Revocability of Proxies

        Any person giving a proxy in response to this solicitation has the power to revoke it at any time prior to the time that the proxy is voted at the special annual meeting. Proxies may be revoked by any of the following actions:

	•	delivering a written notice to our Corporate Secretary at our principal executive offices (935 Stewart Drive, Sunnyvale, California 94085) bearing a date later than the date of the proxy stating that the proxy is revoked;
	•	signing and delivering a later-dated proxy relating to the same shares to our Corporate Secretary at our principal executive offices;
	•	delivering a later-dated proxy using the telephone voting procedures described on the enclosed proxy card; and
	•	attending the special annual meeting and voting in person (although attendance at the meeting will not, by itself, revoke a proxy).

•

a written notice to our Corporate Secretary at our principal executive offices (935 Stewart Drive, Sunnyvale, California 94085) bearing a date later than the date of the proxy stating that the proxy is revoked;



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and delivering a later-dated proxy relating to the same shares to our Corporate Secretary at our principal executive offices;



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a later-dated proxy using the telephone voting procedures described on the enclosed proxy card; and



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the annual meeting and voting in person (although attendance at the meeting will not, by itself, revoke a proxy).

        If your shares are held in “street name”"street name" by your broker, you must follow the directions received from your broker to change your vote.

Stockholder Proposals

        If a stockholder intends to submit a proposal at our 20052006 annual meeting of stockholders and desires to have such proposal included in the Company’sCompany's proxy materials relating to such meeting, such proposal must be received by the Companycompany at its principal executive offices no later than May 24,December 5, 2005, which is 120 calendar days prior to the anniversary of the mailing date of this proxy, statement, and must be in compliance with applicable laws and regulations in order to be considered for possible inclusion in the proxy statement and form of proxy for that annual meeting. Stockholders are advised to review the Company’sCompany's amended and restated bylaws, which contain additional requirements with respect to advance notice of stockholder proposals and director nominations.

        If a stockholder intends to submit a proposal at our 20052006 annual meeting of stockholders that is not eligible for inclusion in the proxy statement relating to the meeting, and the stockholder fails to give us notice in accordance with the requirements set forth in the Securities Exchange Act of 1934, as amended, no later than August 7, 2005,February 18, 2006, which is 45 calendar days prior to the anniversary of the mailing date of thisthe proxy statement relating to this year's annual meeting, then the Company’sCompany's proxy holders will be allowed to use their discretionary authority when and if the proposal is raised at our 20052006 annual meeting.

        We have not been notified by any stockholder of its intention to present a stockholder proposal at this special annual meeting.

Independent Registered Public Accounting FirmAccountants

        The firm of PricewaterhouseCoopers LLP, our independent registered public accounting firm, is expected to be present at the special annual meeting, and will have the opportunity to make a statement if they so decide and will be available to respond to appropriate questions.

     On March 21, 2002, our Board of Directors, upon recommendation of the Audit Committee, made a determination not to engage Arthur Andersen LLP, or Arthur Andersen, as the Company’s independent accountants and, on March 26, 2002, engaged PricewaterhouseCoopers LLP to serve as our independent

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     During the years ended December 31, 2001 and 2000 and through the date of our engagement of PricewaterhouseCoopers LLP, there were no disagreements with Arthur Andersen on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to Arthur Andersen’s satisfaction, would have caused them to make reference to the subject matter in connection with its report on the Company’s financial statements for such years; and there were no reportable events as specified in Item 304(a)(1)(v) of Regulation S-K.

The information set forth above and additional information relating to our change in accountants for the fiscal year ended December 31, 2002 is included in our Current Report on Form 8-K filed on March 28, 2002.

Multiple Stockholders Sharing One Address

        In some instances, we may deliver to multiple stockholders sharing a common address only one copy of this proxy statement and its attachments. If requested by phone or in writing, we will promptly provide a separate copy of the proxy statement and its attachments to a stockholder sharing an address with another stockholder. Requests by phone should be directed to our Corporate Secretary at (408) 731-2700, and requests in writing should be sent to Proxim Corporation, Attention: Corporate Secretary, 935 Stewart Drive, Sunnyvale, California 94085. Stockholders sharing an address who currently receive multiple copies and wish to receive only a single copy should contact their broker or send a signed, written request to us at the address above.

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PROPOSAL I

APPROVAL OF OUR ABILITY TO ISSUE AN AGGREGATE OF

At the special annual meeting, our stockholders will be asked to approve our ability to issue an aggregate of 164,000,000 shares of our Common Stock and 400,000 shares of our Series C Preferred Stock to the Investors upon the Investors’ surrender of all of their Series A Convertible Preferred Stock, all of their Series B Convertible Preferred Stock and their warrants to purchase an aggregate of 42,133,464 shares of our Common Stock.

Background

Merger with Proxim, Inc. On March 26, 2002, we (formerly known as Western Multiplex Corporation) merged with Proxim, Inc. to create one of the industry’s first end-to-end wireless equipment manufacturers capable of building wireless networks from the internet service provider to end users’ personal and laptop computers. In connection with the merger, each share of Proxim, Inc. was converted into 1.8896 of our shares and we changed our name to Proxim Corporation. The stockholders of each company before the merger owned approximately 50% of the combined company following the merger. Additional information about the merger and the merger agreement is available free of charge from the Securities and Exchange Commission’s (“SEC”) web site located at www.sec.gov.

ORiNOCO Business Acquisition. On August 5, 2002, we acquired Agere’s 802.11 wireless local area network equipment business, including its ORiNOCO product line, for $65 million in cash. The addition of the ORiNOCO product line added a premium label and rounded out our wireless equipment product line. The transaction allows us to continue our consolidation of the wireless infrastructure industry, and to fulfill our vision of integrated wireless connectivity from the core network to devices in a home, office or public space. Additional information about the acquisition and related agreements is available free of charge from the SEC’s web site located at www.sec.gov.

2002 Investment. In order to finance the acquisition of the ORiNOCO business in August 2002, we entered into a Securities Purchase Agreement with the Investors, dated June 16, 2002 (the “2002 Securities Purchase Agreement”), pursuant to which the investors agreed, among other things, to invest an aggregate of $75 million in our Company in exchange for our Series A Convertible Preferred Stock, convertible promissory notes and warrants to purchase shares of our Common Stock. The $75 million was used to finance the acquisition of the ORiNOCO business, to pay for related fees and expenses and for our working capital requirements.

     In connection with the 2002 investment, we issued to the investors 1,640,000 shares of our Series A Convertible Preferred Stock in the amount of approximately $41 million, with a conversion price of approximately $3.06 per share, and warrants to purchase approximately 6,700,000 shares of our Common Stock valued at approximately $12.3 million. The remaining $34 million of the 2002 investment was made in the form of convertible promissory notes. Pursuant to the 2002 Securities Purchase Agreement, we agreed to hold a special meeting of our stockholders to approve the conversion of the notes and the issuance to the investors of additional warrants to purchase shares of our Common Stock. Upon receipt of approval of our stockholders at the special meeting held on October 8, 2002, we converted the notes issued to these investors into 1,360,000 shares of our Series A Convertible Preferred Stock and we granted to the investors additional warrants to purchase approximately 5,600,000 shares of our Common Stock. In total, these investors received 3,000,000 shares of our Series A Convertible Preferred Stock and were granted warrants to acquire

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2003 Investment. In April 2003, our management and Board of Directors recognized our need to raise additional funding to support our growth objectives and strengthen our balance sheet position. A special committee consisting of directors not affiliated with our investors was formed and we engaged Credit Suisse First Boston to advise us regarding financing and other strategic alternatives. As revenue in the second quarter was below our expectations, we had to take certain steps to increase our short-term working capital flexibility. Accordingly, in June 2003 while continuing to explore financing and other alternatives, we amended and restated our secured financing arrangements with Silicon Valley Bank to switch to an accounts receivable-based secured credit facility. That financing arrangement is secured by a lien on substantially all of our assets. In view of market conditions, our existing cash constraints, a lease default which limited our ability to file a registration statement on Form S-3 to more quickly effect a public offering, the subscription and anti-dilution rights held by existing investors, the lien Silicon Valley Bank had on our assets and other factors, we determined that it would not be feasible to raise additional capital through a public offering. Instead, we evaluated and focused our efforts on a private placement to existing investors or other investors and evaluated the likelihood of a sale of the Company on favorable terms, or at all. After numerous meetings and extensive discussion of the terms and conditions of a securities purchase agreement with Warburg Pincus and BCP and its affiliated funds, a review of the absence of alternative financing or other strategic prospects and the receipt of advice from our financial advisors, Credit Suisse First Boston, and a fairness opinion from Houlihan Lokey Howard & Zukin Financial Advisors, Inc., the special committee of the Board of Directors approved the financing transaction.

