Document:

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                                                                   Exhibit 10.63

                               PROXIM CORPORATION
                        EMPLOYEE STOCK PURCHASE PLAN(1)
            (AS AMENDED AND RESTATED EFFECTIVE AS OF MARCH 21, 2002)

1.       PURPOSE OF THE PLAN

         The purpose of the Plan is to give eligible employees of the Company
and its Subsidiaries the ability to share in Proxim Corporation's future
success. The Company expects that it will benefit from the added interest which
such employees will have in the welfare of the Company as a result of their
increased equity interest in the Company's success.

2.       SECTION 423 OF THE CODE

         The Plan is intended to qualify as an "employee stock purchase plan"
within the meaning of Section 423 of the Code or any successor section thereto.
Accordingly, all Participants shall have the same rights and privileges under
the Plan, subject to any exceptions that are permitted under Section 423(b)(5)
of the Code. Any provision of the Plan that is inconsistent with Section 423 of
the Code or any successor provision shall, without further act or amendment, be
reformed to comply with the requirements of Section 423. This Section 2 shall
take precedence over all other provisions in the Plan.

3.       DEFINITIONS

         The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:

         (a)      Act: The Securities Exchange Act of 1934, as amended, or any
successor thereto.

         (b)      Beneficial Owner: As such term is defined in Rule 13d-3 under
the Act (or any successor rule thereto).

         (c)      Board: The Board of Directors of the Company.

         (d)      Change in Control: The occurrence of any of the following
events:

                  (i) any Person (other than Ripplewood Holdings L.L.C.
                  ("Ripplewood Holdings"), an Affiliate of Ripplewood Holdings
                  L.L.C., or any Person holding securities representing 10% or
                  more of the combined voting power of the Company's outstanding
                  securities as of the Effective Date, the Company, any trustee
                  or other fiduciary holding securities under an employee
                  benefit plan of the Company, or any company owned, directly or
                  indirectly, by the shareholders of the Company in
                  substantially the same proportions as their ownership of stock
                  of the Company), becomes the Beneficial Owner, directly or
                  indirectly, of securities

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(1) Formerly known as the Western Multiplex Employee Stock Purchase Plan.

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                  of the Company, representing 50% or more of the combined
                  voting power of the Company's then-outstanding securities;

                  (ii) during any period of twenty-four consecutive months (not
                  including any period prior to the Effective Date), individuals
                  who at the beginning of such period constitute the Board, and
                  any new director (other than a director nominated by a Person
                  who has entered into an agreement with the Company to effect a
                  transaction described in Sections 3(d)(i), (iii) or (iv) of
                  the Plan or a director nominated by any Person (including the
                  Company) who publicly announces an intention to take or to
                  consider taking actions (including, but not limited to, an
                  actual or threatened proxy contest) which if consummated would
                  constitute a Change in Control) whose election by the Board or
                  nomination for election by the Company's shareholders was
                  approved by a vote of at least two-thirds (2/3rds) of the
                  directors then still in office who either were directors at
                  the beginning of the period or whose election or nomination
                  for election was previously so approved, cease for any reason
                  to constitute at least a majority thereof;

                  (iii) the consummation of any transaction or series of
                  transactions under which the Company is merged or consolidated
                  with any other company, other than a merger or consolidation
                  which would result in the shareholders of the Company
                  immediately prior thereto continuing to own (either by
                  remaining outstanding or by being converted into voting
                  securities of the surviving entity or its parent) more than
                  50% of the combined voting power of the voting securities of
                  the Company or such surviving entity (or its parent)
                  outstanding immediately after such merger or consolidation; or

                  (iv) the complete liquidation of the Company or the sale or
                  disposition by the Company of all or substantially all of the
                  Company's assets, other than a liquidation of the Company into
                  a wholly-owned subsidiary.

         (e)      Code: The Internal Revenue Code of 1986, as amended, or any
                  successor thereto.

         (f)      Committee: The Compensation Committee of the Board.

         (g)      Company: Proxim Corporation, a Delaware corporation.

         (h)      Compensation: Base salary, annual bonuses, commissions,
                  overtime and shift pay, in each case prior to reductions for
                  pre-tax contributions made to a plan or salary reduction
                  contributions to a plan excludable from income under Section
                  401(k) or 125 of the Code. Notwithstanding the foregoing,
                  Compensation shall exclude severance pay, stay-on bonuses,
                  long-term bonuses, retirement income, change-in-control
                  payments, contingent payments, income derived from stock
                  options, stock appreciation rights and other equity-based
                  compensation and other forms of special remuneration.

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         (i)      Disability: Inability to engage in any substantial gainful
                  activity by reason of a medically determinable physical or
                  mental impairment which constitutes a permanent and total
                  disability, as defined in Section 22(e)(3) of the Code (or any
                  successor section thereto). The determination whether a
                  Participant has suffered a Disability shall be made by the
                  Committee based upon such evidence as it deems necessary and
                  appropriate. A Participant shall not be considered disabled
                  unless he or she furnishes such medical or other evidence of
                  the existence of the Disability as the Committee, in its sole
                  discretion, may require.

