UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K/A





R
              ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008OR£
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 FOR THE TRANSITION PERIOD FROM TO





Commission
File Number 000-29053





PROXIM
WIRELESS CORPORATION


(Exact
name of registrant as specified in its charter)





Delaware
            04-2751645(State
      or other jurisdiction
              of
      incorporation or organization)
            (I.R.S.
      Employer
              Identification
      No.)





1561
Buckeye Drive


Milpitas,
CA 95035


(Address
of principal executive offices)





(408)
383-7600


(Registrant’s
telephone number, including area code)





Securities
registered pursuant to Section 12(b) of the Act:





Title
      of Each Class
            Name
      of each exchange on which registeredCommon
      stock, par value $.01 per share
            The
      NASDAQ Stock Market LLC





Securities registered pursuant to
Section 12(g) of the Act:None





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





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act. Yes £ No R





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





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





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. £





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





Large
      accelerated filer £
                Accelerated
      filer £
                Non-accelerated
      filer £(Do not check if a
      smaller reporting
      company)
                Smaller
      reporting company R





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes £ No R





As of
June 30, 2008, the aggregate market value of the voting and non-voting common
equity held by non-affiliates of the registrant was $10,551,377. For purposes of
this calculation only, shares of common equity held by each of the registrant’s
directors and officers on that date and by each person who beneficially owned
10% or more of the outstanding common stock on that date have been excluded in
that such persons may be deemed to be affiliates. The aggregate market value has
been computed based on a price per share of $0.60, which is the price at which
the common equity was last sold on June 30, 2008.





As of
March 13, 2009, the registrant had 23,519,069 shares of common stock
outstanding.




















Explanatory
Note





We are
filing this amendment in order to report the information required by Part
III.  We will not be filing a proxy statement containing that
information within 120 days after the end of our fiscal year ended December 31,
2008 and accordingly are unable to incorporate that information by
reference.  The remaining items of the original Annual Report on Form
10-K are not amended hereby.




In order
to preserve the nature and character of the disclosures set forth in the
original Annual Report on Form 10-K, except for the information in Part III and
as otherwise expressly stated herein, this report speaks as of the date of the
filing of the original Annual Report on Form 10-K, March 31, 2009, and we have
not updated the disclosures in this report or the original Annual Report on Form
10-K to speak as of a later date.





PART
III




Item
10.  Directors, Executive Officers and Corporate
Governance.




Director
and Officer Information





Our
current directors and executive officers and their ages as of March 31, 2009 are
as follows:





Name
              Age
              
              PositionPankaj
      S. Manglik
              44
              
              President,
      Chief Executive Officer, and DirectorThomas
      S. Twerdahl
              59
              
              Interim
      Chief Financial Officer and TreasurerDavid
      L. Renauld
              43
              
              Vice
      President, Corporate Affairs, General Counsel, and
    SecretaryAlan
      B. Howe
              47
              
              Chairman
      of the Board of DirectorsJohn
      W. Gerdelman
              56
              
              DirectorJ.
      Michael Gullard
              64
              
              DirectorRobert
      A. Wiedemer
              50
              
              Director





Pankaj S.
Manglik was promoted to his current position of President and Chief Executive
Officer in January 2008.  He had been our President and Chief
Operating Officer since May 2006 and has been a director since July
2006.  Prior to joining Proxim, Mr. Manglik was an independent
consultant advising the boards of directors of venture capital-funded startup
companies.  In January 2002, he co-founded Aruba Networks, which is
now a publicly-traded wireless infrastructure company, and was served as its
President, Chief Executive Officer, and Vice President at different times during
his employment through May 2004.  Previously, he was Director of
Product Management for Alteon Websystems, which was acquired by Nortel
Networks.  Prior to Alteon, Mr. Manglik worked at Cisco Systems and
Intel Corporation.  Under the terms of Mr. Manglik’s employment
agreement with us, failure of our board of directors to nominate Mr. Manglik for
election to the board as part of the board’s slate of nominees would give Mr.
Manglik “good reason” to terminate that employment agreement and receive
severance payments from us.





Thomas S.
Twerdahl has been our Interim Chief Financial Officer and Treasurer since
September 2008 and was Corporate Controller for Proxim since February
2007.  From October 2004 to January 2007, he was Corporate Controller
for Adept Technology, a leading worldwide manufacturer of vision-guided robotics
equipment.  From November 1999 to September 2004, he was Director of
Finance for Philips Medical Systems, a world leader in diagnostic medical
systems.  Earlier in his career, he held various financial roles at
3Com Corporation, National Semiconductor, and Applied Materials.  He
started his career at Deloitte & Touche LLP.  Mr. Twerdahl has a
B.S. in Accounting from San Jose State University and an MBA from the University
of Santa Clara.  He has been a licensed Certified Public Accountant in
the State of California since 1989.





David L.
Renauld has been our Vice President, Corporate Affairs, General Counsel, and
Secretary since May 2005.  From November 1999 to May 2005, he was our
Vice President, Legal and Corporate Affairs and Secretary.  From
January 1997 to November 1999, he was an attorney with Mirick, O’Connell,
DeMallie & Lougee,


2


LLP, a
law firm in Worcester, Massachusetts.  From September 1991 to December
1996, he was an attorney with Richards, Layton & Finger, a law firm in
Wilmington, Delaware.  Mr. Renauld holds a B.A. in mathematics/arts
from Siena College and a J.D. from Cornell University.





Alan B.
Howe has been a director since May 2007 and Chairman of the Board of Directors
since March 2008.  Mr. Howe has extensive operational expertise
combined with corporate finance and business development
experience.  Since May 2005, he has served as Vice President of
Strategic and Wireless Business Development for Covad Communications, Inc., a
national broadband telecommunications company.  From April 2001 to May
2005, Mr. Howe was a founding partner and principal at Broadband
Initiatives, LLC, a boutique consulting and advisory
firm.  Previously, Mr. Howe was Chief Financial Officer and Vice
President of Corporate Development of Teletrac, Inc. for six years from
1995 to 2001 when the company was sold.  During his tenure, he
assisted with the Chapter 11 reorganization of the company in
1999.  Mr. Howe joined Teletrac from Sprint, where he was
Director of Corporate Development from 1994 to 1995 and one of the initial team
members that helped start Sprint PCS.  Mr. Howe is a member of
the board of directors of Alliance Semiconductor Corporation, Crossroads Data
Systems, Inc., Dyntek, Inc., and Kitty Hawk, Inc., a company which
commenced a Chapter 11 bankruptcy reorganization proceeding in October
2007.  Mr. Howe holds a B.A. in business administration from the
University of Illinois and an M.B.A. from the Indiana University Kelley Graduate
School of Business with a specialty in finance.  Mr. Howe was
originally recommended to be a member of our board of directors by Lloyd I.
Miller, III, our largest stockholder.





John W.
Gerdelman has been a director since June 2004.  Since January 2004,
Mr. Gerdelman has been Executive Chairman of Intelliden Corporation, a
leading provider of intelligent networking software solutions.  From
April 2002 to December 2003, Mr. Gerdelman took on the bankruptcy
reorganization of Metromedia Fiber Networks, a provider of digital
communications infrastructure, as President and Chief Executive
Officer.  Metromedia Fiber Networks successfully emerged from Chapter
11 bankruptcy in September 2003 as AboveNet, Inc.  From January
2000 to April 2002, Mr. Gerdelman was Managing Partner of Morton’s
Group LLC, an information technology and telecommunications venture
group.  From April 1999 to December 1999, he served as President and
Chief Executive Officer of USA.NET, a provider of innovative email
solutions.  Previously, he had served as an Executive Vice President
at MCI Corporation.  Mr. Gerdelman serves on the boards of directors
of Brocade Communications Systems Inc., a provider of storage area networks
solutions, Sycamore Networks, an optical gear company, and APAC Customer
Services, Inc., a call center company.  Mr. Gerdelman is a graduate of
the College of William and Mary with a degree in Chemistry and currently serves
on their Board of Visitors.





J.
Michael Gullard has been a director since November 2007.  Since 1984,
he has been General Partner of Cornerstone Management, a company he founded
which focuses on providing hands-on investing, strategic focus and direction for
technology companies primarily in software and data
communications.  From 1979 until 1984, he held various positions a
Telecommunications Technology Inc., a manufacturer of microprocessor controlled
telecommunications test equipment.  From 1972 until 1979, he held
various financial and operational management positions with Intel Corporation, a
semiconductor manufacturer.  Mr. Gullard is a member of the board
of directors of Alliance Semiconductor Corporation, JDA Software Group, Inc.,
and Planar Systems, Inc. and Chairman of the board of directors of Dyntek,
Inc.  Mr. Gullard holds a B.A. in economics and an M.B.A. in business,
both from Stanford University.  Mr. Gullard was originally
recommended to be a member of our board of directors by Lloyd I. Miller, III,
our largest stockholder.





Robert A.
Wiedemer has been a director since December 2003.  Since February
2002, he has been Managing Partner of Business Valuation Center, a company he
co-founded that is focused on the valuation of private, middle-market companies
throughout the United States.  From June 2000 until January 2002, he
held various positions at Pricesaroundtheworld.com, an Internet-based price
research services firm, where he was promoted from Chief Financial Officer to
Chief Executive Officer.  From October 1998 until May 2000, he was
Managing Partner of The Netfire Group, a financial and marketing consulting
firm.  Mr. Wiedemer holds a Masters Degree in Marketing from the
University of Wisconsin – Madison.





There are
no family relationships among our directors and executive
officers.


3


Section
16(a) Beneficial Ownership Reporting Compliance





Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our directors
and executive officers and persons who own more than ten percent of our common
stock (collectively, “Reporting Persons”) to file with the SEC initial reports
of beneficial ownership and reports of changes in beneficial ownership of our
common stock.  Each Reporting Person is required by SEC regulation to
furnish us with copies of these Section 16(a) reports.  Based on our
records and other information, we believe that all of these filing requirements
were met with respect to our last fiscal year (which ended on December 31, 2008)
except that Robert E. Fitzgerald, our former Chief Executive Officer, was late
in filing four Form 4 statements of changes in beneficial ownership: one on
April 16, 2008 reporting sales that occurred on April 1, 2, 3, and 4 (which
sales would have required two separate filings); one on July 14, 2008 reporting
sales that occurred on July 7; and one on July 17, 2008 that reported sales that
occurred on July 14.





Code
of Ethics





We have
adopted a statement of business conduct and code of ethics that applies to all
of our directors, officers, and employees, including our principal executive
officer, principal financial officer, and principal accounting officer and
controller.  This statement has been posted on our website (http://ir.proxim.com/documentdisplay.cfm?DocumentID=3994).