     On July 30, 2003, we received the aggregate investment of $30 million in cash from these investors. We used the proceeds of the investment to provide funding for ongoing business operations as well as to fund certain restructuring expenses, including settlement of lease obligations, related to our merger with Proxim, Inc. in March 2002 and our acquisition of assets from Agere Systems Inc., including our ORiNOCO product line, in August 2002 and certain legal expenses related to the patent infringement litigation with Symbol. In exchange for the investment and in accordance with the related securities purchase agreement, dated July 22, 2003, we issued to the Investors secured promissory notes with an aggregate principal amount equal to their investment of $30 million. We also agreed to hold a special meeting of our stockholders to approve the exchange of the aggregate principal amount of the notes, plus accrued but unpaid interest thereon, for shares of our Series B Convertible Preferred Stock, the issuance to the Investors of warrants to purchase shares of our Common Stock and the right to sell to the Investors at any time and from time to time prior to January 18, 2004 additional shares of our Series B Convertible Preferred Stock for an aggregate purchase price of up to $10 million.

     On September 15, 2003, we announced that a jury had rendered a verdict in the first phase of the patent infringement suit with Symbol. On Symbol’s claims of patent infringement, the jury found that certain of our products infringe two of Symbol’s patents and assessed a 6% royalty on our sales of these products from January 1, 1995. A special committee of members of our Board of Directors not affiliated with the Investors considered the potential impact of the jury verdict on our financial statements and results of operations for the third quarter of 2003. The special committee considered the possibility that the establishment of a reserve for estimated royalties and interest based on the jury verdict and the ongoing litigation with Symbol would, in the absence of a settlement, result in a material adverse change and/or an event of default under the outstanding secured promissory notes, causing all outstanding indebtedness in favor of the Investors and Silicon Valley Bank to become immediately due and payable. In addition, the special committee considered the possibility that the jury verdict would have prevented Proxim from accessing the additional $10 million investment from the Investors under the July 2003 terms.

     In light of these events, the Company and the Investors decided to modify the terms of the July 2003 financing transactions. The special committee of our Board of Directors reviewed alternatives available to us, in light of our recent cash balances, expenses of patent litigation, and our recent revenues and restructuring

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2004 Bridge Note Financing. In April 2004, our management and Board of Directors recognized our need to raise additional capital to fund our ongoing operations, to support our growth objectives and to strengthen our balance sheet position. We formed a special committee consisting of directors not affiliated with the Investors, and we engaged Bear Stearns to advise the Company regarding financing and other strategic alternatives. As revenue in the first quarter was below our expectations, we deemed it necessary to take certain steps to increase our short-term working capital flexibility which we believe impacted our first quarter results. Our liquidity concerns had led certain of our customers, vendors and contract manufacturers to express concern regarding our financial position. We were required to repay $40 million in aggregate principal amount, plus accrued but unpaid interest, of our secured promissory notes issued to the Investors in 2003, on September 30, 2004, absent the Investors’ agreement to exchange the notes for equity securities or otherwise modify our obligations thereunder. Our management and Board of Directors anticipated that we would not have sufficient cash to meet these obligations and recognized that if we were not able to secure additional financing or reach an agreement with the Investors, we would be unable to repay the notes and would have to seek protection under applicable bankruptcy laws.

In view of market conditions, our existing cash constraints, the potential impact of our patent litigation with Symbol as it then stood, the limited number of authorized shares of our common stock available for issuance, the existing preferences of the Investors and other constraints which limited our ability to effect a public offering, we determined that it would not be feasible to raise additional capital through a public offering. In addition, we also considered a private placement to existing investors or other investors and considered the likelihood of a sale of the Company on favorable terms, or at all, but we determined not to proceed with any of these transactions. From April 2004 through July 2004, we engaged in numerous and extensive discussions of the terms and conditions of potential transactions with the Investors, and we reviewed the absence of near-term alternative financing or other strategic prospects in view of our existing capital structure and the significant preferences of the Investors’ outstanding securities. Following the receipt of advice from our financial advisors, Bear Stearns, and the receipt of a fairness opinion from Bear Stearns dated July 26, 2004 as to the Exchange, the special committee of our Board of Directors approved a series of financing and recapitalization transactions designed to simplify the Company’s capital structure and to provide additional working capital.

     On July 30, 2004, the Investors exchanged their $40 million in aggregate principal amount of our secured promissory notes, plus accrued but unpaid interest thereon, for 490,599 shares of our Series B Convertible Preferred Stock, relieving us from the repayment of those obligations on September 30, 2004. Also on July 30, 2004, we issued to the Investors the 15% Bridge Notes with an aggregate principal amount equal to their investment of $10 million and a maturity date of June 30, 2005. The purpose of the Bridge Notes was to provide us with working capital until such time as the Company could complete the Exchange and potential additional financing transactions to fund our ongoing business operations and to provide short-term funding for our pursuit of emerging opportunities in the WiMAX and Wi-Fi spaces. In connection with the issuance of the Bridge Notes, Proxim and the Investors also agreed to the Exchange, subject to stockholder approval, with the

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     In order to provide for further funding of the Company, the Company and the Investors agreed that after the Exchange, (i) the Company would use its reasonable best efforts to market and consummate a Qualified Transaction and (ii) that simultaneous with the closing of a Qualified Transaction, the outstanding principal and accrued but unpaid interest on the Bridge Notes shall automatically be exchanged for the Company’s Common Stock and/or Common Stock warrants at the same price and upon the same terms and conditions agreed to with the investors in the Qualified Transaction.

If our stockholders do not approve the Exchange, our Series A Convertible Preferred Stock, our Series B Convertible Preferred Stock, and the Common Stock warrants held by the Investors will remain outstanding in accordance with their terms. In addition, pursuant to the terms of the Purchase Agreement and the Bridge Notes, if our stockholders do not approve the Exchange, the Investors will have the right to put the Bridge Notes to the Company for repayment, including accrued but unpaid interest thereon, at any time following the thirtieth day after which such approval is not obtained.

We have recently entered into a settlement agreement with Symbol in connection with the patent litigation previously pending between us and Symbol in the U.S. District Court for the District of Delaware. Under the terms of the settlement agreement dated September 13, 2004, we have agreed to pay Symbol $22.75 million over our next ten quarters, to cross-license certain patents with Symbol and to assign certain patents and patent applications to Symbol. We will have payment obligations of $2.5 million in each of the next eight quarters, including the current quarter, a payment obligation of $1.5 million in the ninth quarter and a payment obligation of $1.25 million in the tenth quarter. If at any point during the term of the settlement agreement, we fail to timely make any of these payments within 30 days after Symbol has noticed us of our failure to pay, Symbol would have the right to demand immediate payment of the sum of $25,917,669 minus payments previously made under the agreement and plus applicable interest. We have also agreed to pay Symbol a two percent royalty on sales of certain of our local area networking products. In the event we fail to make any of the lump sum payments due under the settlement agreement during the next ten quarters and fail to cure such missed payment within 30 days thereafter, the royalty rate on sales of our products covered by the cross license agreement would increase to five percent until the required lump sum payments have been made.