         (j)      Disqualifying Disposition: As such term is defined in Section
                  11(f) of the Plan.

         (k)      Effective Date: The date on which the Plan takes effect, as
                  defined pursuant to Section 23 of the Plan.

         (l)      Fair Market Value: On a given date, the closing sales price
                  per Share as quoted on the Nasdaq National Market System (or
                  such market in which such prices are regularly quoted which
                  possesses the greatest average trading volume), or, if there
                  is no market on which the Shares are regularly quoted, the
                  Fair Market Value shall be the value established by the
                  Committee in good faith. If no sale of Shares shall have been
                  quoted on the Nasdaq National Market System on such date,
                  then, with respect to establishing the Fair Market Value on a
                  Purchase Date, the immediately preceding date on which sales
                  of the Shares have been so quoted shall be used, and with
                  respect to establishing the Fair Market Value on an Offering
                  Date, the immediately following date on which sales of the
                  Shares have been so quoted shall be used.

         (m)      Maximum Share Amount: Subject to Section 423 of the Code, the
                  maximum number of Shares that a Participant may purchase in
                  any given calendar year is 2,500 Shares. In no event may a
                  Participant purchase more than $25,000 worth of shares (based
                  on Fair Market Value of such stock at the time the option was
                  granted) in each calendar year during which an option is
                  granted to such Participant.

         (n)      Offering Date: The first date of an Offering Period.

         (o)      Offering Period: An offering period described in Section 6 of
                  the Plan.

         (p)      Option: A stock option granted pursuant to Section 9 of the
                  Plan.

         (q)      Participant: An individual who is eligible to participate in
                  the Plan pursuant to Section 7 of the Plan.

         (r)      Participating Subsidiary: A Subsidiary of the Company that is
                  selected to participate in the Plan by the Committee in its
                  sole discretion.

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         (s)      Payroll Deduction Account: An account to which payroll
                  deductions of Participants are credited under Section 11(c) of
                  the Plan.

         (t)      Person: As such term is used for purposes of Section 13(d) or
                  14(d) of the Act (or any successor section thereto).

         (u)      Plan: The Proxim Corporation Employee Stock Purchase Plan, as
                  amended from time to time.

         (v)      Plan Broker: A stock brokerage or other financial services
                  firm designated by the Committee in its sole discretion.

         (w)      Purchase Date: The last date of an Offering Period.

         (x)      Purchase Price: The purchase price per Share, as determined
                  pursuant to Section 10 of the Plan.

         (y)      Shares: Shares of common stock, par value $0.01 per Share, of
                  the Company.

         (z)      Subsidiary: A subsidiary corporation, as defined in Section
                  424(f) of the Code (or any successor section thereto).

4.       SHARES SUBJECT TO THE PLAN

         Subject to the adjustment provision in Section 15 of the Plan, the
total number of Shares which shall be made available for sale under the Plan
shall be 1,000,000 Shares, plus an annual increase on the first day of each of
the Company's fiscal years beginning in 2001, 2002, 2003, 2004 and 2005 equal to
the lowest of (i) 250,000 Shares, (ii) one percent (1%) of the then outstanding
Shares, on a fully diluted basis or (iii) such lesser number of Shares as is
determined by the Board. If the Board determines that, on a given Purchase Date,
the number of Shares with respect to which options are to be exercised may
exceed (i) the number of Shares available for sale under the Plan on the
Offering Date of the applicable Offering Period or (ii) the number of shares
available for sale under the Plan on such Purchase Date, the Board may in its
sole discretion provide (x) that the Company shall make a pro rata allocation of
the Shares available for purchase on such Offering Date or Purchase Date, as
applicable, in as uniform manner as shall be practicable and as it shall
determine in its sole discretion to be equitable among all Participants
exercising options to purchase Common Stock on such Purchase Date, and continue
all Offering Periods then in effect or (y) that the Company shall make a pro
rata allocation of the Shares available for purchase on such Offering Date or
Purchase Date, as applicable, in as uniform a manner as shall be practicable and
as it shall determine in its sole discretion to be equitable among all
participants exercising options to purchase Common Stock on such Purchase Date,
and terminate any or all Offering Periods then in effect. The Company may make
pro rata allocation of the Shares available on the Offering Date of any
applicable Offering Period pursuant to the preceding sentence, notwithstanding
any authorization of Additional Shares (as defined in Section 10) for issuance
under the Plan by the Company's stockholders subsequent to such Offering Date.
The Shares may consist, in whole or in part, of unissued Shares, treasury

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Shares or Shares purchased on the open market. The issuance of Shares pursuant
to the Plan shall reduce the total number of Shares available under the Plan.