Other
Information





Certain information responsive to this
Item 10 appears below in Item 13. Certain Relationships and Related
Transactions, and Director Independence.











4


Item
11.  Executive Compensation.





Summary
Compensation Table for 2007 and 2008





The
following table summarizes the compensation earned for services rendered to us
in all capacities during 2007 and 2008 by our former Chief Executive Officer
(through early 2008), our current Chief Executive Officer (who was our President
and Chief Operating Officer in 2007), our current interim Chief Financial
Officer, and our other executive officers in those years.  We refer to
these executives as our “named executive officers” elsewhere in this Annual
Report on Form 10-K.  More details about the information in this table
are contained in the following portions of this Item 11.





Name
      and
            
            
            
            Salary
            
            Nonequity
              Incentive
      Plan
              Compensation
            
            Option
              Awards
            
            All
      Other
              Compensation
            
            TotalPrincipal
      Position
            
            Year
            
            ($)
            
            ($)
            
            ($)
      (a)
            
            ($)
            
            ($)Pankaj
      S. Manglik (b)
              President
      and Chief Executive
              Officer
            
            2008
              2007
            
            345,548
              330,000
            
            58,056
              116,325
            
            429,004
              503,333
            
            1,698
      (c)
              990 (c)
            
            834,306
              950,648Thomas
      S. Twerdahl (d)
              Interim
      Chief Financial Officer and
              Treasurer
            
            2008
            
            164,269
            
            2,792
            
            11,335
            
            1,100
      (c)
            
            179,496David
      L. Renauld
              Vice
      President, Corp. Affairs,
              General
      Counsel, and Secretary
            
            2008
              2007
            
            194,250
              191,673
            
            16,273
              68,473
            
            16,788
              19,183
            
            1,300
      (c)
              610 (c)
            
            228,611
              279,939Robert
      E. Fitzgerald (e)
              Former
      Chief Executive Officer
            
            2008
              2007
            
            105,689
              324,346
            
            397,650
              232,650
            
            54,059
              370,867
            
            333,466
      (f)
              13,579
      (g)
            
            890,864
              941,442Lionel
      Chmilewsky (h)
              Former
      Executive Vice President, Worldwide Sales
            
            2008
            
            294,269
            
            191,066
            
            81,673
            
            -
            
            567,008


_________________


(a)
            This
      column represents the dollar amount recognized for financial statement
      reporting purposes with respect to the 2008 fiscal year for the fair value
      of options granted in 2008 as well as prior fiscal years, in accordance
      with Statement of Financial Accounting Standards No. 123 (Revised 2004)
      Share-Based
      Payment(“SFAS 123R”).
       Pursuant to SEC rules, the amounts shown exclude the impact of
      estimated forfeitures related to service-based vesting conditions.
       For additional information, refer to note 13 to our financial
      statements in our annual report on Form 10-K for the year ended
      December 31, 2008 as filed with the SEC.  More information
      about awards made in 2008 is contained below in this Item
      11.  These amounts reflect the Company’s accounting expense for
      these awards and may not correspond to the actual value that will be
      recognized by the executives.


(b)
            Mr.
      Manglik became our President and Chief Operating Officer in May 2006 and
      was promoted to President and Chief Executive Officer in January
      2008.


(c)
            Represents
      premiums on term life insurance paid by the
  Company.


(d)
            Mr.
      Twerdahl became our Interim Chief Financial Officer in September
      2008.  He previously had been our Corporate Controller since
      February 2007.


(e)
            Mr.
      Fitzgerald was our Chief Executive Officer in 2007 and early
      2008.  His employment with Proxim ended in February
      2008.


(f)
            Represents
      a severance payment of $330,000, health insurance premiums of $2,475 and
      term life insurance premiums of $991 paid by the
  Company.


(g)
            Represents
      health insurance premiums of $12,589 and term life insurance premiums of
      $990 paid by the Company.


(h)
            Mr.
      Chmilewsky became our Executive Vice President, Worldwide Sales in January
      2008.  Mr. Chmilewsky’s employment with the Company ended in
      March 2009.  Amounts paid to Mr. Chmilewsky were generally paid
      in Euros so the numbers shown for Mr. Chmilewsky are calculated using the
      average exchange rate of 1 Euro for 1.47 US Dollars in
      2008.  Amounts shown for Mr. Chmilewsky’s nonequity incentive
      plan compensation are his 2008 sales
  commissions.





Compensation
Information





Overview
of Compensation Program





The
Compensation Committee of our board of directors has the responsibility for
reviewing the compensation and benefits of our Chief Executive Officer and other
executive officers and making recommendations to our board of directors
regarding compensation matters.  The Compensation Committee also has
the power to approve stock awards under our stock plans or alternatively to
recommend the approval of awards to the full board of directors (although the
board of directors has adopted a policy statement that generally
stock


5


awards
should be approved by the Compensation Committee).  Thus, compensation
matters for our executive officers are either approved or recommended by our
Compensation Committee, which consists exclusively of independent members of our
board of directors.  When executive compensation matters are approved
by our full board of directors after recommendation by our Compensation
Committee, any affected executive officer who is also a board member abstains
from voting on any compensation matters affecting that officer.





In making
compensation decisions for our executive officers other than the Chief Executive
Officer, the Compensation Committee generally receives and takes into account
specific recommendations from our Chief Executive Officer.  The Chief
Executive Officer often also establishes the terms of any sales commission plans
in which our executive officers may participate.





Each of
our current executive officers has an employment agreement with
us.  Details of those employment agreements are set forth below in
this Item 11 under the heading “Employment Agreements and Change-of-Control
Provisions.”





Objectives and Philosophy of Our
Executive Compensation Program




The
primary objectives of the Compensation Committee with respect to executive
compensation are:





·
            to
      attract, retain, and motivate qualified executives who make important
      contributions to the achievement of our business
      objectives and





·
            to
      align the incentives of our executives with the creation of value for our
      stockholders




Our
compensation plans and policies currently, and we expect will continue to,
compensate executive officers with a combination of base salary, cash bonuses
tied to our financial performance and other measures, equity incentives, and
customary employee benefits.  We currently intend to implement total
compensation packages for our executive officers generally on par with
compensation levels of comparable public companies.  Our Compensation
Committee determines what it believes to be relevant comparable companies based
on a variety of factors, including being in the same industry, being of
comparable size, being in the same geographical region, and having similar
financial performance.





Executive
Compensation Components





The
principal components for the compensation of our named executive officers
are:





·
            base
      salary


·
            annual
      cash bonuses


·
            long-term
      equity incentives (stock options)


·
            other
      benefits and compensation





Base
Salary





The base
salaries that we pay to our executive officers are based on the level and scope
of responsibility required of each executive, particular value, cost of living,
and historical contributions to our success, and take into account the level of
base salary paid by comparable companies for similar positions.  None
of our executive officers has an employment agreement that provides for
automatic or scheduled increases in base salary.  Our Compensation
Committee reviews base salaries annually, generally early in the fiscal year,
based on each executive’s performance during the prior fiscal year, and it
adjusts salaries as it believes appropriate.  In January 2008, our
Compensation Committee did recommend, and our board of directors did approve,
increasing the annual base salary of Pankaj S. Manglik from $330,000 to $346,500
in connection with his promotion to President and Chief Executive
Officer.  In October 2008, the annual base salary of Thomas S.
Twerdahl was increased from $165,000 to $175,000 in connection with his
promotion to Interim Chief Financial Officer and Treasurer.


6


Cash
Bonus Opportunity





A
significant element of the cash compensation of our executive officers is based
upon an annual cash bonus opportunity.  Executive bonuses are used to
focus our executive officers on achieving key corporate financial, business, and
compliance objectives.  Bonuses, if any, are generally determined and
paid on an annual basis after completion of the bonus year.





Under his
employment agreement with us that was in effect in early 2008, Mr. Fitzgerald,
our Chief Executive Officer in early 2008, was entitled to receive an annual
performance bonus based on actual attainment of 2007 performance targets
approved by the board of directors.  At target performance levels, Mr.
Fitzgerald was entitled to receive a cash bonus equal to 100% of his base
salary.  The board decided that Mr. Fitzgerald’s bonus for 2007 would
be based on the following components with the following
weightings:  revenue (25%), operating income/loss (15%), gross margin
(10%), working capital (10%), stock price (10%), net income/loss (5%), earnings
per share (5%), compliance with requirements of the Sarbanes-Oxley Act of 2002
(5%), compliance with Securities and Exchange Commission filing requirements
(5%), product availability (5%), and employee development (5%).  Based
on those components and the directors’ determination of achievement of those
components, the directors granted Mr. Fitzgerald a bonus of $232,650 for 2007 in
connection with the negotiation and finalization of the separation agreement and
release between the Company and Mr. Fitzgerald in February 2008.  That
separation agreement and release is discussed in more detail below in Item
13.  Certain Relationships and Related Party Transactions, and
Director Independence.





Under his current employment agreement
with us, Mr. Manglik, our Chief Executive Officer, was entitled to receive an
annual performance bonus based on actual attainment of performance targets
approved by the board of directors.  At target performance levels, Mr.
Manglik was entitled to receive a cash bonus equal to 100% of his base
salary.  The board decided that Mr. Manglik’s bonus for 2008 would be
based on the following components with the following
weightings:  revenue (20%), operating income/loss (25%), gross margin
(10%), working capital (10%), stock price (5%), net income/loss (5%), earnings
per share (5%), internal controls (5%), and product introductions and revenue
(15%).  Based on those components and the directors’ determination of
achievement of those components, the directors granted Mr. Manglik a bonus of
$58,056 for 2008.





Messrs. Renauld and Twerdahl are
eligible for annual performance bonuses.  At target performance levels
for 2008, Mr. Renauld was eligible for a cash bonus equal to 50% of his $194,250
base salary and Mr. Twerdahl was eligible for a cash bonus of
$50,000.  Our board of directors had previously established bonus
criteria for the Company’s Chief Executive Officer, and the directors decided to
apply these same criteria to Messrs. Renauld and Twerdahl.  Thus, the
2008 bonus was based on the following components with the following
weightings:  revenue (20%), operating income/loss (25%), gross margin
(10%), working capital (10%), stock price (5%), net income/loss (5%), earnings
per share (5%), internal controls (5%), and product introductions and revenue
(15%).  Based on these components and the directors’ determination of
achievement of those components, the directors granted Messrs. Renauld and
Twerdahl bonuses in the respective amounts of $16,273 and $2,792.  In
performing their analysis, the directors prorated Mr. Twerdahl’s bonus for the
portion of 2008 when he was Interim Chief Financial Officer.





