impact of the results of operations in the period. Adjusted Cashflow from Operations/Adjusted EBITDA does not have any standardized meaning prescribed by GAAP, and is not designed to replace other measures of financial performance or the statement of operations as an indicator of performance. This measure should not be considered in isolation or as a substitute for other measures of performance calculated according to GAAP. Consistent improvement in Adjusted Cashflow from Operations/Adjusted EBITDA is one of management's primary objectives. Reducing cash usage from drivers other than working capital and capital investments is an important objective for us and we believe this financial measure is therefore useful to investors in evaluating our operating performance.

        The most directly comparable GAAP measure presented in our consolidated interim financial statements for the three and twelve months ended February 28, 2017 to "Adjusted Cashflow from Operations/Adjustment EBITDA" is "Net Loss". A reconciliation of "Adjusted Cashflow from Operations/Adjusted EBITDA" to "Net Loss" is set out below.

24

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        Reconciliation of Adjusted Cashflow from Operations/Adjusted EBITDA to Net Loss:

	FY17 Q4			FY17 Q3			FY17 Q2			FY17 Q1			FY16 Q4
Adjusted Cashflow from Operations/Adjusted EBITDA		(4,317	)		(3,531	)		(2,081	)		(2,685	)		(4,233	)
Include the following items:
Stock-based compensation		(187	)		(188	)		(160	)		(215	)		(210	)
Inventory provisions		(367	)		(221	)		(365	)		—			(3,181	)
Amortization of Property, Plant and Equipment		(444	)		(420	)		(458	)		(469	)		(467	)
Amortization of deferred financing cost		(442	)
Amortization of intangible assets		(87	)		(98	)		(94	)		(90	)		(96	)
Accretion expense		(1	)		(33	)		(33	)		(35	)		(37	)
Restructuring expense		—			—			—			—			(130	)
Interest expense		(382	)		(346	)		(354	)		(382	)		(424	)
Warrant issuance expenses		—			—			(469	)		(92	)		—
Fair value adjustment — warrant liability		2,470			346			1,182			244			(69	)
Foreign exchange (loss)/gain		(31	)		141			(68	)		(152	)		(307	)
Income tax expense		(137	)		(264	)		(220	)		(162	)		(129	)
Net Loss		(3,925	)		(4,614	)		(3,120	)		(4,038	)		(9,283	)

Note 1: The loss for the period and net loss per share in Q2 FY17 and Q3 FY17 have been restated due to a change in the valuation of the August 2016 warrant liability at issuance date. An additional gain of $0.6 million was recognized in Q2 FY17 and a $0.5 million loss was recognized in Q3 FY17.

"Days Sales Outstanding excluding Tier 1 carrier in India"

        In this MD&A we break out "Days Sales Outstanding excluding Tier 1 carrier in India" as this measure allows management to evaluate our Days Sales Outstanding (DSO) performance and compare to prior periods absent the effect of the extended payment terms granted to this customer. "Days Sales Outstanding excluding Tier 1 carrier in India" does not have any standardized meaning prescribed by GAAP, it is therefore not comparable to similar measures presented by other issuers and is not designed to replace other measures of financial performance or the statement of operations as an indicator of performance. This measure should not be considered in isolation or as a substitute for other measures of performance calculated according to GAAP. We believe that it is useful to compare DSO results without the impact of extended payment terms granted to one customer, since these terms are not standard for us and are unlikely to be afforded to other customers. We believe this non-GAAP measure also provides investors with a better ability to understand our operational performance. The most directly comparable GAAP measure presented in our consolidated interim financial statements for the three and twelve months ended February 28, 2017 to "Days Sales Outstanding excluding Tier 1 carrier in India" is "Days Sales Outstanding".

25

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Liquidity and Capital Resources

        The following table sets out some of the key balance sheet metrics:

	As at February 28, 2017		As at February 29, 2016
Key Balance Sheet Amounts and Ratios:
Cash and Cash Equivalents	4,073		4,277
Working Capital	(3,768	)	403
Long Term Assets	2,853		4,325
Long Term Liabilities	1,518		501
Working Capital Ratio	0.9 : 1		1 : 1
Days Sales Outstanding in accounts receivable (Note 1)	111 days		114 days
Inventory Turnover	1.1 times		1.6 times

Note 1: Days Sales Outstanding in accounts receivable excluding a Tier 1 carrier in India at February 28, 2017 were 97 days (68 days at February 29, 2016). This is a non-GAAP measure. See "Use of Non-GAAP performance measures".

Cash and Cash Equivalents

        As at February 28, 2017, we had $4.1 million in Cash and Cash Equivalents ("Cash"), representing a $0.3 million decrease from the Cash balance at February 29, 2016.

26

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        The following table explains the change in Cash during the three and twelve months ended February 28, 2017.

	Three Months			Twelve Months
	February 28, 2017			February 28, 2017
Operating activities
Net loss		(3,925	)		(15,697	)
Items not affecting cash		(1,604	)		(820	)
Net loss excluding items not affecting cash		(5,529	)		(16,517	)
Working Capital Changes
Trade receivables		1,566			7,110
Inventory		671			1,287
Other current assets		226			986
Accounts payable and accrued liabilities		2,116			1,429
Deferred revenue and other long term liabilities		(29	)		(1,468	)
Changes in non-cash working capital items		4,550			9,344
Investing activities
Acquisition of property and equipment		(88	)		(606	)
Acquisition of intangible assets		(16	)		(82	)
		(104	)		(688	)
Financing activities — excluding debt repayment
Repayments on capital lease obligation		(11	)		(55	)
Dividend paid to non-controlling interest in DW-HFCL		(1,105	)		(1,105	)
Issuance of common shares and warrants net		1,752			14,053
		636			12,893
Effect of foreign exchange on cash and cash equivalents		34			(114	)
Cash (used)/generated before debt repayment		(413	)		4,918
Debt repayment		—			(5,122	)
Cash and cash equivalents at beginning of period		4,486			4,277
Cash and cash equivalents at end of period		4,073			4,073

        Key points associated with the Cash decrease include:

•

We utilized cash from operations during both the three and twelve month periods because we continue to operate in a net loss position;

•

Net working capital changes provided cash for the business in the three and twelve months ended February 28, 2017;

•

Investments in the acquisition of property and equipment as well as in software continue to be small;

27

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

•

We increased our cash resources through the exercise of warrants in the three months ended February 28, 2017 and through the issuance of common shares and warrants in the twelve months ended February 28, 2017; and,

•

We made debt repayments in fiscal year 2017 which depleted our cash resources.

•

DragonWave HFCL issued a dividend. Our cash balance decreased by the value of payment to HFCL and the associated taxes ($1.1 million).

Working Capital

Changes in working capital	November 30, 2016 to February 28, 2017			February 29, 2016 to February 28, 2017
Beginning working capital balance		466			403
Cash and cash equivalents		(413	)		(204	)
Trade receivables		(1,566	)		(7,110	)
Inventory		(671	)		(1,287	)
Other current assets		(226	)		(986	)
Debt facility		—			5,122
Accounts payable and accrued liabilities		(2,004	)		(1,374	)
Deferred revenue		78			1,405
Deferred tax liability		133			146
Warrant liability		435			117
Net change in working capital		(4,234	)		(4,171	)
Ending working capital balance		(3,768	)		(3,768	)

Trade Receivables

        Our trade receivables balance decreased by $7.1 million between February 29, 2016 and February 28, 2017 due to our continued collection efforts in the three and twelve months ended February 28, 2017 and lower sales. Our days sales outstanding performance improved from 114 days at February 29, 2016 to 111 days at February 28, 2017. Our allowance for doubtful accounts continues to represent a small percentage of our total trade receivables outstanding (February 28, 2017 — 1.8%; February 29, 2016 — 1.2%).

        As at February 28, 2017, three customers exceeded 10% of the total receivable balance. These customers represented 21%, 17% and 15% of the trade receivables balance (February 29, 2016 — two customers represented 52% and 16% of the trade receivables balance).

        Included in G&A expenses is a bad debt expense of $0.1 million for both the three and twelve month periods ended February 28, 2017 (three and twelve months ended February 29, 2016 — recovery of $0.2 million and expense of $0.2 million).

28

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Inventory

        The inventory balance decreased by $1.3 million relative to the closing balance at February 29, 2016. By product category the increases in inventory are as follows in USD millions:

Closing inventory February 29, 2016	22.7
Increase in Harmony Enhanced	2.9
Decrease in Horizon Compact Plus	(1.8	)
Decrease in Hub800	(0.9	)
Decrease in Quantum	(0.8	)
Decrease in inventory held for customer support & warranty	(0.7	)
Net Change in Inventory	(1.3	)
Ending inventory at February 28, 2017	21.4

        We use an outsourced manufacturing model in which most of the component acquisition and assembly of our products is executed by third parties. Our contract manufacturers currently have inventory intended for use in the production of our products, and we have purchase orders or demand forecasts in place for raw materials and manufactured products with these contract manufacturers. The gross value of the inventory held by the Company's primary contract manufacturer as at February 28, 2017 was $15.4 million (2016 — $18.7 million) and the Company had provisions on the balance sheet totaling $2.5 million (2016 — $1.9 million) related to inventory held by contract manufacturers that it does not expect to be fully used.

Accounts Payable and Accrued Liabilities

        The accounts payable and accrued liabilities balance decreased by $1.4 million between February 29, 2016 and February 28, 2017 primarily due to continued spending constraints. We continue to extend the payment terms with our vendors as we manage the business with limited cash resources.

Debt Facility

        We established an asset based credit facility with Comerica Bank and Export Development Canada which was extended on January 6, 2014 and matured on June 1, 2016. On October 12, 2016 we signed a forbearance agreement (our fourth) related to this credit facility, which expired on April 1, 2017. We have not yet agreed upon the terms of a fifth forbearance agreement. Under the fourth forbearance agreement we have been required to maintain a minimum of $1.0 million at Comerica Bank. In addition, this forbearance agreement reduced the facility commitment from $40.0 million to $30.0 million, included other compliance requirements and implemented more frequent monitoring. As well, warrants to purchase 375,000 common shares have been granted but not issued to the lenders at an exercise price of $4.00 per share. These warrants expire five years from the date of issuance. Using a Black-Scholes warrant pricing model we calculated a deferred financing cost of $0.5 million associated with these warrants. We are recognizing this expense ratably over the term of the forbearance agreement. As a result, $0.4 million of deferred financing cost was recognized as an expense in the three and twelve months ended February 2, 2017. We are working closely with our lenders to establish a new long term debt facility.

29

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        Over the past twelve month period, we have reduced the balance of the debt facility by $5.2 million from $22.2 million at February 29, 2016 to $17.0 million at February 28, 2017. (February 29, 2016 — $22.2 million) We also had $1.8 million outstanding against our letter of credit facility at February 28, 2017 (February 29, 2016 — $1.9 million).

        The credit facility is secured by a first priority charge on all of the assets of DragonWave Inc. and its principal direct and indirect subsidiaries. The terms of the credit facility include other customary terms, conditions, covenants, and representations and warranties. Borrowing options under the credit facility include US dollar, Canadian dollar, and Euro loans. Interest rates vary with market rate fluctuations, with loans bearing interest in the range of 3% to 4% above the applicable base rates. During the three and twelve months ended February 28, 2017 the weighted average debt outstanding was $17.0 million and $17.9 million (three and twelve months ended February 29, 2016 — $23.7 million and $29.8 million) and we recognized $0.3 million and $1.3 million in interest expense related to the debt facility (three and twelve months ended February 29, 2016 — $0.4 million and $2.0 million).

        We made no further payments on the debt facility between February 28, 2017 and the date of this MD&A.

Equity Offerings and Use of Proceeds

March 2017 Equity Offering

        On March 17, 2017, we issued 1,198,666 common shares in a Registered Direct Offering, and concurrently in a private placement, issued warrants to purchase 599,333 common shares exercisable in the future at an exercise price of $1.50. The price per common share and one half of a warrant was $1.50 and resulted in total gross proceeds of $1.8 million. The warrants are not exercisable for six months and one day from issuance and will expire five years from the date of issuance.

August 2016 Equity Offering

        On August 8, 2016 we completed a public offering. Under the terms of the offering, we issued and sold 1,760,880 Class A units at $3.35 and 30,164 Class B units at $3.34, for aggregate gross proceeds of $6.0 million. Concurrent with the underwritten public offering in the United States, we issued an additional 63,000 Class A Units on a private placement basis to purchasers in Canada for additional gross proceeds of $0.2 million. The total net proceeds after deducting commission and expenses was $5.5 million. Each Class A unit consisted of one common share, one five-year warrant (the "Long-Term Warrant") to purchase one common share and two six-month warrants (the "Short-Term Warrant"). Each Class B unit consisted of a pre-funded warrant (the "Pre-Funded Warrant") to purchase one common share, one Long-Term Warrant and two Short-Term Warrants. The Long-Term Warrants have an exercise price of $4.37 per share, are exercisable immediately and will expire on August 8, 2021. The Short-Term Warrants have an exercise price of $4.00 per share, are exercisable immediately and will expire on February 8, 2017. The Pre-Funded Warrants are exercisable immediately with no expiration date, are deemed purchased for a price of $3.34 per underlying common share by virtue of purchasing a Class B Unit and have an exercise price of $0.01 per share. Upon issuance, we recognized a liability in the amount of $4.7 million for the warrants.

Intended Use of Proceeds	Estimated Amount		Actual Use of Proceeds	Actual Amount		Variances
General corporate purposes		USD$5.5 million	General corporate purposes		USD$5.5 million	No variances

30

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

April 2016 Equity Offering

        On April 11, 2016, we issued 599,998 common shares in a registered direct offering, and concurrently in a private placement, issued warrants to purchase 299,999 common shares (the "2016 Warrants") exercisable at an exercise price of $8.50 until April 11, 2021 (the "April 2016 Equity Offering"). The price per common share and one half of a warrant was $7.25 and resulted in total gross proceeds of $4.4 million (net proceeds of $4.0 million). The proceeds from the April 2016 Equity Offering are expected to be used for general corporate purposes, which may include working capital, general and administrative expenses, capital expenditures and implementation of our strategic priorities.

        Upon issuance, we recognized a liability in the amount of $1.1 million for the April 2016 Warrants.

Intended Use of Proceeds	Estimated Amount		Actual Use of Proceeds	Actual Amount		Variances
General corporate purposes		USD$4.0 million	General corporate purposes		USD$4.0 million	No variances to date

2013 Equity Offering

        On September 23, 2013, pursuant to the public offering of units (the "2013 Equity Offering"), we issued 11,910,000 common shares and 8,932,500 warrants for proceeds, before deducting fees and expenses, of approximately $25.0 million. After deducting fees and expenses, we realized net proceeds of $22.4 million. The units were offered at a price of $2.10 per unit. Each unit consisted of one common share and three quarters of one warrant (each whole warrant a "2013 Warrant"). Each whole 2013 Warrant originally entitled the holder to purchase one common share at an exercise price of $2.70 per share until September 23, 2018, subject to certain adjustments. Subsequent to the Consolidation, 25 whole 2013 Warrants entitled the holder to purchase one common share at an exercise price of $32.50 per share. In connection with the August 2016 public offering, and pursuant to the terms of the 2013 Warrants, the exercise price of the 2013 Warrants was changed, such that 25 whole 2013 Warrants entitle the holder to purchase one common share at a price of $2.80 per share.

        As at September 23, 2013 we recognized a liability in the amount of $6.4 million for the 2013 Warrants.

Commitments as at February 28, 2017

        Future minimum operating lease payments as at February 28, 2017 per fiscal year relate to leases of office and warehouse space.

        They are as follows:

			Payment due by period (Figures are in thousands of USD)
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Total Operating Lease Obligations	$	4,459	$	1,074	$	1,820	$	1,565		—

        We are subject to claims and legal actions in the normal course of our business activities. We recognize a provision for estimated loss contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In management's opinion, adequate provisions have been made for all current and future claims.

31

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        In the normal course of business, we are subject to patent infringement complaints. We defend ourselves vigorously in these matters and do not believe any known complaint is material.

Outstanding Share Data

        Our common shares are listed on the Toronto Stock Exchange under the symbol DRWI and on the NASDAQ under the symbol DRWI.

        The following table shows common share activity in the three and twelve months ended February 28, 2017.

	Three months ended February 28, 2017		Twelve months ended February 28, 2017
Balance at the beginning of the period		6,104,008		3,020,069
Share issuance		—		2,423,878
Exercise of pre-funded warrants		—		30,164
Exercise of warrants		1,200,664		1,811,578
Exercise of options		—		18,220
Share issuance — ESPP		547		1,310
Balance at February 28, 2017		7,305,219		7,305,219

        The following is a summary of stock option activity:

	February 28, 2017					February 28, 2016
	Options			Weighted Average Exercise Price (CAD)		Options			Weighted Average Exercise Price (CAD)
Opening balance		276,728		$	32.82		159,421		$	76.34
Granted		324,895		$	4.36		172,974		$	8.64
Exercised		(18,220	)	$	3.05		—			—
Forfeited		(54,079	)	$	61.43		(55,667	)	$	82.34
Closing balance		529,324		$	13.45		276,728		$	32.82

        As at February 28, 2017 the following securities were issued and outstanding: 7,305,219 common shares, options to purchase 529,324 common shares granted under our Share Based Compensation Plan and 3,299,355 warrants exercisable for 2,559,855 common shares. The number of common shares issuable upon the exercise of the warrants is subject to adjustment in accordance with terms of the warrants.

        As of May 26, 2017 the following securities were issued and outstanding: 8,504,346 common shares, options to purchase 478,993 common shares granted under our Share Based Compensation Plan, and 3,898,688 warrants exercisable for 3,159,188 common shares. The number of common shares issuable upon the exercise of the warrants is subject to adjustment in accordance with terms of the warrants.

Restricted Shares & Employee Share Purchase Plan

        We launched an Employee Share Purchase Plan ("ESPP") on October 20, 2008. The plan includes provisions to allow employees to purchase common shares. We will match the employees' contribution at a rate

32

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

of 25%. During the three and twelve months ended February 28, 2017 a total of 438 and 1,051 common shares were purchased by employees at fair market value, while we issued 109 and 259 common shares as its matching contribution. The shares we contributed will vest twelve (12) months after issuance.

        We record an expense equal to the fair value of shares granted pursuant to the ESPP over the period the shares vest. The total fair value of the shares earned during the three and twelve months ended February 28, 2017 was nominal and $8 thousand (three and twelve months ended February 29, 2016 — $4 thousand and $13 thousand). The fair value of the unearned ESPP shares as at February 28, 2017 was $1 thousand (February 29, 2016 —  $8 thousand). The number of shares held for release, and still restricted under the ESPP at February 28, 2017 was 259 (February 29, 2016 — 978).

Restricted Share Units (RSUs)

        Pursuant to the terms of our Share Based Compensation Plan, we entered into restricted share unit agreements with certain of our independent directors. These units which were issued during July 2014 were subject to each director's continued engagement on the Board for a period of one year from the date of issuance. All of the originally issued RSU"s vested during the third quarter of fiscal year 2016 with the exception of 800 RSU's which were cancelled on April 14, 2015.

Off-Balance Sheet Arrangements

(Actual Dollars)

City	Country	Lessor	Lease Expiry	Cost per Month
Dubai	UAE	TECOM Investments FZ-LLC	November, 2017	$	3,450
Luxembourg City	Luxembourg	ME Business Solutions S.à r.l.	Month to Month	$	1,600
Ottawa (Warehouse & Operations at Terry Fox Drive + Office Space at 411 Legget Drive)	Canada	Kanata Research Park	November, 2016	$	74,400
Shanghai	China	Shanghai Lingang Economic	September, 2017	$	19,300
Gurgaon	India	Narinder Singh & Songs (P) LTD	March, 2018	$	4,300

        The leases listed above are arranged at market pricing levels in all jurisdictions and the lease periods listed above represent a commitment for the time period indicated. We cancelled the lease in Luxembourg City effective June, 2017.

        We use an outsourced manufacturing model in which most of the component acquisition and assembly of our products is executed by third parties. Generally, we provide the supplier with a purchase order 90 days in advance of expected delivery. We are responsible for the financial impact of any changes to the product requirements within this period. In some cases when a product has been purchased by a contract manufacturer but not pulled on for a build after a certain amount of time, we provide a deposit against that inventory, but do not take ownership of it.

        Our contract manufacturers currently have inventory intended for use in the production of our products, and we have purchase orders in place for raw materials and manufactured products with these contract manufacturers as well. All of this material is considered to be part of the normal production process and we take provisions against any portion of that inventory that we do not expect to be fully used based on current forecasts and projections. As mentioned previously, we would generally be responsible for the cost of the material

33

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

approved to be purchased on our behalf by our contract manufacturers should those forecasts or projections change.

        As at February 28, 2017, we have provisions totaling $2.7 million on inventory held by contract manufacturers that we do not expect to be fully used.

Financial Instruments

        Financial instruments are classified into one of the following categories: assets held at fair value, loans and receivables, other financial liabilities, or liabilities held at fair value.

Categories for financial assets and liabilities

        The following table summarizes the carrying values of our financial instruments:

	February 28, 2017		February 29, 2016
Assets held at fair value (A)		4,073		4,277
Loans and receivables (B)		12,071		19,110
Other financial liabilities (C)		41,201		44,434
Liabilities held at fair value (D)		1,090		120

(A)

Includes cash and cash equivalents

(B)

Includes trade receivables and other miscellaneous receivables

(C)

Includes accounts payable, accrued liabilities, payroll related accruals, debt facility and termination fee

(D)

Includes warrant liability

        We classify our fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The accounting standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The inputs fall into three levels that may be used to measure fair value.

        Level 1 — Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.

        Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

        Level 3 — Significant unobservable inputs which are supported by little or no market activity.

        Cash and cash equivalents are measured using Level 1 inputs.

        The warrant liability is classified as Level 3 as it is measured at fair value using significant unobservable inputs. Significant assumptions used at February 28, 2017 for the warrants include a dividend yield of 0%, volatility of 75%, and a risk free spot rate term structure.

34

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        We held the following Level 3 financial instruments carried at fair value on the consolidated balance sheet:

	February 28, 2017		February 29, 2016
	Level 3		Level 3
Financial Liabilities
Warrant liability		1,090		3

        A reconciliation of the Level 3 warrant liability measured at fair value for the three and twelve months ended February 28, 2017 follows:

	Level 3
	Warrants			$
Balance at February 29, 2016		2,088,750			3
Issuance of warrants		5,862,131			5,809
Exercise of warrants		(3,107,572	)		(527	)
Expiry of warrants and change in fair value of warrant liability		(1,950,516	)		(4,195	)
Balance at February 28, 2017		2,892,793			1,090

Interest rate risk

        Cash, cash equivalents and our debt facility, which has interest rates with market rate fluctuations, expose us to interest rate risk on these financial instruments. Net interest expense, excluding deferred financing costs, recognized during the three and twelve months ended February 28, 2017 was $0.4 million and $1.4 million on our cash, cash equivalents and debt facility (three and twelve months ended February 29, 2016 — expense of $0.4 million and $2.0 million).

Credit risk

        In addition to trade receivables and other receivables, we are exposed to credit risk on our cash and cash equivalents in the event that our counterparties do not meet their obligations. We do not use credit derivatives or similar instruments to mitigate this risk and, as such, the maximum exposure is the full carrying value or fair value of the financial instrument. We minimize credit risk on cash and cash equivalents by transacting with only reputable financial institutions and customers.

Foreign exchange risk

        Foreign exchange risk arises because of fluctuations in exchange rates. To mitigate exchange risk, we may utilize forward contracts to secure exchange rates with the objective of offsetting fluctuations in our operating expenses incurred in foreign currencies with gains or losses on the forward contracts. As at February 28, 2017 and February 29, 2016, we had no forward contracts in place. All foreign currency gains and losses related to forward contracts are included in foreign exchange gain (loss) in the consolidated statement of operations.

        As of February 28, 2017, if the U.S. dollar had appreciated 1% against all foreign currencies, with all other variables held constant, the impact of this foreign currency change on our foreign denominated financial instruments would have resulted in a $43 thousand decrease in after-tax net loss for the three and twelve months

35

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

ended February 28, 2017 (three and twelve months ended February 29, 2016 — increase of $27 thousand) with an equal and opposite effect if the U.S. dollar had depreciated 1% against all foreign currencies at February 28, 2017.

Economic Dependence

	Three Months Ended				Twelve Months Ended
	Feb. 28, 2017		Feb. 28, 2016		Feb. 28, 2017		Feb. 28, 2016
Nokia		12%		47%		25%		44%
Tier 1 Customer in USA		20%		11%		14%		11%
Tier 1 Customer in India		Less than 10%		Less than 10%		Less than 10%		15%
Carrier in Mexico		16%		Less than 10%		13%		Less than 10%

Controls and Procedures

        At the end of the period covered by this MD&A (such period being the three and twelve months ended February 28, 2017), an evaluation was carried out under the supervision of, and with the participation of, our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, which are our principal executive officer and principal financial officer, respectively, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based upon that evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective as at February 28, 2017 to give reasonable assurance that the information we are required to disclose in reports that we file or submit under the Exchange Act and/or applicable Canadian securities legislation is (i) recorded, processed, summarized and reported, within the time periods specified in the U.S. Securities and Exchange Commission's as well as in accordance with applicable Canadian securities legislation rules and forms, and (ii) accumulated and communicated to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

        Our management is also responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) as well as National Instrument 52-109 of the Canadian Securities Administrators. These controls are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes. Under the supervision and with the participation of our management, including our principal executive officer, our CEO, and principal financial officer, our CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective and that there are no material weaknesses in our disclosure controls and procedures as of February 28, 2017.

Changes in Internal Control over Financial Reporting

        During the period covered by this report, no changes occurred in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

36

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Critical Accounting Policies and Estimates

Inventory

        Inventory is valued at the lower of cost and net realizable value ("NRV"). The cost of inventory is calculated on a standard cost basis, which approximates average actual cost. NRV is determined as the market value for finished goods, replacement cost for raw materials, and finished goods market value less cost to complete for work in progress inventory.

        We regularly review inventory quantities on hand and record a provision for excess and obsolete inventory based on factors including our estimated forecast of product demand, the stage of the product life cycle and production requirements for the units in question.

        We carry inventory for the purposes of supporting our product warranty. Our standard warranty is typically between 13 and 36 months but we earn revenue by providing enhanced and extended warranty and repair service during and beyond the standard warranty period. Customer service inventory consists of both component parts and finished units. Indirect manufacturing costs and direct labour expenses are allocated systematically to the total production inventory.

Revenue recognition

        We derive revenue from the sale of broadband wireless backhaul equipment which includes embedded software and a license to use said software and extended product warranties. Software is considered to be incidental to the product. Services range from installation and training to basic consulting. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred and there are no significant remaining vendor obligations, collection of receivables is reasonably assured and the fee is fixed and determinable. Where conditions to final acceptance of the product are specified by the customer, revenue is deferred until acceptance criteria have been met.

        Our business agreements may also contain multiple elements. Accordingly, we are required to determine the appropriate accounting, including whether the deliverables specified in a multiple element arrangement should be treated as separate units of accounting for revenue recognition purposes, the fair value of these separate units of accounting and when to recognize revenue for each element. For arrangements involving multiple elements, we allocate revenues to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence ("VSOE") if available, third party evidence ("TPE") if VSOE is not available, or estimated selling price ("ESP") if neither VSOE nor TPE is available. In multiple element arrangements, revenues are allocated to each separate unit of accounting for each of the deliverables using the relative estimated selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. We have determined the selling price both for the undelivered items and the delivered items using ESP.

        We generate revenue through direct sales and sales to distributors. We defer the recognition of a portion of sales to distributors based on estimated sale returns and stock rotation granted to customers on products in the same period the related revenues are recorded. These estimates are based on historical sales returns, stock rotations and other known factors.

        Revenue associated with extended warranty and advanced replacement warranty is recognized ratably over the life of the contracted service.

37

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        Revenue from engineering services or development agreements is recognized according to the specific terms and acceptance criteria as services are rendered.

        We accrue estimated potential product liability as warranty costs when revenue on the sale of equipment is recognized. Warranty liability is estimated based on recent actual return experience and repair costs. Where product defects have been identified which would cause the cost or warranty experience to change, additional warranty costs are recognized.

        Shipping and handling costs borne by us are recorded in cost of sales. Shipping and handling costs charged to customers are recorded as revenue, if billed at the time of shipment. Costs charged to customers after delivery are recorded in cost of sales.

        We generate revenue through royalty agreements as a result of the use of our intellectual property. Royalty revenue is recognized as it is earned.

Advanced Replacement and Extended Warranty

        We offer our customers the option to purchase advanced replacement and extended warranty contracts either at the time the goods are shipped or at any time after shipment takes place. Many customers wait to purchase extended warranty coverage until their standard warranty period ends.

        Advanced replacement is a service we sell which provides customers with the benefit of having a replacement radio or modem shipped to them when a unit they own has been confirmed by us to be malfunctioning. When the customer receives the replacement radio or modem, they ship the malfunctioning unit back to us. We repair and keep the returned unit.

        Our standard warranty for customers generally varies between 12 and 36 months. Our extended warranty programs enable customers to continue to have repairs made as needed and customer support guidance beyond the standard warranty period.

Training

        We earn a minimal portion of our total revenue from the sale of training services primarily to installation companies. Only in rare circumstances do we provide or sub-contract installation services (see below), as the customers to whom we sell microwave equipment outsource the installation to specialized companies. As a result, installation training revenue is generally not sold as a bundled service because it is sold to a different customer base. Further, any training that is provided is not essential to the functionality of our product offerings, and is thus considered an insignificant deliverable to the overall arrangement and is not considered a separate unit of accounting.