5.       ADMINISTRATION OF THE PLAN

         The Plan shall be administered by the Committee, which may delegate its
duties and powers in whole or in part to any subcommittee thereof consisting
solely of at least two individuals who are each "non-employee directors" within
the meaning of Rule 16b-3 under the Act (or any successor rule thereto). The
Committee is authorized to interpret the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, and to make any other
determinations that it deems necessary or desirable for the administration of
the Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan in the manner and to the extent the
Committee deems necessary or desirable. Any decision of the Committee in the
interpretation and administration of the Plan, as described herein, shall lie
within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned (including, but not limited to, Participants
and their beneficiaries or successors). Subject to Section 16 of the Act or
other applicable law, the Committee may delegate its duties and powers under the
Plan to such individuals as it designates in its sole discretion.

6.       OFFERING PERIODS AND PURCHASE PERIODS

         (a)      Offering Periods. The Plan shall be implemented by a series of
Offering Periods of twenty-four (24) months' duration, with new Offering Periods
commencing on the date determined by the Committee. Pursuant to the Agreement
and Plan of Reorganization, dated as of January 16, 2002, among the Company,
Walnut-Pine Merger Corp. and Proxim, Inc., an Offering Period shall commence on
April 6, 2002 and terminate on July 31, 2003 (the "Proxim Offering Period"). The
Plan shall continue until terminated in accordance with Section 17 hereof.
Notwithstanding the foregoing, the Committee may change the duration and/or
frequency of any Offering Period, in its sole discretion, upon the commencement
of any new Offering Period, subject to the limitations under Section 423 of the
Code and all applicable state and local laws.

         (b)      Purchase Periods. Each Offering Period shall consist of four
(4) consecutive purchase periods of six (6) months' duration. The last day of
each Purchase Period shall be the "Purchase Date" for such Purchase Period. A
Purchase Period commencing on February 1 shall end on the next July 31. A
Purchase Period commencing on August 1 shall end on the next January 31. The
first Purchase Period of the Proxim Offering Period shall commence on April 6,
2002 and shall end on July 31, 2002. Notwithstanding the foregoing, the
Committee may change the duration and/or frequency of any Purchase Period, in
its sole discretion, upon the commencement of any new Purchase Period, subject
to the limitations under Section 423 of the Code and all applicable state and
local laws.

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7.       ELIGIBILITY

         (a)      Any individual who is an employee of the Company or of a
Participating Subsidiary is eligible to participate in the Plan, except that one
or more of the following categories of employees may, in the discretion of the
Committee, be excluded from the coverage of the Plan:

         (1) employees who have not been continuously employed by the Company or
         a Participating Subsidiary for such period (not to exceed two years) as
         the Committee may determine, ending on the Offering Date;

         (2) employees whose customary employment is 20 hours or less per week;

         (3) employees whose customary employment is for not more than five (5)
         months in any calendar year;

         (4) highly compensated employees; and

         (5) employees who own or hold options to purchase or who, as a result
         of participation in the Plan, would own or hold options to purchase
         stock of the Company possessing 10% or more of the total combined
         voting power or value of all classes of stock of the Company.

         (b)      In no event shall an employee be granted an option under the
Plan if, immediately after the grant, such Employee (or any other person whose
stock would be attributed to such employee pursuant to Section 424(d) of the
Code) would own capital stock of the Company and/or hold outstanding options to
purchase stock possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of the Company or of any subsidiary of
the Company.

8.       PARTICIPATION IN THE PLAN

         The Committee shall set forth procedures pursuant to which Participants
may elect to participate in a given Offering Period under the Plan. Once a
Participant elects to participate in an Offering Period, such employee shall
automatically participate in all subsequent Offering Periods, unless the
employee (a) makes a new election or (b) withdraws from an Offering Period or
from the Plan pursuant to Section 12 of the Plan. Notwithstanding the foregoing,
no Participant may participate in more than one Offering Period at any given
time.

9.       GRANT OF OPTION ON ENROLLMENT

         Each Participant who elects to participate in a given Offering Period
shall be granted (as of the Offering Date) an Option to purchase (as of the
Purchase Date) a number of Shares equal to the lesser of (i) the Maximum Share
Amount or (ii) the number determined by dividing the amount accumulated in such
employee's payroll deduction account during such Offering Period by the Purchase
Price.

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10.      PURCHASE PRICE

         The Purchase Price at which a Share will be sold for a given Offering
Period, as of the Purchase Date, shall be eighty-five percent (85%) of the
lesser of:

         (a)      the Fair Market Value of a Share on the first day of the
Offering Period; or

         (b)      the Fair Market Value of a Share on the last day of the
Purchase Period.

                  Provided, however, that in the event (i) of any increase in
         the number of Shares available for issuance under the Plan as a result
         of a stockholder-approved amendment to the Plan (the date on which such
         amendment is approved, the "Approval Date"), and (ii) all or a portion
         of such additional Shares are to be issued with respect to one or more
         Offering Periods that are underway on the Approval Date ("Additional
         Shares") and (iii) the Fair Market Value of a Share on the date of such
         increase (the "Approval Date Fair Market Value") is higher than the
         Fair Market Value on the Offering Date for any such Offering Period,
         then in such instance the Approval Date is deemed to be the first day
         of a new Offering Period, and the Purchase Price with respect to the
         Additional Shares shall be 85% of the Approval Date Fair Market Value
         or the Fair Market Value of a Share on the Purchase Date, whichever is
         lower.