We have a significant ongoing need to raise cash to fund our operational activities and obligations to Symbol. As a result, if our stockholders do not approve the Exchange and the Investors demand payment on the Bridge Notes, we likely would not have sufficient cash to repay the Bridge Notes and meet our payment obligations to Symbol and we would be required to seek alternative sources of financing which may not be available on favorable terms, if at all. If we could not obtain such alternative financing in such a situation, we likely also would be unable to meet our ongoing operating obligations as they come due in the ordinary course of business, and would have to seek protection under applicable bankruptcy laws.

Board Recommendation

A special committee of our Board of Directors has approved and recommends that our stockholders approve our ability to issue an aggregate 164,000,000 shares of our Common Stock and 400,000 shares of our Series C Preferred Stock to the Investors upon the Investors’ surrender of all of their Series A Convertible Preferred Stock, all of their Series B Convertible Preferred Stock and their warrants to purchase 42,133,464 shares of our Common Stock.

Reasons for the Board of Directors’ Recommendation

     A special committee of our Board of Directors believes that approval of the proposal is in the best interests of our Company and stockholders for the following reasons:

	•	if the Investors do not exchange the Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and the Common Stock warrants held by them, the Company will retain the complex set of preferences, accretion provisions, antidilution rights, conversion mechanisms and voting limita-

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		tions associated with the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock and will be faced with the continuing administrative burden and costs associated with maintaining those securities;
	•	if the Exchange is not approved by our stockholders, the Bridge Notes will become due and payable on the demand of any Investor. We would most likely have insufficient cash to repay the Bridge Notes and to meet our continuing payment obligations to Symbol and would be required to obtain alternative sources of financing to do so, which may not be available to us on favorable terms, or at all. We may be unable to meet our ongoing operating obligations as they come due in the ordinary course of business, and may have to seek protection under applicable bankruptcy laws;
	•	if the Exchange did not take place and the Investors did not demand payment on the Bridge Notes, we still would be severely burdened in our attempts to secure additional funding through a Qualified Transaction because of our complex capital structure and we might be required to seek alternative sources of additional funding which may not be available on favorable terms or at all;
	•	if the Investors do not exchange the Bridge Notes in a Qualified Transaction and we are unable to repay them or otherwise renegotiate their terms with the Investors, we could be in default of our financing agreements with Silicon Valley Bank, and Warburg Pincus, as collateral agent for the Investors, and Silicon Valley Bank would be entitled to exercise remedies available to them as secured creditors with liens on all of our assets and those of our guaranteeing subsidiaries, subject to the terms of an intercreditor agreement between those parties, us and our guaranteeing subsidiaries;
	•	we will pay a lower accretion rate on the Series C Preferred Stock than the accretion rate on the Series B Convertible Preferred Stock (8.75% vs. 14%);
	•	the Common Stock and the Series C Preferred Stock issued in the Exchange will not be subject to anti-dilution provisions;
	•	the approximately $223 million in liquidation preferences on the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock will be replaced by the approximately $80 million of liquidation preference on the Series C Preferred Stock; our obligation to purchase certain of the Investors’ warrants on a change in control will be eliminated;
	•	the Company and its business are subject to certain risks, set forth in detail atAppendix E, including risks related to its financial performance and its ability to continue as a going concern; a special committee of our Board of Directors believes that the consummation of the Exchange has the potential to partially mitigate certain of these risks;
	•	the interests of our stockholders and the Investors will be more closely aligned;
	•	we will have more flexibility with respect to future financing needs; and
	•	we will have a simplified capital structure that is easier for investors and analysts to understand.

Material Terms of the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock

     The following description summarizes the material terms of the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock which would be exchanged for Common Stock and our newly issued Series C Preferred Stock if the stockholders approve the Exchange. You are urged to read carefully in their entirety the Series A Certificate of Designations and the Series B Certificate of Designations which fully set forth the terms of the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock.

Dividends. The Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock each will receive dividends or distributions declared on the common stock on an as-converted basis. However, the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock will not participate in any such dividends or distributions that would result in an adjustment to the conversion price of the Series A Convertible Preferred Stock or the Series B Convertible Preferred Stock, as applicable.

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     In addition, after August 5, 2005 through August 5, 2007, the Series A Convertible Preferred Stock will receive dividends, in cash or in Common Stock (at our option), on the liquidation preference on a semi-annual basis at a rate of 8% per annum. Dividends paid in Common Stock on the shares of Series A Convertible Preferred Stock will be valued based on the 10-day volume-weighted average price of the Company’s Common Stock prior to the relevant record date.

Liquidation Preference. The initial liquidation preferences for each share of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock were $25.00 per share and $100 per share respectively. The liquidation preference of the Series A Convertible Preferred Stock accretes at 8% per annum, compounded semi-annually, through August 5, 2005. The liquidation preference of the Series B Convertible Preferred Stock accretes at 14% per annum, compounded quarterly, through July 30, 2011.

     Notwithstanding the foregoing, in the event of a Change in Control, as described below, that occurs before August 5, 2005, the liquidation preference of the Series A Convertible Preferred Stock will be increased by the amount, if any, by which the amount of the liquidation preference, had it fully accreted from the date of the transaction through August 5, 2005, exceeds the liquidation preference then in effect.

     In the event of a Change of Control transaction or a Material Asset Sale, as described below, before July 30, 2011, the liquidation preference of the Series B Convertible Preferred Stock will be increased by the amount, if any, by which the amount of the liquidation preference, had it fully accreted from the date of the transaction through July 30, 2011, exceeds the liquidation preference then in effect. Instead of receiving the liquidation preference in the event of a Change in Control, holders of our Series A Convertible Preferred Stock and Series B Convertible Preferred Stock may elect to participate with our common stock upon a liquidation.

     In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, subject to payments to holders of senior securities, the holders of our Series A Convertible Preferred Stock and Series B Convertible Preferred Stock will be entitled to receive the following payments:

	•	Our Series A Convertible Preferred Stock will be entitled to receive the greater of:

	•	(i) the liquidation preference of the Series A Convertible Preferred Stock in effect on the date of the liquidation, dissolution or winding up, plus an amount equal to the unrecognized accretion, if any, from the end of the most recent semi-annual period ending February 5th or August 5th up to but not including the date of the liquidation, dissolution or winding up and after August 5, 2005, the dividends accrued and unpaid on the Series A Convertible Preferred Stock, whether or not declared, up to but not including the date of the liquidation, dissolution or winding up; or
	•	(ii) the payment the holders would have received had the holders, immediately prior to the liquidation, dissolution or winding up, converted their shares of Series A Convertible Preferred Stock into shares of our Common Stock.

	•	Our Series B Convertible Preferred Stock will be entitled to receive the greater of:

	•	the liquidation preference of the Series B Convertible Preferred Stock in effect on the date of the liquidation, dissolution or winding up, plus an amount equal to the unrecognized accretion, if any, from the end of the most recent quarterly period ending on the quarterly anniversary of the filing of the Series B Certificate of Designations up to but not including the date of the liquidation, dissolution or winding up; or
	•	the payment the holders would have received had the holders, immediately prior to the liquidation, dissolution or winding up, converted their shares of Series B Convertible Preferred Stock into shares of our Common Stock.