Installation

        Periodically, a customer may request that we arrange for the installation of our equipment. Installations are performed by a third party service provider. In this case, a separate services agreement is created between us and the end-user of our equipment, and we sub-contract the installation to a qualified installer. Evidence that the revenue associated with the installation service represents the fair value of the offering is provided by the sub-contracted value of the installation.

38

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Research and Development

        Our research costs are expensed as incurred. Our development costs are expensed as incurred unless we meet generally accepted accounting criteria for deferral and amortization. Development costs incurred prior to establishment of technological feasibility do not meet these criteria, and are expensed as incurred.

Income taxes

        Income taxes are accounted for using the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based on differences between the tax and accounting bases of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes that are more likely than not to be realized. Deferred income tax assets and liabilities are measured using enacted tax rates that apply to taxable income in the years in which temporary differences are expected to be recovered or settled. We provide a valuation allowance against our deferred tax assets when we believe that it is more likely than not that the assets will not be realized.

        We determine whether it is more likely than not that an uncertain tax position will be sustained upon examination by the tax authorities. The tax benefit of any uncertain tax position that meets the more-likely-than-not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon successful resolution. To the extent a full benefit is not expected to be realized, an income tax liability is effectively established. We recognize accrued interest and penalties on unrecognized tax benefits as interest expense.

        We periodically review our provision for income taxes and valuation allowance to determine whether the overall tax estimates are reasonable. When we perform our quarterly assessments of the provision and valuation allowance, it may be determined that an adjustment is required. This adjustment may have a material impact on our financial position and results of operations.

FUTURE ACCOUNTING PRONOUNCEMENTS

        In May 2014, the Financial Accounting Standards Board ["FASB"] issued ASU No. 2014-9, "Revenue from Contracts with Customers". The amendments in this Update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and create new Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers. In August 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers" which reflects decisions reached by the FASB at its meeting earlier in the year to defer the effective date to fiscal years beginning after December 15, 2017, with early adoption permitted for the year beginning after December 15, 2016. We are currently assessing the impact this amendment will have on our consolidated financial statements.

        In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements — Going Concern". The update provides U.S. GAAP guidance on management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in this ASU are effective for reporting periods

39

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 28, 2017
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

beginning after December 15, 2016, with early adoption permitted. We are currently assessing the impact this amendment will have on our consolidated financial statements.

        In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes". The amendments in this update eliminate the current requirement for companies to separate deferred income tax liabilities and assets into current and non-current amounts in a classified statement of financial position. Instead, companies will be required to classify all deferred tax liabilities and assets as non-current. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, with early adoption is permitted. We do not expect the adoption of this amendment to have a material effect on our consolidated financial statements.

        In February 2016, the FASB issued ASU No. 2016-02, "Leases". The amendments in this Update create Topic 842, Leases, and supersede the lease requirements in Topic 840, Leases. The Update will require companies to recognize a right-of-use asset and a lease liability in their balance sheets, while still distinguishing between finance leases and operating leases. For finance leases, the lessee would recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income, and for operating leases, the lessee would recognize a straight-line lease expense. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. We are currently assessing the impact this amendment will have on our consolidated financial statements.

        In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting". The amendments in this Update simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, with early adoption permitted. We are currently assessing the impact this amendment will have on our consolidated financial statements.

        In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash". The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this amendment to have a material effect on its consolidated financial statements.

40

EX-15.2

Exhibit 15.2

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        The following is management's discussion and analysis ("MD&A") of DragonWave Inc.'s consolidated results of operations and financial condition for the three and twelve months ended February 29, 2016. This MD&A should be read in conjunction with our audited consolidated financial statements and corresponding notes for the three and twelve months ended February 29, 2016 and our Annual Information Form for the year ended February 29, 2016 (the "AIF") filed on SEDAR at www.sedar.com (SEDAR) and on EDGAR at www.sec.gov/edgar/searchedgar/companysearch.html (EDGAR). Our audited consolidated financial statements and corresponding notes for the three and twelve months ended February 29, 2016, as well as additional information about us, are available on SEDAR and EDGAR.

        Our audited consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (GAAP) and are reported in United States dollars (USD). The information contained in this MD&A is dated as of May 18, 2016 and is current to that date, unless otherwise stated. Our fiscal year commences on March 1 of each year and ends on the last day of February of the following year.

        In this document, unless the context requires otherwise, "we", "us", "our", the "Company" and "DragonWave" all refer to DragonWave Inc. collectively with its direct and indirect subsidiaries. The contents of this MD&A have been approved by our Board of Directors, on the recommendation of its Audit Committee.

        We refer to both Nokia Solutions and Networks and its predecessor business Nokia Siemens Networks as "Nokia" in this MD&A. Nokia is a trademark of Nokia Corporation or its affiliates.

        Unless otherwise indicated, all currency amounts referenced in this MD&A are denominated in USD.

Forward-Looking Statements

        This MD&A contains "forward-looking information" and "forward-looking statements" within the meaning of applicable Canadian and U.S. securities laws. All statements in this MD&A, other than statements that are reporting results or statements of historical fact, are forward-looking statements which involve assumptions and describe our future plans, strategies and expectations. Forward-looking statements are generally identifiable by use of the words "may", "will", "should", "continue", "expect", "anticipate", "estimate", "believe", "intend", "plan" or "project" or the negative of these words or other variations of these words or comparable terminology. Forward-looking statements include, without limitation, statements regarding: our cash resources and liquidity; our strategic plans and objectives; growth strategy; customer diversification and expansion initiatives; our expectations with respect to our relationships with channel partners; our expectations with respect to end-customer demand for our products; our expectations regarding the development of our target markets; and our plans, objectives and targets for operating cost reductions, revenue growth and margin performance. There can be no assurance that forward-looking statements will prove to be accurate and actual results or outcomes could differ materially from those expressed or implied in such statements. Important factors that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements are set forth in this MD&A under the heading "Risks and Uncertainties". Forward-looking statements are provided to assist external stakeholders in understanding management's expectations and plans relating to the future as of the date of this MD&A and may not be appropriate for other purposes. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements are made as of the date of this MD&A and we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent expressly required by law.

1

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Risks and Uncertainties

        We are exposed to risks and uncertainties in our business, including the risk factors set forth below:

•

limited cash resources and our dependence on our credit facilities and accommodations by our lenders and certain suppliers;

•

our reliance on a small number of customers for a large percentage of revenue;

•

our need for working capital will intensify if we are successful in winning new business;

•

intense competition from several competitors;

•

competition from indirect competitors;

•

our history of losses;

•

our ability to implement our ongoing program of operating cost reductions;

•

our dependence on our ability to develop new products, enhance existing products and execute product roll-outs on a basis that meets customer requirements;

•

our exposure to product warranty claims, and inventory and account receivables exposure in relation to recent product quality issues;

•

our ability to successfully manage our resources;

•

our dependence on our ability to manage our workforce and recruit and retain management and other qualified personnel;

•

quarterly revenue and operating results that are difficult to predict and can fluctuate substantially;

•

a lengthy and variable sales cycle;

•

our reliance on suppliers, including outsourced manufacturing, third party component suppliers and suppliers of outsourced services;

•

our ability to manage the risks related to increasingly complex engagements with channel partners and end-customers;

•

pressure on our pricing models from existing and potential customers and as a result of competition;

•

our exposure to credit risk for accounts receivable;

•

our dependence on the development and growth of the market for high-capacity wireless communications services;

•

the allocation of radio spectrum and regulatory approvals for our products;

•

the ability of our customers to secure a license for applicable radio spectrum;

•

changes in government regulation or industry standards that may limit the potential market for our products;

•

currency fluctuations;

2

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

•

our ability to protect our own intellectual property and potential harm to our business if we infringe the intellectual property rights of others;

•

risks associated with software licensed by us;

•

a change in our tax status or assessment by domestic or foreign tax authorities;

•

exposure to risks resulting from our international sales and operations, including the requirement to comply with export control and economic sanctions laws;

•

our exposure to potential product defects and product liability claims and health and safety risk relating to wireless products;

•

the impact that general economic weakness and volatility may be having on our customers; and

•

disruption resulting from economic and geopolitical uncertainty.

        Additional risks related specifically to our securities include:

•

risks associated with our outstanding warrants and the impact that the terms of such warrants have on our ability to raise capital and to undertake certain business transactions;

•

risks associated with our ability to raise additional capital;

•

large fluctuations in the trading price of our common shares;

•

our actual financial results may vary from our publicly disclosed forecasts;

•

expense and risks associated with being a U.S. public company and possible loss of our foreign private issuer status;

•

expense and risks associated with the loss of our ability to use the multi-jurisdictional disclosure system ("MJDS") adopted by the United States and Canada;

•

an investor may not be able to bring actions or enforce judgment against us and certain of our directors and officers;

•

we do not currently intend to pay dividends on our common shares;

•

tax consequences associated with an investment in our securities;

•

future sales of common shares by our existing shareholders could cause our share price to fall;

•

our management's broad discretion over the use of proceeds of financings; and

•

certain Canadian laws could prevent or deter a change of control.

        In our most recent fiscal year ended on February 29, 2016, approximately 44% of our sales were through the Nokia channel. Recent developments within Nokia, including Nokia's combination with Alcatel-Lucent, have resulted in our conclusion that new product sales through this channel are unlikely. See "Nokia Sales Channel Update".

        Also see the discussion under "Recent Developments-Liquidity Discussion" in this MD&A, as well as the discussion under "Risk Factors" contained in our most recently filed AIF.

3

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        Any of the risks referred to above could cause actual results or outcomes to differ materially from those discussed in forward-looking statements. Although we have attempted to identify important factors that could cause our actual results to differ materially from expectations, intentions, estimates or forecasts, there may be other factors that could cause our results to differ from what we currently anticipate, estimate or intend. Ongoing global economic uncertainty could impact forward-looking statements contained in this MD&A in an unpredictable and possibly detrimental manner. In light of these risks and uncertainties, the forward-looking events described in this MD&A might not occur or might not occur when stated.

Non-GAAP Performances Measures

        Readers are cautioned that this MD&A contains certain information that is not consistent with financial measures prescribed under GAAP. See discussion below under "Use of Non-GAAP Performance Measures".

4

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

SELECTED FINANCIAL INFORMATION

	Three Months Ended									Twelve Months Ended
	February 29, 2016			February 28, 2015			February 28, 2014			February 29, 2016			February 28, 2015			February 28, 2014
REVENUE
Hardware and other		8,601			41,654			16,228			71,393			150,432			84,960
Services		3,440			2,088			1,629			14,902			7,334			5,051
		12,041			43,742			17,857			86,295			157,766			90,011
COST OF SALES
Hardware and other		7,794			32,923			14,418			58,991			123,950			77,625
Services		1,563			1,135			324			8,917			3,051			645
		9,357			34,058			14,742			67,908			127,001			78,270
Gross profit before inventory provisions (note 1)		2,684			9,684			3,115			18,387			30,765			11,741
		22.3%			22.1%			17.4%			21.3%			19.5%			13.0%
Inventory provision		3,181			1,187			526			4,416			2,771			1,078
Gross profit		(497	)		8,497			2,589			13,971			27,994			10,663
		(4.1%	)		19.4%			14.5%			16.2%			17.7%			11.8%
EXPENSES
Research and development		2,425			4,271			4,863			13,406			18,657			19,948
Selling and marketing		1,858			3,745			3,165			10,572			13,975			13,201
General and administrative		3,311			3,288			3,762			13,798			15,085			17,087
		7,594			11,304			11,790			37,776			47,717			50,236
Loss before other items		(8,091	)		(2,807	)		(9,201	)		(23,805	)		(19,723	)		(39,573	)
Other Expenses
Goodwill impairment		—			—			—			(11,927	)		—			—
Restructuring costs		(130	)		—			—			(1,549	)		—			—
Amortization of intangible assets		(96	)		(207	)		(404	)		(577	)		(1,188	)		(1,900	)
Accretion expense		(37	)		(59	)		(48	)		(205	)		(168	)		(222	)
Interest expense		(424	)		(452	)		(440	)		(2,014	)		(1,557	)		(1,750	)
Warrant issuance expenses		—			—			—			—			(221	)		(662	)
Gain on change in estimate		—			(234	)		(553	)		—			67			2,759
Gain on contract amendment		—			—			—			—			—			5,702
Gain on sale of fixed assets		—			—			—			—			18			—
Fair value adjustment — warrant liability		(69	)		979			(352	)		1,119			2,007			3,235
Foreign exchange (loss) gain		(307	)		327			(311	)		(331	)		846			(1,530	)
Loss before income taxes		(9,154	)		(2,453	)		(11,309	)		(39,289	)		(19,919	)		(33,941	)
Income tax expense/(recovery)		129			(330	)		128			2,275			717			398
Net Loss		(9,283	)		(2,123	)		(11,437	)		(41,564	)		(20,636	)		(34,339	)
Net (income) loss attributable to non-controlling interest		152			(145	)		(162	)		(740	)		(884	)		97
Net Loss attributable to shareholders		(9,131	)		(2,268	)		(11,599	)		(42,304	)		(21,520	)		(34,242	)
Basic & Diluted loss per share		(3.02	)		(0.75	)		(17.86	)		(14.01	)		(7.90	)		(20.66	)
Basic & Diluted weighted average shares outstanding		3,019,712			3,011,065			1,521,744			3,019,259			2,724,469			1,657,535

Note 1: "Gross profit before inventory provisions" is a non-GAAP financial measure. See "Use of Non-GAAP Performance Measures".

5

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        The principal differences between the three and twelve months ended February 29, 2016 and February 28, 2015 are explained as follows:

•

Revenue changes between these two periods can be attributed to lower sales through all sales channels, most significantly through the Nokia channel. Higher services revenue in fiscal year 2016 relative to the prior year relates to installation services to tier 1 carriers in India and North America.

•

Before considering inventory provisions, our gross profit percentage increased by 1.8% in the twelve months ended February 29, 2016 when compared to the same period one year prior. A higher percentage of sales in fiscal year 2015 was made through both original equipment manufacturers (OEMs) channels and through a customer in India. These channels have inherently lower gross profit percentage levels than other sales channels.

•

The inventory provisions taken in fiscal year 2016 were higher in both the three and twelve months ended February 29, 2016 than they were in the same periods in the prior fiscal year. (Fourth quarter higher by $2.0 million; full year higher by $1.6 million) The increase was driven by the inventory provisions taken in fiscal year 2016 which related primarily to excess inventory.

•

Operating expenses were lower as a result of the steps taken to restructure the business in fiscal year 2016 in order to reduce spending. In addition, a weakened Canadian dollar ("CAD") reduced our USD-translated operating expenses in fiscal year 2016.

        The principal differences between the three and twelve months ended February 29, 2016 and February 28, 2014 are explained as follows:

•

Revenue was lower in fiscal year 2016 compared to fiscal year 2014 as a result of lower sales through most customer channels globally. Higher sales to India in fiscal year 2016 offset this downward trend. Services revenue in fiscal year 2016 was dominated by installation services to tier 1 carriers in India and North America. These installation contracts did not exist in fiscal year 2014.

•

Before considering inventory provisions, the gross profit percentage increased by 4.9% and 8.3% respectively between the fourth quarter and full fiscal year 2016 compared to the same periods two years prior. Improvements relate primarily to material cost improvements since fiscal year 2014 which have resulted in improved gross profit percentages.

•

Inventory provisions were $2.7 million higher in the fourth quarter, and $3.3 million higher for the fiscal year 2016 than they were in the same periods in fiscal year 2014. Inventory provisions were taken in fiscal year 2016 to reflect the continued evolution of the product portfolio and the risk of excess inventory as a result of the change in the relationship with Nokia.

•

Operating expenses were $4.2 million and $12.5 million lower respectively in the three and twelve months ended February 29, 2016 than they were in the same periods two years prior. This reduction is primarily the result of lower compensation related spending following global restructuring activities in fiscal year 2016 and lower depreciation levels as well. A weakened CAD also reduced our USD-translated operating expenses in fiscal year 2016.

6

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Consolidated Balance Sheet Data

	As at February 29, 2016			As at February 28, 2015
Assets
Current Assets
Cash and cash equivalents		4,277			23,692
Trade receivables		18,986			48,626
Inventory		22,702			24,294
Other current assets		2,777			5,895
		48,742			102,507
Long Term Assets
Property and equipment		3,702			4,322
Deferred tax asset		—			1,485
Deferred financing cost		—			18
Intangible assets		623			794
Goodwill		—			11,927
		4,325			18,546
Total Assets		53,067			121,053
Liabilities
Debt facility		22,152
Accounts payable and accrued liabilities		23,557			40,677
Deferred revenue		1,944			830
Deferred tax liability		294			—
Warrant liability		117			—
		48,064			41,507
Long Term Liabilities
Debt facility		—			32,400
Other long term liabilities		773			1,139
Warrant liability		3			1,239
		776			34,778
Shareholders' equity
Capital stock		221,128			220,952
Contributed surplus		9,235			8,388
Deficit		(218,225	)		(175,921	)
Accumulated other comprehensive loss		(9,618	)		(9,618	)
Total Shareholder's equity		2,520			43,801
Non-controlling interests		1,707			967
Total Equity		4,227			44,768
Total Liabilities and Equity		53,067			121,053
Shares issued & outstanding		3,020,069			3,011,632

7

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

SELECTED CONSOLIDATED QUARTERLY FINANCIAL INFORMATION

        The following table sets out selected financial information for each of our most recently completed eight fiscal quarters. In the opinion of management, this information has been prepared on the same basis as our audited consolidated financial statements, and all necessary adjustments have been included in the amounts stated below to present fairly the unaudited quarterly results when read in conjunction with our consolidated financial statements and related notes.

        Historically, our financial results have fluctuated on a quarterly basis and we expect that quarterly financial results will continue to fluctuate in the future. The results of operations for interim periods should not be relied upon as an indication of the results to be expected or achieved in any future period or any fiscal year as a whole. Fluctuations in results reflect the project nature of network installations. In addition, results may vary as a result of staffing levels, infrastructure additions required to support our operations and material costs required to support design initiatives.

	FY15												FY16
	May 31 2014			Aug 31 2014			Nov 30 2014			Feb 28 2015			May 31 2015			Aug 31 2015			Nov 30 2015			Feb 29 2016
Revenue		28,771			37,933			47,320			43,742			26,340			26,917			20,997			12,041
Gross Profit before inventory provisions (note 1)		5,976			7,116			7,990			9,684			5,844			4,715			5,144			2,684
Gross Profit %		20.8%			18.8%			16.9%			22.1%			22.2%			17.5%			24.5%			22.3%
Inventory provisions		90			1,223			272			1,187			295			730			210			3,181
Gross Profit after inventory provisions		5,886			5,893			7,718			8,497			5,549			3,985			4,934			(497	)
Gross Profit % after inventory provisions		20.5%			15.5%			16.3%			19.4%			21.1%			14.8%			23.5%			(4.1%	)
Operating Expenses		12,056			12,165			12,192			11,304			10,963			10,530			8,689			7,594
Loss before other items — (gross profit less operating expenses)		(6,170	)		(6,272	)		(4,474	)		(2,807	)		(5,414	)		(6,545	)		(3,755	)		(8,091	)
Loss for the period		(6,667	)		(8,410	)		(3,436	)		(2,123	)		(5,824	)		(20,703	)		(5,754	)		(9,283	)
Net loss per share
Basic and Diluted		(2.75	)		(3.50	)		(1.25	)		(0.75	)		(1.98	)		(7.00	)		(2.07	)		(3.02	)
Weighted average number of shares outstanding
Basic & Diluted		2,327,766			2,555,762			3,010,178			3,011,065			3,011,941			3,014,892			3,018,034			3,019,712
Total Assets		86,130			110,597			120,291			121,053			113,587			88,327			69,241			53,067

Note 1: Gross profit before inventory provisions is a non-GAAP financial measure. See "Use of Non-GAAP Performance Measures".

Overview

        DragonWave is a leading provider of high-capacity packet microwave solutions that drive next-generation IP networks. DragonWave's carrier-grade point-to-point packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies, enterprises and other organizations to meet their increasing bandwidth requirements rapidly and affordably. The principal application of DragonWave's products is mobile network backhaul. Additional applications include leased line replacement, last mile fiber extension and enterprise networks.

8

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        We support product lines branded under the names Horizon, Avenue and Avenue Lite, Harmony and Harmony Lite, Harmony Eband and Harmony Enhanced. The key elements of our solutions include: high performance; carrier-grade availability; cost-competitiveness; support of legacy networking standards; and the availability of advanced network management and wireless network IP planning.

        The demand for our products is driven by global trends, including IP convergence and pressure on backhaul capacity caused by increased functionality of mobile devices, the shift in demand from voice to multimedia content and services, growing demand for wireless coverage, increasing number of subscribers, and investment in radio access network spectrum. In our target markets, network traffic is shifting from legacy TDM traffic to IP-based traffic to improve network efficiency and enable IP-based services. Principally, we target the global wireless communications service provider market and, in particular, those service providers offering high-capacity wireless communication services, including traditional cellular service providers and emerging broadband wireless access (BWA) service providers.

        We sell our products both directly and indirectly through our channel partners.

        Our direct customers are typically service providers that operate networks in large geographical areas. The sales cycle to this class of customer typically involves a trial (or trials), and typically requires twelve to eighteen months from first contact before orders are received, but can be longer, particularly in greenfield situations. Once the order stage is reached, a supply agreement is usually established and multiple orders are processed under one master supply agreement. Master supply agreements provide the framework for future business and do not generally include any volume commitments.

        Our channel partners are distributors, value-added resellers and OEMs including system integrators and network equipment vendors. In 2012, we acquired Nokia's microwave product line. Nokia rebrands our Harmony product as FlexiPacket. During the three and twelve months ended February 29, 2016, the Nokia channel accounted for 47% and 44% respectively of our sales. See "Relationship with Nokia" below.

        We also have a 50.1% owned subsidiary, DragonWave HFCL India Private Limited ("DragonWave HFCL") to address the Indian market. Because we have a controlling interest in the subsidiary we consolidate its results. Our sales of services and locally sourced material in India flowed through DragonWave HFCL and accounted for $1.6 million and $10.1 million of our total revenue in the three and twelve months ended February 29, 2016.

        We outsource most of our manufacturing and certain elements of the supply chain management and distribution functions. Outsourcing these functions allows us to focus on designing, developing, selling and supporting our products. Our research and development expenses have historically been, and will continue to be, a significant portion of our overall cost structure as we will continue to invest in new product features and new platforms to better serve the current and future needs of our customers.

        Our industry is global and highly competitive. We face competition in our target markets from two types of microwave equipment suppliers: hybrid equipment suppliers (including NEC Corporation, Alcatel-Lucent (recently acquired by Nokia), Ericsson and Huawei) and suppliers, like us, of Ethernet equipment (including SIAE Microelettronica, Ceragon Networks Ltd. and Aviat Networks, Inc.). We also face competition from full service network integrators such as Huawei, NEC Corporation, Alcatel-Lucent (recently acquired by Nokia) and Ericsson, who have developed competing Ethernet-based products for IP networks.

        Our business priorities include: managing resources to minimize cash demands; strengthening our balance sheet; maintaining our global reach while focusing on key revenue growth areas; maintaining and growing our

9

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

relationships with channel partners; building on customer wins; and building toward leadership in outdoor smallcell backhaul.

        Our primary operational objective is to achieve cash flow break-even and reduce our net losses. To this end, we plan to focus on revenue opportunities with higher gross margin potential and lower working capital requirements, at the same time as we restructure the size of the organization to stay in line with our current revenue levels and geographic focus.

Recent Developments

Highlights of Our Financial Results

        The following are key points on our results of operations for the fourth quarter and full year ended February 29, 2016, compared to the same periods in the prior fiscal year:

•

Our revenue decreased by $31.7 million when comparing the three month periods ended February 29, 2016 and February 28, 2015. When comparing the twelve month periods, revenue decreased by $71.5 million between fiscal year 2015 and fiscal year 2016.

	Three months period			Twelve months ended
Revenue ended February 28, 2015		43,742			157,766
Decrease in sales through Nokia Channel		(14,681	)		(46,665	)
Decrease in direct sales to a Tier 1 carrier located in India		(6,065	)		(12,298	)
Decrease in direct and indirect sales in North America		(7,229	)		(5,977	)
Decrease in direct sales in Europe, Middle East & Africa		(3,790	)		(5,801	)
Other		64			(730	)
Total Change		(31,701	)		(71,471	)
Revenue ended February 29, 2015	$	12,041		$	86,295

•

Our gross profit percentage, before inventory provisions, in the fourth quarter of fiscal year 2016 remained consistent with the same period in the prior year despite the significant decline in revenue. The gross profit percentage, before inventory provisions, improved to 21.3% in the twelve months ended February 29, 2016 from 19.5% for the same twelve month period in the prior year. A change in customer and product mix has driven this improvement.

•

Operating expenses decreased as well. The following table highlights the key factors contributing to lower operating expenses.

10

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

	Q4 FY2016 vs. Q4 FY2015			YTD FY2016 vs. YTD FY2015
Key Drivers:
Compensation related spending		(2.7	)		(3.6	)
Travel & living		(0.4	)		(1.3	)
Material spending on prototypes & tooling costs		0.1			(1.2	)
Contractor and professional services spending		(0.3	)		(0.6	)
Depreciation		—			(0.4	)
DragonWave HFCL (India) spending		0.2			0.4
Foreign exchange benefit to operating expenses of translating Canadian dollar expenses to USD		(0.6	)		(3.2	)
(as the Canadian dollar has weakened our USD translated expenses have decreased)		(3.7	)		(9.9	)

•

We recorded a restructuring expense in the amount of $0.1 million and $1.5 million respectively in the three and twelve months ended February 29, 2016 related to staff reductions which took place in the third quarter of fiscal year 2016.

•

We recorded a non-cash impairment charge of $11.9 million in the three months ended August 31, 2015 after performing our annual goodwill impairment test. This adjustment is reflected in the twelve months ended February 29, 2016.

•

A fair value adjustment gain of $1.1 million was realized during the twelve months ended February 29, 2016, as a result of a change in the warrant valuation on the remaining warrants outstanding from the public equity offerings completed in September 2013 and August 2014. A small loss of $0.1 million was recognized in the three months ended February 29, 2016 as the warrant valuation increased during this period.

•

Other items before taxes impacting the loss in the fourth quarter and during the twelve months ended February 29, 2016 totaled $0.9 million and $3.1 million, respectively, and included amortization of software assets, accretion expense, interest expense, and a foreign exchange loss.

•

In the three and twelve months ended February 29, 2016 we recognized a tax expense of $0.1 million and $2.3 million respectively. The tax expense was comprised of an increase in a valuation allowance on a deferred tax asset related to net operating loss carry-forwards in the United States in the amount of $1.6 million, (recognized in the second quarter of fiscal year 2016), a tax expense associated with taxes owing in profitable jurisdictions (fourth quarter of fiscal year 2016 — $0.1 million; full fiscal year 2016 — $0.4 million) and a deferred tax liability in the amount of $0.3 million related to income in India (recognized in the fourth quarter of fiscal year 2016).

•

The net loss applicable to shareholders was $9.1 million and $42.3 million, respectively, for the three and twelve months ended February 29, 2016.

•

In the three months ended February 29, 2016, we repaid $4.5 million on our line of credit which decreased the outstanding debt balance to $22.2 million. Before the debt repayment we generated cash of $0.9 million during this period primarily as a result of our receivable collection efforts. Our ending cash position at February 29, 2016 was $4.3 million.

11

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

•

We repaid a further $3.3 million between March 1, 2016 and the date of this MD&A. As at May 18, 2016 the balance of our outstanding debt is $18.9 million.

Liquidity and Cash Resources

        The consolidated financial statements for the year ended February 29, 2016 have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and the disbursement of liabilities and commitments in the normal course of business in the foreseeable future. We have a history of losses and we have consumed significant cash resources in the past, and we have continued to do so in the year ended February 29, 2016. Recently, we have experienced additional liquidity pressure as a result of reduced revenue from a significant OEM channel and a dispute over inventory shipped to a customer in India in June 2015.

        We have been able to make progress in restructuring the business. This progress includes the following highlights:

•

Reduced operating expenses by 33% in the fourth quarter of fiscal year 2016 compared to the same period in the previous fiscal year primarily through a reduction in staff levels;

•

Raised $4.4 million in equity in an offering completed on April 11, 2016;

•

Reduced outstanding debt on our credit facility by $10.2 million between February 28, 2015 and February 29, 2016 by leveraging our working capital;

•

Negotiated forbearance terms with our credit facility partners; and

•

Engagement in arbitration proceedings to seek resolution to our customer dispute in India.

        Despite the progress identified above, we remain in breach of the terms of our debt facility and we are currently operating under our second forbearance period pursuant to the terms of a forbearance agreement which expires on May 18, 2016. No long term debt facility agreement has been reached. The continued consumption of cash has raised substantial doubt about our ability to continue as a going concern. Our plans to restructure the business and overcome these difficulties include initiatives in a number of areas including:

•

Targeting our sales efforts to direct and indirect opportunities in markets with higher gross margins, and lower working capital requirements;

•

Adjusting our business focus and resources away from Nokia in order to support new sales channels;

•

Renegotiating the terms of existing debt facilities;

•

Continuing to minimize fixed and variable operating expenses, by tightly controlling discretionary spending and headcount growth;

•

Actively investigating and pursuing alternative forms of financing;

•

Reducing inventory levels in both raw material and finished goods inventory; and

•

Working closely with vendors to ensure supply continuity.