11.      PAYMENT OF PURCHASE PRICE; CHANGES IN PAYROLL DEDUCTIONS; ISSUANCE OF
         SHARES

         Subject to Sections 12, 13 and 14 of the Plan:

         (a)      Payroll deductions shall be made on each day that Participants
are paid during an Offering Period with respect to all Participants who elect to
participate in such Offering Period. The deductions shall be made as a
percentage of the Participant's Compensation in one percent (1%) increments,
from one percent (1%) to twenty percent (20%) of such Participant's
Compensation, as elected by the Participant; provided, however, that no
Participant shall be permitted to purchase Shares under this Plan (or under any
other "employee stock purchase plan" within the meaning of Section 423(b) of the
Code, of the Company or any of its Subsidiaries) with an aggregate Fair Market
Value (as determined as of each Offering Date) in excess of $25,000.00 for any
one calendar year within the meaning of Section 423(b)(8) of the Code. For a
given Offering Period, payroll deductions shall commence on the Offering Date
and shall end on the related Purchase Date, unless sooner altered or terminated
as provided in the Plan.

         (b)      The Committee shall specify procedures by which a Participant
may increase or decrease (including to zero) the rate of payroll deductions
during a Purchase Period. The number of changes in the rate of payroll
deductions during any Purchase Period shall be limited to two (2).

         (c)      All payroll deductions made with respect to a Participant
shall be credited to his or her Payroll Deduction Account under the Plan and
shall be deposited with the general funds of the Company, and no interest shall
accrue on the amounts credited to such Payroll Deduction Accounts. All payroll
deductions received or held by the Company may be used by the

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Company for any corporate purpose, and the Company shall not be obligated to
segregate such payroll deductions. A Participant may not make any separate cash
payment into his or her Payroll Deduction Account, and payment for Shares
purchased under the Plan may not be made in any form other than by payroll
deduction.

         (d)      On each Purchase Date, the Company shall apply all funds then
in the Participant's Payroll Deduction Account to purchase Shares (in whole and
or fractional Shares, as the case may be) pursuant to the Option granted on the
Offering Date. In the event that the number of Shares to be purchased by all
Participants in one Offering Period exceeds the number of Shares then available
for issuance under the Plan, (i) the Company shall make a pro rata allocation of
the remaining Shares in as uniform a manner as shall be practicable and as the
Committee shall determine to be equitable and (ii) funds not used to purchase
Shares on the Purchase Date shall be returned, in cash, without interest, to the
Participant.

         (e)      As soon as practicable following the end of each Offering
Period, the number of Shares purchased by each Participant shall be deposited
into an account established in the Participant's name with the Plan Broker to be
held by such Plan Broker during the period set forth in Section 423(a)(1) of the
Code. Unless otherwise permitted by the Committee in its sole discretion,
dividends that are declared on the Shares held in such account shall be
reinvested in whole or fractional Shares.

        (f)      Once the holding period set forth in Section 423(a)(1) of the
Code has been satisfied with respect to a Participant's Shares, the Participant
may (i) transfer his or her Shares to another brokerage account of Participant's
choosing or (ii) request in writing that a stock certificate be issued to him or
her with respect to the whole Shares in his or her account with the Plan Broker
and that any fractional Shares remaining in such account be paid in cash to him
or her.

        The Committee may require, in its sole discretion, that the Participant
bear the cost of transferring such Shares or issuing certificates for such
Shares. Any Participant who engages in a "Disqualifying Disposition" of his or
her Shares within the meaning of Section 421(b) of the Code shall notify the
Company of such Disqualifying Disposition in accordance with Section 21 of the
Plan.

         (g)      The Participant shall have no interest or voting right in the
Shares covered by his or her Option until such Option is exercised. Upon
exercise, the Shares received will carry the same voting rights as other
outstanding shares of the same class.

12.      WITHDRAWAL

         Each Participant may withdraw from an Offering Period and from the Plan
under such terms and conditions as are established by the Committee in its sole
discretion. Upon a Participant's withdrawal from an Offering Period and from the
Plan, all accumulated payroll deductions in the Payroll Deduction Account shall
be returned, without interest, to such Participant, and he or she shall not be
entitled to any Shares on the Purchase Date or thereafter with respect to the
Offering Period in effect at the time of such withdrawal. Such Participant

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shall be permitted to participate in subsequent Offering Periods pursuant to
such terms and conditions established by the Committee in its sole discretion.