Long-Term
Equity Incentives





We
believe that the long-term performance of our business is improved through the
grant of stock-based awards so that the interests of our executive officers are
aligned with the creation of value for our stockholders.  Additional
purposes of our stock-based awards are to provide additional incentive to those
directors, officers, and other employees of our company whose substantial
contributions are essential to the continued growth and success of our business
in order to strengthen their commitment to our company, to motivate such persons
to faithfully and diligently perform their responsibilities, and to attract and
retain competent and dedicated individuals whose efforts will result in the
long-term growth and profitability of our company.





We have a
number of stock plans.  We have one active stock plan (our 2004 Stock
Plan) pursuant to which stock options, restricted stock awards, unrestricted
stock awards, and other stock-based equity awards may be granted and historical
stock plans pursuant to which stock options are currently outstanding but under
which no more stock options or other stock awards will be
issued.


7


To date,
we have granted the substantial majority of our equity awards in the form of
stock options that vest with the passage of time.  While we currently
expect to continue to use time-based stock options as the primary form of equity
awards that we grant, we have considered and may in the future use alternative
forms of equity awards, such as restricted stock, unrestricted stock, or
performance-based stock options, in addition to or in replacement of time-based
stock options.




We
generally grant options to executive officers and other employees upon their
initial hire and in connection with a promotion, and we have made broad-based
periodic grants to all or a large portion of our employees based upon merit and
in specific situations depending on market conditions.





In 2008, we did grant 250,000 stock
options exercisable at $0.82 per share to Mr. Manglik and 15,000 stock options
exercisable at $0.18 per share to Mr. Twerdahl in connection with their
promotions to Chief Executive Officer and Interim Chief Financial Officer,
respectively.  Consistent with our philosophy that stock-based awards
should vest over time to retain qualified individuals, the grants to Messrs.
Manglik and Twerdahl do vest over approximately a three year
period.  Mr. Manglik’s options vested as to 40% of the underlying
shares on grant and will vest as to 20% of the underlying shares on each of the
first three annual anniversaries of the date of grant.  Mr. Twerdahl’s
options will vest as to 34% of the underlying shares on the first annual
anniversary of the date of grant and then as to an additional 8.25% of the
underlying shares on the first day of each January, April, July, and October
until fully vested.  These are the typical vesting provisions in our
stock options granted to our employees.





All of
these 2008 options were granted at fair market value on the date of grant as
determined by our board of directors.  The board of directors
determined the fair market value of our common stock based on the trading value
of our stock on the date of grant.





Mr.
Manglik’s unvested stock options will vest upon certain terminations of his
employment, as discussed below in this Item 11 under the heading “Employment
Agreements and Change-of-Control Provisions.”




All stock
options granted to Mr. Manglik in 2008 terminate on the earliest
of:





·
            three
      months after the date of termination of the executive’s employment if he
      ceases to be employed by us except as a result of his death or
      disability


·
            one
      year after his death or disability or termination of his employment by the
      Company without good cause or by Mr. Manglik for good
    reason


·
            5
      years from the date of grant





Half of
the unvested options granted to Mr. Twerdahl in 2008 that would have vested on
each vesting date become fully vested upon the occurrence of any of the
following events:





·
            a
      merger or consolidation of our company with any other company (other than
      such a transaction in which the pre-transaction shareholders of our
      company would own more than 50% of the resulting or combined
      company)


·
            the
      sale of substantially all of our
assets


·
            the
      sale of more than 50% of our outstanding stock to an unrelated person or
      group





All stock
options granted to Mr. Twerdahl in 2008 terminate on the earliest
of:





·
            three
      months after the date of termination of the executive’s employment if he
      ceases to be employed by us except as a result of his death or
      disability


·
            one
      year after his death or disability


·
            5
      years from the date of grant





Other
Benefits and Compensation





Each of
our executive officers is eligible to participate in our employee benefits
programs generally on the same terms as non-executive employees, including our
401(k) plan, flexible spending accounts plan, medical plan, dental plan, vision
care plan, life and accidental death & dismemberment insurance
policies, long-term and short


8


term
disability plans, standard company holidays, and other typical employee benefit
plans.  However, we paid the full cost of providing Mr. Manglik
medical (including his eligible dependents), life, disability, and accidental
death and dismemberment insurance in the period of 2008 after he became our
Chief Executive Officer.





In
addition, Lionel Chmilewsky served as our Executive Vice President, Worldwide
Sales for much of 2008.  In that position, he received sales
commissions in 2008 of approximately $191,066 (based on the average 1 Euro to
$1.47 US dollar exchange rate in 2008).





Termination
of Employment and Change in Control Arrangements





We have
entered into agreements with each of Messrs. Manglik, Renauld, and Twerdahl that
provide them with severance benefits in the event of the termination of their
employment under specified circumstances including following a change of control
of Proxim.  These agreements are described below in this Item 11 under
the heading “Employment Agreements and Change-of-Control
Provisions.”





In early
2008, we did have an employment agreement with Mr. Fitzgerald, our Chief
Executive Officer at the time, that would have provided Mr. Fitzgerald with
severance benefits in the event of his termination under specified circumstances
including following a change of control of Proxim.  Mr. Fitzgerald’s
employment with Proxim ceased in February 2008 and his employment agreement was
terminated in connection with the cessation of his employment pursuant to a
settlement agreement and release entered into in February 2008.  That
separation agreement and release is discussed in more detail below in Item
13.  Certain Relationships and Related Party Transactions, and
Director Independence.





We
believe providing these benefits helps us compete for and retain executive
talent and fosters the continued employment of our executive officers by
allowing them to focus attention on their assigned responsibilities without
distraction in the event of a possible change in control of
Proxim.  After reviewing the practices of companies we believe are
comparable, we believe that our severance and change-in-control benefits are
generally in line with those provided to executives by comparable
companies.





Tax
Considerations




Section
162(m) of the Internal Revenue Code limits our ability to deduct, for income tax
purposes, compensation in excess of $1.0 million paid to our chief executive
officer and the four most highly compensated officers of Proxim (other than the
chief executive officer) in any year, unless the compensation qualifies as
“performance-based compensation.”  The aggregate base salaries,
bonuses, and non-equity compensation of each of our officers have not
historically exceeded, and are not in the foreseeable future expected to exceed,
the $1.0 million limit.  The Compensation Committee’s policy with
respect to equity compensation is that it would prefer to cause the compensation
to be deductible by Proxim; however, the Compensation Committee also weighs the
need to provide appropriate incentives to our officers against the potential
adverse tax consequences that may result under Section 162(m) from the grant of
equity compensation that does not qualify as performance-based
compensation.  The board and Compensation Committee has granted and
may continue to grant equity compensation to our officers that does not qualify
as performance-based compensation that could be in excess of the Section 162(m)
limits in circumstances when the board or Compensation Committee believes such
grants are appropriate.





Employment
Agreements and Change-of-Control Provisions





Employment
Agreement with Pankaj S. Manglik





Pankaj
Manglik was promoted to be our President and Chief Executive Officer in January
2008, and Mr. Manglik entered into a new employment agreement with us at that
time.  That new employment agreement replaced his previous
agreement.  The summary below describes Mr. Manglik’s current January
2008 employment agreement rather than his superseded employment agreement
because we believe discussion of his current agreement is more relevant for our
stockholders.





Under
that employment agreement, we agreed to employ Mr. Manglik as our president and
chief executive officer.  Mr. Manglik will report directly to the
board, and our other officers and employees will report to Mr.


9


Manglik.  The
agreement also contemplates that Mr. Manglik will continue to serve on our board
of directors.  The employment agreement has an initial term of five
years, commencing January 14, 2008, unless sooner terminated and may be renewed
for additional periods if we give Mr. Manglik notice of our intention to renew
or negotiate a new agreement at least 90 days prior to the expiration of the
term.  Mr. Manglik’s annual base salary was set at $346,500 subject to
future adjustment.





In
addition, Mr. Manglik is entitled to receive an annual performance bonus based
on actual attainment of performance targets approved by the board of
directors.  At target performance levels, Mr. Manglik shall receive a
cash bonus equal to 100% of his base salary.  The board decided that
Mr. Manglik’s bonus for 2008 would be based on the following components with the
following weightings:  revenue (20%), operating income/loss (25%),
gross margin (10%), working capital (10%), stock price (5%), net income/loss
(5%), earnings per share (5%), internal controls (5%), and product introductions
and revenue (15%).  Mr. Manglik is also entitled to receive additional
bonus awards at the discretion of the board.





Mr.
Manglik receives five weeks of paid vacation per year.  Mr. Manglik
receives medical, life, disability, and accidental death and dismemberment
insurance at Proxim cost and is also entitled to participate in our other
benefit programs for executives or other employees.  If we issue
equity rights in any of our subsidiaries or controlled entities to other
employees, Mr. Manglik is also entitled to receive equity rights no less than
the amount granted to the largest grantee with no less favorable
terms.





Mr.
Manglik may be entitled to receive severance benefits after termination of
employment depending on the circumstances under which his employment
terminates.  If Mr. Manglik’s employment is terminated by us for good
cause (as narrowly defined in the employment agreement) or by Mr. Manglik
without good reason (as defined in the employment agreement), Mr. Manglik will
not be entitled to severance benefits.  If Mr. Manglik’s employment is
terminated by us due to his death or total disability, Mr. Manglik (or his
estate) would be entitled to (a) a payment based on a pro rated amount of his
target annual bonus for the year of termination (based on the number of days
worked divided by 365) and (b) in the case of total disability, continuation of
his medical (including his eligible dependents), life, disability, and
accidental death and dismemberment insurance benefits for a period of twelve
months or receipt of a lump-sum amount in lieu thereof.  Mr. Manglik
would also be entitled to severance benefits if his employment is terminated by
us without good cause or by Mr. Manglik for good reason.  In those
situations, Mr. Manglik generally is entitled to severance benefits of (a) a
lump-sum payment equal to twelve months of base salary, (b) a lump-sum payment
equal to the greater of his annual bonus at target performance levels for the
portion of the year actually worked or six months pro rata bonus at target
performance levels, (c) vesting in full of his unvested stock options, and (d)
continuation of his medical (including his eligible dependents), life,
disability, and accidental death and dismemberment insurance benefits for a
period of twelve months or receipt of a lump-sum amount in lieu
thereof.  However, if Mr. Manglik’s employment is terminated by us
without good cause or by Mr. Manglik for good reason within a six month period
following or at any time within the three month period prior to a change in
control of Proxim, Mr. Manglik is entitled to severance benefits of (a) a
lump-sum payment equal to twenty-one months of base salary, (b) a lump-sum
payment equal to twenty-one months of his annual bonus at target performance
levels, (c) continuation of his medical (including his eligible dependents),
life, disability, and accidental death and dismemberment insurance benefits for
a period of twelve months or receipt of a lump-sum amount in lieu thereof, and
(d) vesting in full of his outstanding stock options and other unvested
benefits.  The lump-sum payments generally are due to Mr. Manglik
within five business days of termination, and all payments are subject to
applicable withholding taxes.  In any case when Mr. Manglik is
entitled to severance benefits, his vested stock options will remain exercisable
for twelve months from the date of termination.  Our obligation to
provide these severance benefits is contingent on Mr. Manglik providing a
release of claims to us and resigning his board and other positions with Proxim
and its affiliated entities.  There is no requirement on the employee
to mitigate these benefits by seeking other employment.





