PROXIM INC /DE/, DEF 14A, 1998-04-22

PROXIM INC /DE/
DEF 14A, 1998-04-22
COMPUTER COMMUNICATIONS EQUIPMENT

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

PROXIM, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
<PAGE> 2
PROXIM, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1998

To The Stockholders:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
PROXIM, INC., a Delaware corporation (the "Company"), will be held on May 22,
1998, at 10:00 a.m., local time, at the Sunnyvale Hilton Inn, 1250 Lakeside
Drive, Sunnyvale, California 94086, for the following purposes:

1. To elect directors to serve for the ensuing year and until their
successors are elected and duly qualified;

2. To approve an amendment to the Company's 1995 Long-Term Incentive
Plan to increase the number of shares of Common Stock reserved for issuance
thereunder by 500,000 shares;

3. To approve an amendment to the Company's 1993 Employee Stock
Purchase Plan to increase the number of shares of Common Stock reserved for
issuance thereunder by 200,000 shares;

4. To ratify the appointment of Price Waterhouse LLP as independent
accountants of the Company for the fiscal year ending December 31, 1998; and

5. To transact such other business as may properly come before the
meeting or any adjournment thereof.

Only stockholders of record at the close of business on April 3, 1998
are entitled to receive notice of and to vote at the Annual Meeting.

All stockholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage-prepaid envelope enclosed for that purpose. Any
stockholder attending the Annual Meeting may vote in person even if he or she
previously returned a proxy.

By Order of the Board of Directors

Jeffrey D. Saper
Secretary

Mountain View, California
April 22, 1998

YOUR VOTE IS IMPORTANT

IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE
REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.

<PAGE> 3

PROXIM, INC.

295 NORTH BERNARDO AVENUE
MOUNTAIN VIEW, CALIFORNIA 94043

----------------
PROXY STATEMENT
----------------

The enclosed Proxy is solicited on behalf of the Board of Directors of
Proxim, Inc., a Delaware corporation ("Proxim" or the "Company"), for use at
Proxim's Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Friday, May 22, 1998, at 10:00 a.m., local time, or at any adjournment(s)
thereof. The purposes of the Annual Meeting are set forth in this Proxy
Statement and in the accompanying Notice of Annual Meeting of Stockholders. The
Annual Meeting will be held at the Sunnyvale Hilton Inn, 1250 Lakeside Drive,
Sunnyvale, California 94086. The telephone number at that location is (408)
738-4888.

These proxy solicitation materials were mailed on or about April 22,
1998 to all stockholders entitled to vote at the Annual Meeting.

RECORD DATE; OUTSTANDING SHARES; PROCEDURAL MATTERS

Stockholders of record as of the close of business on April 3, 1998
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
At the April 3, 1998 Record Date, 10,278,177 shares of Proxim's Common Stock,
$.001 par value (the "Common Stock"), were issued and outstanding. Each share
has one vote on all matters. For information regarding holders of more than 5%
of the outstanding Common Stock, see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT." The closing sale price of Proxim Common Stock as
reported on the Nasdaq National Market on April 3, 1998 was $14.75 per share.

Proxies properly executed, duly returned to the Company and not revoked
will be voted in accordance with the specifications made. Where no
specifications are given, such proxies will be voted as the management of the
Company may propose. If any matter not described in this Proxy Statement is
properly presented for action at the meeting, the persons named in the enclosed
form of proxy will have discretionary authority to vote according to their best
judgment.

Each stockholder is entitled to one vote for each share of Common Stock
on all matters presented at the meeting. The required quorum for the transaction
of business at the Annual Meeting is a majority of the votes eligible to be cast
by holders of shares of Common Stock issued and outstanding on the Record Date.
Shares that are voted "FOR," "AGAINST," "WITHHELD" or "ABSTAIN" are treated as
being present at the meeting for purposes of establishing a quorum and are also
treated as shares entitled to vote at the Annual Meeting (the "Votes Cast") with
respect to such matter. Abstentions will have the same effect as a vote against
a proposal. Broker non-votes will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business, but such
non-votes will not be counted for purposes of determining the number of Votes
Cast with respect to the particular proposal on which a broker has expressly not
voted. Thus, a broker non-vote will not affect the outcome of the voting on a
proposal.

Proxim will bear the cost of this solicitation, including reimbursement
of brokerage firms and other persons representing beneficial owners of shares
for their reasonable expenses in forwarding solicitation material to such
beneficial owners. Proxies may be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone or facsimile.

<PAGE> 4

REVOCABILITY OF PROXIES

A stockholder may revoke any proxy given pursuant to this solicitation
by attending the Annual Meeting and voting in person, or by delivering to the
Company prior to the Annual Meeting a written notice of revocation or a duly
executed proxy bearing a date later than that of the previous proxy.

DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR ANNUAL MEETING FOR FISCAL YEAR
1998

Proposals of stockholders which are intended to be presented by such
stockholders at the Company's 1999 Annual Meeting must be received by the
Company no later than December 18, 1998 in order that they may be included in
the proxy statement and form of proxy relating to that meeting.

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<PAGE> 5
PROPOSAL NO. 1

ELECTION OF DIRECTORS

NOMINEES

As of the date of the Annual Meeting, the Bylaws of the Company will
provide that there shall be five directors and that such directors are to be
elected at the Annual Meeting. Unless otherwise instructed, the proxy holders
will vote the proxies received by them for the Company's five nominees named
below, all of whom are presently directors of the Company. If any nominee of the
Company is unable or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee designated by the present
Board of Directors to fill the vacancy. It is not presently expected that any of
the nominees named below will be unable or will decline to serve as a director.
If additional persons are nominated for election as directors, the proxy holders
intend to vote all proxies received by them in a manner to assure the election
of as many of the nominees listed below as possible. In such event, the specific
nominees to be voted for will be determined by the proxy holders. The term of
office of each person elected as a director will continue until the next annual
meeting of stockholders or until a successor has been elected and duly
qualified.

Names of the five nominees and certain information about each of them
are set forth below. There is no family relationship among any directors or
executive officers of the Company.

<TABLE>
<CAPTION>
DIRECTOR
NAME, PRINCIPAL OCCUPATION AND DIRECTORSHIPS AGE SINCE
- -------------------------------------------------------------------------------------------- ----- --------
<S> <C> <C>
David C. King............................................................................... 38 1993
Mr. King joined Proxim in December 1992 as Vice President of Marketing
and Acting Chief Financial Officer, in July 1993 was appointed President, Chief
Executive Officer and director, and in January 1996 was appointed Chairman of
the Board. From December 1990 to November 1992, Mr. King served in various
executive capacities at Vitalink Communications Corporation ("Vitalink"), a LAN
internetworking subsidiary of Network Systems Corporation, most recently as Vice
President of Marketing and General Manager of Customer Service. From 1985 to
1990, Mr. King was Senior Manager in the San Francisco office of McKinsey &
Company, Inc., a management consulting firm, where he was a member of the firm's
high technology and health care practices. Mr. King holds an A.B. in Economics,
as well as M.B.A. and J.D. degrees, all from Harvard University.

Raymond Chin................................................................................ 44 1991
Dr. Chin became a director of the Company in April 1991 and served as
Chairman of the Board from September 1991 until January 1996. Since July 1994,
Dr. Chin has served as Chairman of the Board of GWcom, Inc., and was appointed
Chief Executive Officer in July 1996. From January 1995 to June 1996, Dr. Chin
served as a general partner of Alpine Technology Ventures, a venture capital
firm. From May 1990 to January 1995, Dr. Chin served as a general partner of MK
Global Ventures, a venture capital firm. From June 1984 to May 1990, Dr. Chin
served in various investment and strategic planning management positions at
Ameritech Development Corporation, a subsidiary of Ameritech Corporation, a
regional Bell operating company. Dr. Chin holds B.S., M.S. and Ph.D. degrees in
Electrical Engineering from the University of Illinois, Champaign-Urbana.

Leslie G. Denend............................................................................ 57 1996
Mr. Denend became a director of the Company in March 1996. From
December 1997 to March 1998, Mr. Denend served as President of Networks
Associates, Inc., the corporation resulting from the merger of Network General
Corporation with McAfee Associates, Inc. From June 1993 to December 1997, Mr.
Denend was Chief Executive Officer and President of Network General Corporation.
From February of 1993 to June of 1993 Mr. Denend was Senior Vice President of
Network General Corporation. Mr. Denend currently serves as a director of
Networks Associates, Inc. and Rational Software Corporation.
</TABLE>

<PAGE> 6
<TABLE>
<CAPTION>
DIRECTOR
NAME, PRINCIPAL OCCUPATION AND DIRECTORSHIPS AGE SINCE
- -------------------------------------------------------------------------------------------- ----- --------
<S> <C> <C>
Gregory L. Reyes............................................................................ 35 1997
Mr. Reyes became a director of the Company in December 1997. Since
November 1997, Mr. Reyes has served as President and General Manager of Glenayre
Technologies Inc. Wireless Access Group. From January 1995 until October 1997,
Mr. Reyes served as Chairman, President and Chief Executive Officer of Wireless
Access Inc. From January 1992 until December 1994, Mr. Reyes served as
Divisional Vice President of Data Systems at Norand Corporation. Mr. Reyes holds
a B.S. in Business from Saint Mary's College.

Jeffrey D. Saper............................................................................ 50 1997
Mr. Saper became a director of the Company in December 1997. He has
been a partner of the law firm Wilson Sonsini Goodrich & Rosati, Professional
Corporation, since 1980. Mr. Saper is also a director of Diamond Multimedia
Systems, Inc.
</TABLE>

VOTE REQUIRED

The five (5) candidates receiving the highest number of "FOR" votes
shall be elected to the Company's Board of Directors. An abstention will have
the same effect as a vote withheld for the election of directors.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ALL OF
THE NOMINEES LISTED ABOVE.

BOARD MEETINGS AND COMMITTEES

The Board of Directors of the Company held a total of five (5) meetings
during 1997. The Board has an Audit Committee and a Compensation Committee but
does not have a nominating committee or any committee performing a similar
function.

The Audit Committee of the Board of Directors, which consisted of
Messrs. Denend, Kaufman and Mortenson during 1997, was established in September
1993. The Audit Committee recommends engagement of the Company's independent
accountants and is primarily responsible for approving the services performed by
the Company's independent accountants and for reviewing and evaluating the
Company's accounting principles and its system of internal accounting controls.
There was one (1) meeting of the Audit Committee during 1997. For 1998, the
Audit Committee consists of Messrs. Denend, Reyes and Saper.

The Compensation Committee of the Board of Directors, which consisted
of Messrs. Chin, Denend and Mortenson during 1997, was established in September
1993. The Compensation Committee is primarily responsible for making
recommendations to the Board of Directors regarding the Company's executive
compensation policy and incentive compensation for employees and consultants to
the Company. There was one (1) meeting of the Compensation Committee during
1997. For 1998, the Compensation Committee consists of Messrs. Chin, Denend and
Reyes.

During 1997, no incumbent director attended fewer than 80% of the sum
of the total number of meetings of the Board of Directors and the total number
of meetings of all committees of the Board of Directors on which that director
served. See "Director Compensation" for information on the compensation of
nonemployee directors.

DIRECTOR COMPENSATION

Beginning in 1996 nonemployee directors received $3,000 each quarter as
their sole cash compensation from the Company for their service as members of
the Board of Directors and any committees thereof. Directors are also reimbursed
for all reasonable expenses incurred in connection with attending Board

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<PAGE> 7

and Committee meetings. Each director who is also an officer of the Company has
been granted options to purchase Common Stock under the 1986 Stock Option Plan
and under the 1995 Long-Term Incentive Plan. In addition, all nonemployee
directors have received options to purchase Common Stock under the Company's
1986 Stock Option Plan for grants prior to January 1994 and under the 1994
Director Option Plan for grants after December 1993.

PROPOSAL NO. 2

APPROVAL OF AMENDMENT TO THE
1995 LONG-TERM INCENTIVE PLAN

The Proxim, Inc. 1995 Long-Term Incentive Plan (the "1995 Plan") was
adopted by the Board of Directors in April 1995 and approved by the stockholders
of the Company in May 1995. A total of 1,750,000 shares of the Company's Common
Stock are currently authorized for issuance under the 1995 Plan. The 1995 Plan
was intended to supplement and replace the Company's 1986 Stock Option Plan,
which expired in March 1996. As of April 3, 1998, 1,554,030 options to purchase
shares were outstanding under the 1995 Plan and 185,970 shares remained
available for future issuance.

AMENDMENT TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE UNDER THE 1995
PLAN

On April 15, 1998, the Board of Directors approved an amendment to the
1995 Plan to increase the number of shares reserved for issuance thereunder by
500,000 shares to an aggregate of 2,250,000 shares. The stockholders are being
asked to approve this amendment at the Annual Meeting.

The Board of Directors believes that it is in the best interests of the
Company to provide an incentive to eligible employees, consultants and officers
whose present and potential contributions are important to the continued success
of the Company, to afford these individuals the opportunity to acquire a
proprietary interest in the Company, and to enable the Company to enlist and
retain in its employment the best available talent for the successful conduct of
its business. The Board of Directors believes that the shares remaining
available for issuance pursuant to the 1995 Plan are insufficient for such
purposes. Accordingly, at the Annual Meeting, the stockholders are being
requested to consider and approve the amendment of the 1995 Plan to increase the
number of shares reserved for issuance thereunder by 500,000 shares.

VOTE REQUIRED

The approval of this proposal requires the affirmative vote of a
majority of the Votes Cast on the proposal at the Annual Meeting. An abstention
will have the same effect as a vote against the proposal, and, pursuant to
Delaware law, a broker non-vote will not be treated as a Vote Cast on the
proposal.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE 1995 LONG-TERM INCENTIVE PLAN.

SUMMARY OF THE 1995 PLAN

The essential features of the 1995 Plan are outlined below.