13.      AUTOMATIC WITHDRAWAL

         If the Fair Market Value of the Shares on any Purchase Date of an
Offering Period is less than the Fair Market Value of the Shares on the Offering
Date for such Offering Period, then every Participant shall automatically (i) be
withdrawn form such Offering Period at the close of such Purchase Date and after
the acquisition of Shares for such Purchase Period, and (ii) be enrolled in the
Offering Period commencing on the first business day subsequent to such Purchase
Period.

14.      TERMINATION OF EMPLOYMENT

         A Participant whose employment terminates for any reason shall cease to
participate in the Plan upon his or her termination of employment. Upon such
termination all payroll deductions credited to the Participant's Payroll
Deduction Account shall be returned in cash, without interest, to such
Participant and such Participant shall have no future rights in any unexercised
Options under the Plan.

15.      ADJUSTMENTS UPON CERTAIN EVENTS

         Notwithstanding any other provisions in the Plan to the contrary, the
following provisions shall apply to all Options granted under the Plan:

         (a)      Generally. In the event of any change in the outstanding
Shares by reason of any Share dividend, split, reverse stock split,
reorganization, recapitalization, merger, consolidation, spin-off, combination
or exchange of Shares or other corporate exchange, or any distribution to
stockholders of Shares other than regular cash dividends, the Committee without
liability to any person will make such substitution or adjustment, as it deems
to be equitable, as to (i) the number or kind of Shares or other securities or
property issued or reserved for issuance pursuant to the Plan, (ii) the Purchase
Price, (iii) the Maximum Share Amount, and/or (iv) any other affected terms of
such Options.

         (b)      Change in Control. In the event of a Change in Control, then,
as determined by the Committee in its sole discretion and without liability to
any person (i) the Committee may take such actions, if any, as it deems
necessary or desirable with respect to any Option or Offering Period as of the
date of the consummation of the Change in Control, (ii) any surviving or
acquiring corporation may assume outstanding Options or substitute similar
Options for those under the Plan, (iii) such Options may continue in full force
and effect, or (iv) the Participants' accumulated payroll deductions may be used
to purchase Shares immediately prior to the effective date of the Change in
Control transaction and the Participants' Options under the ongoing Offering
Period(s) terminated.

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16.      NONTRANSFERABILITY

         No Options granted under the Plan shall be transferred, assigned,
pledged or otherwise disposed of in any way by the Participant other than by
will or by the laws of descent and distribution. Any such attempted transfer,
assignment, pledge or other disposition shall be of no force or effect, except
that the Committee may treat such act as an election to withdraw from the
Offering Period in accordance with Section 12.

17.      NO RIGHT TO EMPLOYMENT

         The granting of an Option under the Plan shall impose no obligation on
the Company or any Subsidiary to continue the employment of a Participant and
shall not lessen or affect the Company's or Subsidiary's right to terminate the
employment of such Participant.

18.      AMENDMENT OR TERMINATION OF THE PLAN

         The Plan shall continue until the earliest to occur of the following:
(a) termination of the Plan by the Board, (b) issuance of all of the Shares
reserved for issuance under the Plan, (c) failure to satisfy the conditions of
Section 23 of the Plan. The Board may amend, alter or discontinue the Plan, but
no amendment, alteration or discontinuation shall be made which, (a) without the
approval of the stockholders of the Company, would (except as is provided in
Section 15 of the Plan), increase the total number of Shares reserved for the
purposes of the Plan or (b) except as otherwise provided in Section 15(b),
without the consent of a Participant, would impair any of the rights or
obligations under any Option theretofore granted to such Participant under the
Plan prior to the end of the Purchase Period during which such amendments,
alteration or discontinuation occurred; provided, however, that the Committee
may amend the Plan in such manner as it deems necessary to permit the granting
of Options meeting the requirements of the Code or other applicable laws.

19.      TAX WITHHOLDING

         The Participant's employer shall have the right to withhold from such
Participant such withholding taxes as may be required by federal, state, local
or other law, or to otherwise require the Participant to pay such withholding
taxes. If the Committee so allows, a Participant may elect to pay a portion or
all of such withholding taxes by (a) delivery of Shares or (b) having Shares
withheld by the Company from the Shares otherwise to be received. The Shares so
delivered or withheld shall have an aggregate Fair Market Value equal to the
amount of the employer's minimum statutory withholding (based on minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes, that are applicable to such supplemental taxable income).

20.      INTERNATIONAL PARTICIPANTS

         With respect to Participants who reside or work outside the United
States of America, the Committee may, in its sole discretion, amend the terms of
the Plan or Options with respect to such Participants in order to conform such
terms with the requirements of local law; provided,

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however, that such amendments are not in conflict with the requirements of
Section 423 of the Code.

21.      NOTICES

         All notices and other communications hereunder shall be in writing and
hand delivered or mailed by registered or certified mail (return receipt
requested) or sent by any means of electronic message transmission with delivery
confirmed (by voice or otherwise) to the parties at the following addresses (or
at such other addresses for a party as shall be specified by like notice) and
will be deemed given on the date on which such notice is received:

         Proxim Corporation
         935 Stewart Drive
         Sunnyvale, California  94085
         Attention:  Company Secretary

22.      CHOICE OF LAW

         The Plan shall be governed by and construed in accordance with the laws
of the State of California applicable to contracts made and to be performed in
the State of California.