        These plans may be difficult to achieve. They are dependent on a number of key assumptions including the timing of significant new customer projects, and success in arbitration with the customer located in India. It is possible that the plans described above may not be fully executed or may occur too slowly to solve our current

12

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

liquidity concerns. There can be no assurance that the existing financing facility can be renegotiated or that any other forms of financing can be arranged on satisfactory terms. These consolidated financial statements do not include any adjustments to the accounts and classification of assets and liabilities that may be necessary if we are unable to continue as a going concern. Such adjustments could be material.

Expense Reduction Actions

        As part of an overall plan to decrease our operating expenses we reduced our global workforce early in the third quarter of fiscal year 2016 by approximately 23%. The reductions impacted our Shanghai design center as well as a number of sales and customer support centers around the world. Staff changes also occurred across a variety of functional areas in Canada. We recognized a restructuring expense of $0.1 million and $1.5 million in the fourth quarter and full year of fiscal 2016 respectively. Approximately $0.3 million of that amount remains as a liability on the balance sheet at February 29, 2016. It is expected that the reduction in staff will enable us to reduce operating expenses by approximately $7.0 million annually.

Arbitration Process in India

        In January 2016, a customer in India initiated an arbitration process with us to resolve the dispute over inventory shipped to them in June 2015. The value of the inventory shipped is $4.7 million. The customer has submitted their claim statement which we feel has no merit. We will submit a counter-claim for the material shipped, orders cancelled and other damages in June 2016. The arbitration hearing is set for July, 2016. As of the date of this MD&A, the outcome of this matter is not determinable.

Nokia Sales Channel Update

        Following Nokia's announced combination with Alcatel-Lucent, which has a vertically integrated microwave business unit, we announced that we have reshaped our channel strategy. Our revised strategy primarily positions our latest and new products directly to customers. We will continue to provide software maintenance and level 3 hardware support to Nokia for the large installed base of network elements deployed by both our Company and Nokia to date. In addition, we expect to sell the Harmony FlexiPacket Multiradio (Harmony Radio) product family and legacy products through the Nokia channel to customers who wish to continue with this platform, although we do expect these sales levels to decrease over time. To facilitate these ongoing activities, our global framework agreements will continue in place.

Debt Facility

        In light of our liquidity issues, our credit facility and our relationship with our lenders is a primary focus for us.

        We have an existing credit facility with Comerica Bank and Export Development Canada which is an asset based credit facility and was structured for a total of $40.0 million plus $4.0 million for letters of credit and foreign exchange facilities. We had drawn $22.2 million on the facility as at February 29, 2016 (February 28, 2015 — $32.4 million), and $1.9 million against our letter of credit facility (February 28, 2015 — $1.9 million). The credit facility which was extended on January 6, 2014, matures on June 1, 2016 and is secured by a first priority charge on all of our assets and our principal direct and indirect subsidiaries. The terms of the credit facility include other customary terms, conditions, covenants, and representations and warranties and credit availability is subject to ongoing compliance with borrowing covenants and short term assets on hand.

13

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        We have in place a forbearance agreement until May 18, 2016, which identifies new minimum covenant levels reflecting our revised financial plans. The forbearance agreement includes a requirement to hold a minimum of $1.0 million at Comerica Bank. In addition, the forbearance agreement reduces the facility commitment from $40.0 million to $35.0 million and implements more frequent monitoring. Subsequent to February 29, 2016, we repaid $3.3 million on the line of credit. As of the date of this MD&A the balance of the line of credit is $18.9 million. We are in compliance with the financial terms of the forbearance agreement at May 18, 2016.

Strategic Review Process

        Our Board of Directors reviews our corporate strategy on an ongoing basis. The Board continues to review all strategic and financial alternatives that may be available, including a potential sale of the Company, debt or equity financing, business combinations, joint ventures and strategic alliances, and ways to optimize our stand alone plan. CIBC World Markets Inc. has been engaged since January, 2014 to assist in the analysis of our strategic and financing alternatives. They continue to be engaged in this capacity. HC Wainwright has been engaged to investigate financing options, and recently represented us in the registered direct offering in April, 2016 discussed further below.

Transfer of Securities to the NASDAQ Capital Market

        On September 1, 2015 we announced that the transfer of the listing of our securities from The NASDAQ Global Market to The NASDAQ Capital Market ("NASDAQ") had been approved by the Staff of the NASDAQ Listing Qualifications Department ("NASDAQ Staff"), effective as of the opening of trading on August 28, 2015. Our common shares continue to trade under the symbol "DRWI".

        As previously announced, on March 5, 2015, we received notice that our closing bid price had been below US$1.00 per share for 30 consecutive business days and that, accordingly, the NASDAQ Staff had granted us an extension through November 30, 2015 to regain compliance with the US$1.00 per share bid price requirement. We were not able to regain compliance with this requirement within such period, and as a result we transferred the listing of our common shares from The NASDAQ Global Market to The NASDAQ Capital Market. In connection with such transfer, we were granted an additional 180 days to regain compliance with the minimum $1.00 bid price per share requirement. The new extension period ran through February 29, 2016. A notice from NASDAQ, received February 19, 2016, noted that the closing bid price of our common shares had been at US$1.00 per share or greater from February 4, 2016 to February 18, 2016. Accordingly, the Company has regained compliance with the US$1.00 per share bid price requirement.

Share Consolidation

        On December 11, 2015 we proposed in a Management Proxy Circular a consolidation of our shares (the "Consolidation"). The resolution to consolidate the shares was passed at a special meeting of shareholders on Tuesday, January 26, 2016. The resolution authorized a consolidation ratio of between 1-for-15 and 1-for-25. The Board of Directors effected the share Consolidation on February 2, 2016 on the basis of twenty-five (25) pre-Consolidation shares for one (1) post-Consolidation share. The Consolidation of our common shares was intended to establish the basis for the shares to trade above US$1.00, as per the listing requirements of the NASDAQ. The Consolidation reduced the number of outstanding common shares from approximately 75,493,513 to approximately 3,019,717. Each fractional share remaining after the share consolidation was cancelled. The number of outstanding warrants, stock options and restricted share units were proportionately

14

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

adjusted by the consolidation ratio and the exercise prices correspondingly increased by the same consolidation ratio. All shares and exercise prices are presented on a post-consolidation basis in our annual consolidated financial statements and in this MD&A.

Registered Direct Offering

        On April 7, 2016 we announced our intention to complete a registered direct offering, which was completed on April 11, 2016. Under the offering, we issued 599,998 common shares and concurrently in a private placement issued warrants to purchase 299,999 common shares exercisable until March 12, 2020 at an exercise price of $8.50. The price per common share and one half of a warrant was $7.25 and resulted in total gross proceeds of $4.35 million. The net proceeds of the offering, before expenses, were approximately US$4.0 million. We expect that any exercise of the warrants will result in the cash proceeds from the exercise of such warrants being paid to us. Rodman & Renshaw, a unit of H.C. Wainwright & Co., LLC acted as the exclusive placement agent for the registered direct offering and concurrent private placement.

Continued Investment in New Technology and New Customer Opportunities

        We continue to invest in new technology in order to meet the changing needs of the market with a focus on both increased capability and operating cost efficiencies for carriers. Evidence of that objective includes the announcement of product offerings like Harmony Care designed to support the extended life of a variety of our hardware and software products and the recently announced joint initiative with Mitel Networks Corporation which will be focused on advancing the development of 5G networking. We continue to work toward the adoption of our products with existing and new customers including the recently launched Harmony Enhanced^MC dual carrier product by supporting active trials throughout the world.

        We are also actively engaged in supporting bids for opportunities which will leverage the high capacity and operating efficiency characteristics that our products are optimized for, including opportunities with a major Tier 1 carrier in North America.

15

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Adjusted Cashflow from Operations/Adjusted EBITDA

Please note: Adjusted Cashflow from Operations/Adjusted EBITDA is a non-GAAP measure. See "Use of Non-GAAP Performance Measures".

	FY16 Q4			FY16 Q3			FY16 Q2			FY16 Q1
Revenue		12,041			20,997			26,917			26,340
Cost of Sales		12,538			16,063			22,236			20,791
Gross Profit		(497	)		4,934			3,985			5,549
		(4.1	%)		23.5	%		14.8	%		21.1	%
Add:
Inventory Provisions		3,181			210			730			295
Gross profit before inventory provisions (Note 1)		2,684			5,144			4,715			5,844
		22.3	%		24.5	%		17.5	%		22.2	%
Operating Expenses		7,594			8,689			10,530			10,963
Less:
Amortization		(467	)		(494	)		(498	)		(472	)
Stock-based compensation		(210	)		(273	)		(228	)		(277	)
		6,917			7,922			9,804			10,214
Adjusted Cashflow from Operations/Adjusted EBITDA		(4,233	)		(2,778	)		(5,089	)		(4,370	)

Note 1: Gross profit before inventory provisions is a non-GAAP financial measure. See "Use of Non-GAAP Performance Measures".

Comparison of the three and twelve months ended February 29, 2016 and February 28, 2015

Revenue

	Three Months Ended							Twelve Months Ended
	February 29, 2016		February 28, 2015		Variance			February 29, 2016		February 28, 2015		Variance
	$		$		$			$		$		$
Hardware and other		8,601		41,654		(33,053	)		71,393		150,432		(79,039	)
Services		3,440		2,088		1,352			14,902		7,334		7,568
		12,041		43,742		(31,701	)		86,295		157,766		(71,471	)

        Hardware and other sales include both the microwave backhaul equipment shipped and the related software upgrades. The Services category includes software maintenance contracts, extended warranty programs and site planning and installation services. The growth in Services revenue in fiscal year 2016 in both the three and twelve months ended February 29, 2016 compared to the same periods in the prior year relates to an increase in installation services in India and North America.

16

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        We analyze our sales according to geographic region and target product development and sales strategies to meet the unique requirements of each region. The table below displays this information for the three months ended February 29, 2016 and February 28, 2015.

	Three Months Ended February 29, 2016								Three Months Ended February 28, 2015
	Direct & Indirect Sales		OEM Sales through Nokia		Total		% of total revenue		Direct & Indirect Sales		OEM Sales through Nokia		Total		% of total revenue
Canada		156		—		156		1%		1,136		—		1,136		3%
Europe, Middle East & Africa		1,357		4,979		6,336		53%		5,147		17,008		22,155		51%
India		1,245		506		1,751		15%		7,310		2,622		9,932		23%
United States		2,179		—		2,179		18%		8,428		—		8,428		19%
Rest of World		1,489		130		1,619		13%		1,425		666		2,091		4%
		6,426		5,615		12,041		100%		23,446		20,296		43,742		100%

        The table below displays the geographic comparatives for the twelve months ended February 29, 2016 and February 28, 2015.

	Year Ended February 29, 2016								Year Ended February 28, 2015
	Direct & Indirect Sales		OEM Sales through Nokia		Total		% of total revenue		Direct & Indirect Sales		OEM Sales through Nokia		Total		% of total revenue
Canada		2,255		—		2,255		3%		4,358		—		4,358		3%
Europe, Middle East & Africa		6,753		31,109		37,862		44%		12,554		61,467		74,021		47%
India		13,993		3,787		17,780		21%		26,291		10,854		37,145		24%
United States		19,577		19		19,596		23%		23,451		—		23,451		15%
Rest of World		6,095		2,707		8,802		9%		6,825		11,966		18,791		11%
		48,673		37,622		86,295		100%		73,479		84,287		157,766		100%

17

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        The following chart identifies the major contributors to the decrease in sales between fiscal year 2016 and fiscal year 2015.

	Three month period
Revenue ended February 28, 2015		43,742
Increased sales to a carrier in Mexico		707
New installation with a Czech carrier (existing customer)		163
New customer in Finland		163
New installation with a customer in the U.A.E.		204
Two new customers in the USA		117
Sales through the Nokia channel in India		181
Nokia channel — outside of India		(14,862	)
Decrease in direct sales to a tier 1 carrier in India		(6,065	)
Decrease in direct and indirect sales in North America		(8,257	)
Decrease in direct sales in Europe, Middle East & Africa		(4,116	)
Other		64
Net Change		(31,701	)
Revenue ended February 29, 2016		12,041

	Twelve Month Period
Revenue for the year ended February 28, 2015		157,766
Increase sales to a tier 1 carrier in the USA (primarily installation services)		1,482
Increase in sales to existing distributors in the USA (2 distributors)		1,104
New installation with a Czech carrier (existing customer)		1,067
Two new customers in the USA		1,010
New customers in Saudi Arabia and the U.A.E.		668
New customer in South Africa (previously purchased through Nokia)		641
Nokia Channel		(46,665	)
Decrease in direct sales to a tier 1 carrier in India		(12,298	)
Decrease in direct and indirect sales in North America		(9,573	)
Decrease in direct sales in Europe, Middle East & Africa		(8,177	)
Other		(730	)
Net change		(71,471	)
Revenue for the year ended February 29, 2016		86,295

18

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Gross Profit

	Three Months Ended								Twelve Months Ended
	February 29, 2016			February 28, 2015		Variance			February 29, 2016		February 28, 2015		Variance
	$			$		$			$		$		$
Hardware and other		7,794			32,923		(25,129	)		58,991		123,950		(64,959	)
Services		1,563			1,135		428			8,917		3,051		5,866
		9,357			34,058		(24,701	)		67,908		127,001		(59,093	)
Gross Profit before inventory provisions		2,684			9,684		(7,000	)		18,387		30,765		(12,378	)
(Note)		22.3%			22.1%		0.1%			21.3%		19.5%		1.8%
Inventory provisions		3,181			1,187		1,994			4,416		2,771		1,645
Gross Profit		(497	)		8,497		(8,994	)		13,971		27,994		(14,023	)
		(4.1%	)		19.4%		(23.6%	)		16.2%		17.7%		(1.6%	)

Note: Gross profit before inventory provision is a non-GAAP financial measure. See "Use of Non-GAAP Performance Measures".

        A large component of our cost of sales for hardware is the cost of products purchased from outsourced manufacturers. Final testing and assembly for the links sold by us is carried out both at our premises and at the premises of our contract manufacturers. Additional costs for logistics and warranty activities are included in the Hardware and other category as well.

        Services costs relate primarily to the cost of third party installation service providers.

        Despite the decrease in sales, our gross profit percentage before inventory provisions remained consistent during the three months ended February 29, 2016 and increased by 1.8% in the twelve months ended February 29, 2016 compared to the same periods in the prior fiscal year. The primary reasons for the improvement relates to a change in the mix of customers, and an increase in the percentage of higher margin products in fiscal year 2016.

        The increase in the inventory provision in fiscal year 2016 relates to the excess provisions taken in this year associated with products sold substantially through the Nokia sales channel given the decrease in future demand through this customer.

19

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Expenses

        The foreign exchange benefit on the charts below is the estimated reduction in the expenses paid in Canadian dollars when translated to USD. The Canadian dollar has weakened relative to the USD between fiscal year 2015 and fiscal year 2016.

	Fiscal Year 2016		Fiscal Year 2015		Difference			% Difference
Average foreign exchange rate CAD to USD		0.768		0.893		(0.125	)		(14%	)

Research and Development

Three Months Ended			Twelve Months Ended
February 29, 2016	February 28, 2015	Variance	February 29, 2016	February 28, 2015	Variance
$	$	$	$	$	$
2,425	4,271	(1,846)	13,406	18,657	(5,251)

        Research and development ("R&D") costs relate mainly to the compensation of our engineering group and the material consumption associated with prototyping activities. Staff employed in this functional area are located in Canada and China. Staff levels declined by approximately 47% between February 28, 2015 and February 29, 2016 primarily as a result of restructuring initiatives.

Changes to R&D Expenses in USD Millions:

	Q4 FY2016 vs. Q4 FY2015			YTD FY2016 vs. YTD FY2015
Key Drivers:
Compensation related spending		(1.2	)		(1.5	)
Depreciation		(0.1	)		(0.7	)
Material spending on prototypes		(0.1	)		(1.8	)
Rent (China)		(0.2	)		(0.4	)
Foreign exchange — benefit of Canadian to USD conversion		(0.2	)		(0.9	)
		(1.8	)		(5.3	)

Sales and Marketing

Three Months Ended			Twelve Months Ended
February 29, 2016	February 28, 2015	Variance	February 29, 2016	February 28, 2015	Variance
$	$	$	$	$	$
1,858	3,745	(1,887)	10,572	13,975	(3,403)

20

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        Sales and marketing ("S&M") expenses include the remuneration of sales, marketing, product line management and customer service staff, including their associated travel and other spending. Recent staff reductions which were part of the restructuring efforts undertaken in September, 2015 impacted the S&M organization as well.

Changes to S&M Expenses in USD Millions:

	Q4 FY2016 vs. Q4 FY2015			YTD FY2016 vs. YTD FY2015
Key Drivers:
Compensation related spending		(0.8	)		(1.1	)
Variable compensation (program changes and lower revenue)		(0.4	)		(0.7	)
Travel & living		(0.3	)		(0.7	)
External contracted services		(0.2	)		(0.1	)
Foreign exchange		(0.2	)		(0.8	)
		(1.9	)		(3.4	)

General and Administrative

	Three Months Ended							Twelve Months Ended
	February 29, 2016		February 28, 2015		Variance			February 29, 2016		February 28, 2015		Variance
	$		$		$			$		$		$
		3,311		3,288		23			13,798		15,085		(1,287	)
Breakdown by functional area:
Finance, human resources and exec office		1,363		1,750		(387	)		5,962		7,416		(1,454	)
Operations groups not in Cost of Sales		1,639		1,442		197			6,202		6,788		(586	)
DragonWave HFCL spending		309		96		213			1,634		881		753
		3,311		3,288		23			13,798		15,085		(1,287	)

        General and administrative ("G&A") expenses include finance, human resources and the executive office, as well as the portion of the costs of the operations organization which does not flow directly into Cost of Sales. This operations team includes inventory and production management, as well as IT and purchasing.

21

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Changes to G&A Expenses in USD Millions:

	Q4 FY2016 vs. Q4 FY2015			YTD FY2016 vs. YTD FY2015
Key Drivers:
Compensation related spending		(0.4	)		(0.3	)
DragonWave HFCL related spending		0.2			0.8
Travel & living		(0.2	)		(0.5	)
Professional fees and insurance costs		(0.1	)		(0.2	)
Warehousing costs		0.3			0.3
Operations/IT related contractor spending		(0.4	)		(0.3	)
Operations spending not recovered through Cost of Sales		0.9			0.4
(results from lower volumes)
Foreign exchange		(0.3	)		(1.5	)
		—			(1.3	)

Goodwill Impairment

Three Months Ended			Twelve Months Ended
February 29, 2016	February 28, 2015	Variance	February 29, 2016	February 28, 2015	Variance
$	$	$	$	$	$
—	—	—	11,927	—	11,927

        We recorded a non-cash impairment charge of $11.9 million in the twelve months ended February 29, 2016 after performing our annual goodwill impairment test which indicated the carrying value of the goodwill was fully impaired.

Restructuring Costs

Three Months Ended			Twelve Months Ended
February 29, 2016	February 28, 2015	Variance	February 29, 2016	February 28, 2015	Variance
$	$	$	$	$	$
130	—	130	1,549	—	1,549

        In September 2015, we implemented a restructuring plan in line with our objective of reducing our net losses and cash usage. Our plan included a 23% reduction of the workforce across a variety of functional areas of the business. The restructuring plan impacted staff primarily in China and Canada and, to a lesser extent, other countries globally. The corresponding reduction in compensation related spending is intended to help better align our costs with our revenues. Restructuring charges take the form of severance paid to employees. We have paid $1.3 million of the total restructuring charge, while $0.3 million remains unpaid and is reflected in our liabilities at February 29, 2016.

22

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Amortization of Intangible Assets

	Three Months Ended			Twelve Months Ended
	February 29, 2016	February 28, 2015	Variance	February 29, 2016	February 28, 2015	Variance
	$	$	$	$	$	$
Amortization of computer software & infrastructure software	96	207	(111)	577	1,188	(611)

        The amortization of software has decreased significantly as the net book value of software on the balance sheet has been declining.

Accretion Expense

Three Months Ended			Twelve Months Ended
February 29, 2016	February 28, 2015	Variance	February 29, 2016	February 28, 2015	Variance
$	$	$	$	$	$
37	59	(22)	205	168	37

        Accretion expenses have been recognized for both capital leases and for the termination liability which exists in connection with the termination of a services agreement with Nokia. In the prior fiscal year capital leases accounted for 100% of the accretion expense. In fiscal year 2016 the accretion expense associated with the termination liability represents approximately 80% of the total expense in this category.

Interest Expense

Three Months Ended			Twelve Months Ended
February 29, 2016	February 28, 2015	Variance	February 29, 2016	February 28, 2015	Variance
$	$	$	$	$	$
424	452	(28)	2,014	1,557	457

        Interest expense relates primarily to interest on our debt facility, this expense increased in the twelve month period ending February 29, 2016 compared with the same period in the prior year because the weighted average debt outstanding has increased between fiscal year 2016 and fiscal year 2015.

        During the three month period ended February 29, 2016 the weighted average debt outstanding was $23.7 million (three month period ended February 28, 2015 — $27.9 million) while for the twelve month period ended February 29, 2016 it was $29.8 million (twelve months ended February 28, 2015 — $20.3 million). Interest rates vary with market rate fluctuations, with loans bearing interest in the range of 3% to 4% above the applicable base rates.

23

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Warrant Issuance Expenses

Three Months Ended			Twelve Months Ended
February 29, 2016	February 28, 2015	Variance	February 29, 2016	February 28, 2015	Variance
$	$	$	$	$	$
—	—	—	—	221	(221)

        On August 1, 2014 we completed an equity offering which included the issuance of warrants. Of the total equity issuance costs of $2.3 million, $0.2 million was attributed to the warrants specifically and expensed to our consolidated statement of operations in the twelve months ended February 28, 2015.

Loss (Gain) on Change in Estimate

Three Months Ended			Twelve Months Ended
February 29, 2016	February 28, 2015	Variance	February 29, 2016	February 28, 2015	Variance
$	$	$	$	$	$
—	234	(234)	—	(67)	67

        During the twelve months ended February 28, 2015, we revised the Nokia termination fee estimate, received the final invoice, and determined the payment schedule of the Italian operations termination fee. This resulted in a gain in change in estimate.

        The total termination fee liability is valued at $3.3 million as at February 29, 2016. All of this liability is considered short term in nature.

Fair Value Adjustment — Warrant Liability

Three Months Ended			Twelve Months Ended
February 29, 2016	February 28, 2015	Variance	February 29, 2016	February 28, 2015	Variance
$	$	$	$	$	$
69	(979)	1,048	(1,119)	(2,007)	888

        The warrant liability is required to be presented at its estimated fair value as at each balance sheet date. As DragonWave's share price has decreased, the liability has decreased as well, which has resulted in a recognition of a gain in the consolidated statement of operations. In the three months ended February 29, 2016 our share price increased which resulted in a $0.1 million loss during this period as the corresponding value of the liability on the balance sheet also increased.

24

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Foreign Exchange (Gain)/Loss

Three Months Ended			Twelve Months Ended
February 29, 2016	February 28, 2015	Variance	February 29, 2016	February 28, 2015	Variance
$	$	$	$	$	$
307	(327)	634	331	(846)	1,177

        The foreign exchange gains and losses result from the translation of foreign denominated monetary accounts and the strength of the U.S. dollar relative to foreign currencies. During the three and twelve months ended February 29, 2016 the translation of bank and receivable accounts resulted in foreign currency losses of $0.3 million and $0.3 million respectively. These losses are driven by the devaluation of the Indian Rupee in fiscal year 2016.

Income Taxes Expense

	Three Months Ended								Twelve Months Ended
	February 29, 2016			February 28, 2015			Variance		February 29, 2016		February 28, 2015		Variance
	$			$			$		$		$		$
Increase in valuation allowance on deferred tax asset		25			—			25		1,546		—		1,546
Deferred Tax Expense		294			—			294		294		—		294
Current Tax Expense/(Recovery)		(190	)		(330	)		140		435		717		(282	)
		129			(330	)		459		2,275		717		1,558

        As of February 28, 2015, our deferred tax assets related to net operating loss carry-forwards in the United States. During the twelve months ended February 29, 2016, we recorded an increase in the valuation allowance of $1.5 million as we believe it is more likely than not that the related deferred tax assets will not be realized (increase in the valuation allowance in the three and twelve months ended February 28, 2015 — nil).

        We accrue tax expenses for entities located in foreign jurisdictions that are anticipated to be profitable for fiscal year 2016. The determination of our tax provision is based on the statutory tax rates applicable in each region and takes into account any available tax losses in each country. For the three and twelve months ended February 29, 2016, we recognized a deferred tax expense of $0.3 million related DragonWave HFCL. We recognized a current tax true up of ($0.2) million and a tax expense of $0.4 million in the three and twelve months ended February 29, 2016 respectively related to foreign jurisdictions which are anticipated to be profitable within the current fiscal year.

        We have losses available in the following jurisdictions:

	Net Operating Losses		Capital Losses		Investment Tax Credits		Ontario R&D Tax Credits
Canada		136,221		16,302		14,720		2,361
US		7,888		45,543
Luxembourg		36,007

25

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        The losses in Canada expire starting in fiscal 2031 until fiscal 2036. The losses in Luxembourg can be carried forward indefinitely. Income tax benefits relating to the losses in Canada and Luxembourg have not been recognized in the consolidated financial statements as the recognition requirements under the liability method of accounting for income taxes have not been met.

        The losses in the U.S. expire between fiscal 2022 and fiscal 2032. Internal Revenue Code Section 382 imposes an annual limitation on the use of a company's net operating loss carryforwards when a company has an ownership change. Our acquisition of Axerra Networks, Inc. resulted in an ownership change as understood by Section 382. As a result, the annual restriction of the amount of losses of Axerra Networks, Inc. that may be used has been calculated as $0.5 million

        The investment tax credits available to reduce future federal Canadian income taxes payable begin to expire in 2022. The provincial research and development tax credits are available to reduce future provincial income taxes payable and these provincial tax credits begin to expire in 2029. The tax benefit of the federal and provincial tax credits has not been recognized in the consolidated financial statements.

        As at February 29, 2016, we have not recorded any liabilities associated with uncertain tax positions.

        We remain subject to examination by tax authorities in Canada for years 2009 to 2016 and in the other jurisdictions for tax years 2011 to 2016.

        No deferred income taxes have been provided on undistributed earnings or relating to cash held in foreign jurisdictions, as we have determined that any income or withholding taxes on repatriation would either not be significant, or we have decided to permanently reinvest the earnings in the foreign jurisdiction.

Use of Non-GAAP Performance Measures

"Gross profit before inventory provisions"

        In this MD&A, we break out "Gross profit before inventory provisions" as this measure allows management to evaluate our operational performance and compare to prior periods more effectively. "Gross profit before inventory provisions" does not have any standardized meaning prescribed by GAAP, it is therefore unlikely to be comparable to similar measures presented by other issuers and is not designed to replace other measures of financial performance or the statement of operations as an indicator of performance. This measure should not be considered in isolation or as a substitute for other measures of performance calculated according to GAAP. We believe that it is useful to compare gross profit results without the impact of inventory provisions, since our inventory provisions generally relate to technical obsolescence and excess due to market changes. We believe this non-GAAP measure also provides investors with a better ability to understand our operational performance. We calculate "Gross profit before inventory provisions" consistently over each fiscal period.

        The most directly comparable GAAP measure presented in our consolidated financial statements for the three and twelve months ended February 29, 2016 to "Gross profit before inventory provisions" is "Gross profit".

"Adjusted Cashflow from Operations/Adjusted EBITDA"

        In this MD&A, we also break out "Adjusted Cashflow from Operations" also called "Adjusted EBITDA". This measure corresponds to earnings before interest, taxes, depreciation and amortization less elements that are non-cash in nature. Because it omits non-cash items, we feel that Adjusted Cashflow from Operations/Adjusted EBITDA better represents the cash impact of the results of operations in the period. Adjusted

26

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Cashflow from Operations/Adjusted EBITDA does not have any standardized meaning prescribed by GAAP, and is not designed to replace other measures of financial performance or the statement of operations as an indicator of performance. This measure should not be considered in isolation or as a substitute for other measures of performance calculated according to GAAP. Consistent improvement in Adjusted Cashflow from Operations/Adjusted EBITDA is one of management's primary objectives. Reducing cash usage from drivers other than working capital and capital investments is an important objective for us and we believe this financial measure is therefore useful to investors in evaluating our operating performance.

        The most directly comparable GAAP measure presented in our consolidated financial statements for the three and twelve months ended February 29, 2016 to "Adjusted Cashflow from Operations/Adjustment EBITDA" is "Net Loss". A reconciliation of "Adjusted Cashflow from Operations/Adjusted EBITDA" to "Net Loss" is set out below.

"Days Sales Outstanding excluding Tier 1 carrier in India"

        In this MD&A we break out "Days Sales Outstanding excluding Tier 1 carrier in India" as this measure allows management to evaluate our Days Sales Outstanding (DSO) performance and compare to prior periods absent the effect of the extended payment terms granted to this customer. "Days Sales Outstanding excluding Tier 1 carrier in India" does not have any standardized meaning prescribed by GAAP, it is therefore not comparable to similar measures presented by other issuers and is not designed to replace other measures of financial performance or the statement of operations as an indicator of performance. This measure should not be considered in isolation or as a substitute for other measures of performance calculated according to GAAP. We believe that it is useful to compare DSO results without the impact of extended payment terms granted to one customer, since these terms are not standard for us and are unlikely to be afforded to other customers. We believe this non-GAAP measure also provides investors with a better ability to understand our operational performance. The most directly comparable GAAP measure presented in our consolidated financial statements for the three months ended February 29, 2016 to "Days Sales Outstanding excluding Tier 1 carrier in India" is "Days Sales Outstanding".