The
employment agreement contemplates Mr. Manglik being granted options to purchase
250,000 shares of our common stock.  We have granted these options
pursuant to a non-qualified stock option agreement, dated as of January 28,
2008, having a per share exercise price of $0.82, the fair market value of our
common stock on the date of grant.





Mr.
Manglik agreed not to compete with us and not to adversely interfere with our
employee, customer, supplier, and other business relationships during his
employment and for one year after termination of his


10


employment
(subject to the provisions of California law), provided that we are in
compliance with any obligation to provide severance benefits to Mr. Manglik and
provided further that Mr. Manglik will be released from the noncompetition
obligations if we terminate his employment without cause or if Mr. Manglik
terminates his employment for good reason.  He agreed to disclose to
us any business opportunity relating to our current or contemplated business
that he conceives or of which he becomes aware during his employment by
us.  He agreed to treat our non-public information confidentially, to
use it only in the course of performing his duties, and to return all of our
business information and other property to us in the event of his
termination.  Mr. Manglik also agreed to assign to us any inventions
and intellectual property he develops during his employment except for any
invention developed by him on his own time using his own facilities that do not
result from his work for us or relate to our current or contemplated
business.





In
January 2009, Mr. Manglik signed a letter agreement agreeing that his base
salary for the period from January 15, 2009 through March 28, 2009 would be
reduced by 15%.





Agreements Concerning Employment with
Thomas S. Twerdahl





On
October 9, 2008, Thomas Twerdahl signed a letter employment agreement with us
for Mr. Twerdahl to be our Interim Chief Financial Officer and
Treasurer.  He will also serve in similar positions for selected other
subsidiaries of Proxim.  The employment agreement establishes an
at-will employment relationship and contains no provisions for cash or other
benefits to be paid upon termination of employment.





Mr.
Twerdahl reports to Pankaj Manglik, our Chief Executive Officer.  His
principal office location will be at our headquarters in Milpitas, California,
but he may be expected to travel from time to time.  Mr. Twerdahl’s
annual base salary is set at $175,000 subject to future
adjustment.  Mr. Twerdahl is eligible to receive an annual bonus with
a target annual bonus of $50,000 and received a bonus of $2,792 for
2008.  Mr. Twerdahl is also entitled to participate in our normal
benefit programs.  Mr. Twerdahl has signed our standard employee
agreement for confidential and proprietary information, intellectual property,
non-competition, and non-solicitation.





The
letter employment agreement contemplates Mr. Twerdahl being granted an option to
purchase 15,000 shares of our common stock with an exercise price equal to the
fair market value of our stock on the date of grant.  The options were
granted by us on October 10, 2008 with an exercise price of $0.18 per share, the
fair market value of our common stock on that date.  More details
about this grant are contained in this Item 11 under the headings “Compensation
Information” above and “Outstanding Equity Awards at 2008 Fiscal Year-End”
below.  As described in more detail in those sections, the option
agreement provide that, upon a change of control, 50% of all unvested stock
options will automatically vest.





In
January 2009, Mr. Twerdahl signed a letter agreement agreeing that his base
salary for the period from January 15, 2009 through March 28, 2009 would be
reduced by 15%.





On April
9, 2009, Mr. Twerdahl signed a letter agreement with us confirming that Mr.
Twerdahl’s employment by Proxim is for no specified period and may be terminated
by him or Proxim at any time, with or without cause or advance
notice.  However, the letter agreement provides that if, within three
(3) months after a change of control (as defined in the letter agreement),
either (a) Proxim terminates Mr. Twerdahl’s employment without cause (also as
defined in the letter agreement) or (b) Mr. Twerdahl terminates his employment
after Proxim significantly reduces his compensation (other than as part of a
general salary reduction applicable to all employees of Proxim) or roles and
responsibilities without cause and does not cure such reduction within fifteen
(15) days of written notice from him, Proxim will pay Mr. Twerdahl an amount
equal to three (3) months of his base salary upon him providing a release of
claims to Proxim (in form and substance acceptable to Proxim).





Employment
Agreement with David Renauld





We
entered into an amended and restated employment agreement, dated as of October
25, 2007, with David Renauld for Mr. Renauld to be our Vice President, Corporate
Affairs and General Counsel reporting to our Chief Executive
Officer.  This amended and restated agreement replaced Mr. Renauld’s
previous employment agreement with the Company.  Mr. Renauld’s base
salary is set at $194,250, and he is eligible for an annual bonus pursuant
to


11


an
incentive plan to be established by our board of directors with a target annual
bonus opportunity of at least 50% of Mr. Renauld’s base salary.  Mr.
Renauld received a bonus of $16,273 for 2008.





Mr.
Renauld receives four weeks of paid vacation per year.  Mr. Renauld is
entitled to participate in our benefit programs as generally made available for
executives (other than our Chief Executive Officer).





Mr.
Renauld would be entitled to severance benefits if we terminate his employment
without cause (as defined in the employment agreement) or if Mr. Renauld
terminates his employment for good reason (as defined in the employment
agreement).  The severance benefits consist of (a) continued payment
of base salary for eleven months, (b) 11/12th of his
annual bonus (if the payment criteria are met), (c) acceleration of any of Mr.
Renauld’s stock options that would have otherwise vested during the 11-month
severance period with those options remaining exercisable for the entire
severance period, and (d) continued coverage during the severance period under
our medical insurance plans at the same cost to Mr. Renauld as prior to
termination.  Mr. Renauld’s severance benefits would be modified as
described below if we terminate his employment without cause (as defined in the
employment agreement) or if Mr. Renauld terminates his employment for good
reason (as defined in the employment agreement) within twelve months following
or three months prior to a change of control of Proxim: (a) Mr. Renauld’s base
salary amount described above would be paid in a lump sum shortly after
termination, (b) Mr. Renauld’s full annual target bonus amount would be paid in
a lump sum shortly after termination without regard to meeting the payment
criteria, and (c) all of Mr. Renauld’s unvested options would
accelerate.  The amounts payable upon termination in connection with a
change of control are subject to reduction to avoid excise tax but only if the
reduction would cause the net after-tax benefit to Mr. Renauld to exceed the net
after-tax benefit if no reduction were made.  If Mr. Renauld’s
employment is terminated by us due to his death or total disability, Mr. Renauld
(or his estate) would be entitled to a payment based on a pro rated amount of
his target annual bonus for the year of termination (based on the number of days
worked in the year of termination) that Mr. Renauld would have been entitled to
receive.





Mr.
Renauld has agreed to keep our information confidential.  During his
employment and for one year thereafter, he agreed not to compete with us or to
solicit our employees subject to the provisions of applicable
law.  Mr. Renauld also agreed to assign to us any inventions and
intellectual property he develops during his employment subject to the
provisions of applicable law.  In general, Mr. Renauld’s right to
receive severance payments from us is contingent on him complying with these
obligations.





Also, upon a change of control of
Proxim, 50% of all of Mr. Renauld’s unvested stock options would automatically
vest.





In
January 2009, Mr. Renauld signed a letter agreement agreeing that his base
salary for the period from January 15, 2009 through March 28, 2009 would be
reduced by 15%.



















12


Outstanding
Equity Awards at 2008 Fiscal Year-End





The
following table provides information on the current holdings of stock option
awards by the named executive officers.  This table shows unexercised
exercisable (vested) and unexercisable (unvested) option awards as of December
31, 2008.  None of the named executive officers has been granted any
stock awards.  Each option grant is shown separately for each named
executive officer.  The vesting schedule for each grant is shown
following this table.





Date
      of
                                                                                          
                                                                                          Number
      of
                                                                                            Securities
                                                                                            Underlying
                                                                                            Unexercised
                                                                                            Options
      (#)
                                                                                          
                                                                                          Number
      of
                                                                                            Securities
                                                                                            Underlying
                                                                                            Unexercised
                                                                                            Options
      (#)
                                                                                          
                                                                                          Option
      Exercise
                                                                                          
                                                                                          Option
                                                                                            ExpirationName
                                                                                          
                                                                                          Grant
                                                                                          
                                                                                          Exercisable
                                                                                          
                                                                                          Unexercisable
                                                                                          
                                                                                          Price
      ($)
                                                                                          
                                                                                          DatePankaj
      Manglik
                                                                                          
                                                                                          1/28/08
                                                                                          
                                                                                          
                                                                                          100,000
                                                                                          
                                                                                          
                                                                                          
                                                                                          150,000
                                                                                          (1)
                                                                                          
                                                                                          $
                                                                                          0.82
                                                                                          
                                                                                          
                                                                                          1/28/135/19/06
                                                                                          
                                                                                          
                                                                                          249,990
                                                                                          
                                                                                          
                                                                                          
                                                                                          50,010
                                                                                          (2)
                                                                                          
                                                                                          $
                                                                                          2.53
                                                                                          
                                                                                          
                                                                                          5/19/115/19/06
                                                                                          
                                                                                          
                                                                                          83,330
                                                                                          
                                                                                          
                                                                                          
                                                                                          16,670
                                                                                          (2)
                                                                                          
                                                                                          $
                                                                                          3.79
                                                                                          
                                                                                          
                                                                                          5/19/115/19/06
                                                                                          
                                                                                          
                                                                                          166,660
                                                                                          
                                                                                          
                                                                                          
                                                                                          33,340
                                                                                          (2)
                                                                                          
                                                                                          $
                                                                                          5.06
                                                                                          
                                                                                          
                                                                                          5/19/11Thomas
      S. Twerdahl
                                                                                          
                                                                                          10/10/08
                                                                                          
                                                                                          
                                                                                          0
                                                                                          
                                                                                          
                                                                                          
                                                                                          15,000
                                                                                          (3)
                                                                                          
                                                                                          $
                                                                                          0.18
                                                                                          