23.      EFFECTIVENESS OF THE PLAN

         The Plan shall become effective on the date on which it is adopted by
the Board (the "Effective Date"); provided, however, that the Plan must be
approved within twelve (12) months after the Effective Date by the stockholders
of the Company.

                          THIS IS THE END OF THE PLAN

                                       11<PAGE>

                                                                    EXHIBIT 10.3

                               AVANEX CORPORATION

                         SEVERANCE AGREEMENT AND RELEASE

         This Severance Agreement and Release ("Agreement") is made by and
between Avanex Corporation (the "Company"), and Bruce Pollock ("Executive").

         WHEREAS, Executive was employed by the Company as its Vice President,
Finance and IT and Chief Financial Officer;

         WHEREAS, Executive has resigned from such positions;

         WHEREAS, the Company and Executive have entered into a stock option
agreement, dated November 4, 2002 (the "Stock Option Agreement"), granting
Executive an option (the "Option") to purchase 500,000 shares of the Company's
common stock subject to the terms and conditions of the Company's 1998 Stock
Plan and the Stock Option Agreement; and

         WHEREAS, the Executive agrees to release the Company from any claims
arising from or related to Executive's service relationship;

         NOW THEREFORE, in consideration of the mutual promises made herein, the
Company and Executive (collectively referred to as "the Parties") hereby agree
as follows:

         1. Termination of Employment. Executive hereby acknowledges resignation
of his employment effective upon the close of business on November 14, 2003 (the
"Termination Date"). Executive resigns as a director, officer and fiduciary of
any and all subsidiaries, branches, divisions and affililiates of Company and
any 401(k) plans and other employee benefit plans of any of them, effective as
of the Termination Date.

         2. Payment of Salary and Expense Reimbursement. Executive acknowledges
and represents that the Company has paid all salary, wages, accrued vacation and
any and all other benefits due to Executive as of the Termination Date with the
exception of a final paycheck which Executive acknowledges receiving on November
18, 2003. Executive shall submit his final expense reports by December 1, 2003
and the Company will promptly process and pay the amounts due in accordance with
the Company's standard expense reimbursement policies and procedures.

         3. Consideration. As consideration for Executive entering into this
Agreement, the Company agrees to provide Executive with the following benefits:

                  (a) Cash Payments. Executive shall be paid severance pay equal
to his annual base salary in effect immediately prior to the Termination Date
for a period of six (6) months following the Termination Date, less applicable
withholding. The severance pay will be paid in accordance with the Company's
standard payroll practices. The payments will commence within three (3) business
days after the Effective Date.

                  (b) COBRA Payments. If Executive elects to continue his group
health insurance coverage pursuant to COBRA after the Termination Date, the
Company will pay or reimburse Executive for the COBRA premiums otherwise payable
by Executive (for coverage for himself and his eligible dependents) for

<PAGE>

a period of six (6) months following the Effective Date. After the six-month
coverage period, Executive will be responsible for the payment of any COBRA
premiums. The Company will not reimburse Executive for any taxable income
imputed to him because the Company has paid his COBRA premiums (or those of his
eligible dependents).

                  (c) Outplacement Services. Reasonable executive outplacement
services, to be determined at the Company's discretion, for a period of up to
six (6) months after the Effective Date.

         4. Stock Option. Executive acknowledges that, as of the Termination
Date, the Option was vested as to 125,000 of the shares subject to the Option,
and that the Option shall cease vesting as of the Termination Date. Executive
further acknowledges that the Option may be exercised for three (3) months
following the Termination Date and that the Option shall continue to be subject
to the terms of the Company's 1998 Stock Plan and the Stock Option Agreement.

         5. Release of Claims. Executive agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Executive
by the Company. Executive, on behalf of himself and his respective heirs,
executors and assigns, hereby fully and forever releases the Company and its
officers, directors, employees, investors, shareholders, administrators,
predecessor and successor corporations, and assigns, of and from any claim,
duty, obligation or cause of action relating to any matters of any kind, whether
presently known or unknown, suspected or unsuspected, that any of them may
possess arising from any omissions, acts or facts that have occurred up until
and including the effective date of this Agreement including, without
limitation:

                  (a) any and all claims relating to or arising from Executive's
employment relationship with the Company and the termination of that
relationship;

                  (b) any and all claims relating to, or arising from,
Executive's right to purchase, or actual purchase of shares of stock of the
Company;

                  (c) any and all claims for wrongful discharge of employment;
breach of contract, both express and implied; breach of a covenant of good faith
and fair dealing, both express and implied; negligent or intentional infliction
of emotional distress; negligent or intentional misrepresentation; negligent or
intentional interference with contract or prospective economic advantage; and
defamation;

                  (d) any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, and the California
Fair Employment and Housing Act;

                  (e) any and all claims arising out of any other laws or
regulations relating to employment or employment discrimination; and

                  (f) any and all claims for attorneys' fees and costs.

