<PAGE>

                                                                   EXHIBIT 10.14

ADAPTIVE BROADBAND CORPORATION

RETENTION AND SEVERANCE AGREEMENT


THIS RETENTION AND SEVERANCE AGREEMENT ("Agreement") is entered into as of
February 18, 2000 (the  "Effective Date"), between ADAPTIVE BROADBAND
CORPORATION, a Delaware corporation ("ADAP") and  George G Arena (the
"Employee").

RECITAL

The Employee is employed by ADAP at the Rochester business unit ("Business
Unit").  ADAP and the Employee desire to set forth the terms of retention
incentive and severance compensation benefits being offered to the Employee in
conjunction with ADAP's announced intention to sell the Business Unit.  The
Agreement also places certain obligations on the Employee in return.  ADAP
wishes to retain the Employee's services to support the sale of the Business
Unit.  If the Employee remains employed during the Retention Period, a retention
incentive will be paid.  If the Employee is terminated either (a) at the time of
the sale of the Business Unit or (b) during a one year period thereafter upon
becoming employed by the buyer of the Business Unit (the "Buyer"), the Employee
will be eligible for severance compensation benefits.

The parties agree as follows:

1.  Definitions. For purposes of this Agreement, the following terms will have
    -----------
the meanings set forth below:

    a.   "Retention Period" shall mean the period ending the earlier of (a) the
          ----------------
close of the sale of the Business Unit or (b) September 1, 2000.

    b.  "Termination" shall mean termination of employment other than a
         -----------
Termination for Cause either by (a) ADAP, other than in conjunction with the
Employee's acceptance of employment with the Buyer; or (b) the Buyer, within one
year following the end of the Retention Period; or (c) the Employee, either (i)
at the time of the sale of the Business Unit or (ii) for any reason within 90
days following acceptance of employment with the Buyer or (iii) for Good Reason
within one year following acceptance of employment with the Buyer.

    c.  "Termination for Cause" is termination of the Employee's employment as a
         ---------------------
result of (a) the Employee's willful misconduct or the Employee's dishonesty
towards, fraud upon, crime against or deliberate or attempted injury or bad
faith action with respect to ADAP or the Buyer; or (b) the Employee's conviction
for a felony (whether in connection with ADAP's or the Buyer's affairs or
otherwise), other than a motor vehicle violation.
<PAGE>

    d.  "Good Reason" includes any of the following:
         -----------

        (i)   the assignment to the Employee of duties inconsistent with, or a
              substantial alternation in the nature of status of, the Employee's
              responsibilities immediately before the close of the sale of the
              Business Unit;

        (ii)  a reduction in the Employee's salary or other benefits as in
              effect on the date of the close of the sale of the Business Unit;

        (iii) the Employee's relocation to a work site requiring an increase in
              one-way commute from Employee's residence of more than thirty-five
              (35) miles; or

        (iv)  a breach of this Agreement by ADAP if the breach has not been
              cured within 30 days after written notice by the Employee to ADAP
              setting forth with specificity the nature of the breach.

2.  Retention Incentive.  If the Employee remains employed by ADAP throughout
    -------------------
the Retention Period, ADAP shall pay the Employee a retention incentive award
equal to the greater of (a) $58,047 or (b) an amount equal to the product of (i)
$232,187, and (ii) the Business Unit's business goal achievement percentage for
the period between January 1, 2000 and the earlier of June 30, 2000 or the last
full month prior to the close of the sale of the Business Unit, and (iii) the
percentage of the FY00 fiscal year which has transpired  by the earlier of June
30, 2000 or the close of the sale of the Business Unit.   This payment shall be
made no later than sixty days following the end of the Retention Period.

3.  Compensation at Termination.  If a Termination occurs, the Employee shall
    ---------------------------
immediately be paid all (a) accrued salary, (b) vested deferred compensation
plus the value of any unvested company matching shares of ADAP phantom stock in
ADAP's Supplemental Executive Deferred Compensation Plan (other than pension
plan or profit sharing plan benefits, which will be paid in accordance with the
applicable plan), unless the Employee is eligible for a delayed payout as
authorized by the plan, (c) benefits then due under any plans of ADAP or the
Buyer in which the Employee is a participant, (d) accrued Personal Time Off pay
or vacation pay and (e) reimbursements for any appropriate business expenses
incurred by the Employee in connection with his duties, all to the date of
termination. The Employee will also be entitled to the severance compensation
described in Section 4.