Redemption. Both the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock are mandatorily redeemable securities. The Company must redeem the Series A Convertible Preferred Stock on August 5, 2007 and must redeem the Series B Convertible Preferred Stock on July 30, 2011. On their respective redemption dates, both the Series A Convertible Preferred Stock and the Series B Convertible

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Conversion Price. The initial price at which the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock could be converted into shares of the Company’s Common Stock were $3.0559 and $1.15 per share respectively. The initial conversion price of both the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock is subject to adjustment as set forth below under “Anti-Dilution.” As a result of such antidilution adjustments made in connection with the issuance of the $40 million in aggregate principal of secured promissory notes in 2003 and the subsequent exchange of these notes and the issuance of the Series B Convertible Preferred Stock in July 2004, the conversion price of the Series A Convertible Preferred Stock is $2.0680 as of the date of this proxy statement. The conversion price of the Series B Convertible Preferred Stock has not been subject to any such adjustment as the date of this proxy statement.

Conversion by Proxim. We can require conversion of the Series A Convertible Preferred Stock into shares of our Common Stock (i) after August 5, 2004, in whole or in part, if the closing market price of our Common Stock exceeds 250% of the conversion price then in effect for 30 consecutive trading days, (ii) after August 5, 2005, in whole or in part, if the closing market price of our Common Stock exceeds 200% of the conversion price then in effect for 30 consecutive trading days, (iii) after August 5, 2006, in whole or in part, if the closing market price of our Common Stock exceeds 150% of the conversion price then in effect for 30 consecutive trading days; and (iv) as described below under “Change in Control or Material Asset Sale.”

     We can require conversion of the Series B Convertible Preferred Stock into shares of our Common Stock from and after July 30, 2009, in whole or in part, if the average of the highest and lowest reported sales price of our Common Stock exceeds 300% of the conversion price then in effect for 90 consecutive trading days.

Conversion by the Holders. The Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock are convertible at any time, in whole or in part, into that number of shares of Common Stock equal to the liquidation preference then in effect divided by the then current conversion price.

Change of Control or Material Asset Sale. In the event that (i) any person or entity were to acquire 50% or more of either our common stock or voting power, (ii) the individuals who constitute our Incumbent Board cease for any reason to constitute at least a majority of our Board of Directors, (iii) we were to experience a business combination transaction after which our stockholders generally hold less than 50% of the common stock and less than 50% of the combined voting power of the voting securities of the combined company, or (iv) our stockholders approve a complete liquidation or dissolution of the Company (each such event, a “Change of Control”), the Company will have the right to convert the Series A Convertible Preferred Stock and the holders will have the right to convert the Series B Convertible Preferred Stock, in whole or in part, into the then current number of shares of our Common Stock equal to the liquidation preference then in effect divided by the conversion price, and holders of the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock receiving the Common Stock will receive the consideration from the Change of Control transaction upon conversion. These conversion rights apply if the consideration to be received from the Change of Control transaction is in liquid securities or cash and has a fair market value equal to or greater than 110% of the liquidation preference then in effect. If the consideration is less than 110% of the then current liquidation preference, we must either:

	•	modify the conversion price of each of the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock so that the consideration to be received by the holders equals 110% of the

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		liquidation preference then in effect for each of the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock; or
	•	offer to repurchase the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock for cash within 60 days of the Change of Control transaction at 101% of the liquidation preference then in effect, plus any unrecognized accretion or accrued and unpaid dividends, in each case up to but not including the repurchase date.

     Upon a change in control transaction before August 5, 2005, the liquidation preference of the Series A Convertible Preferred Stock will increase to include up to three years of accretion.

     A Material Asset Sale (as defined in the Series B Certificate of Designations) is any sale of our assets that does not constitute a sale of all or substantially all of our assets but as a result of which our revenues for the twelve-month period preceding the transaction would have declined by 40% or more on a pro forma basis, giving effect to such asset sale. Upon a Change of Control transaction or Material Asset Sale that occurs after the Series B Original Issue Date, the liquidation preference of the Series B Convertible Preferred Stock will automatically increase to include seven full years of accretion at 14% per annum. In connection with a Material Asset Sale after July 30, 2011, the holders will also be entitled to receive unrecognized accretion and accrued but unpaid dividends. Instead of receiving the liquidation preference, holders of the Series B Convertible Preferred Stock may elect to participate with our common stock upon a liquidation.

Anti-Dilution. The conversion price of both the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock are subject to customary weighted average anti-dilution adjustments and other customary adjustments upon transactions such as stock splits, subdivisions, distributions, business combinations and issuances of our common stock or securities exercisable for or exchangeable or convertible into, our common stock (other than capital stock issued as consideration for mergers and acquisitions, upon the exercise of employee stock options, in a registered public offering resulting in gross proceeds of not less than $20 million or upon issuance of Common Stock upon exercise of the Series A Convertible Preferred Stock or Series B Convertible Preferred Stock or upon exercise of the existing warrants or any future issued warrants), without consideration or for consideration per share less than the conversion price then in effect.

Purchase Rights. If at any time after the initial issuance of the Series A Convertible Preferred Stock or the Series B Convertible Preferred Stock, we grant, issue or sell any:

	•	options, warrants or other rights to purchase or acquire common stock (other than capital stock issued as consideration for mergers and acquisitions, upon the exercise of employee stock options, in a registered public offering resulting in gross proceeds of not less than $20 million or upon issuance of common stock upon exercise of the Series B preferred stock or Series A preferred stock or upon exercise of the existing warrants or any future issued warrants);
	•	securities by their terms convertible into or exchangeable for common stock (other than capital stock issued as consideration for mergers and acquisitions, upon the exercise of employee stock options, in a registered public offering resulting in gross proceeds of not less than $20 million or upon issuance of common stock upon exercise of the Series B preferred stock or Series A preferred stock or upon exercise of the existing warrants or any future issued warrants) or options, warrants or other rights to purchase or acquire these convertible or exchangeable securities; or
	•	rights to purchase property

pro rata to the record holders of our common stock, other than issuances or sales that result in an adjustment of the conversion price under the anti-dilution provisions, then each holder of Series A Convertible Preferred Stock and the Series B preferred stock will be entitled to acquire on the same terms either:

	•	the aggregate amount of these rights which the holder would have acquired if it had held the number of shares of common stock acquirable upon conversion of the Series A Convertible Preferred Stock or Series B Convertible Preferred Stock immediately before the grant, issuance or sale of these rights; or

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	•	if these rights have expired, the number of shares of Common Stock or the amount of property which the holder could have acquired upon the exercise of the rights at the time or times at which we granted, issued or sold the expired rights.

Voting Rights. Holders of the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock have the right to vote with the common stock on an as-converted basis subject to the voting rights limitations of the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock set forth in the paragraph below. In addition, the approval of holders of a majority of the Series A Convertible Preferred Stock or Series B Convertible Preferred Stock, as appropriate, is separately required to approve:

	•	changes to the certificate of incorporation or bylaws that adversely affect the rights of the holders of our Series A Convertible Preferred Stock or Series B Convertible Preferred Stock;
	•	any creation, authorization, or issuance of any equity or equity-linked securities of our Company ranking senior to or equally with the Series A Convertible Preferred Stock or the Series B Convertible Preferred Stock; and
	•	any repurchase or redemption of equity securities or rights to acquire equity securities (other than from an employee, director or consultant following termination), or the declaration or payment of any dividend on our common stock.

Although the conversion of the Series A Convertible Preferred and the Stock Series B Convertible Preferred Stock are subject to weighted-average anti-dilution adjustments in the event of certain issuances of our common stock, or securities exercisable for or exchangeable or convertible into our common stock, as described in Anti-Dilution (page 29), the Series A Certificate of Designations and the Series B Certificate of Designations limit the voting rights of both series as follows:

	•	Series A Convertible Preferred Stock shall not vote at a higher rate than if converted to Common Stock at a conversion price of $2.18 per share. Accordingly, as of September 17, 2004, the holders of the Series A Convertible Preferred Stock are entitled to vote 40,623,070 shares on an as-converted basis;
	•	Series B Convertible Preferred Stock shall not vote at a higher rate than as if converted at $1.15. Accordingly, as of September 17, 2004, the holders of the Series B Convertible Preferred Stock are entitled to vote 43,440,555 shares on an as-converted basis.