         The Company hereby fully and forever releases Executive of and from any
claim, duty, obligation or cause of action relating to any matters of any kind,
whether presently known or unknown, suspected or unsuspected, that Company may
possess arising from any omissions, acts or facts that have occurred up until
and including the Effective Date (as defined in Section 21 below); provided,
however, that such release shall

                                      -2-

<PAGE>

not extend to: (i) any obligations created by or arising out of this Agreement
or (ii) any claims or causes of action for fraud, embezzlement or criminal
conduct.

         The Company and Executive agree that the releases set forth in this
section shall be and remain in effect in all respects as a complete general
release as to the matters released. These releases do not extend to any
obligations incurred under this Agreement. Furthermore, the foregoing releases
do not waive Executive's rights to indemnification, if any, pursuant to Section
8 herein.

         The parties acknowledge that they have been advised by legal counsel
and are familiar with the provisions of California Civil Code Section 1542,
which provides as follows:

         A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
         KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
         RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
         SETTLEMENT WITH THE DEBTOR.

         The parties, being aware of said Code Section, agree to expressly waive
any rights they may have thereunder, as well as under any other statute or
common law principles of similar effect.

         6. Acknowledgment of Waiver of Claims under ADEA. Executive
acknowledges that he is waiving and releasing any rights he may have under the
Age Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Executive agrees that this waiver and release
does not apply to any rights or claims that may arise under the ADEA after the
Effective Date of this Agreement. Executive acknowledges that the consideration
given for this waiver and release is in addition to anything of value to which
Executive was already entitled. Executive further acknowledges that he has been
advised by this writing that: (a) he should consult with an attorney prior to
executing this Agreement; (b) he has twenty-one (21) days within which to
consider this Agreement; (c) he has seven (7) days following his execution of
this Agreement to revoke the Agreement; (d) this Agreement shall not be
effective until after the revocation period has expired; and (e) nothing in this
Agreement prevents or precludes Executive from challenging or seeking a
determination in good faith of the validity of this waiver under the ADEA, nor
does it impose any condition precedent, penalties or costs from doing so, unless
specifically authorized by federal law.

         7. Return of Company Property. Executive agrees to return all Company
property to the Company upon or prior to the Effective Date of this Agreement,
except that Company and Executive agree that Executive will retain one IBM T40
laptop computer and related items (including installed software) and that
Executive will pay the Company the sum of $1,500 to purchase such computer and
related items from the Company. Executive agrees to sign Exhibit C of the
Company's Employment, Confidential Information and Invention Assignment
Agreement.

         8. Indemnification. Executive and the Company are parties to an
Indemnification Agreement dated November 4, 2002 (the "Indemnification
Agreement") pursuant to which the Company has agreed to indemnify Executive with
respect to certain claims and expenses. Notwithstanding the provisions of
Section 5 of this Agreement, Executive shall continue to be entitled to
indemnification, in accordance with the Indemnification Agreement, the
applicable provisions of the Company's certificate of incorporation and bylaws
and any directors' and officers' liability insurance coverage in effect as of
the date hereof.

         9. Mutual Non-Disparagement. The Company agrees that its officers and
directors will refrain from any disparagement, criticism, defamation or slander
of Executive, or tortious interference with the contracts and relationships of
Executive. Executive agrees to refrain from any disparagement, criticism,

                                      -3-

<PAGE>

defamation or slander of the Company or its employees, or tortious interference
with the contracts and relationships of the Company.

         10. No Cooperation. Each party agrees that it will not knowingly
counsel or assist any attorneys or their clients in the presentation or
prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against the other party, unless under a subpoena
or other court order to do so. Each party agrees to immediately notify the other
party upon receipt of any such subpoena or court order, and to furnish, within
three (3) business days of its receipt, a copy of such subpoena or court order
to the other party. If approached by anyone for counsel or assistance in the
presentation or prosecution of any disputes, differences, grievances, claims,
charges, or complaints against the other party, each party agrees that it shall
state no more than that it cannot provide counsel or assistance.

         11. Non-Solicitation. In consideration for the severance benefits
Executive is to receive hereunder, Executive agrees that he will not, at any
time during the twelve months following the Termination Date, directly or
indirectly solicit any individuals to leave the Company's employ for any reason
or interfere in any other manner with the employment relationships at the time
existing between the Company and its employees.

         12. Tax Consequences. The Company makes no representations or
warranties with respect to the tax consequences of the payment of any sums or
provision of any benefits to Executive under the terms of this Agreement. The
Company will withhold sums from Executive's compensation hereunder sufficient to
satisfy the Company's withholding obligations. Executive agrees and understands
that he is responsible for payment, if any, of his portion of the local, state
and/or federal taxes on the sums paid hereunder by the Company and any penalties
or assessments thereon.