4.  Severance Compensation.  If a Termination occurs, ADAP shall pay weekly
    ----------------------
severance compensation to the Employee for a period ending 52 weeks after
Termination in an aggregate amount determined by adding (a) the Employee's
weekly base salary at the time of Termination which shall not be less than
$4,807.70 per week and (b) the amount of $1,111.55 per week paid in lieu of
other employee benefits (including health benefits and other perquisites) which
the Employee was receiving from ADAP.  If the Employee has not begun employment
of any nature or duration during this initial period of severance compensation,
the severance compensation payments shall continue for an additional 52 weeks
but shall be discontinued immediately if the Employee begins
<PAGE>

employment of any nature or duration. Employee agrees to promptly notify ADAP of
any such employment and to reimburse ADAP for any payments made by ADAP
hereunder that cover any period during which the Employee was employed in any
capacity.

5.  Outplacement Support.  If a Termination occurs, ADAP shall provide the
    ---------------------
Employee with outplacement counseling and support in a manner and at a level
which ADAP determine appropriate for the circumstances.

6.  Acceleration of Options. If the Employee remains employed by ADAP
    -----------------------
throughout the Retention Period, all stock options held by the Employee
immediately before the termination or sale will become fully vested and the
stock options will be exercisable for the periods specified with respect to
termination of employment in the plans covering the options.

7.  Continuation of ADAP Employment Past the Retention Period.  If the Employee
    ----------------------------------------------------------
accepts a job offer from ADAP resulting in his continued employment by ADAP
after the sale of the Business Unit, the Employee shall be paid the retention
incentive described in Section 2 but shall forfeit eligibility for the severance
compensation payments described in Sections 3 and 4 and shall forfeit the
acceleration of options described in Section 6.  However, nothing in this
section shall require the Employee to accept such a position from ADAP in order
to be entitled to the severance compensation payments provided for by Sections 3
and 4 and the acceleration of options described in Section 6.

8.  Other Benefits.  Neither this Agreement nor the severance compensation that
    --------------
it provides for will reduce any amounts otherwise payable, or in any way
diminish the Employee's rights as an employee of ADAP, whether existing now or
hereafter, under any benefit, incentive, retirement, stock option, stock bonus
or stock purchase plan or under any employment agreement or other plan or
arrangement, provided, however, that the rights granted to the Employee and the
obligations assumed by ADAP under this Agreement will be in lieu of, and not in
addition to, any severance or other termination payments to which the Employee
may be entitled under any employment agreement or other plan or arrangement that
the Employee may now or hereafter have with ADAP.

9.  Employment Status.  This Agreement does not constitute a contract of
    -----------------
employment.  It does not impose on ADAP any obligation to retain the Employee as
an employee, to change the status of the Employee's employment or to change
ADAP's policies regarding termination of employment.

10. Waiver and Release of Claims.  In exchange for the consideration from ADAP,
    ----------------------------
the receipt and sufficiency of which is hereby acknowledged, the Employee and
the Employee on behalf of his/her heirs, personal representatives, and assigns,
hereby voluntarily and irrevocably release, acquit and forever discharge ADAP,
and all of ADAP's affiliated and related entities, and their officers,
directors, agents, representatives, attorneys, servants, employees,
predecessors, successors, assigns and all persons acting herein specifically
named or not, from any and all claims, demands,
<PAGE>

liabilities, debts, judgments, damages, expenses, actions, causes of action or
suits of any kind whatsoever which the Employee, his/her heirs, personal
representatives and assigns, and each of them, may have had or may now have,
whether known or unknown, including, but not limited to, common law claims,
statutory claims, claims for wages or earnings or benefits, claims for overtime,
claims or causes of action under Title VII of the Civil Rights Acts of 1964,
claims or causes of action under the Civil Rights Act of 1991, claims for
wrongful termination (including constructive termination), defamation, or
invasion of privacy, claims or causes of action under the Employee Retirement
Income Security Act of 1974 ("ERISA"), as amended, claims or causes of action
under the Fair Labor Standards Act ("FLSA"), claims or causes of action under
the American with Disabilities Act ("ADA"), claims or causes of action under the
Older Workers Benefit Protection Act ("OWBPA"), and claims or causes of action
under the California Fair Employment and Housing Act, the California Family
Rights Act, the California Labor Code, any other federal, state or municipal
statute or ordinance, and claims or causes of action under any tort, contract or
other theory, which arise out of or are connected in any way, directly or
indirectly, with his/her employment by ADAP or his/her termination of such
employment. The Employee acknowledges that through this Agreement he/she is
receiving consideration from ADAP beyond that to which he/she would otherwise be
entitled.