GENERAL

Purpose. The purpose of the 1995 Plan is to enable the Company to
provide an incentive to eligible employees, consultants and officers whose
present and potential contributions are important to the continued success of
the Company, to afford these individuals the opportunity to acquire a
proprietary interest in the

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<PAGE> 8

Company, and to enable the Company to enlist and retain in its employment the
best available talent for the successful conduct of its business. It is intended
that this purpose will be effected through the granting of stock options, stock
purchase rights to buy restricted stock, stock appreciation rights, performance
shares, stock unit awards or a combination of the above. The 1995 Plan has
replaced the Company's 1986 Stock Option Plan as the principal method of
providing incentives to employees with equity in the Company. The 1986 Stock
Option Plan (but not outstanding options issued thereunder) terminated by its
terms on March 20, 1996.

Administration. The 1995 Plan is administered by the Company's Board of
Directors, the Compensation Committee or any other committee appointed by the
Board (the "Administrator"). The 1995 Plan may be administered so as to comply
with the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 (the
"Exchange Act") and Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). The Administrator is authorized to grant awards in the
form of stock options, restricted stock, performance shares, restricted stock
units, and stock unit awards, and the terms and conditions relating thereto. The
Administrator has complete authority to construe, interpret and administer the
provisions of the 1995 Plan and the provisions of the agreements governing
awards granted thereunder. The Administrator has the authority to prescribe,
amend and rescind rules and regulations pertaining to the 1995 Plan and to make
all other determinations necessary or deemed advisable in the administration of
the 1995 Plan. The determinations and interpretations made by the Administrator
are final and binding.

Eligibility. The 1995 Plan provides that stock options and other plan
awards may be granted to employees (including officers and directors who are
also employees) and consultants of the Company, as selected by the
Administrator.

AWARDS UNDER THE 1995 PLAN

Stock Options. The Administrator may grant awards under the 1995 Plan
in the form of options to purchase shares of the Company's Common Stock. The
maximum number of shares of Common Stock in respect of which stock options may
be granted under the Plan will be 2,250,000 shares. In addition, no participant
in the Plan may be granted stock options for more than 200,000 shares of Common
Stock in the aggregate during any fiscal year of the Company. With regard to
each such option, the Administrator will determine the number of shares subject
to the option, the manner and time of the exercise of the option, the exercise
price per share of stock subject to the option, and other applicable conditions.
The Administrator may grant either "non-qualified stock options" ("NSOs") or
"incentive stock options" ("ISOs") pursuant to Section 422 of the Code, or both.
In the case of ISOs, the term of each option may not exceed 10 years from the
date of grant. In addition, the exercisability of options may be accelerated
either automatically upon the occurrence of certain events described in the 1995
Plan or on a discretionary basis by the Administrator at the time the options
are granted. See "Extraordinary Events--Change-in-Control Provisions" below.

The exercise price of ISOs will not be less than the fair market value
of the Common stock on the date of grant (and not less than 110% of the fair
market value in the case of options granted to an optionee owning 10% or more of
the outstanding Common Stock). The exercise price for NSOs intended to qualify
as "performance-based compensation" within the meaning of Section 162(m) of the
Code shall not be less than 100% of the fair market value of the Common Stock on
the date of grant. The fair market value on the date of grant is the closing
price as reported on the Nasdaq National Market on the last market trading day
prior to the date of grant of the option.

Under the 1995 Plan, in the event of an optionee's termination of
employment or consulting relationship for any reason, an option may thereafter
be exercised, to the extent it was exercisable at the date of such termination,
for such period of time as is determined by the Administrator, up to a maximum
of 12 months in the case of death or permanent disability or six months in the
case of termination for any other reason but in no event after the expiration of
the original term of the option. The employment or consulting

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<PAGE> 9

relationship is not considered to be terminated in the event of certain leaves
of absence or transfers between the Company, its parent (if any) and its
majority-owned subsidiaries.

The method of payment of consideration with respect to shares issued
upon exercise of options granted under the 1995 Plan shall be determined by the
Administrator (and, in the case of ISOs, determined at the time of grant) and
may be any legal form of consideration permitted by applicable laws. The 1995
Plan specifically enumerates the following as acceptable forms of consideration:
cash, check, promissory note, other shares of Common Stock or delivery of
irrevocable instructions to a broker to deliver to the Company the appropriate
amount of proceeds of the sale or loan of the shares exercised (often referred
to as a "cashless exercise").

The Administrator of the 1995 Plan may at any time offer to buy out,
for a payment in cash or shares of Common Stock of the Company, any outstanding
option, based on such terms and conditions as the Administrator shall establish
and communicate to the optionee at the time that such offer is made.

Stock Appreciation Rights. The 1995 Plan also permits the granting of
nontransferable stock appreciation rights ("SARs"). SARs may be granted in
connection with all or any part of an option, either concurrently with the grant
of the option or at any time thereafter during the term of the option, or may be
granted independently of options.

An SAR in connection with an option will entitle the optionee to
exercise the SAR by surrendering to the Company a portion of the unexercised
related option. The optionee will receive in exchange from the Company an amount
equal to the excess of the fair market value on the date of exercise of the SAR
of the Common Stock covered by the surrendered portion of the related option
over the exercise price of the Common Stock covered by the surrendered portion
of the related option. When an SAR granted in connection with an option is
exercised, the related option, to the extent surrendered, will cease to be
exercisable. An SAR granted in connection with an option will be exercisable
until, and will expire no later than, the date on which the related option
ceases to be exercisable or expires.

SARs may also be granted independently of options. In such an event,
the SAR will entitle the optionee, upon exercise, to receive from the Company an
amount equal to the excess of the fair market value of the Common Stock covered
by the exercised portion of the SAR as of the date of such exercise over the
fair market value of the Common Stock covered by the exercised portion of the
SAR as of the last market trading date prior to the date on which the SAR was
granted. An SAR granted without a related option will be exercisable, in whole
or in part, at such time as the Administrator will specify in the SAR agreement.

The Company's obligation arising upon the exercise of an SAR may be
paid in Common Stock or in cash, or any combination thereof, as the
administrator may determine.

Stock Purchase Rights. The 1995 Plan permits the Company to grant stock
purchase rights which allow the offeree the opportunity, during a specified
period of time not exceeding 30 days, to purchase Common Stock of the Company on
the terms specified by the Administrator. The Administrator notifies the offeree
in writing of the terms, conditions and restrictions related to the offer,
including the number of shares of Common Stock that the offeree will be entitled
to purchase, the price to be paid and the time within which the offeree must
accept such offer (which will in no event exceed 30 days from the date upon
which the Administrator made the determination to grant the purchase right).
Offers may be accepted by execution of a restricted stock purchase agreement
between the Company and the offeree and payment of the purchase price.

Unless the Administrator determines otherwise, the restricted stock
purchase agreement will grant the Company a repurchase option at the original
price paid by the purchaser, exercisable upon the termination of the purchaser's
employment or consulting relationship with the Company for any reason. The
purchase price for shares repurchased by the Company pursuant to the restricted
stock purchase agreement shall be the

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<PAGE> 10

original price paid by the purchaser and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option will lapse
at such rate as the Administrator may determine.

Performance Shares. The 1995 Plan permits the Administrator to grant
awards of performance shares to eligible employees. These awards are contingent
upon the achievement of certain performance goals established by the
Administrator. The length of time over which performance will be measured, the
performance goals, and the criteria to be used in determining whether and to
what degree the goals have been attained will be determined by the
Administrator. The Administrator will also determine at the time of grant the
effect (on the performance share award) of the termination of employment of a
recipient of performance shares (by reason of death, retirement, disability or
otherwise) during the performance period.

Other Stock Based Awards. In addition, the Administrator shall have
authority under the 1995 Plan to grant restricted stock unit awards and other
stock unit awards, which can be in the form of Common Stock or units, the value
of which is based, in whole or in part, on the value of the Company's Common
Stock. Such stock unit awards will be subject to such terms, restrictions,
conditions, vesting requirements and payment rules as the Administrator may
determine. Stock unit awards may relate in whole or in part to certain
performance criteria established by the Administrator at the time of grant. The
Administrator will also determine at the time of grant the effect of termination
of employment (on the stock unit award) of a stock unit award recipient (by
reason of death, retirement, disability or otherwise) during any applicable
vesting period.

Written Agreements. All awards under the 1995 Plan shall be evidenced
by a written agreement between the Company and the employee or consultant to
whom such award is granted.

Nontransferability of Rights. Unless determined otherwise by the
Administrator, options, SARs, stock purchase rights, performance shares and
stock unit awards or other stock based awards granted pursuant to the 1995 Plan
are nontransferable by the participant, other than by will or by the laws of
descent and distribution and may be exercised, during the lifetime of the
participant, only by the participant.

EXTRAORDINARY EVENTS

Adjustment Upon Changes in Capitalization. Subject to any required
action by the stockholders of the Company, in the event any change, such as a
stock split or dividend, is made in the Company's capitalization which results
in an increase or decrease in the number of outstanding shares of Common Stock
without receipt of consideration by the Company, an appropriate adjustment shall
be made in the number of shares which have been reserved for issuance under the
1995 Plan (including shares subject to outstanding options or rights) and the
price per share covered by each outstanding option, SAR, purchase right,
performance share and stock unit award. In the event of any proposed dissolution
or liquidation of the Company, all outstanding options and rights will terminate
immediately prior to the consummation of such proposed action. However, the
Administrator may, in its discretion, make provisions for accelerating the
exercisability of any option or right under the 1995 Plan in such event.

Change in Control Provisions. The 1995 Plan provides that at the time
any option or right is granted under the 1995 Plan the Administrator may, in its
discretion, provide that in the event of a "Change-in-Control" of the Company
(as defined below) (i) all or any portion of such option or right will become
immediately vested and fully exercisable or (ii) all or any portion of such
option or right will be cashed out at the "Change-in-Control Price" (as defined
below) reduced by the exercise price, if any, applicable to such option or
right.

A "Change-in-Control" means the occurrence of (i) the acquisition by an
unaffiliated third party of securities representing 40% or more of the combined
voting power of the Company with an intent to acquire control of the Company, or
(ii) the Company's merger or consolidation with any other corporation, other
than a merger or consolidation which would result in the holders of the voting
securities of the Company outstanding

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<PAGE> 11

immediately prior thereto continuing to hold at least 60% of the total voting
power represented by the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or (iii)
stockholder approval of an agreement for the sale or disposition of all or
substantially all of the Company's assets, or (iv) a change in the composition
of the Board of Directors of the Company occurring within a two-year period, as
a result of which fewer than a majority of the directors are incumbent
directors.

The "Change-in-Control Price" shall be determined by the Administrator
and shall be (i) the highest closing sale price of a share of Common Stock (as
quoted on any established exchange or a national market system) any time within
the 60-day period immediately preceding the date of determination of the
Change-in-Control Price, (ii) the highest price paid or offered per share of
Common Stock in any bona fide action or bona fide offer related to the
Change-in-Control of the Company at any time within such 60-day period, or (iii)
such lower price as the Administrator, in its discretion, determines to be a
reasonable estimate of the fair market value of a share of Common Stock.

Merger or Sale of Assets. Subject to the 1995 Plan's Change-in-Control
Provisions discussed above, in the event of a sale of substantially all of the
assets of the Company or the merger of the Company with or into another
corporation which also constitutes a Change-in-Control, the 1995 Plan provides
that (i) each outstanding option and right shall be assumed or substituted by
such successor corporation or a parent or subsidiary of such successor
corporation and (ii) twelve months of unvested shares, if any, subject to such
option or right shall vest and become fully exercisable upon the
Change-in-Control. In the event that the successor corporation does not agree to
such assumption or substitution, the 1995 Plan provides that any unvested shares
subject to the option or right shall vest as of the Change-in-Control and the
participant shall have the right to exercise such option or right as to all of
the shares subject thereto for a period of time determined by the Administrator,
after which such options and rights shall terminate.

Amendment and Termination. The Board may amend, alter, suspend or
discontinue the 1995 Plan at any time, but any such amendment, alteration,
suspension or discontinuation shall not adversely affect any outstanding option
or right under the 1995 Plan without the written consent of the holder thereof.
To the extent necessary and desirable to comply with applicable laws, the
Company shall obtain stockholder approval of any amendment to the 1995 Plan in
such a manner and to such a degree as is required. The 1995 Plan continues until
terminated by the Board; however, no ISOs may be granted after March 2, 2005.

Subject to applicable laws and the specific terms of the 1995 Plan, the
Administrator may accelerate any option or right or waive any condition or
restriction pertaining to such option or right at any time. The Administrator
may also substitute new options or rights for outstanding options or rights,
including outstanding options or rights having higher prices, and may reduce the
exercise price of any option or right.

UNITED STATES TAX INFORMATION

Under current U.S. federal law, the following are the U.S. federal
income tax consequences generally arising with respect to awards under the 1995
Plan.

Stock Options. An optionee who is granted an incentive stock option
will not recognize taxable income either at the time the option is granted or
upon its exercise, although the exercise may subject the optionee to the
alternative minimum tax. Upon the sale or exchange of the shares more than two
years after grant of the incentive stock option and one year after exercising
the incentive stock option, any gain or loss will be treated as long-term
capital gain or loss. If these holding periods are not satisfied, the optionee
will recognize ordinary income at the time of sale or exchange equal to the
difference between the exercise price and the lower of (i) the fair market value
of the shares at the date of the option exercise or (ii) the sale price of the
shares. A different rule for measuring ordinary income upon such a premature
disposition may apply if the optionee is also an officer, director or 10%
stockholder of the Company. The Company will be entitled to a deduction in the
same amount as the ordinary income recognized by the optionee. Any gain or loss
recognized

-9-

<PAGE> 12

on such a premature disposition of the shares in excess of the amount treated as
ordinary income will be characterized as long-term or short-term capital gain or
loss, depending on the holding period.

All other options which do not qualify as incentive stock options are
referred to as non-qualified stock options. An optionee will not recognize any
taxable income at the time he or she is granted a non-qualified stock option.
However, upon its exercise, the optionee generally will recognize taxable income
measured as the excess of the then fair market value of the shares purchased
over the purchase price. Any taxable income recognized in connection with an
option exercise by an optionee who is also an employee of the Company may be
subject to tax withholding by the Company. Upon resale of such shares by the
optionee, any difference between the sales price and the optionee's purchase
price, to the extent not recognized as taxable income as described above, will
be treated as long-term or short-term capital gain or loss, depending on the
holding period. The Company will be entitled to a tax deduction in the same
amount as the ordinary income recognized by the optionee with respect to shares
acquired upon exercise of a non-qualified stock option.