         13. No Admission of Liability. No action taken by the Parties hereto,
or either of them, either previously or in connection with this Agreement shall
be deemed or construed to be (a) an admission of the truth or falsity of any
claims heretofore made or (b) an acknowledgment or admission by either party of
any fault or liability whatsoever to the other party or to any third party.

         14. Costs. The Parties shall each bear their own costs, expert fees,
attorneys' fees and other fees incurred in connection with this Agreement.

         15. Arbitration and Equitable Relief.

                  (a) The Parties agree that, to the extent permitted by law,
any dispute or controversy arising out of, relating to, or in connection with
this Agreement, or the interpretation, validity, construction, performance,
breach, or termination thereof shall be settled by arbitration to be held in
Alameda County, California, in accordance with the National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association (the "Rules"). The arbitrator may grant injunctions or other relief
in such dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator's decision in any court having jurisdiction.

                  (b) The arbitrator shall apply California law to the merits of
any dispute or claim, without reference to rules of conflict of law. The
arbitration proceedings shall be governed by federal arbitration law and by the
Rules, without reference to state arbitration law. The parties hereto hereby
expressly consent to the personal jurisdiction of the state and federal courts
located in California for any action or proceeding

                                      -4-

<PAGE>

arising from or relating to this Agreement and/or relating to any arbitration in
which the parties are participants.

                  (c) Each party shall pay its own attorneys' fees in any such
 arbitration; provided, however, that the Company shall pay for any
administrative or filing fees, including the arbitrator's fee, that Executive
would not have otherwise incurred if the dispute was adjudicated in a court of
law, rather than through arbitration.

                  (d) THE PARTIES HERETO HAVE READ AND UNDERSTAND SECTION 15,
WHICH DISCUSSES ARBITRATION. THE PARTIES HERETO UNDERSTAND THAT BY SIGNING THIS
AGREEMENT, THEY AGREE, TO THE EXTENT PERMITTED BY LAW, TO SUBMIT ANY FUTURE
CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE
INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH, OR TERMINATION
THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A
WAIVER OF THEIR RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL
DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP,
INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:

                           (i)      ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF
EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT
OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL
MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR
PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.

                           (ii)     ANY AND ALL CLAIMS FOR VIOLATION OF ANY
FEDERAL, STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF
THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF
1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING
ACT, AND LABOR CODE SECTION 201, et seq;

                           (iii)    ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER
LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

         16. Authority. The Company represents and warrants that the undersigned
has the authority to act on behalf of the Company and to bind the Company and
all who may claim through it to the terms and conditions of this Agreement.
Executive represents and warrants that he has the capacity to act on his own
behalf and on behalf of all who might claim through him to bind them to the
terms and conditions of this Agreement.

         17. No Representations. Each party represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.

         18. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.

                                      -5-

<PAGE>

         19. Entire Agreement. This Agreement, along with the previously
executed Employment, Confidential Information and Invention Assignment
Agreement, the Indemnification Agreement and the Stock Option Agreement,
represent the entire agreement and understanding between the Company and
Executive concerning Executive's separation from the Company, and supersede,
replace and fully discharge all obligations under any and all prior agreements
and understandings concerning Executive's relationship with the Company and his
compensation by the Company.

         20. No Oral Modification. This Agreement may only be amended in writing
signed by Executive and the Company's Chief Executive Officer.

         21. Effective Date. This Agreement will become effective (the
"Effective Date") one day after i) it has been signed by both Parties and ii)
seven days have passed since Executive signed the Agreement (provided that
Executive has not revoked the Agreement during such seven day period).

         22. Cooperation with the Company. Executive agrees to cooperate fully
with the Company, including but not limited to, responding to reasonable
requests from the Company's Chief Executive Officer, Chief Financial Officer or
the Company's legal counsel in connection with any and all existing or future
litigation related to the Company. Executive also agrees to furnish upon
reasonable request, information necessary in order to assist the Company in
meeting the Company's reporting requirements and Executive's continuing Section
16 reporting obligations on a timely manner and as prescribed by the then
current SEC and/or Nasdaq rules. Executive understands that he remains subject
to the SEC and Nasdaq prohibitions on insider trading even after the Effective
Date of this Agreement.

         23. Counterparts. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

         24. Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:

                  (a) They have read this Agreement;

                  (b) They have been represented in the negotiation and
execution of this Agreement by legal counsel of their own choice or that they
have voluntarily declined to seek such counsel;

                  (c) They understand the terms and consequences of this
Agreement and of the releases it contains;

                  (d) They are fully aware of the legal and binding effect of
this Agreement.

                                      -6-

<PAGE>

         IN WITNESS WHEREOF, the Parties have executed this Agreement.

Avanex Corporation                                    Executive

By: /s/ WALTER ALESSANDRINI                           /s/ BRUCE  POLLOCK
    Walter Alessandrini                               Bruce Pollock

Date: November 25, 2003                               Date: November 25, 2003

                                      -7-

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