PROXIM INC /DE/, DEF 14A, 1999-04-29

PROXIM INC /DE/
DEF 14A, 1999-04-29
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 25, 1999

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 25, 1999, at
11:00 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 900,000 shares;

3. To approve an amendment to the Company's 1994 Director Option Plan
to increase the number of shares of Common Stock reserved for issuance
thereunder by 100,000 shares;

4. To ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants of the Company for the fiscal year ending December
31, 1999; 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 5, 1999 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 30, 1999

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
Tuesday, May 25, 1999, at 11:00 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 30, 1999
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 5, 1999 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. At
the April 5, 1999 Record Date, 10,676,426 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 5, 1999 was $30.75 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
1999

Proposals of stockholders which are intended to be presented by such
stockholders at the Company's 2000 Annual Meeting must be received by the
Company no later than December 31, 1999 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............................................... 39 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................................................ 45 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.
</TABLE>

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<TABLE>
<CAPTION>
DIRECTOR
NAME, PRINCIPAL OCCUPATION AND DIRECTORSHIPS AGE SINCE
-------------------------------------------- --- --------
<S> <C> <C>
Leslie G. Denend............................................ 58 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.
Gregory L. Reyes............................................ 36 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............................................ 51 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 1998. 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, Reyes and Saper during 1998, 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 1998. For 1999, 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 Reyes during 1998, 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 1998. For 1999, the
Compensation Committee consists of Messrs. Chin, Denend and Reyes.

During 1998, 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.

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<PAGE> 7

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 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 2,250,000 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 5, 1999, 1,963,000 options to purchase
shares were outstanding under the 1995 Plan and 120,807 shares remained
available for future issuance.

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

On January 25, 1999, the Board of Directors approved an amendment to the
1995 Plan to increase the number of shares reserved for issuance thereunder by
900,000 shares to an aggregate of 3,150,000 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 900,000 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 Company, and to enable the Company to enlist and retain in its employment
the best available talent for the
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<PAGE> 8

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 nonstatutory 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. Incentive stock options may be granted only to employees.

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.

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 3,150,000 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.

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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 (twelve) months in the case of death or permanent disability or six (6)
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
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, 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") or any combination thereof.

The Administrator of the 1995 Plan may at any time offer to buy out, for a
payment in cash, promissory note 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.

If an optionee's employment or consulting relationship terminates for any
reason (including death or disability), then all options held by the optionee
under the 1995 Plan expire on the earlier of (i) the date set forth in his or
her notice of grant or (ii) the expiration date of such option. The 1995 Plan
and the option agreement may provide for a longer period of time for the option
to be exercised after the optionee's death or disability than for other
terminations. To the extent the option is exercisable at the time of such
termination, the optionee (or the optionee's estate or the person who acquires
the right to exercise the option by bequest or inheritance) may exercise all or
part of his or her option at any time before termination.

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.

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<PAGE> 10

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 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,

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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 not yet
exercisable and vested 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 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 transaction 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 (12) 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.

9
<PAGE> 12

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 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

10
<PAGE> 13

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.

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.

PROPOSAL NO. 3

APPROVAL OF AMENDMENT TO THE
1994 DIRECTOR OPTION PLAN

DESCRIPTION OF PROPOSED AMENDMENTS

On January 25, 1999, subject to approval by the stockholders at the Annual
Meeting, the Board approved an amendment to the 1994 Director Option Plan (the
"Director Plan") to increase the number of shares reserved for issuance
thereunder by 100,000 shares to an aggregate of 300,000 shares. As of April 5,
1999, 76,667 options to purchase shares were outstanding under the Director Plan
and 85,834 shares remained available for future issuance.

PURPOSE OF THE DIRECTOR PLAN

The purpose of the Director Plan is to attract and retain the best
available people for service as directors of the Company and to encourage their
continued service on the Board. The Board believes that in order to attract and
retain the best available people for service as directors of the Company and
encourage their continued service on the Board, the amendments proposed are
necessary to meet such purposes.

VOTE REQUIRED

The approval of this proposal requires the affirmative vote of a majority
of the shares 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 STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE AMENDMENT TO THE 1994 DIRECTOR OPTION PLAN.