Stock Appreciation Rights. No income will be recognized by a recipient
in connection with the grant of an SAR. When the SAR is exercised, the recipient
will generally be required to include as taxable ordinary income in the year of
exercise an amount equal to the amount of cash received and the fair market
value of any Common Stock received on the exercise. In the case of a recipient
who is also an employee, any income recognized upon exercise of an SAR will
constitute wages for which withholding will be required. The Company will be
entitled to a tax deduction in the same amount. If the optionee receives Common
Stock upon the exercise of an SAR, any gain or loss on the sale of such stock
will be treated in the same manner as discussed above with respect to
non-qualified stock options.

Performance Shares. Generally, no income will be recognized by a
recipient in connection with the grant of a stock award of unvested stock,
unless the participant makes an election to be taxed at the time of the award.
Otherwise, at the time the stock award vests, the recipient generally will
recognize compensation income in an amount equal to the difference between the
fair market value of the stock at the time of vesting and the amount paid for
the stock, if any. Generally, the recipient will be subject to tax consequences
similar to those discussed with respect to non-qualified stock options. In the
case of a recipient who is also an employee, any amount treated as compensation
will be subject to tax withholding by the Company. The Company will be entitled
to a tax deduction in the amount and at the time the recipient recognizes
ordinary income with respect to a stock award.

Restricted Stock. A participant who has been granted an award of
restricted stock will not realize taxable income at the time of the grant, and
the Company will not be entitled to a tax deduction at the time of the grant,
unless the participant makes an election to be taxed at the time of the award.
When the restrictions lapse, the participant will recognize taxable income in an
amount equal to the excess of the fair market value of the shares at such time
over the amount, if any, paid for such shares. The Company will be entitled to a
corresponding tax deduction. Upon resale of such shares, any difference between
the taxable amount recognized and the sale price will be treated as long-term or
short-term capital gain, depending on the holding period.

Stock Units. Generally, no income will be recognized by a recipient in
connection with the grant of a stock award of unvested stock, unless the
participant makes an election to be taxed at the time of the award. Otherwise,
at the time the stock award vests, the recipient generally will recognize
compensation income in an amount equal to the difference between the fair market
value of the stock at the time of vesting and the amount paid for the stock, if
any. Generally, the recipient will be subject to tax consequences similar to
those discussed with respect to non-qualified stock options. In the case of a
recipient who is also an employee, any amount treated as compensation will be
subject to tax withholding by the Company. The Company will be entitled to a tax
deduction in the amount and at the time the recipient recognizes ordinary income
with respect to a stock award.

-10-

<PAGE> 13

THE FOREGOING BRIEF SUMMARY OF THE EFFECT OF UNITED STATES FEDERAL
INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY IN CONNECTION WITH THE 1995
PLAN DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO THE
APPLICABLE PROVISIONS OF THE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS
THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN
COUNTRY IN WHICH PARTICIPANTS MAY RESIDE.

CERTAIN GRANT LIMITS

The Omnibus Budget Reconciliation Act of 1993 ("OBRA") added Section
162(m) to the Code. Under Section 162(m), the allowable deduction for
compensation paid or accrued with respect to the chief executive officer and
each of the four most highly compensated employees of a publicly-held
corporation is limited to no more than $1,000,000 per year for fiscal years
beginning on or after January 1, 1994. For purposes of Section 162(m), any
compensation expense attributable to stock options is subject to this limitation
unless, among other things, the plan under which the options are granted
includes a limit on the number of shares with respect to which options may be
granted to any one employee in a specified period.

In order to qualify compensation resulting from options granted under
the Company's 1995 Plan as "performance-based" and thereby to exclude such
compensation from the $1,000,000 limit on deductibility, the 1995 Plan limits
the number of options that may be granted to employees in a fiscal year. The
1995 Plan provides that no employee may be granted, in any fiscal year of the
Company, options to acquire in the aggregate more than 200,000 shares of Common
Stock. The foregoing limitation adjusts proportionately in connection with any
change in capitalization. The purpose of this provision is solely to preserve
the Company's ability to deduct compensation expense related to stock options.

PROPOSAL NO. 3

APPROVAL OF AMENDMENT TO THE
1993 EMPLOYEE STOCK PURCHASE PLAN

The 1993 Employee Stock Purchase Plan (the "Purchase Plan") was adopted
by the Board of Directors in September 1993 and approved by the stockholders in
November 1993. A total of 600,000 shares of the Company's Common Stock are
currently reserved for issuance under the Purchase Plan. As of April 3, 1998,
250,987 shares remained available for issuance under the Purchase Plan.

AMENDMENT TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE UNDER THE
PURCHASE PLAN

On April 15, 1998, the Board of Directors approved an amendment to the
Purchase Plan to increase the number of shares of Common Stock reserved for
issuance thereunder by 200,000 shares to an aggregate of 800,000 shares. The
stockholders are being asked to approve this amendment at the Annual Meeting.

The Board of Directors believes that in order to provide additional
incentives to participants in the Purchase Plan, it is necessary to continue its
policy of providing for the sale of Common Stock to such employees at a discount
from the market price through voluntary payroll deductions. The Board of
Directors further believes that without increasing the number of shares reserved
for issuance the remaining shares in the Purchase Plan are insufficient for such
purpose. Accordingly, at the Annual Meeting, the stockholders are being
requested to consider and approve the amendment of the Purchase Plan to increase
the number of shares reserved for issuance thereunder by 200,000 shares.

-11-

<PAGE> 14

VOTE REQUIRED

Approval of this proposal requires the affirmative vote of the holders
of a majority of the Votes Cast on the proposal at the Annual Meeting. An
abstention will have the same effect as a vote against the proposal, and,
pursuant to Delaware law, a broker non-vote will not be treated as a Vote Cast
on the proposal.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE 1993 EMPLOYEE STOCK PURCHASE PLAN.

PURCHASE PLAN ACTIVITY

To date (without taking into account the proposed amendment to the
Purchase Plan), the Company has issued and sold an aggregate of 349,013 shares
of Common Stock pursuant to the Purchase Plan and 250,987 shares of Common Stock
are available for future issuance under the Purchase Plan. Participation in the
Purchase Plan is voluntary and is dependent on each eligible employee's election
to participate and his or her determination as to the level of payroll
deductions. Accordingly, future purchases under the Purchase Plan are not
determinable.

The following table sets forth certain information regarding shares
purchased under the Purchase Plan during 1997 by the Chief Executive Officer and
the four other most highly compensated executive officers whose salary plus
bonus exceeded $100,000 in the last fiscal year (collectively, the "Named
Executive Officers"), all current executive officers as a group and all
non-executive officer employees as a group:

<TABLE>
<CAPTION>
Number of
Shares
Name of Individual or Identity of Group or Position Dollar Value(1) Purchased
- --------------------------------------------------- --------------- ---------
<S> <C> <C>
David C. King ........................................................ 84,790 4,555
Brian Button ......................................................... 55,680 2,979
Keith E. Glover ...................................................... 59,801 3,212
Juan Grau ............................................................ 64,152 3,446
Thomas J. Carey ...................................................... 30,146 1,578
All executive officers as a group (5 persons) ........................ 294,569 15,770
All other employees (excluding executive officers) as a group ........ 1,570,500 83,939
</TABLE>

- ----------------------------
(1) Represents the market value of the shares on the date of purchase. The
purchase price paid by each participant in the Purchase Plan is at
least 15% below the market value.

SUMMARY OF THE PURCHASE PLAN

The purpose of the Purchase Plan is to provide a convenient and
practical means for employees of the Company and its subsidiaries to purchase
the Company's Common Stock and a method by which the Company may assist and
encourage its employees to become stockholders. The Purchase Plan is intended to
be a permanent program but the Board of Directors may terminate the Purchase
Plan at any time.

The Purchase Plan is intended to qualify under Sections 421 and 423 of
the Code. Each twenty-four-month offering period will consist of four purchase
periods of approximately six months duration. The Purchase Plan was implemented
with an eight-month purchase period which commenced on December 15, 1993.
Subsequent purchase periods each have a six-month duration commencing on the
first trading day on or after February 15 and August 15 of each year.

-12-
<PAGE> 15

The Purchase Plan is administered by the Compensation Committee. The
Board may change the duration of the purchase periods or the length or date of
commencement of an offering period.

All individuals employed by the Company or its subsidiaries on the
commencement of an offering period are eligible to participate if they are
customarily employed by the Company for at least twenty hours per week and at
least five months per year, provided, however, that individuals holding 5% or
more of the Company's Common Stock (directly or upon the exercise of options)
are not eligible to participate. The Purchase Plan permits eligible employees to
purchase Common Stock through payroll deductions not exceeding 10% of an
employee's compensation, at a price equal to 85% of the lower of the closing
sale price for the Common Stock reported on the Nasdaq National Market at (i)
the beginning of the offering period or (ii) at the end of each purchase period.
Once an employee becomes a participant in the Purchase Plan, the employee will
automatically participate in each successive offering period until such time as
the employee withdraws from the Purchase Plan or the employee's employment with
the Company terminates. At the beginning of each offering period, each
participant is automatically granted options to purchase shares of the Company's
Common Stock. The option expires at the end of the purchase period or upon
termination of employment, whichever is earlier, but is exercised at the end of
each purchase period to the extent of the payroll deductions accumulated during
such purchase period. The maximum number of shares a participant may purchase
during each purchase period is determined by dividing $25,000 by the fair market
value of a share of Common Stock on the first date of the offering period.

To the extent the fair market value of the Common Stock on any exercise
date in an offering period is lower than the fair market value of the Common
Stock on the first day of the offering period, then all participants in such
offering period will be automatically withdrawn from such offering period
immediately after the exercise of their options on such exercise date and
automatically re-enrolled in the immediately following offering period as of the
first day thereof.

In the event of a stock dividend, stock split or other change in
capitalization affecting the Company's Common Stock, or in the event of any
merger, sale or reorganization, appropriate adjustments will be made in the
Purchase Plan's share reserve, the shares subject to purchase under each
participant's purchase opportunity and the purchase price per share of Common
Stock. In the event of a transfer of control of the Company pursuant to a sale
of stock, a merger or a sale of assets, the Board of Directors may provide that
the current offering shall be shortened and a new exercise date set or arrange
with the successor corporation for such corporation to assume the Company's
rights and obligations under the Purchase Plan. All purchase opportunities shall
terminate as of the date of the transfer of control to the extent that the
purchase opportunity is neither exercised nor assumed by the successor
corporation.

The Board of Directors may amend or terminate the Purchase Plan at any
time, except that such termination cannot affect shares of Common Stock or
purchase opportunities previously granted under the Purchase Plan, nor can any
amendment be made without approval of the stockholders of the Company within
twelve months of the date of the adoption of the amendment if the amendment
would authorize the sale of more shares than are authorized under the Purchase
Plan or would change the designation of the corporations whose employees may
participate under the Purchase Plan.

UNITED STATES TAX INFORMATION

The Purchase Plan, and the right of participants to make purchase
thereunder, are intended to qualify under the provisions of Sections 421 and 423
of the Code, under which no income will be taxable to a participant until the
shares purchased under the Purchase Plan are sold or otherwise disposed of. Upon
the sale or other disposition of shares, the participant will generally be
subject to tax and the amount of the tax will depend upon the holding period. If
the shares are sold or otherwise disposed of more than two years from the first
day of the offering period and one year from the date the shares are purchased,
the participant will recognize ordinary income measured as the lesser of (a) the
excess of the fair market value of the shares at the

-13-
<PAGE> 16

time of such sale or disposition over the purchase price, or (b) an amount equal
to 15% of the fair market value of the shares as of the first day of the
offering period. Any additional gain will be treated as long-term capital gain.
If the shares are sold or otherwise disposed of before the expiration of these
holding periods, the participant will recognize ordinary income generally
measured as the excess of the fair market value of the shares on the date the
shares are purchased over the purchase price. Any additional gain or loss on
such sale or disposition will be long-term or short-term capital gain or loss,
depending on the holding period. The Company is not entitled to a deduction for
amounts taxed as ordinary income or capital gain to a participant except to the
extent of ordinary income recognized by participants upon a sale or disposition
of shares prior to the expiration of the holding period described above.

THE FOREGOING SUMMARY OF THE EFFECT OF UNITED STATES FEDERAL INCOME
TAXATION UPON PARTICIPANTS AND THE COMPANY IN CONNECTION WITH THE PURCHASE PLAN
DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO THE APPLICABLE
PROVISIONS OF THE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE
PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY
IN WHICH PARTICIPANTS MAY RESIDE.

PROPOSAL NO. 4

RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS

The Board of Directors has appointed Price Waterhouse LLP, independent
accountants, to audit Proxim's financial statements for the fiscal year ending
December 31, 1998. Such nomination is being presented to the stockholders for
ratification at the meeting. The affirmative vote of the holders of a majority
of the Votes Cast on this proposal at the Annual Meeting is required to ratify
the Board's selection. If the stockholders reject the nomination, the Board will
reconsider its selection.

Price Waterhouse LLP has audited Proxim's financial statements since
the fiscal period ended October 31, 1985. Representatives of Price Waterhouse
LLP are expected to be present at the Annual Meeting and will have the
opportunity to respond to questions and to make a statement if they desire.

VOTE REQUIRED

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.