27

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        Reconciliation of Adjusted Cashflow from Operations/Adjusted EBITDA to Net Loss

	FY16 Q4			FY16 Q3			FY16 Q2			FY16 Q1
Adjusted Cashflow from Operations/Adjusted EBITDA		(4,233	)		(2,778	)		(5,089	)		(4,370	)
Include the following items:
Stock-based compensation		(210	)		(273	)		(228	)		(277	)
Inventory provisions		(3,181	)		(210	)		(730	)		(295	)
Amortization of Property Plant and Equipment		(467	)		(494	)		(498	)		(472	)
Goodwill impairment		—			—			(11,927	)		—
Restructuring Costs		(130	)		(1,419	)		—			—
Amortization of intangible assets		(96	)		(149	)		(149	)		(183	)
Accretion expense		(37	)		(36	)		(61	)		(71	)
Interest expense		(424	)		(499	)		(560	)		(531	)
Fair value adjustment — warrant liability		(69	)		293			373			522
Foreign exchange (loss) gain		(307	)		270			(214	)		(80	)
Income taxes		(129	)		(459	)		(1,620	)		(67	)
Net Loss		(9,283	)		(5,754	)		(20,703	)		(5,824	)

Liquidity and Capital Resources

        The following table sets out some of the key balance sheet metrics:

	As at February 29, 2016		As at February 28, 2015
Key Balance Sheet Amounts and Ratios:
Cash and Cash Equivalents		4,277		23,692
Working Capital (Note 1)		678		61,000
Long Term Assets		4,325		18,546
Long Term Liabilities		776		34,778
Working Capital Ratio		1 : 1		2.5 : 1
Days Sales Outstanding in accounts receivable (Note 2)		114 days		96 days
Inventory Turnover		1.6 times		6.5 times

Note 1: The debt facility was included in long term liabilities at February 28, 2015.

Note 2: Days Sales Outstanding in accounts receivable excluding a Tier 1 carrier in India at February 29, 2016 were 68 days (59 days at February 28, 2015). This is a non-GAAP measure. See "Use of Non-GAAP performance measures".

Cash and Cash Equivalents

        As at February 29, 2016, we had $4.3 million in Cash and Cash Equivalents ("Cash"), representing a $19.4 million decrease from the Cash balance at February 28, 2015.

28

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        The following table explains the change in Cash during the three and twelve months ended February 29, 2016.

	Three Months Ended
				Twelve Months Ended
	February 29, 2016
				February 29, 2016
Operating activities
Net loss		(9,283	)		(41,564	)
Items not affecting cash		1,235			16,350
Net loss excluding items not affecting cash		(8,048	)		(25,214	)
Working Capital Changes
Trade receivables		8,580			29,640
Inventory		2,701			1,592
Other current assets		834			3,074
Accounts payable and accrued liabilities		(2,561	)		(16,880	)
Deferred revenue and other long term liabilities		(276	)		810
Changes in non-cash working capital items		9,278			18,236
Investing activities
Acquisition of property and equipment		(21	)		(1,311	)
Acquisition of intangible assets		(15	)		(406	)
		(36	)		(1,717	)
Financing activities — excluding debt repayment
Repayments on capital lease obligation		(204	)		(507	)
Issuance of common shares, net		3			35
		(201	)		(472	)
Cash generated/(used) before debt repayment		993			(9,167	)
Debt repayment		(4,500	)		(10,248	)
Cash and cash equivalents at beginning of period		7,784			23,692
Cash and cash equivalents at end of period		4,277			4,277

        Key points associated with the Cash decrease of $3.5 million in the fourth quarter of fiscal year 2016 include:

•

We repaid $4.5 million on the debt facility.

•

Working capital changes provided $9.3 million in cash.

•

We used $8.0 million in cash as a result of our net loss from operations.

•

Spending on capital acquisitions and software spending have been strictly controlled.

29

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        Key points associated with the Cash decrease of $19.4 million in fiscal year 2016 include:

•

We repaid $10.2 million on the debt facility.

•

Working capital changes provided $18.2 million in cash.

•

We used $25.2 million in cash as a result of our net loss from operations.

•

Spending on capital acquisitions and software spending was limited to $1.7 million

Working Capital

Changes in working capital	November 30, 2015 to February 29, 2016			February 28, 2015 to February 29, 2016
Beginning working capital balance		9,337			61,000
Cash and cash equivalents		(3,507	)		(19,415	)
Trade receivables		(8,580	)		(29,640	)
Inventory		(2,701	)		(1,592	)
Other current assets		(834	)		(3,118	)
Future income tax asset		(25	)		—
Debt facility		4,500			(22,152	)
Accounts payable and accrued liabilities		2,561			17,120
Deferred revenue		80			(1,114	)
Capital lease obligation		(83	)		(294	)
Warrant liability		(70	)		(117	)
Net change in working capital		(8,659	)		(60,322	)
Ending working capital balance		678			678

Trade Receivables

        Our trade receivables balance decreased by $29.6 million between February 29, 2016 and February 28, 2015 primarily due to lower sales levels in the three months ended February 29, 2016, compared to the fourth quarter of fiscal year 2015 (fourth quarter of fiscal year 2016 vs. fourth quarter of fiscal year 2015 — $31.7 million lower). Our rate of collection has remained fairly consistent for most of our customers, so the reduction in accounts receivable is attributed primarily to the lower sales levels. Our allowance for doubtful accounts continues to represent a small percentage of our total trade receivables outstanding (February 29, 2016 — 1.0%; February 28, 2015 — 1.0%).

        As at February 29, 2016, two customers exceeded 10% of the total receivable balance. These customers represented 52% and 16% of the trade receivables balance (February 28, 2015 — two customers represented 37% and 34% of the trade receivables balance).

        Included in G&A expenses is bad debt expense of $0.2 million and $0.2 million for the three and twelve months ended February 29, 2016 (three and twelve months ended February 28, 2015 — nominal and $0.2 million).

30

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Inventory

        The inventory balance decreased by $1.6 million relative to the closing balance at February 28, 2015. By product category the changes in inventory are as follows in USD millions:

Closing inventory February 28, 2015	24.3
Increase in Harmony Enhanced (product built for Tier 1 customer in India)	4.5
Increase in Horizon Compact Plus	1.2
Increase in inventory held for customer support & warranty	0.2
Decrease in Harmony (Flexipacket & Hubs for Enhanced) product porfolio	(7.2	)
driven by a sale of raw material back to a contract manufacturer
Other	(0.3	)
Net Change in Inventory	(1.6	)
Ending inventory at February 29, 2016	22.7

        During the twelve months ended February 29, 2016, we entered into an agreement to sell back inventory to a contract manufacturer. The total reduction of raw material inventory was $10.2 million and we reduced accounts payable owing to the contract manufacturer by the same amount. The balance of inventory held at this contract manufacturer at February 29, 2016 was $16.8 million (February 28, 2015 — $13.6 million).

        We provide for inventory which we believe will not be consumed in the normal course of business either because we believe the part has become technically obsolete or because we believe that the demand for the part is too low to consume the remaining inventory on hand. We created inventory provisions of $2.9 million and $4.4 million in the three and twelve months ended February 29, 2016 to reflect this risk. (Fourth quarter fiscal year 2015 — $1.2 million; Full fiscal year 2015 — $2.8 million)

Accounts Payable and Accrued Liabilities

        The accounts payable and accrued liabilities balance decreased by $17.1 million between February 28, 2015 and February 29, 2016. This decrease was driven by the inventory transaction described above which decreased the payable balance to a contract manufacturer by $10.2 million. In addition we have reduced our inventory purchasing over the year as sales levels have declined.

Equity Offerings

2016 Equity Offering

        On April 11, 2016, we issued 599,998 common shares in a registered direct offering, and concurrently in a private placement, issued warrants to purchase 299,999 common shares (the "2016 Warrants") exercisable at an exercise price of $8.50 until March 12, 2020 (the "2016 Equity Offering"). The price per common share and one half of a warrant was $7.25 and resulted in total gross proceeds of $4.4 million. The warrants are not exercisable until October 12, 2016. The proceed from the 2016 Equity Offering are expected to be used for general corporate purposes, which may include working capital, general and administrative expenses, capital expenditures and implementation of our strategic priorities.

31

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

2014 Equity Offering

        On August 1, 2014 we completed a public equity offering (the "2014 Equity Offering"). Under the terms of the 2014 Equity Offering, we issued and sold 15,927,500 units at CAD$1.80 per unit for aggregate gross proceeds of $26.2 million (CAD$28.7 million). After deducting commissions and expenses, we realized net proceeds of $24.0 million. Each unit consisted of one common share of the Company and one half of one warrant (each whole warrant a "2014 Warrant"). On a pre-Consolidation basis, each whole 2014 Warrant entitled the holder to purchase one common share of the Company at an exercise price of CAD$2.25 per share until August 1, 2016, subject to certain standard adjustments. Subsequent to the Consolidation, 25 whole 2014 Warrants entitle the holder to purchase one common share of the Company at an exercise price of C$56.25 per share.

        Upon issuance, we recognized a liability in the amount of $2.6 million for the 2014 Warrants.

2013 Equity Offering

        On September 23, 2013, pursuant to the public equity offering of units (the "2013 Equity Offering"), we issued 11,910,000 common shares and 8,932,500 warrants for proceeds, before deducting fees and expenses, of approximately $25.0 million. After deducting fees and expenses, we realized net proceeds of $22.4 million. The units were offered at a price of $2.10 per unit. Each unit consisted of one common share and three quarters of one warrant (each whole warrant a "2013 Warrant"). Each whole warrant 2013 Warrant originally entitled the holder to purchase one common share at an exercise price of $2.70 per share until September 23, 2018, subject to certain adjustments. In connection with the 2014 Equity Offering, and pursuant to the terms of such warrants, the exercise price of the warrants issued in the 2013 Equity Offering was changed to $1.30 per share (on a pre-Consolidation basis). Subsequent to the Consolidation, 25 whole 2013 Warrants entitle the holder to purchase one common share at an exercise price of $32.50 per share. In connection with the 2016 Equity Offering, and pursuant to the terms of the 2013 Warrants, the exercise price of the 2013 Warrants was changed, such that 25 whole 2013 Warrants entitle the holder to purchase one common share at a price of $6.76 per share.

        As at September 23, 2013 we recognized a liability in the amount of $6.4 million for the 2013 Warrants.

Commitments as at February 29, 2016

        Future minimum operating lease payments as at February 29, 2016 per fiscal year relate to leases of office and warehouse space.

        They are as follows:

			Payment due by period (Figures are in thousands of USD)
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Total Operating Lease Obligations		1,288		1,144		134		10		—

        In January 2016, a customer in India initiated an arbitration process with us to resolve the dispute over inventory shipped to this customer in June 2015. The value of the inventory shipped is $4.7 million. The customer submitted a claim statement which we believe has no merit. We will submit a counter claim in June 2016. The arbitration hearing is set for July 2016 and as of the date of this MD&A the outcome of this matter is not determinable.

32

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Off-Balance Sheet Arrangements

(Actual Dollars)

City	Country	Lessor	Lease Expiry	Cost per Month
Dubai	UAE	TECOM Investments FZ-LLC	November, 2016	$	3,450
Luxembourg City	Luxembourg	ME Business Solutions S.à r.l.	Month to Month	$	1,700
Ottawa (Warehouse & Operations at Terry Fox Drive + Office Space at 411 Legget Drive)	Canada	Kanata Research Park	November, 2016	$	90,000
Herzlyia	Israel	Margalin Holdings Ltd.	November, 2016	$	2,500
Shanghai	China	Shanghai Lingang Economic
		Development Group	September, 2017	$	20,800
Gurgaon	India	Narinder Singh & Songs (P) LTD	March, 2018	$	4,430

        The leases listed above are arranged at market pricing levels in all jurisdictions and the lease periods listed above represent a commitment for the time period indicated. We are actively seeking sub-lease arrangements in a number of locations as part of our efforts to reduce costs, and have in place subleases in Ottawa which reduce the monthly cost by approximately 10%. We expect that, if any of the above noted leases where terminated, we would be able to lease premises on substantially similar terms.

        We use an outsourced manufacturing model in which most of the component acquisition and assembly of our products is executed by third parties. Generally, we provide the supplier with a purchase order 90 days in advance of expected delivery. We are responsible for the financial impact of any changes to the product requirements within this period. In some cases when a product has been purchased by a contract manufacturer but not pulled on for a build after a certain amount of time, we provide a deposit against that inventory, but do not take ownership of it.

        As at February 29, 2016, we have provisions totaling $3.1 million on inventory held by contract manufacturers that we do not expect to be fully used.

Outstanding Share Data

        Our common shares are listed on the Toronto Stock Exchange under the symbol DWI and on the NASDAQ under the symbol DRWI.

        Our warrants issued on August 1, 2014 in connection with the 2014 Equity Offering are traded on the Toronto Stock Exchange under the symbol DWI.WT and on the NASDAQ Capital Market under the symbol DRWIW.

33

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        The following tables show common share activity in the three and twelve months ended February 29, 2016 (on a post-Consolidation basis).

	Common Shares
Balance at February 28, 2015		3,011,632
ESPP		5,473
Exercise of restricted share units		2,400
Balance at November 30, 2015		3,019,505
ESPP		564
Balance at February 29, 2016		3,020,069

        The following is a summary of stock option activity:

	Options			Weighted Average Price (CAD)
Options outstanding at February 28, 2015		159,421		$	76.34
Granted		171,037		$	8.70
Forfeited		(43,675	)	$	96.14
Options outstanding at November 30, 2015		286,783		$	33.48
Granted		1,937		$	3.50
Forfeited		(11,992	)	$	32.09
Options outstanding at February 29, 2016		276,728		$	32.82

        As at February 29, 2016 the following securities were issued and outstanding: 3,020,069 common shares, options to purchase 276,728 common shares granted under our Share Based Compensation Plan, and 10,084,062 warrants exercisable for 403,362 common shares. The number of common shares issuable upon the exercise of the warrants is subject to adjustment in accordance with terms of the warrants.

        As of May 18, 2016 the following securities were issued and outstanding: 3,620,506 common shares, options to purchase 260,442 common shares granted under our Share Based Compensation Plan, and warrants exercisable for 403,362 common shares. The number of common shares issuable upon the exercise of the warrants is subject to adjustment in accordance with terms of the warrants.

Restricted Shares & Employee Share Purchase Plan

        We launched an Employee Share Purchase Plan ("ESPP") on October 20, 2008. The plan includes provisions to allow employees to purchase common shares. We will match the employees' contribution at a rate of 25%. During the three and twelve months ended February 29, 2016 a total of 470 and 5,207 common shares were purchased by employees at fair market value, while we issued 114 and 1,227 common shares, net of forfeitures, as its matching contribution. The shares we contributed will vest twelve (12) months after issuance.

        We record an expense equal to the fair value of shares granted pursuant to the ESPP over the period the shares vest, with a corresponding credit to contributed surplus. The total fair value of the shares earned during

34

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

the three and twelve months ended February 29, 2016 was $5 thousand and $13 thousand (three and twelve months ended February 28, 2015 — $3 thousand and $13 thousand). The fair value of the unearned ESPP shares as at February 29, 2016 was $8 thousand (February 28, 2015 — $13 thousand). The number of shares held for release, and still restricted under the ESPP at February 29 2016 was 978 (February 28, 2015 — 440).

Restricted Share Units (RSUs)

        Pursuant to the terms of our Share Based Compensation Plan, we entered into restricted share unit agreements with certain of our independent directors. These units which were issued during July 2014 were subject to each director's continued engagement on the Board for a period of one year from the date of issuance. All of the originally issued RSUs vested during the second quarter of fiscal year 2016 with the exception of 800 RSUs which were cancelled on April 14, 2015.

        The following table sets forth the summary of RSU activity under our Share Based Compensation Plan for the three and twelve months ended February 29, 2016:

	Twelve months ended February 29, 2016
	RSU's			Weighted Average Price (CAD)
RSU balances at February 28, 2015		3,200		$	53.75
Forfeited		(800	)	$	53.75
Vested		(2,400	)	$	53.75
RSU balances at February 29, 2016		—			—

        We have recognized $nil and $39 thousand for the three and twelve months ended February 29, 2016 as compensation expense for restricted share units, with a corresponding credit to contributed surplus.

Financial Instruments

        Financial instruments are classified into one of the following categories: assets held at fair value, loans and receivables, other financial liabilities, or liabilities held at fair value.

35

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Categories for financial assets and liabilities

        The following table summarizes the carrying values of our financial instruments:

	February 29, 2016		February 28, 2015
Assets held at fair value (A)		4,277		23,692
Loans and receivables (B)		19,110		49,614
Other financial liabilities (C)		44,434		71,728
Liabilities held at fair value (D)		120		1,239

(A)

Includes cash and cash equivalents

(B)

Includes trade receivables and other miscellaneous receivables

(C)

Includes accounts payable, accrued liabilities, payroll related accruals, debt facility and termination fee

(D)

Warrant liability

        We classify our fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The accounting standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The inputs fall into three levels that may be used to measure fair value.

        Level 1 — Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.

        Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

        Level 3 — Significant unobservable inputs which are supported by little or no market activity.

        Cash and cash equivalents are measured using Level 1 inputs.

        The August 1, 2014 warrant liability is classified as Level 1 as the warrants are traded on the Toronto Stock Exchange and on the NASDAQ Capital Market.

36

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

        The September 23, 2013 warrant liability is classified as Level 3 as it is measured at fair value using significant unobservable inputs. Significant assumptions used at February 29, 2016 for the warrants include a dividend yield of 0%, a 1% assumption that the fundamental transaction will happen every year, volatility of 60%, and a risk free spot rate term structure.

        As at February 29, 2016 we held the following Level 3 financial instruments carried at fair value on the consolidated balance sheet.

	Level 3		Total
Financial Liabilities
Warrant liability		3		3

        As at February 28, 2015, we held the following Level 3 financial instruments carried at fair value on the consolidated balance sheet.

	Level 3		Total
Financial Liabilities
Warrant liability		603		603

        A reconciliation of the Level 3 warrant liability measured at fair value for the year ended February 29, 2016 follows:

	Warrants		$
Balance at February 28, 2015		2,088,750		603
Fair value adjustment — warrant liability		—		(600	)
Balance at February 29, 2016		2,088,750		3

Interest rate risk

        Cash, cash equivalents and our debt facility, which has interest rates with market rate fluctuations, expose us to interest rate risk on these financial instruments. Net interest expense, excluding deferred financing costs, recognized during the three and twelve months ended February 29, 2016 was $0.4 million and $2.0 million on our cash, cash equivalents and debt facility (three and twelve months ended February 28, 2015 — expense of $0.4 million and $1.4 million).

Credit risk

        In addition to trade receivables and other receivables, we are exposed to credit risk on our cash and cash equivalents in the event that our counterparties do not meet their obligations. We do not use credit derivatives or similar instruments to mitigate this risk and, as such, the maximum exposure is the full carrying value or fair value of the financial instrument. We minimize credit risk on trade receivables and other receivables, and cash and cash equivalents by transacting with only reputable financial institutions and customers.

37

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

Foreign exchange risk

        Foreign exchange risk arises because of fluctuations in exchange rates. To mitigate exchange risk, we may utilize forward contracts to secure exchange rates with the objective of offsetting fluctuations in our operating expenses incurred in foreign currencies with gains or losses on the forward contracts.

        As of February 29, 2016, if the U.S. dollar had appreciated 1% against all foreign currencies to which we have exposure, with all other variables held constant, the impact of this foreign currency change on our foreign denominated financial instruments would have resulted in a $27 thousand after-tax net loss for the three and twelve months ended February 29, 2016 (three and twelve months ended February 28, 2015 — $42 thousand) with an equal and opposite effect if the U.S. dollar had depreciated 1% against all foreign currencies at February 29, 2016.

        The risk described above relates to balance sheet accounts. However, as the section under "Expenses" indicates fluctuations in the Canadian dollar relative to the USD make it relatively more or less expensive to operate our R&D and head office functions in Canada.

Economic Dependence

        We were dependent on two key customers with respect to revenue in the three months ended February 29, 2016. These customers represented approximately 47% and 11% of sales for the three months ended February 29, 2016 (three months ended February 28, 2015 — three customers represented 46%, 16% and 10%).

        We were dependent on three key customers with respect to revenue in the twelve months ended February 29, 2016. These customers represented approximately 44%, 15% and 11% of sales for the twelve months ended February 29, 2016 (twelve months ended February 28, 2015 — two customers represented 53% and 16%).

Controls and Procedures

        At the end of the period covered by this MD&A (such period being the three and twelve months ended February 29, 2016), an evaluation was carried out under the supervision of, and with the participation of, our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, which are our principal executive officer and principal financial officer, respectively, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based upon that evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective as at February 29, 2016 to give reasonable assurance that the information we are required to disclose in reports that we file or submit under the Exchange Act and/or applicable Canadian securities legislation is (i) recorded, processed, summarized and reported, within the time periods specified in the U.S. Securities and Exchange Commission's as well as in accordance with applicable Canadian securities legislation rules and forms, and (ii) accumulated and communicated to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

        Our management is also responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) as well as National Instrument 52-109 of the Canadian Securities Administrators. These controls are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes. Under the supervision and with the participation of our management, including our principal

38

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

executive officer, our CEO, and principal financial officer, our CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective and that there are no material weaknesses in our disclosure controls and procedures as of February 29, 2016.

Changes in Internal Control over Financial Reporting

        During the period covered by this report, no changes occurred in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Critical Accounting Policies and Estimates

Inventory

        Inventory is valued at the lower of cost and net realizable value ("NRV"). The cost of inventory is calculated on a standard cost basis, which approximates average actual cost. NRV is determined as the market value for finished goods, replacement cost for raw materials, and finished goods market value less cost to complete for work in progress inventory.

        We regularly review inventory quantities on hand and record a provision for excess and obsolete inventory based on factors including our estimated forecast of product demand, the stage of the product life cycle and production requirements for the units in question.

        We carry inventory for the purposes of supporting our product warranty. Our standard warranty is typically between 12 and 36 months but we earn revenue by providing enhanced and extended warranty and repair service during and beyond the standard warranty period. Customer service inventory consists of both component parts and finished units. Indirect manufacturing costs and direct labour expenses are allocated systematically to the total production inventory.

Revenue recognition

        We derive revenue from the sale of broadband wireless backhaul equipment which includes embedded software and a license to use said software and extended product warranties. Software is considered to be incidental to the product. Services range from installation and training to basic consulting. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred and there are no significant remaining vendor obligations, collection of receivables is reasonably assured and the fee is fixed and determinable. Where conditions to final acceptance of the product are specified by the customer, revenue is deferred until acceptance criteria have been met.

        Our business agreements may also contain multiple elements. Accordingly, we are required to determine the appropriate accounting, including whether the deliverables specified in a multiple element arrangement should be treated as separate units of accounting for revenue recognition purposes, the fair value of these separate units of accounting and when to recognize revenue for each element. For arrangements involving multiple elements, we allocate revenues to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence ("VSOE") if available, third party evidence ("TPE") if VSOE is not available, or estimated selling price ("ESP") if neither VSOE nor TPE is available. In

39

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

multiple element arrangements, revenues are allocated to each separate unit of accounting for each of the deliverables using the relative estimated selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. We have determined the selling price both for the undelivered items and the delivered items using ESP.

        We generate revenue through direct sales and sales to distributors. We defer the recognition of a portion of sales to distributors based on estimated sale returns and stock rotation granted to customers on products in the same period the related revenues are recorded. These estimates are based on historical sales returns, stock rotations and other known factors.

        Revenue associated with extended warranty and advanced replacement warranty is recognized ratably over the life of the contracted service.

        Revenue from engineering services or development agreements is recognized according to the specific terms and acceptance criteria as services are rendered.

        We accrue estimated potential product liability as warranty costs when revenue on the sale of equipment is recognized. Warranty liability is estimated based on recent actual return experience and repair costs. Where product defects have been identified which would cause the cost or warranty experience to change, additional warranty costs are recognized.

        Shipping and handling costs borne by us are recorded in cost of sales. Shipping and handling costs charged to customers are recorded as revenue, if billed at the time of shipment. Costs charged to customers after delivery are recorded in cost of sales.

        We generate revenue through royalty agreements as a result of the use of our intellectual property. Royalty revenue is recognized as it is earned.

Advanced Replacement and Extended Warranty

        We offer our customers the option to purchase advanced replacement and extended warranty contracts either at the time the goods are shipped or at any time after shipment takes place. Many customers wait to purchase extended warranty coverage until their standard warranty period ends.

        Advanced replacement is a service we sell which provides customers with the benefit of having a replacement radio or modem shipped to them when a unit they own has been confirmed by us to be malfunctioning. When the customer receives the replacement radio or modem, they ship the malfunctioning unit back to us. We repair and keep the returned unit.

        Our standard warranty for customers generally varies between 12 and 36 months. Our extended warranty programs enable customers to continue to have repairs made as needed and customer support guidance beyond the standard warranty period.

Training

        We earn a minimal portion of our total revenue from the sale of training services primarily to installation companies. Only in rare circumstances do we provide or sub-contract installation services (see below), as the customers to whom we sell microwave equipment outsource the installation to specialized companies. As a result, installation training revenue is generally not sold as a bundled service because it is sold to a different customer base. Further, any training that is provided is not essential to the functionality of our product offerings,

40

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

and is thus considered an insignificant deliverable to the overall arrangement and is not considered a separate unit of accounting.

Installation

        Periodically, a customer may request that we arrange for the installation of our equipment. Installations are performed by a third party service provider. In this case, a separate services agreement is created between us and the end-user of our equipment, and we sub-contract the installation to a qualified installer. Evidence that the revenue associated with the installation service represents the fair value of the offering is provided by the sub-contracted value of the installation.

Research and Development

        Our research costs are expensed as incurred. Our development costs are expensed as incurred unless we meet generally accepted accounting criteria for deferral and amortization. Development costs incurred prior to establishment of technological feasibility do not meet these criteria, and are expensed as incurred.

Income taxes

        Income taxes are accounted for using the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based on differences between the tax and accounting bases of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes that are more likely than not to be realized. Deferred income tax assets and liabilities are measured using enacted tax rates that apply to taxable income in the years in which temporary differences are expected to be recovered or settled. We provide a valuation allowance against our deferred tax assets when we believe that it is more likely than not that the assets will not be realized.

        We determine whether it is more likely than not that an uncertain tax position will be sustained upon examination by the tax authorities. The tax benefit of any uncertain tax position that meets the more-likely-than-not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon successful resolution. To the extent a full benefit is not expected to be realized, an income tax liability is effectively established. We recognize accrued interest and penalties on unrecognized tax benefits as interest expense.

        We periodically review our provision for income taxes and valuation allowance to determine whether the overall tax estimates are reasonable. When we perform our quarterly assessments of the provision and valuation allowance, it may be determined that an adjustment is required. This adjustment may have a material impact on our financial position and results of operations.

FUTURE ACCOUNTING PRONOUNCEMENTS

        In May 2014, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2014-9, "Revenue from Contracts with Customers". The amendments in this Update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and create new Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers. In August 2015, the FASB issued ASU No. 2015-14, "Revenue

41

DragonWave Inc.
Management's Discussion and Analysis
For the three and twelve months ended February 29, 2016
Tables are expressed in USD $000's except share and per share amounts unless otherwise indicated

from Contracts with Customers" which reflects decisions reached by the FASB at its meeting earlier in the year to defer the effective date to fiscal years beginning after December 15, 2017, with early adoption permitted for the year beginning after December 15, 2016. We are currently assessing the impact this amendment will have on our consolidated financial statements.

        In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements — Going Concern". The update provides U.S. GAAP guidance on management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. We are currently assessing the impact this amendment will have on our consolidated financial statements.

        In February 2016, the FASB issued ASU No. 2016-02, "Leases". The amendments in this Update create Topic 842, Leases, and supersede the lease requirements in Topic 840, Leases. The Update will require companies to recognize a right-of-use (ROU) asset and a lease liability in their balance sheets, while still distinguishing between finance leases and operating leases. For finance leases, the lessee would recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income, and for operating leases, the lessee would recognize a straight-line lease expense. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. We are currently assessing the impact this amendment will have on our consolidated financial statements.