Right to Board Seat. For so long as Warburg Pincus owns at least 25% of its shares of Series A Convertible Preferred Stock or 25% of the shares of common stock issuable on conversion of its Series A Convertible Preferred Stock, Warburg Pincus will have the right to appoint one member to our Board of Directors In addition, Warburg Pincus and BCP each have the right to appoint one director to our Board of Directors for so long as Warburg Pincus or BCP, as the case may be, owns at least 25% of the shares of Series B Convertible Preferred Stock or 25% of the shares of common stock issuable on conversion of such shares of Series B Convertible Preferred Stock and issuable upon exercise of the warrants issued in connection with the issuance in 2003 of the $40 million in aggregate principal of our secured promissory notes. Each of the directors appointed by Warburg Pincus and BCP pursuant to these rights will sit on all major board committees (for so long as such membership does not conflict with any applicable law or regulation or listing requirement of the Nasdaq National Market, as determined in good faith by our Board of Directors).

As a result of these rights, the Investors have a right to hold three of the nine seats on our Board of Directors. Messrs. Lorenzo Bettino and Jeffrey A. Harris are the members of our Board of Directors appointed by Warburg Pincus. Mr. Steven Brooks is the member of our Board of Directors appointed by BCP. Warburg Pincus has the additional right to have one observer attend the meetings of the Board of Directors. Our amended and restated certificate of incorporation and bylaws provide that our Board of Directors shall be divided into three classes. The term of office for Class I directors expires at the special annual meeting of stockholders to be held October 21, 2004, the term of office for Class II directors expires at the annual meeting of stockholders to be held in 2005 and the term of office for Class III directors expires at the annual

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Material Terms of the Warrants

     The following description summarizes the material terms of the common stock warrants held by the Investors.

Number of Shares and Exercise Price. On August 5, 2002, in connection with the issuance to the Investors of our Series A Convertible Preferred Stock, we issued to the Investors warrants to purchase 6,708,335 shares of our Common Stock at an exercise price of $3.0559 per share. Thereafter in October 2002, we issued to the Investors additional warrants to purchase 5,563,010 additional shares of our Common Stock at an exercise price of $3.0559 per share. In the aggregate, we refer to these warrants as the Series A Warrants. All of the Series A Warrants are exercisable at any time, in whole or in part. As a result of certain anti-dilution adjustments to the Series A Warrants as described below, as of the date of this proxy statement, the Investors have the right pursuant to the Series A Warrants to purchase an aggregate of 18,133,464 shares of our Common Stock at an exercise price of $2.0680 per share.

     In December 2003, in connection with the amendment of the terms of our outstanding secured promissory notes and the issuance to the Investors of new secured promissory notes, we issued to the Investors warrants to purchase an aggregate of 18 million shares of our Common Stock at an exercise price of $1.46 per share and an aggregate of 6 million shares of our Common Stock at an exercise price of $1.53 per share. In the aggregate, we refer to these warrants as the Series B Warrants. All of the Series B Warrants are exercisable at any time, in whole or in part.

Expiration. The Series A Warrants automatically expire on August 5, 2007. The Series B Warrants automatically expire on December 13, 2011.

Adjustments in the Exercise Price. The exercise price and the number of shares issuable upon exercise of the Series A Warrants and the Series B Warrants is subject to customary weighted average anti-dilution adjustments and customary adjustments due to business combinations and other transactions affecting our common stock.

Change of Control. In the event of a Change of Control transaction (as defined in the Series B Certificate of Designations), the Investors shall have the right to require the Company to purchase the Series B Warrants, at a valuation based on a computation of the option value of the Series B Warrants using a Black-Scholes calculation methodology.

Material Terms of the Series C Preferred Stock

The following description summarizes the material terms of the Series C Preferred Stock. You are urged to read carefully in its entirety the form of Certificate of Designations, Preferences and Rights of Series C Preferred Stock of Proxim Corporation (the “Series C Preferred Certificate of Designations”) which fully sets forth the terms of our Series C Preferred Stock. A copy of the Series C Preferred Certificate of Designations is attached asAppendix A.

Dividends. The holders of the Series C Preferred Stock are not entitled to receive dividends on the Series C Preferred Stock.

Liquidation Preference. The initial liquidation preference for the shares of Series C Preferred Stock is $100.00 per share. The liquidation preference accretes at 8.75% per annum, compounded quarterly, through the eighth anniversary of the date on which we will first issue shares of our Series C Preferred Stock (the “Series C Preferred Stock Original Issue Date”). The liquidation preference is generally subject to adjustment in the event we undertake a business combination or other extraordinary transaction, or we are liquidated or dissolved. In the event of a Change of Control transaction or a Material Asset Sale (as described below) after the Series C Preferred Stock Original Issue Date, the liquidation preference will automatically increase to include eight full years of accretion at 8.75% per annum.

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Mandatory Redemption. On the eighth anniversary of the Series C Preferred Stock Original Issue Date, we will be required to redeem all outstanding shares of Series C Preferred Stock, if any, at a price per share in cash equal to the liquidation preference as if the Series C Preferred Stock had fully accreted through the eighth anniversary of the Series C Preferred Stock Original Issue Date.

Optional Redemption. At any time prior to the eighth anniversary of the Series C Preferred Stock Original Issue Date, the Company has the right at its option to redeem all outstanding shares of Series C Preferred Stock at a price per share in cash equal to the liquidation preference as if the Series C Preferred Stock had fully accreted through the eighth anniversary of the Series C Preferred Stock Original Issue Date. Additionally, the Company has the right at its option to redeem all outstanding shares of Series C Preferred Stock (i) at any time prior to, and including, the third anniversary of the Series C Preferred Stock Original Issuance Date at a price per share in cash equal to its then accreted liquidation preference, if the market price of the Company’s Common Stock has been higher than $2.25 for a period of forty-five (45) consecutive trading days prior to the date that notice of redemption is given to the Investors or (ii) at any time following the third anniversary of the Series C Preferred Stock Original Issuance Date at a price per share equal to its then accreted liquidation preference if the market price of the Company’s Common Stock has been higher than $2.00 for a period of forty-five (45) consecutive trading days prior to the date that notice of redemption is given to the Investors.

Change of Control or Material Asset Sale. In the event that (i) any person or entity were to acquire 50% or more of either our Common Stock or voting power, (ii) the individuals who constitute our Incumbent Board cease for any reason to constitute at least a majority of our Board of Directors, (iii) we were to experience a business combination transaction after which our stockholders generally hold less than 50% of the Common Stock and less than 50% of the combined voting power of the voting securities of the combined company, or (iv) our stockholders approve a complete liquidation or dissolution of the Company (each such event, a “Change of Control”), the Company is required to redeem in cash or readily marketable securities all of the Series C Preferred Stock at a price per share in cash equal to the liquidation preference as if the Series C Preferred Stock had fully accreted through the eighth anniversary of the Series C Preferred Stock Original Issue Date plus following the eighth anniversary of the Series C Preferred Stock Original Issue Date, an amount equal to the unrecognized accretion, if any, up to but not including the date of the Change of Control.

In the event that the Company participates in any any sale of the Corporation’s assets (i) that does not constitute a Business Combination and (ii) as a result of which sale the Corporation’s revenues for the prior twelve-month period would have declined by forty percent (40%) or more on a pro forma basis giving effect to such asset sale (a “Material Asset Sale”), each holder of shares of Series C Preferred Stock has the right to require the Company to repurchase such holder’s shares of Series C Preferred Stock, in whole or in part, at such holder’s option, at a price per share in cash equal to the liquidation preference as if the Series C Preferred Stock had fully accreted through the eighth anniversary of the Series C Preferred Stock Original Issue Date plus following the eighth anniversary of the Series C Preferred Stock Original Issue Date, an amount equal to the unrecognized accretion, if any, up to but not including the date of the Material Asset Sale.