-14-
<PAGE> 17

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of April 3, 1998, information
relating to the beneficial ownership of the Company's Common Stock by each
person known by the Company, based upon Schedule 13G's filed with the Securities
and Exchange Commission, to be the beneficial owner of more than five percent
(5%) of the outstanding shares of Common Stock, by each director and nominee for
director, by each of the executive officers named in the Summary Compensation
Table, and by all directors and executive officers as a group.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
---------------------------
NAME AND ADDRESS NUMBER PERCENT
- ----------------------------------------------------------------- --------- ---------
<S> <C> <C>
Kopp Investment Advisors, Inc.(2) ............................. 1,702,850 16.6%

6600 France Avenue South
Suite 672
Edina, MN 55435

National Westminister Bank, PLC ................................ 550,440 5.4%
41 Lothbury
London, EC2P 2BP
England

Wellington Management Company LLP .............................. 515,000 5.0%
75 State Street
Boston, MA 02109

Hartford Investment Management Company ......................... 515,000 5.0%
200 Hopmeadow Street
Simsbury, CT 06070

David C. King(3) ............................................... 310,448 3.0%

Raymond Chin(4) ................................................ 67,811 *

Leslie G. Denend(5) ............................................ 19,167 *

Michael Kaufman(6) ............................................. 39,353 *

G. Russell Mortenson(7) ........................................ 18,333 *

Gregory Reyes .................................................. 0 *

Jeffrey D. Saper ............................................... 0 *

Brian Button(8) ................................................ 109,396 1.0%

Keith E. Glover(9) ............................................. 94,649 *

Juan Grau(10) .................................................. 60,479 *

Thomas J. Carey(11) ............................................ 48,358 *

All directors and executive officers as a group (11 persons)(12) 767,994 7.5%
</TABLE>

- ------------------------------

* Less than 1%.
(1) Beneficial ownership is determined in accordance with the Rules and
Regulations of the Securities and Exchange Commission and generally
includes voting or investment power with respect to securities. Options to
purchase shares of Common Stock currently exercisable or exercisable
within 60 days of April 3, 1998 are deemed outstanding for computing the
percentage of the person holding such option but are not outstanding for
computing the percentage of any other person. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by
them.
(2) Includes 1,647,850 shares with shared dispositive power and 55,000 shares
with sole dispositive power.
(3) Includes 164,607 shares issuable upon the exercise of stock options
exercisable within 60 days after April 3, 1998. Mr. King holds stock
options to purchase an aggregate of 98,358 shares under the Company's 1986
Stock Option Plan and 290,000 shares under the Company's 1995 Long- Term
Incentive Plan.
(4) Includes 11,770 shares issuable upon the exercise of stock options
exercisable within 60 days after April 3, 1998. Dr. Chin holds stock
options to purchase an aggregate of 17,500 shares under the Company's 1994
Director Option Plan.
(5) Includes 19,167 shares issuable upon the exercise of stock options
exercisable within 60 days after April 3, 1998. Mr. Denend holds stock
options to purchase an aggregate of 24,167 shares under the Company's 1994
Director Option Plan.
(6) Includes 6,353 shares issuable upon the exercise of stock options
exercisable within 60 days after April 3, 1998. Mr. Kaufman holds stock
options to purchase an aggregate of 12,083 shares under the Company's 1994
Director Option Plan.

-15-
<PAGE> 18

(7) Includes 18,333 shares issuable upon the exercise of stock options
exercisable within 60 days after April 3, 1998. Mr. Mortenson holds stock
options to purchase an aggregate of 23,750 shares under the Company's 1994
Director Option Plan.
(8) Includes 14,217 shares issuable upon the exercise of stock options
exercisable within 60 days after April 3, 1998. Mr. Button holds stock
options to purchase an aggregate of 32,500 shares under the Company's 1986
Stock Option Plan and 80,000 shares under the Company's 1995 Long- Term
Incentive Plan.
(9) Includes 57,447 shares issuable upon the exercise of stock options
exercisable within 60 days after April 3, 1998. Mr. Glover holds stock
options to purchase an aggregate of 63,334 shares under the Company's 1986
Stock Option Plan and 90,000 shares under the Company's 1995 Long- Term
Incentive Plan.
(10) Includes 35,833 shares issuable upon the exercise of stock options
exercisable within 60 days after April 3, 1998. Mr. Grau holds stock
options to purchase an aggregate of 16,250 shares under the Company's 1986
Stock Option Plan and 130,000 shares under the Company's 1995 Long-Term
Incentive Plan.
(11) Includes 42,678 shares issuable upon the exercise of stock options
exercisable within 60 days after April 3, 1998. Mr. Carey holds stock
options to purchase an aggregate of 37,750 shares under the Company's 1986
Stock Option Plan and 100,000 shares under the Company's 1995 Long- Term
Incentive Plan.
(12) Includes 370,405 shares issuable upon the exercise of stock options held
by all directors and executive officers exercisable within 60 days after
April 3, 1998.

EXECUTIVE OFFICER COMPENSATION

SUMMARY COMPENSATION TABLE

The following table shows, as to the Named Executive Officers, information
concerning compensation paid for services to the Company in all capacities
during the fiscal years ended December 31, 1995, December 31, 1996 and December
31, 1997.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------
LONG-TERM
OTHER COMPENSATION
ANNUAL STOCK OPTIONS
YEAR SALARY BONUS (2) COMPENSATION GRANTED (#)
---- ------ --------- ------------ -----------
<S> <C> <C> <C> <C> <C>
David C. King ............................................. 1997 209,529 -- -- 200,000
Chairman, President and Chief Executive Officer(1) ... 1996 192,164 38,500 -- 17,500
1995 175,395 35,000 -- 122,500

Brian T. Button ........................................... 1997 124,865 43,875 -- 70,000
Vice President of Sales and Marketing (3) ............ 1996 119,707 24,000 -- 17,500
1995 104,999 21,000 -- 10,000

Keith E. Glover ........................................... 1997 149,596 -- -- 80,000
Vice President of Finance and Administration and Chief 1996 134,800 27,000 -- 22,500
Financial Officer .................................... 1995 124,519 25,000 -- --

Juan Grau ................................................. 1997 159,711 -- -- 100,000
Vice President of Engineering ............................. 1996 144,805 29,000 -- 10,000
1995 134,423 27,000 -- 30,000

Thomas J. Carey ........................................... 1997 139,058 -- -- 60,000
Vice President of Operations ......................... 1996 104,808 20,000 -- 42,750
1995 46,040 35,000 -- 40,000
</TABLE>

- -------------------------------
(1) Mr. King was appointed Chairman on January 17, 1996, and President and
Chief Executive Officer on July 26, 1993.
(2) Bonuses related to operating achievements and financial performance during
1995, 1996 and 1997 were paid in January 1996, January 1997 and January
1998, respectively.
(3) Mr. Button was named Vice President of Sales on September 1, 1996, and
Vice President of Marketing on June 26, 1994. Mr. Button's bonus in 1997
represents sales commissions paid during 1997.

-16-
<PAGE> 19

STOCK OPTION GRANTS AND EXERCISES

The following table sets forth the stock options granted to
the Named Executive Officers under the Company's stock option plans and the
options exercised by such Named Executive Officers during the fiscal year ended
December 31, 1997.

Stock Option Grants in 1997

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
POTENTIAL REALIZABLE
VALUE ASSUMED ANNUAL
PERCENT OF RATES OF STOCK PRICE
GRANTED TO EXERCISE OR APPRECIATION FOR
OPTION/SARS EMPLOYEES IN BASE PRICE EXPIRATION OPTION TERM(2)~
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- -------------------- ------------- ----------- --------- ---- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
David C. King ...... 200,000 12.3% $ 10.375 11/3/07 1,304,956 3,307,015

Brian Button ....... 70,000 4.3% 10.375 11/3/07 456,735 1,157,455

Keith E. Glover .... 80,000 4.9% 10.375 11/3/07 521,983 1,322,806

Juan Grau .......... 100,000 6.2% 10.375 11/3/07 652,478 1,653,508

Thomas J. Carey .... 60,000 3.7% 10.375 11/3/07 391,487 992,105
</TABLE>

(1) The Company did not grant SARs in fiscal 1997. 510,000 options to purchase
shares of the Company's Common Stock in this table were granted under the
Company's 1995 Long-Term Incentive Plan, and have exercise prices equal to
the fair market value on the respective dates of grant.

(2) Potential realizable value is based on an assumption that the stock price
of the Common Stock appreciates at the annual rate shown (compounded
annually) from the date of grant until the end of the ten (10)-year option
term. Potential realizable value is shown net of exercise price. These
numbers are calculated based on the regulations promulgated by the SEC and
do not reflect the Company's estimate of future stock price growth.

Option Exercises in 1997 and Year-End Option Values

<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES 1997 YEAR-END(2) 1997 YEAR-END(2)
ACQUIRED ---------------------------- ------------------------------
ON VALUE
NAME EXERCISE(#) REALIZED(1)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David C. King . 80,000 1,310,000 208,867 227,657 1,511,446 226,537
Brian Button .. 40,000 295,625 19,112 93,388 41,138 108,909
Keith E. Glover 10,000 96,250 51,718 101,616 376,175 127,075
Juan Grau ..... 9,167 149,795 31,666 114,584 156,968 145,835
Thomas J. Carey -- -- 33,913 103,837 64,470 103,390
</TABLE>

- ---------------------

(1) Value realized represents the difference between the exercise price of the
options and the value of the underlying securities on the date of
exercise.

(2) Represents the difference between the exercise price of the options and
the closing price of the Company's Common Stock on December 31, 1997 of
$11.31 per share.

-17-
<PAGE> 20

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board of Directors (the "Committee")
for 1997 was comprised of Messrs. Chin, Denend and Mortenson. The Committee is
responsible for determining the Company's executive compensation policies and
incentive compensation for employees and consultants to the Company. The
Committee also evaluates the performance of the Company's executive officers
against the Company's overall objectives.

The Company's policy is that executive compensation should meet two
objectives: (1) to ensure that the compensation and incentives provided to the
executive officers are closely aligned with the Company's financial performance
and stockholder value and (2) to attract and retain, through a competitive
compensation structure, those key executives critical to the long-term success
of the Company.

To ensure the first objective is met, remuneration is tied to the
Company's stock price performance by granting stock options to key executive
officers. The Committee believes that the grant of an equity interest serves to
link management interests with stockholder interests and to motivate executive
officers to make long-term decisions that are in the best interests of the
Company and the stockholders. The Committee considers stock option grants to
executive officers based on various factors, including (i) each officer's
responsibilities, (ii) any changes in such responsibilities, (iii) past option
grants and each officer's current equity interest in the Company and (iv)
performance. In consideration for his performance during 1997, the Committee
granted the Chief Executive Officer options to purchase an aggregate of 200,000
shares of the Company's Common Stock in November of 1997. In addition to stock
options, executives are eligible to participate in the Purchase Plan pursuant to
which stock may be purchased at 85% of the fair market value at the beginning
and end of each offering period (with the amount of deduction equal to up to a
maximum of 10% of salary).

The second objective of the overall executive compensation policy is
addressed by a salary and bonus policy which is based on consideration of the
salaries and total compensation of executive officers in similar positions with
comparable companies in the industry, the qualifications and experience of each
executive officer, the Company's financial performance during the past year and
each officer's performance against objectives related to their areas of
responsibility. The Committee periodically reviews individual base salaries of
executive officers, and adjusts salaries based on individual job performance and
changes in the officer's duties and responsibilities. In making salary
decisions, the Committee exercises its discretion and judgment based on these
factors. No specific formula is applied to determine the weight of each factor.
Based upon the forgoing, the Chief Executive Officer's salary was established at
$209,529 for 1997.

The Committee believes that another key element of executive
compensation should be the variable portion provided by annual cash incentive
plans. The bonus award portion of the executive officers' compensation is
dependent primarily on the Company's financial performance and achievement of
specified corporate objectives as determined by the Board. The Company's
executive officer annual bonus plan is designed such that if the Company
performs above its stated objectives, bonus awards may be above the award
target. If the Company performs below its stated objectives, bonus awards may be
significantly reduced, and may be eliminated altogether if performance is below
defined thresholds. The corporate performance measures currently used for annual
executive bonus awards are actual total revenue and income from operations
compared with the target total revenue and income from operations approved each
year by the Board of Directors. A substantially smaller portion of each
executive's annual bonus is based on performance against individual objectives.

The Committee has considered the potential impact of Section 162(m) of
the Internal Revenue Code of 1986, as amended, and proposed regulations
thereunder (the "Section"). The Section limits the federal income tax
deductibility of compensation paid to the Company's Chief Executive Officer and
to each of the other four most highly compensated executive officers. For this
purpose, compensation can include, in addition to cash compensation, the
difference between the exercise price of stock options and the value of the
underlying stock

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<PAGE> 21

on the date of exercise. Under this legislation, the Company may deduct
compensation with respect to any of these individuals only to the extent that
during any fiscal year such compensation does not exceed $1,000,000 or meets
certain other conditions (such as stockholder approval). The Company's policy is
to qualify, to the extent reasonable, its executive officers' compensation for
deductibility under applicable tax laws. However, the Committee believes that
its primary responsibility is to provide a compensation program that will
attract, retain and reward the executive talent necessary to achieve the
Company's objectives. Consequently, the Committee recognizes that the loss of a
tax deduction could be necessary in certain circumstances.

Respectfully Submitted by the 1997 Compensation
Committee of the Board of Directors:
Raymond Chin
Leslie G. Denend
G. Russell Mortenson

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No member of the Compensation Committee has a relationship that would
constitute an interlocking relationship with executive officers or directors of
another entity.

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PERFORMANCE GRAPH

Set forth below is a line graph comparing the percentage change in the
cumulative total return to the stockholders of the Company's Common Stock with
the cumulative return of the Nasdaq U.S. Index and the NationsBanc Montgomery
Securities 500 Growth Index for the period commencing December 15, 1993 (the
date the Company's Common Stock first traded on the Nasdaq National Market) and
ending on December 31, 1997. The total stockholder return assumes $100 invested
at the beginning of the period in the Common Stock of the Company, the Nasdaq
U.S. Index and NationsBanc Montgomery Securities 500 Growth Index. Historical
stock price is not necessarily indicative of future stock performance.