42

XML

Document and Entity Information	12 Months Ended
	Feb. 28, 2017 shares
Document and Entity Information
Entity Registrant Name	DRAGONWAVE INC
Entity Central Index Key	0001178946
Document Type	20-F
Document Period End Date	Feb. 28, 2017
Amendment Flag	false
Current Fiscal Year End Date	--02-28
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding	7,305,219
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Feb. 28, 2017	Feb. 29, 2016
Current Assets
Cash and cash equivalents	$ 4,073	$ 4,277
Trade receivables	11,876	18,986
Inventory	21,415	22,702
Other current assets	1,791	2,777
Total Current Assets	39,155	48,742
Long-term Assets
Property and equipment	2,517	3,702
Intangible assets	336	623
Total Long Term Assets	2,853	4,325
Total Assets	42,008	53,067
Current Liabilities
Debt facility	17,030	22,152
Accounts payable and accrued liabilities	25,206	23,832
Deferred revenue	539	1,944
Deferred tax liability	148	294
Warrant liability		117
Total Current Liabilities	42,923	48,339
Long-term Liabilities
Deferred revenue	435	498
Warrant liability	1,090	3
Total Long Term Liabilities	1,525	501
Commitments and contingencies
Shareholders' Equity (Deficiency)
Capital stock	229,995	221,128
Contributed surplus	10,503	9,235
Deficit	(234,113)	(218,225)
Accumulated other comprehensive loss	(9,618)	(9,618)
Total Shareholders' Equity (Deficiency)	(3,233)	2,520
Non-controlling interest	793	1,707
Total Equity (Deficiency)	(2,440)	4,227
Total Liabilities and Equity (Deficiency)	$ 42,008	$ 53,067
Shares issued and outstanding	7,305,219	3,020,069

XML

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Hardware and other	$ 32,742	$ 70,491
Services	11,174	15,804
REVENUE	43,916	86,295
COST OF SALES
Hardware and other	25,672	58,991
Services	5,477	8,917
Inventory provision	953	4,416
Total Cost of Sales	32,102	72,324
Gross profit	11,814	13,971
EXPENSES
Research and development	7,825	13,406
Selling and marketing	7,363	10,572
General and administrative	12,734	13,798
Total Expenses	27,922	37,776
Loss before other items	(16,108)	(23,805)
Goodwill impairment		(11,927)
Restructuring costs		(1,549)
Amortization of deferred financing cost	(442)
Amortization of intangible assets	(369)	(577)
Accretion expense	(102)	(205)
Interest expense	(1,464)	(2,014)
Warrant issuance expenses	(561)
Change in fair value of warrant liability	4,242	1,119
Foreign exchange loss	(110)	(331)
Loss before income taxes	(14,914)	(39,289)
Income tax expense	783	2,275
Net loss and comprehensive loss	(15,697)	(41,564)
Net income attributable to non-controlling interest	(191)	(740)
Net loss and comprehensive loss attributable to shareholders	$ (15,888)	$ (42,304)
Net loss and comprehensive loss per share
Basic and diluted	$ (3.26)	$ (14.01)
Weighted average shares outstanding
Basic and diluted	4,879,738	3,019,259

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Operating activities
Net loss	$ (15,697)	$ (41,564)
Items not affecting cash
Goodwill impairment		11,927
Amortization of deferred financing cost	442
Amortization of property and equipment	1,791	1,931
Amortization of intangible assets	369	577
Accretion expense	102	205
Change in fair value of warrant liability	(4,242)	(1,119)
Stock-based compensation	750	988
Unrealized foreign exchange loss	114	485
Deferred income tax expense	(146)	1,841
Net cash used in operating activities before adjusting non-cash working capital items	(16,517)	(24,729)
Changes in non-cash working capital items	9,344	18,236
Net Cash Used in Operating Activities	(7,173)	(6,493)
Investing activities
Acquisition of property and equipment	(606)	(1,311)
Acquisition of intangible assets	(82)	(406)
Net Cash Used in Investing Activities	(688)	(1,717)
Financing activities
Repayments on capital lease obligation	(55)	(507)
Proceeds from debt facility		1,300
Repayment of debt facility	(5,122)	(11,548)
Dividend paid to non-controlling interest in DW-HFCL	(1,105)
Issuance of warrants	5,809
Issuance of common shares, net	8,244	35
Net Cash (Used in) Provided by Financing Activities	7,771	(10,720)
Effect of foreign exchange on cash and cash equivalents	(114)	(485)
Net decrease in cash and cash equivalents	(204)	(19,415)
Cash and cash equivalents at beginning of period	4,277	23,692
Cash and cash equivalents at end of period	4,073	4,277
Cash paid during the period for interest	1,320	2,335
Cash paid during the period for taxes	$ 1,061	$ 522

XML

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIENCY) - USD ($) $ in Thousands	Common Shares	Contributed Surplus	Deficit	AOCL	Non-Controlling Interest	Total
Balance at Feb. 28, 2015	$ 220,952	$ 8,388	$ (175,921)	$ (9,618)	$ 967	$ 44,768
Balance, shares at Feb. 28, 2015	3,011,632
Stock-based compensation		988				988
Exercise of restricted share units	$ 133	(133)
Exercise of restricted share units (in shares)	2,400
Share issuance - ESPP	$ 43	(8)				35
Share issuance - ESPP (in shares)	6,037
Net income (loss)			(42,304)		740	(41,564)
Balance at Feb. 29, 2016	$ 221,128	9,235	(218,225)	(9,618)	1,707	4,227
Balance, shares at Feb. 29, 2016	3,020,069
Stock-based compensation		750				750
Share issuance	$ 4,232					4,232
Share issuance (in shares)	2,423,878
Exercise of pre-funded warrants, shares	30,164
Exercise of warrants	$ 4,562					4,562
Exercise of warrants, shares	1,811,578
Exercise of stock options	$ 69	(26)				$ 43
Exercise of stock options, shares	18,220					18,220
Share issuance - ESPP	$ 4					$ 4
Share issuance - ESPP (in shares)	1,310					1,051
Fair value of warrants to Comerica		544				$ 544
Dividend paid to non-controlling interest in DW-HFCL					(1,105)	(1,105)
Net income (loss)			(15,888)		191	(15,697)
Balance at Feb. 28, 2017	$ 229,995	$ 10,503	$ (234,113)	$ (9,618)	$ 793	$ (2,440)
Balance, shares at Feb. 28, 2017	7,305,219

XML

NATURE OF BUSINESS, BASIS OF PRESENTATION AND GOING CONCERN

12 Months Ended

Feb. 28, 2017

NATURE OF BUSINESS, BASIS OF PRESENTATION AND GOING CONCERN

NATURE OF BUSINESS, BASIS OF PRESENTATION AND GOING CONCERN

1. NATURE OF BUSINESS, BASIS OF PRESENTATION AND GOING CONCERN

        DragonWave Inc. [the "Company"], incorporated under theCanada Business Corporations Actin February 2000, is a provider of high-capacity packet microwave solutions that drive next-generation IP networks.

        The Company's common shares are traded on the Toronto Stock Exchange under the trading symbol DRWI and on the NASDAQ Capital Market under the symbol DRWI.

        These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: DragonWave Corp., incorporated in the state of Delaware, USA; DragonWave PTE. LTD., incorporated in Singapore; DragonWave S.à r.l., incorporated in Luxembourg; DragonWave Telecommunication Technology (Shanghai) Co., Ltd., incorporated in China; DragonWave Mexico S.A. de C.V., incorporated in Mexico; Axerra Networks Asia Pacific Limited, incorporated in Hong Kong; DragonWave India Private Limited, incorporated in India; and DragonWave Inc.'s majority owned subsidiary, DragonWave HFCL India Private Limited, incorporated in India. All intercompany accounts and transactions have been eliminated upon consolidation.

        The consolidated financial statements of the Company have been prepared in United States dollars following United States Generally Accepted Accounting Principles ["U.S. GAAP"].

        The consolidated financial statements for the year ended February 28, 2017 have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the disbursement of liabilities and commitments in the normal course of business in the foreseeable future. The Company has a history of losses and has consumed significant cash resources in the past, and has continued to do so in the year ended February 28, 2017. During the last two fiscal years, additional pressure has been placed on the Company's liquidity position as a result of reduced revenue from a significant Original Equipment Manufacturer ["OEM"] channel and a dispute over inventory shipped to a customer in India in June 2015.

        The Company has been able to make progress in restructuring the business. This progress includes the following highlights:

Operational improvements:

•           Selected by Sprint for its network densification and optimization strategy;

•           Improved the gross profit percentage in fiscal year 2017 to 26.9% from 16.2% in fiscal year 2016;

•           Reduced operating expenses by 26% in the twelve months of fiscal year 2017 compared to the same period in the previous year primarily through reduction in staff levels internationally;

Debt Facility:

•           Reduced outstanding debt on the Company's credit facility by $5,122 and $10,248 in the twelve months ending February 28, 2017 and February 29, 2016, respectively, by leveraging its working capital;

New Capital:

•           Raised $9,502 in cash (net of commissions and expenses) with a public offering in August 2016 and a registered direct offering in April 2016 which in both cases included common shares and warrants;

•           Received $4,180 in cash from the exercise of warrants during the twelve months ended February 28, 2017;

Other:

•           Initiated arbitration proceedings to seek resolution to its customer dispute in India.

        Despite the progress identified above, the Company remains in breach of the original terms of its debt facility, and has not yet been able to achieve a quarterly break-even level. See Note 11 for further details on the debt facility. The continued consumption of cash has raised substantial doubt about DragonWave Inc.'s ability to continue as a going concern. Management's plans to restructure the business, improve its financial results and overcome these difficulties include initiatives in a number of areas, including:

•           Targeting its sales efforts to direct and indirect opportunities in markets with higher gross margins, and lower working capital requirements;

•           Adjusting its business focus and resources away from Nokia in order to support new sales channels;

•           Renegotiating the terms of existing debt facilities, or finding new debt providers;

•           Actively investigating and pursuing alternative forms of financing;

•           Seeking to reduce fixed and variable operating expenses further, by tightly controlling discretionary spending and headcount growth;

•           Continuing to collect accounts receivable from customers in a timely manner;

•           Reducing inventory levels in both raw material and finished goods inventory;

•           Working closely with vendors to ensure supply continuity; and

•           Investigating strategic and financial alternatives that may be available including a potential sale of the Company, alternative debt and equity, and business combinations.

        In addition, the Company no longer complies with Nasdaq Listing Rule 5550(b)(1) due to its failure to maintain a minimum of $2,500 in shareholders' equity or any alternatives to such requirement, and was granted an extension to April 17, 2017 to remedy the deficiency. The Company did not regain compliance and has requested a hearing before the Nasdaq Listing Qualifications Panel to request a further extension. There can be no assurance that the Panel will ultimately grant an extension of the compliance period. Continued listing of its common shares on the Nasdaq increases the Company's ability to raise additional capital in the future. Trading of the Company's securities under the symbol "DRWI" on the Toronto Stock Exchange, the Company's primary listing, is not impacted by this decision.

        These plans may be difficult to achieve. They are dependent on a number of key assumptions including the timing of significant new customer projects, success in arbitration with the customer located in India, and accommodations from the Company's suppliers and credit lenders. It is possible that the plans described above may not be fully executed or may occur too slowly to solve the Company's current liquidity concerns. There can be no assurance that the existing financing facility can be renegotiated or that any other forms of financing can be arranged on satisfactory terms. These consolidated financial statements do not include any adjustments to the accounts and classification of assets and liabilities that may be necessary if the Company is unable to continue as a going concern. Such adjustments could be material.

XML

SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Feb. 28, 2017

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

2. SIGNIFICANT ACCOUNTING POLICIES

Use of accounting estimates

        The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company's management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent amounts of assets and liabilities as at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Actual results could differ from the estimates made by management.

        The following includes estimates by management: allowance for doubtful accounts, inventory allocations, inventory provisions, accrued liabilities, warranty provisions, warrant liability, property and equipment amortization, tax valuation allowance, impairment of long-lived assets, vendor specific objective evidence, estimated selling price and estimated returns as it relates to revenue recognition, and stock-based compensation.

        These estimates and assumptions are based on management's historical experience, best knowledge of current events and conditions and actions that the Company may undertake in the future. Certain of these estimates require subjective or complex judgments by management about matters that are uncertain and changes in those estimates could materially impact the amounts reported in the consolidated financial statements and accompanying notes.

Foreign currency translation

        The Company's operations and balances denominated in foreign currencies, including those of its foreign subsidiaries that are primarily a direct and integral component or extension of the Company's operations, are translated into US dollars ["USD"] using the following: monetary assets and liabilities are translated at the period end exchange rate, non-monetary assets are translated at the historical exchange rate, and revenue and expense items are translated at the average exchange rate. Gains or losses resulting from the translation adjustments are included in the consolidated statements of operations and comprehensive loss.

Revenue recognition

        The Company derives revenue from the sale of broadband wireless backhaul equipment, which includes embedded software and a license to use said software and extended product warranties. Software is considered to be incidental to the product. Services range from installation and training to basic consulting. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred and there are no significant remaining vendor obligations, collection of receivables is reasonably assured and the fee is fixed and determinable. Where conditions to final acceptance of the product are specified by the customer, revenue is deferred until acceptance criteria have been met.

        The Company's sales agreements may also contain multiple elements. Accordingly, the Company is required to determine the appropriate accounting, including whether the deliverables specified in a multiple element arrangement should be treated as separate units of accounting for revenue recognition purposes, the fair value of these separate units of accounting and when to recognize revenue for each element. For arrangements involving multiple elements, the Company allocates revenues to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence ["VSOE"] if available, third party evidence ["TPE"] if VSOE is not available, or estimated selling price ["ESP"] if neither VSOE nor TPE is available. In multiple element arrangements, revenues are allocated to each separate unit of accounting for each of the deliverables using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. The Company has determined the selling price for both the undelivered items and the delivered items using ESP.

        The Company generates revenue through direct sales and sales to distributors. The Company defers the recognition of a portion of sales to distributors based on estimated sales return and stock rotation granted to customers on products in the same period the related revenues are recorded. These estimates are based on historical sales returns, stock rotations and other known factors.

        Revenue from engineering services or development agreements is recognized according to the specific terms and acceptance criteria as services are rendered.

        Revenue associated with extended warranty and advanced replacement warranty is recognized ratably over the life of the contracted service.

        The Company accrues estimated potential product liability as warranty costs when revenue on the sale of equipment is recognized. Warranty liability is estimated based on recent actual return experience and repair costs. Where product defects have been identified that would cause the cost or warranty experience to change, additional warranty costs are recognized.

        Shipping and handling costs borne by the Company are recorded in cost of sales. Shipping and handling costs charged to customers are recorded as revenue, if billed at the time of shipment. Costs charged to customers after delivery are recorded in cost of sales.

Cash and cash equivalents

        The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Financial instruments

        The Company classifies its financial instruments as assets held at fair value, loans and receivables, other financial liabilities, or liabilities held at fair value. The classification depends on the purpose for which the financial instruments were acquired, their characteristics and management's intent. Management determines the classification of financial assets and liabilities at initial recognition and the classification is not changed subsequent to initial recognition.

        The Company designated its cash and cash equivalents and foreign exchange contracts as assets held at fair value, which are measured at fair value, with changes in fair value being recorded in net earnings. Trade receivables and other receivables have been classified as loans and receivables which are measured at amortized cost. Accounts payable, accrued liabilities and the debt facility have been classified as other financial liabilities, which are measured at amortized cost. Liabilities held at fair value include the warrant liability, which is measured at fair value, with changes in fair value being recorded in net loss.

        Transaction costs directly attributable to the acquisition of financial assets are recorded in net loss in the period in which they are incurred.

Inventory

        Inventory is valued at the lower of cost and net realizable value ["NRV"]. The cost of inventory is calculated on a standard cost basis, which approximates weighted average actual cost. NRV is determined as the market value for finished goods, replacement cost for raw materials, and finished goods market value less cost to complete for work in progress inventory.

        The Company regularly reviews inventory quantities on hand and records an impairment for excess and obsolete inventory based on factors including its estimated forecast of product demand, the stage of the product life cycle and production requirements for the units in question.

        Indirect manufacturing costs and direct labour expenses are allocated systematically to the total production inventory.

        The Company carries inventory for the purposes of supporting its product warranty. Standard warranty is typically 13 to 36 months, but the Company earns revenue by providing enhanced and extended warranty and repair service during and beyond the standard warranty period. Customer service inventory consists of both component parts and finished units.

Income taxes

        Income taxes are accounted for using the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based on differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes that are more likely than not to be realized. Deferred income tax assets and liabilities are measured using enacted tax rates that apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The Company provides a valuation allowance against its deferred tax assets when it believes that it is more likely than not that the assets will not be realized.

        The Company determines whether it is more likely than not that an uncertain tax position will be sustained upon examination by the tax authorities. The tax benefit of any uncertain tax position that meets the more likely than not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon successful resolution. To the extent a full benefit is not expected to be realized, an income tax liability is effectively established. The Company recognizes accrued interest and penalties on unrecognized tax benefits as interest expense.

        Management periodically reviews the Company's provision for income taxes and valuation allowance to determine whether the overall tax estimates are reasonable. When management performs its assessments of the provision and valuation allowance, it may be determined that an adjustment is required. This adjustment may have a material impact on the Company's financial position and results of operations.

Property and equipment

        Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the anticipated useful lives of the assets as follows:

Test equipment, research and development equipment	4 - 5 years
Computer hardware	2 years
Production fixtures	3 years
Leasehold improvements	5 years
Other	3 - 5 years

Intangible assets

        Intangible assets include software and are amortized over their estimated useful life of between 2 and 3 years.

Impairment of long-lived assets

        The Company reviews long-lived assets ["LLA"] such as property, equipment and intangible assets with finite useful lives for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. These events and circumstances may include significant decreases in the market price of an asset or asset group, significant changes in the extent or manner in which an asset or asset group is being used by the Company or in its physical condition, a significant change in legal factors or in the business climate, a history or forecast of future operating or cash flow losses, significant disposal activity, a significant decline in the Company's share price, a significant decline in revenue or adverse changes in the economic environment.

        The LLA impairment requires the Company to identify its asset groups and test impairment of each asset group separately. To conduct the LLA impairment test, the asset group is tested for recoverability using undiscounted cash flows over the remaining useful life of the primary asset. If forecasted net cash flows are less than the carrying amount of the asset group, an impairment charge is measured by comparing the fair value of the asset group to its carrying value. Determining the Company's asset groups and related primary assets requires significant judgment by management. Different judgments could yield different results.

        When indicators of impairment exist, LLA impairment is tested using a two-step process. The Company performs a cash flow recoverability test as the first step, which involves comparing the asset group's estimated undiscounted future cash flows to the carrying amount of its net assets. If the net cash flows of the asset group exceed the carrying amount of its net assets, LLA are not considered to be impaired. If the carrying amount exceeds the net cash flows, there is an indication of potential impairment and the second step of the LLA impairment test is performed to measure the impairment amount. The second step involves determining the fair value of the asset group. Fair values are determined using valuation techniques that are in accordance with U.S. GAAP, including the market approach, income approach and cost approach. If the carrying amount of the asset group's net assets exceeds the fair value of the Company, then the excess represents the maximum amount of potential impairment that will be allocated to the asset group, with the limitation that the carrying value of each separable asset cannot be reduced to a value lower than its individual fair value. The total impairment amount allocated is recognized as a non-cash impairment loss.

        The Company reviews any changes in events and circumstances that have occurred on a quarterly basis to determine if indicators of LLA impairment exist.

Share-based compensation plan and employee share purchase plan

        The Company accounts for stock options granted to employees using the fair value method calculated by the Black-Scholes option pricing model. In accordance with the fair value method, the Company recognizes estimated compensation expense related to stock options over the vesting period of the options granted, with the related credit being charged to contributed surplus. The Company estimates the volatility at the date of grant based on the volatility of a group of comparator companies.

        The employee share purchase plan includes provisions to allow employees to purchase common shares. The Company will match the employees' contribution at a rate of 25%. Proceeds from employees are received and the cost of the matching shares is recorded in share capital, with the related debit applied to contributed surplus at the time the shares are issued. The shares contributed by the Company will vest 12 months after issuance with a corresponding compensation expense recognized in loss.

Research and development

        Research costs are expensed as incurred. Development costs are expensed as incurred unless they meet generally accepted accounting criteria for deferral and amortization. Development costs incurred prior to establishment of technological feasibility do not meet these criteria, and are expensed as incurred.

Loss per share

        Basic loss per share is calculated by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. For all periods presented, the net loss available to common shareholders equates to the net loss.

        In the computation of diluted earnings per share, the Company includes the number of additional common shares that would have been outstanding if the dilutive potential equity instruments had been issued.

Non-controlling interest

        Non-controlling interest consists of the minority-owned portion of the Company's 50.1% owned subsidiary, DragonWave HFCL India Private Limited.

FUTURE ACCOUNTING PRONOUNCEMENTS

        In May 2014, the Financial Accounting Standards Board ["FASB"] issued ASU No. 2014-9, "Revenue from Contracts with Customers". The amendments in this Update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and create new Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers. In August 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers" which reflects decisions reached by the FASB at its meeting earlier in the year to defer the effective date to fiscal years beginning after December 15, 2017, with early adoption permitted for the year beginning after December 15, 2016. The Company is currently assessing the impact this amendment will have on its consolidated financial statements.

        In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements – Going Concern". The update provides U.S. GAAP guidance on management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company is currently assessing the impact this amendment will have on its consolidated financial statements.

        In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes". The amendments in this update eliminate the current requirement for companies to separate deferred income tax liabilities and assets into current and non-current amounts in a classified statement of financial position. Instead, companies will be required to classify all deferred tax liabilities and assets as non-current. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial statements.

        In February 2016, the FASB issued ASU No. 2016-02, "Leases". The amendments in this Update create Topic 842, Leases, and supersede the lease requirements in Topic 840, Leases. The Update will require companies to recognize a right-of-use asset and a lease liability in their balance sheets, while still distinguishing between finance leases and operating leases. For finance leases, the lessee would recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income, and for operating leases, the lessee would recognize a straight-line lease expense. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact this amendment will have on its consolidated financial statements.

        In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting". The amendments in this Update simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company is currently assessing the impact this amendment will have on its consolidated financial statements.

        In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash". The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial statements.

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NON-CONTROLLING INTEREST

12 Months Ended

Feb. 28, 2017

NON-CONTROLLING INTEREST

NON-CONTROLLING INTEREST

3. NON-CONTROLLING INTEREST

DragonWave HFCL India Private Limited

        Non-controlling interest consists of the minority owned portion of the Company's 50.1% owned subsidiary, DragonWave HFCL India Private Limited. During the year ended February 28, 2017, DragonWave HFCL India Private Limited paid a dividend excluding withholding taxes totaling $1,839 to its shareholders. The Company received $921 and the minority-owned portion received $918.

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CASH AND CASH EQUIVALENTS

12 Months Ended

Feb. 28, 2017

CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS

4. CASH AND CASH EQUIVALENTS

        The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

	February 28, 2017				February 29, 2016
Currency	USD Amount		% of Total		USD Amount		% of Total
US dollar		2,320		57.0%		1,600		37.4%
Canadian dollar		44		1.1%		39		0.9%
Indian rupee		1,279		31.4%		2,317		54.2%
Other		430		10.5%		321		7.5%
Total Cash and Cash Equivalents		4,073		100.0%		4,277		100.0%

        In accordance with the fourth forbearance agreement which is valid until April 1, 2017 the Company is required to have a minimum of $1,000 held at Comerica Bank [2016 – $1,000].

        The Company could elect to repatriate funds from its foreign subsidiaries and this may result in withholding taxes.

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TRADE RECEIVABLES

12 Months Ended

Feb. 28, 2017

TRADE RECEIVABLES

TRADE RECEIVABLES

5. TRADE RECEIVABLES

        The Company is exposed to credit risk with respect to trade receivables in the event that its counterparties do not meet their obligations. The Company minimizes its credit risk with respect to trade receivables by performing credit reviews for each of its customers. The Company's allowance for doubtful accounts reflects the Company's assessment of collectability across its global customer base.

	February 28, 2017			February 29, 2016
Trade receivables		12,099			19,209
Allowance for doubtful accounts		(223	)		(223	)
Total trade receivables		11,876			18,986

        As at February 28, 2017, three customers exceeded 10% of the total receivable balance. These customers represented 21%, 17% and 15% of the trade receivables balance [2016 – two customers represented 52% and 16% of the trade receivables balance].

        Included in general and administrative expenses is an expense of $82 related to bad debt expense for the year ended February 28, 2017 [2016 – expense of $240].

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INVENTORY

12 Months Ended

Feb. 28, 2017

INVENTORY

INVENTORY

6. INVENTORY

        Inventory consists of the following:

	February 28, 2017		February 29, 2016
Raw materials		2,844		2,389
Work in progress		2,089		614
Finished goods		14,384		16,986
Total production inventory		19,317		19,989
Inventory held for customer service/warranty		2,098		2,713
Total inventory		21,415		22,702

        Cost of sales for the year ended February 28, 2017 was $32,102 [2016 – $72,324], which included $22,982 of product costs [2016 – $56,296]. The remaining costs of $9,120 [2016 – $16,028] related principally to the costs of sub-contractors for services, warehousing, freight, warranty, overhead and other direct costs of sales.

        For the year ended February 28, 2017, the Company recognized an impairment loss on inventory of $953 [2016 – $4,416], which included an impairment loss of $648 for inventory held by contract manufacturers that it does not expect to be fully used [2016 – $1,497].

        The Company allocates overhead and labour to inventory. Included in cost of sales for the year ended February 28, 2017 were overhead and labour allocations of $753 [2016 – $1,746]. Included in inventory at February 28, 2017 were overhead and labour allocations of $454 [2016 – $551].

        The Company uses an outsourced manufacturing model in which most of the component acquisition and assembly of its products is executed by third parties. The Company's contract manufacturers currently have inventory intended for use in the production of its products, and the Company has purchase orders or demand forecasts in place for raw materials and manufactured products with these contract manufacturers. When a product has been purchased by a contract manufacturer but not pulled on for a build after a certain amount of time, the Company may be required to take ownership of it. The value of the inventory held by the Company's primary contract manufacturer as at February 28, 2017 was $12,939 [2016 – $16,848].

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OTHER CURRENT ASSETS

12 Months Ended

Feb. 28, 2017

OTHER CURRENT ASSETS

OTHER CURRENT ASSETS

7. OTHER CURRENT ASSETS

        Other current assets consist of the following:

	February 28, 2017		February 29, 2016
Deposits on inventory		368		670
Prepaid expenses		840		1,355
Indirect taxes receivable		388		610
Deferred financing costs		—		18
Receivable from contract manufacturers and other items		195		124
Total other current assets		1,791		2,777

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PROPERTY AND EQUIPMENT

12 Months Ended

Feb. 28, 2017

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

8. PROPERTY AND EQUIPMENT

        Property and equipment are apportioned as follows:

	February 28, 2017						February 29, 2016
	Cost		Accumulated Amortization		Net Book Value		Net Book Value
Test equipment, research and development equipment		24,627		22,736		1,891		2,655
Computer hardware		3,717		3,656		61		213
Production fixtures		2,633		2,228		405		559
Leasehold improvements		1,081		1,031		50		103
Other		1,600		1,490		110		172
Total		33,658		31,141		2,517		3,702

        Amortization expense relating to the above property and equipment was allocated to operating expenses as follows:

	February 28, 2017		February 29, 2016
Research and development		290		364
Selling and marketing		34		40
General and administrative		1,467		1,527
		1,791		1,931

        Amortization expense includes amortization of assets recorded under capital lease.

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INTANGIBLE ASSETS

12 Months Ended

Feb. 28, 2017

INTANGIBLE ASSETS

INTANGIBLE ASSETS

9. INTANGIBLE ASSETS

        Intangible assets are apportioned as follows:

	February 28, 2017						February 29, 2016
	Cost		Accumulated Amortization		Net Book Value		Net Book Value
Software		7,094		6,758		336		623

        For the year ended February 28, 2017, the Company recognized amortization of intangible assets of $369 [2016 – $577]. The Company estimates that it will recognize $181 and $155, respectively, for the next two succeeding years.

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ACCOUNTS PAYABLES AND ACCRUED LIABILITIES

12 Months Ended

Feb. 28, 2017

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

        Accounts payable and accrued liabilities are apportioned as follows:

	February 28, 2017		February 29, 2016
Trade payables		14,726		11,858
Accrued liabilities		5,061		5,830
Termination fee		3,351		3,337
Payroll related accruals		1,033		1,257
Warranty accrual		697		926
Income taxes payable		303		555
Capital lease obligation		35		69
Total accounts payable and accrued liabilities		25,206		23,832

        On April 10, 2013, the Company announced changes to its existing operational framework with Nokia. Included in the changes was an agreement to a termination fee in the amount of $8,668 to be paid to Nokia in installments. Payments totaling $4,351 were made by the year ended February 29, 2016. As at February 28, 2017, the liability is valued at $3,351 and is considered short term in nature [2016 – $3,337 short term].

        Warranty accrual:

        The Company records a liability for future warranty costs based on management's best estimate of probable claims within the Company's product warranties. The accrual is based on the terms of the warranty, which vary by customer, product, or service and historical experience of returns and cost of repairs. The Company regularly evaluates the appropriateness of the remaining accrual.

        The following table details the changes in the warranty accrual for the respective years:

	February 28, 2017			February 29, 2016
Balance at the beginning of the period		926			678
Accruals		1,314			2,057
Utilization		(1,543	)		(1,809	)
Balance at the end of the period		697			926

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DEBT FACILITY

12 Months Ended

Feb. 28, 2017

DEBT FACILITY

DEBT FACILITY

11. DEBT FACILITY

        On October 12, 2016, the Company signed a fourth forbearance agreement which is valid until April 1, 2017 against a credit facility with Comerica Bank and Export Development Canada which matured on June 1, 2016.

        This asset-based credit facility was for a total of $40,000 plus $4,000 for letters of credit and foreign exchange facilities. Credit availability is subject to ongoing compliance with borrowing covenants and short-term assets on hand. The Company had drawn $17,030 on the facility as at February 28, 2017 [2016 – $22,152] and $1,845 against its letter of credit facility [2016 – $1,853].

        The credit facility that was extended on January 6, 2014, matured on June 1, 2016 and is secured by a first priority charge on all of the assets of the Company and its principal direct and indirect subsidiaries. The terms of the credit facility include other customary terms, conditions, covenants, and representations and warranties. Borrowing options under the credit facility include US dollar, Canadian dollar, and Euro loans. Interest rates vary with market rate fluctuations, with loans bearing interest in the range of 3% to 4% above the applicable base rates. Direct costs associated with obtaining the debt facility such as closing fees, registration and legal expenses have been capitalized and were expensed over the original 30-month term of the facility. During the year ended February 28, 2017, the weighted average debt outstanding was $17,916 [2016 – $29,765] and the Company recognized $1,300 in interest expense related to the debt facility [2016 – $2,007] and expensed $18 in deferred financing cost [2016 – $55].