Material Terms of the Bridge Notes

     The following description summarizes the general terms of the Bridge Notes issued to the Investors on July 30, 2004 and the rights given to the Investors upon the Company’s stockholders’ approval or failure to approve the Exchange. You are urged to read carefully the Purchase Agreement, the form of senior secured promissory note and the Pledge and Security agreement, copies of which were filed as exhibits to the Company’s current report on Form 8-K filed July 30, 2004 and which are incorporated herein by reference. The descriptions here are qualified in their entirety by reference to the complete documents so filed.

Principal, Maturity and Interest. The outstanding Bridge Notes have an aggregate principal amount of $10 million. These outstanding notes have been issued in the form of the secured promissory note. All of the Bridge Notes are outstanding. Each Bridge Note generally becomes due and payable upon the earliest of (i) the occurrence of an event of default under the terms of the Bridge Notes, (ii) any date after the Exchange

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     Interest on each Bridge Note accrues at the rate of 15% per annum until the Maturity Date. From and after the Maturity Date or the occurrence of any event of default, interest on each Bridge Note shall accrue at the rate of 20% per annum and accrued but unpaid interest on each Note shall become payable on the demand of the holder. If a Qualified Transaction is consummated by June 30, 2005, simultaneous with the closing of the Qualified Transaction, the outstanding principal and accrued but unpaid interest on the Bridge Notes shall automatically be exchanged for the Company’s Common Stock and/or Common Stock warrants at the same price and upon the same terms and conditions agreed to with the investors in the Qualified Transaction.

Right to Board Seats. Under the terms of the Purchase Agreement, upon the closing of the Exchange, Warburg Pincus shall have the exclusive right to appoint one (1) director and BCP shall have the exclusive right to appoint one (1) director (each, a “Board Designee”) to the Board of Directors for so long as Warburg Pincus or BCP, as the case may be, beneficially owns shares of Common Stock equal to at least twenty-five percent (25%) of the number of shares of our Common Stock issued to Warburg Pincus or BCP, as the case may be, pursuant to the Exchange. In addition, Warburg Pincus shall have the exclusive right to appoint one (1) additional Board Designee for so long as Warburg Pincus beneficially owns shares of Common Stock equal to at least fifty percent (50%) of the number of shares of Common Stock issued to Warburg Pincus pursuant to the Exchange.

     The Board Designees shall be duly appointed in accordance with the Company’s By-laws, Certificate of Incorporation and the General Corporation Law of Delaware. For so long as Warburg Pincus retains the right to appoint two Board Designees, the Warburg Pincus Board Designees so elected shall serve as a Class III Director and a Class II Director, respectively, and BCP’s Board Designee so elected shall serve as a Class II Director (as designated in the Company’s Certificate of Incorporation), each serving until his or her successor is elected and qualified. If Warburg Pincus should retain the right to appoint only one Board Designee, Warburg Pincus shall elect to retain either its Class III Board Designee or its Class II Board Designee.

Until the consummation of the Exchange, Warburg Pincus and BCP will retain their existing similar rights to appoint two (2) and one (1) Board Designee, respectively, as set forth in Section 9(e) of the Series A Preferred Certificate of Designations and Section 9(e) of the Series B Preferred Certificate of Designations.

Opinion of Financial Advisor

Bear Stearns has acted as financial advisor to the Company’s special committee of its Board of Directors with respect to the Exchange. In connection with Bear Stearns’ engagement as financial advisor, the special committee requested that Bear Stearns evaluate the fairness, from a financial point of view, of the Exchange. On July 26, 2004, Bear Stearns delivered its oral opinion, subsequently confirmed in writing, to the special committee to the effect that, as of the date of its opinion and based on and subject to the assumptions, limitations and qualifications set forth therein, the Exchange was fair, from a financial point of view, to the holders of Common Stock (other than the Investors and their respective affiliates). For purposes of Bear Stearns’ opinion, the term “Exchange” does not include the issuance of Bridge Notes or any Qualified Transaction. Bear Stearns delivered its opinion to the Company’s special committee before the Company entered into the settlement agreement with Symbol. Accordingly, Bear Stearns’ opinion and the analyses underlying the opinion did not take into account the terms of such settlement agreement.

     THE FULL TEXT OF BEAR STEARNS’ WRITTEN OPINION, DATED JULY 26, 2004, WHICH SETS FORTH THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS OF THE REVIEW UNDERTAKEN BY BEAR STEARNS, IS ATTACHED AS APPENDIX B TO THIS PROXY STATEMENT. THE SUMMARY OF THE BEAR

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     The Bear Stearns opinion was provided for the information of the special committee in connection with its consideration of the Exchange and relates only to the fairness, from a financial point of view, of the Exchange to the holders of Common Stock (other than the Investors and their respective affiliates). The Bear Stearns opinion does not constitute a recommendation to the special committee or any holders of Common Stock, Series A Convertible Preferred Stock or Series B Convertible Preferred Stock as to how to vote in connection with the Exchange or any matters related to the Exchange. The Bear Stearns opinion does not address the Company’s underlying business decision to pursue the Exchange, the relative merits of the Exchange as compared to any alternative business strategies that might exist for the Company or the effects of any other transaction in which the Company might engage. The Bear Stearns opinion is subject to the assumptions and conditions contained herein and is necessarily based on economic, market and other conditions, and the information made available to Bear Stearns as of the date of its opinion.

     Although Bear Stearns evaluated the fairness, from a financial point of view, of the Exchange to the holders of Common Stock (other than the Investors and their respective affiliates), the form of the Exchange was determined by the parties to the Exchange through arm’s-length negotiations.

     In arriving at its opinion, Bear Stearns:

	•	reviewed drafts dated July 26, 2004 of the Purchase Agreement, the Bridge Notes and the forms of the Certificates of Designations, Preferences and Rights of the Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock and the Series C Preferred Stock;
	•	reviewed the Company’s Annual Reports to Shareholders and Annual Reports on Form 10-K for the years ended December 31, 2002 and 2003, its Quarterly Reports on Form 10-Q for the period ended March 31, 2004, its preliminary results for the quarter ended June 30, 2004 and its Reports on Form 8-K for the two years ended the date of the Bear Stearns opinion;
	•	reviewed certain operating and financial information relating to the Company’s business and prospects, including projections for the five years ended December 31, 2008, which are referred to as the “Projections”, all as prepared and provided to Bear Stearns by the Company’s senior management;
	•	reviewed the forecasted monthly free cash flow generation as reflected in the Company’s monthly 2004 cash flow forecast and the Company’s potential needs for external capital in order to conduct its business, which are referred to as the “Monthly Cash Flow Statements”, all as prepared and provided to Bear Stearns by the Company’s senior management;
	•	met with certain members of the Company’s senior management to discuss the Company’s business, operations, historical and projected financial results, capital needs and potential sources of liquidity, and future prospects;
	•	reviewed a liquidation analysis of the Company as of June 30, 2004, as prepared and provided to Bear Stearns by the Company’s senior management, which is referred to as the “Liquidation Analysis”;
	•	reviewed the historical prices, trading multiples and trading volumes of Common Stock;
	•	reviewed publicly available financial data, stock market performance data and trading multiples of companies which Bear Stearns deemed generally comparable to the Company;
	•	reviewed the terms of recent transactions which Bear Stearns deemed comparable in certain respects to the Company and to the Exchange;
	•	reviewed the pro forma impact of the Exchange and the Qualified Transaction; and
	•	conducted such other studies, analyses, inquiries and investigations as Bear Stearns deemed appropriate.