                                                                                          
                                                                                          10/10/1310/11/07
                                                                                          
                                                                                          
                                                                                          2,550
                                                                                          
                                                                                          
                                                                                          
                                                                                          4,950
                                                                                          (3)
                                                                                          
                                                                                          $
                                                                                          1.44
                                                                                          
                                                                                          
                                                                                          10/11/122/13/07
                                                                                          
                                                                                          
                                                                                          5,875
                                                                                          
                                                                                          
                                                                                          
                                                                                          4,125
                                                                                          (3)
                                                                                          
                                                                                          $
                                                                                          2.26
                                                                                          
                                                                                          
                                                                                          2/13/12David
      L. Renauld
                                                                                          
                                                                                          10/11/07
                                                                                          
                                                                                          
                                                                                          8,500
                                                                                          
                                                                                          
                                                                                          
                                                                                          16,500
                                                                                          (3)
                                                                                          
                                                                                          $
                                                                                          1.44
                                                                                          
                                                                                          
                                                                                          10/11/129/14/05
                                                                                          
                                                                                          
                                                                                          10,000
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          2.73
                                                                                          
                                                                                          
                                                                                          9/14/1012/7/04
                                                                                          
                                                                                          
                                                                                          25,000
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          2.47
                                                                                          
                                                                                          
                                                                                          12/7/097/8/04
                                                                                          
                                                                                          
                                                                                          15,000
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          4.76
                                                                                          
                                                                                          
                                                                                          7/8/091/30/04
                                                                                          
                                                                                          
                                                                                          2,500
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          6.35
                                                                                          
                                                                                          
                                                                                          1/30/094/2/03
                                                                                          
                                                                                          
                                                                                          20,000
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          0.96
                                                                                          
                                                                                          
                                                                                          4/2/137/17/01
                                                                                          
                                                                                          
                                                                                          15,000
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          2.12
                                                                                          
                                                                                          
                                                                                          7/17/117/17/01
                                                                                          
                                                                                          
                                                                                          8,250
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          2.12
                                                                                          
                                                                                          
                                                                                          7/17/1112/19/00
                                                                                          
                                                                                          
                                                                                          5,767
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          5.76
                                                                                          
                                                                                          
                                                                                          12/19/109/19/00
                                                                                          
                                                                                          
                                                                                          3,000
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          27.32
                                                                                          
                                                                                          
                                                                                          9/19/107/20/00
                                                                                          
                                                                                          
                                                                                          172
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          114.00
                                                                                          
                                                                                          
                                                                                          7/20/104/18/00
                                                                                          
                                                                                          
                                                                                          500
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          161.00
                                                                                          
                                                                                          
                                                                                          4/18/1012/15/99
                                                                                          
                                                                                          
                                                                                          625
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          50.40
                                                                                          
                                                                                          
                                                                                          12/15/0911/3/99
                                                                                          
                                                                                          
                                                                                          10,975
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          32.00
                                                                                          
                                                                                          
                                                                                          11/3/098/24/99
                                                                                          
                                                                                          
                                                                                          1,250
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          18.00
                                                                                          
                                                                                          
                                                                                          8/24/09Robert
      E. Fitzgerald
                                                                                          
                                                                                          2/9/05
                                                                                          
                                                                                          
                                                                                          500,000
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          3.34
                                                                                          
                                                                                          
                                                                                          2/15/0912/7/04
                                                                                          
                                                                                          
                                                                                          50,000
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          2.72
                                                                                          
                                                                                          
                                                                                          2/15/091/30/04
                                                                                          
                                                                                          
                                                                                          40,000
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          6.99
                                                                                          
                                                                                          
                                                                                          1/30/09Lionel
      Chmilewsky
                                                                                          
                                                                                          8/9/06
                                                                                          
                                                                                          
                                                                                          30,100
                                                                                          
                                                                                          
                                                                                          
                                                                                          9,900
                                                                                          (4)
                                                                                          
                                                                                          $
                                                                                          1.93
                                                                                          
                                                                                          
                                                                                          8/9/118/9/06
                                                                                          
                                                                                          
                                                                                          22,575
                                                                                          
                                                                                          
                                                                                          
                                                                                          7,425
                                                                                          (4)
                                                                                          
                                                                                          $
                                                                                          3.00
                                                                                          
                                                                                          
                                                                                          8/9/118/9/06
                                                                                          
                                                                                          
                                                                                          22,575
                                                                                          
                                                                                          
                                                                                          
                                                                                          7,425
                                                                                          (4)
                                                                                          
                                                                                          $
                                                                                          4.50
                                                                                          
                                                                                          
                                                                                          8/9/119/14/05
                                                                                          
                                                                                          
                                                                                          30,000
                                                                                          
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          $
                                                                                          2.73
                                                                                          
                                                                                          
                                                                                          9/14/10


___________________________________


(1)
            1/3
      of remaining unvested options will vest on each of January 28, 2009,
      January 28, 2010, and January 28,
2011.


(2)
            Each
      of Mr. Manglik’s stock options vested as to 8 1/3% of the underlying
      shares on July 1, 2006 and then vests as to an additional 8 1/3% of the
      underlying shares on the first day of each January, April, July, and
      October until fully vested.


(3)
            Each
      of these stock options will vest or has vested, as the case may be, as to
      34% of the underlying shares on the first annual anniversary of the date
      of grant and then as to an additional 8.25% of the underlying shares on
      the first day of each January, April, July, and October until fully
      vested.


(4)
            3,300
      of the remaining 9,900 options exercisable at $1.93 per share and 2,475 of
      the remaining 7,425 options exercisable at each of $3.00 and $4.50 per
      share vested on January 1, 2009.  No further options will vest
      as Mr. Chmilewsky is no longer a Proxim
  employee.








13


Non-Management Directors’ Compensation for Fiscal
2008





Name
                        
                        Fees
      Earned or
                          Paid
      in Cash ($)
                        
                        Option
      Awards ($)
                          (1)
                        
                        Total
      ($)John
      W. Gerdelman
                        
                        $
                        20,375
                        
                        
                        $
                        2,810
                        (2)
                        
                        $
                        23,185J.
      Michael Gullard
                        
                        $
                        19,791
                        
                        
                        $
                        17,666
                        (3)
                        
                        $
                        37,457Alan
      B. Howe
                        
                        $
                        28,125
                        
                        
                        $
                        38,310
                        (4)
                        
                        $
                        66,435Daniel
      A. Saginario
                        
                        $
                        13,757
                        
                        
                        $
                        0
                        (5)
                        
                        $
                        13,757Robert
      A. Wiedemer
                        
                        $
                        26,750
                        
                        
                        $
                        2,810
                        (6)
                        
                        $
                        29,560


___________________________________


(1)
            These
      amounts in this column reflect the Company’s accounting expense for these
      awards and do not correspond to the actual value that will be recognized
      by the named directors.  Each of Messrs. Gerdelman, Howe, and
      Wiedemer was granted a fully-vested option to purchase 15,000 shares of
      our common stock on September 30, 2008 with an exercise price per share of
      $0.38.  The grant date fair value of each of these options,
      computed in accordance with SFAS 123R, is $0.19.  Mr. Gullard
      was granted options to purchase 50,000 shares of our common stock on
      November 7, 2007 with an exercise price per share of $1.22, 33,332 of
      which options were vested as of December 31, 2008.  The grant
      date fair value of Mr. Gullard’s options, computed in accordance with SFAS
      123R, is $1.06.  Mr. Howe was granted options to purchase 50,000
      shares of our common stock on May 23, 2007 with an exercise price per
      share of $2.31, 33,332 of which options were vested as of December 31,
      2008.  The grant date fair value of Mr. Howe’s options, computed
      in accordance with SFAS 123R, is $2.13.  All options to purchase
      shares of our common stock that had been granted to our directors prior to
      2007 were fully vested prior to 2007.  For additional
      information on the valuation assumptions, refer to note 13 to our
      financial statements in our annual report on Form 10-K for the year ended
      December 31, 2008 as filed with the
SEC.


(2)
            As
      of December 31, 2008, Mr. Gerdelman had fully-vested options outstanding
      to purchase 72,500 shares of our common
stock.


(3)
            As
      of December 31, 2008, Mr. Gullard had vested options outstanding to
      purchase 33,332 shares of our common stock with 16,668 additional options
      vesting on November 7, 2009.


(4)
            As
      of December 31, 2008, Mr. Howe had vested options outstanding to purchase
      48,332 shares of our common stock with 16,668 additional options vesting
      on May 23, 2009.


(5)
            As
      of December 31, 2008, Mr. Saginario had fully-vested options outstanding
      to purchase 12,500 shares of our common stock.  Mr. Saginario
      retired from our board of directors in May 2008.  As a result of
      his retirement, vested options to purchase 63,750 shares of our stock held
      by Mr. Saginario expired unexercised in August 2008: 15,000 at $2.31 per
      share; 15,000 at $2.40 per share; 15,000 at $2.41 per share; 15,000 at
      $2.47 per share; and 3,750 at $2.50 per
share.


(6)           As
of December 31, 2008, Mr. Wiedemer had fully-vested options outstanding to
purchase 87,500 shares of our common stock.





All of the director compensation
described in the foregoing table was paid and granted in accordance with our
policy statement concerning the compensation of directors of Proxim who are not
insiders.  This policy statement was unanimously adopted by our board
of directors on February 9, 2005.  This policy statement sets out
guidelines for compensation of our board members who are not employees or other
insiders of Proxim.  Any board member determined by the board to be an
employee or other insider of Proxim does not receive any compensation pursuant
to this policy statement.





The
policy statement contemplates the following cash compensation:





·
            a
      $17,000 annual retainer for serving on the
board


·
            an
      additional $9,000 annual retainer for serving as chairperson of the
      board


·
            an
      additional $7,500 annual retainer for serving as chairperson of the Audit
      Committee of the board


·
            an
      additional $4,000 annual retainer for serving as a non-chair member of the
      Audit Committee of the board


·
            an
      additional $2,000 annual retainer for serving as chairperson of the
      Compensation Committee of the board


·
            an
      additional $1,000 annual retainer for serving as a non-chair member of the
      Compensation Committee of the board


·
            an
      additional $1,000 annual retainer for serving as chairperson of the
      Governance and Nominating Committee of the
board


·
            an
      additional $500 annual retainer for serving as a non-chair member of the
      Governance and Nominating Committee of the
board





No
additional compensation is paid for attending board or committee
meetings.  Directors are also entitled to reimbursement for expenses
incurred to attend board and committee meetings held in person or otherwise
incurred on our behalf.