        The credit facility contains financial covenants including minimum tangible net worth requirements, minimum cash levels to be held at Comerica Bank and minimum liquidity ratio requirements. The credit facility also imposes certain restrictions on the Company's ability to acquire capital assets above a threshold over a trailing six-month period.

        The fourth forbearance agreement identified new minimum covenant levels reflecting the Company's revised financial plans. The forbearance agreement includes a requirement to hold a minimum of $1,000 at Comerica Bank. In addition, the forbearance agreement reduces the facility commitment from $40,000 to $30,000, includes additional compliance requirements and implements more frequent monitoring. Warrants to purchase 375,000 common shares were agreed to be issued to the lenders at an exercise price of $4.00 per share and will expire five years from the date of issuance. The expense associated with the warrant issuance was calculated using a Black-Scholes warrant pricing model and recognized rateably over the term of the forbearance agreement which expired on April 1, 2017. In the twelve months ending February 28, 2017, the Company recognized an expense of $442 in deferred financing costs relating to these warrants.

        As at May 26, 2017, the Company's fourth forbearance agreement had expired, and a new forbearance agreement has not yet been agreed.

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SHAREHOLDERS' EQUITY

12 Months Ended

Feb. 28, 2017

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

12. SHAREHOLDERS' EQUITY

Number of shares authorized

        The Company has an unlimited amount of common shares authorized for issuance.

        On September 23, 2013, the Company completed a public offering. Under the terms of the offering, the Company issued and sold 11,910,000 units at $2.10 on a pre-consolidation basis, for aggregate gross proceeds of $25,011. After deducting commissions and listing expenses, the Company realized net proceeds of $22,434. Each unit consisted of one common share of the Company and three quarters of one warrant. Each whole warrant entitles the holder to purchase 1/25th of one common share at an exercise price of $2.80 per share following the August 8, 2016 public offering, until September 23, 2018, subject to certain adjustments. Upon issuance, the Company recognized a liability in the amount of $6,425 for the warrants. See Warrants section for further details.

        On February 2, 2016, the Company effected a share consolidation of the Company's common shares at a ratio of 1-for-25. As a result of the share consolidation, every 25 shares of the issued and outstanding common shares consolidated into one newly-issued outstanding common share. Each fractional share remaining after the share consolidation was cancelled. The number of outstanding stock options and restricted share units were proportionately adjusted by the consolidation ratio and the exercise prices correspondingly increased by the same consolidation ratio. All shares and exercise prices are presented on a post-consolidation basis in these consolidated financial statements.

        On April 11, 2016, the Company completed a registered direct offering. Under the terms of the offering, the Company issued and sold 599,998 units at $7.25, for aggregate gross proceeds of $4,350. After deducting commissions and listing expenses, the Company realized net proceeds of $4,014. Each unit consisted of one common share of the Company and one half of one warrant. Each whole warrant entitles the holder to purchase one common share of the Company at an exercise price of $8.50 per share until April 11, 2021. Upon issuance, the Company recognized a liability in the amount of $1,137 for the warrants. See Warrants section for further details.

        On August 8, 2016 the Company completed a public offering. Under the terms of the offering, the Company issued and sold 1,760,880 Class A units at $3.35 and 30,164 Class B units at $3.34, for aggregate gross proceeds of $6,000. After deducting commissions and expenses, the Company realized net proceeds of $5,277. Concurrent with the underwritten public offering in the United States, the Company issued an additional 63,000 Class A Units on a private placement basis to purchasers in Canada for additional gross proceeds of $211. Each Class A unit consisted of one common share, one five-year warrant [the "Long-Term Warrant"] to purchase one common share and two six-month warrants [the "Short-Term Warrant"]. Each Class B unit consisted of a pre-funded warrant [the "Pre-Funded Warrant"] to purchase one common share, one Long-Term Warrant and two Short-Term Warrants. The Long-Term Warrants have an exercise price of $4.37 per share, are exercisable immediately and will expire on August 8, 2021. The Short-Term Warrants have an exercise price of $4.00 per share, are exercisable immediately and expired on February 8, 2017. The Pre-Funded Warrants are exercisable immediately with no expiration date, are deemed purchased for a price of $3.34 per underlying common share by virtue of purchasing a Class B Unit and have an exercise price of $0.01 per share. Upon issuance, the Company recognized a liability in the amount of $4,672 for the warrants. See Warrants section for further details.

Share-based compensation plan

        On June 20, 2014, the Shareholders approved the adoption of a new Share-based Compensation Plan [the "Plan"] to replace the Previous Plan. The Plan includes provision for granting of performance share units ["PSUs"], restricted share units ["RSUs"], deferred share units ["DSUs"], Bonus Shares (as defined in the Plan) and options to purchase common shares. Settlement of vested PSUs, RSUs and DSUs is effected by delivering common shares acquired in the open market and/or issued from treasury, or by making a cash payment equal to the number of PSUs, RSUs or DSUs multiplied by the volume weighted average trading price of the common shares on the applicable stock exchange for the five trading days preceding the settlement date, or by a combination of these methods. The manner of settlement for RSUs, PSUs and DSUs is determined by the Compensation Committee in its sole discretion. Options are granted with an exercise price equal to the fair value of the common shares of the Company, and generally vest at a rate between six months to four years from the date of the option grant. All remaining outstanding options expire five years from the grant date, or upon termination of employment. The maximum number of common shares issuable under the Plan is 730,522, which represents 10% of the common shares issued and outstanding as at February 28, 2017.

        The following is a summary of stock option activity:

	February 28, 2017					February 29, 2016
	Options			Weighted Average Exercise Price (CAD)		Options			Weighted Average Exercise Price (CAD)
Opening balance		276,728		$	32.82		159,421		$	76.34
Granted		324,895		$	4.36		172,974		$	8.64
Exercised		(18,220	)	$	3.05		—		$	—
Expired		(54,079	)	$	61.43		(55,667	)	$	82.34
Closing balance		529,324		$	13.45		276,728		$	32.82

        The following table shows the weighted average values used in determining the fair value of options granted during the three months ended February 28, 2017 and February 29, 2016:

	February 28, 2017		February 29, 2016
Volatility		75.0%		95.6%
Risk-free rate		1.05%		0.58%
Dividend yield		Nil		Nil
Average expected life		4 yrs		4 yrs

        The 324,895 options granted during the year ended February 28, 2017 were determined to have a fair value of $773 [2016-172,974 options valued at $683].

        The following table summarizes the various exercise prices inherent in the Company's stock options outstanding and exercisable on February 28, 2017:

Exercise Price				Options Outstanding						Options Exercisable
Low (CAD)		High (CAD)		Quantity of options		Weighted average remaining contractual life (yrs)		Weighted average exercise price (CAD)		Quantity of options		Weighted average remaining contractual life (yrs)		Weighted average exercise price (CAD)
$	3.00	$	3.34		84,639		3.75	$	3.00		83,389		3.73	$	3.00
$	3.35	$	3.83		232,990		4.54	$	3.66		—		—		—
$	3.84	$	6.78		75,050		4.20	$	6.16		725		3.63	$	4.00
$	6.79	$	46.88		63,688		2.95	$	21.19		37,477		2.61	$	24.01
$	46.89	$	73.50		72,957		1.54	$	57.59		62,745		1.45	$	58.21
					529,324		3.76	$	13.45		184,336		2.73	$	26.07

        The Company has recognized $750 for the year ended February 28, 2017 as compensation expense for stock-based grants, with a corresponding credit to contributed surplus [2016 – $941]. Stock compensation expense was allocated to operating expenses as follows:

	February 28, 2017		February 29, 2016
Research and development		182		172
Selling and marketing		239		204
General and administrative		329		565
		750		941

        As at February 28, 2017, compensation costs not yet recognized relating to stock option awards outstanding are $1,276 [2016 – $1,476] net of estimated forfeitures. Performance vesting awards will vest as performance conditions are met. Compensation will be adjusted for subsequent changes in estimated forfeitures.

        The total intrinsic value of options exercised during the year ended February 28, 2017 is $29 [2016 – nil].

        The intrinsic value associated with outstanding and fully vested options as at February 28, 2017 is nil [2016 – nil].

Restricted Share Units

        The Company has recognized nil for the year ended February 28, 2017 as compensation expense for RSUs, with a corresponding credit to contributed surplus [2016 – $39].

Restricted shares and employee share purchase plan

        The Company launched an Employee Share Purchase Plan ["ESPP"] on October 20, 2008. The plan includes provisions to allow employees to purchase common shares. The Company will match the employees' contribution at a rate of 25%. During the year ended February 28, 2017, a total of 1,051 common shares were purchased by employees at fair market value, while the Company issued 259 common shares, net of forfeitures, as its matching contribution during the year ended February 28, 2017. The shares contributed by the Company will vest 12 months after issuance.

        The Company records an expense equal to the fair value of shares granted pursuant to the ESPP over the period the shares vest, with a corresponding credit to contributed surplus. The total fair value of the shares earned during the year ended February 28, 2017 was $8 [2016 – $13]. The fair value of the unearned ESPP shares as at February 28, 2017 was $1 [2016 – $8]. The number of shares held for release, and still restricted under the plan, as at February 28, 2017 was 259 [2016-978].

Warrants

        Effective May 30, 2007, the Company granted warrants to purchase up to 5,050 common shares of the Company at a price of $88.75 CAD per share. The warrants expire 10 years after the date of issuance. The warrants vested based on the achievement of pre-determined business milestones and resulted in 31,562 warrants being eligible for exercise. Each whole warrant entitles the holder to purchase 1/25th of one common share of the Company.

        On September 23, 2013, the Company completed a public offering. Under the terms of the offering, the Company issued and sold 11,910,000 units at $2.10 on a pre-consolidation basis, for aggregate gross proceeds of $25,011. Equity issuance expenses relating to the offering totaled $2,576, of which $662 was expensed as the proportionate warrant costs. Each unit consisted of one common share of the Company and three quarters of one warrant (warrants issued – 8,932,500). Each whole warrant entitles the holder to purchase 1/25th of one common share of the Company at an exercise price of $2.80 per share until September 23, 2018 following the August 8, 2016 equity financing undertaken by the Company. In the event of a fundamental transaction, the Company may be required to settle the warrants with a cash payment. As a result, the Company recognized a warrant liability of $6,425, which represented the estimated fair value of the liability as at September 23, 2013. The warrant liability is adjusted quarterly to its estimated fair value. Increases or decreases in the fair value of the warrants are presented as "Change in fair value of warrant liability" in the consolidated statements of operations and comprehensive loss. As at February 28, 2017, 738,750 warrants were outstanding. During the year ended February 28, 2017, the Company realized a loss in the amount of $75 in the consolidated statement of operations and comprehensive loss which represented the change in fair value of the remaining warrant liability of $7.

        On August 1, 2014, the Company completed a public offering. Under the terms of the offering, the Company issued and sold 15,927,500 units at $1.80 CAD on a pre-consolidation basis for aggregate gross proceeds of $28,670 CAD. Each unit consisted of one common share of the Company and one half of one warrant. Each whole warrant entitles the holder to purchase 1/25th of one common share of the Company at an exercise price of $56.25 CAD per share until August 1, 2016, subject to certain adjustments. Equity issuance expenses relating to the offering totaled $2,275, of which $221 was expensed as the proportionate warrant costs. As a result of the offering, the Company issued warrants totaling 7,963,750 and recognized a warrant liability of $2,551, which represented the estimated fair value of the liability as at August 1, 2014. During the year ended February 28, 2017, the Company realized a gain in the amount of $117 in the consolidated statements of operations and comprehensive loss which represented the change in fair value of the warrant liability.

        On April 11, 2016, the Company completed a registered direct offering. Under the terms of the offering, the Company issued and sold 599,998 units at $7.25, for aggregate gross proceeds of $4,350. Each unit consisted of one common share of the Company and one half of one warrant. Each whole warrant entitles the holder to purchase one common share of the Company at an exercise price of $8.50 per share until April 11, 2021, subject to certain adjustments. Equity issuance expenses relating to the offering totaled $428 of which $92 was expensed as the proportionate warrant costs. As a result of the offering, the Company issued 299,999 warrants and recognized a warrant liability of $1,137, which represented the estimated fair value of the liability as at April 11, 2016. During the year ended February 28, 2017, the Company realized a gain in the amount of $1,038 in the consolidated statements of operations and comprehensive loss, which represented the change in fair value of the remaining warrant liability of $99.

        On August 8, 2016, the Company completed a public offering. Under the terms of the offering, the Company issued and sold 1,760,880 Class A units at $3.35 and 30,164 Class B units at $3.34, for aggregate gross proceeds of $6,000. After deducting commissions and expenses, the Company realized net proceeds of $5,277. Concurrent with the underwritten public offering in the United States, the Company issued an additional 63,000 Class A Units on a private placement basis to purchasers in Canada for additional gross proceeds of $211. Each Class A unit consisted of one common share, one Long-Term Warrant to purchase one common share and two Short-Term Warrants. Each Class B unit consisted of a Pre-Funded Warrant to purchase one common share, one Long-Term Warrant and two Short-Term Warrants. The Long-Term Warrants have an exercise price of $4.37 per share, are exercisable immediately and will expire on August 8, 2021. The Short-Term Warrants have an exercise price of $4.00 per share, are exercisable immediately and expired on February 8, 2017. The Pre-Funded Warrants are exercisable immediately with no expiration date, are deemed purchased for a price of $3.34 per underlying common share by virtue of purchasing a Class B Unit and have an exercise price of $0.01 per share. The Pre-Funded Warrants were fully exercised on August 25, 2016. Equity issuance expenses relating to the offering totaled $723, of which $469 was expensed as the proportionate warrant costs. As a result of the offering, the Company issued 1,854,044 Long-Term Warrants and 3,708,088 Short-Term Warrants and recognized a warrant liability of $4,672, which represented the estimated fair value of the liability as at August 31, 2016. As at February 28, 2017, 1,854,044 Long-Term Warrants were outstanding. During the year ended February 28, 2017 the Company realized a gain in the amount of $3,162 in the consolidated statements of operations and comprehensive loss, which represented the change in fair value of the remaining warrant liability of $984.

        The following is a summary of granted warrants:

	February 28, 2017
	Warrants Granted		Shares Purchasable		Exercise Price		Termination date
May 2007 Issuance		31,562		1,262	$	88.75 CAD		May 30, 2017
September 2013 Issuance		738,750		29,550	$	2.80		September 23, 2018
April 2016 Issuance		299,999		299,999	$	8.50		April 11, 2021
August 2016 Issuance – Long-Term Warrants		1,854,044		1,854,044	$	4.37		August 8, 2021
Sub-total warrants issued and outstanding		2,924,355		2,184,855
Comerica Warrants – granted but not issued		375,000		375,000	$	4.00		five years from issuance date
Total warrants granted		3,299,355		2,559,855

        The warrants to Comerica were granted but not issued at February 28, 2017. See Note 11 for further details on these warrants.

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NET LOSS PER SHARE

12 Months Ended

Feb. 28, 2017

NET LOSS PER SHARE

NET LOSS PER SHARE

13. NET LOSS PER SHARE

        Basic loss per share is calculated by dividing net loss available to shareholders by the weighted average number of common shares outstanding during the period. In the computation of diluted earnings per share, the Company includes the number of additional common shares that would have been outstanding if the dilutive potential equity instruments had been issued.

        As at February 28, 2017, a total of 529,324 options and 3,299,355 warrants have been excluded from the diluted net loss per share calculations, as their effect would have been anti-dilutive.

        The following table illustrates the net loss per share during the year ended February 28, 2017 and February 29, 2016 excluding the effect of outstanding options and warrants:

	Twelve months ended
	February 28, 2017			February 29, 2016
Net loss attributable to shareholders		(15,888	)		(42,304	)
Weighted average number of shares outstanding		4,879,738			3,019,259
Basic net loss / dilutive net loss per share	$	(3.26	)	$	(14.01	)

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Feb. 28, 2017

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

14. COMMITMENTS AND CONTINGENCIES

        Future minimum operating lease payments per fiscal year that relate to office and warehouse space in various countries as at February 28, 2017 are as follows:

2018	1,074
2019	915
2020	905
2021	905
Thereafter	660
	4,459

        For the year ended February 28, 2017, the Company incurred rental expenses of $1,357 [2016 – $1,590].

        In January 2016, a customer in India initiated an arbitration process with the Company to resolve the dispute over inventory shipped to this customer in June 2015, with a carrying amount of $4,707. The customer has now submitted its claim statement, which discloses an aggregate claim amount of approximately $6,425 in respect of, among other things, damages claimed with respect to lost revenue, import duties, and inventory replacement costs. The Company believes that the claim has no merit. The Company has not recognized the revenue related to this shipment and has recorded the cost of the inventory provided to the customer as an asset with a value of $4,600. The Company has not received any payment with respect to this inventory. The Company submitted a counter-claim in June 2016 for the full value of the contract and damages. Frequent arbitration meetings have been held to date and are planned during the first half of calendar 2017. No decision has been made as of the date of this report and the outcome of this matter is not determinable.

        In the normal course of business, the Company is subject to patent infringement complaints. The Company defends itself vigorously in these matters and does not believe any known complaint is material.

        See Note 6 for the discussion on the purchase order commitments with contract manufacturers.

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SUPPLEMENTAL CASH FLOW INFORMATION

12 Months Ended

Feb. 28, 2017

SUPPLEMENTAL CASH FLOW INFORMATION

SUPPLEMENTAL CASH FLOW INFORMATION

15. SUPPLEMENTAL CASH FLOW INFORMATION

	February 28, 2017			February 29, 2016
Changes in non-cash working capital balances:
Trade receivables		7,110			29,640
Inventory		1,287			1,592
Other current assets		986			3,074
Accounts payable and accrued liabilities		1,429			(16,880	)
Deferred revenue		(1,468	)		810
		9,344			18,236

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FINANCIAL INSTRUMENTS

12 Months Ended

Feb. 28, 2017

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

16. FINANCIAL INSTRUMENTS

        Financial instruments are classified into one of the following categories: assets held at fair value, loans and receivables, other financial liabilities, or liabilities held at fair value.

Categories for financial assets and liabilities

        The following table summarizes the carrying values of the Company's financial instruments:

	February 28, 2017		February 29, 2016
Assets held at fair value (A)		4,073		4,277
Loans and receivables (B)		12,071		19,110
Other financial liabilities (C)		41,201		44,434
Liabilities held at fair value (D)		1,090		120

(A)	Includes cash and cash equivalents
(B)	Includes trade receivables and other miscellaneous receivables
(C)	Includes accounts payable and accrued liabilities, payroll-related accruals, debt facility and termination fee
(D)	Includes warrant liability

        The Company classifies its fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The accounting standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The inputs fall into three levels that may be used to measure fair value.

        Level 1 – Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.

        Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

        Level 3 – Significant unobservable inputs that are supported by little or no market activity.

        Cash and cash equivalents are measured using Level 1 inputs.

        The warrant liability is classified as Level 3 as it is measured at fair value calculated by the Black-Scholes model using significant unobservable inputs. Significant assumptions used as at February 28, 2017 for the warrants include a dividend yield of 0%, volatility of 75%, and a risk-free spot rate term structure.

        The Company held the following Level 3 financial instruments carried at fair value on the consolidated balance sheet.

	February 28, 2017		February 29, 2016
	Level 3		Level 3
Financial Liabilities
Warrant liability		1,090		3

        A reconciliation of the Level 3 warrant liability measured at fair value for the year ended February 28, 2017 follows:

	Level 3
	Warrants			$
Balance at February 29, 2016		2,088,750			3
Issuance of warrants		5,862,131			5,809
Exercise of warrants		(3,107,572	)		(527	)
Expiry of warrants and change in fair value of warrant liability		(1,950,516	)		(4,195	)
Balance at February 28, 2017		2,892,793			1,090

Interest rate risk

        Cash and cash equivalents and the Company's debt facility, which has interest rates with market rate fluctuations, expose the Company to interest rate risk on these consolidated financial instruments. Interest expense, excluding deferred financing costs, recognized during the year ended February 28, 2017 was $1,446 on the Company's cash and cash equivalents, and debt facility [2016 – expense of $1,959].

Credit risk

        In addition to trade receivables and other receivables, the Company is exposed to credit risk on its cash and cash equivalents in the event that its counterparties do not meet their obligations. The Company does not use credit derivatives or similar instruments to mitigate this risk and, as such, the maximum exposure is the full carrying value or fair value of the financial instrument. The Company minimizes credit risk on trade receivables and other receivables, and cash and cash equivalents by transacting with only reputable financial institutions and customers.

Foreign exchange risk

        Foreign exchange risk arises because of fluctuations in exchange rates. As at February 28, 2017, if the US dollar had appreciated by 1% against all foreign currencies to which the Company is exposed, with all other variables held constant, the impact of this foreign currency change on the Company's foreign denominated financial instruments would have resulted in a decrease in after-tax net loss of $43 for the year ended February 28, 2017 [2016 – increase of $27], with an equal and opposite effect if the US dollar had depreciated by 1% against all foreign currencies as at February 28, 2017.

Liquidity risk

        A risk exists that the Company will encounter difficulty in satisfying its financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. As at February 28, 2017, the Company had cash and cash equivalents totaling $4,073 [2016 – $4,277]. See Note 1 for further discussion of liquidity risk associated with the Company and Note 11 for details of the debt facility requirement.

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SEGMENTED INFORMATION

12 Months Ended

Feb. 28, 2017

SEGMENTED INFORMATION

SEGMENTED INFORMATION

17. SEGMENTED INFORMATION

        The Company operates in one operating segment – broadband wireless backhaul equipment.

        The following table presents total net book value of property, equipment and intangible assets by geographic location:

	February 28, 2017				February 29, 2016
	Amount		%		Amount		%
Canada		1,586		56%		1,860		43%
Malaysia		786		28%		1,492		34%
Other		481		16%		973		23%
Total		2,853		100%		4,325		100%

        The Company analyzes its sales according to geographic region and targets product development and sales strategies by region. The following tables present total revenue by geographic location through direct and indirect sales and through its OEM partner, Nokia:

	Year Ended February 28, 2017								Year Ended February 29, 2016
	Direct & Indirect Sales		OEM Sales through Nokia		Total		% of Total Revenue		Direct & Indirect Sales		OEM Sales through Nokia		Total		% of Total Revenue
Canada		2,648		—		2,648		6%		2,255		—		2,255		3%
Europe, Middle East and Africa		4,825		10,287		15,112		34%		6,753		31,109		37,862		44%
India		4,391		301		4,692		11%		13,993		3,787		17,780		21%
United States		13,261		—		13,261		30%		19,577		19		19,596		23%
Rest of World		7,661		542		8,203		19%		6,095		2,707		8,802		9%
		32,786		11,130		43,916		100%		48,673		37,622		86,295		100%

        The Company has shown revenue by the customers' purchasing entities' geographic location, except in cases where the geographic location of the product deployment is explicitly known.

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ECONOMIC DEPENDENCE

12 Months Ended

Feb. 28, 2017

ECONOMIC DEPENDENCE

ECONOMIC DEPENDENCE

18. ECONOMIC DEPENDENCE

        For the year ended February 28, 2017, the Company was dependent on three key customers with respect to revenue. These customers represented approximately 25%, 14% and 13% of sales during that twelve month period [2016 – three customers represented 44%, 15% and 11%].

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INCOME TAXES

12 Months Ended

Feb. 28, 2017

INCOME TAXES

INCOME TAXES

19. INCOME TAXES

        The components of the Company's income (loss) before income taxes, by taxing jurisdiction, were as follows:

	February 28, 2017			February 29, 2016
Canada		(14,156	)		(22,994	)
Luxembourg		(2,004	)		(7,222	)
India		728			1,756
China		414			706
Other		104			(11,535	)
		(14,914	)		(39,289	)

        Income tax expense, both current and deferred, relates to jurisdictions outside of Canada where losses are not sufficient to cover the tax liability in the region. For the year ended February 28, 2017, the current income tax expenses were $931 [2016 – $434] and the deferred income tax expense (recovery) was ($148) [2016 – $1,841].

        The reported income tax provision differs from the amount computed by applying the Canadian statutory rate to the net loss, for the following reasons:

	2017			2016
Loss before income taxes		(14,914	)		(39,289	)
Statutory income tax rate		26.5%			26.5%
Expected income tax recovery		(3,952	)		(10,412	)
Foreign tax rate differences		563			578
Non-deductible expenses and non-taxable income		(785	)		37
Change in valuation allowances		4,967			6,043
Share issue costs		(156	)		—
Goodwill impairment		—			4,420
Foreign bank, minimum and withholding taxes		353			—
Prior year adjustments		(183	)		1,444
Other		(24	)		165
		783			2,275

        The Company's deferred tax assets and liabilities include the following significant components:

	2017			2016
Income tax loss carryforwards		44,541			39,322
Capital loss		19,011			19,011
Research and development tax credits		13,180			13,180
SR&ED expenditures		6,872			6,872
Book and tax differences on assets		960			1,256
Share issue expenses		529			443
Income and expense reserves		194			236
Total gross deferred tax assets		85,287			80,320
Valuation allowance		(85,287	)		(80,320	)
Income and expense reserves		(148	)		(294	)
Net deferred tax liability		(148	)		(294	)

        As at February 28, 2017, the Company had cumulative tax loss carryforwards in the following jurisdictions: Canada – $155,054, United States – $7,783, Luxembourg – $38,165. The Company also has capital losses being carried forward in the following jurisdictions: Canada – $16,302; United States – $45,543.

        The losses in Canada expire starting in fiscal 2031 until fiscal 2037. The losses in Luxembourg can be carried forward indefinitely. Income tax benefits relating to the losses in Canada and Luxembourg have not been recognized in the consolidated financial statements as the recognition requirements under the liability method of accounting for income taxes have not been met.

        The losses in the U.S. expire between fiscal 2022 and fiscal 2032. Internal Revenue Code Section 382 imposes an annual limitation on the use of a company's net operating loss carryforwards when a company has an ownership change. The acquisition of Axerra Networks, Inc. by the Company resulted in an ownership change as understood by Section 382. As a result, the annual restriction of the amount of losses of Axerra Networks, Inc. that may be used has been calculated as $521.

        As at February 28, 2017, the Company had $14,720 of investment tax credits available to reduce future federal Canadian income taxes payable. These investment tax credits begin to expire in 2022. In addition, the Company had provincial research and development tax credits of $2,361, which are available to reduce future provincial income taxes payable. These provincial tax credits begin to expire in 2029. The tax benefit of the federal and provincial tax credits has not been recognized in the consolidated financial statements.

        As at February 28, 2017, the Company has not recorded any liabilities associated with uncertain tax positions.

        The Company remains subject to examination by tax authorities in Canada for years 2011 to 2017 and in the major jurisdictions for tax years 2012 to 2017.

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COMPARATIVE FIGURES

12 Months Ended

Feb. 28, 2017

COMPARATIVE FIGURES

COMPARATIVE FIGURES

20. COMPARATIVE FIGURES

        Certain comparative figures have been reclassified to conform to the presentation adopted in the current fiscal year. The Company reclassified an amount of $902 from hardware revenue to service revenue to conform with the current fiscal year presentation.

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SUBSEQUENT EVENT

12 Months Ended

Feb. 28, 2017

SUBSEQUENT EVENT

SUBSEQUENT EVENT

21. SUBSEQUENT EVENT

        On March 17, 2017, the Company issued 1,198,666 common shares in a Registered Direct Offering, and concurrently in a private placement, issued warrants to purchase 599,333 common shares exercisable in the future at an exercise price of $1.50. The price per common share and one half of a warrant was $1.50 and resulted in total gross proceeds to the Company of $1,798. The warrants are not exercisable for six months and one day from issuance and will expire five years from the date of issuance.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Feb. 28, 2017

SIGNIFICANT ACCOUNTING POLICIES

Use of accounting estimates

Use of accounting estimates

        The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company's management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent amounts of assets and liabilities as at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Actual results could differ from the estimates made by management.

        The following includes estimates by management: allowance for doubtful accounts, inventory allocations, inventory provisions, accrued liabilities, warranty provisions, warrant liability, property and equipment amortization, tax valuation allowance, impairment of long-lived assets, vendor specific objective evidence, estimated selling price and estimated returns as it relates to revenue recognition, and stock-based compensation.

        These estimates and assumptions are based on management's historical experience, best knowledge of current events and conditions and actions that the Company may undertake in the future. Certain of these estimates require subjective or complex judgments by management about matters that are uncertain and changes in those estimates could materially impact the amounts reported in the consolidated financial statements and accompanying notes.

Foreign currency translation

Foreign currency translation

        The Company's operations and balances denominated in foreign currencies, including those of its foreign subsidiaries that are primarily a direct and integral component or extension of the Company's operations, are translated into US dollars ["USD"] using the following: monetary assets and liabilities are translated at the period end exchange rate, non-monetary assets are translated at the historical exchange rate, and revenue and expense items are translated at the average exchange rate. Gains or losses resulting from the translation adjustments are included in the consolidated statements of operations and comprehensive loss.

Revenue recognition

Revenue recognition

        The Company derives revenue from the sale of broadband wireless backhaul equipment, which includes embedded software and a license to use said software and extended product warranties. Software is considered to be incidental to the product. Services range from installation and training to basic consulting. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred and there are no significant remaining vendor obligations, collection of receivables is reasonably assured and the fee is fixed and determinable. Where conditions to final acceptance of the product are specified by the customer, revenue is deferred until acceptance criteria have been met.