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     In arriving at its fairness opinion, Bear Stearns relied and assumed, without independent verification, the accuracy and completeness of the financial and other information provided to Bear Stearns by the Company, including, without limitation, the Projections, the Monthly Cash Flow Statements and the Liquidation Analysis. With respect to the Company’s projected financial results that could be achieved upon consummation of the Exchange and the Qualified Transaction, Bear Stearns relied on representations that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the senior management of the Company as to the expected future performance of the Company. With respect to the Liquidation Analysis, Bear Stearns relied upon representations that it had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the senior management of the Company as to the expected recoveries of the various creditors and equity holders of the Company upon a bankruptcy proceeding under the U.S. bankruptcy laws. In this regard, the Company advised Bear Stearns that, absent the Exchange, the Company would have no alternative other than to seek protection under the U.S. bankruptcy laws, and that upon a liquidation of the Company, the holders of Common Stock would not expect to receive any recovery. Bear Stearns did not assume any responsibility for the independent verification of any such information or of the Projections or the Monthly Cash Flow Statements provided to Bear Stearns, and Bear Stearns further relied upon the assurances of the senior management of the Company that they were unaware of any facts that would make the information, including the Projections, the Monthly Cash Flow Statements and Liquidation Analysis provided to Bear Stearns, incomplete or misleading.

     In arriving at its opinion, Bear Stearns did not perform or obtain any independent appraisal of the assets or liabilities (contingent or otherwise) of the Company, nor was Bear Stearns furnished with any such appraisals. During the course of its engagement, Bear Stearns was not asked by the special committee to solicit indications of interest from various third parties regarding any transaction with the Company. Bear Stearns assumed that the Exchange would be consummated in a timely manner and in accordance with the terms of the documents Bear Stearns reviewed without any limitations, restrictions, conditions, amendments or modifications, regulatory or otherwise, that collectively would have a material effect on the Company.

     Bear Stearns did not express any opinion as to the price or range of prices at which the shares of Common Stock may trade subsequent to the announcement or consummation of the Exchange. Bear Stearns further expressed no opinion as to whether the Company would be able to consummate a Qualified Transaction on terms it deemed acceptable or as to the terms of the Bridge Notes.

     The following is a summary of the material factors considered and material analyses underlying the Bear Stearns opinion dated July 26, 2004, delivered to the special committee in connection with the Exchange. The financial analyses summarized below include information presented in tabular format. In order to fully understand Bear Stearns’ financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data set forth in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses could create a misleading or incomplete view of Bear Stearns’ financial analyses.

Situation Analysis. In connection with the delivery of its opinion, Bear Stearns reviewed selected historical financial and operating results of the Company and observed that:

	•	the Company has limited available cash which will not cover near-term operating or debt service requirements;
	•	the Company faces litigation from Symbol, which could also have a significant impact;
	•	the Company’s current capital structure is an impediment to raising new capital;
	•	PricewaterhouseCoopers issued a going concern opinion in March 2004;
	•	the Company has reported weak year-to-date financial performance;
	•	the Company’s management has had difficulty forecasting the financial performance of the business;
	•	the Company’s relationships with its contract manufacturers are strained;

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	•	the Company’s customers and vendors have expressed significant concern over the Company’s current financial position;
	•	Over the past two quarters, key employees have left the Company largely due to the uncertainty and instability at the Company;
	•	Despite a highly competitive environment, the Company’s management has been increasingly forced to divert its attention to managing internal issues;
	•	the Company’s management has prepared two monthly liquidity scenarios forecasting liquidity with and without the Bridge Notes, the Exchange and a Qualified Transaction. These forecasts showed that, absent the Bridge Notes, the Exchange and a Qualified Transaction, the Company would exhaust its liquidity during the third quarter of 2004.

Liquidity Analysis. The Company’s senior management provided Bear Stearns with the Monthly Cash Flow Statements. The Monthly Cash Flow Statements showed that, without the Bridge Notes, the Company would have a negative cash balance by August 31, 2004.

Liquidation Analysis. The Company’s senior management also provided Bear Stearns with the Liquidation Analysis. The Liquidation Analysis showed that the holders of the Common Stock would not expect to receive any recovery upon a liquidation of the Company.

Analysis of a Sale of the Company Outside of Bankruptcy. Bear Stearns analyzed potential recoveries for the holders of Common Stock in the event of an eventual sale of the Company. In order to develop an illustrative range of potential acquisition multiples, Bear Stearns analyzed both comparable company trading levels and publicly available comparable precedent transactions.

Comparable Company Trading Analysis

     Bear Stearns analyzed selected projected operating information provided by the Company’s management, stock price performance data and valuation multiples for the Company and compared this data to publicly available information for eight publicly traded wireless equipment companies. For each company, Bear Stearns reviewed:

	•	Enterprise Value as a multiple of calendar year 2004 projected revenue
	•	Enterprise Value as a multiple of calendar year 2005 projected revenue

     Enterprise Value is calculated as the sum of the value of the common equity on a fully diluted basis, using the treasury stock method for calculating in-the-money options, and the value of net debt, any minority interest and preferred stock.

     Bear Stearns reviewed the following companies:

Enterprise Wireless Equipment Companies

	•	Enterasys Networks, Inc.
	•	NETGEAR, Inc.
	•	Spectralink Corporation
	•	Symbol Technologies, Inc.

Carrier Wireless Equipment Companies

	•	Airspan Networks, Inc.
	•	Alvarion Ltd.
	•	Nera ASA
	•	Stratex Networks, Inc.

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     Bear Stearns noted that due to various factors, none of the wireless equipment companies was directly comparable to the Company for reasons including:

	•	none of the comparable companies are in all the same businesses as the Company;
	•	the business lines of the comparable companies in which the Company does not operate have different growth characteristics and economics than those in which the Company operates;
	•	some of the comparable companies are larger than the Company and have performed better than the Company over recent history;
	•	the Company does not have positive projected net income, earnings before interest, taxes, depreciation and amortization, or earnings before interest and taxes, for 2004 or 2005, which makes most of the analysis of the comparable companies less relevant; and
	•	the Company’s distressed situation makes comparison of financial multiples less relevant.

     The analysis showed the following:

Comparable Company Trading Analysis Summary

*	All eight wireless equipment companies

Precedent Transaction Analysis

     Bear Stearns analyzed a number of publicly announced merger and acquisition transactions in the communications technology industry. For each transaction, Bear Stearns reviewed:

	•	the target companies’ enterprise value implied by the purchase rice as a multiple of last twelve months revenue before the transaction, which is referred to as “LTM revenue”; and
	•	the target companies’ enterprise value implied by the purchase price as a multiple of the target companies’ projected revenues (based on target revenue for the year when the transaction was announced).

     Bear Stearns noted that due to various factors, none of the comparable transactions was directly comparable to the Company for reasons including:

	•	that none of the target companies have the same business mix that the Company has;
	•	the Company’s distressed situation makes comparison of financial multiples less relevant; and
	•	the $237.6 million aggregate change of control preference on the Investors’ existing securities implied control over the Company, which makes the precedent transaction analysis less relevant.

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     This analysis showed the following:

Precedent Transactions

(1)	Purchase price calculated based on enterprise value at transaction price.

     Bear Stearns used the comparable company trading analysis and the precedent transaction analysis summarized above as a general guideline to determine a broad illustrative reference range for potential acquisition multiples. Using a reference range from 0.90x to 1.65x estimated 2004 revenues, as projected by the Company’s senior management, the implied enterprise value for the Company ranged from $118.0 million to $216.3 million.

     Taking into account the $237.6 million change of control preference on the Investors’ existing securities, as well as the Company’s potential liability for the Symbol litigation (which was assumed to be approximately $31 million for purposes of this analysis), the holders of Common Stock would receive no value through a sale of the Company at any revenue multiples within this range.