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COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file certain reports of ownership with the Securities and
Exchange Commission (the "SEC") and with the National Association of Securities
Dealers, Inc. Such officers, directors and stockholders are also required by SEC
rules to furnish the Company with copies of all Section 16(a) forms they file.
To the best of the Company's knowledge, all Section 16(a) filing requirements
applicable to its officers, directors and ten-percent stockholders were complied
with. In making this statement, the Company has relied solely on written
representations of its directors and executive officers and any ten- percent
stockholders, and copies of the reports they filed with the SEC.

OTHER MATTERS

Proxim knows of no other matters to be submitted to the stockholders at
the Annual Meeting. If any other matters properly come before the stockholders
at the Annual Meeting, it is the intention of the persons named on the enclosed
proxy card to vote the shares they represent as the Board of Directors may
recommend. For business to be properly brought before the Annual Meeting by a
stockholder, the Company's bylaws provide that a stockholder must have given
timely notice thereof in writing to the Secretary of the Company. To be timely,
a stockholder's notice must have been delivered to or mailed and received at the
principal executive offices of the Company not less than one hundred twenty
(120) calendar days in advance of the date specified in the Company's proxy
statement released to the stockholders in connection with the previous year's
Annual Meeting of Stockholders.

Dated: April 22, 1998

By Order of the Board of Directors

Jeffrey D. Saper
Secretary

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<PAGE> 24

APPENDIX 1

PROXIM, INC.

1995 LONG-TERM INCENTIVE PLAN

The following constitutes the provisions of the 1995 Long-Term
Incentive Plan of Proxim, Inc., as amended, effective upon the approval of the
stockholders of the Company on May 22, 1998.

1. Purpose of the Plan. The purpose of the Proxim, Inc. 1995
Long-Term Incentive Plan is to enable Proxim, Inc. to provide an incentive to
eligible employees, consultants and officers whose present and potential
contributions are important to the continued success of the Company, to afford
these individuals the opportunity to acquire a proprietary interest in the
Company, and to enable the Company to enlist and retain in its employment the
best available talent for the successful conduct of its business. It is
intended that this purpose will be effected through the granting of (a) stock
options, (b) stock purchase rights to buy restricted stock, (c) stock
appreciation rights, (d) performance shares and (e) stock unit awards.

2. Definitions. As used herein, the following definitions shall
apply:

(a) "Administrator" means the Board or such of its
Committees as shall be administering the Plan, in accordance with Section 5 of
the Plan.

(b) "Applicable Laws" means the requirements relating to
the administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.

(d) "Code" means the Internal Revenue Code of 1986, as
amended.

(e) "Committee" means a Committee appointed by the Board
in accordance with Section 5 of the Plan.

(f) "Common Stock" means the Common Stock of the Company.

(g) "Company" means Proxim, Inc., a Delaware corporation.

(h) "Consultant" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services and who is
compensated for such services.

(i) "Continuous Status as an Employee or Consultant"
means that the employment or consulting relationship with the Company, any
Parent, Subsidiary, or, where applicable, any affiliated companies, is not
interrupted or terminated. Continuous Status as an Employee or Consultant
shall not be considered interrupted in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, any successor, or, where
applicable, any affiliated companies. A leave of absence approved by the
Company shall include sick leave, military leave, or any other personal leave
approved by an authorized representative of the Company. For purposes of
Incentive Stock Options, no such leave may exceed ninety days, unless
reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by
the Company is not so guaranteed, on the ninety-first day following such leave
any

<PAGE> 25
Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option.

(j) "Director" means a member of the Board.

(k) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.

(l) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent, Subsidiary or where
applicable, entities affiliated with the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.

(m) "Exchange Act" means the Securities Exchange Act of
1934, as amended.

(n) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:

(i) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, the Fair Market Value of a
Share of Common Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such system or exchange
(or the exchange with the greatest volume of trading in Common Stock) on the
last market trading day prior to the day of determination, as reported in The
Wall Street Journal or such other source as the Administrator deems reliable;

(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or is regularly quoted
by a recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;

(iii) In the absence of an established market for
the Common Stock, the Fair Market Value shall be determined in good faith by
the Administrator.

(o) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.

(p) "Nonstatutory Stock Option" means any Option that is
not an Incentive Stock Option.

(q) "Notice of Grant" means a written notice evidencing
certain terms and conditions of an individual Option, Stock Purchase Right,
SAR, Performance Share or Stock Unit Award grant. The Notice of Grant is part
of the corresponding agreement.

(r) "Officer" means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

(s) "Option" means a stock option granted pursuant to the
Plan.

(t) "Option Agreement" means a written agreement between
the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.

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<PAGE> 26
(u) "Optioned Stock" means the Common Stock subject to an
Option or Right.

(v) "Optionee" means an Employee or Consultant who holds
an outstanding Option or Right.

(w) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

(x) "Payment Value" means the dollar amount assigned to a
Performance Share which shall be equal to the Fair Market Value of the Common
Stock on the day of the Administrator's determination under Section 9 with
respect to the applicable Performance Cycle.

(y) "Performance Cycle" or "Cycle" means the period of
years selected by the Administrator during which the performance is measured
for the purpose of determining the extent to which an award of Performance
Shares has been earned.

(z) "Performance Goals" means the objectives established
by the Administrator for a Performance Cycle, for the purpose of determining
the extent to which Performance Shares that have been contingently awarded for
such Cycle are earned.

(aa) "Performance Share" means an award granted pursuant
to Section 9 of the Plan expressed as a share of Common Stock.

(bb) "Plan" means this 1995 Long-Term Incentive Plan.

(cc) "Restricted Stock" means shares of Common Stock
subject to a Restricted Stock Purchase Agreement acquired pursuant to a grant
of Stock Purchase Rights under Section 8 below.

(dd) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.

(ee) "Right" means and includes SARs, Performance Shares,
Stock Unit Awards and Stock Purchase Rights granted pursuant to the Plan.

(ff) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or
any successor rule thereto, as in effect when discretion is being exercised
with respect to the Plan.

(gg) "SAR" means a stock appreciation right granted
pursuant to Section 7 of the Plan.

(hh) "SAR Agreement" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
SAR grant. The SAR Agreement is subject to the terms and conditions of the
Plan.

(ii) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 12 of the Plan.

(jj) "Stock Purchase Right" means the right to purchase
Common Stock pursuant to Section 8 of the Plan, as evidenced by a Notice of
Grant.

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<PAGE> 27
(kk) "Stock Unit Award" means an award of Common Stock or
units granted under Section 10.

(ll) "Subsidiary" means a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Code.

3. Eligibility and Code Section 162(m) Limitation.

(a) Eligibility. Nonstatutory Stock Options and Rights
may be granted to Employees and Consultants. Incentive Stock Options may be
granted only to Employees. If otherwise eligible, an Employee or Consultant
who has been granted an Option or Right may be granted additional Options or
Rights.

(b) Code Section 162(m) Limitation. The following
limitation shall apply to grants of Options, Stock Purchase Rights and Stock
Unit Awards to Employees:

(i) No Employee shall be granted, in any fiscal
year of the Company, Options, Stock Purchase Rights and Stock Unit Awards to
purchase more than 200,000 Shares.

(ii) The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company's capitalization
as described in Section 12.

(iii) If an Option, Stock Purchase Right or Stock
Unit Award is canceled in the same fiscal year of the Company in which it was
granted (other than in connection with a transaction described in Section 12),
the canceled Option, Stock Purchase Right or Stock Unit Award will be counted
against the limit set forth in Section 3(b)(i). For this purpose, if the
exercise price of an Option, Stock Purchase Right or Stock Unit Award is
reduced, the transaction will be treated as a cancellation of the Option, Stock
Purchase Right or Stock Unit Award and the grant of a new Option, Stock
Purchase Right or Stock Unit Award.

4. Stock Subject to the Plan. The total number of Shares
reserved and available for distribution under the Plan is two million two
hundred fifty thousand (2,250,000) Shares. Subject to Section 12 of the Plan,
if any Shares that have been optioned under an Option cease to be subject to
such Option (other than through exercise of the Option), or if any Option or
Right granted hereunder is forfeited or any such award otherwise terminates
prior to the issuance of Common Stock to the participant, the shares that were
subject to such Option or Right shall again be available for distribution in
connection with future Option or right grants under the Plan; provided,
however, that Shares that have actually been issued under the Plan, whether
upon exercise of an Option or Right, shall not be returned to the Plan and
shall not become available for future distribution under the Plan, except that
if Shares of Restricted Stock are repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the
Plan.

5. Administration.

(a) Composition of Administrator.

(i) Multiple Administrative Bodies. The Plan may
be administered by different committees with respect to different groups of
Directors, Officers, and Employees.

(ii) Section 162(m). To the extent that the
Administrator determines it to be desirable to qualify Options granted
hereunder as "performance-based compensation" within the meaning of Section
162(m) of the Code, the Plan shall be administered by a Committee of two or
more "outside directors" within the meaning of Section 162(m) of the Code.

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<PAGE> 28
(iii) Rule 16b-3. To the extent desirable to
qualify transactions hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder shall be structured to satisfy the requirements for
exemption under Rule 16b-3.

(iv) Other Administration. Other than as provided
above, the Plan shall be administered by (A) the Board or (B) a Committee,
which committee shall be constituted to satisfy Applicable Laws.

(b) Powers of the Administrator. Subject to the
provisions of the Plan, and in the case of a Committee, subject to the specific
duties delegated by the Board to such Committee, the Administrator shall have
the authority, in its discretion:

(i) to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(n) of the Plan;

(ii) to select the Consultants and Employees to
whom Options and Rights may be granted hereunder;

(iii) to determine whether and to what extent
Options and Rights or any combination thereof, are granted hereunder;

(iv) to determine the number of shares of Common
Stock to be covered by each Option and Right granted hereunder;

(v) to approve forms of agreement for use under
the Plan;

(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options or Rights may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or Right
or the shares of Common Stock relating thereto, based in each case on such
factors as the Administrator, in its sole discretion, shall determine;

(vii) to construe and interpret the terms of the
Plan;

(viii) to prescribe, amend and rescind rules and
regulations relating to the Plan;

(ix) to determine whether and under what
circumstances an Option or Right may be settled in cash instead of Common Stock
or Common Stock instead of cash;

(x) to reduce the exercise price of any Option or
Right;

(xi) to modify or amend each Option or Right
(subject to Section 14 of the Plan);

(xii) to authorize any person to execute on behalf
of the Company any instrument required to effect the grant of an Option or
Right previously granted by the Administrator;

(xiii) to institute a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price;

(xiv) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that

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<PAGE> 29
number of Shares having a Fair Market Value equal to the amount required to be
withheld. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined. All elections by an Optionee to have Shares withheld for this
purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable;

(xv) to determine the terms and restrictions
applicable to Options and Rights and any Restricted Stock; and

(xvi) to make all other determinations deemed
necessary or advisable for administering the Plan.

(c) Effect of Administrator's Decision. The
Administrator's decisions, determinations and interpretations shall be final
and binding on all Optionees and any other holders of Options or Rights.

6. Duration of the Plan. The Plan shall remain in effect until
terminated by the Board under the terms of the Plan, provided that in no event
may Incentive Stock Options be granted under the Plan later than 10 years from
the date the Plan was adopted by the Board.

7. Options and SARs.

(a) Options. The Administrator, in its discretion, may
grant Options to eligible participants and shall determine whether such Options
shall be Incentive Stock Options or Nonstatutory Stock Options. Each Option
shall be evidenced by a Notice of Grant which shall expressly identify the
Options as Incentive Stock Options or as Nonstatutory Stock Options, and be in
such form and contain such provisions as the Administrator shall from time to
time deem appropriate. Without limiting the foregoing, the Administrator may
at any time authorize the Company, with the consent of the respective
recipients, to issue new Options or Rights in exchange for the surrender and
cancellation of outstanding Options or Rights. Option agreements shall contain
the following terms and conditions:

(i) Exercise Price; Number of Shares. The per
Share exercise price for the Shares issuable pursuant to an Option shall be
such price as is determined by the Administrator; provided, however, that in
the case of an Incentive Stock Option, the price shall be no less than 100% of
the Fair Market Value of the Common Stock on the date the Option is granted,
subject to any additional conditions set out in Section 7(a)(iv) below. In the
case of a Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

The Notice of Grant shall specify the number of
Shares to which it pertains.

(ii) Waiting Period and Exercise Dates. At the
time an Option is granted, the Administrator will determine the terms and
conditions to be satisfied before Shares may be purchased, including the dates
on which Shares subject to the Option may first be purchased. The
Administrator may specify that an Option may not be exercised until the
completion of the service period specified at the time of grant. (Any such
period is referred to herein as the "waiting period.") At the time an Option
is granted, the Administrator shall fix the period within which the Option may
be exercised, which shall not be earlier than the end of the waiting period, if
any, nor, in the case of an Incentive Stock Option, later than ten (10) years,
from the date of grant.

(iii) Form of Payment. The consideration to be
paid for the Shares to be issued upon exercise of an Option, including the
method of payment, shall be determined by the Administrator (and, in the case
of an Incentive Stock Option, shall be determined at the time of grant) and
may, to the extent permitted by the Delaware General Corporation Law, consist
entirely of:

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<PAGE> 30
(1) cash;

(2) check;

(3) promissory note;

(4) other Shares which (1) in the case
of Shares acquired upon exercise of an option, have been owned by the Optionee
for more than six months on the date of surrender, and (2) have a Fair Market
Value on the date of surrender not greater than the aggregate exercise price of
the Shares as to which said Option shall be exercised;

(5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale or loan proceeds required to pay the
exercise price;

(6) any combination of the foregoing
methods of payment; or

(7) such other consideration and method
of payment for the issuance of Shares to the extent permitted by Applicable
Laws.

(iv) Special Incentive Stock Option Provisions.
In addition to the foregoing, Options granted under the Plan which are intended
to be Incentive Stock Options under Section 422 of the Code shall be subject to
the following terms and conditions:

(a) Dollar Limitation. To the extent
that the aggregate Fair Market Value of (a) the Shares with respect to which
Options designated as Incentive Stock Options plus (b) the shares of stock of
the Company, Parent and any Subsidiary with respect to which other incentive
stock options are exercisable for the first time by an Optionee during any
calendar year under all plans of the Company and any Parent and Subsidiary
exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options.
For purposes of the preceding sentence, (a) Options shall be taken into account
in the order in which they were granted, and (b) the Fair Market Value of the
Shares shall be determined as of the time the Option or other incentive stock
option is granted.