        The Company's sales agreements may also contain multiple elements. Accordingly, the Company is required to determine the appropriate accounting, including whether the deliverables specified in a multiple element arrangement should be treated as separate units of accounting for revenue recognition purposes, the fair value of these separate units of accounting and when to recognize revenue for each element. For arrangements involving multiple elements, the Company allocates revenues to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence ["VSOE"] if available, third party evidence ["TPE"] if VSOE is not available, or estimated selling price ["ESP"] if neither VSOE nor TPE is available. In multiple element arrangements, revenues are allocated to each separate unit of accounting for each of the deliverables using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. The Company has determined the selling price for both the undelivered items and the delivered items using ESP.

        The Company generates revenue through direct sales and sales to distributors. The Company defers the recognition of a portion of sales to distributors based on estimated sales return and stock rotation granted to customers on products in the same period the related revenues are recorded. These estimates are based on historical sales returns, stock rotations and other known factors.

        Revenue from engineering services or development agreements is recognized according to the specific terms and acceptance criteria as services are rendered.

        Revenue associated with extended warranty and advanced replacement warranty is recognized ratably over the life of the contracted service.

        The Company accrues estimated potential product liability as warranty costs when revenue on the sale of equipment is recognized. Warranty liability is estimated based on recent actual return experience and repair costs. Where product defects have been identified that would cause the cost or warranty experience to change, additional warranty costs are recognized.

        Shipping and handling costs borne by the Company are recorded in cost of sales. Shipping and handling costs charged to customers are recorded as revenue, if billed at the time of shipment. Costs charged to customers after delivery are recorded in cost of sales.

Cash and cash equivalents

Cash and cash equivalents

        The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Financial instruments

Financial instruments

        The Company classifies its financial instruments as assets held at fair value, loans and receivables, other financial liabilities, or liabilities held at fair value. The classification depends on the purpose for which the financial instruments were acquired, their characteristics and management's intent. Management determines the classification of financial assets and liabilities at initial recognition and the classification is not changed subsequent to initial recognition.

        The Company designated its cash and cash equivalents and foreign exchange contracts as assets held at fair value, which are measured at fair value, with changes in fair value being recorded in net earnings. Trade receivables and other receivables have been classified as loans and receivables which are measured at amortized cost. Accounts payable, accrued liabilities and the debt facility have been classified as other financial liabilities, which are measured at amortized cost. Liabilities held at fair value include the warrant liability, which is measured at fair value, with changes in fair value being recorded in net loss.

        Transaction costs directly attributable to the acquisition of financial assets are recorded in net loss in the period in which they are incurred.

Inventory

Inventory

        Inventory is valued at the lower of cost and net realizable value ["NRV"]. The cost of inventory is calculated on a standard cost basis, which approximates weighted average actual cost. NRV is determined as the market value for finished goods, replacement cost for raw materials, and finished goods market value less cost to complete for work in progress inventory.

        The Company regularly reviews inventory quantities on hand and records an impairment for excess and obsolete inventory based on factors including its estimated forecast of product demand, the stage of the product life cycle and production requirements for the units in question.

        Indirect manufacturing costs and direct labour expenses are allocated systematically to the total production inventory.

        The Company carries inventory for the purposes of supporting its product warranty. Standard warranty is typically 13 to 36 months, but the Company earns revenue by providing enhanced and extended warranty and repair service during and beyond the standard warranty period. Customer service inventory consists of both component parts and finished units.

Income taxes

Income taxes

        Income taxes are accounted for using the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based on differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes that are more likely than not to be realized. Deferred income tax assets and liabilities are measured using enacted tax rates that apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The Company provides a valuation allowance against its deferred tax assets when it believes that it is more likely than not that the assets will not be realized.

        The Company determines whether it is more likely than not that an uncertain tax position will be sustained upon examination by the tax authorities. The tax benefit of any uncertain tax position that meets the more likely than not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon successful resolution. To the extent a full benefit is not expected to be realized, an income tax liability is effectively established. The Company recognizes accrued interest and penalties on unrecognized tax benefits as interest expense.

        Management periodically reviews the Company's provision for income taxes and valuation allowance to determine whether the overall tax estimates are reasonable. When management performs its assessments of the provision and valuation allowance, it may be determined that an adjustment is required. This adjustment may have a material impact on the Company's financial position and results of operations.

Property and equipment

Property and equipment

        Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the anticipated useful lives of the assets as follows:

Test equipment, research and development equipment	4 - 5 years
Computer hardware	2 years
Production fixtures	3 years
Leasehold improvements	5 years
Other	3 - 5 years

Intangible assets

Intangible assets

        Intangible assets include software and are amortized over their estimated useful life of between 2 and 3 years.

Impairment of long-lived assets

Impairment of long-lived assets

        The Company reviews long-lived assets ["LLA"] such as property, equipment and intangible assets with finite useful lives for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. These events and circumstances may include significant decreases in the market price of an asset or asset group, significant changes in the extent or manner in which an asset or asset group is being used by the Company or in its physical condition, a significant change in legal factors or in the business climate, a history or forecast of future operating or cash flow losses, significant disposal activity, a significant decline in the Company's share price, a significant decline in revenue or adverse changes in the economic environment.

        The LLA impairment requires the Company to identify its asset groups and test impairment of each asset group separately. To conduct the LLA impairment test, the asset group is tested for recoverability using undiscounted cash flows over the remaining useful life of the primary asset. If forecasted net cash flows are less than the carrying amount of the asset group, an impairment charge is measured by comparing the fair value of the asset group to its carrying value. Determining the Company's asset groups and related primary assets requires significant judgment by management. Different judgments could yield different results.

        When indicators of impairment exist, LLA impairment is tested using a two-step process. The Company performs a cash flow recoverability test as the first step, which involves comparing the asset group's estimated undiscounted future cash flows to the carrying amount of its net assets. If the net cash flows of the asset group exceed the carrying amount of its net assets, LLA are not considered to be impaired. If the carrying amount exceeds the net cash flows, there is an indication of potential impairment and the second step of the LLA impairment test is performed to measure the impairment amount. The second step involves determining the fair value of the asset group. Fair values are determined using valuation techniques that are in accordance with U.S. GAAP, including the market approach, income approach and cost approach. If the carrying amount of the asset group's net assets exceeds the fair value of the Company, then the excess represents the maximum amount of potential impairment that will be allocated to the asset group, with the limitation that the carrying value of each separable asset cannot be reduced to a value lower than its individual fair value. The total impairment amount allocated is recognized as a non-cash impairment loss.

        The Company reviews any changes in events and circumstances that have occurred on a quarterly basis to determine if indicators of LLA impairment exist.

Share-based compensation plan and employee share purchase plan

Share-based compensation plan and employee share purchase plan

        The Company accounts for stock options granted to employees using the fair value method calculated by the Black-Scholes option pricing model. In accordance with the fair value method, the Company recognizes estimated compensation expense related to stock options over the vesting period of the options granted, with the related credit being charged to contributed surplus. The Company estimates the volatility at the date of grant based on the volatility of a group of comparator companies.

        The employee share purchase plan includes provisions to allow employees to purchase common shares. The Company will match the employees' contribution at a rate of 25%. Proceeds from employees are received and the cost of the matching shares is recorded in share capital, with the related debit applied to contributed surplus at the time the shares are issued. The shares contributed by the Company will vest 12 months after issuance with a corresponding compensation expense recognized in loss.

Research and development

Research and development

        Research costs are expensed as incurred. Development costs are expensed as incurred unless they meet generally accepted accounting criteria for deferral and amortization. Development costs incurred prior to establishment of technological feasibility do not meet these criteria, and are expensed as incurred.

Loss per share

Loss per share

        Basic loss per share is calculated by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. For all periods presented, the net loss available to common shareholders equates to the net loss.

        In the computation of diluted earnings per share, the Company includes the number of additional common shares that would have been outstanding if the dilutive potential equity instruments had been issued.

Non-controlling interest

Non-controlling interest

        Non-controlling interest consists of the minority-owned portion of the Company's 50.1% owned subsidiary, DragonWave HFCL India Private Limited.

FUTURE ACCOUNTING PRONOUNCEMENTS

FUTURE ACCOUNTING PRONOUNCEMENTS

        In May 2014, the Financial Accounting Standards Board ["FASB"] issued ASU No. 2014-9, "Revenue from Contracts with Customers". The amendments in this Update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and create new Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers. In August 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers" which reflects decisions reached by the FASB at its meeting earlier in the year to defer the effective date to fiscal years beginning after December 15, 2017, with early adoption permitted for the year beginning after December 15, 2016. The Company is currently assessing the impact this amendment will have on its consolidated financial statements.

        In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements – Going Concern". The update provides U.S. GAAP guidance on management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company is currently assessing the impact this amendment will have on its consolidated financial statements.

        In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes". The amendments in this update eliminate the current requirement for companies to separate deferred income tax liabilities and assets into current and non-current amounts in a classified statement of financial position. Instead, companies will be required to classify all deferred tax liabilities and assets as non-current. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial statements.

        In February 2016, the FASB issued ASU No. 2016-02, "Leases". The amendments in this Update create Topic 842, Leases, and supersede the lease requirements in Topic 840, Leases. The Update will require companies to recognize a right-of-use asset and a lease liability in their balance sheets, while still distinguishing between finance leases and operating leases. For finance leases, the lessee would recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income, and for operating leases, the lessee would recognize a straight-line lease expense. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact this amendment will have on its consolidated financial statements.

        In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting". The amendments in this Update simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company is currently assessing the impact this amendment will have on its consolidated financial statements.

        In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash". The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial statements.

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Feb. 28, 2017

SIGNIFICANT ACCOUNTING POLICIES

Schedule of Property And Equipment Anticipated Useful Lives

        Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the anticipated useful lives of the assets as follows:

Test equipment, research and development equipment	4 - 5 years
Computer hardware	2 years
Production fixtures	3 years
Leasehold improvements	5 years
Other	3 - 5 years

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CASH AND CASH EQUIVALENTS (Tables)

12 Months Ended

Feb. 28, 2017

CASH AND CASH EQUIVALENTS

Schedule of Cash, Cash Equivalents and Restricted Cash

        The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

	February 28, 2017				February 29, 2016
Currency	USD Amount		% of Total		USD Amount		% of Total
US dollar		2,320		57.0%		1,600		37.4%
Canadian dollar		44		1.1%		39		0.9%
Indian rupee		1,279		31.4%		2,317		54.2%
Other		430		10.5%		321		7.5%
Total Cash and Cash Equivalents		4,073		100.0%		4,277		100.0%

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TRADE RECEIVABLES (Tables)

12 Months Ended

Feb. 28, 2017

TRADE RECEIVABLES

Schedule of Trade Receivables

The Company's allowance for doubtful accounts reflects the Company's assessment of collectability across its global customer base.

	February 28, 2017			February 29, 2016
Trade receivables		12,099			19,209
Allowance for doubtful accounts		(223	)		(223	)
Total trade receivables		11,876			18,986

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INVENTORY (Tables)

12 Months Ended

Feb. 28, 2017

INVENTORY

Schedule of Inventory

        Inventory consists of the following:

	February 28, 2017		February 29, 2016
Raw materials		2,844		2,389
Work in progress		2,089		614
Finished goods		14,384		16,986
Total production inventory		19,317		19,989
Inventory held for customer service/warranty		2,098		2,713
Total inventory		21,415		22,702

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OTHER CURRENT ASSETS (Tables)

12 Months Ended

Feb. 28, 2017

OTHER CURRENT ASSETS

Schedule of Other Current Assets

        Other current assets consist of the following:

	February 28, 2017		February 29, 2016
Deposits on inventory		368		670
Prepaid expenses		840		1,355
Indirect taxes receivable		388		610
Deferred financing costs		—		18
Receivable from contract manufacturers and other items		195		124
Total other current assets		1,791		2,777

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PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Feb. 28, 2017

PROPERTY AND EQUIPMENT

Schedule of Property and Equipment

        Property and equipment are apportioned as follows:

	February 28, 2017						February 29, 2016
	Cost		Accumulated Amortization		Net Book Value		Net Book Value
Test equipment, research and development equipment		24,627		22,736		1,891		2,655
Computer hardware		3,717		3,656		61		213
Production fixtures		2,633		2,228		405		559
Leasehold improvements		1,081		1,031		50		103
Other		1,600		1,490		110		172
Total		33,658		31,141		2,517		3,702

Schedule of amortization expense relating to property and equipment allocated to operating expenses

        Amortization expense relating to the above property and equipment was allocated to operating expenses as follows:

	February 28, 2017		February 29, 2016
Research and development		290		364
Selling and marketing		34		40
General and administrative		1,467		1,527
		1,791		1,931

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INTANGIBLE ASSETS (Tables)

12 Months Ended

Feb. 28, 2017

INTANGIBLE ASSETS

Schedule of Intangible assets

        Intangible assets are apportioned as follows:

	February 28, 2017						February 29, 2016
	Cost		Accumulated Amortization		Net Book Value		Net Book Value
Software		7,094		6,758		336		623

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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables)

12 Months Ended

Feb. 28, 2017

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Schedule of Accounts Payable and Accrued Liabilities

        Accounts payable and accrued liabilities are apportioned as follows:

	February 28, 2017		February 29, 2016
Trade payables		14,726		11,858
Accrued liabilities		5,061		5,830
Termination fee		3,351		3,337
Payroll related accruals		1,033		1,257
Warranty accrual		697		926
Income taxes payable		303		555
Capital lease obligation		35		69
Total accounts payable and accrued liabilities		25,206		23,832

Changes in the Warranty Liability

        The following table details the changes in the warranty accrual for the respective years:

	February 28, 2017			February 29, 2016
Balance at the beginning of the period		926			678
Accruals		1,314			2,057
Utilization		(1,543	)		(1,809	)
Balance at the end of the period		697			926

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SHAREHOLDERS' EQUITY (Tables)

12 Months Ended

Feb. 28, 2017

SHAREHOLDERS' EQUITY

Summary of Stock Option Activity

        The following is a summary of stock option activity:

	February 28, 2017					February 29, 2016
	Options			Weighted Average Exercise Price (CAD)		Options			Weighted Average Exercise Price (CAD)
Opening balance		276,728		$	32.82		159,421		$	76.34
Granted		324,895		$	4.36		172,974		$	8.64
Exercised		(18,220	)	$	3.05		—		$	—
Expired		(54,079	)	$	61.43		(55,667	)	$	82.34
Closing balance		529,324		$	13.45		276,728		$	32.82

Schedule of Assumptions Used to Estimate Fair Value of Stock Option Awards

        The following table shows the weighted average values used in determining the fair value of options granted during the three months ended February 28, 2017 and February 29, 2016:

	February 28, 2017		February 29, 2016
Volatility		75.0%		95.6%
Risk-free rate		1.05%		0.58%
Dividend yield		Nil		Nil
Average expected life		4 yrs		4 yrs

Schedule of Stock Options Outstanding and Exercisable

        The following table summarizes the various exercise prices inherent in the Company's stock options outstanding and exercisable on February 28, 2017:

Exercise Price				Options Outstanding						Options Exercisable
Low (CAD)		High (CAD)		Quantity of options		Weighted average remaining contractual life (yrs)		Weighted average exercise price (CAD)		Quantity of options		Weighted average remaining contractual life (yrs)		Weighted average exercise price (CAD)
$	3.00	$	3.34		84,639		3.75	$	3.00		83,389		3.73	$	3.00
$	3.35	$	3.83		232,990		4.54	$	3.66		—		—		—
$	3.84	$	6.78		75,050		4.20	$	6.16		725		3.63	$	4.00
$	6.79	$	46.88		63,688		2.95	$	21.19		37,477		2.61	$	24.01
$	46.89	$	73.50		72,957		1.54	$	57.59		62,745		1.45	$	58.21
					529,324		3.76	$	13.45		184,336		2.73	$	26.07

Schedule of Stock-Based Compensation Expense

Stock compensation expense was allocated to operating expenses as follows:

	February 28, 2017		February 29, 2016
Research and development		182		172
Selling and marketing		239		204
General and administrative		329		565
		750		941

Summary of granted warrants

        The following is a summary of granted warrants:

	February 28, 2017
	Warrants Granted		Shares Purchasable		Exercise Price		Termination date
May 2007 Issuance		31,562		1,262	$	88.75 CAD		May 30, 2017
September 2013 Issuance		738,750		29,550	$	2.80		September 23, 2018
April 2016 Issuance		299,999		299,999	$	8.50		April 11, 2021
August 2016 Issuance – Long-Term Warrants		1,854,044		1,854,044	$	4.37		August 8, 2021
Sub-total warrants issued and outstanding		2,924,355		2,184,855
Comerica Warrants – granted but not issued		375,000		375,000	$	4.00		five years from issuance date
Total warrants granted		3,299,355		2,559,855

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NET LOSS PER SHARE (Tables)

12 Months Ended

Feb. 28, 2017

NET LOSS PER SHARE

Schedule of Calculation Basic and Diluted Earnings per Share

        The following table illustrates the net loss per share during the year ended February 28, 2017 and February 29, 2016 excluding the effect of outstanding options and warrants:

	Twelve months ended
	February 28, 2017			February 29, 2016
Net loss attributable to shareholders		(15,888	)		(42,304	)
Weighted average number of shares outstanding		4,879,738			3,019,259
Basic net loss / dilutive net loss per share	$	(3.26	)	$	(14.01	)

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Feb. 28, 2017

COMMITMENTS AND CONTINGENCIES

Schedule of Future Minimum Payments under Operating Leases

        Future minimum operating lease payments per fiscal year that relate to office and warehouse space in various countries as at February 28, 2017 are as follows:

2018	1,074
2019	915
2020	905
2021	905
Thereafter	660
	4,459

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

12 Months Ended

Feb. 28, 2017

SUPPLEMENTAL CASH FLOW INFORMATION

Schedule of Changes in non-cash working capital balances

	February 28, 2017			February 29, 2016
Changes in non-cash working capital balances:
Trade receivables		7,110			29,640
Inventory		1,287			1,592
Other current assets		986			3,074
Accounts payable and accrued liabilities		1,429			(16,880	)
Deferred revenue		(1,468	)		810
		9,344			18,236

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FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Feb. 28, 2017

FINANCIAL INSTRUMENTS

Schedule of Fair Value of Financial Instruments

        The following table summarizes the carrying values of the Company's financial instruments:

	February 28, 2017		February 29, 2016
Assets held at fair value (A)		4,073		4,277
Loans and receivables (B)		12,071		19,110
Other financial liabilities (C)		41,201		44,434
Liabilities held at fair value (D)		1,090		120

(A)	Includes cash and cash equivalents
(B)	Includes trade receivables and other miscellaneous receivables
(C)	Includes accounts payable and accrued liabilities, payroll-related accruals, debt facility and termination fee
(D)	Includes warrant liability

Schedule of Level 2 and Level 3 Financial instruments carried at fair value

        The Company held the following Level 3 financial instruments carried at fair value on the consolidated balance sheet.

	February 28, 2017		February 29, 2016
	Level 3		Level 3
Financial Liabilities
Warrant liability		1,090		3

Schedule of Level 3 warrant liability measured at fair value

        A reconciliation of the Level 3 warrant liability measured at fair value for the year ended February 28, 2017 follows:

	Level 3
	Warrants			$
Balance at February 29, 2016		2,088,750			3
Issuance of warrants		5,862,131			5,809
Exercise of warrants		(3,107,572	)		(527	)
Expiry of warrants and change in fair value of warrant liability		(1,950,516	)		(4,195	)
Balance at February 28, 2017		2,892,793			1,090

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SEGMENTED INFORMATION (Tables)

12 Months Ended

Feb. 28, 2017

SEGMENTED INFORMATION

Schedule of Net Book Value by Geographic Area

        The following table presents total net book value of property, equipment and intangible assets by geographic location:

	February 28, 2017				February 29, 2016
	Amount		%		Amount		%
Canada		1,586		56%		1,860		43%
Malaysia		786		28%		1,492		34%
Other		481		16%		973		23%
Total		2,853		100%		4,325		100%

Schedule of Revenues by Geographic Area

The following tables present total revenue by geographic location through direct and indirect sales and through its OEM partner, Nokia:

	Year Ended February 28, 2017								Year Ended February 29, 2016
	Direct & Indirect Sales		OEM Sales through Nokia		Total		% of Total Revenue		Direct & Indirect Sales		OEM Sales through Nokia		Total		% of Total Revenue
Canada		2,648		—		2,648		6%		2,255		—		2,255		3%
Europe, Middle East and Africa		4,825		10,287		15,112		34%		6,753		31,109		37,862		44%
India		4,391		301		4,692		11%		13,993		3,787		17,780		21%
United States		13,261		—		13,261		30%		19,577		19		19,596		23%
Rest of World		7,661		542		8,203		19%		6,095		2,707		8,802		9%
		32,786		11,130		43,916		100%		48,673		37,622		86,295		100%

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INCOME TAXES (Tables)

12 Months Ended

Feb. 28, 2017

INCOME TAXES

Schedule of Income (Loss) Before Income Taxes

        The components of the Company's income (loss) before income taxes, by taxing jurisdiction, were as follows:

	February 28, 2017			February 29, 2016
Canada		(14,156	)		(22,994	)
Luxembourg		(2,004	)		(7,222	)
India		728			1,756
China		414			706
Other		104			(11,535	)
		(14,914	)		(39,289	)

Schedule of Reported Income Tax Provision Reconciliation

        The reported income tax provision differs from the amount computed by applying the Canadian statutory rate to the net loss, for the following reasons:

	2017			2016
Loss before income taxes		(14,914	)		(39,289	)
Statutory income tax rate		26.5%			26.5%
Expected income tax recovery		(3,952	)		(10,412	)
Foreign tax rate differences		563			578
Non-deductible expenses and non-taxable income		(785	)		37
Change in valuation allowances		4,967			6,043
Share issue costs		(156	)		—
Goodwill impairment		—			4,420
Foreign bank, minimum and withholding taxes		353			—
Prior year adjustments		(183	)		1,444
Other		(24	)		165
		783			2,275

Schedule of Deferred Tax Assets and Liabilities

        The Company's deferred tax assets and liabilities include the following significant components:

	2017			2016
Income tax loss carryforwards		44,541			39,322
Capital loss		19,011			19,011
Research and development tax credits		13,180			13,180
SR&ED expenditures		6,872			6,872
Book and tax differences on assets		960			1,256
Share issue expenses		529			443
Income and expense reserves		194			236
Total gross deferred tax assets		85,287			80,320
Valuation allowance		(85,287	)		(80,320	)
Income and expense reserves		(148	)		(294	)
Net deferred tax liability		(148	)		(294	)

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NATURE OF BUSINESS, BASIS OF PRESENTATION AND GOING CONCERN (Details) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Effects from restructuring the business
Gross profit (as a percent)	26.90%	16.20%
Line of Credit Facility, Decrease, Net	$ 5,122	$ 10,248
Proceeds from Issuance Initial Public Offering	9,502
Proceeds from Warrant Exercises	$ 4,180
Operating Expenses
Effects from restructuring the business
Reduction of operating expenses	26%

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SIGNIFICANT ACCOUNTING POLICIES - Inventory (Details)	12 Months Ended
	Feb. 28, 2017
Minimum
Standard Warranty Period	13 months
Maximum
Standard Warranty Period	36 months

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SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details)	12 Months Ended
	Feb. 28, 2017
Test equipment, research and development equipment | Minimum
Property and equipment
Useful lives	4 years
Test equipment, research and development equipment | Maximum
Property and equipment
Useful lives	5 years
Computer hardware
Property and equipment
Useful lives	2 years
Production fixtures
Property and equipment
Useful lives	3 years
Leasehold improvements
Property and equipment
Useful lives	5 years
Other | Minimum
Property and equipment
Useful lives	3 years
Other | Maximum
Property and equipment
Useful lives	5 years

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SIGNIFICANT ACCOUNTING POLICIES - Goodwill and Intangible Assets (Details) - Software	12 Months Ended
	Feb. 28, 2017
Minimum
Intangible assets
Amortization Period	2 years
Maximum
Intangible assets
Amortization Period	3 years

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SIGNIFICANT ACCOUNTING POLICIES - Share Based Compensation and Non-Controlling Interest (Details)	12 Months Ended
	Feb. 28, 2017
Share based compensation plan and employee share purchase plan
Employer match percentage	25.00%
Vesting period	12 months
DragonWave HFCL India Private Limited
Non-controlling Interest
Ownership interest (as a percent)	50.10%

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NON-CONTROLLING INTEREST - DragonWave HFCL India Private Limited (Details) $ in Thousands	12 Months Ended
	Feb. 28, 2017 USD ($)
Noncontrolling Interest
Dividend paid to minority share holders	$ 1,105
DragonWave HFCL India Private Limited
Noncontrolling Interest
Ownership interest (as a percent)	50.10%
Dividend paid to share holders	$ 1,839
Dividend paid to parent company share holders	921
Dividend paid to minority share holders	$ 918

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CASH AND CASH EQUIVALENTS (Details) - USD ($) $ in Thousands	Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2015
Cash and Cash Equivalents
Total Cash and Cash Equivalents	$ 4,073	$ 4,277	$ 23,692
Percent of total, cash and cash equivalents	100.00%	100.00%
Forbearance Agreement | Minimum
Cash and Cash Equivalents
Bank Cash Requirement	$ 1,000	$ 1,000
US Dollar
Cash and Cash Equivalents
Total Cash and Cash Equivalents	$ 2,320	$ 1,600
Percent of total, cash and cash equivalents	57.00%	37.40%
Canadian Dollar
Cash and Cash Equivalents
Total Cash and Cash Equivalents	$ 44	$ 39
Percent of total, cash and cash equivalents	1.10%	0.90%
Indian Rupee
Cash and Cash Equivalents
Total Cash and Cash Equivalents	$ 1,279	$ 2,317
Percent of total, cash and cash equivalents	31.40%	54.20%
Other
Cash and Cash Equivalents
Total Cash and Cash Equivalents	$ 430	$ 321
Percent of total, cash and cash equivalents	10.50%	7.50%

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TRADE RECEIVABLES (Details) $ in Thousands	12 Months Ended
	Feb. 28, 2017 USD ($) customer	Feb. 29, 2016 USD ($) customer
Trade Receivables
Trade Receivables (gross)	$ 12,099	$ 19,209
Allowance for doubtful accounts	(223)	(223)
Trade Receivables (net)	11,876	18,986
General and Administration
Trade Receivables
Bad Debt Expense	$ 82	$ 240
Credit Concentration Risk | Accounts Receivable
Trade Receivables
Number of customers exceeding 10% of the total receivable balance | customer	3	2
Credit Concentration Risk | Accounts Receivable | Customer 1
Trade Receivables
Concentration Risk, Percentage	21.00%	52.00%
Credit Concentration Risk | Accounts Receivable | Customer 2
Trade Receivables
Concentration Risk, Percentage	17.00%	16.00%
Credit Concentration Risk | Accounts Receivable | Customer 3
Trade Receivables
Concentration Risk, Percentage	15.00%

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INVENTORY (Details) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
INVENTORY
Raw materials	$ 2,844	$ 2,389
Work in progress	2,089	614
Finished goods	14,384	16,986
Total production inventory	19,317	19,989
Inventory held for customer service/warranty	2,098	2,713
Total inventory	21,415	22,702
Total Cost of Sales	32,102	72,324
Product costs included in cost of sales	22,982	56,296
Warehousing, freight, warranty, overhead and other direct costs of sales	9,120	16,028
Impairment loss on inventory	953	4,416
Impairment loss for inventory held by contract manufacturers	648	1,497
Overhead and labor allocations included in Cost of Sales	753	1,746
Overhead and labor allocations included in Inventory	454	551
Inventory held by primary contract manufacturer	$ 12,939	$ 16,848

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OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands	Feb. 28, 2017	Feb. 29, 2016
OTHER CURRENT ASSETS
Deposits on inventory	$ 368	$ 670
Prepaid expenses	840	1,355
Indirect taxes receivable	388	610
Deferred financing costs		18
Receivable from contract manufacturers and other items	195	124
Total other current assets	$ 1,791	$ 2,777

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PROPERTY AND EQUIPMENT (Detail) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Property and equipment
Cost	$ 33,658
Accumulated Amortization	31,141
Net Book Value	2,517	$ 3,702
Depreciation Expense
Amortization of property and equipment	1,791	1,931
Research and Development
Depreciation Expense
Amortization of property and equipment	290	364
Selling and Marketing
Depreciation Expense
Amortization of property and equipment	34	40
General and Administration
Depreciation Expense
Amortization of property and equipment	1,467	1,527
Test equipment, research and development equipment
Property and equipment
Cost	24,627
Accumulated Amortization	22,736
Net Book Value	1,891	2,655
Computer hardware
Property and equipment
Cost	3,717
Accumulated Amortization	3,656
Net Book Value	61	213
Production fixtures
Property and equipment
Cost	2,633
Accumulated Amortization	2,228
Net Book Value	405	559
Leasehold improvements
Property and equipment
Cost	1,081
Accumulated Amortization	1,031
Net Book Value	50	103
Other
Property and equipment
Cost	1,600
Accumulated Amortization	1,490
Net Book Value	$ 110	$ 172

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INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Intangible Assets
Amortization of intangible assets	$ 369	$ 577
Estimated amortization of intangible assets for 2018	181
Estimated amortization of intangible assets for 2019	155
Software
Intangible Assets
Cost	7,094
Accumulated Amortization	6,758
Net Book Value	$ 336	$ 623

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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES - Components of Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Feb. 29, 2016	Feb. 28, 2017	Apr. 10, 2013
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Trade payables	$ 11,858	$ 14,726
Accrued liabilities	5,830	5,061
Termination Fee, Current	3,337	3,351
Payroll related accruals	1,257	1,033
Warranty accrual	926	697
Income taxes payable	555	303
Capital lease obligation	69	35
Total Accounts Payable and Accrued Liabilities	23,832	25,206
Termination Fee	3,337	$ 3,351	$ 8,668
Payments for Termination Fees	$ 4,351