11.  Non-disparagement of ADAP.  The Employee agrees not to make any negative or
     --------------------------
disparaging statement or comment about ADAP, its affiliates and their related
persons and entities to any person, entity or organization.

12.  Legal Review.  The Employee has been advised by ADAP to consult with an
     -------------
attorney prior to entering into this Agreement and has had full opportunity to
do so.  In entering into this Agreement, the Employee acknowledges he/she is not
relying on any statement, representation or promise by ADAP or any
representative of ADAP which is not expressly set forth herein.

13.  Confidentiality.  The Employee agrees to keep the terms of this Agreement
     ----------------
strictly confidential and may disclose them to no one except to immediate family
(who have agreed to the same confidentiality obligations) or as may be
reasonably necessary for the purpose of obtaining professional advice, meeting
legal reporting requirements or pursuant to judicial process, court order or
subpoena.

14.  Miscellaneous.
     -------------

     a.   Severability. If any provision of this Agreement or the application
          ------------
thereof is held invalid, the invalidity shall not affect other provisions or
applications of the Agreement which can be given effect without the invalid
provisions or application, and to this end this Agreement is declared to be
severable.

     b.   Withholding.  Compensation and benefits to the Employee under this
          -----------
Agreement will be reduced by all federal, state, local and other withholdings or
similar taxes as required by applicable law.

     c.   Arbitration.  The parties will submit all controversies, claims and
          -----------
matters of difference in any way related to this Agreement, its performance or
breach, to arbitration in San Francisco, California, according to the rules and
practices of the American Arbitration
<PAGE>

Association from time to time in effect. Any awards in such arbitration shall be
final and binding on all parties. The arbitrators shall allocate the costs of
the arbitration in such manner as they deem equitable. The arbitrators may
require the reimbursement of all or a portion of the reasonable legal fees
incurred by the prevailing party in the arbitration proceeding and any legal
proceedings which are taken to enforce the arbitral award. Any rights to trial
by jury with respect to any claim or proceeding related to, or arising out of,
this Agreement are waived by the Employee and ADAP.

   d. Entire Agreement: Modifications. (i) This Agreement is the entire
      -------------------------------
agreement between the parties with respect to the matters covered hereby, and
may be amended, modified, superseded or canceled, or its terms waived, only by a
written instrument executed by each party or, in the case of a waiver, by the
party waiving compliance. (ii) Failure of a party at any time to require
performance of any provision of this Agreement will not affect the right at a
later time to enforce the same. (iii) No waiver of a breach of this Agreement,
whether by conduct or otherwise, in any one or more instances will be construed
as a further or continuing waiver of the breach or of any other term of this
Agreement. (iv) This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the parties hereto.

   e.  Applicable Law. This Agreement will be construed under and governed by
       ----------------
the laws of the State of California without regard or reference to the rules of
conflicts of law that would require the application of the laws of any other
jurisdiction.

15.  Prior Severance Agreement.  The Employee and ADAP acknowledge their
     -------------------------
prior severance agreement dated July 2, 1999.  The Employee and ADAP hereby
terminate such prior severance agreement as of the day immediately prior to the
Effective Date of this Agreement, and neither the Employee nor ADAP shall have
any rights or obligations thereunder.

16.  Review Period. The Employee acknowledges that he/she has been given 21 days
     --------------
to review and study this Agreement prior to its execution and that he/she has
the right to revoke this Agreement within 7 days following its execution. The
Employee acknowledges that he/she has had the opportunity and the time to
discuss this Agreement with an attorney and he she has been encouraged to do so
by ADAP, and that no monies payable by ADAP pursuant to the terms of this
Agreement shall be disbursed to him/her until the expiration of the time limits
prescribed in this paragraph. The Employee acknowledges that he/she is executing
this Agreement voluntarily, free from duress, undue pressure or influence,
harassment and intimidation. The Employee acknowledges that this Agreement
represents an important legal and binding agreement, and he/she enters into it
voluntarily and with full knowledge of its intent and terms.

17.  Re-execution at Termination.  In the event of the Employee's termination,
     ----------------------------
he/she agrees to execute this Agreement again with a then current date.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
<PAGE>

THIS AGREEMENT CONTAINS A RELEASE OF KNOWN AND UNKNOWN CLAIMS.

ADAPTIVE BROADBAND CORPORATION



________________________________
________________________________
Donna Birks
George G Arena

Executive Vice President and CFO
Employee