SUMMARY OF DIRECTOR PLAN, AS AMENDED

Administration. The Director Plan is administered by the Board of
Directors. All options under the Director Plan shall be automatic options. The
timing of automatic option grants are determined by the Director Plan and no
discretion is permitted. No member of the Board may vote on the grant of any
option which relates to himself.

Eligibility. Only nonemployee directors ("Outside Directors") may
participate in the Director Plan. As of April 5, 1999, there were four (4)
Outside Directors eligible to participate in the Director Plan.

Automatic Option Grants. Each Outside Director is automatically granted an
initial option to purchase 15,000 shares of Common Stock upon the date such
person first becomes a director, whether through election by the stockholders of
the Company or appointment by the Board of Directors to fill a vacancy. On
January 1 of each year, each Outside Director automatically will be granted an
option to purchase 5,000 shares of Common Stock, provided, however, that such
grant shall be prorated for the number of whole months the director served
during the previous year.
11
<PAGE> 14

Terms of Options. Options granted under the Director Plan have a term of
ten years and are exercisable only while the Outside Director remains an Outside
Director of the Company or within three (3) months following the date the
Outside Director ceases to serve as a director. The exercise price of automatic
options is 100% of the fair market value per share on the date of grant of the
option.

The shares subject to the automatic options shall fully vest one (1) year
after the date of grant provided, however, that if the optionee ceases to serve
as an Outside Director of the Company, vesting shall cease as of the date of
termination. If an option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased shares which were subject
to such option shall become available for future grant under the Director Plan.

Options granted under the Director Plan shall comply with Section 16(b) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule
16b-3 (or any successor rule) promulgated thereunder and shall contain any such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
plan transactions.

Exercise of Options. An option is exercised by giving written notice of
exercise to the Company, specifying the number of full shares of Common Stock to
be purchased, and tendering payment to the Company of the purchase price. The
payment shall consist entirely of cash, check, other shares of Common Stock
having a fair market value on the date of surrender equal to the aggregate
exercise price of the shares as to which said option shall be exercised (which,
if acquired from the Company, shall have been held for at least six (6) months),
cashless exercise or any combination of such methods of payment.

Termination of Director Status. If an optionee ceases to serve as an
director, the optionee may, but only within three (3) months after the date he
or she ceases to be an director of the Company, exercise his or her option to
the extent he or she was entitled to exercise it at the date of such
termination.

Disability of Optionee. If an Outside Director ceases to serve as a
director or is unable to continue his or her service as a director with the
Company as a result of total and permanent disability (as defined in Section
22(e)(3) of the Code), the director may exercise the option, but only within
twelve (12) months after the date he or she ceases to be a director of the
Company, and only to purchase vested shares. To the extent that he or she was
not entitled to exercise an option at the date of such termination, or if he or
she does not exercise such option (which he or she was entitled to exercise)
within the time specified herein, the option shall terminate.

Death of Optionee. If the optionee dies during the term of the option and
the optionee was, at the time of his death, a director of the Company and who
shall have been in continuous status as a director since the date of grant of
the option, the option may be exercised, at any time within twelve (12) months
following the date of death, by the optionee's estate or by a person who
acquired the right to exercise the option by bequest or inheritance, but only to
the extent of the shares that had vested at the date of death.

Changes in Capitalization. In the event of any changes in the
capitalization of the Company effected without receipt of consideration by the
Company, such as stock splits or stock dividends, resulting in an increase or
decrease in the number of shares of Common Stock, proportionate adjustments
shall be made by the Company in the shares subject to purchase and in the price
per share.

Effect of Liquidation, Dissolution, Asset Sale or Merger. In the event of a
liquidation or dissolution of the Company, all options, to the extent not
previously exercised, will terminate immediately before consummation of such
event. In the event of a proposed sale of all or substantially all of the assets
of the Company, or merger of the Company with or into another corporation, all
options shall be assumed or equivalent options shall be substituted, by such
successor corporation or a parent or subsidiary of such successor corporation.
If such successor corporation refuses to assume the option or to substitute an
equivalent option, each outstanding option shall become fully vested and
exercisable, including as to shares as to which it would not otherwise be
exercisable, unless the Board, in its discretion, determines otherwise. If the
Board makes an option fully exercisable in lieu of assumption or substitution in
the event of a merger or sale of assets, the Board shall notify the optionee
that the option shall be fully exercisable for a period of thirty (30) days from
the date of such notice, and the option will terminate upon the expiration of
such period.
12
<PAGE> 15

Change in Control Provisions. The Director Plan provides that in the event
of a "Change-in-Control" of the Company (as defined below) and the termination
of a director's status as a director, whether voluntary or involuntary, either
upon such Change of Control or within one (1) year following the Change of
Control, all options granted to the director under the Director Plan shall
become immediately vested and fully exercisable.