(b) 10% Stockholder. If any Optionee to
whom an Incentive Stock Option is to be granted pursuant to the provisions of
the Plan is, on the date of grant, the owner of Common Stock (as determined
under Section 424(d) of the Code) possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Parent or
Subsidiary of the Company, then the following special provisions shall be
applicable to the Option granted to such individual:

(a) The per Share Option price of
Shares subject to such Incentive Stock Option shall not be less than 110% of
the Fair Market Value of Common Stock on the date of grant; and

(b) The Option shall not have a
term in excess of five (5) years from the date of grant.

Except as modified by the preceding provisions of this subsection 7(a)(iv) and
except as otherwise limited by Section 422 of the Code, all of the provisions
of the Plan shall be applicable to the Incentive Stock Options granted
hereunder.

(v) Other Provisions. Each Option granted under
the Plan may contain such other terms, provisions, and conditions not
inconsistent with the Plan as may be determined by the Administrator.

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(vi) Buyout Provisions. The Administrator may at
any time offer to buyout for a payment in cash, promissory note or Shares, an
Option previously granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Optionee at the time that
such offer is made.

(b) SARs.

(i) In Connection with Options. At the sole
discretion of the Administrator, SARs may be granted in connection with all or
any part of an Option, either concurrently with the grant of the Option or at
any time thereafter during the term of the Option. The following provisions
apply to SARs that are granted in connection with Options:

(1) The SAR shall entitle the Optionee
to exercise the SAR by surrendering to the Company unexercised the
corresponding portion of the related Option. The Optionee shall receive in
Exchange from the Company an amount equal to the excess of (1) the Fair Market
Value on the date of exercise of the SAR of the Common Stock covered by the
surrendered portion of the related Option over (2) the exercise price of the
Common Stock covered by the surrendered portion of the related Option.
Notwithstanding the foregoing, the Administrator may place limits on the amount
that may be paid upon exercise of an SAR; provided, however, that such limit
shall not restrict the exercisability of the related Option.

(2) When an SAR is exercised, the
related Option, to the extent surrendered, shall cease to be exercisable.

(3) An SAR shall be exercisable only
when and to the extent that the related Option is exercisable and shall expire
no later than the date on which the related Option expires.

(4) An SAR may only be exercised at a
time when the Fair Market Value of the Common Stock covered by the related
Option exceeds the exercise price of the Common Stock covered by the related
Option.

(ii) Independent of Options. At the sole
discretion of the Administrator, SARs may be granted without related Options.
The following provisions apply to SARs that are not granted in connection with
Options:

(1) The SAR shall entitle the Optionee,
by exercising the SAR, to receive from the Company an amount equal to the
excess of (1) the Fair Market Value of the Common Stock covered by the
exercised portion of the SAR, as of the date of such exercise, over (2) the
Fair Market Value of the Common Stock covered by the exercised portion of the
SAR, as of the date on which the SAR was granted; provided, however, that the
Administrator may place limits on the aggregate amount that may be paid upon
exercise of an SAR.

(2) SARs shall be exercisable, in whole
or in part, at such times as the Administrator shall specify in the Optionee's
SAR agreement.

(iii) Form of Payment. The Company's obligation
arising upon the exercise of an SAR may be paid in Common Stock or in cash, or
in any combination of Common Stock and cash, to the extent permitted by
Delaware corporation law and as the Administrator, in its sole discretion, may
determine. Shares issued upon the exercise of an SAR shall be valued at their
Fair Market Value as of the date of exercise.

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<PAGE> 32
(c) Method of Exercise.

(i) Procedure for Exercise; Rights as a
Stockholder. Any Option or SAR granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator and as shall
be permissible under the terms of the Plan.

An Option may not be exercised for a fraction of a
Share.

An Option or SAR shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance
with the terms of the Option or SAR by the person entitled to exercise the
Option or SAR and full payment for the Shares with respect to which the Option
is exercised has been received by the Company. Full payment may, as authorized
by the Administrator (and, in the case of an Incentive Stock Option, determined
at the time of grant) and permitted by the Option Agreement consist of any
consideration and method of payment allowable under subsection 7(a)(iii) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote or receive dividends
or any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date
the stock certificate is issued, except as provided in Section 12 of the Plan.

Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter shall be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised. Exercise of an SAR in any manner shall, to
the extent the SAR is exercised, result in a decrease in the number of Shares
which thereafter shall be available for purposes of the Plan, and the SAR shall
cease to be exercisable to the extent it has been exercised.

(ii) Termination of Employment or Consulting
Relationship. In the event an Optionee's Continuous Status as an Employee or
Consultant terminates other than upon the Optionee's death or Disability (but
not in the event of an Optionee's change of status from Employee to Consultant
(in which case an Employee's Incentive Stock Option shall automatically convert
to a Nonstatutory Stock Option on the date three (3) months and one day
following such change of status) or from Consultant to Employee), the Optionee
may exercise his or her Option or SAR, but only within such period of time as
is determined by the Administrator, not to exceed six (6) months (three (3)
months in the case of an Incentive Stock Option) from the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration
of the term of such Option or SAR as set forth in the Option or SAR Agreement).
To the extent that Optionee was not entitled to exercise an Option or SAR at
the date of such termination, and to the extent that the Optionee does not
exercise such Option or SAR (to the extent otherwise so entitled) within the
time specified herein, the Option or SAR shall terminate.

(iii) Disability of Optionee. In the event an
Optionee's Continuous Status as an Employee or Consultant terminates as a
result of the Optionee's Disability, the Optionee may exercise his or her
Option or SAR, but only within twelve (12) months from the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration
of the term of such Option or SAR as set forth in the Option or SAR Agreement).
To the extent that Optionee was not entitled to exercise an Option or SAR at
the date of such termination, and to the extent that the Optionee does not
exercise such Option or SAR (to the extent otherwise so entitled) within the
time specified herein, the Option or SAR shall terminate.

(iv) Death of Optionee. In the event of an
Optionee's death, the Optionee's estate or a person who acquired the right to
exercise the deceased Optionee's Option or SAR by bequest or inheritance may
exercise the Option or SAR, but only within twelve (12) months following the
date of death, and only to the extent that the Optionee was entitled to
exercise it at the date of death (but in no event later

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<PAGE> 33

than the expiration of the term of such Option or SAR as set forth in the
Option or SAR Agreement). To the extent that Optionee was not entitled to
exercise an Option or SAR at the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option or SAR (to the extent otherwise so entitled)
within the time specified herein, the Option or SAR shall terminate.

8. Stock Purchase Rights.

(a) Rights to Purchase. Stock Purchase Rights may be
issued either alone, in addition to, or in tandem with other awards granted
under the Plan and/or cash awards made outside of the Plan. After the
Administrator determines that it will offer Stock Purchase Rights under the
Plan, it shall advise the offeree in writing of the terms, conditions and
restrictions related to the offer, including the number of Shares that the
offeree shall be entitled to purchase, the price to be paid (provided that such
price is not less than the minimum price permitted by the Delaware General
Corporation Law), and the time within which the offeree must accept such offer,
which shall in no event exceed thirty (30) days from the date upon which the
Administrator made the determination to grant the Stock Purchase Right. The
offer shall be accepted by execution of a Restricted Stock Purchase Agreement
in the form determined by the Administrator.

(b) Repurchase Option. Unless the Administrator
determines otherwise, the Restricted Stock Purchase Agreement shall grant the
Company a repurchase option exercisable upon the voluntary or involuntary
termination of the purchaser's employment with the Company for any reason
(including death or Disability). The purchase price for Shares repurchased
pursuant to the Restricted Stock purchase agreement shall be the original price
paid by the purchaser and may be paid by cancellation of any indebtedness of
the purchaser to the Company. The repurchase option shall lapse at such rate
as the Administrator may determine.

(c) Other Provisions. The Restricted Stock Purchase
Agreement shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Administrator in its
sole discretion. In addition, the provisions of Restricted Stock Purchase
Agreements need not be the same with respect to each purchaser.

(d) Rights as a Stockholder. Once the Stock Purchase
Right is exercised, the purchaser shall have the rights equivalent to those of
a stockholder, and shall be a stockholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Stock Purchase Right is exercised, except as provided
in Section 12 of the Plan.

9. Performance Shares.

(a) The Administrator shall have sole and complete
authority to determine the Employees who shall receive Performance Shares, the
number of such shares for each Performance Cycle, the Performance Goals on
which each Award shall be contingent, the duration of each Performance Cycle,
and the value of each Performance Share. There may be more than one
Performance Cycle in existence at any one time, and the duration of Performance
Cycles may differ from each other.

(b) The Administrator shall establish Performance Goals
for each Cycle on the basis of such criteria and to accomplish such objectives
as the Administrator may from time to time select. During any Cycle, the
Administrator may adjust the Performance Goals for such Cycle as it deems
equitable in recognition of unusual or nonrecurring events affecting the
Company, changes in applicable tax laws or accounting principles, or such other
factors as the Administrator may determine.

(c) As soon as practicable after the end of a Performance
Cycle, the Administrator shall determine the number of Performance Shares that
have been earned on the basis of performance in relation to

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<PAGE> 34
the established Performance Goals. Payment Values of earned Performance Shares
shall be distributed to the Participant or, if the Participant has died, to the
Participant's designated Beneficiary, as soon as practicable after the
expiration of the Performance Cycle and the Administrator's determination
above. The Administrator shall determine whether Payment Values are to be
distributed in the form of cash or shares of Common Stock.

(d) In the sole and complete discretion of the
Administrator, an Award granted under this Section 9 may provide the
Participant with dividends or dividend equivalents (payable on a current or
deferred basis) and cash payments in lieu of or in addition to an Award.

10. Stock Unit Awards.

(a) The Administrator shall have sole and complete
authority to grant Stock Unit Awards hereunder that can be in the form of
Common Stock or units (including restricted stock units), the value of which is
based, in whole or in part, on the value of Common Stock. Subject to the
provisions of the Plan, Stock Unit Awards shall be subject to such terms,
restrictions, conditions, vesting requirements and payment rules (all of which
are sometimes hereinafter collectively referred to as "rules") as the
Administrator may determine in its sole and complete discretion at the time of
grant. The rules need not be identical for each Stock Unit Award.

(b) A Stock Unit Award may be granted subject to the
following rules:

(i) Unless determined otherwise by the
Administrator, any shares of Common Stock that are part of a Stock Unit Award
may not be assigned, sold, transferred, pledged or otherwise encumbered prior
to the date on which the shares are issued or, if later, the date provided by
the Administrator at the time of grant of the Stock Unit Award.

(ii) Stock Unit Awards may provide for the payment
of cash consideration by the person to whom such Award is granted or provide
that the Award, and any Common Stock to be issued in connection therewith, if
applicable, shall be delivered without the payment of cash consideration,
provided that for any Common Stock to be purchased in connection with a Stock
Unit Award the purchase price shall be at least 50% of the Fair Market Value of
such Common Stock on the date such award is granted.

(iii) Stock Unit Awards may relate in whole or in
part to certain performance criteria established by the Administrator at the
time of grant.

(iv) Stock Unit Awards may provide for deferred
payment schedules and/or vesting over a specific period of employment.

(v) In such circumstances as the Administrator
may deem advisable, the Administrator may waive or otherwise remove, in whole
or in part, any restriction or limitation to which a Stock Unit Award was made
subject at the time of grant.

(c) In the sole and complete discretion of the
Administrator, an Award pursuant to this Section 10 may provide the Participant
with dividends or dividend equivalents (payable on a current or deferred basis)
and cash payments in lieu of or in addition to an Award.

11. Non-Transferability of Options and Rights. Unless determined
otherwise by the Administrator, Options and Rights may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee. If the Administrator makes an
Option or Stock Purchase Right transferable, such Option or Stock Purchase
Right shall contain such additional terms and conditions as the Administrator
deems appropriate.

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<PAGE> 35
12. Adjustments Upon Changes in Capitalization, Dissolution,
Merger, Asset Sale or Change of Control.

(a) Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of shares of Common Stock
covered by each outstanding Option and Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Rights have yet been granted or which have been returned to
the Plan upon cancellation or expiration of an Option or Right, as well as the
price per share of Common Stock covered by each such outstanding Option or
Right, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option or Right.

(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, to the extent that an
Option or Right has not been previously exercised, it will terminate
immediately prior to the consummation of such proposed action. The
Administrator may, in the exercise of its sole discretion in such instances,
declare that any Option or Right shall terminate as of a date fixed by the
Administrator and give each Optionee the right to exercise his or her Option or
Right as to all or any part of the Optioned Stock, including Shares as to which
the Option or Right would not otherwise be exercisable.

(c) Merger or Asset Sale. Subject to the provisions of
paragraph (d) hereof, in the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the
Company, (i) each outstanding Option and Right shall be assumed or an
equivalent Option or Right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation and (ii) twelve months of unvested
shares, if any, subject to such Option or Right shall vest and become fully
exercisable upon the Change in Control. In the event that the successor
corporation does not agree to assume the Option or Right or to substitute an
equivalent option or right, the Optionee shall have the right to exercise the
Option or Right as to all of the Optioned Stock, including Shares as to which
it would not otherwise be exercisable. If an Option or Right becomes
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Optionee shall be notified that the Option or Right shall
be exercisable for a period of fifteen (15) days from the date of such notice,
and the Option or Right will terminate upon the expiration of such period. For
the purposes of this paragraph, the Option or Right shall be considered assumed
if, immediately following the merger or sale of assets, the Option or Right
confers the right to purchase, for each Share of Optioned Stock subject to the
Option or Right immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received
in the merger or sale of assets by holders of Common Stock for each Share held
on the effective date of the transaction (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares); provided, however, that if such consideration
received in the merger or sale of assets was not solely common stock of the
successor corporation or its Parent, the Administrator may, with the consent of
the successor corporation and the Optionee, provide for the consideration to be
received upon the exercise of the Option or Right, for each Share of Optioned
Stock subject to the Option or Right, to be solely common stock of the
successor corporation or its Parent equal in Fair Market Value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.