The
policy statement also contemplates the following equity
compensation:




14


·
            for
      each new director elected or appointed to the board, a non-qualified stock
      option to purchase 50,000 shares of our common stock that vests in three
      equal annual installments beginning on the date of
  grant


·
            for
      each incumbent director, a fully vested, non-qualified stock option to
      purchase 15,000 shares of our common stock granted immediately following
      each annual meeting of stockholders, as long as the director has served at
      least one complete year before the date of the annual meeting and
      continues to serve as a director after the
  meeting





The
exercise price for all stock options granted pursuant to this policy statement
is to be the fair market value of our common stock on the date of
grant.





In addition to the compensation
described above, the policy statement contemplates that board members may be
periodically granted special additional consideration, in cash or non-qualified
stock options, in recognition of extraordinary demands, additional committee
assignments, or other circumstances deserving of special
consideration.





The
policy statement may be altered at any time by the board of
directors.  The policy statement does not constitute a contract, and
the terms of the policy statement are not intended to create any binding
obligations on us or enforceable rights of any director.








Item
12.  Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters.




Information
relating to our equity compensation plans as of December 31, 2008 appears above
under Item 5.  Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities in this Annual
Report on Form 10-K.





The
following table provides information regarding the beneficial ownership of our
outstanding common stock as of March 31, 2009 (unless otherwise noted)
by:





·
            each
      person or group that we know owns more than 5% of our common
      stock,


·
            each
      of our current directors,


·
            each
      of our named executive officers,
and


·
            all
      of our current directors and executive officers as a
  group.





Beneficial
ownership is determined under rules of the SEC and includes shares over which
the beneficial owner exercises voting or investment power.  The
percentage beneficially owned by each person is based upon 23,519,069 shares of
our common stock outstanding on March 31, 2009.  Shares of common
stock that we may issue upon the exercise of options or warrants currently
exercisable or exercisable within 60 days of March 31, 2009 are deemed
outstanding for computing the percentage ownership of the person holding the
options or warrants but are not deemed outstanding for computing the percentage
ownership of any other person.  Except as otherwise indicated, we
believe the beneficial owners of the common stock listed below, based on
information furnished by them, have sole voting and investment power over the
number of shares listed opposite their names.


15





Name
      of Beneficial Owner
                          
                          Shares
      Issuable
                            pursuant
      to Options
                            and
      Warrants
                            Exercisable
      within 60
                            days
      of
                            March
      31, 2009
                          
                          Number
      of Shares
                            Beneficially
      Owned
                            (Including
      the Number
                            of
      Shares shown in
                            the
      first column)
                          
                          Percentage
      of
                            Shares
                            OutstandingLloyd
      I. Miller, III
                            4550
      Gordon Drive
                            Naples,
      FL  34102
      (1)
                          
                          
                          1,250,000
                          
                          
                          
                          4,803,940
                          
                          
                          
                          19.4
                          %Milfam
      II L.P.
                            (same
      address as Mr. Miller)
      (1)
                          
                          
                          625,000
                          
                          
                          
                          2,469,439
                          
                          
                          
                          10.2
                          %Funds
      managed by
                            Mobius
      Venture Capital
                            1050
      Walnut Street, Ste 210
                            Boulder,
      CO  80302
      (2)
                          
                          
                          0
                          
                          
                          
                          1,755,547
                          
                          
                          
                          7.5
                          %State
      of Wisconsin Investment Board
                            P.O.
      Box 7842
                            Madison,
      WI  53707
      (3)
                          
                          
                          0
                          
                          
                          
                          1,344,878
                          
                          
                          
                          5.7
                          %Brean
      Murray Carret Group Inc.
                            Tropic
      Isle Building, P.O. Box 3331
                            Road
      Town, Tortola
                            British
      Virgin Islands  VG 1110 (4)
                          
                          
                          0
                          
                          
                          
                          1,201,501
                          
                          
                          
                          5.1
                          %Pankaj
      Manglik
      (5)
                          
                          
                          750,000
                          
                          
                          
                          780,000
                          
                          
                          
                          3.2
                          %Thomas
      S.
      Twerdahl
                          
                          
                          11,311
                          
                          
                          
                          12,561
                          
                          
                          
                          *David
      L. Renauld
      (6)
                          
                          
                          128,163
                          
                          
                          
                          145,638
                          
                          
                          
                          *John
      W.
      Gerdelman
                          
                          
                          72,500
                          
                          
                          
                          72,500
                          
                          
                          
                          *J.
      Michael
      Gullard
                          
                          
                          33,332
                          
                          
                          
                          33,332
                          
                          
                          
                          *Alan
      B.
      Howe
                          
                          
                          65,000
                          
                          
                          
                          68,300
                          
                          
                          
                          *Robert
      A.
      Wiedemer
                          
                          
                          87,500
                          
                          
                          
                          87,575
                          
                          
                          
                          *Robert
      E. Fitzgerald
      (7)
                          
                          
                          0
                          
                          
                          
                          1,864,900
                          
                          
                          
                          7.9
                          %Lionel
      Chmilewsky
      (8)
                          
                          
                          113,500
                          
                          
                          
                          118,500
                          
                          
                          
                          *All
      current executive officers and directors as a group (7
      persons)
                          
                          
                          1,147,806
                          
                          
                          
                          1,199,906
                          
                          
                          
                          4.9
                          %





*      Less
than 1%.


(1)
            The
      number of shares beneficially owned by Mr. Miller is based solely on
      information contained in the public filings made by Mr. Miller with the
      SEC, particularly the Schedule 13D/A filed by Mr. Miller with the SEC on
      August 4, 2008.  Based on these filings, we believe that (1) Mr.
      Miller directly owns 1,189,963 shares of our common stock and has the
      right to acquire an additional 625,000 shares of our common stock upon
      exercise of warrants; (2) Mr. Miller has sole voting and dispositive power
      of the 1,844,439 shares of our common stock owned by Milfam II L.P. and
      the additional 625,000 shares of our common stock that may be acquired
      upon exercise of warrants held by Milfam II L.P.; and (3) Mr. Miller has
      shared voting and dispositive power of the 519,538 shares of our common
      stock owned by Trust A-4.  Mr. Miller disclaims beneficial
      ownership of the shares beneficially held by Milfam II L.P. and Trust A-4
      except to the extent of his pecuniary interest in those
      shares.


(2)
            The
      number of shares beneficially owned by funds managed by Mobius Venture
      Capital is based solely on information contained in the Schedule 13G/A
      filed by Mobius Venture Capital with the SEC on February 17,
      2009.


(3)
            The
      number of shares beneficially owned by State of Wisconsin Investment Board
      is based solely on information contained in the Schedule 13G filed by
      State of Wisconsin Investment Board with the SEC on February 3,
      2009.


(4)
            The
      number of shares beneficially owned by Brean Murray Carret Group Inc. is
      based solely on information contained in the Schedule 13D filed by Brean
      Murray Carret Group Inc.with the SEC on February 9, 2009.  That
      Schedule 13D states that Brean Murray Carret Group Inc. has sole voting
      and dispositive control over the indicated shares but also provides
      further information about parties related to Brean Murray Carret Group
      Inc. who may have voting and/or dispositive control with respect to the
      indicated shares.


(5)
            The
      30,000 shares of our outstanding stock included in Mr. Manglik’s holdings
      are held of record by the Manglik/Sundari Family Trust dated February 17,
      2003. Mr. Manglik has shared voting and investment power with his wife
      with respect to these 30,000 shares of our common
  stock.


(6)
            Mr.
      Renauld has joint ownership and shared voting and investment power with
      his wife with respect to 17,400 shares of our common
  stock.


(7)
            Mr.
      Fitzgerald was our Chief Executive Officer at the beginning of calendar
      year 2008 and ceased to be a Proxim employee in February
      2008.  The number of shares beneficially owned by Mr. Fitzgerald
      is based solely on information contained in the Form 4 filed by Mr.
      Fitzgerald with the SEC on July 17, 2008.  While Mr. Fitzgerald
      has not provided more specific current information, the Company believes
      this information is no longer current and that the number of shares of
      Company stock owned by Mr. Fitzgerald has
  declined.


16


(8)
            Mr.
      Chmilewsky was our Executive Vice President, Worldwide Sales until March
      2009.  The number of shares beneficially owned by Mr. Chmilewsky
      is based on information made known to us while Mr. Chmilewsky was a Proxim
      employee.  We believe this information is still
      current.







Item
13.  Certain Relationships and Related Transactions, and Director
Independence.




Related Party Transactions




In October 2008, we entered into a
letter employment agreement with Thomas Twerdahl in connection with his
promotion to Interim Chief Financial Officer and Treasurer.  This
letter employment agreement is summarized above in Item 11.  Executive
Compensation under the heading “Employment Agreements and Change-of-Control
Provisions.”




In January 2008, we entered into a new
employment agreement with Pankaj Manglik in connection with his promotion to
President and Chief Executive Officer.  This new employment agreement
replaced the one that had been entered into in May 2006.  That new
agreement is summarized above in Item 11.  Executive Compensation
under the heading “Employment Agreements and Change-of-Control
Provisions.”  This transaction was recommended by the Compensation
Committee of our board of directors and approved by our board of
directors.




In October 2007, we entered into an
amended and restated employment agreement with David Renauld which replaced the
one that had been entered into in December 2000.  That new agreement
is summarized above in Item 11.  Executive Compensation under the
heading “Employment Agreements and Change-of-Control Provisions.”  This
transaction was recommended by the Compensation Committee of our board of
directors and approved by our board of directors.




In February 2008, we entered into a
separation agreement and release with Robert E. Fitzgerald, who had previously
been our Chief Executive Officer.  In that agreement, Proxim and Mr.
Fitzgerald agreed that his last day of employment with Proxim was February 15,
2008 and that generally his perquisites of employment ended on that
date.  Mr. Fitzgerald agreed to return to Proxim, on or before the
date of the agreement, all property of Proxim.  The parties agreed
that Proxim had continued to pay Mr. Fitzgerald his base salary through February
15, 2008 and had paid his accrued but unused paid time off in the amount of
$54,918.28 (less deductions).  Proxim agreed to pay Mr. Fitzgerald, on
the effective date of the agreement (seven days after execution), the sum of
$727,650 (less deductions) and also the sum of $12,342.85 for disputed expense
reimbursement claims.  Mr. Fitzgerald acknowledged that, other than
the payments contemplated in the agreement, Proxim has paid all benefits and
compensation due to Mr. Fitzgerald.  The parties agreed that all
options to purchase common stock of Proxim held by Mr. Fitzgerald that were
unvested on February 15, 2008 were forfeited on that date and that Mr.
Fitzgerald could have exercised vested stock options in accordance with the
terms of the applicable stock option agreement through February 15, 2009 but in
no event after the expiration date of the applicable option.  Proxim
agreed to continue specified health, life, disability, and accidental death and
dismemberment benefits through February 15, 2009 or to pay a lump sum equal to
the economic equivalent of such coverage, which obligation will cease if and
when Mr. Fitzgerald becomes covered under similar plans of a new
employer.  In the agreement, Mr. Fitzgerald provided Proxim and its
affiliates, directors, officers, employees, and other agents a general release
from claims, from the beginning of time through February 25, 2008, that Mr.
Fitzgerald may have against any of the released parties except for claims
relating solely to indemnification, contribution, or insurance
coverage.  The parties agreed that the provisions in Mr. Fitzgerald’s
February 9, 2005 employment agreement relating to non-competition,
nondisclosure, and intellectual property remain in force and effect, as do any
other agreements Mr. Fitzgerald entered into with Proxim relating to inventions,
non-competition, restrictive covenants, and confidential and/or proprietary
information.  The separation agreement and release was approved by a
transition committee of our board of directors consisting of all board members
except for Mr. Fitzgerald (who was a board member at the time).