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, (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 immediately
prior thereto continuing to hold at least 40% 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) 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.

Amendment and Termination. The Board of Directors may amend, alter, suspend
or discontinue the Director Plan; provided, however, that the terms of automatic
options may not be amended more than once in any six-month period. The Company
shall obtain stockholder approval of any Director Plan amendment that is
required to comply with Rule 16b-3. No action by the Board may affect options
already granted under the Director Plan without the consent of the Optionee. The
Director Plan will terminate on March 31, 2004, unless terminated earlier by the
Board.

Tax Information. Options granted under the Director Plan are nonstatutory
stock options. An optionee will not recognize any taxable income at the time he
or she is granted a nonstatutory option. However, upon its exercise, the
optionee will recognize taxable income, generally measured by the excess of the
then fair market value of the shares of Common Stock purchased over the purchase
price. Upon resale of such shares by the optionee, any difference between the
sale price and the optionee's purchase price, to the extent not recognized as
taxable income as provided 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 nonstatutory
option.

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON THE OPTIONEE AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF
OPTIONS UNDER THE DIRECTOR PLAN, DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT
DISCUSS THE TAX CONSEQUENCES OF THE OPTIONEE'S DEATH OR THE INCOME TAX LAWS OF
ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH AN OPTIONEE MAY RESIDE.

PROPOSAL NO. 4

RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS

The Board of Directors has appointed PricewaterhouseCoopers LLP,
independent accountants, to audit Proxim's financial statements for the current
fiscal year ending December 31, 1999. 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.

PricewaterhouseCoopers LLP has audited Proxim's financial statements since
the fiscal period ended October 31, 1985. Representatives of
PricewaterhouseCoopers 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 PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
13
<PAGE> 16

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of April 5, 1999, 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)........................... 1,866,573 17.5%
6600 France Avenue South
Suite 672
Edina, MN 55435
David C. King(3)............................................ 372,007 3.5%
Raymond Chin(4)............................................. 66,041 *
Leslie G. Denend(5)......................................... 24,167 *
Gregory Reyes(6)............................................ -- --
Jeffrey D. Saper(7)......................................... 15,000 *
Brian Button(8)............................................. 129,585 1.2%
Keith E. Glover(9).......................................... 123,142 1.2%
Juan Grau(10)............................................... 86,220 *
Brian Messenger(11)......................................... 32,937 *
All directors and executive officers as a group (9
persons)(12).............................................. 849,099 8.0%
</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 5, 1999 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 1,811,573 shares with shared dispositive power and 55,000 shares
with sole dispositive power.

(3) Includes 227,107 shares issuable upon the exercise of stock options
exercisable within 60 days after April 5, 1999. Mr. King holds stock
options to purchase an aggregate of 68,358 shares under the Company's 1986
Stock Option Plan and 320,000 shares under the Company's 1995 Long-Term
Incentive Plan.

(4) Includes 17,500 shares issuable upon the exercise of stock options
exercisable within 60 days after April 5, 1999. Dr. Chin holds stock
options to purchase an aggregate of 22,500 shares under the Company's 1994
Director Option Plan.

(5) Includes 24,167 shares issuable upon the exercise of stock options
exercisable within 60 days after April 5, 1999. Mr. Denend holds stock
options to purchase an aggregate of 29,167 shares under the Company's 1994
Director Option Plan.

(6) Mr. Reyes holds stock options to purchase an aggregate of 5,000 shares
under the Company's 1994 Director Option Plan.

(7) Includes 15,000 shares issuable upon the exercise of stock options
exercisable within 60 days of April 5, 1999. Mr. Saper holds stock options
to purchase an aggregate of 20,000 shares under the Company's 1994 Director
Option Plan.