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<PAGE> 36
(d) Change in Control. At the time any Option or Right
is granted, the Administrator may, in its sole discretion, provide that in the
event of a "Change in Control" of the Company, as defined in paragraph (e)
below, then the following acceleration and valuation provisions shall apply:

(i) Such Option or Right outstanding on the date
such Change in Control is determined to have occurred that is not yet
exercisable and vested on such date shall become fully exercisable and vested;
or

(ii) Such Option or Right, to the extent it is
exercisable and vested (including any Option or Right that shall become
exercisable and vested pursuant to subparagraph (i) above), shall be terminated
in exchange for a cash payment equal to the Change in Control Price, (reduced
by the exercise price, if any, applicable to such Options or Rights). These
cash proceeds shall be paid to the Optionee or, in the event of death of an
Optionee prior to payment, to the estate of the Optionee or to a person who
acquired the right to exercise the Option or Right by bequest or inheritance.

(e) Definition of "Change in Control". For purposes of
this Section 12, a "Change in Control" means the happening of any of the
following:

(i) When any "person," as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (other than the Company, a
Subsidiary or a Company employee benefit plan, including any trustee of such
plan acting as trustee) files or becomes obligated to file a Schedule 13D under
the Exchange Act or any amendment thereto (the "Filing") reporting that such
person (or group of affiliated persons) is or has become the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing forty percent (40%) or more of the total
voting power represented by the Company's then outstanding voting securities,
and such person (or group) indicates in connection with such Filing any plans
or proposals to effect any of the transactions or events enumerated in Item 4
of Schedule 13D; or

(ii) A merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least sixty percent (60%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve an agreement for the
sale or disposition by the Company of all or substantially all the Company's
assets; or

(iii) A change in the composition of the Board of
Directors of the Company occurring within a two-year period, as a result of
which fewer than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (A) are directors of the
Company as of the date the Plan is approved by the stockholders, or (B) are
elected, or nominated for election, to the Board of Directors of the Company
with the affirmative votes of at least a majority of the Incumbent Directors at
the time of such election or nomination (but shall not include an individual
whose election or nomination is in connection with an actual or threatened
proxy contest relating to the election of directors to the Company).

(f) Change in Control Price. For purposes of this
Section 12, "Change in Control Price" shall be, as determined by the
Administrator, (i) the highest Fair Market Value of a Share within the 60-day
period immediately preceding the date of determination of the Change in Control
Price by the Administrator (the "60-Day Period"), or (ii) the highest price
paid or offered per Share, as determined by the Administrator, in any bona fide
transaction or bona fide offer related to the Change in Control of the Company,
at any time within the 60-Day Period, or (iii) such lower price as the
Administrator, in its discretion, determines to be a reasonable estimate of the
fair market value of a Share.

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<PAGE> 37
13. Date of Grant. The date of grant of an Option or Right shall
be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Right, or such other later date as is
determined by the Administrator. Notice of the determination shall be provided
to each Optionee within a reasonable time after the date of such grant.

14. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.

(b) Stockholder Approval. The Company shall obtain
stockholder approval of any Plan amendment to the extent such approval is
determined by the Board to be necessary and desirable to comply with Applicable
Laws.

(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of
any Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee
and the Company.

15. Conditions Upon Issuance of Shares.

(a) Legal Compliance. Shares shall not be issued
pursuant to the exercise of an Option or Right unless the exercise of such
Option or Right and the issuance and delivery of such Shares shall comply with
all relevant provisions of Applicable Laws.

(b) Investment Representations. As a condition to the
exercise of an Option or Right, the Company may require the person exercising
such Option or Right to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required.

16. Liability of Company. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

17. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.

18. Shareholder Approval. The Plan shall be subject to approval
by the shareholders of the Company within twelve (12) months before or after
the date the Plan is adopted. Such shareholder approval shall be obtained in
the degree and manner required under Applicable Laws.

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APPENDIX 2

PROXIM, INC.

1993 EMPLOYEE STOCK PURCHASE PLAN

The following constitutes the provisions of the 1993 Employee Stock
Purchase Plan of Proxim, Inc., as amended, effective upon the approval of the
stockholders of the Company on May 22, 1998.

1. Purpose. The purpose of the Plan is to provide employees of
the Company and its Designated Subsidiaries with an opportunity to purchase
Common Stock of the Company through accumulated payroll deductions. It is the
intention of the Company to have the Plan qualify as an "Employee Stock
Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, as
amended. The provisions of the Plan, accordingly, shall be construed so as to
extend and limit participation in a manner consistent with the requirements of
that section of the Code.

2. Definitions.

(a) "Board" shall mean the Board of Directors of the
Company.

(b) "Code" shall mean the Internal Revenue Code of 1986,
as amended.

(d) "Company" shall mean Proxim, Inc., a Delaware
corporation.

(e) "Compensation" shall mean all base straight time
gross earnings, overtime, shift premium, incentive compensation, incentive
payments, bonuses, commissions and other compensation but shall not include
income recognized in connection with stock options.

(f) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole
discretion as eligible to participate in the Plan.

(g) "Employee" shall mean any individual who is an
Employee of the Company for purposes of tax withholding under the Code whose
customary employment with the Company or any Designated Subsidiary is at least
twenty (20) hours per week. For purposes of the Plan, the employment
relationship shall be treated as continuing intact while the individual is on
sick leave or other leave of absence approved by the Company. Where the period
of leave exceeds 90 days and the individual's right to reemployment is not
guaranteed either by statute or by contract, the employment relationship will
be deemed to have terminated on the 91st day of such leave.

(h) "Enrollment Date" shall mean the first day of each
Offering Period.

(i) "Exercise Date" shall mean the last day of each
Purchase Period.

(j) "Fair Market Value" shall mean, as of any date, the
value of Common Stock determined as follows:

(1) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair Market Value
shall be the closing sale price for the Common Stock (or the mean of the
closing bid and asked prices, if no sales were reported), as

<PAGE> 39
quoted on such exchange (or the exchange with the greatest volume of trading in
Common Stock) or system on the date of such determination, as reported in The
Wall Street Journal or such other source as the Board deems reliable, or;

(2) If the Common Stock is quoted on the NASDAQ
system (but not on the National Market System thereof) or is regularly quoted
by a recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;

(3) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Board.

(4) For purposes of the Enrollment Date under the
first Offering Period under the Plan, the Fair Market Value of the Common Stock
shall be the Price to Public as set forth in the final prospectus filed with
the Securities and Exchange Commission pursuant to Rule 424 under the
Securities Act of 1933, as amended.

(k) "Offering Period" shall mean the period of
approximately twenty-four (24) months during which an option granted pursuant
to the Plan may be exercised, commencing on the first Trading Day on or after
February 15 and August 15 of each year and terminating on the last Trading Day
in the periods ending twenty-four months later, except that the first Offering
Period shall be an extended Offering Period of approximately twenty-six months,
commencing with the date on which the Company's registration statement on Form
S-1 (or any successor form thereof) is declared effective by the Securities and
Exchange Commission and ending on the last Trading Day in the period ending
February 15, 1996. The second Offering Period under the Plan shall commence
with the first Trading Day on or after August 15, 1994. The duration of
Offering Periods may be changed pursuant to Section 4 of this Plan.

(l) "Plan" shall mean this 1993 Employee Stock Purchase
Plan.

(m) "Purchase Price" shall mean an amount equal to 85% of
the Fair Market Value of a share of Common Stock on the Enrollment Date or on
the Exercise Date, whichever is lower.

(n) "Purchase Period" shall mean the approximately six
month period commencing after one Exercise Date and ending with the next
Exercise Date, except that the first Purchase Period of any Offering Period
shall commence on the Enrollment Date and end with the next Exercise Date;
provided, however, that the first Purchase Period of the first Offering Period
under the Plan shall commence with the date on which the Company's registration
statement on Form S-1 (or any successor form thereof) is declared effective by
the Securities and Exchange Commission and end on the last Trading Day
occurring in the period ending August 15, 1994.

(o) "Reserves" shall mean the number of shares of Common
Stock covered by each option under the Plan which have not yet been exercised
and the number of shares of Common Stock which have been authorized for
issuance under the Plan but not yet placed under option.

(p) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the
Company or a Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the Company or a Subsidiary.

(q) "Trading Day" shall mean a day on which national
stock exchanges and the National Association of Securities Dealers Automated
Quotation (NASDAQ) System are open for trading.

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<PAGE> 40

3. Eligibility.

(a) Any Employee (as defined in Section 2(g)), who shall
be employed by the Company on a given Enrollment Date shall be eligible to
participate in the Plan.

(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) which permits his or her rights to purchase stock under
all employee stock purchase plans of the Company and its subsidiaries to accrue
at a rate which exceeds twenty-five thousand dollars ($25,000) worth of stock
(determined at the fair market value of the shares at the time such option is
granted) for each calendar year in which such option is outstanding at any
time.

4. Offering Periods. The Plan shall be implemented by
consecutive, overlapping Offering Periods with a new Offering Period commencing
on the first Trading Day on or after February 15 and August 15 each year, or on
such other date as the Board shall determine, and continuing thereafter until
terminated in accordance with Section 19 hereof; provided, however, that the
first Offering Period under the Plan shall be an extended Offering Period of
approximately twenty-six months, commencing with the first Trading Day on or
after the date on which the Company's registration statement on Form S-1 (or
any successor form thereof) is declared effective by the Securities and
Exchange Commission and ending on the last Trading Day in the period ending
February 15, 1996. The second Offering Period under the Plan shall commence
with the first Trading Day on or after August 15, 1994. The Board shall have
the power to change the duration of Offering Periods (including the
commencement and termination dates thereof) with respect to future offerings
without shareholder approval if such change is announced at least fifteen (15)
days prior to the scheduled beginning of the first Offering Period to be
affected thereafter.

5. Participation.

(a) An eligible Employee may become a participant in the
Plan by completing a subscription agreement authorizing payroll deductions in
the form of Exhibit A to this Plan and filing it with the Company's payroll
office prior to the applicable Enrollment Date, unless a later time for filing
the subscription agreement is set by the Board for all eligible Employees with
respect to a given Offering Period.

(b) Payroll deductions for a participant shall commence
on the first payroll following the Enrollment Date and shall end on the last
payroll in the Offering Period to which such authorization is applicable,
unless sooner terminated by the participant as provided in Section 11 hereof.

6. Payroll Deductions.

(a) At the time a participant files his or her
subscription agreement, he or she shall elect to have payroll deductions made
on each pay day during the Offering Period in an amount not exceeding ten
percent (10%) of the Compensation which he or she receives on each pay day
during the Offering Period, and the aggregate of such payroll deductions during
the Offering Period shall not exceed ten percent (10%) of the participant's
Compensation during said Offering Period.

(b) All payroll deductions made for a participant shall
be credited to his or her account under the Plan and will be withheld in whole
percentages only. A participant may not make any additional payments into such
account.

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<PAGE> 41
(c) A participant may discontinue his or her
participation in the Plan as provided in Section 10 hereof, or may increase or
decrease (down to 0%) the rate of his or her payroll deductions during the
Offering Period by completing or filing with the Company a new subscription
agreement authorizing a change in payroll deduction rate. The Board may, in
its discretion, limit the number of participation rate changes during any
Offering Period. The change in rate shall be effective with the first full
payroll period following five (5) business days after the Company's receipt of
the new subscription agreement unless the Company elects to process a given
change in participation more quickly. A participant's subscription agreement
shall remain in effect for successive Offering Periods unless terminated as
provided in Section 10 hereof.

(d) Notwithstanding the foregoing, to the extent
necessary to comply with Section 423(b)(8) of the Code and Section 3(b) hereof,
a participant's payroll deductions may be decreased to 0% at such time during
any Purchase Period which is scheduled to end during the current calendar year
(the "Current Purchase Period") that the aggregate of all payroll deductions
which were previously used to purchase stock under the Plan in a prior Purchase
Period which ended during that calendar year plus all payroll deductions
accumulated with respect to the Current Purchase Period equal $21,250. Payroll
deductions shall recommence at the rate provided in such participant's
subscription agreement at the beginning of the first Purchase Period which is
scheduled to end in the following calendar year, unless terminated by the
participant as provided in Section 11 hereof.

(e) At the time the option is exercised, in whole or in
part, or at the time some or all of the Company's Common Stock issued under the
Plan is disposed of, the participant must make adequate provision for the
Company's federal, state, or other tax withholding obligations, if any, which
arise upon the exercise of the option or the disposition of the Common Stock.
At any time, the Company may, but will not be obligated to, withhold from the
participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to make
available to the Company any tax deductions or benefits attributable to sale or
early disposition of Common Stock by the Employee.

7. Grant of Option. On the Enrollment Date of each Offering
Period, each eligible Employee participating in such Offering Period shall be
granted an option to purchase on each Exercise Date during such Offering Period
(at the applicable Purchase Price) up to a number of shares of the Company's
Common Stock determined by dividing such Employee's payroll deductions
accumulated prior to such Exercise Date and retained in the Participant's
account as of the Exercise Date by the applicable Purchase Price; provided that
in no event shall an Employee be permitted to purchase during each Purchase
Period more than a number of Shares determined by dividing $25,000 by the Fair
Market Value of a share of the Company's Common Stock on the Enrollment Date,
and provided further that such purchase shall be subject to the limitations set
forth in Sections 3(b) and 12 hereof. Exercise of the option shall occur as
provided in Section 8 hereof, unless the participant has withdrawn pursuant to
Section 10 hereof, and shall expire on the last day of the Offering Period.

8. Exercise of Option. Unless a participant withdraws from the
Plan as provided in Section 10 hereof, his or her option for the purchase of
shares will be exercised automatically on the Exercise Date, and the maximum
number of full shares subject to option shall be purchased for such participant
at the applicable Purchase Price with the accumulated payroll deductions in his
or her account. No fractional shares will be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.