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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES - Warranty Accrual (Details) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Balance at the beginning of the period	$ 926	$ 678
Accruals	1,314	2,057
Utilization	(1,543)	(1,809)
Ending Balance	$ 697	$ 926

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DEBT FACILITY (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Debt Facility
Long-term credit facility, weighted average debt outstanding	$ 17,916	$ 29,765
Long-term credit facility, interest expense during period	1,300	2,007
Interest expense related to deferred financing cost	$ 18	55
Period during which company is restricted from acquiring capital assets over a threshold amount	6 months
Repayments of debt facility	$ 5,122	11,548
Aggregate number of common shares that may be purchased from warrants	2,184,855
Deferred financing costs related to warrants	$ 442
Minimum
Debt Facility
Long-term credit facility, interest rate above base rate	3.00%
Maximum
Debt Facility
Long-term credit facility, interest rate above base rate	4.00%
Forbearance Agreement
Debt Facility
Aggregate number of common shares that may be purchased from warrants	375,000
Exercise price, warrants	$ 4.00
Expiration term of warrants	5 years
Forbearance Agreement | Minimum
Debt Facility
Bank Cash Requirement	$ 1,000	1,000
Comerica Bank and Export Development Canada | Line of Credit
Debt Facility
Long-term credit facility, borrowing capacity	40,000
Debt facility	17,030	22,152
Comerica Bank and Export Development Canada | Line of Credit | Forbearance Agreement
Debt Facility
Long-term credit facility, borrowing capacity	30,000
Bank Cash Requirement	1,000
Comerica Bank and Export Development Canada | Letter of Credit
Debt Facility
Long-term credit facility, borrowing capacity	4,000
Debt facility	$ 1,845	$ 1,853

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SHAREHOLDERS' EQUITY - Number of shares authorized (Details) CAD / shares in Units, $ / shares in Units, CAD in Thousands, $ in Thousands						12 Months Ended
	Aug. 08, 2016 USD ($) item $ / shares shares	Apr. 11, 2016 USD ($) $ / shares shares	Feb. 02, 2016	Aug. 01, 2014 CAD CAD / shares shares	Sep. 23, 2013 USD ($) $ / shares shares	Feb. 28, 2017 USD ($) shares	Feb. 28, 2017 CAD / shares	Feb. 28, 2017 USD ($) $ / shares	Aug. 01, 2014 USD ($) shares	May 30, 2007 shares
Number of shares authorized
Aggregate gross proceeds from equity offering | $						$ 9,502
Fair value of warrant liability | $	$ 4,672	$ 1,137			$ 6,425
Class A unit
Number of shares authorized
Numbers of common shares each warrant may be converted into	1
Class B unit
Number of shares authorized
Numbers of common shares each warrant may be converted into	1
Long-Term Warrants
Number of shares authorized
Exercise price, warrants | $ / shares	$ 4.37
Long-Term Warrants | Class A unit
Number of shares authorized
Expiration term of warrants	5 years
Number of warrants in each class | item	1
Long-Term Warrants | Class B unit
Number of shares authorized
Number of warrants in each class | item	1
Short-Term Warrants
Number of shares authorized
Exercise price, warrants | $ / shares	$ 4.00
Short-Term Warrants | Class A unit
Number of shares authorized
Expiration term of warrants	6 months
Number of warrants in each class | item	2
Short-Term Warrants | Class B unit
Number of shares authorized
Number of warrants in each class | item	2
Pre-Funded Warrants
Number of shares authorized
Exercise price, warrants | $ / shares	$ 0.01
Pre-Funded Warrants | Class B unit
Number of shares authorized
Number of warrants in each class | item	1
Share price | $ / shares	$ 3.34
Common Shares
Number of shares authorized
Share issuance (in shares)						2,423,878
Share consolidation ratio			0.04
Warrants
Number of shares authorized
Numbers of common shares each warrant may be converted into										0.04
Public Offering September 23 2013
Number of shares authorized
Shares issued under public equity offering (in shares)					11,910,000
Shares issued under public equity offering (in dollars per share) | $ / shares					$ 2.10
Aggregate gross proceeds from equity offering | $					$ 25,011
Net realized proceeds from equity offering | $					$ 22,434
Exercise price, warrants | $ / shares					$ 2.80
Fair value of warrant liability | $					$ 6,425
Public Offering September 23 2013 | Common Shares
Number of shares authorized
Share issuance (in shares)					1
Public Offering September 23 2013 | Warrants
Number of shares authorized
Share issuance (in shares)					0.75
Numbers of common shares each warrant may be converted into					0.04
Exercise price, warrants | $ / shares								$ 2.80
Fair value of warrant liability | $								$ 7
Public Offering September 23 2013 | Scenario 2 | Warrants
Number of shares authorized
Exercise price, warrants | $ / shares					$ 2.80
Public Offering August 1 2014
Number of shares authorized
Shares issued under public equity offering (in shares)									15,927,500
Shares issued under public equity offering (in dollars per share) | CAD / shares				CAD 1.80
Aggregate gross proceeds from equity offering | CAD				CAD 28,670
Fair value of warrant liability | $									$ 2,551
Public Offering August 1 2014 | Common Shares
Number of shares authorized
Share issuance (in shares)				1
Public Offering August 1 2014 | Warrants
Number of shares authorized
Share issuance (in shares)				0.5
Numbers of common shares each warrant may be converted into									0.04
Exercise price, warrants | CAD / shares				CAD 56.25
Registered Direct Offering April 11, 2016
Number of shares authorized
Shares issued under public equity offering (in shares)		599,998
Shares issued under public equity offering (in dollars per share) | $ / shares		$ 7.25
Aggregate gross proceeds from equity offering | $		$ 4,350
Net realized proceeds from equity offering | $		$ 4,014
Registered Direct Offering April 11, 2016 | Common Shares
Number of shares authorized
Share issuance (in shares)		1
Registered Direct Offering April 11, 2016 | Warrants
Number of shares authorized
Share issuance (in shares)		0.5
Numbers of common shares each warrant may be converted into		1
Exercise price, warrants | $ / shares		$ 8.50						$ 8.50
Public Equity Offering August 8, 2016
Number of shares authorized
Aggregate gross proceeds from equity offering | $	$ 6,000
Net realized proceeds from equity offering | $	5,277
Fair value of warrant liability | $	$ 4,672
Public Equity Offering August 8, 2016 | Class A unit
Number of shares authorized
Shares issued under public equity offering (in shares)	1,760,880
Shares issued under public equity offering (in dollars per share) | $ / shares	$ 3.35
Public Equity Offering August 8, 2016 | Class B unit
Number of shares authorized
Shares issued under public equity offering (in shares)	30,164
Shares issued under public equity offering (in dollars per share) | $ / shares	$ 3.34
Public Equity Offering August 8, 2016 | Short-Term Warrants
Number of shares authorized
Exercise price, warrants | CAD / shares							CAD 4.37
Private Equity Offering August 8, 2016 | Class A unit
Number of shares authorized
Shares issued under private placement (in shares)	63,000
Aggregate proceeds from private equity placement | $	$ 211

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SHAREHOLDERS' EQUITY - Share based compensation plan (Details) - shares	1 Months Ended	12 Months Ended
	Jun. 19, 2014	Feb. 28, 2017
Previous plan
Share based compensation plan
Number of trading days prior to settlement date	5 days	5 days
Plan
Share based compensation plan
Expiration period		5 years
Common stock reserved for issuance under plan		730,522
Maximum number of shares issuable as a percentage of shares issued and outstanding		10.00%
Plan | Minimum
Share based compensation plan
Vesting period		6 months
Plan | Maximum
Share based compensation plan
Vesting period		4 years

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SHAREHOLDERS' EQUITY - Schedule of stock option activity (Details) - CAD / shares	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Options
Opening Balance	276,728	159,421
Granted	324,895	172,974
Exercised	(18,220)
Expired	(54,079)	(55,667)
Closing Balance	529,324	276,728
Weighted Average Price (CAD)
Opening Balance	CAD 32.82	CAD 76.34
Granted	4.36	8.64
Exercised	3.05
Expired	61.43	82.34
Closing Balance	CAD 13.45	CAD 32.82

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SHAREHOLDERS' EQUITY - Schedule of fair value assumptions (Details) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Weighted average values used in determining the fair value of options granted
Granted	324,895	172,974
Stock Options
Weighted average values used in determining the fair value of options granted
Volatility	75.00%	95.60%
Risk-free rate	1.05%	0.58%
Dividend yield	0.00%	0.00%
Average expected life	4 years	4 years
Fair value of options granted	$ 773	$ 683

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SHAREHOLDERS' EQUITY - Schedule of stock option exercise prices (Details)	12 Months Ended
	Feb. 28, 2017 CAD / shares shares
Options Outstanding
Quantity of options | shares	529,324
Weighted average remaining contractual life (in years)	3 years 9 months 4 days
Weighted average exercise price	CAD 13.45
Options Exercisable
Quantity of options | shares	184,336
Weighted average remaining contractual life	2 years 8 months 23 days
Weighted average exercise price	CAD 26.07
$3.00 to $3.34
Exercise Price
Exercise Price, Low	3.00
Exercise Price, High	CAD 3.34
Options Outstanding
Quantity of options | shares	84,639
Weighted average remaining contractual life (in years)	3 years 9 months
Weighted average exercise price	CAD 3.00
Options Exercisable
Quantity of options | shares	83,389
Weighted average remaining contractual life	3 years 8 months 23 days
Weighted average exercise price	CAD 3.00
$3.35 to $3.83
Exercise Price
Exercise Price, Low	3.35
Exercise Price, High	CAD 3.83
Options Outstanding
Quantity of options | shares	232,990
Weighted average remaining contractual life (in years)	4 years 6 months 15 days
Weighted average exercise price	CAD 3.66
$3.84 to $6.78
Exercise Price
Exercise Price, Low	3.84
Exercise Price, High	CAD 6.78
Options Outstanding
Quantity of options | shares	75,050
Weighted average remaining contractual life (in years)	4 years 2 months 12 days
Weighted average exercise price	CAD 6.16
Options Exercisable
Quantity of options | shares	725
Weighted average remaining contractual life	3 years 7 months 17 days
Weighted average exercise price	CAD 4.00
$6.79 to $46.88
Exercise Price
Exercise Price, Low	6.79
Exercise Price, High	CAD 46.88
Options Outstanding
Quantity of options | shares	63,688
Weighted average remaining contractual life (in years)	2 years 11 months 12 days
Weighted average exercise price	CAD 21.19
Options Exercisable
Quantity of options | shares	37,477
Weighted average remaining contractual life	2 years 7 months 10 days
Weighted average exercise price	CAD 24.01
$46.89 to $73.50
Exercise Price
Exercise Price, Low	46.89
Exercise Price, High	CAD 73.50
Options Outstanding
Quantity of options | shares	72,957
Weighted average remaining contractual life (in years)	1 year 6 months 15 days
Weighted average exercise price	CAD 57.59
Options Exercisable
Quantity of options | shares	62,745
Weighted average remaining contractual life	1 year 5 months 12 days
Weighted average exercise price	CAD 58.21

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SHAREHOLDERS' EQUITY - Schedule of Expenses (Details) - Stock Options - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Compensation expense
Share-based compensation	$ 750	$ 941
Unrecognized compensation costs relating to stock option awards outstanding	1,276	1,476
Total intrinsic value of exercised options	29	0
Intrinsic value associated with outstanding options	0	0
Total intrinsic value of fully vested options	0	0
Research and Development
Compensation expense
Share-based compensation	182	172
Selling and Marketing
Compensation expense
Share-based compensation	239	204
General and Administration
Compensation expense
Share-based compensation	$ 329	$ 565

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SHAREHOLDERS' EQUITY - Restricted Shares and Employee Share Purchase Plan (Details) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Restricted Shares & Employee Share Purchase Plan
Employer match percentage	25.00%
Shares issued for employees' portion of Employee Stock Purchase Plan	1,051
Shares issued for Company portion of Employee Stock Purchase Plan	259
Vesting period	12 months
Fair value of shares earned	$ 8	$ 13
Fair value of unearned Employee Stock Purchase Plan shares	$ 1	$ 8
Shares held for release under the Employee Stock Purchase Plan	259	978
Restricted Stock Units
Restricted Share Units
Compensation expense	$ 0	$ 39

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SHAREHOLDERS' EQUITY - Warrants (Details) CAD / shares in Units, $ / shares in Units, CAD in Thousands, $ in Thousands							12 Months Ended
	Aug. 08, 2016 USD ($) item $ / shares shares	Apr. 11, 2016 USD ($) $ / shares shares	Aug. 01, 2014 CAD CAD / shares shares	Aug. 01, 2014 USD ($) shares	Sep. 23, 2013 USD ($) $ / shares shares	May 30, 2007 shares	Feb. 28, 2017 USD ($) $ / shares shares	Feb. 28, 2017 CAD / shares	Feb. 28, 2017 USD ($) $ / shares shares	Aug. 01, 2014 USD ($) shares
Warrants
Shares Purchasable									2,184,855
Shares purchasable for Comerica Warrants - granted but not issued									375,000
Shares purchasable for total warrants granted									2,559,855
Warrants outstanding									2,924,355
Comerica Warrants - granted but not issued									375,000
Total warrants granted									3,299,355
Exercise price of Comerica Warrants - granted but not issued | $ / shares							$ 4.00
Termination period for Comerica Warrants - granted but not issued							5 years
Aggregate gross proceeds from equity offering | $							$ 9,502
Fair value of warrant liability | $	$ 4,672	$ 1,137			$ 6,425
Issuance Of Warrants, May 30, 2007
Warrants
Shares Purchasable									1,262
Warrants outstanding									31,562
Exercise price, warrants | CAD / shares								CAD 88.75
Public Offering September 23 2013
Warrants
Shares Purchasable									29,550
Warrants outstanding					8,932,500				738,750
Exercise price, warrants | $ / shares					$ 2.80
Shares issued under public equity offering (in shares)					11,910,000
Shares issued under public equity offering (in dollars per share) | $ / shares					$ 2.10
Aggregate gross proceeds from equity offering | $					$ 25,011
Equity issuance expenses related to offering | $					2,576
Warrant costs | $					662
Fair value of warrant liability | $					$ 6,425
Change in fair value of warrant liability | $							75
Registered Direct Offering April 11, 2016
Warrants
Shares Purchasable									299,999
Warrants outstanding		299,999							299,999
Shares issued under public equity offering (in shares)		599,998
Shares issued under public equity offering (in dollars per share) | $ / shares		$ 7.25
Aggregate gross proceeds from equity offering | $		$ 4,350
Equity issuance expenses related to offering | $		428
Warrant costs | $		$ 92
Realized gain in fair value of warrant | $							1,038
Change in fair value of warrant liability | $							99
Public Equity Offering August 8, 2016
Warrants
Shares Purchasable									1,854,044
Warrants outstanding									1,854,044
Aggregate gross proceeds from equity offering | $	6,000
Equity issuance expenses related to offering | $	723
Warrant costs | $	469
Fair value of warrant liability | $	$ 4,672
Realized gain in fair value of warrant | $							3,162
Change in fair value of warrant liability | $							984
Public Offering August 1 2014
Warrants
Warrants outstanding										7,963,750
Shares issued under public equity offering (in shares)										15,927,500
Shares issued under public equity offering (in dollars per share) | CAD / shares			CAD 1.80
Aggregate gross proceeds from equity offering | CAD			CAD 28,670
Equity issuance expenses related to offering | $				$ 2,275
Warrant costs | $				$ 221
Fair value of warrant liability | $										$ 2,551
Realized gain in fair value of warrant | $							$ 117
Common Shares
Warrants
Share issuance (in shares)							2,423,878
Common Shares | Public Offering September 23 2013
Warrants
Share issuance (in shares)					1
Common Shares | Registered Direct Offering April 11, 2016
Warrants
Share issuance (in shares)		1
Common Shares | Public Offering August 1 2014
Warrants
Share issuance (in shares)			1	1
Warrants
Warrants
Warrants outstanding						31,562
Warrant expiration period						10 years
Numbers of common shares each warrant may be converted into						0.04
Warrants | Maximum
Warrants
Shares Purchasable						5,050
Warrants | Public Offering September 23 2013
Warrants
Exercise price, warrants | $ / shares									$ 2.80
Numbers of common shares each warrant may be converted into					0.04
Share issuance (in shares)					0.75
Fair value of warrant liability | $									$ 7
Warrants | Registered Direct Offering April 11, 2016
Warrants
Exercise price, warrants | $ / shares		$ 8.50							$ 8.50
Numbers of common shares each warrant may be converted into		1
Share issuance (in shares)		0.5
Warrants | Public Offering August 1 2014
Warrants
Exercise price, warrants | CAD / shares			CAD 56.25
Numbers of common shares each warrant may be converted into										0.04
Share issuance (in shares)			0.5	0.5
Scenario 2 | Warrants | Public Offering September 23 2013
Warrants
Exercise price, warrants | $ / shares					$ 2.80
Long-Term Warrants
Warrants
Exercise price, warrants | $ / shares	$ 4.37
Long-Term Warrants | Public Equity Offering August 8, 2016
Warrants
Warrants outstanding	1,854,044								1,854,044
Short-Term Warrants
Warrants
Exercise price, warrants | $ / shares	$ 4.00
Short-Term Warrants | Public Equity Offering August 8, 2016
Warrants
Warrants outstanding	3,708,088
Exercise price, warrants | CAD / shares								CAD 4.37
Pre-Funded Warrants
Warrants
Exercise price, warrants | $ / shares	$ 0.01
Class A unit
Warrants
Numbers of common shares each warrant may be converted into	1
Class A unit | Public Equity Offering August 8, 2016
Warrants
Shares issued under public equity offering (in shares)	1,760,880
Shares issued under public equity offering (in dollars per share) | $ / shares	$ 3.35
Class A unit | Private Equity Offering August 8, 2016
Warrants
Shares issued under private placement (in shares)	63,000
Aggregate proceeds from private equity placement | $	$ 211
Class A unit | Long-Term Warrants
Warrants
Number of warrants in each class | item	1
Class A unit | Short-Term Warrants
Warrants
Number of warrants in each class | item	2
Class B unit
Warrants
Numbers of common shares each warrant may be converted into	1
Class B unit | Public Equity Offering August 8, 2016
Warrants
Shares issued under public equity offering (in shares)	30,164
Shares issued under public equity offering (in dollars per share) | $ / shares	$ 3.34
Class B unit | Long-Term Warrants
Warrants
Number of warrants in each class | item	1
Class B unit | Short-Term Warrants
Warrants
Number of warrants in each class | item	2
Class B unit | Pre-Funded Warrants
Warrants
Number of warrants in each class | item	1

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NET LOSS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Basic Net Income (Loss) per share
Net loss applicable to shareholders	$ (15,888)	$ (42,304)
Diluted Net Income (Loss) per share
Net loss attributable to shareholders	$ (15,888)	$ (42,304)
Weighted average number of shares outstanding	4,879,738	3,019,259
Basic net loss/dilutive net loss per share	$ (3.26)	$ (14.01)
Stock Options
Diluted Net Income (Loss) per share
Anti-dilutive securities	529,324
Warrants
Diluted Net Income (Loss) per share
Anti-dilutive securities	3,299,355

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COMMITMENTS AND CONTINGENCIES - Future Minimum Operating Lease Payments (Details) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Future minimum operating lease payments
2018	$ 1,074
2019	915
2020	905
2021	905
Thereafter	660
Operating Leases, Future Minimum Payments Due, Total	4,459
Rental expenses incurred	$ 1,357	$ 1,590

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COMMITMENTS AND CONTINGENCIES - Customer Claims (Details) - Pending Arbitration $ in Thousands	Feb. 28, 2017 USD ($)
Customer Claims
Value of inventory shipped to customer	$ 4,707
Amount of damages claimed by the customer	6,425
Cost of inventory provided to customer treated as asset	$ 4,600

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SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Changes in non-cash working capital balances:
Trade receivables	$ 7,110	$ 29,640
Inventory	1,287	1,592
Other current assets	986	3,074
Accounts payable and accrued liabilities	1,429	(16,880)
Deferred revenue	(1,468)	810
Total changes in non-cash working capital items	$ 9,344	$ 18,236

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FINANCIAL INSTRUMENTS (Schedule of Categories for financial assets and liabilities) (Details) - USD ($) $ in Thousands	Feb. 28, 2017	Feb. 29, 2016
FINANCIAL INSTRUMENTS
Assets held at fair value	$ 4,073	$ 4,277
Loans and receivables	12,071	19,110
Other financial liabilities	41,201	44,434
Liabilities held at fair value	$ 1,090	$ 120

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FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Feb. 28, 2017	Feb. 29, 2016
Financial Liabilities
Warrant liability	$ 1,090	$ 3
Level 3
Financial Liabilities
Warrant liability	$ 1,090	$ 3

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FINANCIAL INSTRUMENTS Schedule of warrant liability measured at fair value (Details) $ in Thousands	12 Months Ended
	Feb. 28, 2017 USD ($) shares
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning balance	$ 3
End balance (in shares) | shares	2,924,355
End balance	$ 1,090
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning balance (in shares) | shares	2,088,750
Beginning balance	$ 3
Issuance of warrants, shares | shares	5,862,131
Warrants Issued	$ 5,809
Exercise of warrants (in shares) | shares	(3,107,572)
Exercise Of Warrants	$ (527)
Expiry of warrants and change in fair value of warrant liability (in shares) | shares	(1,950,516)
Expiry of warrants and change in fair value of warrant liability	$ (4,195)
End balance (in shares) | shares	2,892,793
End balance	$ 1,090

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FINANCIAL INSTRUMENTS (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016	Feb. 28, 2015
Interest rate risk
Interest expense	$ 1,446	$ 1,959
Foreign exchange risk
Impact of a 1% appreciation in the exchange rate of the reporting currency against all foreign currencies on net income (loss)	43	27
Liquidity risk
Cash and cash equivalents	$ 4,073	$ 4,277	$ 23,692
Expected dividend yields	0.00%
Expected volatility	75.00%

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SEGMENTED INFORMATION (Details) $ in Thousands	12 Months Ended
	Feb. 28, 2017 USD ($) segment	Feb. 29, 2016 USD ($)
Segmented Information
Number of Segments | segment	1
Net book value of property and equipment, intangible assets and goodwill by geographic location
Total Net Book Value	$ 2,853	$ 4,325
Percentage of Total Net Book Value	100.00%	100.00%
Total revenues by geographic location
Total Revenue	$ 43,916	$ 86,295
Percentage of Revenues	100.00%	100.00%
Product Sales	$ 32,742	$ 70,491
Subsegment Sales Type Indirect And Direct Sales
Total revenues by geographic location
Total Revenue	32,786	48,673
Subsegment Sales Type Sales Through Original Equipment Manufacturers Partner, Nokia
Total revenues by geographic location
Total Revenue	11,130	37,622
Canada
Net book value of property and equipment, intangible assets and goodwill by geographic location
Total Net Book Value	$ 1,586	$ 1,860
Percentage of Total Net Book Value	56.00%	43.00%
Total revenues by geographic location
Total Revenue	$ 2,648	$ 2,255
Percentage of Revenues	6.00%	3.00%
Canada | Subsegment Sales Type Indirect And Direct Sales
Total revenues by geographic location
Total Revenue	$ 2,648	$ 2,255
Europe, Middle East & Africa
Total revenues by geographic location
Total Revenue	$ 15,112	$ 37,862
Percentage of Revenues	34.00%	44.00%
Europe, Middle East & Africa | Subsegment Sales Type Indirect And Direct Sales
Total revenues by geographic location
Total Revenue	$ 4,825	$ 6,753
Europe, Middle East & Africa | Subsegment Sales Type Sales Through Original Equipment Manufacturers Partner, Nokia
Total revenues by geographic location
Total Revenue	10,287	31,109
India
Total revenues by geographic location
Total Revenue	$ 4,692	$ 17,780
Percentage of Revenues	11.00%	21.00%
India | Subsegment Sales Type Indirect And Direct Sales
Total revenues by geographic location
Total Revenue	$ 4,391	$ 13,993
India | Subsegment Sales Type Sales Through Original Equipment Manufacturers Partner, Nokia
Total revenues by geographic location
Total Revenue	301	3,787
Unites States
Total revenues by geographic location
Total Revenue	$ 13,261	$ 19,596
Percentage of Revenues	30.00%	23.00%
Unites States | Subsegment Sales Type Indirect And Direct Sales
Total revenues by geographic location
Total Revenue	$ 13,261	$ 19,577
Unites States | Subsegment Sales Type Sales Through Original Equipment Manufacturers Partner, Nokia
Total revenues by geographic location
Total Revenue		19
Malaysia
Net book value of property and equipment, intangible assets and goodwill by geographic location
Total Net Book Value	$ 786	$ 1,492
Percentage of Total Net Book Value	28.00%	34.00%
Rest of World
Total revenues by geographic location
Total Revenue	$ 8,203	$ 8,802
Percentage of Revenues	19.00%	9.00%
Rest of World | Subsegment Sales Type Indirect And Direct Sales
Total revenues by geographic location
Total Revenue	$ 7,661	$ 6,095
Rest of World | Subsegment Sales Type Sales Through Original Equipment Manufacturers Partner, Nokia
Total revenues by geographic location
Total Revenue	542	2,707
Other
Net book value of property and equipment, intangible assets and goodwill by geographic location
Total Net Book Value	$ 481	$ 973
Percentage of Total Net Book Value	16.00%	23.00%

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ECONOMIC DEPENDENCE (Details) - Customer Concentration Risk - Revenue - customer	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Economic Dependence
Number of key customers	3	3
Customer 1
Economic Dependence
Percentage	25.00%	44.00%
Customer 2
Economic Dependence
Percentage	14.00%	15.00%
Customer 3
Economic Dependence
Percentage	13.00%	11.00%

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INCOME TAXES (Narrative) (Details) $ in Thousands	12 Months Ended
	Feb. 28, 2017 USD ($)
Canadian Tax Authority
Income Tax Disclosure
Capital loss carryforward	$ 16,302
Net operating loss carry forward	155,054
Canadian Tax Authority | Investment Tax Credit Carryforward
Income Tax Disclosure
Tax credit carryforwards	14,720
Luxembourg
Income Tax Disclosure
Net operating loss carry forward	38,165
United States Tax Authority (IRS)
Income Tax Disclosure
Capital loss carryforward	45,543
Net operating loss carry forward	7,783
United States Tax Authority (IRS) | Axerra Networks [Member] | Maximum
Income Tax Disclosure
Section 382 loss limitation	521
Provincial Tax Authority | Research Tax Credit Carryforward
Income Tax Disclosure
Tax credit carryforwards	$ 2,361

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INCOME TAXES (Components of Income (Loss) Before Income Taxes) (Details) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Income Taxes
Income (loss) before income taxes	$ (14,914)	$ (39,289)
Canada
Income Taxes
Income (loss) before income taxes	(14,156)	(22,994)
Luxembourg
Income Taxes
Income (loss) before income taxes	(2,004)	(7,222)
India
Income Taxes
Income (loss) before income taxes	728	1,756
China
Income Taxes
Income (loss) before income taxes	414	706
Other
Income Taxes
Income (loss) before income taxes	$ 104	$ (11,535)

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INCOME TAXES (Components of the Income Tax Expense (Recovery)) (Details) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Current:
Current income tax expenses	$ 931	$ 434
Deferred:
Deferred income tax expense (recovery)	$ (148)	$ 1,841

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INCOME TAXES (Reconciliation of Canadian Statutory Rate to Net Income (Loss)) (Details) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
INCOME TAXES
Loss before income taxes	$ (14,914)	$ (39,289)
Statutory income tax rate	26.50%	26.50%
Expected income tax recovery	$ (3,952)	$ (10,412)
Foreign tax rate differences	563	578
Non-deductible expenses and non-taxable income	(785)	37
Change in valuation allowances	4,967	6,043
Share issue costs	(156)
Goodwill impairment		4,420
Foreign bank, minimum and withholding taxes	353
Prior year adjustments	(183)	1,444
Other	(24)	165
Income tax expense	$ 783	$ 2,275

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INCOME TAXES (Schedule of the Components of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands	Feb. 28, 2017	Feb. 29, 2016
Deferred Tax Assets
Income tax loss carryforwards	$ 44,541	$ 39,322
Capital Loss	19,011	19,011
Research and development tax credits	13,180	13,180
SR&ED expenditures	6,872	6,872
Book and tax differences on assets	960	1,256
Share issue expenses	529	443
Income and expense reserves	194	236
Gross future tax assets	85,287	80,320
Valuation allowance	(85,287)	(80,320)
Deferred tax liabilities
Income and expense reserves	(148)	(294)
Net deferred tax liability	$ (148)	$ (294)

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COMPARATIVE FIGURES (Details) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2017	Feb. 29, 2016
Comparative figures adjustments
Hardware revenue	$ 32,742	$ 70,491
Service revenue	11,174	$ 15,804
Adjustment
Comparative figures adjustments
Hardware revenue	(902)
Service revenue	$ 902

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SUBSEQUENT EVENT (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Mar. 17, 2017	Feb. 28, 2017	Feb. 29, 2016
Subsequent Event
Aggregate number of common shares that may be purchased from warrants		2,184,855
Total gross proceeds		$ 8,244	$ 35
Subsequent Event | Registered Direct Offering and Private Placement
Subsequent Event
Common shares issued	1,198,666
Aggregate number of common shares that may be purchased from warrants	599,333
Exercise price, warrants	$ 1.50
Price per common share and one half of a warrant	$ 1.50
Total gross proceeds	$ 1,798,000
Period during which warrants are not exercisable	6 months + one day
Class Of Warrant Or Right Expiration Period	5 years