(8) Includes 22,169 shares issuable upon the exercise of stock options
exercisable within 60 days after April 5, 1999. Mr. Button holds stock
options to purchase an aggregate of 8,750 shares under the
14
<PAGE> 17

Company's 1986 Stock Option Plan and 91,078 shares under the Company's 1995
Long-Term Incentive Plan.

(9) Includes 99,112 shares issuable upon the exercise of stock options
exercisable within 60 days after April 5, 1999. Mr. Glover holds stock
options to purchase an aggregate of 63,334 shares under the Company's 1986
Stock Option Plan and 115,000 shares under the Company's 1995 Long-Term
Incentive Plan.

(10) Includes 62,291 shares issuable upon the exercise of stock options
exercisable within 60 days after April 5, 1999. Mr. Grau holds stock
options to purchase an aggregate of 11,250 shares under the Company's 1986
Stock Option Plan and 140,000 shares under the Company's 1995 Long-Term
Incentive Plan.

(11) Includes 25,086 shares issuable upon the exercise of stock options
exercisable within 60 days after April 5, 1999. Mr. Messenger holds stock
options to purchase an aggregate of 7,917 shares under the Company's 1986
Stock Option Plan and 90,000 shares under the Company's 1995 Long-Term
Incentive Plan.

(12) Includes 492,432 shares issuable upon the exercise of stock options held by
all directors and executive officers exercisable within 60 days after April
5, 1999.

15
<PAGE> 18

EXECUTIVE OFFICER COMPENSATION

SUMMARY COMPENSATION TABLE

The following table shows, as to the Company's Chief Executive Officer and
the Company's four other most highly compensated executive officers
(collectively, the "Named Executive Officers"), information concerning
compensation paid for services to the Company in all capacities during the
fiscal years ended December 31, 1996, December 31, 1997 and December 31, 1998.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
---------------------------------- COMPENSATION
OTHER -------------
ANNUAL STOCK OPTIONS
YEAR SALARY BONUS(2) COMPENSATION GRANTED(#)
---- -------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
David C. King............................... 1998 $244,539 $45,000 -- 30,000
Chairman, President and 1997 209,529 -- -- 200,000
Chief Executive Officer(1) 1996 192,164 38,500 -- 17,500
Brian T. Button............................. 1998 125,000 95,007 -- 30,000
Vice President of Sales and Marketing(3) 1997 124,865 43,875 -- 70,000
1996 119,707 24,000 -- 17,500
Keith E. Glover............................. 1998 164,538 33,000 -- 25,000
Vice President of Finance and
Administration 1997 149,596 -- -- 80,000
and Chief Financial Officer 1996 134,800 27,000 -- 22,500
Juan Grau................................... 1998 174,538 35,000 -- 25,000
Vice President of Engineering 1997 159,711 -- -- 100,000
1996 144,805 29,000 -- 10,000
Brian Messenger............................. 1998 125,620 34,555 -- 50,000
Vice President of Operations(4) 1997 105,203 20,525 -- 27,000
1996 95,637 23,173 -- 13,000
</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
1996, 1997 and 1998 were paid in January 1997, January 1998 and January
1999, 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, and in 1998 represents
commissions paid in 1998 as well as bonus.

(4) Mr. Messenger was named Vice President of Operations on October 19, 1998.

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, 1998.

STOCK OPTION GRANTS IN 1998

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE ASSUMED ANNUAL
---------------------------------------------------------- RATES OF STOCK PRICE
PERCENT OF APPRECIATION FOR
GRANTED TO EXERCISE OR OPTION TERM(2)
OPTION/SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ------------- ------------ ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
David C. King........ 30,000 4.11% $12.125 10/7/08 $228,760 $579,724
Brian Button......... 30,000 4.11% 12.125 10/7/08 228,760 579,724
Keith E. Glover...... 25,000 3.42% 12.125 10/7/08 190,634 483,103
Juan Grau............ 25,000 3.42% 12.125 10/7/08 190,634 483,103
Brian Messenger...... 50,000 6.85% 12.125 10/7/08 381,267 966,206
</TABLE>