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<PAGE> 42
9. Delivery. As promptly as practicable after each Exercise Date
on which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.

10. Restriction on Transfer of Shares. Shares of Common Stock
purchased upon exercise of a participant's option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or the laws of dissent or distribution for a period of six (6) months from
the Exercise Date. This restriction on transfer shall be earlier terminated in
the event of a participant's permanent disability or death, or upon the
involuntary transfer of the shares due to divorce, judicial declaration of
insolvency or bankruptcy or other form of involuntary transfer.

11. Withdrawal; Termination of Employment.

(a) A participant may withdraw all but not less than all
the payroll deductions credited to his or her account and not yet used to
exercise his or her option under the Plan at any time by giving written notice
to the Company in the form of Exhibit B to this Plan. All of the participant's
payroll deductions credited to his or her account will be paid to such
participant promptly after receipt of notice of withdrawal and such
participant's option for the Offering Period will be automatically terminated,
and no further payroll deductions for the purchase of shares will be made
during the Offering Period. If a participant withdraws from an Offering
Period, payroll deductions will not resume at the beginning of the succeeding
Offering Period unless the participant delivers to the Company a new
subscription agreement.

(b) Upon a participant's ceasing to be an Employee (as
defined in Section 2(g) hereof), for any reason, including by virtue of him or
her having failed to remain an Employee of the Company for at least twenty (20)
hours per week during an Offering Period in which the Employee is a
participant, he or she will be deemed to have elected to withdraw from the Plan
and the payroll deductions credited to such participant's account during the
Offering Period but not yet used to exercise the option will be returned to
such participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 14 hereof, and such participant's option will be
automatically terminated.

12. Interest. No interest shall accrue on the payroll deductions
of a participant in the Plan.

13. Stock.

(a) The maximum number of shares of the Company's Common
Stock which shall be made available for sale under the Plan shall be eight
hundred thousand (800,000) shares, subject to adjustment upon changes in
capitalization of the Company as provided in Section 18 hereof. If on a given
Exercise Date the number of shares with respect to which options are to be
exercised exceeds the number of shares then available under the Plan, the
Company shall make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable.

(b) The participant will have no interest or voting right
in shares covered by his option until such option has been exercised.

(c) Shares to be delivered to a participant under the
Plan will be registered in the name of the participant or in the name of the
participant and his or her spouse.

14. Administration.

(a) Administrative Body. The Plan shall be administered
by the Board or a committee of members of the Board appointed by the Board.
The Board or its committee shall have full and exclusive discretionary
authority to construe, interpret and apply the terms of the Plan, to determine
eligibility and to

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<PAGE> 43
adjudicate all disputed claims filed under the Plan. Every finding, decision
and determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties. Members of the Board
who are eligible Employees are permitted to participate in the Plan, provided
that:

(1) Members of the Board who are eligible to
participate in the Plan may not vote on any matter affecting the administration
of the Plan or the grant of any option pursuant to the Plan.

(2) If a Committee is established to administer
the Plan, no member of the Board who is eligible to participate in the Plan may
be a member of the Committee.

(b) Rule 16b-3 Limitations. Notwithstanding the
provisions of Subsection (a) of this Section 14, in the event that Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor provision ("Rule 16b-3") provides specific
requirements for the administrators of plans of this type, the Plan shall be
only administered by such a body and in such a manner as shall comply with the
applicable requirements of Rule 16b-3. Unless permitted by Rule 16b-3, no
discretion concerning decisions regarding the Plan shall be afforded to any
committee or person that is not "disinterested" as that term is used in Rule
16b-3.

15. Designation of Beneficiary.

(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a
participant may file a written designation of a beneficiary who is to receive
any cash from the participant's account under the Plan in the event of such
participant's death prior to exercise of the option. If a participant is
married and the designated beneficiary is not the spouse, spousal consent shall
be required for such designation to be effective.

(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may designate.

16. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option
or to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 11 hereof.

17. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such payroll deductions.

18. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees at least annually, which statements will set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.

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<PAGE> 44
19. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.

(a) Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the Reserves as well as the price
per share of Common Stock covered by each option under the Plan which has not
yet been exercised shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration".
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an option.

(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Offering Periods will
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board.

(c) Merger or Asset Sale. In the event of a proposed
sale of all or substantially all of the assets of the Company, or the merger of
the Company with or into another corporation, each option under the Plan shall
be assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless the
Board determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the Offering Periods then in progress by
setting a new Exercise Date (the "New Exercise Date"). If the Board shortens
the Offering Periods then in progress in lieu of assumption or substitution in
the event of a merger or sale of assets, the Board shall notify each
participant in writing, at least ten (10) business days prior to the New
Exercise Date, that the Exercise Date for his option has been changed to the
New Exercise Date and that his option will be exercised automatically on the
New Exercise Date, unless prior to such date he has withdrawn from the Offering
Period as provided in Section 11 hereof. For purposes of this paragraph, an
option granted under the Plan shall be deemed to be assumed if, following the
sale of assets or merger, the option confers the right to purchase, for each
share of option stock subject to the option immediately prior to the sale of
assets or merger, the consideration (whether stock, cash or other securities or
property) received in the sale of assets or merger by holders of Common Stock
for each share of Common Stock held on the effective date of the transaction
(and if such holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if such consideration received in the
sale of assets or merger was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code), the Board
may, with the consent of the successor corporation and the participant, provide
for the consideration to be received upon exercise of the option to be solely
common stock of the successor corporation or its parent equal in fair market
value to the per share consideration received by holders of Common Stock and
the sale of assets or merger.

20. Amendment or Termination.

(a) The Board of Directors of the Company may at any time
and for any reason terminate or amend the Plan. Except as provided in Section
19 hereof, no such termination can affect options previously granted, provided
that an Offering Period may be terminated by the Board of Directors on any
Exercise Date if the Board determines that the termination of the Plan is in
the best interests of the Company and its shareholders. Except as provided in
Section 19 hereof, no amendment may make any change in any option theretofore
granted which adversely affects the rights of any participant. To the extent
necessary to comply with Rule 16b-3 or under Section 423 of the Code (or any
successor rule or provision or any other applicable

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<PAGE> 45
law or regulation), the Company shall obtain shareholder approval in such a
manner and to such a degree as required.

(b) Without shareholder consent and without regard to
whether any participant rights may be considered to have been "adversely
affected," the Board (or its committee) shall be entitled to change the
Offering Periods, limit the frequency and/or number of changes in the amount
withheld during an Offering Period, establish the exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars, permit payroll
withholding in excess of the amount designated by a participant in order to
adjust for delays or mistakes in the Company's processing of properly completed
withholding elections, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that amounts applied
toward the purchase of Common Stock for each participant properly correspond
with amounts withheld from the participant's Compensation, and establish such
other limitations or procedures as the Board (or its committee) determines in
its sole discretion advisable which are consistent with the Plan.

21. Notices. All notices or other communications by a participant
to the Company under or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.

22. Conditions Upon Issuance of Shares. Shares shall not be
issued with respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment
and without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.

23. Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board of Directors or its approval by
the shareholders of the Company. It shall continue in effect for a term of ten
(10) years unless sooner terminated under Section 20 hereof.

24. Additional Restrictions of Rule 16b-3. The terms and
conditions of options granted hereunder to, and the purchase of shares by,
persons subject to Section 16 of the Exchange Act shall comply with the
applicable provisions of Rule 16b-3. This Plan shall be deemed to contain, and
such options shall contain, and the shares issued upon exercise thereof shall
be subject to, such additional conditions and restrictions as may be required
by Rule 16b-3 to qualify for the maximum exemption from Section 16 of the
Exchange Act with respect to Plan transactions.

25. Automatic Transfer to Low Price Offering Period. To the
extent permitted by Rule 16b-3 of the Exchange Act, if the Fair Market Value of
the Common Stock on any Exercise Date in an Offering Period is lower than the
Fair Market Value of the Common Stock on the Enrollment Date of such Offering
Period, then all participants in such Offering Period shall be automatically
withdrawn from such Offering Period immediately after the exercise of their
option on such Exercise Date and automatically re-enrolled in the immediately
following Offering Period as of the first day thereof.

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<PAGE> 46
EXHIBIT A

PROXIM, INC.

1993 EMPLOYEE STOCK PURCHASE PLAN

SUBSCRIPTION AGREEMENT

_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)

1. ________________________________________ hereby elects to participate
in the Proxim, Inc. 1993 Employee Stock Purchase Plan (the "Employee
Stock Purchase Plan") and subscribes to purchase shares of the
Company's Common Stock in accordance with this Subscription Agreement
and the Employee Stock Purchase Plan.

2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (not to exceed 10%) during
the Offering Period in accordance with the Employee Stock Purchase
Plan. (Please note that no fractional percentages are permitted.)

3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.

4. I have received a copy of the complete "Proxim, Inc. 1993 Employee
Stock Purchase Plan." I understand that my participation in the
Employee Stock Purchase Plan is in all respects subject to the terms
of the Plan. I understand that the grant of the option by the Company
under this Subscription Agreement is subject to obtaining shareholder
approval of the Employee Stock Purchase Plan.

5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and spouse only):
____________________________________________________________________.

6. I understand that if I dispose of any shares received by me pursuant
to the Plan within 2 years after the Enrollment Date (the first day of
the Offering Period during which I purchased such shares) or one year
after the Exercise Date, I will be treated for federal income tax
purposes as having received ordinary income at the time of such
disposition in an amount equal to the excess of the fair market value
of the shares at the time such shares were purchased over the price
which I paid for the shares. I HEREBY AGREE TO NOTIFY THE COMPANY IN
WRITING WITHIN 30 DAYS AFTER THE DATE OF ANY DISPOSITION OF MY SHARES
AND I WILL MAKE ADEQUATE PROVISION FOR FEDERAL, STATE OR OTHER TAX
WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON THE DISPOSITION OF
THE COMMON STOCK. The Company may, but will not be obligated to,
withhold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding necessary
to make available to the Company any tax deductions or benefits
attributable to sale or early disposition of Common Stock by me. If I
dispose of such shares at any time after the expiration of the 2-year
and 1-year holding periods, I understand that I will be treated for
federal income tax purposes as having received income only at the time
of such disposition, and that such income will be taxed as ordinary
income only to the extent of an amount equal to the lesser of (1) the
excess of the fair market value of the shares at the time of such
disposition over the purchase price which I paid for the shares, or
(2) 15% of the fair

<PAGE> 47

market value of the shares on the first day of the Offering Period.
The remainder of the gain, if any, recognized on such disposition will
be taxed as capital gain.

7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase
Plan.

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<PAGE> 48
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:

NAME: (Please print)_________________________________________________________
(First) (Middle) (Last)

__________________________ _____________________________________
Relationship

_____________________________________
(Address)

Employee's Social
Security Number:
_____________________________________

Employee's Address:
_____________________________________

_____________________________________

I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

Dated:____________________ _____________________________________
Signature of Employee

_____________________________________
Spouse's Signature (If beneficiary
other than spouse)

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<PAGE> 49
EXHIBIT B

PROXIM, INC.

1993 EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

The undersigned participant in the Offering Period of the Proxim, Inc.
1993 Employee Stock Purchase Plan which began on ____________, 19____ (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.

Name and Address of Participant:

_____________________________________

Signature:

_____________________________________

Date:________________________________

<PAGE> 50
DETACH HERE

PROXY

PROXIM, INC.

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, MAY 22, 1998

The undersigned stockholder of Proxim, Inc. (the "Company"), hereby
appoints David C. King and Keith E. Glover and each of them, with power of
substitution to each, true and lawful attorneys, agents and proxyholders of the
undersigned, and hereby authorizes them to represent and vote, as specified
herein, all the shares of Common Stock of the Company held of record by the
undersigned on April 3, 1998, at the 1998 Annual Meeting of Stockholders of the
Company to be held on Friday, May 22, 1998 at 10:00 a.m., local time, at the
Sunnyvale Hilton Inn, 1250 Lakeside Drive, Sunnyvale, California 94086, and any
adjournments or postponements thereof.

SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<PAGE> 51
<TABLE>
<S> <C>
DETACH HERE

[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.

The shares represented by this proxy will be voted in the manner directed. In the absence of any direction, the shares will be
voted FOR Proposals 1, 2, 3 and 4. The undersigned acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement dated April 22, 1998.

Please mark, sign and date this proxy and return it promptly whether you plan to attend the meeting or not. If you do attend, you
may vote in person if you desire.
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS: 2. To approve an amendment to the [ ] [ ] [ ]
Nominees: David C. King, Raymond Chin, Leslie G. Denend, Company's 1995 Long-Term Incentive
Gregory L. Reyes, Jeffrey D. Saper Plan to increase the number of shares
FOR WITHHELD of Common Stock reserved for issuance
[ ] [ ] thereunder by 500,000 shares.

[ ] ________________________________________ MARK HERE [ ] 3. To approve an amendment to the FOR AGAINST ABSTAIN
For all nominees except as noted above FOR ADDRESS Company's 1993 employee Stock [ ] [ ] [ ]
CHANGE AND Purchase Plan to increase the number
NOTE BELOW of shares of Common Stock reserved for
issuance thereunder by 200,000 shares.

4. To ratify the appointment of Price FOR AGAINST ABSTAIN
Waterhouse LLP as independent [ ] [ ] [ ]
accountants of the Company for the
fiscal year ending December 31, 1998.

5. In their discretion, the proxyholders are authorized to vote
upon such other business as may properly come before the
meeting, or any adjournments or postponements thereof.

PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD
EACH SIGN. TRUSTEE AND OTHERS ACTING IN A REPRESENTATIVE CAPACITY
SHOULD INDICATE THE CAPACITY IN WHICH THEY SIGN AND GIVE THEIR FULL
TITLE. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY AN
AUTHORIZED OFFICER. IF A PARTNERSHIP PLEASE SIGN IN PARTNERSHIP
NAME BY AN AUTHORIZED PERSON.

Signature: _________________________________ Date: _______________ Signature: ________________________________ Date: ______________
</TABLE>