Merry Fields, LLC was formed by
shareholders of a Company predecessor, Young Design, Inc., under the laws of the
State of Delaware in August 2000.  Merry Fields is indirectly majority
owned and controlled by Robert Fitzgerald, the Company’s previous Chief
Executive Officer.  Merry Fields owns the property and land leased to
Young Design, Inc. for its Falls Church, Virginia operation.  Young
Design had originally guaranteed Merry Fields’




17


obligations
under the loan Merry Fields had received to acquire that property and
land.  During the year ended December 31, 2005, the guarantee
obligation was removed.  The property lease for the approximately
15,000 square foot facility commenced on January 1, 2001 and terminates on
December 31, 2010.  The lease provides for base monthly rent payments
of $20,625 with a 3% fixed annual increase after the base year.  There
were no amounts due at year end, and payments under the lease totaled
approximately $287,600 during the year ended December 31, 2007.  This
lease was entered into back in 2001 when Young Design, Inc. was a private
company.




Lloyd I.
Miller, III, personally and through affiliated entities, is our largest
stockholder.  Mr. Miller holds no board or management position with
our company.  Two of our directors, Messrs. Gullard and Howe, were
originally nominated for election as a director of the Company on the
recommendation of Mr. Miller.  We have engaged in two transactions
with Mr. Miller in the preceding two fiscal years.





First,
Mr. Miller and a company controlled by him were two of the parties who purchased
common stock and warrants from us in a private placement in July
2007.  In that transaction, we sold 4.3 million shares for an
aggregate purchase price of $7.525 million and issued warrants to purchase 2.15
million shares of our common stock at an exercise price of $2.45 per
share.  Mr. Miller, personally and through his company, acquired a
total of 1,850,000 of the 4.3 million shares issued for an aggregate purchase
price of $3,237,500 and received warrants to purchase an aggregate of 925,000
shares of our common stock.  The documentation for that private
placement contains various representations, warranties, covenants,
indemnifications, and other terms relating to the private
placement.  In particular, the purchasers of the stock agreed not to
engage in a variety of short sale transactions unless the bid price per share of
our common stock is greater than $3.00 or we fail to keep effective the
registration statement relating to the stock and warrants when we are required
to be so.  We agreed not to enter into a variety of variable rate
transactions on or before July 1, 2009.  For one year after closing,
we granted the purchasers rights of first refusal and participation relating to
any subsequent capital-raising transaction in which the effective price per
share is $2.70 or less.  We also entered into a registration rights
agreement in which we agreed to file a registration statement on Form S-3 with
the Securities and Exchange Commission within thirty days after the closing
of the private placement to register the resale of the shares and the shares of
common stock issuable upon exercise of the warrants.  We did file that
registration statement, and it was declared effective.  In March 2009,
Mr. Miller agreed to waive the requirement for us to keep that registration
statement effective and we terminated the effectiveness of that registration
statement.  In November 2007, we repurchased all the common stock (and
received back for cancellation all warrants) that had been issued in the private
placement to all participants other than Mr. Miller and his company, who elected
not to participate in the repurchase.  The private placement was
approved by our board of directors.





Second,
in July 2008, Mr. Miller and an affiliated entity lent us $3.0
million.  This loan is reflected by promissory notes dated July 25,
2008 from Proxim to each of the lenders in the initial principal amount of $1.5
million.  The notes are unsecured.  In connection with this
transaction, Proxim paid each lender a fee of $22,500, being 1.5% of the amount
lent by each lender.  All outstanding amounts are scheduled to be
repaid on July 25, 2011.  Proxim may prepay any or all outstanding
principal amounts at any time by paying to the lenders 102% of the principal
amount being repaid.  All outstanding amounts must be prepaid upon a
change of control of Proxim (as defined in the securities purchase agreement) by
paying 102% of the entire principal amount then outstanding.  Amounts
may also be required to be repaid earlier upon the occurrence of specified
defaults by Proxim.  The notes accrue interest at 16% per
annum.  Interest payments are due and payable monthly in arrears on
the last day of each calendar month beginning on July 31, 2008.  In
lieu of paying accrued interest in cash on each interest payment date, Proxim,
in its sole discretion, may elect to pay interest in kind at the rate of 19% per
annum, compounding monthly, in which case the accrued interest will be added to
the outstanding principal amount of the notes and interest will accrue on that
aggregate principal amount thereafter.  In December 2008, Proxim did
elect to pay the interest in kind and has continued to do so.





In the
securities purchase agreement, Proxim made customary representations and
warranties and gave customary affirmative and negative covenants to the
lenders.  Covenants include notifications of certain events,
maintenance of business, and limitations on Proxim’s ability to pay dividends on
its capital stock, to make capital expenditures, to conduct mergers,
acquisitions and/or assets sales or acquisitions, to incur future indebtedness,
to place liens on assets, and to prepay other indebtedness.  The
lenders are entitled to accelerate repayment of the loans under the securities
purchase agreement upon the occurrence of any of various customary events of
default, which include, among other events, failure to pay when due any
principal or interest in respect of the loans, breach of any


18


of
Proxim’s covenants (subject, in some cases, to certain grace periods) or
representations under the securities purchase agreement and related documents,
failure by Proxim to pay its other obligations, Proxim becoming involved in
specified financial difficulties such as bankruptcy or insolvency proceedings,
attachment or seizure of a material portion of Proxim’s assets, a significant
unsatisfied judgment against Proxim, and the occurrence of a material adverse
change in Proxim’s business or financial condition taken as a
whole.  Upon default by Proxim, the lenders may declare the entire
unpaid amounts under the notes to be due and payable.





In connection with the transactions
contemplated by the securities purchase agreement, the lenders agreed to cancel
warrants that had been issued to the lenders in July 2007.  In the
aggregate, warrants to purchase 925,000 shares of Proxim’s common stock at an
exercise price of $2.45 per share were cancelled effective July 25,
2008.  Proxim issued the two lenders warrants, dated July 25, 2008, to
purchase an aggregate of 1,250,000 shares of Proxim’s common stock (subject to
adjustment) at an exercise price of $0.53 per share (subject to
adjustment).  The warrants may be exercised at any time until July 25,
2018.  The warrants may be exercised by paying the exercise price to
Proxim or by cashless exercise pursuant to a formula.





Given the
relationship with Mr. Miller, the Proxim Board of Directors delegated the
negotiation of the July 2008 transactions described above with Mr. Miller to a
Transaction Committee of the Board of Directors.  The Transaction
Committee consisted of Robert A. Wiedemer and John W. Gerdelman, the two
independent directors of Proxim who were not originally recommended by Mr.
Miller.  After negotiation, the Transaction Committee approved the
transactions described above with Mr. Miller and recommended approval by the
full Board of Directors.  The full Board of Directors accepted the
Transaction Committee’s recommendation and approved the recommended transactions
without modification.





The
aggregate amount of interest paid in cash relating to this July 2008
indebtedness through December 31, 2008 was $170,000.  No principal
amounts of this indebtedness to Mr. Miller have been repaid.  As of
December 31, 2008, the principal amount outstanding was $3,047,500 (which
includes the original principal amount plus interest paid in
kind).  As of March 31, 2009, the principal amount outstanding was
$3,194,560 (which includes the original principal amount plus interest paid in
kind).





Information
about Board of Directors





The
Board of Directors and Corporate Governance





We have
established corporate governance practices designed to serve the best interests
of Proxim and its stockholders.  We are in compliance with the
currently applicable corporate governance requirements imposed by the
Sarbanes-Oxley Act of 2002 and the Nasdaq Stock Market.  We may make
additional changes to our policies and procedures in the future to ensure
continued compliance with developing standards in the corporate governance
area.





Our board
of directors has determined that each of John W. Gerdelman, J. Michael Gullard,
Alan B. Howe, and Robert A. Wiedemer is an “independent director” as defined in
the rules of the Nasdaq Stock Market.  In making this determination,
the board considered the fact that Messrs. Gullard and Howe were originally
nominated for election as a director of the Company on the recommendation of
Lloyd I. Miller, III, our largest stockholder.  These four directors
constitute a majority of our current directors, as required by the Nasdaq Stock
Market.  The remaining current director is Pankaj S. Manglik, our
Chief Executive Officer.  The board of directors also determined that
Daniel A. Saginario, who was a board member until May 2008 was an “independent
director” as defined in the rules of the Nasdaq Stock Market.





Each
member of our board of directors is elected each year at the annual meeting of
stockholders for a one-year term of office.  Our executive officers
serve at the discretion of the directors.


19


Attendance
of Directors at Annual Meetings





It is a
policy of our board of directors that attendance of all directors at the annual
meeting of stockholders is strongly encouraged but is not
required.  Our 2008 annual meeting of stockholders was attended by all
of our current directors who were serving on our board at the time of the
meeting.





Board
of Director Meetings and Committees





The board
of directors meets on a regularly scheduled basis and holds special meetings as
required.  The board met eighteen times during 2008.  None
of our incumbent directors attended fewer than 75% of the total number of
meetings of the board and committees on which such board member served in 2008
during the period he served as a director or member of the
committees.





We have a
standing Audit Committee, Compensation Committee, and Governance and Nominating
Committee, each of which was established by the board of
directors.  Each of these committees operates under a written charter
adopted by our board of directors defining their functions and
responsibilities.  Each of the charters for our Audit Committee,
Compensation Committee, and Governance and Nominating Committee is available on
our website at the following respective locations: http://ir.proxim.com/documentdisplay.cfm?DocumentID=3991;
http://ir.proxim.com/documentdisplay.cfm?DocumentID=3992;
http://ir.proxim.com/documentdisplay.cfm?DocumentID=3993.