- ---------------
(1) The Company did not grant SARs in fiscal 1998. 710,400 options to purchase
shares of the Company's Common Stock in this table were granted in 1998
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 1998 AND YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED 1998 YEAR-END 1998 YEAR-END(2)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED(1)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David C. King........ 58,166 $618,604 219,866 188,492 $4,310,962 $2,957,276
Brian Button......... 14,687 66,294 38,383 89,430 565,292 1,350,875
Keith E. Glover...... -- -- 86,509 91,825 1,676,851 1,384,713
Juan Grau............ 10,000 151,875 58,749 102,501 1,039,992 1,591,104
Brian Messenger...... -- -- 23,133 78,784 394,349 1,196,755
</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, 1998 of $26.67
per share.

EMPLOYMENT ARRANGEMENTS

The Company has entered into change of control severance agreements with
Messrs. King, Button, Glover, Grau and Messenger. Pursuant to the terms of an
agreement between the Company and Mr. King, effective as of June 18, 1998, if at
any time within two years following a change of control of the Company, Mr.
King's employment with the Company is terminated as a result of an involuntary
termination or other than for cause, Mr. King is entitled to receive severance
payments in an amount equal to two hundred percent (200%) of his annual
compensation to be paid over a two-year period, continuation of employee
benefits, acceleration of vesting of all unvested stock options and certain
outplacement assistance benefits.

Messrs. Button, Glover and Grau's agreements with the Company, each
effective as of June 18, 1998, and Mr. Messenger's agreement with the Company,
effective as of October 19, 1998, provide that if at any time within two years
following a change of control of the Company, the executive officer's employment
with the Company is terminated as a result of an involuntary termination or
other than for cause, the executive officer is entitled to receive severance
payments in an amount equal to one hundred percent (100%) of his annual
compensation to be paid over a one-year period, continuation of employee
benefits, acceleration of vesting of all unvested stock options and certain
outplacement assistance benefits.

17
<PAGE> 20

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board of Directors (the "Committee") for
1998 was comprised of Messrs. Chin, Denend and Reyes. 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 1998, the Committee
granted the Chief Executive Officer options to purchase an aggregate of 30,000
shares of the Company's Common Stock in October of 1998. In addition to stock
options, executives are eligible to participate in the Employee Stock 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 foregoing, the Chief Executive Officer's salary was established
at $244,539 for 1998.

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.

18
<PAGE> 21

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 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 1998
Compensation
Committee of the Board of Directors:

Raymond Chin
Leslie G. Denend
Gregory L. Reyes

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.

19
<PAGE> 22

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 Composite Index and the NationsBanc
Montgomery Securities Growth Index -- Technology sector for the period
commencing December 31, 1993 and ending on December 31, 1998. The total
stockholder return assumes $100 invested at the beginning of the period in the
Common Stock of the Company, the Nasdaq Composite Index and NationsBanc
Montgomery Securities Growth Index -- Technology sector. Historical stock price
is not necessarily indicative of future stock performance.
LOGO

20
<PAGE> 23

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.

By Order of the Board of Directors

Jeffrey D. Saper
Secretary

Dated: April 30, 1999

21
<PAGE> 24

1257-PS-99
<PAGE> 25

DETACH HERE
- --------------------------------------------------------------------------------

PROXY

PROXIM, INC.

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, MAY 25, 1999

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 5, 1999, at the 1999 Annual Meeting of Stockholders of the Company to be
held on Tuesday, May 25, 1999 at 11:00 a.m., local time, at the Sunnyvale
Hilton Inn, 1250 Lakeside Drive, Sunnyvale, California 94086, and any
adjournments or postponements thereof.

SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE> 26

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 30, 1999.

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.

1. ELECTION OF DIRECTORS:

Nominees: David C. King, Raymond Chin, Leslie G. Denend, Gregory L. Reyes,
Jeffrey D. Saper
FOR WITHHELD
[ ] [ ]

[ ]
-----------------------------------------
For all nominees except as noted above

[ ] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW

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 900,000 shares.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

3. To approve an amendment to the Company's 1994 Director Option Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 100,000 shares.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

4. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants of the Company for the fiscal year ending December 31, 1999.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

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.
Trustees and others acting in 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:
------------------------------------- ---------------------