     This analysis showed the following:

Analysis of a Potential Sale

(1)	Based on 2004E revenues of $131.1 million, per the Company’s management.
(2)	Source: Proxy statement dated November 10, 2003, Form 10-Q dated May 11, 2004, Form 10-K dated March 15, 2004, and the Company’s counsel and management.
(3)	As of June 30, 2004 (excludes $2.4 million in short-term investments and $0.8 million in restricted cash).
(4)	Liability of $31.5 million based on projected accruals as of January 2005, per the Company’s management. This date was chosen for illustrative purposes.

     Bear Stearns also analyzed the potential recovery to the holders of Common Stock assuming that the Investors did not receive the full amount of the accreted liquidation preference on their existing securities of

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Analysis of a Potential Sale

(1)	Based on 2004E revenues of $131.1 million, per the Company’s management.
(2)	Source: Proxy statement dated November 10, 2003, Form 10-Q dated May 11, 2004, Form 10-K dated March 15, 2004, and the Company’s counsel and management.
(3)	As of June 30, 2004 (excludes $2.4 million in short-term investments and $0.8 million in restricted cash).
(4)	Liability of $31.5 million based on projected accruals as of January 2005, per the Company’s management. This date was chosen for illustrative purposes.

Analysis of the Exchange. The Company’s management provided Bear Stearns with the Projections, which included the following assumptions:

	•	Series B Note is converted to Series B Convertible Preferred Stock in July 2004;
	•	Bridge Notes are funded by the Investors in July 2004;
	•	The Exchange is consummated and a $50 million Qualified Transaction is effected in October 2004. The Bridge Notes are exchanged for the same consideration issued in the Qualified Transaction; and
	•	the Company receives an adverse ruling on its litigation with Symbol and is required to post payment in the form of a bond to appeal the ruling or payment of past royalties of approximately $31 million in January 2005.

Cash Flow Analysis

     Based on the Monthly Cash Flow Statements, following the Exchange and a Qualified Transaction, the Company would be able to withstand an adverse ruling in the Symbol litigation in the amount of $31 million in January 2005 and still have sufficient cash to fund its business plan through the end of the period covered by such statements.

Sale of the Company Analysis

     Bear Stearns also analyzed potential recoveries to the holders of Common Stock in the event of an eventual sale of the Company following the Exchange. Using the capital structure assumptions noted above and a range of illustrative revenue multiples from 0.90x to 1.65x estimated 2004 revenues, Bear Stearns observed that, after giving effect to the Exchange, the holders of Common Stock would receive recovery throughout this range of illustrative revenue multiples.

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Analysis of a Potential Sale Post-Exchange*

(*) Assumes $50 million Qualified Financing.

(1)	Based on 2004E revenues of $131.1 million, per the Company’s management.
(2)	Source: Draft Purchase Agreement
(3)	Includes $11.4 million in cash as of 6/30/04 (excluding $2.4 million in short-term investments and $0.8 million in restricted cash) plus $10 million from a new bridge loan plus proceeds of $50.0 million less estimated fees of $4.5 million.
(4)	Liability of $31.5 million based on projected accruals as of January 2005, per the Company’s management. This date was chosen for illustrative purposes.

Other Analyses. In preparing its opinion, Bear Stearns performed a variety of financial analyses, including those described above. The summary of Bear Stearns’ analyses is not a complete description of the analyses underlying the Bear Stearns opinion. The preparation of a fairness opinion is a complex process and involves various judgments and determinations as to the most appropriate and relevant assumptions and financial analyses and the application of those methods to the particular circumstances involved. The Bear Stearns opinion is therefore not necessarily susceptible to partial analyses or summary description. In arriving at its opinion, Bear Stearns made qualitative judgments as to the significance and relevance of each analysis and factor considered by it and did not attribute particular weight to any one analysis or factor. Bear Stearns did not form an opinion as to whether any individual analysis or factor, positive or negative, considered in solution, supported or failed to support the Bear Stearns opinion. Accordingly, Bear Stearns believes that its analyses must be considered as a whole and that selecting portions of its analyses could create a misleading or incomplete view of the processes underlying its analyses and opinion.

     The analyses performed by Bear Stearns, particularly those based on estimates, are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than those results suggested by the analyses. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold. Accordingly, Bear Stearns’ analyses are inherently subject to substantial uncertainty. The analyses were prepared solely as part of Bear Stearns’ analysis of the fairness, from a financial point of view, of the Exchange to the holders of the Company’s Common Stock (other than the Investors and their respective affiliates).

     The Bear Stearns opinion and financial analyses performed by Bear Stearns were only one of many factors considered by the special committee in its evaluation of the Exchange, and should not be viewed as determinative of the views of the special committee or the Company’s management with respect to the Exchange.

     The Company engaged Bear Stearns based on Bear Stearns’ qualifications, expertise and reputation in providing advice to companies with respect to transactions similar to the Exchange. Except as set forth in the following paragraph, Bear Stearns has not provided the Company any investment banking or other services in the past two years. Bear Stearns is an internationally recognized investment banking firm, and, as part of its

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Pursuant to the terms of its engagement letter dated May 27, 2004 with Bear Stearns, the Company has agreed to pay Bear Stearns a fee of $1,000,000, $500,000 of which became payable upon the delivery of the Bear Stearns opinion and the balance of which will become payable upon consummation of the Exchange. The Company has also engaged Bear Stearns to assist in its future financing activities for which Bear Stearns will receive customary fees. In addition, the Company has agreed to reimburse Bear Stearns for all reasonable out-of-pocket expenses incurred by Bear Stearns in connection with its engagement, including reasonable fees and disbursements of its legal counsel. The Company has also agreed to indemnify Bear Stearns against certain liabilities in connection with its engagement, including certain liabilities under the federal securities laws.

Effects of the Exchange Transaction

Effect on Beneficial Ownership. If the proposal is approved by our stockholders at the special annual meeting, we will have the ability to issue an aggregate of 164,000,000 shares of our Common Stock and 400,000 shares of our Series C Preferred Stock to the Investors in the Exchange.

On a fully accreted basis before the Exchange, the Investors collectively own 199,771,935 shares of our Common Stock on an as-converted and as-exercised basis, representing approximately 61.8% of our Common stock based on 123,540,674 shares outstanding as of September 17, 2004. If our stockholders approve the Exchange and we issue to the Investors 164,000,000 shares of our Common Stock and 400,000 shares of our newly issued Series C Preferred Stock, the shares of our Common Stock issued in connection with the Exchange and held by the Investors would represent approximately 57.04% of our Common Stock as of September 17, 2004, based on 123,540,674 shares outstanding as of September 17, 2004. In effect, the Exchange would reduce the Investors’ holdings by 35,771,935 shares, or 4.75% on a fully accreted, as-converted and as-exercised basis.

     The following table sets forth:

	•	the beneficial ownership of our Common Stock, on an as-converted and as-exercised basis, by each beneficial owner of our Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, including Common Stock issuable to each such holder on the exercise of warrants, as of September 17, 2004; and
	•	the fully accreted beneficial ownership of our Common Stock, on an as-converted and as-exercised basis, by each beneficial owner of our Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, including accretion on the Series A Convertible Preferred Stock through August 5, 2005 and accretion on the Series B Convertible Preferred Stock through July 30, 2011; and
	•	assuming approval of the proposal and the consummation of the Exchange, the projected beneficial ownership of our Common Stock based on shares outstanding as of September 17, 2004;

Beneficial ownership information set forth in this table is determined in accordance with the rules of the SEC. Shares issuable upon exercise of outstanding options and warrants within 60 days of September 17, 2004 are considered owned by the person having the right to acquire such shares but are not deemed to be outstanding for purposes of computing the percentage ownership of any other person. Except as otherwise indicated in the footnotes to the table, we believe that the beneficial owners listed in this table, based on

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