Each of
the current members of each of these committees is, and each of the members of
each of these committees during 2008 was, independent as defined in the rules of
the Nasdaq Stock Market.





The
members of our Audit Committee during 2008 were Mr. Wiedemer (Chair), Mr.
Gerdelman (until March 2008), Mr. Gullard (beginning in March 2008), and Mr.
Howe.  The members of our Audit Committee currently are Mr. Wiedemer
(Chair), Mr. Gullard, and Mr. Howe.  The Audit Committee held seven
meetings during 2008.  The Audit Committee selects and engages our
independent auditors, reviews and evaluates our audit and control functions,
reviews the results and scope of the audit and other services provided by our
independent auditors, and performs such other duties as may from time to time be
determined by the board of directors.  The board of directors has
determined that each of Messrs. Wiedemer, Gullard, and Howe is an “audit
committee financial expert” as defined in Item 407 of Securities and Exchange
Commission Regulation S-K.  The board made this determination after a
qualitative assessment of each of their levels of knowledge and experience based
on a number of factors, including formal education and work and other
professional experience.





The
members of our Compensation Committee during 2008 were Mr. Saginario (member and
Chair until March 2008), Mr. Gerdelman (Chair beginning in March 2008), Mr.
Gullard (beginning in March 2008), and Mr. Wiedemer.  The members of
our Compensation Committee currently are Messrs. Gerdelman (Chair), Gullard, and
Wiedemer.  The Compensation Committee held four meetings during
2008.  The Compensation Committee reviews the compensation and
benefits of our executive officers, recommends and approves stock option grants
under our stock option plans (a shared power with the full board of directors),
makes recommendations to the board of directors regarding compensation matters,
and performs such other duties as may from time to time be determined by the
board of directors.  More information about our executive officer
compensation is contained above in Item 11.  Executive Compensation
under the heading “Compensation Information.”





The
members of our Governance and Nominating Committee during 2008 were Mr.
Gerdelman (Chair until March 2008), Mr. Gullard (member and Chair beginning in
March 2008), Mr. Howe (beginning in March 2008), Mr. Saginario (until March
2008), and Mr. Wiedemer (until March 2008).  The members of our
Governance and Nominating Committee currently are Messrs. Gullard (Chair),
Gerdelman, and Howe.  The Governance and Nominating Committee held two
meetings during 2008.  The Governance and Nominating Committee
recommends candidates for membership on the board of directors based on
committee-established guidelines, consults with the Chairman of the board on
committee assignments, considers candidates for the board of directors proposed
by stockholders, periodically evaluates the processes and performance of the
board, monitors and reports on developments in corporate governance, and
performs such other duties as may from time to time be determined by the board
of directors.


20


Director
Nomination Process





The
Governance and Nominating Committee believes that candidates for director should
have certain minimum qualifications, including being able to read and understand
basic financial statements and having the highest personal and professional
integrity and ethics.  The Governance and Nominating Committee will
seriously consider only those candidates who have demonstrated exceptional
ability and judgment and who are expected to be effective, in connection with
the other nominees to or members of our board of directors, in providing the
skills and expertise appropriate for Proxim and serving the long-term interests
of our stockholders.  Candidates for director are reviewed in the
context of the current composition of the board, Proxim’s operating and other
business requirements, and the long-term interests of stockholders to maintain a
balance of knowledge, experience, and capability on our board.  In the
case of incumbent directors, the Governance and Nominating Committee reviews
such directors’ overall service to Proxim during their term, including the
number of meetings attended, level of preparation and participation, quality of
performance, and any other relationships and transactions that might impair such
directors’ independence.  In the case of new director candidates, the
Governance and Nominating Committee also determines whether the nominee must be
independent for Nasdaq Stock Market purposes, which determination is based upon
applicable Nasdaq listing standards, applicable SEC rules and regulations, and
the advice of counsel, if necessary.  The Governance and Nominating
Committee then uses its network of contacts to compile a list of potential
candidates, but may also engage, if it deems appropriate, a professional search
firm.  The Governance and Nominating Committee conducts any
appropriate inquiries into the backgrounds and qualifications of possible
candidates after considering the function and needs of the board.  The
Governance and Nominating Committee considers such candidates’ qualifications
and then selects a nominee or nominees for recommendation to the
board.  The Governance and Nominating Committee retains the right to
modify the qualifications and processes described in this paragraph from time to
time.





The
Governance and Nominating Committee will consider any qualified director
candidates recommended by stockholders.  The Governance and Nominating
Committee does not intend to alter the manner in which it evaluates candidates
based on whether the candidate was recommended by a stockholder or
not.  Stockholders who wish to recommend individuals for consideration
by the Governance and Nominating Committee to become nominees for election to
the board may do so by delivering a written recommendation to the Governance and
Nominating Committee at the following address: c/o Secretary, Proxim Wireless
Corporation, 881 North King Street, Suite 100, Northampton, MA 01060, no sooner
than 120 days and no later than 90 days prior to the first anniversary
of the preceding year’s annual meeting.  Submissions must include, at
a minimum, the full name of the candidate, sufficient biographical information
concerning the candidate, including age, five-year employment history with
employer names, positions held, and description of the employers’ businesses,
whether such candidate can read and understand basic financial statements, and
board memberships, if any.  Any such submission must be accompanied by
the written consent of the proposed nominee to be named as a nominee and to
serve as a director if elected.








21


Item
14. Principal Accountant Fees and Services.




The firm
of Mark Bailey & Co., Ltd., independent certified public accountants, served
as our auditors for the fiscal year ended December 31, 2008.  The firm
of Fitzgerald, Snyder & Co., P.C. (now called Fitzgerald, Co., CPAs, P.C.),
independent certified public accountants, served as our auditors for the fiscal
year ended December 31, 2007.





Audit
and Other Fees Paid to Independent Accountant





The
following table is a summary of the fees billed to us by Mark Bailey & Co.,
Ltd. for professional services rendered for the fiscal year ended December 31,
2008.  There were no fees billed to us by Mark Bailey & Co., Ltd.
in 2007.





Fee
      Category
                  
                  Fiscal
      2008 FeesAudit
      Fees
                  
                  $
                  245,000Audit-Related
      Fees
                  
                  
                  -Tax
      Fees
                  
                  
                  -All
      Other Fees
                  
                  
                  2,448Total
      Fees
                  
                  $
                  247,448





Audit
Fees.    Consists of fees billed for professional
services rendered for the audit of our consolidated annual financial statements
and review of the interim consolidated financial statements included in
quarterly reports and services that are normally provided by Mark Bailey, Co.,
Ltd. in connection with statutory and regulatory filings or
engagements.





All Other
Fees.    Consists of fees for products and services
other than the services reported above.  In fiscal 2008, the $2,448 of
fees consisted of travel expenses.





The
following table is a summary of the fees billed to us by Fitzgerald, Snyder
& Co., P.C. for professional services rendered for the fiscal years ended
December 31, 2008 and December 31, 2007:





Fee
      Category
                    
                    Fiscal
      2008 Fees
                    
                    
                    Fiscal
      2007 FeesAudit
      Fees
                    
                    $
                    206,664
                    
                    
                    $
                    266,165Audit-Related
      Fees
                    
                    
                    -
                    
                    
                    
                    7,500Tax
      Fees
                    
                    
                    19,065
                    
                    
                    
                    17,775All
      Other Fees
                    
                    
                    24,043
                    
                    
                    
                    16,656Total
      Fees
                    
                    $
                    249,772
                    
                    
                    $
                    308,096





Audit
Fees.    Consists of fees billed for professional
services rendered for the audit of our consolidated annual financial statements
and review of the interim consolidated financial statements included in
quarterly reports and services that are normally provided by Fitzgerald, Snyder
& Co., P.C. in connection with statutory and regulatory filings or
engagements.





Audit-Related
Fees.    Consists of fees billed for assurance and
related services that are reasonably related to the performance of the audit or
review of our consolidated financial statements and are not reported under
“Audit Fees.”  In fiscal 2007, the $7,500 of fees related to the audit
of our 401(k) plan’s financial statements.





Tax
Fees.    Consists of fees billed for professional
services for tax compliance, tax advice, and tax planning.  These
services include preparation of federal and state income tax
returns.





All Other
Fees.    Consists of fees for products and services
other than the services reported above.  In fiscal 2008, the $24,043
of fees consisted of $15,924 in travel expenses, $2,024 in computer and word
processing charges, and $6,095 in outside consulting expenses.  In
fiscal 2007, the $16,656 of fees consisted of $13,934 in travel expenses, $2,522
in computer and word processing charges, and $200 of outside consulting
expense.


22





Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditors




The Audit
Committee’s policy is to pre-approve all audit and permissible non-audit
services provided by the independent auditors.  These services may
include audit services, audit-related services, tax services, and other
services.  Pre-approval is generally provided for up to one year, and
any pre-approval is detailed as to the particular service or category of
services and is generally subject to a specific budget.  The
independent auditors and management are required to periodically report to the
Audit Committee regarding the extent of services provided by the independent
auditors in accordance with this pre-approval and the fees for the services
performed to date.  The Audit Committee may also pre-approve
particular services on a case-by-case basis.





No audit-related fees, tax fees, or
other fees were approved by our Audit Committee pursuant to Rule
2-01(c)(7)(i)(C) of Regulation S-X.














23


SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, Proxim Wireless Corporation has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.





PROXIM
      WIRELESS CORPORATIONDate:
      April 30, 2009
              By:
              /s/ Pankaj S. ManglikPankaj
      S. Manglik,Chief
      Executive Officer








Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of Proxim Wireless Corporation
and in the capacities and on the dates indicated.





Signature
            
            Title
            
            Date/s/ Pankaj S. Manglik
            
            Chief
      Executive Officer, President, and Director
            
            April
      30, 2009Pankaj
      S. Manglik
            
            (principal executive
      officer)/s/ Thomas S. Twerdahl
            
            Interim
      Chief Financial Officer and Treasurer
            
            April
      30, 2009Thomas
      S. Twerdahl
            
            (principal financial
      and accounting
      officer)/s/ Alan B. Howe
            
            Director
            
            April
      30, 2009Alan
      B. Howe/s/ John W. Gerdelman
            
            Director
            
            April
      30, 2009John
      W. Gerdelman/s/  J. Michael
      Gullard
            
            Director
            
            April
      30, 2009J.
      Michael Gullard/s/ Robert A. Wiedemer
            
            Director
            
            April
      30, 2009Robert
      A. Wiedemer








24